10-QPeriod: Q3 FY2014

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 6, 2014For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiary, Consolidated Edison Company of New York, Inc. (CECONY), reported mixed financial results for the nine months ended September 30, 2014. While total operating revenues saw an increase compared to the same period in 2013, driven by higher volumes and rate adjustments across utility segments, net income for common stock experienced a significant boost, largely due to a gain on the sale of solar energy projects and favorable outcomes from past LILO transactions. The company continues to invest heavily in utility plant construction, with a substantial portion of cash flow dedicated to these activities. Despite increased capital expenditures, Con Edison maintained a stable common equity ratio and a strong earnings to fixed charges ratio, indicating a solid financial footing. Management highlights the ongoing regulatory environment, including the transformative Reforming the Energy Vision (REV) proceeding in New York, which could significantly impact future business models and operations. Investors should monitor regulatory developments and the company's adaptation to evolving energy market dynamics.

Financial Highlights

44 data points
Beta

Revenue

$3.39B

Net Income

$436.00M

12.9% Net Margin

EPS (Diluted)

$1.48

Total Assets

$40.67B

Cash & Equivalents

$205.00M

Free Cash Flow

$455.00M

Financial Statements
Beta
Revenue$3.39B
Operating Expenses$2.57B
Operating Income$819.00M
Interest Expense$145.00M
Net Income$436.00M
EPS (Basic)$1.49
EPS (Diluted)$1.48
Shares Outstanding (Basic)292.90M
Shares Outstanding (Diluted)294.00M

Key Highlights

  • 1Net income for common stock increased to $1,010 million for the nine months ended September 30, 2014, up from $828 million in the prior year period, driven by operational improvements and a gain on solar energy project sales.
  • 2Total operating revenues for the nine months increased to $10,091 million from $9,487 million, reflecting higher revenues across most business segments.
  • 3The company generated $1,751 million in net cash from operating activities for the nine months ended September 30, 2014, an increase from $1,238 million in the prior year, supported by improved operating performance.
  • 4Utility construction expenditures remained substantial, with Con Edison investing $1,663 million in electric and $1,554 million in gas utility construction during the nine-month period.
  • 5The common equity ratio remained strong, at 53.7% for Con Edison and 52.3% for CECONY as of September 30, 2014.
  • 6The company generated a gain of $45 million (pre-tax) from the sale of solar energy projects in the first nine months of 2014.
  • 7Consolidated Edison is actively participating in New York's Reforming the Energy Vision (REV) proceeding, which aims to transform the state's energy market and could significantly impact future operations and regulatory frameworks.

Frequently Asked Questions

The increase in net income for common stock to $1,010 million from $828 million in the prior year was primarily driven by a gain on the sale of solar energy projects ($45 million pre-tax), along with operational improvements across its utility segments and favorable impacts from past Lease In/Lease Out (LILO) transactions.

Con Edison continued to make significant investments in its utility infrastructure. For the nine months ended September 30, 2014, utility construction expenditures totaled approximately $1,663 million for electric and $1,554 million for gas, reflecting ongoing commitment to maintaining and upgrading its operational assets.

The REV proceeding initiated by the New York State Public Service Commission (NYSPSC) is a comprehensive and transformative initiative aimed at improving energy system efficiency, promoting renewables, and supporting customer choice. While the specific outcomes are still uncertain, it could lead to significant changes in utility business models, regulatory practices, and the role of utilities as Distributed System Platform Providers (DSPPs).

Con Edison accrues liabilities for environmental remediation costs, including those related to manufactured gas plant (MGP) sites. At September 30, 2014, the accrued liabilities for Con Edison and CECONY were $734 million and $636 million, respectively. The company also carries regulatory assets to defer and subsequently recover certain remediation costs. While investigations are ongoing, the company notes that for some sites, the full extent and cost of remediation are not yet determinable and could be material.