10-QPeriod: Q3 FY2016

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 3, 2016For Securities:ED

Summary

Consolidated Edison, Inc. (ED) reported financial results for the third quarter and nine months ended September 30, 2016. The company, through its subsidiaries, operates regulated electric, gas, and steam utilities, as well as competitive energy businesses and transmission investments. For the three months ended September 30, 2016, Con Edison reported net income of $497 million, an increase from $428 million in the prior year period, with earnings per share of $1.63 compared to $1.46. Key drivers of performance included strong results from the regulated utilities (CECONY and O&R) and a significant one-time gain from the sale of the retail electric supply business within the competitive energy segment. The company continues to invest in infrastructure and renewable energy projects, reflecting its strategy to provide reliable energy while pursuing growth opportunities. Despite some fluctuations in operational revenues due to weather and energy market conditions, the overall financial performance demonstrated resilience, supported by regulated rate structures and strategic divestitures.

Financial Highlights

44 data points
Beta

Revenue

$3.42B

Net Income

$497.00M

14.5% Net Margin

EPS (Diluted)

$1.62

Total Assets

$47.32B

Cash & Equivalents

$150.00M

Free Cash Flow

$600.00M

Financial Statements
Beta
Revenue$3.42B
Operating Expenses$2.58B
Operating Income$940.00M
Interest Expense$174.00M
Net Income$497.00M
EPS (Basic)$1.63
EPS (Diluted)$1.62
Shares Outstanding (Basic)304.50M
Shares Outstanding (Diluted)305.90M

Key Highlights

  • 1Net income for the third quarter of 2016 increased to $497 million ($1.63 per share) from $428 million ($1.46 per share) in the same period of 2015, driven by utility operations and a gain on sale of a business.
  • 2CECONY's electric operations saw a slight decrease in operating revenue ($1 million) but an increase in operating income ($30 million) due to lower purchased power and fuel costs, and higher revenues from the electric rate plan.
  • 3O&R's electric operations reported an increase in operating revenue ($8 million) and operating income ($4 million), supported by higher revenues from electric rate plans and purchased power costs.
  • 4The competitive energy businesses recorded a significant gain of $104 million from the sale of the retail electric supply business, contributing to a substantial increase in operating income for this segment.
  • 5Con Edison Transmission reported increased other income, reflecting earnings from equity investments.
  • 6Capital expenditures for 2016 were revised upwards to $6,117 million, reflecting increased investments in gas pipeline and storage joint ventures and renewable energy projects.
  • 7The company's common equity ratio remained strong, at 50.9% for Con Edison and 51.0% for CECONY as of September 30, 2016.

Frequently Asked Questions

The primary drivers of Con Edison's earnings growth in the third quarter of 2016 were the strong performance of its regulated utility operations (CECONY and O&R) and a significant one-time gain of $104 million from the sale of its retail electric supply business. These factors, combined with effective cost management and favorable rate adjustments, contributed to the increase in net income compared to the prior year period.

The sale of the retail electric supply business resulted in a gain of $104 million, which was recognized in the third quarter of 2016. This gain significantly boosted the net income and operating income for the competitive energy businesses segment, contributing positively to the consolidated results for the period.

Con Edison has increased its capital expenditure estimates for 2016 to $6,117 million. This includes significant investments in a 50% equity interest in a gas pipeline and storage joint venture and increased capital expenditures for its competitive energy businesses to support additional renewable energy project development. The company plans to fund these requirements through internally generated funds and the issuance of securities.

Con Edison manages interest rate risk primarily through issuing fixed-rate debt and opportunistic refinancing. For commodity price risk, the company employs risk management strategies and derivative instruments to hedge exposures. The Utilities generally recover energy costs, including gains and losses on certain derivative instruments, from customers through approved rate plans, which mitigates the direct impact on earnings.