10-QPeriod: Q2 FY2018

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 2, 2018For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported solid financial performance for the second quarter and first half of 2018, driven by its regulated utility operations, primarily CECONY and O&R. Net income for the second quarter increased to $188 million ($0.60 per share) from $175 million ($0.57 per share) in the prior year's quarter. For the first six months of 2018, net income reached $616 million ($1.98 per share), up from $563 million ($1.84 per share) in the same period of 2017. The company benefited from regulatory rate plan changes, which positively impacted revenues for both CECONY and O&R. While the Tax Cuts and Jobs Act (TCJA) led to deferred benefits for customers, it also contributed to lower income tax expenses for the company. The company's Clean Energy Businesses also showed growth in operating revenues. Despite some increases in operating and maintenance expenses, particularly storm-related and consultant costs, the overall financial health appears stable. Con Edison continues to invest in its infrastructure, with increased utility construction expenditures noted. The company's liquidity remains strong, evidenced by positive cash flows from operating activities, although a significant portion was impacted by storm restoration costs and contributions to pension plans. The company's capital structure remains well-balanced with a common equity ratio above 50%. Overall, Con Edison demonstrated resilience and strategic execution, with a focus on providing essential energy services and pursuing growth in renewable energy.

Financial Highlights

44 data points
Beta

Revenue

$2.70B

Net Income

$188.00M

7.0% Net Margin

EPS (Diluted)

$0.60

Total Assets

$49.06B

Cash & Equivalents

$866.00M

Free Cash Flow

$823.00M

Financial Statements
Beta
Revenue$2.70B
Operating Expenses$2.27B
Operating Income$426.00M
Interest Expense$190.00M
Net Income$188.00M
EPS (Basic)$0.60
EPS (Diluted)$0.60
Shares Outstanding (Basic)310.80M
Shares Outstanding (Diluted)311.90M

Key Highlights

  • 1Net income for Q2 2018 was $188 million ($0.60/share), an increase from $175 million ($0.57/share) in Q2 2017.
  • 2First six months of 2018 net income was $616 million ($1.98/share), up from $563 million ($1.84/share) in the same period of 2017.
  • 3CECONY's electric operations saw a $45 million increase in operating revenues for the quarter, driven by rate plan changes.
  • 4CECONY's gas operations revenue increased by $47 million for the quarter, also benefiting from rate plans and customer growth.
  • 5Clean Energy Businesses revenue increased by $12 million for the quarter, attributed to higher renewable revenues and projects in operation.
  • 6Increased utility construction expenditures were noted for CECONY and Con Edison, reflecting ongoing investment in infrastructure.
  • 7The company's common equity ratio remained strong, at 50.7% for Con Edison and 50.1% for CECONY as of June 30, 2018.

Frequently Asked Questions

The primary drivers of net income growth were changes in regulatory rate plans for CECONY and O&R, which increased revenues. The Clean Energy Businesses also contributed with higher renewable revenues. Additionally, lower income tax expense due to the Tax Cuts and Jobs Act (TCJA) positively impacted earnings, although a portion of these benefits were deferred for customers.

The TCJA led to a reduction in the corporate federal income tax rate, resulting in lower income tax expenses for Con Edison and its subsidiaries. The company also deferred estimated net benefits from the TCJA as a regulatory liability for customers, impacting other operating revenues and regulatory liabilities. Overall, the lower tax rate provided a benefit, but the regulatory deferral moderated its direct impact on reported revenues.

Key operational expenses include purchased power, fuel, gas purchased for resale, and operations and maintenance (O&M) expenses. For the second quarter of 2018, O&M expenses saw increases due to higher consultant costs, storm-related costs, and municipal infrastructure support costs. Depreciation and property taxes also contributed to increased expenses.

Con Edison is actively investing in utility construction expenditures to maintain and upgrade its infrastructure. The company also invests in electric and gas transmission projects through its Con Edison Transmission segment. For financing, Con Edison and CECONY issued new debt during the period to fund general corporate purposes and repay existing debt. The company maintains a strong common equity ratio, indicating a stable capital structure.