10-QPeriod: Q3 FY2018

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 1, 2018For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported its third-quarter and year-to-date results for 2018, showcasing resilience in its core utility operations while expanding its clean energy segment. The company's regulated utilities, CECONY and O&R, demonstrated stable performance, driven by rate plan adjustments and customer growth in gas services, though electric demand forecasts remained flat. The Clean Energy Businesses segment continued its growth trajectory, highlighted by a significant agreement to acquire Sempra Solar Holdings, LLC, signaling a strategic move to bolster its renewable energy portfolio. While overall net income saw a slight decrease compared to the prior year's comparable periods, largely influenced by the re-measurement of deferred tax assets due to the Tax Cuts and Jobs Act of 2017 and transaction costs associated with the Sempra Solar acquisition, the underlying operational performance of the utilities remained robust. The company's commitment to shareholder value, evidenced by its dividend growth strategy and investments in reliable and clean energy infrastructure for New York City, underpins its financial outlook.

Financial Highlights

44 data points
Beta

Revenue

$3.33B

Net Income

$435.00M

13.1% Net Margin

EPS (Diluted)

$1.39

Total Assets

$49.54B

Cash & Equivalents

$199.00M

Free Cash Flow

$476.00M

Financial Statements
Beta
Revenue$3.33B
Operating Expenses$2.50B
Operating Income$826.00M
Interest Expense$195.00M
Net Income$435.00M
EPS (Basic)$1.40
EPS (Diluted)$1.39
Shares Outstanding (Basic)311.10M
Shares Outstanding (Diluted)312.30M

Key Highlights

  • 1Net income for the nine months ended September 30, 2018, was $1,051 million, a slight increase from $1,020 million in the same period of 2017.
  • 2CECONY, the primary utility, reported an increase in net income for the nine months ended September 30, 2018, to $969 million, up from $883 million in the prior year, driven by higher electric and gas net base revenues.
  • 3The Clean Energy Businesses are expanding, with a pending acquisition of Sempra Solar Holdings, LLC, which holds significant renewable energy assets.
  • 4Con Edison Transmission continues to invest in infrastructure projects, including a stake in the Mountain Valley Pipeline, though construction has faced delays.
  • 5Total operating revenues for the nine months ended September 30, 2018, increased to $9,388 million from $8,812 million in the prior year.
  • 6The company experienced increased financing activities, including significant long-term debt issuances to fund capital expenditures and the Sempra Solar acquisition.
  • 7Moody's Investors Service lowered its ratings for Con Edison's senior unsecured debt and CECONY's commercial paper in October 2018, citing an unspecified reason for the downgrade.

Frequently Asked Questions

The change in net income was influenced by several factors. For the nine months ended September 30, 2018, the company recorded a significant income tax expense of $42 million related to the re-measurement of deferred tax assets and liabilities due to the Tax Cuts and Jobs Act of 2017. Additionally, transaction costs associated with the pending acquisition of Sempra Solar Holdings, LLC, also impacted net income.

The Clean Energy Businesses segment showed strong performance, with operating revenues increasing by $113 million for the nine months ended September 30, 2018, primarily driven by higher renewable revenues and wholesale sales. The significant pending acquisition of Sempra Solar Holdings, LLC, is a key strategic initiative that will expand the company's renewable energy generation capacity, indicating a continued focus on growth in this sector.

For CECONY, the five-year forecast for average annual growth in electric peak demand remained unchanged at approximately 0.1 percent. The forecast for peak gas demand growth was slightly reduced to 1.3 percent. For O&R, the forecast for electric peak demand growth is approximately (0.3) percent, while gas demand growth is projected at 0.6 percent.

The TCJA had a notable impact, primarily through a reduction in the corporate federal income tax rate. This led to a significant decrease in income tax expense for the nine months ended September 30, 2018, compared to the prior year. However, the company also incurred costs related to the re-measurement of deferred tax assets and liabilities, and the deferral of estimated net benefits under the TCJA as a regulatory liability, which affected reported results.