10-QPeriod: Q1 FY2019

CONSOLIDATED EDISON INC Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 2, 2019For Securities:ED

Summary

Consolidated Edison, Inc. (ED) reported its first-quarter results for the period ending March 31, 2019. The company demonstrated stable performance in its core utility operations, with CECONY and O&R contributing significantly to net income. While consolidated net income for common stock slightly decreased year-over-year due to challenges in the Clean Energy Businesses segment, the regulated utility segments showed resilience, driven by rate plan adjustments and operational efficiencies. The company continues to invest in infrastructure and renewable energy projects, aligning with its strategy of providing shareholder value through earnings growth in regulated utilities and contracted assets. Investors should note the impact of the Sempra Solar acquisition on the Clean Energy Businesses' financials, including increased debt and depreciation, and monitor the situation regarding PG&E's bankruptcy and its potential impact on certain renewable energy projects. Overall, the report indicates a steady quarter for Con Edison's utilities, with a slight drag from its non-regulated segment. The company's commitment to reliable, safe, and clean energy for New York's economy remains a core focus. Key financial metrics suggest operational stability, though the Clean Energy Businesses segment experienced a net loss, primarily due to acquisition-related costs and mark-to-market adjustments. Management remains focused on strategic investments and managing financial risks.

Financial Highlights

44 data points
Beta

Revenue

$3.51B

Net Income

$424.00M

12.1% Net Margin

EPS (Diluted)

$1.31

Total Assets

$55.07B

Cash & Equivalents

$406.00M

Free Cash Flow

$416.00M

Financial Statements
Beta
Revenue$3.51B
Operating Expenses$2.73B
Operating Income$786.00M
Interest Expense$221.00M
Net Income$424.00M
EPS (Basic)$1.31
EPS (Diluted)$1.31
Shares Outstanding (Basic)322.50M
Shares Outstanding (Diluted)323.40M

Key Highlights

  • 1Consolidated net income for common stock was $424 million, a slight decrease from $428 million in the prior year's first quarter.
  • 2CECONY (Consolidated Edison Company of New York) reported strong operating income, driven by electric and gas rate increases, contributing $412 million in net income for common stock.
  • 3The Clean Energy Businesses segment incurred a net loss of $35 million, impacted by acquisition-related mark-to-market losses and increased depreciation from the Sempra Solar acquisition.
  • 4Operations and maintenance expenses for CECONY increased by $29 million, primarily due to higher stock-based compensation and pension costs.
  • 5Net interest expense increased by $17 million for Con Edison, largely attributed to higher debt balances associated with the Sempra Solar acquisition.
  • 6Cash flows from operating activities for Con Edison and CECONY showed significant increases due to changes in pension contributions and lower storm restoration costs.
  • 7The company is advancing its clean energy strategy, with a significant portfolio of solar and wind projects, although a portion of these projects face uncertainty due to PG&E's bankruptcy filing.

Frequently Asked Questions

The primary driver for the slight decrease in net income for common stock was the performance of the Clean Energy Businesses segment, which reported a net loss of $35 million in the first quarter of 2019, compared to a net income of $6 million in the prior year. This loss was influenced by mark-to-market adjustments and increased expenses related to the recent acquisition of Sempra Solar Holdings, LLC.

The acquisition of Sempra Solar Holdings, LLC, completed in December 2018, led to an increase in operating revenues for the Clean Energy Businesses, but also resulted in higher depreciation and net interest expenses. The segment reported a net loss in the first quarter of 2019, partly due to these acquisition-related costs and mark-to-market losses.

Con Edison Development has significant renewable electric production projects (680 MW) with power purchase agreements (PPAs) with PG&E. PG&E's Chapter 11 bankruptcy filing constitutes an event of default under these PPAs. This has led to the suspension of distributions from these projects to Con Edison Development, and lenders have the right to declare project debt immediately payable and foreclose on the projects if not repaid. The company has substantial non-utility plant and intangible assets related to these PG&E Projects on its balance sheet.

The company's liquidity is supported by cash flows from operating, investing, and financing activities. For the first quarter of 2019, Con Edison and CECONY saw significant increases in cash flows from operating activities, driven by changes in pension contributions and reduced storm restoration costs. Financing activities included the issuance of common stock for approximately $425 million to fund subsidiary capital requirements and repay debt, as well as borrowings under a term loan.