10-QPeriod: Q2 FY2019

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 1, 2019For Securities:ED

Summary

Consolidated Edison Inc. (Con Edison) reported its financial results for the second quarter and first half of 2019, showcasing the performance of its regulated utility operations (CECONY and O&R) and its growing Clean Energy Businesses. While the regulated utilities demonstrated stable performance with slight increases in net income, the Clean Energy Businesses experienced a significant shift. The acquisition of Sempra Solar Holdings in late 2018 boosted revenue but also increased depreciation and interest expenses, leading to a net loss for the segment in the quarter. Overall, Con Edison's consolidated net income for common stock decreased in the second quarter of 2019 compared to the prior year, primarily due to the performance of the Clean Energy segment and higher operating expenses in the regulated utilities, such as increased property taxes and pension costs. However, the company continues to invest in its infrastructure and renewable energy projects, positioning itself for long-term value creation. Looking ahead, Con Edison faces regulatory and environmental considerations, including new climate change laws in New York State that aim to increase renewable energy procurement and reduce emissions. The company's liquidity remains strong, supported by operating cash flows and financing activities, including the issuance of new debt and common stock. Investors should note the continued investments in transmission and renewable projects, which are strategic to the company's growth and sustainability goals.

Financial Highlights

44 data points
Beta

Revenue

$2.74B

Net Income

$152.00M

5.5% Net Margin

EPS (Diluted)

$0.46

Total Assets

$55.60B

Cash & Equivalents

$831.00M

Free Cash Flow

$1.03B

Financial Statements
Beta
Revenue$2.74B
Operating Expenses$2.29B
Operating Income$458.00M
Interest Expense$219.00M
Net Income$152.00M
EPS (Basic)$0.46
EPS (Diluted)$0.46
Shares Outstanding (Basic)328.30M
Shares Outstanding (Diluted)329.20M

Key Highlights

  • 1Consolidated net income for common stock decreased by $36 million in Q2 2019 compared to Q2 2018, primarily driven by the Clean Energy Businesses segment.
  • 2CECONY, the largest subsidiary, saw a slight increase in net income for common stock to $152 million in Q2 2019, up from $149 million in Q2 2018, driven by rate plan changes.
  • 3The Clean Energy Businesses reported a net loss of $6 million for common stock in Q2 2019, a significant change from a net income of $25 million in Q2 2018, impacted by acquisition-related expenses and mark-to-market losses.
  • 4Total operating revenues for Con Edison increased to $2.74 billion in Q2 2019, up from $2.69 billion in Q2 2018, largely due to the Clean Energy Businesses and CECONY.
  • 5Con Edison Transmission continues to invest in significant infrastructure projects, including participation in the New York Transco LLC and Mountain Valley Pipeline projects.
  • 6The company highlights a strengthened common equity ratio, with Con Edison at 50.5% and CECONY at 49.7% as of June 30, 2019.
  • 7New York State enacted significant climate legislation aiming for 70% renewable electricity by 2030 and zero emissions by 2040, which will influence future operations and investments.

Frequently Asked Questions

The primary driver for the decrease in consolidated net income for common stock in Q2 2019, compared to the prior year, was the performance of the Clean Energy Businesses segment. This segment reported a net loss of $6 million for common stock in Q2 2019, a significant shift from a net income of $25 million in Q2 2018, impacted by acquisition-related expenses from the Sempra Solar acquisition and mark-to-market losses.

The acquisition of Sempra Solar Holdings in late 2018 significantly increased operating revenues for the Clean Energy Businesses. However, it also led to higher depreciation and net interest expenses, contributing to a net loss for the segment in the second quarter of 2019. Additionally, the segment experienced mark-to-market losses.

Con Edison is strategically investing in both renewable energy projects through its Clean Energy Businesses and in electric and gas transmission facilities through Con Edison Transmission. The company aims to provide reliable, resilient, safe, and clean energy, supporting New York's economy and sustainability goals. This includes developing large-scale solar generation and investing in critical transmission and pipeline projects.

New York State's recent climate legislation, which mandates increased renewable energy procurement (70% by 2030) and zero emissions by 2040, will significantly influence Con Edison's future operations and investments. The company will likely need to further expand its renewable energy portfolio and potentially adapt its infrastructure to meet these ambitious environmental targets.