10-QPeriod: Q2 FY2020

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 6, 2020For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported its second quarter 2020 results, facing the ongoing impacts of the COVID-19 pandemic. While the utility segment, primarily CECONY, demonstrated resilience with stable net income for the quarter, the company is navigating regulatory measures and economic conditions influenced by the pandemic. Key financial highlights indicate a consolidated net income of $190 million for the quarter, a notable increase from $152 million in the prior year, driven significantly by improved performance in the Clean Energy Businesses. However, the Utilities experienced a slight decline in operating revenues due to decreased energy demand, partially offset by revenue decoupling mechanisms. The company continues to focus on its core regulated utility operations while expanding its renewable energy portfolio. Management is actively responding to the pandemic's challenges, including implementing safety protocols and adapting to regulatory directives such as the suspension of service disconnections.

Financial Highlights

42 data points
Beta

Revenue

$2.72B

Net Income

$190.00M

7.0% Net Margin

EPS (Diluted)

$0.57

Total Assets

$59.08B

Cash & Equivalents

$1.14B

Free Cash Flow

$768.00M

Financial Statements
Beta
Revenue$2.72B
Operating Expenses$2.24B
Operating Income$479.00M
Interest Expense$247.00M
Net Income$190.00M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)334.10M
Shares Outstanding (Diluted)335.00M

Key Highlights

  • 1Consolidated net income increased to $190 million in Q2 2020 from $152 million in Q2 2019, primarily benefiting from the Clean Energy Businesses.
  • 2CECONY's electric operating income saw a slight increase of $4 million, while gas operating income rose by $11 million, indicating stable performance in core utility operations.
  • 3The Clean Energy Businesses reported a significant turnaround, generating $34 million in net income compared to a loss of $6 million in the prior year's quarter, driven by higher renewable energy project revenues and improved net interest expense.
  • 4Total operating revenues for Con Edison decreased slightly to $2,719 million from $2,744 million year-over-year, reflecting lower energy demand amidst the pandemic.
  • 5The company is managing its liquidity through various credit facilities and commercial paper issuances, noting an $820 million borrowing in July 2020 under a supplemental credit agreement.
  • 6CECONY reached a new four-year collective bargaining agreement with its largest union in June 2020, ensuring labor stability.
  • 7Regulatory measures due to COVID-19, such as the suspension of service disconnections and late fees, resulted in foregone revenues of approximately $20 million for CECONY and $1.2 million for O&R in the second quarter.

Frequently Asked Questions

The COVID-19 pandemic has impacted Con Edison's financial performance primarily through decreased energy demand, leading to lower operating revenues for its utility segments. However, regulatory measures like revenue decoupling mechanisms have helped mitigate the impact on net income. The company has also incurred incremental costs related to pandemic response and safety protocols. Despite these challenges, Con Edison has implemented various measures to ensure liquidity and operational continuity.

Con Edison is actively managing its liquidity through existing credit facilities and commercial paper issuances. In July 2020, the company borrowed $820 million under a supplemental credit agreement for general corporate purposes, including debt repayment. They also have a $2,250 million credit agreement in place. The company is focused on maintaining access to capital to fund its operations and capital expenditures.

The Clean Energy Businesses showed a strong recovery in the second quarter of 2020, with net income turning positive compared to a loss in the prior year. This improvement was driven by higher revenues from renewable electric production projects and favorable net interest expense. The company continues to invest in and develop renewable energy projects, positioning this segment for future growth.

Yes, New York State enacted a law prohibiting utilities from disconnecting residential customers during the COVID-19 state of emergency, extending for 180 days after the emergency ends for customers experiencing financial hardship. This has resulted in foregone revenues for the Utilities. Additionally, regulatory bodies are working with utilities to defer COVID-19 related costs and explore surcharge mechanisms.