01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Consolidated Edison's Q3 2024 10-Q shows a quarter of steady regulated growth, with GAAP net income for common stock of $588 milliona ($1.69 diluted EPS) versus $526 million ($1.52) a year earlier.
The increase was driven mainly by CECONY's higher electric rate base and steam rate plan, partly offset by higher interest expense and lower pension credits in other income. Year-to-date results are down sharply, with nine-month net income of $1,510 millionb ($4.35 diluted EPS) versus $2,185 million ($6.24) in 2023. That comparison is distorted by the prior year's roughly $866 million pre-tax gain on the March 2023 sale of the Clean Energy Businesses, so investors should look at utility earnings growth rather than the headline decline.
Balance sheet and cash flow trends warrant attention. Operating cash flow rose to $2,304 millionc for the nine months, up from $1,181 million, but utility construction spending of $3,533 million exceeded that by a wide margin, and cash fell to $93 million at quarter-end. Long-term debt grew to $23,688 million (carrying amount), and the company issued $1,525 million of new long-term debt while using short-term commercial paper ($2,059 million outstanding).
Customer accounts receivable are rising, with CECONY aged balances over 60 days at $1,654 milliond, which management says continues to pressure liquidity and may require more capital. Regulatory and legal items are material to the outlook. The NYSPSC denied CECONY's request to capitalize $89 million of excess billing-system costs, which led to a $51 million expense in the quarter and a $37 million after-tax earnings hit for the nine months.
Regulatory assets tied to a federal income tax normalization issue total about $1,066 million at CECONY and are not earning a return, with the NYSPSC audit still open. Superfund and environmental exposure remains large, with about $1,101 million accrued and a Gowanus Canal remediation estimated at $369 million, and an asbestos-related reasonable possibility of loss above accrual is disclosed but not quantified.
02—Key points
Key Highlights
- Q3 2024 GAAP EPS was $1.69 diluted, up from $1.52 in Q3 2023, with net income for common stock of $588 million versus $526 million, driven by CECONY's electric rate base growth and a new steam rate plan.
- Nine-month GAAP diluted EPS fell to $4.35 from $6.24, mainly because 2023 included the roughly $866 million pre-tax gain on the Clean Energy Businesses sale; this is not a sign of core utility deterioration.
- Operating cash flow for the nine months rose to $2,304 million from $1,181 million, but utility construction expenditures of $3,533 million far exceeded it, leaving year-end-period cash at only $93 million.
- Long-term debt rose to $23,438 million on the balance sheet (carrying amount $23,688 million incl. current portion), including $1,400 million of CECONY debentures and $125 million from O&R in 2024, with commercial paper at $2,059 million.
- Aged customer receivables are a liquidity concern: CECONY's balances over 60 days were $1,654 million at September 30, 2024, versus $408 million at February 2020, and management expects this to keep pressuring cash flow.
- The NYSPSC denied recovery of about $89 million of CECONY's billing-system costs above a rate-plan cap, resulting in $51 million expensed in Q2 2024 and a rehearing petition pending.
- Material contingencies include the Gowanus Canal Superfund remediation (EPA estimate $369 million for the middle segment), manufactured gas plant sites with an aggregate undiscounted potential liability up to $3,440 million, and unquantified asbestos exposure above accruals.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 7, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $4.22B$3.85B | +9.7% |
| Operating Expenses | $3.23B$3.15B | +2.6% |
| Operating Income | $862.00M$722.00M | +19.4% |
| Interest Expense | $306.00M$259.00M | +18.1% |
| Net Income | $588.00M$526.00M | +11.8% |
| EPS (Basic) | $1.70$1.53 | +11.1% |
| EPS (Diluted) | $1.69$1.52 | +11.2% |
| Shares Outstanding (Basic) | 346.20M345.00M | +0.3% |
| Shares Outstanding (Diluted) | 347.50M346.50M | +0.3% |
05—Questions
Frequently Asked Questions
Why did Con Edison's year-to-date earnings fall so much compared with 2023?
Nine-month net income for common stock was $1,510 million ($4.35 diluted EPS), down from $2,185 million ($6.24) in 2023. The 2023 period included an $866 million pre-tax gain (about $784 million after tax) on the March 2023 sale of the Clean Energy Businesses, which has no equivalent in 2024. Excluding that item, the utilities' earnings grew, with CECONY up about $109 million on higher electric rate base and new steam rates.
Is Con Edison's cash position and funding need a concern?
Cash and temporary investments fell to $93 million at September 30, 2024, from $1,189 million at year-end 2023. Utility construction spending of $3,533 million is being funded through long-term debt issuance ($1,525 million in 2024) and commercial paper, which stood at $2,059 million. Rising customer receivables and the regulatory timing of cost recovery mean the company will likely need continued external financing, which increases interest expense and the importance of rate case outcomes.
What regulatory risks could affect future earnings?
Key risks include the NYSPSC's denial of CECONY's capitalization of billing-system costs (rehearing pending), an open NYSPSC audit that could force a write-off of about $1,066 million of CECONY income tax regulatory assets not earning a return, and pending O&R electric and gas rate requests for January 2025 where the NYSDPS recommended decreases. Rate case outcomes directly affect the rate base growth that drives utility earnings.
How significant are environmental and litigation liabilities?
Accrued Superfund liabilities total $1,101 million at Con Edison, with a matching $1,093 million regulatory asset for recovery through rates, which reduces earnings risk if prudence is maintained. Manufactured gas plant sites could carry potential liability up to $3,440 million, and the Gowanus Canal middle-segment work is estimated at $369 million, though actual costs may be higher. Asbestos suits have a reasonable possibility of loss above the $8 million accrual that the company cannot estimate. The company has not accrued liabilities for the gas-weld investigation or the Utilities' income tax audit issue.
Are there any new growth drivers or capital plans highlighted?
Con Edison Transmission's equity earnings are rising from the Mountain Valley Pipeline entering service in June 2024, with Con Edison's share of MVP earnings at $21 million pre-tax for the nine months, and it is pursuing offshore wind transmission proposals. CECONY also received NYSPSC approval for Empire Wind 1 interconnection and is working on thermal energy network pilots. CECONY increased its five-year electric peak demand growth forecast to about 1.0 percent per year for 2025-2029, supporting the continued utility capital investment program.
06—Continue