Why is there such a large difference between GAAP EPS ($7.25) and adjusted EPS ($5.07) for 2023?

The difference is primarily the one-time gain from the March 1, 2023 sale of the Clean Energy Businesses, which contributed about $2.49 per share pre-tax on the gain itself, net of related items. Adjusted EPS also excludes HLBV accounting effects on tax equity investments and net mark-to-market effects. Management views adjusted EPS as the better measure of ongoing performance.

What is Con Edison guiding for 2024 earnings?

The company expects 2024 adjusted EPS of $5.20 to $5.40, excluding HLBV effects of roughly $(0.01) per share after tax. It also targets a five-year compound annual adjusted EPS growth rate of 5% to 7% based on the 2024 guidance.

How will Con Edison fund its large capital program?

The plan relies on internally generated cash, long-term debt, and common equity. For 2024 the company plans up to $3,250 million of utility long-term debt and no common equity beyond dividend reinvestment and employee plans. In 2025 it plans up to $1,000 million of debt and about $1,300 million of common equity, and for 2026 through 2028 about $6,000 million of debt and up to $2,800 million of equity.

Does the sale of the Clean Energy Businesses change the company's risk profile?

Yes. Management describes the company as a pure-play regulated utility with a simplified balance sheet, having paid off all parent-level long-term debt and completed a $1 billion share repurchase. Earnings are now concentrated in New York regulated utilities, so results depend heavily on rate case outcomes with the New York State Public Service Commission and on execution of major infrastructure projects.

What regulatory items could affect future results?

Key items include the NYSPSC's review of the utilities' climate change resilience plans (about $1.3 billion of proposed 2025-2029 investments, with action expected by October 2024), the Reliable Clean City Idlewild project (about $1.2 billion, approved January 2024), O&R's rate case filed January 2024 seeking $18.1 million electric and $14.4 million gas increases effective January 2025, and the Mountain Valley Pipeline targeting an in-service date in early 2024.

ED 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 15, 2024. Cited figures are marked; the original filing is the authoritative source.

Consolidated Edison's (ED) February 15, 2024 8-K furnishes its press release and earnings presentation for fourth quarter and full-year 2023 results under Item 2.02.

Reported 2023 GAAP net income for common stock was $2,519 million^a, or $7.25 per share, versus $1,660 million, or $4.68 per share, in 2022. Adjusted (non-GAAP) earnings were $1,762 million, or $5.07 per share, versus $4.57 in 2022. The GAAP-to-adjusted gap is driven mainly by the March 1, 2023 sale of the Clean Energy Businesses, which produced a one-time pre-tax gain of about $887 million, along with HLBV and mark-to-market adjustments.

Investors should treat the adjusted figure of $5.07^b as the better gauge of ongoing earnings power, since the GAAP number includes a large non-recurring gain. The company guided 2024 adjusted EPS to $5.20 to $5.40 and a 5% to 7% five-year compound annual adjusted EPS growth rate off the 2024 base. Management forecasts capital investment of $4,849 million in 2024 and $5,243 million in 2025, plus $17,960 million over 2026 through 2028, supporting a 6.4% annual rate base growth forecast through 2028.

Financing plans call for up to $3,250 million^c of utility long-term debt in 2024, no common equity issuance in 2024 beyond employee and dividend plans, and up to about $1,300 million of common equity in 2025. The balance sheet was simplified in 2023: parent-level long-term debt was fully retired using sale proceeds, and a $1 billion share repurchase was completed.

The company also highlighted a 50-year streak of dividend increases and a payout target of 55%^d to 65% of adjusted EPS. Key risks for investors include the pace and approval of New York Public Service Commission rate and resilience filings, the Mountain Valley Pipeline in-service timing, and the execution of large capital projects.

02—Key points

Key Highlights

2023 GAAP EPS of $7.25 (vs. $4.68 in 2022) was inflated by the Clean Energy Businesses sale; adjusted EPS was $5.07 (vs. $4.57), up about 11%.
Q4 2023 GAAP EPS was $0.97 and adjusted EPS was $1.00 (vs. $0.81 in Q4 2022).
2024 adjusted EPS guidance of $5.20 to $5.40, with a 5% to 7% five-year adjusted EPS CAGR target.
Capital plan of $4,849 million (2024), $5,243 million (2025), and $17,960 million (2026-2028); forecast 6.4% annual rate base growth through 2028.
Parent company long-term debt fully retired in 2023 after the Clean Energy Businesses sale; $1 billion share repurchase completed.
Financing plan includes up to $3,250 million of utility debt in 2024 and no planned common equity issuance in 2024 beyond employee and dividend programs.
CECONY steam rate plan approved (9.25% ROE, 48% equity ratio through October 2026); O&R filed a New York electric and gas rate case for January 2025 rates.

03—Questions

Frequently Asked Questions

Why is there such a large difference between GAAP EPS ($7.25) and adjusted EPS ($5.07) for 2023?
The difference is primarily the one-time gain from the March 1, 2023 sale of the Clean Energy Businesses, which contributed about $2.49 per share pre-tax on the gain itself, net of related items. Adjusted EPS also excludes HLBV accounting effects on tax equity investments and net mark-to-market effects. Management views adjusted EPS as the better measure of ongoing performance.
What is Con Edison guiding for 2024 earnings?
The company expects 2024 adjusted EPS of $5.20 to $5.40, excluding HLBV effects of roughly $(0.01) per share after tax. It also targets a five-year compound annual adjusted EPS growth rate of 5% to 7% based on the 2024 guidance.
How will Con Edison fund its large capital program?
The plan relies on internally generated cash, long-term debt, and common equity. For 2024 the company plans up to $3,250 million of utility long-term debt and no common equity beyond dividend reinvestment and employee plans. In 2025 it plans up to $1,000 million of debt and about $1,300 million of common equity, and for 2026 through 2028 about $6,000 million of debt and up to $2,800 million of equity.
Does the sale of the Clean Energy Businesses change the company's risk profile?
Yes. Management describes the company as a pure-play regulated utility with a simplified balance sheet, having paid off all parent-level long-term debt and completed a $1 billion share repurchase. Earnings are now concentrated in New York regulated utilities, so results depend heavily on rate case outcomes with the New York State Public Service Commission and on execution of major infrastructure projects.
What regulatory items could affect future results?
Key items include the NYSPSC's review of the utilities' climate change resilience plans (about $1.3 billion of proposed 2025-2029 investments, with action expected by October 2024), the Reliable Clean City Idlewild project (about $1.2 billion, approved January 2024), O&R's rate case filed January 2024 seeking $18.1 million electric and $14.4 million gas increases effective January 2025, and the Mountain Valley Pipeline targeting an in-service date in early 2024.

04—Continue

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