Why did reported EPS decline sharply for the first nine months of 2024?

The 2023 period included a large gain on the March 2023 sale of the Clean Energy Businesses, which contributed $(2.25) per share net of tax to that period's GAAP results. The 2024 nine-month figure of $4.37 therefore compares against an unusually high base. On an adjusted basis, which excludes these one-time items, EPS grew from $4.07 to $4.42, about 9%.

What drove the earnings growth at the core utility business?

The main driver was CECONY's higher electric rate base, which added $0.22 per share in Q3 and $0.31 per share year to date. The new steam rate plan effective November 2023 and higher gas rate base also contributed. These gains were partly offset by higher interest expense, higher operations and maintenance activity, and higher stock-based compensation.

Is the company on track for its 2024 earnings guidance?

Management narrowed the range to $5.30-$5.40 from $5.20-$5.40 and said it now expects results in the upper half of the original range. Year-to-date adjusted EPS of $4.42 implies that Q4 results will need to contribute roughly $0.88-$0.98 to hit the guidance range. The guidance excludes HLBV effects, the MVP basis-difference accretion, and the final Clean Energy Businesses adjustments, which will not be known until year-end.

What are the main regulatory risks and catalysts for investors?

Key items include the pending O&R electric and gas rate case, with new rates expected in January 2025 and a settlement or ALJ process still in progress. The NYISO's 2024 Reliability Needs Assessment identifies a New York City reliability need beginning in summer 2033, with CECONY positioned to propose a regulated backstop solution. The NYSPSC's gas system long-term plan order requires additional filings that could affect future gas investment and growth.

Does the dividend remain secure?

The company declared a quarterly dividend of $0.83 per share on October 17, 2024. It has increased its dividend for 50 consecutive years at a 5.65% compound annual growth rate and targets a payout of 55% to 65% of adjusted earnings. Based on the adjusted EPS guidance, the current dividend payout is within that target range.

ED 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.

Consolidated Edison reported third-quarter 2024 GAAP net income for common stock of $588 million^a, or $1.70 per share, up from $526 million, or $1.53 per share, in the 2023 quarter.

Adjusted EPS (non-GAAP) was $1.68^b versus $1.62 a year earlier, driven mainly by higher electric rate base at CECONY, partly offset by higher interest expense and stock-based compensation. For the first nine months, GAAP EPS fell to $4.37 from $6.27, but that comparison is distorted by the 2023 gain on the sale of the Clean Energy Businesses. Adjusted EPS rose to $4.42 from $4.07.

Management narrowed and raised the low end of its 2024 adjusted EPS guidance to $5.30^c-$5.40, from $5.20-$5.40, placing it in the upper half of the original range. The company continues to target 6.4% annual rate base growth through 2028 on a $28 billion five-year capital plan, and it does not plan to issue common equity in 2024. Regulatory items to watch include the pending O&R electric and gas rate case (Rate Year 1 beginning January 2025), NYISO reliability needs and the resulting regulated backstop solution, and the New York Gas System Long Term Plan order.

The quarter was a steady, largely in-line update. The main investor considerations are execution on rate case outcomes and the pace of capital deployment, along with a continued dividend increase track record (50 consecutive years, with a quarterly dividend of $0.83^d declared in October 2024).

02—Key points

Key Highlights

Q3 2024 GAAP EPS of $1.70 vs. $1.53 in Q3 2023 (up 11%); adjusted EPS of $1.68 vs. $1.62 (up 4%).
YTD 2024 GAAP EPS of $4.37 vs. $6.27, depressed by the 2023 Clean Energy Businesses sale gain; YTD adjusted EPS rose to $4.42 from $4.07.
2024 adjusted EPS guidance narrowed and revised to $5.30-$5.40 (upper half of the prior $5.20-$5.40 range).
CECONY higher electric rate base contributed $0.22 to Q3 EPS, the largest driver of growth; higher interest expense was a $0.10 headwind.
Forecasts $28 billion in capital investment for 2024-2028 and targets 6.4% annual average rate base growth through 2028.
No common equity issuance planned for 2024; up to $3.25 billion of long-term debt planned at the utilities.
Pending O&R electric and gas rate case with a proposed January 2025 effective date; the NYSPSC's final decision is still outstanding.

03—Questions

Frequently Asked Questions

Why did reported EPS decline sharply for the first nine months of 2024?
The 2023 period included a large gain on the March 2023 sale of the Clean Energy Businesses, which contributed $(2.25) per share net of tax to that period's GAAP results. The 2024 nine-month figure of $4.37 therefore compares against an unusually high base. On an adjusted basis, which excludes these one-time items, EPS grew from $4.07 to $4.42, about 9%.
What drove the earnings growth at the core utility business?
The main driver was CECONY's higher electric rate base, which added $0.22 per share in Q3 and $0.31 per share year to date. The new steam rate plan effective November 2023 and higher gas rate base also contributed. These gains were partly offset by higher interest expense, higher operations and maintenance activity, and higher stock-based compensation.
Is the company on track for its 2024 earnings guidance?
Management narrowed the range to $5.30-$5.40 from $5.20-$5.40 and said it now expects results in the upper half of the original range. Year-to-date adjusted EPS of $4.42 implies that Q4 results will need to contribute roughly $0.88-$0.98 to hit the guidance range. The guidance excludes HLBV effects, the MVP basis-difference accretion, and the final Clean Energy Businesses adjustments, which will not be known until year-end.
What are the main regulatory risks and catalysts for investors?
Key items include the pending O&R electric and gas rate case, with new rates expected in January 2025 and a settlement or ALJ process still in progress. The NYISO's 2024 Reliability Needs Assessment identifies a New York City reliability need beginning in summer 2033, with CECONY positioned to propose a regulated backstop solution. The NYSPSC's gas system long-term plan order requires additional filings that could affect future gas investment and growth.
Does the dividend remain secure?
The company declared a quarterly dividend of $0.83 per share on October 17, 2024. It has increased its dividend for 50 consecutive years at a 5.65% compound annual growth rate and targets a payout of 55% to 65% of adjusted earnings. Based on the adjusted EPS guidance, the current dividend payout is within that target range.

04—Continue

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