Consolidated Edison, Inc. (Con Edison) (NYSE:ED) today reported
second quarter net income of $175 million or $0.57 a share compared
with $232 million or $0.78 a share in 2016. Adjusted earnings,
which exclude the effects of a gain on the sale of a solar electric
production project, the impairment of a solar electric production
investment in 2016 and the net mark-to-market effects of Con Edison
Clean Energy Businesses, Inc.'s subsidiaries (the Clean Energy
Businesses), were $178 million or $0.58 a share in 2017 compared
with $179 million or $0.60 a share in 2016.
For the first six months of 2017, net income was $563 million or
$1.84 a share compared with $542 million or $1.83 a share in the
first six months of 2016. Adjusted earnings, which exclude the
effects of a gain on the sale of a solar electric production
project, the impairment of a solar electric production investment
in 2016 and the net mark-to-market effects of the Clean Energy
Businesses, were $565 million or $1.85 a share in 2017 compared
with $527 million or $1.78 a share in 2016.
“We have begun installing smart meters that will help us manage
our energy systems more efficiently, while providing our customers
with more control over their energy use,” said John McAvoy,
chairman and CEO of Con Edison. “Our energy efficiency programs
offer new technology products, such as smart air conditioners
and Wi-Fi-enabled thermostats, which make it easier for
customers to get through these hot summer months comfortably, while
saving money on their energy bills.”
The following table is a reconciliation of Con Edison’s reported
earnings per share to adjusted earnings per share and reported net
income to adjusted earnings for the three and six months ended
June 30, 2017 and 2016.
|
For the Three Months Ended |
For the Six Months Ended |
|
Earnings per Share |
Net Income (Millions of Dollars) |
Earnings per Share |
Net Income (Millions of Dollars) |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
2017 |
|
|
2016 |
Reported earnings per share (basic) and net income (GAAP
basis) |
$ |
0.57 |
|
$ |
0.78 |
|
$ |
175 |
|
$ |
232 |
|
$ |
1.84 |
|
$ |
1.83 |
|
$ |
563 |
|
$ |
542 |
|
Gain on sale of solar
electric production project |
|
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
Impairment of solar
electric production investment (a) |
|
— |
|
|
0.02 |
|
|
— |
|
|
5 |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
5 |
|
Net
mark-to-market effects of the Clean Energy Businesses (b) |
|
0.01 |
|
|
(0.20 |
) |
|
4 |
|
(58 |
) |
|
0.01 |
|
|
(0.07 |
) |
|
3 |
|
|
(20 |
) |
Adjusted
earnings per share and adjusted earnings (non-GAAP basis) |
$ |
0.58 |
|
$ |
0.60 |
|
$ |
178 |
|
$ |
179 |
|
$ |
1.85 |
|
$ |
1.78 |
|
$ |
565 |
|
$ |
527 |
|
(a) After taxes of $3 million for the three and six months ended
June 30, 2016.
(b) After taxes of $3 million and $(39) million for the three
months ended June 30, 2017 and 2016, respectively, and $2
million and $(13) million for the six months ended June 30,
2017 and 2016, respectively.
For the year 2017, the company expects its adjusted earnings per
share to be in the range of $4.00 to $4.15 a share. The company's
previous forecast was in the range of $3.95 to $4.15 per share.
Adjusted earnings per share for 2017 exclude the gain on the sale
of a solar electric production project shown on the preceding
table. It also excludes the net mark-to-market effects of the Clean
Energy Businesses, the amount of which will not be determinable
until year end.
The results of operations for the three and six months ended
June 30, 2017, as compared with the 2016 periods, reflect
changes in rate plans and regulatory charges and the impact of
weather on steam revenues. The new electric rate plan of
Consolidated Edison Company of New York, Inc. (CECONY) includes
changes in the timing of recognition of annual revenues between
quarters. Operations and maintenance expenses for CECONY for the
three and six months ended June 30, 2017 reflect lower costs
for pensions and other postretirement benefits and lower regulatory
assessments and fees that are collected in revenues from customers,
offset in part by higher costs for municipal infrastructure
support. In addition, the utilities' rate plans provide for
revenues to cover expected changes in certain operating costs
including depreciation, property taxes and other tax matters.
The following table presents the estimated effect on earnings
per share and net income for the three and six months ended June
30, 2017 periods compared to the 2016 periods, resulting from these
and other major factors:
|
Three Months Ended Variation |
Six Months Ended Variation |
|
2017 vs. 2016 |
2017 vs. 2016 |
|
Earnings per Share |
Net Income (Millions of Dollars) |
Earnings per Share |
Net Income (Millions of Dollars) |
CECONY (a) |
|
|
|
|
Changes in rate
plans and regulatory charges (b) |
$ |
(0.04 |
) |
$ |
(11 |
) |
$ |
0.16 |
|
$ |
48 |
|
Weather impact
on steam revenues |
|
— |
|
|
(1 |
) |
|
0.02 |
|
|
5 |
|
Operations and
maintenance expenses (c) |
|
0.13 |
|
|
38 |
|
|
0.16 |
|
|
48 |
|
Depreciation,
property taxes and other tax matters (d) |
|
(0.12 |
) |
|
(38 |
) |
|
(0.26 |
) |
|
(78 |
) |
Other (e) |
|
(0.04 |
) |
|
(6 |
) |
|
(0.09 |
) |
|
(13 |
) |
Total CECONY |
|
(0.07 |
) |
|
(18 |
) |
|
(0.01 |
) |
|
10 |
|
Orange and Rockland
Utilities, Inc. (O&R) (a) |
|
|
|
|
Changes in rate
plans and regulatory charges |
|
0.03 |
|
|
7 |
|
|
0.04 |
|
|
11 |
|
Operations and
maintenance expenses (f) |
|
(0.02 |
) |
|
(4 |
) |
|
(0.03 |
) |
|
(7 |
) |
Depreciation and
property taxes |
|
— |
|
|
— |
|
|
(0.01 |
) |
|
(2 |
) |
Other (e) |
|
(0.01 |
) |
|
— |
|
|
— |
|
|
1 |
|
Total O&R |
|
— |
|
|
3 |
|
|
— |
|
|
3 |
|
Clean Energy
Businesses |
|
|
|
|
Operating
revenues less energy costs (g) |
|
(0.15 |
) |
|
(46 |
) |
|
— |
|
|
(1 |
) |
Operations and
maintenance expenses |
|
(0.02 |
) |
|
(5 |
) |
|
(0.02 |
) |
|
(6 |
) |
Depreciation |
|
(0.02 |
) |
|
(5 |
) |
|
(0.04 |
) |
|
(10 |
) |
Net
interest expense |
|
— |
|
|
(2 |
) |
|
(0.01 |
) |
|
(4 |
) |
Other (e)
(h) |
|
0.02 |
|
|
7 |
|
|
0.02 |
|
|
7 |
|
Total Clean Energy Businesses |
|
(0.17 |
) |
|
(51 |
) |
|
(0.05 |
) |
|
(14 |
) |
Con
Edison Transmission, Inc. (e) (i) |
|
0.03 |
|
|
8 |
|
|
0.05 |
|
|
15 |
|
Other,
including parent company expenses (e) (j) |
|
— |
|
|
1 |
|
|
0.02 |
|
|
7 |
|
Total
Reported (GAAP basis) |
$ |
(0.21 |
) |
$ |
(57 |
) |
$ |
0.01 |
|
$ |
21 |
|
Gain on
sale of solar electric production project |
|
— |
|
|
(1 |
) |
|
— |
|
|
(1 |
) |
Impairment of solar electric production investment |
|
(0.02 |
) |
|
(5 |
) |
|
(0.02 |
) |
|
(5 |
) |
Net
mark-to-market effects of the Clean Energy Businesses |
|
0.21 |
|
|
62 |
|
|
0.08 |
|
|
23 |
|
Total Adjusted (non-GAAP basis) |
$ |
(0.02 |
) |
$ |
(1 |
) |
$ |
0.07 |
|
$ |
38 |
|
(a) Under the revenue decoupling mechanisms in the Utilities’
New York electric and gas rate plans and the weather-normalization
clause applicable to their gas businesses, revenues are generally
not affected by changes in delivery volumes from levels assumed
when rates were approved. In general, the Utilities recover on a
current basis the fuel, gas purchased for resale and purchased
power costs they incur in supplying energy to their full-service
customers. Accordingly, such costs do not generally affect Con
Edison’s results of operations.
(b) For the three months ended June 30, 2017 as compared to the
2016 period, reflects lower electric net base revenues of $(0.05) a
share, resulting from the timing of recognition of annual revenues
between quarters under the company's new electric rate plan which
reflected decreased assumed delivery volumes that offset increased
base rates. For the six months ended June 30, 2017 as compared with
the 2016 period, reflects higher electric net base revenues of
$0.02 a share, as over the six month period increased base rates
offset decreased assumed delivery volumes. Also, for the three and
six months ended June 30, 2017 as compared with the 2016 periods,
reflects higher gas net base revenues ($0.05 a share and $0.15 a
share, respectively) and lower surcharges for assessments and fees
that are collected in revenues from customers ($(0.03) a share and
$(0.02) a share, respectively). For the six months ended June 30,
2017 as compared with the 2016 period, reflects growth in the
number of gas customers of $0.02 a share.
(c) Reflects lower pension and other postretirement benefits
costs of $0.07 a share and $0.15 a share as well as lower
regulatory assessments and fees that are collected in revenues from
customers of $0.03 a share and $0.02 a share for the three and six
months ended June 30, 2017 as compared with the 2016 periods,
offset, in part, by higher municipal infrastructure costs of
$(0.01) a share and $(0.02) a share for the three and six months
ended June 30, 2017 as compared with the 2016 periods.
(d) Reflects higher depreciation and amortization expense of
$(0.04) a share and $(0.09) a share, property taxes of $(0.04) a
share and $(0.09) a share, and income taxes of $(0.04) a share and
$(0.08) a share for the three and six months ended June 30, 2017 as
compared with the 2016 periods.
(e) Includes the impact of the dilutive effect of Con Edison's
stock issuances.
(f) Reflects higher pension costs of $(0.01) a share and $(0.01)
a share for the three and six months ended June 30, 2017 as
compared with the 2016 periods. Also, for the six months ended June
30, 2017 as compared with the 2016 period, reflects higher
regulatory assessments and fees that are collected in revenues from
customers of $(0.01) a share.
(g) Reflects higher revenues from renewable electric production
projects, offset by lower revenues from the retail electric supply
business which was sold in September 2016. Includes $(0.01) a share
and $0.20 a share of net after-tax mark-to-market gains/(losses)
for the three months ended June 30, 2017 and 2016, respectively,
and $(0.01) a share and $0.07 a share of net after-tax
mark-to-market gains/(losses) for the six months ended June 30,
2017 and 2016, respectively. Substantially all the mark-to-market
effects in the 2016 periods related to the retail electric supply
business sold in September 2016.
(h) Includes $0.02 a share of net after-tax
loss related to the impairment of a solar electric production
investment for the three and six months ended June 30, 2016.
(i) Reflects income from equity
investments.
(j) Reflects higher state income tax
benefits.
Refer to the company's Second Quarter Form 10-Q, which is being
filed with the Securities and Exchange Commission, for the
consolidated balance sheets at June 30, 2017 and December 31, 2016
and the consolidated income statements for the three and six months
ended June 30, 2017 and 2016. A second quarter 2017 earnings
release presentation will be available at
www.conedison.com (select "For Investors" and then select
"Press Releases").
This press release contains forward-looking statements that are
intended to qualify for the safe-harbor provisions of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements are statements of future expectations and not facts.
Words such as “forecasts,” “expects,” “estimates,” “anticipates,”
“intends,” “believes,” “plans,” “will” and similar expressions
identify forward-looking statements. The forward-looking statements
reflect information available and assumptions at the time the
statements are made, and speak only as of that time. Actual results
or developments may differ materially from those included in the
forward-looking statements because of various factors such as those
identified in reports the company has filed with the Securities and
Exchange Commission, including that the company’s subsidiaries are
extensively regulated and are subject to penalties; its utility
subsidiaries’ rate plans may not provide a reasonable return; it
may be adversely affected by changes to the utility subsidiaries’
rate plans; the intentional misconduct of employees or contractors
could adversely affect it; the failure of, or damage to, its
subsidiaries’ facilities could adversely affect it; a cyber-attack
could adversely affect it; it is exposed to risks from the
environmental consequences of its subsidiaries’ operations; a
disruption in the wholesale energy markets or failure by an energy
supplier could adversely affect it; it has substantial unfunded
pension and other postretirement benefit liabilities; its ability
to pay dividends or interest depends on dividends from its
subsidiaries; it requires access to capital markets to satisfy
funding requirements; changes to tax laws could adversely affect
it; its strategies may not be effective to address changes in the
external business environment; and it also faces other risks that
are beyond its control.
This press release also contains a financial measure, adjusted
earnings, that is not determined in accordance with generally
accepted accounting principles in the United States of America
(GAAP). This non-GAAP financial measure should not be considered as
an alternative to net income, which is an indicator of financial
performance determined in accordance with GAAP. Adjusted earnings
excludes from net income the net mark-to-market changes in the fair
value of the derivative instruments the Clean Energy Businesses use
to economically hedge market price fluctuations in related
underlying physical transactions for the purchase or sale of
electricity and gas. Adjusted earnings may also exclude from net
income certain other items that the company does not consider
indicative of its ongoing financial performance. Management uses
this non-GAAP financial measure to facilitate the analysis of the
company's financial performance as compared to its internal budgets
and previous financial results. Management also uses this non-GAAP
financial measure to communicate to investors and others the
company’s expectations regarding its future earnings and dividends
on its common stock. Management believes that this non-GAAP
financial measure is also useful and meaningful to investors to
facilitate their analysis of the company's financial
performance.
Consolidated Edison, Inc. is one of the nation's largest
investor-owned energy-delivery companies, with approximately $12
billion in annual revenues and $49 billion in assets. The company
provides a wide range of energy-related products and services to
its customers through the following subsidiaries: Consolidated
Edison Company of New York, Inc., a regulated utility providing
electric, gas and steam service in New York City and Westchester
County, New York; Orange and Rockland Utilities, Inc., a regulated
utility serving customers in a 1,300-square-mile-area in
southeastern New York State and northern New Jersey; Con Edison
Clean Energy Businesses, Inc., which through its subsidiaries
develops, owns and operates renewable and energy infrastructure
projects and provides energy-related products and services to
wholesale and retail customers; and Con Edison Transmission, Inc.,
which through its subsidiaries invests in electric and natural gas
transmission projects.
Contact:
Robert McGee
212-460-4111
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