Consolidated Edison, Inc. (Con Edison) (NYSE:ED) today reported
third quarter net income of $457 million or $1.48 a share compared
with $497 million or $1.63 a share in 2016. Adjusted earnings,
which exclude the effects of the gain on the sale of Con Edison
Clean Energy Businesses, Inc.'s (the Clean Energy Businesses)
retail electric supply business in 2016, the gain related to a
solar electric production investment in 2016 and the net
mark-to-market effects of the Clean Energy Businesses, were $453
million or $1.47 a share in 2017 compared with $460 million or
$1.51 a share in 2016.
For the first nine months of 2017, net income was $1,020 million
or $3.33 a share compared with $1,039 million or $3.47 a share in
the first nine months of 2016. Adjusted earnings, which exclude the
effects of the gain on the sale of the Clean Energy Businesses'
retail electric supply business in 2016, the gain/impairment
related to a solar electric production investment in 2016, the gain
on the sale of a solar electric production project and the net
mark-to-market effects of the Clean Energy Businesses, were $1,018
million or $3.32 a share in 2017 compared with $987 million or
$3.30 a share in 2016.
“This is an exciting time in the energy industry,” said Con
Edison Chairman and CEO John McAvoy. “We’re incorporating
renewables into the grid at an increasing rate, we’re using data
analytics to provide customers with more information about the way
they’re using energy and how they can save, and we’re working on
programs to increase electric vehicle use and access to charging
stations. At the same time, our $1 billion storm hardening program
after Superstorm Sandy has made our system more reliable than ever
five years later, having already prevented 250,000 power outages
due to our investments.”
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 nine months ended
September 30, 2017 and 2016.
|
For the Three Months Ended |
For the Nine 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) |
$ |
1.48 |
|
$ |
1.63 |
|
$ |
457 |
|
$ |
497 |
|
$ |
3.33 |
|
$ |
3.47 |
|
$ |
1,020 |
|
$ |
1,039 |
|
Gain on sale of a solar
electric production project |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
|
— |
|
Gain on sale of the
CEBs' retail electric supply business (a) |
|
— |
|
|
(0.15 |
) |
|
— |
|
|
(47 |
) |
|
— |
|
|
(0.15 |
) |
|
— |
|
|
(47 |
) |
Gain/impairment related
to a solar electric production investment (b) |
|
— |
|
|
(0.02 |
) |
|
— |
|
|
(5 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net
mark-to-market effects of the Clean Energy Businesses (c) |
|
(0.01 |
) |
|
0.05 |
|
|
(4 |
) |
|
15 |
|
|
(0.01 |
) |
|
(0.02 |
) |
|
(1 |
) |
|
(5 |
) |
Adjusted
earnings per share and adjusted earnings (non-GAAP basis) |
$ |
1.47 |
|
$ |
1.51 |
|
$ |
453 |
|
$ |
460 |
|
$ |
3.32 |
|
$ |
3.30 |
|
$ |
1,018 |
|
$ |
987 |
|
(a) After taxes of $(57) million for the three and nine
months ended September 30, 2016, which includes an adjustment for
the apportionment of state income taxes.(b) In August 2016,
the company recognized a gain of $5 million (after taxes of $3
million) upon its acquisition of the remaining ownership interest
in a solar electric production investment. An impairment charge of
a similar amount was recognized in June 2016 on the investment
portion held at that time.(c) After taxes of $(3) million and
$10 million for the three months ended September 30, 2017 and
2016, respectively, and $(1) million and $(3) million for the nine
months ended September 30, 2017 and 2016, respectively.
For the year 2017, the company expects its adjusted earnings per
share to be in the range of $4.05 to $4.15 a share. The company's
previous forecast was in the range of $4.00 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 nine months ended
September 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 nine months ended September 30, 2017 primarily
reflect lower costs for pensions and other postretirement benefits.
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 nine months ended
September 30, 2017 periods compared to the 2016 periods,
resulting from these and other major factors:
|
Three Months Ended Variation |
Nine 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) |
$ |
0.12 |
|
$ |
35 |
|
$ |
0.29 |
|
$ |
87 |
|
Weather
impact on steam revenues |
|
— |
|
|
(1 |
) |
|
0.01 |
|
|
4 |
|
Operations and maintenance expenses (c) |
|
0.07 |
|
|
22 |
|
|
0.24 |
|
|
73 |
|
Depreciation, property taxes and other tax matters (d) |
|
(0.10 |
) |
|
(30 |
) |
|
(0.36 |
) |
|
(108 |
) |
Other
(e) |
|
(0.06 |
) |
|
(13 |
) |
|
(0.17 |
) |
|
(32 |
) |
Total CECONY |
|
0.03 |
|
|
13 |
|
|
0.01 |
|
|
24 |
|
Orange and Rockland
Utilities, Inc. (O&R) (a) |
|
|
|
|
Changes
in rate plans and regulatory charges |
|
— |
|
|
1 |
|
|
0.04 |
|
|
12 |
|
Operations and maintenance expenses (f) |
|
(0.01 |
) |
|
(2 |
) |
|
(0.03 |
) |
|
(9 |
) |
Depreciation and property taxes |
|
(0.01 |
) |
|
(4 |
) |
|
(0.02 |
) |
|
(6 |
) |
Other
(e) |
|
— |
|
|
— |
|
|
0.01 |
|
|
1 |
|
Total O&R |
|
(0.02 |
) |
|
(5 |
) |
|
— |
|
|
(2 |
) |
Clean Energy
Businesses |
|
|
|
|
Operating
revenues less energy costs (g) |
|
0.10 |
|
|
32 |
|
|
0.10 |
|
|
31 |
|
Operations and maintenance expenses (h) |
|
(0.08 |
) |
|
(23 |
) |
|
(0.10 |
) |
|
(30 |
) |
Depreciation |
|
(0.02 |
) |
|
(5 |
) |
|
(0.05 |
) |
|
(15 |
) |
Net
interest expense |
|
(0.01 |
) |
|
(3 |
) |
|
(0.02 |
) |
|
(6 |
) |
Other (e)
(i) |
|
(0.17 |
) |
|
(53 |
) |
|
(0.15 |
) |
|
(46 |
) |
Total Clean Energy Businesses |
|
(0.18 |
) |
|
(52 |
) |
|
(0.22 |
) |
|
(66 |
) |
Con
Edison Transmission, Inc. (e) (j) |
|
— |
|
|
(1 |
) |
|
0.04 |
|
|
14 |
|
Other,
including parent company expenses (e) (k) |
|
0.02 |
|
|
5 |
|
|
0.03 |
|
|
11 |
|
Total
Reported (GAAP basis) |
$ |
(0.15 |
) |
$ |
(40 |
) |
$ |
(0.14 |
) |
$ |
(19 |
) |
Gain on
sale of CEBs retail electric supply business |
|
0.15 |
|
|
47 |
|
|
0.15 |
|
|
47 |
|
Gain/impairment related to a solar electric production
investment |
|
0.02 |
|
|
5 |
|
|
— |
|
|
— |
|
Gain on
sale of solar electric production project |
|
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
Net mark-to-market effects of the Clean Energy Businesses |
|
(0.06 |
) |
|
(19 |
) |
|
0.01 |
|
|
4 |
|
Total Adjusted (non-GAAP basis) |
$ |
(0.04 |
) |
$ |
(7 |
) |
$ |
0.02 |
|
$ |
31 |
|
(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 and nine months ended September 30, 2017 as compared to
the 2016 periods, reflects lower electric net base revenues of
$(0.03) a share, resulting from the timing of recognition of annual
revenues between quarters under the company's new electric rate
plan. Also, for the three and nine months ended September 30, 2017
as compared with the 2016 periods, reflects higher electric net
base revenues ($0.07 a share and $0.08 a share, respectively),
resulting from the increased base rates under the company's new
electric rate plan, higher gas net base revenues ($0.01 a share and
$0.16 a share, respectively), incentives earned under the electric
Earnings Adjustment Mechanisms of $0.02 a share, a property tax
refund incentive of $0.01 a share, and an increase to the
regulatory reserve related to certain gas proceedings in 2016
($0.02 a share and $0.03 a share, respectively). For the nine
months ended September 30, 2017 as compared with the 2016 period,
reflects growth in the number of gas customers of $0.03 a
share.(c) Reflects lower pension and other postretirement
benefits costs of $0.07 a share and $0.22 a share for the three and
nine months ended September 30, 2017 as compared with the 2016
periods.(d) Reflects higher depreciation and amortization
expense of $(0.04) a share and $(0.13) a share, property taxes of
$(0.04) a share and $(0.13) a share, and income taxes of $(0.02) a
share and $(0.10) a share for the three and nine months ended
September 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 $(0.02) a share for the three and nine months ended
September 30, 2017 as compared with the 2016 periods. Also, for the
nine months ended September 30, 2017 as compared with the 2016
period, reflects higher regulatory assessments and fees that are
collected in revenues from customers and a higher reserve for
injuries and damages of $(0.01) a share.(g) Reflects higher
revenues from renewable electric production projects and lower
revenues and energy costs resulting from the retail electric supply
business which was sold in September 2016. Includes $0.01 a share
and $(0.05) a share of net after-tax mark-to-market gains/(losses)
for the three months ended September 30, 2017 and 2016,
respectively, and $0.01 a share and $0.02 a share of net after-tax
mark-to-market gains for the nine months ended September 30, 2017
and 2016, respectively. Substantially all the mark-to-market
effects in the 2016 periods were related to the retail electric
supply business sold in September 2016.(h) Reflects Upton 2
engineering, procurement and construction costs ($(0.05) a share
and $(0.06) a share, respectively) as well as increased energy
service costs ($(0.02) a share and $(0.04) a share, respectively)
for the three and nine months ended September 30, 2017 as compared
with the 2016 periods.(i) Includes $0.02 a share of net
after-tax gain related to the acquisition of a solar electric
production investment for the three and nine months ended September
30, 2016, net of $(0.02) a share of impairment loss related to the
solar electric production investment for the nine months ended
September 30, 2016. Includes $0.15 a share of net after-tax gain
related to the sale of the retail electric supply business for the
three and nine months ended September 30, 2016.(j) Reflects
income from equity investments.(k) Reflects higher state
income tax benefits.
Refer to the company's Third Quarter Form 10-Q, which is being
filed with the Securities and Exchange Commission, for the
consolidated balance sheets at September 30, 2017 and December 31,
2016 and the consolidated income statements for the three and nine
months ended September 30, 2017 and 2016. A third 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
McGee212-460-4111
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