Con Edison Reports 2020 First Quarter Earnings
May 07 2020 - 4:41PM
Consolidated Edison, Inc. (Con Edison) (NYSE: ED) today reported
2020 first quarter net income for common stock of $375 million or
$1.13 a share compared with $424 million or $1.31 a share in the
2019 first quarter. Adjusted earnings were $451 million or $1.35 a
share in the 2020 period compared with $448 million or $1.39 a
share in the 2019 period. Adjusted earnings in the 2020 and 2019
periods exclude the effects of hypothetical liquidation at book
value (HLBV) accounting for tax equity investments in certain
renewable electric production projects of Con Edison Clean Energy
Businesses, Inc. (the Clean Energy Businesses) and the net
mark-to-market effects of the Clean Energy Businesses.
“During this pandemic, all of us at Con Edison remain solely
focused on the health and safety of our employees and our
customers, while continuing to provide the highest level of
reliable service,” said John McAvoy, chairman and CEO of Con
Edison. “Like many Americans, we have lost family, friends and
colleagues to this virus. Throughout, I am immensely proud of our
dedicated workforce who have risen to the challenge and to our
unions’ leadership in working with us. We must and will summon all
the compassion, grace and strength needed to provide for the
recovery.”
For the year of 2020, the company expects its adjusted earnings
per share to be in the range of $4.15 to $4.35 per share. The
company's previous forecast was in the range of $4.30 to $4.50 per
share. The company’s revised adjusted earnings per share range for
the year 2020 reflects predominantly the impact of warmer than
normal winter weather on steam revenues, and also the potential
financial impact from the Coronavirus Disease 2019 (COVID-19)
pandemic. The company’s forecast assumes the restart of some
"paused" commercial activities by early June, with a phased process
that continues through the third quarter. Adjusted earnings per
share exclude the effects of HLBV accounting for tax equity
investments in certain of the Clean Energy Businesses' renewable
electric production projects (approximately $(0.19) a share).
Adjusted earnings per share also exclude the Clean Energy
Businesses' net mark-to-market effects, the amount of which will
not be determinable until year end.
See Attachment A to this press release for a reconciliation of
Con Edison’s reported earnings per share to adjusted earnings per
share and reported net income for common stock to adjusted earnings
for the three months ended March 31, 2020 and 2019. See
Attachment B for the estimated effect of major factors resulting in
variations in earnings per share and net income for common stock
for the three months ended March 31, 2020 compared to the 2019
period.
The company's First Quarter Form 10-Q is being filed with the
Securities and Exchange Commission. A first quarter 2020 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 failure of
processes and systems and the performance of employees and
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,
including increased costs related to climate change; a disruption
in the wholesale energy markets or failure by an energy supplier or
customer 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; it faces risks related to health
epidemics and other outbreaks, including the COVID-19 pandemic; and
it also faces other risks that are beyond its control. Con Edison
assumes no obligation to update forward-looking statements.
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 for common stock, which is an
indicator of financial performance determined in accordance with
GAAP. Adjusted earnings excludes from net income for common stock
certain items that the company does not consider indicative of its
ongoing financial performance such as the effects of the Clean
Energy Businesses' HLBV accounting for tax equity investors in
certain renewable electric production projects and mark-to-market
accounting. 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 and
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 $13
billion in annual revenues and $59 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. (CECONY), a regulated utility
providing electric, gas and steam service in New York City and
Westchester County, New York; Orange and Rockland Utilities, Inc.
(O&R), 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.
|
Attachment A |
|
|
|
For the Three Months Ended |
|
March 31, |
|
Earnings per Share |
Net Income for Common Stock (Millions of Dollars) |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Reported earnings per share (basic) and net income for
common stock (GAAP basis) |
$ |
1.13 |
|
$ |
1.31 |
|
$ |
375 |
|
$ |
424 |
|
|
|
|
|
|
HLBV effects of the Clean Energy Businesses (pre-tax) |
|
0.06 |
|
|
0.07 |
|
|
17 |
|
|
21 |
|
Income taxes (a) |
|
(0.02 |
) |
|
(0.02 |
) |
|
(4 |
) |
|
(5 |
) |
HLBV effects of the Clean
Energy Businesses (net of tax) |
|
0.04 |
|
|
0.05 |
|
|
13 |
|
|
16 |
|
Net mark-to-market effects of the Clean Energy Businesses
(pre-tax) |
|
0.25 |
|
|
0.04 |
|
|
83 |
|
|
11 |
|
Income taxes (b) |
|
(0.07 |
) |
|
(0.01 |
) |
|
(20 |
) |
|
(3 |
) |
Net mark-to-market effects of
the Clean Energy Businesses (net of tax) |
|
0.18 |
|
|
0.03 |
|
|
63 |
|
|
8 |
|
|
|
|
|
|
Adjusted earnings per share and adjusted earnings (non-GAAP
basis) |
$ |
1.35 |
|
$ |
1.39 |
|
$ |
451 |
|
$ |
448 |
|
- The amount of income taxes was calculated using a combined
federal and state income tax rate of 24% for the three months ended
March 31, 2020 and 2019.
- The amount of income taxes was calculated using a combined
federal and state income tax rate of 24% and 27% for the three
months ended March 31, 2020 and 2019, respectively.
|
|
|
Attachment B |
|
Variation for the
Three Months Ended March 31, 2020 vs. 2019 |
|
Earnings per Share |
Net Income for Common Stock (Millions of Dollars) |
|
CECONY (a) |
|
|
|
Changes in rate plans |
$ |
0.12 |
|
$ |
38 |
|
Reflects higher electric and gas net base revenues of $0.03 a share
and $0.09 a share, respectively, due primarily to electric and gas
base rate increases in January 2020 under the company's rate
plans. |
Weather impact on steam revenues |
|
(0.08 |
) |
|
(25 |
) |
Reflects the impact of warmer
winter weather in 2020. |
Operations and maintenance expenses |
|
0.21 |
|
|
67 |
|
Reflects lower costs for pension
and other postretirement benefits of $0.18 a share, which are
reconciled under the rate plans, lower stock-based compensation of
$0.02 a share, and lower consultant cost of $0.01 a share, offset,
in part, by a higher reserve for uncollectibles and incremental
costs associated with the Coronavirus Disease 2019 (COVID-19) of
$(0.02) a share. |
Depreciation, property taxes and other tax matters |
|
(0.21 |
) |
|
(67 |
) |
Reflects higher property taxes of
$(0.08) a share and higher depreciation and amortization expense of
$(0.13) a share, both of which are recoverable under the rate
plans. |
Other |
|
(0.10 |
) |
|
(20 |
) |
Reflects primarily higher costs
associated with components of pension and other postretirement
benefits other than service cost of $(0.11) a share, which are
reconciled under the rate plans, suspension of customers' late
payment charges and certain other fees associated with COVID-19 of
$(0.01) a share and the dilutive effect of Con Edison's stock
issuances of $(0.03). |
Total CECONY |
|
(0.06 |
) |
|
(7 |
) |
|
O&R (a) |
|
|
|
Changes in rate plans |
|
0.02 |
|
|
6 |
|
Reflects an electric base rate
increase of $0.02 a share under the company's rate plans. |
Operations and maintenance expenses |
|
(0.01 |
) |
|
(3 |
) |
Reflects primarily lower
recoveries for workers' compensation. |
Depreciation, property taxes and other tax matters |
|
(0.01 |
) |
|
(2 |
) |
Reflects higher depreciation and
amortization expense. |
Other |
|
(0.01 |
) |
|
(2 |
) |
Reflects primarily the dilutive effect of Con Edison's stock
issuances. |
Total O&R |
|
(0.01 |
) |
|
(1 |
) |
|
Clean Energy Businesses |
|
|
|
Operating revenues less energy costs |
|
— |
|
|
(2 |
) |
|
Operations and maintenance expenses |
|
0.02 |
|
|
4 |
|
Reflects primarily lower energy
services costs. |
Depreciation and amortization |
|
— |
|
|
1 |
|
|
Net interest expense |
|
(0.16 |
) |
|
(57 |
) |
Reflects primarily unrealized
losses on interest rate swaps. |
HLBV effects |
|
0.01 |
|
|
3 |
|
|
Other |
|
0.01 |
|
|
4 |
|
Reflects re-measurement of
deferred tax assets under the Coronavirus Aid, Relief, and Economic
Security Act. |
Total Clean Energy Businesses |
|
(0.12 |
) |
|
(47 |
) |
|
Con Edison Transmission |
|
— |
|
|
1 |
|
|
Other, including parent company expenses |
|
0.01 |
|
|
4 |
|
Reflects primarily New York State combined income tax
benefits. |
Total Reported (GAAP basis) |
$ |
(0.18 |
) |
$ |
(50 |
) |
|
HLBV effects of the Clean Energy Businesses |
|
(0.01 |
) |
|
(3 |
) |
|
Net mark-to-market effects of the Clean Energy Businesses |
|
0.15 |
|
|
55 |
|
Reflects unrealized losses on interest rate swaps, offset, in part,
by unrealized wholesale energy gains. |
Total Adjusted (non-GAAP basis) |
$ |
(0.04 |
) |
$ |
2 |
|
|
|
|
|
|
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. |
Contact: Robert
McGee212-460-4111
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