Con Edison Reports 2019 Third Quarter Earnings
November 04 2019 - 5:13PM
Consolidated Edison, Inc. (Con Edison) (NYSE: ED) today reported
2019 third quarter net income for common stock of $473 million or
$1.42 a share compared with $435 million or $1.40 a share in the
2018 third quarter. Adjusted earnings were $513 million or $1.54 a
share in the 2019 period compared with $489 million or $1.57 a
share in the 2018 period. Adjusted earnings in the 2019 period
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). Adjusted earnings in the 2018
period exclude the income tax expense resulting from a
re-measurement of the company's deferred tax assets and liabilities
following the issuance of proposed regulations relating to the Tax
Cuts and Jobs Act of 2017 (TCJA) and transaction costs related to
the acquisition of Sempra Solar Holdings, LLC. Adjusted earnings in
the 2019 and 2018 periods also exclude the net mark-to-market
effects of the Clean Energy Businesses.
For the first nine months of 2019, net income for common stock
was $1,048 million or $3.20 a share compared with $1,051 million or
$3.38 a share in the first nine months of 2018. Adjusted earnings
were $1,149 million or $3.51 a share in the 2019 period compared
with $1,106 million or $3.56 a share in the 2018 period. Adjusted
earnings for the 2019 period exclude the effects of HLBV accounting
for tax equity investments in certain renewable electric production
projects of the Clean Energy Businesses. Adjusted earnings for the
2018 period exclude the income tax expense resulting from a
re-measurement of the company's deferred tax assets and liabilities
following the issuance of proposed regulations relating to the TCJA
and transaction costs related to the acquisition of Sempra Solar
Holdings, LLC. Adjusted earnings in the 2019 and 2018 periods also
exclude the net mark-to-market effects of the Clean Energy
Businesses.
“We continue to strengthen our commitment to safety, reliability
and pursuing clean energy solutions for our customers,” said John
McAvoy, chairman and CEO of Con Edison. “We have reached an
agreement with multiple parties on three-year rate plans for
Consolidated Edison Company of New York, Inc.’s electric and gas
delivery businesses that, if approved, will allow us to help
achieve our shared objectives. We will be making investments in
electric and gas delivery infrastructure, new technology, renewable
energy, electric vehicle charging stations and energy efficiency
programs that will support New York’s clean energy goals.”
For the year of 2019, the company expects its adjusted earnings
per share to be in the range of $4.25 to $4.35 a share. The
company's previous forecast was in the range of $4.25 to $4.45 per
share. 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 $(0.20) 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 and nine months ended September 30, 2019 and
2018. See Attachments B and C for the estimated effect of major
factors resulting in variations in earnings per share and net
income for common stock for the three and nine months ended
September 30, 2019 compared to the 2018 periods.
The company's Third Quarter Form 10-Q is being filed with the
Securities and Exchange Commission. A third quarter 2019 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 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;
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. 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 $56 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 |
|
For the Nine Months Ended |
|
September 30, |
|
September 30, |
|
Earnings per Share |
Net Income for Common Stock(Millions of Dollars) |
|
Earnings per Share |
Net Income for Common Stock (Millions of Dollars) |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Reported earnings per share (basic) and net income for
common stock (GAAP basis) |
$1.42 |
|
$1.40 |
|
$473 |
|
$435 |
|
|
$3.20 |
|
$3.38 |
|
$1,048 |
|
$1,051 |
|
|
|
|
|
|
|
|
|
|
|
HLBV effects of the Clean Energy Businesses (pre-tax) |
|
0.10 |
|
|
— |
|
|
30 |
|
|
— |
|
|
|
0.25 |
|
|
— |
|
|
79 |
|
|
— |
|
Income taxes (a) |
|
(0.03 |
) |
|
— |
|
|
(7 |
) |
|
— |
|
|
|
(0.07 |
) |
|
— |
|
|
(19 |
) |
|
— |
|
HLBV effects of the Clean
Energy Businesses (net of tax) |
|
0.07 |
|
|
— |
|
|
23 |
|
|
— |
|
|
|
0.18 |
|
|
— |
|
|
60 |
|
|
— |
|
Net mark-to-market effects of the Clean Energy Businesses
(pre-tax) |
|
0.07 |
|
|
— |
|
|
23 |
|
|
3 |
|
|
|
0.18 |
|
|
0.01 |
|
|
54 |
|
|
5 |
|
Income taxes (b) |
|
(0.02 |
) |
|
— |
|
|
(6 |
) |
|
(1 |
) |
|
|
(0.05 |
) |
|
— |
|
|
(13 |
) |
|
(2 |
) |
Net mark-to-market effects of
the Clean Energy Businesses (net of tax) |
|
0.05 |
|
|
— |
|
|
17 |
|
|
2 |
|
|
|
0.13 |
|
|
0.01 |
|
|
41 |
|
|
3 |
|
TCJA re-measurement |
|
— |
|
|
0.14 |
|
|
— |
|
|
42 |
|
|
|
— |
|
|
0.14 |
|
|
— |
|
|
42 |
|
Sempra Solar Holdings, LLC transaction costs (pre-tax) |
|
— |
|
|
0.04 |
|
|
— |
|
|
14 |
|
|
|
— |
|
|
0.04 |
|
|
— |
|
|
14 |
|
Income taxes (b) |
|
— |
|
|
(0.01 |
) |
|
— |
|
|
(4 |
) |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|
(4 |
) |
Sempra Solar Holdings, LLC
transaction costs (net of tax) |
|
— |
|
|
0.03 |
|
|
— |
|
|
10 |
|
|
|
— |
|
|
0.03 |
|
|
— |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share and adjusted earnings (non-GAAP
basis) |
$1.54 |
|
$1.57 |
|
$513 |
|
$489 |
|
|
$3.51 |
|
$3.56 |
|
$1,149 |
|
$1,106 |
|
- The amount of income taxes was calculated using a combined
federal and state income tax rate of 23% and 24% for the three and
nine months ended September 30, 2019, respectively.
- The amount of income taxes was calculated using a combined
federal and state income tax rate of 26% and 24% for the three and
nine months ended September 30, 2019, respectively, and a
combined federal and state income tax rate of 28% for the three and
nine months ended September 30, 2018.
|
|
|
Attachment B |
Variation for the Three Months Ended September 30, 2019 vs.
2018 |
|
EarningsperShare |
Net IncomeforCommonStock(Millions ofDollars) |
|
CECONY (a) |
|
|
|
Changes in rate plans |
$0.11 |
|
$35 |
|
Reflects higher electric and gas net base revenues of $0.19 a share
and $0.01 a share, respectively, due primarily to electric and gas
base rates increases in January 2019 under the company's rate
plans. |
Weather impact on steam revenues |
|
— |
|
|
(1 |
) |
|
Operations and maintenance expenses |
|
(0.11 |
) |
|
(34 |
) |
Reflects higher costs for pension
and other postretirement benefits of $(0.04) a share, stock-based
compensation of $(0.03) a share and uncollectibles of $(0.02) a
share. |
Depreciation, property taxes and other tax matters |
|
(0.10 |
) |
|
(31 |
) |
Reflects higher property taxes of
$(0.06) a share and higher depreciation and amortization expense of
$(0.06) a share, offset, in part, by the reduction in the sales and
use tax reserve upon conclusion of the audit assessment of $0.02 a
share. |
Other |
|
(0.03 |
) |
|
14 |
|
Reflects primarily the dilutive
effect of Con Edison's stock issuances of $(0.09) a share, offset,
in part, by lower costs associated with components of pension and
other postretirement benefits other than service cost of $0.05 a
share. |
Total CECONY |
|
(0.13 |
) |
|
(17 |
) |
|
O&R (a) |
|
|
|
Changes in rate plans |
|
0.03 |
|
|
11 |
|
Reflects primarily an electric
base rate increase under the company's new rate plan, effective
January 1, 2019. |
Operations and maintenance expenses |
|
— |
|
|
(1 |
) |
|
Depreciation, property taxes and other tax matters |
|
(0.01 |
) |
|
(2 |
) |
Reflects higher depreciation and
amortization expense. |
Other |
|
(0.02 |
) |
|
(4 |
) |
Reflects primarily the dilutive effect of Con Edison's stock
issuances of $(0.01) a share. |
Total O&R |
|
— |
|
|
4 |
|
|
Clean Energy Businesses |
|
|
|
Operating revenues less energy costs |
|
0.27 |
|
|
85 |
|
Reflects primarily higher
revenues from renewable electric production projects resulting from
the December 2018 acquisition of Sempra Solar Holdings, LLC,
including the consolidation of certain jointly-owned projects that
were previously accounted for as equity investments of $0.30 a
share, and lower gas purchased for resale due to lower purchased
volume of $0.12 a share, offset, in part, by lower wholesale
revenues of $(0.13) a share. |
Operations and maintenance expenses |
|
(0.01 |
) |
|
(2 |
) |
Reflects higher costs associated
with additional renewable electric production projects in operation
resulting from the December 2018 acquisition of Sempra Solar
Holdings, LLC. of $(0.03) a share, offset, in part, by lower energy
services costs of $0.02 a share. |
Depreciation and amortization |
|
(0.08 |
) |
|
(26 |
) |
Reflects an increase in renewable
electric production projects resulting from the December 2018
acquisition of Sempra Solar Holdings, LLC. |
Net interest expense |
|
(0.12 |
) |
|
(35 |
) |
Reflects primarily an increase in
debt resulting from the December 2018 acquisition of Sempra Solar
Holdings, LLC. |
HLBV effects |
|
(0.07 |
) |
|
(23 |
) |
|
Other |
|
(0.02 |
) |
|
(4 |
) |
Reflects primarily the absence in 2019 of equity income from
certain jointly-owned projects that were accounted for as equity
investments in 2018 but consolidated after the December 2018
acquisition of Sempra Solar Holdings, LLC. |
Total Clean Energy Businesses |
|
(0.03 |
) |
|
(5 |
) |
|
Con Edison Transmission |
|
— |
|
|
1 |
|
Reflects income from equity investments. |
Other, including parent company expenses |
|
0.18 |
|
|
55 |
|
|
Total Reported (GAAP basis) |
$0.02 |
|
$38 |
|
|
HLBV effects of the Clean Energy Businesses |
|
0.07 |
|
|
23 |
|
|
Net mark-to-market effects of the Clean Energy Businesses |
|
0.05 |
|
|
15 |
|
|
Income tax effect of the TCJA in 2018 |
|
(0.14 |
) |
|
(42 |
) |
|
Sempra Solar Holdings, LLC transaction costs in 2018 |
|
(0.03 |
) |
|
(10 |
) |
|
Total Adjusted (non-GAAP basis) |
$(0.03 |
) |
|
$24 |
|
|
|
|
|
|
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. |
|
|
|
Attachment C |
Variation for the Nine Months Ended September 30, 2019 vs.
2018 |
|
EarningsperShare |
Net IncomeforCommonStock(Millions ofDollars) |
|
CECONY (a) |
|
|
|
Changes in rate plans |
|
$0.59 |
|
|
$185 |
|
Reflects higher electric and gas net base revenues of $0.42 a share
and $0.12 a share, respectively, due primarily to electric and gas
base rates increases in January 2019 under the company's rate plans
and growth in the number of gas customers of $0.02 a share. |
Weather impact on steam revenues |
|
(0.05 |
) |
|
(15 |
) |
Reflects the impact of warmer
winter weather in 2019. |
Operations and maintenance expenses |
|
(0.23 |
) |
|
(71 |
) |
Reflects higher costs for pension
and other postretirement benefits of $(0.11) a share, stock-based
compensation of $(0.07) a share and regulatory assessments and fees
that are collected in revenues from customers of $(0.05) a
share. |
Depreciation, property taxes and other tax matters |
|
(0.38 |
) |
|
(121 |
) |
Reflects higher property taxes of
$(0.19) a share, higher depreciation and amortization expense of
$(0.17) a share and the absence of New York State sales and use tax
refunds received in 2018 of $(0.04) a share; offset, in part, by
the reduction in the sales and use tax reserve upon conclusion of
the audit assessment of $0.02 a share. |
Other |
|
(0.06 |
) |
|
31 |
|
Reflects primarily the dilutive
effect of Con Edison's stock issuances of $(0.16) a share and
higher interest expense on long-term debt of $(0.09) a share,
offset, in part, by lower costs associated with components of
pension and other postretirement benefits other than service cost
of $0.14 a share. |
Total CECONY |
|
(0.13 |
) |
|
9 |
|
|
O&R (a) |
|
|
|
Changes in rate plans |
|
0.03 |
|
|
10 |
|
Reflects an electric base rate
increase of $0.05 a share, offset, in part, by a gas base rate
decrease of $(0.02) a share under the company's new rate plans,
effective January 1, 2019. |
Operations and maintenance expenses |
|
0.02 |
|
|
6 |
|
Reflects primarily a reduction of
a regulatory asset associated with certain site investigation and
environmental remediation costs in 2018. |
Depreciation, property taxes and other tax matters |
|
(0.02 |
) |
|
(5 |
) |
Reflects higher depreciation
and amortization expense. |
Other |
|
(0.02 |
) |
|
(3 |
) |
Reflects primarily the dilutive effect of Con Edison's stock
issuances of $(0.01) a share. |
Total O&R |
|
0.01 |
|
|
8 |
|
|
Clean Energy Businesses |
|
|
|
Operating revenues less energy costs |
|
0.44 |
|
|
137 |
|
Reflects primarily higher
revenues from renewable electric production projects resulting from
the December 2018 acquisition of Sempra Solar Holdings, LLC,
including the consolidation of certain jointly-owned projects that
were previously accounted for as equity investments of $0.68 a
share, offset, in part, by lower engineering, procurement and
construction services revenues of $(0.22) a share. |
Operations and maintenance expenses |
|
0.14 |
|
|
43 |
|
Reflects primarily lower
engineering, procurement and construction costs of $0.20 a share
and lower energy services costs of $0.02 a share, offset, in part,
by higher costs associated with additional renewable electric
production projects in operation resulting from the December 2018
acquisition of Sempra Solar Holdings, LLC. of $(0.08) a share. |
Depreciation and amortization |
|
(0.27 |
) |
|
(84 |
) |
Reflects an increase in
renewable electric production projects resulting from the December
2018 acquisition of Sempra Solar Holdings, LLC. |
Net interest expense |
|
(0.31 |
) |
|
(96 |
) |
Reflects primarily an increase in
debt resulting from the December 2018 acquisition of Sempra Solar
Holdings, LLC. |
HLBV effects |
|
(0.18 |
) |
|
(60 |
) |
|
Other |
|
(0.07 |
) |
|
(17 |
) |
Reflects primarily the absence in 2019 of equity income from
certain jointly-owned projects that were accounted for as equity
investments in 2018 but consolidated after the December 2018
acquisition of Sempra Solar Holdings, LLC. |
Total Clean Energy Businesses |
|
(0.25 |
) |
|
(77 |
) |
|
Con Edison Transmission |
|
— |
|
|
3 |
|
Reflects income from equity investments. |
Other, including parent company expenses |
|
0.19 |
|
|
54 |
|
|
Total Reported (GAAP basis) |
|
$(0.18 |
) |
|
$(3 |
) |
|
HLBV effects of the Clean Energy Businesses |
|
0.18 |
|
|
60 |
|
|
Net mark-to-market effects of the Clean Energy Businesses |
|
0.12 |
|
|
38 |
|
|
Income tax effect of the TCJA in 2018 |
|
(0.14 |
) |
|
(42 |
) |
|
Sempra Solar Holdings, LLC, transaction costs in 2018 |
|
(0.03 |
) |
|
(10 |
) |
|
Total Adjusted (non-GAAP basis) |
|
$(0.05 |
) |
|
$43 |
|
|
|
|
|
|
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 McGee
212-460-4111
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