Con Edison Tops Consensus - Analyst Blog

Consolidated Edison Inc. (ED) announced its first quarter results of fiscal 2010 with earnings per share (EPS) of 93 cents, beating both the Zacks Consensus EPS Estimate of 81 cents and the year-ago EPS of 78 cents. On a reported basis, the company reported earnings of 80 cents per share compared with 66 cents per share in the year-ago quarter.

The GAAP EPS variations reflect the year-over-year differences, where Con Edison of New York benefited by 52 cents per share as higher rates authorized higher recovery of costs and 4 cent from other items. This was offset by 23 cents from higher operations and maintenance expense, 16 cents from depreciation, and 3 cents from interest expense. The net effect was a 14-cent upside in EPS year over year while the Orange and Rockland utilities remained steady. In the Competitive Energy businesses, EPS shrunk by a cent while lower parent company expenses added a cent year-over-year.

Operational Results

Consolidated Edison reported operating revenue of $3.5 billion, an increase of $39 million over the year-ago quarter. Of this Electric revenues rose $86 million to $1.9 billion, while Non-utility revenues rose $92 million to $493 million. However the upside was partially offset by lower Gas and Stream revenues. Gas revenues fell $115 million to $773 million and Stream revenues fell $24 million to $307 million.

Consolidated Edison’s earnings from ongoing operations were $264 million compared with $214 million in the year-ago quarter. Its net income was $226 million compared with $180 million in the year-ago quarter. Earnings were boosted by lower fuel expenses and gas purchased for resale but was offset by higher operations and maintenance expense, and depreciation.

Financial Condition

Consolidated Edison ended the quarter with cash and cash equivalents of $87 million and long-term debt of $9.9 billion, compared to $260 million of cash and $9.9 billion of long-term debt in the year-ago period. In the reported quarter the company generated $1 million of cash for operating activities and deployed $431 million towards construction expenditure, $45 million towards long-term debt repayments and $155 million towards dividends.

Outlook

Consolidated Edison reaffirmed its guidance for EPS from ongoing operations for fiscal 2010 in the range of $3.10 – $3.30. This is in line with the Zacks Consensus Estimate of $3.27 for fiscal 2010. The forecast reflects capital investments of $2.3 billion, substantially all of which will be spent on the company's regulated utilities. The company also expects to issue common stock worth between $300 million and $500 million and long-term debt between $600 million and $900 million to finance its expansion plans.

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