8-K: Con Edison Reports 2024 Earnings: Adjusted EPS Exceeds Expectations, Driven by Strong Utility Performance

Con Edison announced its 2024 financial results, with adjusted earnings per share of $5.40, surpassing previous guidance, and forecasts continued growth driven by investments in grid infrastructure and clean energy transition.

Summary

• Consolidated Edison, Inc. (Con Edison) reported a net income for common stock of $1,820 million, or $5.26 per share, for 2024, compared to $2,519 million, or $7.25 per share, in 2023.
• Adjusted earnings (non-GAAP) for 2024 were $1,868 million, or $5.40 per share, compared to $1,762 million, or $5.07 per share, in 2023.
• For the fourth quarter of 2024, net income for common stock was $310 million, or $0.90 per share, compared to $335 million, or $0.97 per share, in the 2023 period.
• Adjusted earnings for the fourth quarter of 2024 were $340 million, or $0.98 per share, compared to $346 million, or $1.00 per share, in the 2023 period.
• Con Edison expects its adjusted earnings per share for 2025 to be in the range of $5.50 to $5.70 per share.
• The company forecasts a five-year compounded annual adjusted earnings per share growth rate of 6% to 7% based on its 2025 adjusted earnings per share guidance.
• Con Edison expects to make capital investments of $5,122 million in 2025 and $8,067 million in 2026.
• For 2027 through 2029, Con Edison expects to make capital investments of $24,469 million in aggregate.
• The company plans to issue up to $1,350 million of common equity in 2025, including the physical settlement of the estimated $677 million available under its December 2024 equity forward transaction.
• Con Edison also plans to issue common equity of approximately $1,850 million in 2026 and up to $4,300 million in aggregate during 2027 through 2029.
• The company plans to issue up to $1,750 million of long-term debt in 2025 and up to $3,800 million of long-term debt in 2026, including for maturing securities.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting strong adjusted earnings, dividend growth, and significant investments in future growth. However, there are some concerns regarding declining net income and potential risks associated with regulation and market conditions.

Positives

• Adjusted earnings per share for 2024 exceeded expectations, reaching $5.40.
• The company achieved a 4.3% five-year adjusted EPS CAGR, meeting its long-term growth targets.
• Con Edison has a long history of dividend increases, marking its 51st consecutive year.
• The company is investing heavily in infrastructure and clean energy, with $38 billion forecasted for 2025-2029.
• CECONY's electric system reliability is significantly higher than the national average.
• The company is actively supporting the adoption of clean heating technologies, with a substantial increase in heat pump installations.
• Con Edison is committed to customer affordability, with programs aimed at reducing energy burden for vulnerable customers.
• The company is proactively planning for the clean energy transition, with a $72 billion investment identified in CECONY's Integrated Long-Range Plan.

Negatives

• Net income for common stock decreased from $2,519 million in 2023 to $1,820 million in 2024.
• The company is considering strategic alternatives for its investment in Mountain Valley Pipeline, LLC (MVP) and Honeoye Storage Corporation (Honeoye), indicating potential uncertainty.
• CECONY and O&R's customer accounts receivables balances have increased significantly compared to pre-pandemic levels.
• The company is planning to issue a significant amount of common equity in the coming years, which could dilute existing shareholders.

Risks

• Con Edison's subsidiaries are extensively regulated and may be subject to substantial penalties.
• The utility subsidiaries' rate plans may not provide a reasonable return.
• The company may be adversely affected by changes to the utility subsidiaries' rate plans.
• Failure of, or damage to, its subsidiaries' facilities could adversely affect it.
• A cyber-attack could adversely affect it.
• The company is exposed to risks from the environmental consequences of its subsidiaries' operations, including increased costs related to climate change.
• Changes to tax laws could adversely affect it.
• A disruption in the wholesale energy markets, increased commodity costs or failure by an energy supplier or customer could adversely affect it.
• The company faces risks related to supply chain disruptions, inflation and the imposition of tariffs.
• Actual developments and the timing and amount of funding may differ materially from estimates due to various factors.

Future Outlook

Con Edison anticipates continued growth, driven by investments in grid infrastructure and the clean energy transition, forecasting a 6% to 7% five-year adjusted EPS growth rate and an 8.2% annual rate base CAGR.

Management Comments

• Tim Cawley, the chairman and CEO of Con Edison, stated that the effective implementation of their strategy yielded strong results in 2024 and that they support their customers adoption of clean energy technologies while delivering the most reliable electric service in the nation.
• Tim Cawley is optimistic about growth and believes the company is well positioned to continue to meet demand to power the electrification of buildings and transportation throughout their service territory with increased capital investments in grid infrastructure.
• Kirk Andrews, senior vice president and CFO, noted that the 2024 financial performance was driven by strong execution within their utility rate plans and ongoing investment to ensure reliability while continuing to support the clean energy transition.
• Kirk Andrews also mentioned that the successful execution of an equity forward transaction in the fourth quarter provides greater pricing certainty for a meaningful portion of their estimated 2025 equity funding needs.

Industry Context

Con Edison's focus on grid modernization and clean energy aligns with broader industry trends and regulatory mandates, particularly in New York State, which has ambitious climate goals. The company's investments in EV infrastructure and clean heating solutions position it to capitalize on the growing demand for electrification.

Comparison to Industry Standards

• CECONY's electric system reliability is reported to be approximately 9 times more reliable than the U.S. average, indicating a leading position in operational excellence.
• The company's dividend aristocrat status, with 51 consecutive years of increases, demonstrates a commitment to shareholder value that is comparable to other established utility companies like NextEra Energy (NEE) and Duke Energy (DUK).
• Con Edison's planned capital investments of $38 billion from 2025-2029 are significant and reflect a proactive approach to grid modernization and clean energy transition, similar to strategies employed by companies like Southern Company (SO) and Dominion Energy (D).
• The company's focus on customer affordability programs aligns with industry efforts to address energy burden, as seen in initiatives by companies like Exelon (EXC) and PG&E (PCG).

Stakeholder Impact

• Shareholders can expect continued dividend growth and potential capital appreciation from investments in grid modernization and clean energy.
• Customers will benefit from improved reliability and access to clean energy technologies.
• Employees will have opportunities to work on innovative projects related to the clean energy transition.
• The company's investments will support economic growth and development in New York City and Westchester County.

Next Steps

• The New York State Public Service Commission (NYSPSC) will review and approve the proposed electric and gas rates for CECONY, effective January 1, 2026.
• The NYSPSC will review and approve the joint proposal for new electric and gas rate plans for O&R for the period January 2025 through December 2027.
• CECONY will continue to execute its integrated collections strategy to reduce aged accounts receivables balances.
• Con Edison will physically settle the 7 million shares under the equity forward sale agreement that was entered into in December 2024 by December 31, 2025.
• The NYISO board is expected to occur by Q4 2025 for the proposed Public Policy Transmission projects.

Key Dates