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Amended: Consolidated Edison Q4 Profit Misses Estimate, Boosts Dividend

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1/31/2013 8:35 PM ET

Utility company Consolidated Edison Inc. (ED: Quote) on Thursday reported a 9 percent increase in profit for the fourth quarter, as a decline in revenues was more than offset by lower operating expenses as well as income tax expense. Adjusted earnings per share from ongoing operations declined and missed analysts' estimates.

Looking ahead, Con Edison expects to incur a charge in the first quarter to reflect the interest payment on disallowed federal income tax deductions. In addition, the company forecast earnings for fiscal 2013 in line with analysts' estimates and increased its dividend for the 39th consecutive year.

The New York-based company's fourth-quarter net income was $207 million or $0.70 per share, up from $190 million or $0.65 per share in the previous-year quarter.

Excluding the net mark-to-market effects of the competitive energy businesses or CEBs, earnings from ongoing operations for the quarter were $203 million or $0.69 per share, compared with $219 million or $0.74 per share in the same period last year.

On average, twelve analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.

Total operating revenues for the quarter edged down to $2.90 billion from $2.92 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $3.35 billion.

For fiscal 2012, Con Edison's net income rose to $1.14 billion or $3.86 per share from $1.05 billion or $3.57 per share in the prior year. Adjusted earnings from ongoing operations were $1.10 billion or $3.75 per share, compared to $1.06 billion or $3.64 per share in the previous year.

Operating revenues for the year declined 5 percent to $12.19 billion from $12.89 billion last year.

Analysts expected the company to earn $3.77 per share for the year on revenues of $13.01 billion.

Con Edison declared a quarterly dividend of $0.615 per share on its common stock, payable March 15 to shareholders of record as of February 13. This represents an annualized increase of $0.04 over the previous annualized dividend of $2.42 per share.

In January 2013, the United States Court of Appeals for the Federal Circuit reversed an October 2009 trial court ruling and disallowed company-claimed tax deductions relating to a 1997 transaction in which Consolidated Edison Development, Inc. leased property from the owner and then immediately subleased it back to the owner.

As a result, Con Edison expects to record an estimated charge of between $150 million and $170 million after-tax in the first quarter of 2013 to reflect the interest payment on disallowed federal income tax deductions and the recalculation of the accounting effect of the 1997 transaction and its 1999 lease in/lease out transaction.

Looking ahead to fiscal 2013, Con Edison expects earnings from ongoing operations in a range of $3.65 to $3.85 per share. Analysts expect the company to earn $3.83 per share for the year.

The outlook excludes an estimated $0.50 to $0.60 per share charge relating to the disallowance of tax deductions associated with its lease in/lease out transactions and the net mark-to-market effects of the CEBs. The outlook also reflects capital investments of $2.425 billion, substantially all of which will be spent at the company's regulated utilities.

ED closed Thursday's trading at $56.88, up $0.10 or 0.18 percent on a volume of 1.42 million shares. In after-hours, the stock declined $0.18 or 0.32 percent to $56.70.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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