Edison International (NYSE: EIX) today reported second quarter
2016 net income of $276 million, or $0.85 per share, compared to
$379 million, or $1.16 per share, in the second quarter of 2015. On
an adjusted basis, Edison International’s second quarter 2016 core
earnings were $276 million, or $0.85 per share, compared to $378
million, or $1.16 per share, in the second quarter of 2015.
Comparisons to second quarter and year-to-date 2015 results are not
meaningful primarily because of the delay in receiving Southern
California Edison's (SCE) 2015 General Rate Case (GRC) decision and
the impact of taxes.
SCE's second quarter 2016 net income decreased by $69 million,
or $0.21 per share, from the second quarter 2015 primarily due to
$100 million, or $0.31 per share, of income tax benefits from
revisions to liabilities for uncertain tax positions recorded in
the second quarter of 2015, partially offset by the implementation
of the 2015 GRC decision and 2016 incremental return on the pole
loading rate base.
SCE's 2015 earnings were impacted by the timing of the 2015 GRC
decision. During the second quarter of 2015, pending the outcome of
the 2015 GRC decision, SCE recognized GRC-related revenue largely
based on the 2014 authorized revenue requirement. During the third
and fourth quarters of 2015, SCE recorded revenue refunds to
customers to reflect the final decision in the 2015 GRC. The
estimated amount of the refund to customers attributable to the
second quarter 2015, but subsequently recorded in 2015, was
approximately $35 million ($21 million after-tax), or $0.06 per
share. In addition, second quarter 2016 earnings included an
increase in revenue of approximately $50 million ($30 million
after-tax), or $0.09 per share, from the revenue escalation
mechanism in the 2015 GRC decision.
Edison International Parent and Other’s second quarter 2016
losses from continuing operations increased by $32 million, or
$0.09 per share, compared to second quarter 2015. The higher losses
included an after-tax charge of $13 million, or $0.04 per share,
related to the buy-out of an earn-out provision with the former
shareholders of a company acquired by Edison Energy at the end of
2015. The buy-out was completed, together with modification to
employment contracts, in order to align long-term incentive
compensation. In addition, losses included higher operating and
development costs and lower revenue and gross margin from the sale
of solar systems at Edison Energy Group. Results during 2015
included income of $8 million, or $0.02 per share, from Edison
Capital's investments in affordable housing projects which were
sold at the end of 2015.
Edison International Parent and Other's second quarter 2016
non-core items included income of $2 million, or $0.01 per share,
compared to income of $1 million for the same period in 2015
related to losses (net of distributions) allocated to tax equity
investors under the hypothetical liquidation at book value (HLBV)
accounting method. Additionally, during the second quarter 2016,
Edison International recorded $2 million, or $0.01 per share, of
losses from discontinued operations.
“Today, we reaffirmed our full-year earnings guidance based on
second quarter results and more favorable SCE earnings expected for
the balance of the year,” said Ted Craver, chairman and chief
executive officer of Edison International.
Year-to-Date Earnings
For the six months ended June 30, 2016, Edison International
reported net income of $546 million, or $1.68 per share, compared
to $678 million, or $2.08 per share, during the same period in
2015. On an adjusted basis, Edison International’s core earnings
were $543 million, or $1.67 per share, compared to $672 million, or
$2.06 per share, in the year-to-date period in 2015.
SCE’s net income for the six months ended June 30, 2016
decreased $88 million, or $0.27 per share, from the same period in
2015, primarily due to $100 million, or $0.31 per share, of income
tax benefits from revisions to liabilities for uncertain tax
positions recorded in the second quarter of 2015 and higher
operation and maintenance costs, partially offset by the
implementation of the 2015 GRC decision and 2016 incremental return
on the pole loading rate base.
SCE's 2015 year-to-date earnings were similarly impacted by the
timing of the 2015 GRC decision. The estimated amount of the refund
to customers attributable to the year-to-date period in 2015, but
subsequently recorded in 2015, was approximately $70 million ($42
million after-tax), or $0.12 per share. In addition, earnings for
the six months ended June 30, 2016 included an increase in revenue
of approximately $96 million ($57 million after-tax), or $0.17
per share, from the revenue escalation mechanism in the 2015 GRC
decision.
Edison International Parent and Other’s losses from continuing
operations from the six months ended June 30, 2016 increased by $43
million, or $0.13 per share, compared to same period 2015. The
increase includes the earn-out provision buyout discussed above.
The increased losses also reflect higher operating and development
costs and lower revenue and gross margin from the sale of solar
systems at Edison Energy Group, and income in 2015 of $12 million,
or $0.04 per share, from Edison Capital's investments in affordable
housing projects.
Edison International's non-core items for the six months ended
June 30, 2016 included income of $4 million, or $0.01 per share,
compared to income of $6 million, or $0.02 per share, for the same
period in 2015 related to losses (net of distributions) allocated
to tax equity investors under the HLBV accounting method.
Additionally, during the six months ended June 30, 2016, Edison
International recorded $1 million of losses from discontinued
operations.
Edison International uses core earnings, which is a non-GAAP
financial measure that adjusts for significant discrete items that
management does not consider representative of ongoing earnings.
Edison International management believes that core earnings provide
more meaningful comparisons of performance from period to period.
Please see the attached tables for a reconciliation of core
earnings to basic GAAP earnings.
2016 Earnings Guidance
Reaffirmed
The company reaffirmed its earnings guidance for 2016 as
summarized in the following chart. See the presentation
accompanying the company’s conference call for further information
including key guidance assumptions.
2016 Earnings Guidance
2016 Earnings Guidance 2016 Earnings Guidance
as of May 2, 2016 as of July 28, 2016 Low
Mid High Low Mid
High EIX Basic EPS $3.82 $3.92
$4.02 $3.82 $3.92 $4.02 Less: Non-core
Items* 0.01 0.01 0.01 0.01 0.01 0.01
EIX Core EPS
$3.81 $3.91 $4.01 $3.81 $3.91
$4.01
* Non-core items recorded for the six
months ended June 30, 2016.
About Edison International
Edison International (NYSE:EIX), through its subsidiaries, is a
generator and distributor of electric power, as well as a provider
of energy services and technologies, including renewable energy.
Headquartered in Rosemead, Calif., Edison International is the
parent company of Southern California Edison, one of the nation’s
largest electric utilities. Edison International is also the parent
company of Edison Energy Group, a portfolio of competitive
businesses that provide commercial and industrial customers with
energy management and procurement services and distributed solar
generation. Edison Energy Group companies are independent from
Southern California Edison.
Appendix
Use of Non-GAAP Financial
Measures
Edison International’s earnings are prepared in accordance with
generally accepted accounting principles used in the United States
and represent the company’s earnings as reported to the Securities
and Exchange Commission. Our management uses core earnings and core
earnings per share (EPS) internally for financial planning and for
analysis of performance of Edison International and Southern
California Edison. We also use core earnings and core EPS when
communicating with analysts and investors regarding our earnings
results to facilitate comparisons of the Company’s performance from
period to period. Financial measures referred to as net income,
basic EPS, core earnings, or core EPS also apply to the description
of earnings or earnings per share.
Core earnings and core EPS are non-GAAP financial measures and
may not be comparable to those of other companies. Core earnings
and core EPS are defined as basic earnings and basic EPS excluding
income or loss from discontinued operations and income or loss from
significant discrete items that management does not consider
representative of ongoing earnings. Basic earnings and losses refer
to net income or losses attributable to Edison International
shareholders. Core earnings are reconciled to basic earnings in the
attached tables. The impact of participating securities (vested
awards that earn dividend equivalents that may participate in
undistributed earnings with common stock) for the principal
operating subsidiary is not material to the principal operating
subsidiary’s EPS and is therefore reflected in the results of the
Edison International holding company, which is included in Edison
International Parent and Other.
Safe Harbor Statement
Statements contained in this release about future performance,
including, without limitation, operating results, rate base growth,
financial outlook, and other statements that are not purely
historical, are forward-looking statements. These forward-looking
statements reflect our current expectations; however, such
statements involve risks and uncertainties. Actual results could
differ materially from current expectations. Important factors that
could cause different results include, but are not limited to
the:
- ability of SCE to recover its costs in
a timely manner from its customers through regulated rates,
including regulatory assets related to San Onofre;
- decisions and other actions by the
CPUC, the FERC, the NRC and other regulatory authorities, including
the determinations of authorized rates of return or return on
equity, outcome of San Onofre CPUC proceedings and delays in
regulatory actions;
- ability of cities, counties and certain
other public agencies to generate and/or purchase electricity for
their local residents and businesses, along with other possible
customer bypass or departure due to technological advancements in
the generation, storage, transmission, distribution and use of
electricity, and supported by public policy, government regulations
and incentives;
- risks inherent in the construction of
transmission and distribution infrastructure replacement and
expansion projects, including those related to project site
identification, public opposition, environmental mitigation,
construction, permitting, power curtailment costs (payments due
under power contracts in the event there is insufficient
transmission to enable acceptance of power delivery), and
governmental approvals;
- ability to obtain sufficient insurance,
including insurance relating to SCE's nuclear facilities and
wildfire-related liability, and to recover the costs of such
insurance or in the absence of insurance the ability to recover
uninsured losses; and
- risks associated with the retirement
and decommissioning of nuclear generating facilities.
Other important factors are discussed under the headings “Risk
Factors” and “Management’s Discussion and Analysis” in Edison
International’s Form 10-K, most recent Form 10-Q, and other reports
filed with the Securities and Exchange Commission, which are
available on our website: www.edisoninvestor.com. These filings
also provide additional information on historical and other factual
data contained in this news release.
These forward-looking statements represent our expectations only
as of the date of this news release, and Edison International
assumes no duty to update them to reflect new information, events
or circumstances.
Reminder: Edison International Will Hold a
Conference Call Today
When: Thursday, July 28, 2016, 1:30 p.m. (Pacific
Time) Telephone Numbers: 1-800-369-2198 (US) and 1-773-756-4618
(Int'l) - Passcode: Edison Telephone Replay: 1-800-216-6079 (US)
and 1-402-220-3893 (Int’l) - Passcode: 22316 Telephone replay
available through August 7, 2016 Webcast:
www.edisoninvestor.com
Second Quarter Reconciliation of Basic
Earnings Per Share to Core Earnings Per Share
Three months ended June 30, Six months ended June 30,
2016 2015 Change 2016
2015 Change Earnings (loss) per share attributable to Edison
International Continuing operations SCE $ 0.97 $ 1.18
$ (0.21 ) $ 1.85 $ 2.12 $ (0.27 ) Edison International Parent and
Other (0.11 ) (0.02 ) (0.09 ) (0.17 ) (0.04 ) (0.13 ) Discontinued
operations (0.01 ) —
(0.01 ) — —
— Edison International 0.85 1.16
(0.31 ) 1.68
2.08 (0.40 ) Less: Non-core items SCE —
— — — — — Edison International Parent and Other 0.01 — 0.01 0.01
0.02 (0.01 ) Discontinued operations (0.01 ) —
(0.01 ) — —
— Total non-core items —
— — 0.01
0.02 (0.01 ) Core
earnings (losses) SCE 0.97 1.18 (0.21 ) 1.85 2.12 (0.27 ) Edison
International Parent and Other (0.12 ) (0.02 )
(0.10 ) (0.18 ) (0.06 )
(0.12 ) Edison International $ 0.85
$ 1.16 $ (0.31 ) $ 1.67
$ 2.06 $ (0.39 ) Note: Diluted
earnings were $0.84 and $1.15 per share for the three months ended
June 30, 2016 and 2015, respectively and $1.66 and $2.06 per share
for the six months ended June 30, 2016 and 2015, respectively.
Second Quarter Reconciliation of Basic
Earnings to Core Earnings (in millions)
Three months ended June 30, Six months ended June 30, (in
millions) 2016 2015 Change 2016
2015 Change Net income (loss) attributable to Edison
International Continuing operations SCE $ 315 $ 384 $
(69 ) $ 601 $ 689 $ (88 ) Edison International Parent and Other (37
) (5 ) (32 ) (54 ) (11 ) (43 ) Discontinued operations (2 )
— (2 ) (1 )
— (1 ) Edison International 276
379 (103 )
546 678 (132 ) Less:
Non-core items SCE — — — — — — Edison International Parent and
Other 2 1 1 4 6 (2 ) Discontinued operations (2 )
— (2 ) (1 )
— (1 ) Total non-core items —
1 (1 ) 3
6 (3 ) Core earnings (losses)
SCE 315 384 (69 ) 601 689 (88 ) Edison International Parent and
Other (39 ) (6 ) (33 )
(58 ) (17 ) (41 ) Edison
International $ 276 $ 378
$ (102 ) $ 543 $ 672 $ (129 )
Consolidated Statements of
Income Edison International
Three months ended June 30, Six months ended June 30,
(in millions, except per-share amounts, unaudited)
2015 2014 2016 2015
Total operating
revenue $ 2,777 $ 2,908 $ 5,218
$ 5,420 Purchased power and fuel 1,064 1,078
1,858 1,864 Operation and maintenance 721 743 1,350 1,380
Depreciation, decommissioning and amortization 505 481 982 945
Property and other taxes 85 82 178 171 Impairment and other charges
21 — 21
—
Total operating expenses 2,396
2,384 4,389
4,360
Operating income 381 524 829 1,060
Interest and other income 33 43 65 82 Interest expense (144 ) (138
) (284 ) (281 ) Other expenses (11 ) (17 )
(19 ) (24 )
Income from continuing
operations before income taxes 259 412 591 837 Income tax
(benefit) expense (47 ) 6
(9 ) 113
Income from continuing
operations 306 406 600 724 Loss from discontinued operations,
net of tax (2 ) — (1 )
—
Net income 304 406 599 724 Preferred
and preference stock dividend requirements of SCE 31 28 61 56 Other
noncontrolling interests (3 ) (1 )
(8 ) (10 )
Net income attributable to
Edison International common shareholders $ 276 $
379 $ 546 $ 678
Amounts
attributable to Edison International common shareholders:
Income from continuing operations, net of tax $ 278 $ 379 $ 547 $
678 Loss from discontinued operations, net of tax (2 )
— (1 ) —
Net income attributable to Edison International common
shareholders $ 276 $ 379 $ 546
$ 678
Basic earnings per common share
attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding 326 326 326 326
Continuing operations $ 0.86 $ 1.16 $ 1.68 $ 2.08 Discontinued
operations (0.01 ) — —
—
Total $ 0.85 $
1.16 $ 1.68 $ 2.08
Diluted
earnings per common share attributable to Edison International
common shareholders: Weighted-average shares of common stock
outstanding, including effect of dilutive securities 329 328 329
329 Continuing operations $ 0.85 $ 1.15 $ 1.66 $ 2.06 Discontinued
operations (0.01 ) — —
—
Total $ 0.84 $
1.15 $ 1.66 $ 2.06
Dividends
declared per common share $ 0.4800
$ 0.4175 $ 0.9600 $ 0.8350
Consolidated Balance
Sheets Edison International (in
millions, unaudited)
June 30,2016
December 31,2015
ASSETS Cash and cash equivalents $ 111 $ 161 Receivables,
less allowances of $56 and $62 for uncollectible accounts at
respective dates 801 771 Accrued unbilled revenue 682 565 Inventory
308 267 Derivative assets 65 79 Regulatory assets 478 560 Other
current assets 214 251
Total current
assets 2,659 2,654 Nuclear decommissioning
trusts 4,344 4,331 Other investments 203 203
Total investments 4,547 4,534 Utility
property, plant and equipment, less accumulated depreciation and
amortization of $8,531 and $8,548 at respective dates 35,629 34,945
Nonutility property, plant and equipment, less accumulated
depreciation of $92 and $85 at respective dates 148
140
Total property, plant and equipment 35,777
35,085 Derivative assets 69 84 Regulatory assets
7,792 7,512 Other long-term assets 353 360
Total long-term assets 8,214 7,956
Total assets $ 51,197
$ 50,229
Consolidated
Balance Sheets Edison International
(in millions, except share amounts, unaudited) June
30,2016 December 31,2015
LIABILITIES AND EQUITY
Short-term debt $ 800 $ 695 Current portion of long-term debt 696
295 Accounts payable 1,166 1,310 Accrued taxes 74 72 Customer
deposits 257 242 Derivative liabilities 195 218 Regulatory
liabilities 1,072 1,128 Other current liabilities 889
967
Total current liabilities
5,149 4,927
Long-term debt
10,845 10,883 Deferred income
taxes and credits 7,892 7,480 Derivative liabilities 1,101 1,100
Pensions and benefits 1,774 1,759 Asset retirement obligations
2,590 2,764 Regulatory liabilities 6,017 5,676 Other deferred
credits and other long-term liabilities 2,081
2,246
Total deferred credits and other
liabilities 21,455 21,025
Total liabilities 37,449 36,835
Commitments and contingencies
Redeemable noncontrolling
interest — 6 Common stock, no par value (800,000,000 shares
authorized; 325,811,206 shares issued and outstanding at respective
dates) 2,499 2,484 Accumulated other comprehensive loss (53 ) (56 )
Retained earnings 9,111 8,940
Total Edison International's common shareholders' equity
11,557 11,368 Noncontrolling
interests – preferred and preference stock of SCE 2,191
2,020
Total equity 13,748
13,388
Total
liabilities and equity $ 51,197 $
50,229
Consolidated
Statements of Cash Flows Edison
International Six months ended June 30, (in millions,
unaudited) 2016 2015
Cash flows from
operating activities: Net income $ 599 $ 724 Less: Loss
from discontinued operations (1 ) —
Income from continuing operations 600 724 Adjustments to reconcile
to net cash provided by operating activities: Depreciation,
decommissioning and amortization 1,025 987 Allowance for equity
during construction (42 ) (42 ) Deferred income taxes and
investment tax credits (28 ) 101 Other 11 11 Nuclear
decommissioning trusts (144 ) 41 EME insurance proceeds 1 — Changes
in operating assets and liabilities: Receivables (33 ) 32 Inventory
(41 ) 5 Accounts payable 67 130 Prepaid and accrued taxes 1 (50 )
Other current assets and liabilities (135 ) (411 ) Derivative
assets and liabilities, net 15 33 Regulatory assets and
liabilities, net 90 241 Other noncurrent assets and liabilities
42 (34 )
Net cash provided by
operating activities 1,429 1,768
Cash flows from financing activities: Long-term debt
issued, net of discount and issuance costs of $3 and $16
forrespective periods 397 1,415 Long-term debt matured (41 ) (721 )
Preference stock issued, net 294 — Preference stock redeemed (125 )
— Short-term debt financing, net 106 125 Dividends to
noncontrolling interests (61 ) (56 ) Dividends paid (313 ) (272 )
Other (55 ) (18 )
Net cash provided by
financing activities 202 473
Cash flows from investing activities: Capital expenditures
(1,828 ) (2,197 ) Proceeds from sale of nuclear decommissioning
trust investments 1,391 1,455 Purchases of nuclear decommissioning
trust investments (1,247 ) (1,503 ) Other 3
11
Net cash used in investing activities
(1,681 ) (2,234 )
Net (decrease) increase
in cash and cash equivalents (50 ) 7 Cash and cash equivalents
at beginning of period 161 132
Cash and cash equivalents at end of period $
111 $ 139
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Edison InternationalMedia relations
contact:Charles Coleman, (626) 302-7982orInvestor relations
contact:Scott Cunningham, (626) 302-2540
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