Edison International (NYSE: EIX) today reported second quarter
2019 net income of $392 million, or $1.20 per share, compared to
net income of $276 million, or $0.85 per share, in the second
quarter 2018. As adjusted, second quarter 2019 core earnings were
$515 million, or $1.58 per share, compared to core earnings of $274
million, or $0.85 per share, in the second quarter 2018.
SCE's second quarter 2019 earnings increased by $122 million, or
$0.37 per share, from the second quarter 2018, consisting of $245
million, or $0.75 per share, of higher core earnings and $123
million, or $0.38 per share, of higher non-core losses. The
increase in core earnings was primarily due to adoption of the 2018
General Rate Case (GRC) final decision in the second quarter 2019,
the timing of regulatory deferrals related to wildfire insurance
and wildfire mitigation costs and higher revenue due to a change in
estimate under the FERC formula rate mechanism. The higher non-core
losses for the second quarter 2019 were mainly related to the $170
million ($123 million after-tax), or $0.38 per share, impairment
charge resulting from the disallowance of certain historical
capital expenditures in SCE's 2018 GRC final decision.
Edison International Parent and Other’s second quarter 2019 loss
from continuing operations increased by $6 million, or $0.02 per
share, compared to second quarter 2018, consisting of $4 million,
or $0.02 per share, of higher core losses and $2 million of higher
non-core losses. The higher core losses were primarily due to
higher interest expense as a result of increased borrowings.
“The increase in core earnings in the second quarter 2019 was
primarily due to the adoption of the 2018 GRC final decision, the
timing of regulatory deferrals related to wildfire insurance and
mitigation costs,” said Pedro J. Pizarro, president and chief
executive officer of Edison International. “We remain committed to
improving our wildfire risk profile through enhanced operational
capabilities, while continuing to make significant investments in
grid hardening and resiliency, as well as other capital programs
that support California’s energy goals.”
Pizarro added, “On the legislative front, SCE appreciates the
significant leadership that Governor Newsom and the legislature
have shown and their willingness to act with urgency to address
this wildfire crisis through the passage of Assembly Bill 1054 and
companion measures. We supported passage of these bills, which
improve the current regulatory framework. The state must ensure
careful implementation and make some refinements in the future to
ensure their success; we will work hard to see those changes
made.”
Year-to-Date Earnings
For the six months ended June 30, 2019, Edison International
reported net income of $670 million, or $2.05 per share, compared
to $494 million, or $1.52 per share, during the same period in
2018. As adjusted, Edison International’s core earnings were $721
million, or $2.21 per share, compared to $536 million, or $1.65 per
share, in the year-to-date period in 2018.
SCE's year-to-date 2019 earnings increased by $129 million, or
$0.39 per share, from the same period prior year, consisting of
$180 million, or $0.55 per share, of higher core earnings and $51
million, or $0.16 per share, of higher non-core losses. The
increase in core earnings was primarily due to the adoption of the
2018 GRC final decision in the second quarter 2019, the timing of
regulatory deferrals and cost recovery of wildfire insurance costs
and higher revenue due to a change in estimate under the FERC
formula rate mechanism, partially offset by higher wildfire
mitigation costs in 2019. Higher non-core losses were mainly
related to the $170 million ($123 million after-tax), or $0.38 per
share, impairment charge resulting from the disallowance of certain
historical capital expenditures in SCE's 2018 GRC final decision
recorded in the second quarter 2019, offset by $69 million, or
$0.21 per share, of income tax benefits related to changes in the
allocation of deferred tax re-measurement between customers and
shareholders as a result of a CPUC resolution issued in February
2019.
Edison International Parent and Other’s year-to-date 2019 losses
from continuing operations decreased by $47 million, or $0.14 per
share, compared to the same period in 2018, consisting of $5
million, or $0.01 per share, of lower core losses and $42 million,
or $0.13 per share, of lower non-core losses. The lower core losses
were primarily due to lower corporate and operating expenses and
lower losses at the competitive business under Edison Energy Group,
partially offset by higher interest expense. The decrease in
non-core losses primarily related to the absence of the loss
recorded in connection with the sale of SoCore Energy in April
2018.
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.
Wildfire Insurance Fund
Today, SCE notified the California Public Utilities Commission
(CPUC) of its commitment to make its initial and annual
contributions to the wildfire insurance fund. SCE will make its
initial contribution of approximately $2.4 billion to the wildfire
insurance fund by September 10, 2019 and its annual contributions
of approximately $95 million on each January 1 for the subsequent
10 years. Edison International has evaluated a range of potential
funding options to efficiently finance this contribution. See the
presentation accompanying the company’s conference call for further
information including key financing assumptions.
2019 Earnings Guidance
The company lowered its earnings guidance for 2019 as summarized
in the following chart due to the increased financing needs at both
Edison International and SCE related to the initial contribution to
the wildfire insurance fund. See the presentation accompanying the
company’s conference call for further information including key
guidance assumptions.
2019 Earnings Guidance
2019 Earnings Guidance
2019 Earnings Guidance
as of May 28, 2019
as of July 25, 2019
Low
Mid
High
Low
Mid
High
EIX Basic EPS
$4.57
$4.67
$4.77
$4.46
$4.56
$4.66
Less: Non-core Items*
(0.15)
(0.15)
(0.15)
(0.15)
(0.15)
(0.15)
EIX Core EPS
$4.72
$4.82
$4.92
$4.61
$4.71
$4.81
*
There were ($51) million, or ($0.15) per
share of non-core items recorded for the six months ended June 30,
2019, calculated based on an assumed weighted average share count
for 2019.
About Edison International
Edison International (NYSE:EIX), through its subsidiaries, is a
distributor and generator of electric power, as well as a provider
of energy services and technologies, including renewable energy.
Headquartered in Rosemead, California, 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, a portfolio of competitive businesses
that provide commercial and industrial customers with energy
management and procurement services. Edison Energy is 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 through regulated rates,
including costs related to uninsured wildfire-related and
mudslide-related liabilities and capital spending incurred prior to
formal regulatory approval;
- ability to obtain sufficient insurance at a reasonable cost,
including insurance relating to SCE's nuclear facilities and
wildfire-related claims, and to recover the costs of such insurance
or, in the event liabilities exceed insured amounts, the ability to
recover uninsured losses from customers or other parties;
- risks associated with AB 1054 effectively mitigating the
significant risk faced by California investor-owned utilities
related to liability for damages arising from catastrophic
wildfires where utility facilities are a substantial cause,
including the ability of SCE and SDG&E to raise the funds
required to make initial contributions to the insurance fund under
AB 1054, SCE's ability to maintain a valid safety certification,
SCE's ability to recover uninsured wildfire-related costs from the
wildfire fund established under AB 1054, and the CPUC's
interpretation of and actions under AB 1054;
- actions, or inaction, of the state of California with respect
to achieving a timely and comprehensive solution mitigating the
significant risk faced by California investor-owned utilities
related to liability for damages arising from catastrophic
wildfires where utility facilities are a substantial cause;
- decisions and other actions by the CPUC, the FERC, the NRC and
other regulatory authorities, including decisions and actions
related to determinations of authorized rates of return or return
on equity, the GS&RP application, the recoverability of
wildfire-related and mudslide-related costs, and delays in
regulatory actions;
- ability of Edison International or SCE to borrow funds and
access the bank and capital markets on reasonable terms;
- actions by credit rating agencies to downgrade Edison
International or SCE's credit ratings or to place those ratings on
negative watch or outlook;
- risks associated with the decommissioning of San Onofre,
including those related to public opposition, permitting,
governmental approvals, on-site storage of spent nuclear fuel,
delays, contractual disputes, and cost overruns;
- extreme weather-related incidents and other natural disasters
(including earthquakes and events caused, or exacerbated, by
climate change, such as wildfires), which could cause, among other
things, public safety issues, property damage and operational
issues;
- risks associated with cost allocation resulting in higher rates
for utility bundled service customers because of possible customer
bypass or departure for other electricity providers such as CCAs
and Electric Service Providers;
- risks inherent in SCE's transmission and distribution
infrastructure investment program, 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),
changes in the CAISO's transmission plans, and governmental
approvals; and
- risks associated with the operation of transmission and
distribution assets and power generating facilities, including
public and employee safety issues, the risk of utility assets
causing or contributing to wildfires, failure, availability,
efficiency, and output of equipment and facilities, and
availability and cost of spare parts.
Other important factors are discussed under the headings “Risk
Factors” and “Management’s Discussion and Analysis” in Edison
International’s Form 10-K, 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. Edison International and SCE
provide direct links to certain SCE and other parties' regulatory
filings and documents with the CPUC and the FERC and certain agency
rulings and notices in open proceedings at www.edisoninvestor.com (SCE Regulatory Highlights)
so that such filings, rulings and notices are available to all
investors. Edison International and SCE post or provide direct
links to certain documents and information related to Southern
California wildfires which may be of interest to investors at
www.edisoninvestor.com (Southern
California Wildfires) in order to publicly disseminate such
information. Edison International and SCE also routinely post or
provide direct links to presentations, documents and other
information that may be of interest to investors at www.edisoninvestor.com (Events and Presentations)
in order to publicly disseminate such information.
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 25, 2019, 1:30 p.m.
(Pacific Time)
Telephone Numbers:
1-888-673-9780 (US) and 1-312-470-0178
(Int'l) - Passcode: Edison
Telephone Replay:
1-888-296-6944 (US) and 1-203-369-3027
(Int’l) - Passcode: 9856
Telephone replay available through August
9, 2019
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,
2019
2018
Change
2019
2018
Change
Earnings (loss) per share attributable to
Edison International
Continuing operations
SCE
$
1.28
$
0.91
$
0.37
$
2.18
$
1.79
$
0.39
Edison International Parent and Other
(0.08
)
(0.06
)
(0.02
)
(0.13
)
(0.27
)
0.14
Edison International
1.20
0.85
0.35
2.05
1.52
0.53
Less: Non-core items
SCE
(0.38
)
—
(0.38
)
(0.16
)
—
(0.16
)
Edison International Parent and Other
—
—
—
—
(0.13
)
0.13
Total non-core items
(0.38
)
—
(0.38
)
(0.16
)
(0.13
)
(0.03
)
Core earnings (losses)
SCE
1.66
0.91
0.75
2.34
1.79
0.55
Edison International Parent and Other
(0.08
)
(0.06
)
(0.02
)
(0.13
)
(0.14
)
0.01
Edison International
$
1.58
$
0.85
$
0.73
$
2.21
$
1.65
$
0.56
Note: Diluted earnings were $1.20
and $0.84 per share for the three months ended June 30, 2019 and
2018 respectively, and $2.05 and $1.51 per share for the six months
ended June 30, 2019 and 2018.
Second Quarter Reconciliation
of Basic Earnings to Core Earnings (in millions)
Three months ended June 30,
Six months ended June 30,
(in millions)
2019
2018
Change
2019
2018
Change
Net income (loss) attributable to Edison
International
Continuing operations
SCE
$
419
$
297
$
122
$
712
$
583
$
129
Edison International Parent and Other
(27
)
(21
)
(6
)
(42
)
(89
)
47
Edison International
392
276
116
670
494
176
Less: Non-core items
SCE1
(123
)
—
(123
)
(51
)
—
(51
)
Edison International Parent and Other2
—
2
(2
)
—
(42
)
42
Total non-core items
(123
)
2
(125
)
(51
)
(42
)
(9
)
Core earnings (losses)
SCE
542
297
245
763
583
180
Edison International Parent and Other
(27
)
(23
)
(4
)
(42
)
(47
)
5
Edison International
$
515
$
274
$
241
$
721
$
536
$
185
1
Includes an impairment charge of $170
million ($123 million after-tax) recorded in 2019 for SCE related
to disallowed historical capital expenditures in SCE's 2018 GRC
final decision in the second quarter of 2019. The six months ended
June 30, 2019, includes income tax benefits of $69 million recorded
in 2019 for SCE related to changes in the allocation of deferred
tax re-measurement between customers and shareholders as a result
of a CPUC resolution issued in February 2019.
2
Includes Loss of $63 million ($46 million
after-tax) recorded in 2018 for Edison International Parent and
Other related to sale of SoCore Energy in April 2018.
Consolidated Statements of
Income
Edison International
Six months ended June 30,
(in millions, except per-share amounts,
unaudited)
2019
2018
Total operating revenue
$
5,636
$
5,379
Purchased power and fuel
2,140
2,038
Operation and maintenance
1,477
1,394
Depreciation and amortization
801
925
Property and other taxes
203
204
Impairment and other
166
71
Other operating income
(3
)
(3
)
Total operating expenses
4,784
4,629
Operating income
852
750
Interest expense
(405
)
(350
)
Other income and expenses
93
100
Income from continuing operations
before income taxes
540
500
Income tax benefit
(190
)
(40
)
Income from continuing
operations
730
540
Net income
730
540
Preferred and preference stock dividend
requirements of SCE
60
60
Other noncontrolling interests
—
(14
)
Net income attributable to Edison
International common shareholders
$
670
$
494
Amounts attributable to Edison
International common shareholders:
Income from continuing operations, net of
tax
$
670
$
494
Net income attributable to Edison
International common shareholders
$
670
$
494
Basic earnings per share:
Weighted-average shares of common stock
outstanding
326
326
Continuing operations
$
2.05
$
1.52
Basic earnings per common share
attributable to Edison International common shareholders
$
2.05
$
1.52
Diluted earnings per share:
Weighted-average shares of common stock
outstanding, including effect of dilutive securities
327
327
Continuing operations
$
2.05
$
1.51
Diluted earnings per common share
attributable to Edison International common shareholders:
$
2.05
$
1.51
Consolidated Balance Sheets
Edison International
(in millions, unaudited)
June 30, 2019
December 31, 2018
ASSETS
Cash and cash equivalents
$
257
$
144
Receivables, less allowances of $49 and
$52 for uncollectible accounts at respective dates
795
730
Accrued unbilled revenue
562
482
Inventory
331
282
Income tax receivables
127
191
Prepaid expenses
407
148
Derivative assets
55
171
Regulatory assets
1,294
1,133
Other current assets
108
78
Total current assets
3,936
3,359
Nuclear decommissioning trusts
4,421
4,120
Other investments
83
63
Total investments
4,504
4,183
Utility property, plant and equipment,
less accumulated depreciation and amortization of $9,743 and $9,566
at respective dates
42,329
41,269
Nonutility property, plant and equipment,
less accumulated depreciation of $83 and $82 at respective
dates
85
79
Total property, plant and
equipment
42,414
41,348
Regulatory assets
5,469
5,380
Operating lease right-of-use assets
742
—
Other long-term assets
2,456
2,445
Total long-term assets
8,667
7,825
Total assets
$
59,521
$
56,715
Consolidated Balance Sheets
Edison International
(in millions, except share amounts,
unaudited)
June 30, 2019
December 31, 2018
LIABILITIES AND EQUITY
Short-term debt
$
1,213
$
720
Current portion of long-term debt
479
79
Accounts payable
1,578
1,511
Customer deposits
302
299
Regulatory liabilities
767
1,532
Current portion of operating lease
liabilities
108
—
Other current liabilities
1,218
1,254
Total current liabilities
5,665
5,395
Long-term debt
15,883
14,632
Deferred income taxes and credits
4,856
4,576
Pensions and benefits
864
869
Asset retirement obligations
3,016
3,031
Regulatory liabilities
8,685
8,329
Operating lease liabilities
634
—
Wildfire-related claims
4,669
4,669
Other deferred credits and other long-term
liabilities
2,336
2,562
Total deferred credits and other
liabilities
25,060
24,036
Total liabilities
46,608
44,063
Commitments and contingencies
Common stock, no par value (800,000,000
shares authorized; 325,811,206 shares issued and outstanding at
respective dates)
2,555
2,545
Accumulated other comprehensive loss
(57
)
(50
)
Retained earnings
8,222
7,964
Total Edison International's common
shareholders' equity
10,720
10,459
Noncontrolling interests – preferred and
preference stock of SCE
2,193
2,193
Total equity
12,913
12,652
Total liabilities and equity
$
59,521
$
56,715
Consolidated Statements of Cash
Flows
Edison International
Six months ended June 30,
(in millions, unaudited)
2019
2018
Cash flows from operating
activities:
Net income
$
730
$
540
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization
837
1,074
Allowance for equity during
construction
(49
)
(44
)
Impairment and other
166
71
Deferred income taxes and investment tax
credits
(182
)
(5
)
Other
13
35
Nuclear decommissioning trusts
(72
)
(73
)
Changes in operating assets and
liabilities:
Receivables
(72
)
(58
)
Inventory
(49
)
(14
)
Accounts payable
221
(4
)
Tax receivables and payables
65
90
Other current assets and liabilities
(423
)
(533
)
Regulatory assets and liabilities, net
(543
)
204
Other noncurrent assets and
liabilities
(44
)
(66
)
Net cash provided by operating
activities
598
1,217
Cash flows from financing
activities:
Long-term debt issued, net of discount and
issuance costs of $18 and $33 for the respective periods
1,682
2,417
Term loan issued
1,000
—
Long-term debt matured
(41
)
(213
)
Short-term debt financing, net
(509
)
(2,031
)
Payments for stock-based compensation
(48
)
(21
)
Receipts from stock option exercises
25
9
Dividends to noncontrolling interests
(60
)
(60
)
Dividends paid
(399
)
(394
)
Other
1
39
Net cash provided by (used in) financing
activities
1,651
(254
)
Cash flows from investing
activities:
Capital expenditures
(2,235
)
(2,159
)
Proceeds from sale of nuclear
decommissioning trust investments
2,440
1,770
Purchases of nuclear decommissioning trust
investments
(2,368
)
(1,697
)
Proceeds from sale of SoCore Energy, net
of cash acquired by buyer
—
78
Other
27
20
Net cash used in investing
activities
(2,136
)
(1,988
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
113
(1,025
)
Cash, cash equivalents and restricted cash
at beginning of period
152
1,132
Cash, cash equivalents and restricted
cash at end of period
$
265
$
107
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005748/en/
Investor relations contact: Sam Ramraj, (626)
302-2540
Media relations contact: Charles Coleman, (626)
302-7982
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