Edison International (NYSE: EIX) today reported second quarter
2020 net income of $318 million, or $0.85 per share, compared to
net income of $392 million, or $1.20 per share, in the second
quarter 2019. As adjusted, second quarter 2020 core earnings were
$375 million, or $1.00 per share, compared to core earnings of $515
million, or $1.58 per share, in the second quarter 2019.
Southern California Edison's (SCE) second quarter 2020 earnings
per share (EPS) decreased by $0.26 from the prior year period,
consisting of lower core EPS of $0.56 and lower non-core loss per
share of $0.30. Lower core EPS was primarily due to the increase in
shares outstanding related to the equity offerings in July 2019 and
May 2020, the adoption of the 2018 GRC decision in the second
quarter of 2019, and the timing of O&M expenses, partially
offset by higher CPUC-related revenue due to the escalation
mechanism as set forth in the 2018 GRC decision.
SCE's lower non-core loss per share was mainly attributable to
the absence of $0.38 of disallowed historical capital expenditures
in SCE's 2018 GRC decision recorded in the second quarter 2019, and
a charge recorded in 2020 of $0.16 from the amortization of SCE's
contributions to the Wildfire Insurance Fund. These were partially
offset by a gain of $0.10 recorded in 2020 for SCE's sale of San
Onofre nuclear fuel.
Edison International Parent and Other's second quarter 2020 loss
per share increased by $0.09 compared to second quarter 2019,
consisting of higher core loss per share of $0.02 and higher
non-core loss per share of $0.07. The higher core loss per share
was primarily due to higher interest expense, partially offset by
the increase in shares outstanding. The higher non-core loss per
share was mainly related to a goodwill impairment charge recorded
in 2020 related to Edison Energy stemming from the economic impact
of COVID-19.
“We are confident in our 2020 earnings guidance, although the
timing of operations and maintenance expenses and deferrals of
certain wildfire-related costs negatively impacted our core
earnings per share for the quarter. These comparisons should
improve in the second half of the year,” said Pedro J. Pizarro,
president and chief executive officer of Edison International. “I
am proud of our team’s steadfast performance during this COVID-19
pandemic, focusing on practices to ensure the safety and health of
employees and critical operations for customers’ benefit, including
those laid out in SCE’s 2020–2022 Wildfire Mitigation Plan.”
Pizarro added, “While we anticipate another active fire season,
SCE is entering this period better prepared than ever. In addition
to advancing wildfire mitigation measures, the company has made
improvements to Public Safety Power Shutoff, or PSPS, protocols
since last year which we expect will reduce the number of customers
affected by 30% under the same conditions as last year.”
Year-to-Date Earnings
For the six months ended June 30, 2020, Edison International
reported net income of $501 million, or $1.37 per share, compared
to $670 million, or $2.05 per share, during the same period in
2019. As adjusted, Edison International's core earnings were $603
million, or $1.65 per share, compared to $721 million, or $2.21 per
share, in the year-to-date period in 2019.
SCE's year-to-date 2020 EPS decreased $0.54 from the same period
prior year, consisting of lower core EPS of $0.50 per share and
higher non-core loss per share of $0.04. The decrease in SCE's core
EPS was primarily due to the increase in shares outstanding related
to the equity offerings in July 2019 and May 2020, the adoption of
the 2018 GRC decision in the second quarter of 2019, and the timing
of O&M expenses, partially offset by higher CPUC-related
revenue due to the escalation mechanism as set forth in the 2018
GRC decision. SCE's higher non-core loss per share was mainly
related to a charge of $0.32 recorded in 2020 from the amortization
of SCE's contributions to the Wildfire Insurance Fund and the
absence of $0.21 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. These were partially offset by a $0.09 higher gain for SCE's
sale of San Onofre nuclear fuel and the absence of the $0.38
impairment charge resulting from the disallowance of certain
historical capital expenditures in SCE's 2018 GRC final decision
recorded in the second quarter 2019.
Edison International Parent and Other’s year-to-date 2020 loss
per share increased by $0.14 compared to the same period in 2019,
consisting of higher core loss per share of $0.06 and higher
non-core loss per share of $0.08. The increase in core loss per
share was primarily due to higher interest expense, partially
offset by the increase in shares outstanding. The higher non-core
loss per share was mainly related to a goodwill impairment charge
recorded in 2020 related to Edison Energy stemming from the
economic impact of COVID-19.
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.
2020 Earnings Guidance
The company narrowed its earnings guidance range for 2020 as
summarized in the following chart. See the presentation
accompanying the company’s conference call for further
information.
2020 Earnings Guidance
2020 Earnings Guidance
2020 Earnings Guidance
as of April 30, 2020
as of July 28, 2020
Low
High
Low
High
EIX Basic EPS
$4.19
$4.49
$4.09
$4.34
Less: Non-core Items*
(0.13)
(0.13)
(0.28)
(0.28)
EIX Core EPS
$4.32
$4.62
$4.37
$4.62
* There were ($102) million, or ($0.28)
per share of non-core items recorded for the six months ended June
30, 2020, calculated based on an assumed weighted average share
count for 2020.
Second Quarter 2020 Earnings Conference
Call Materials
Edison International has posted its earnings conference call
prepared remarks by the CEO and CFO, the teleconference
presentation, and Form 10-Q to the company's investor relations
website. These materials are available at
www.edisoninvestor.com.
Reminder: Edison International Will Hold a
Conference Call Today When: Tuesday, July 28, 2020, 1:30
p.m. (Pacific Time) Telephone Numbers: 1-888-673-9780 (US) and
1-312-470-0178 (Int'l) - Passcode: Edison Telephone Replay:
1-866-441-1051 (US) and 1-203-369-1058 (Int’l) - Passcode: 2548
Telephone replay available through August 11, 2020 Webcast:
www.edisoninvestor.com
About Edison International
Edison International (NYSE: EIX) is one of the nation’s largest
electric utility holding companies, providing clean and reliable
energy and energy services through its independent companies.
Headquartered in Rosemead, California, Edison International is the
parent company of Southern California Edison Company, a utility
that delivers electricity to 15 million people across Southern,
Central and Coastal California. Edison International is also the
parent company of Edison Energy, a global energy advisory company
delivering comprehensive, data-driven energy solutions to
commercial and industrial users to meet their cost, sustainability
and risk goals.
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 presentation about future
performance, including, without limitation, operating results,
capital expenditures, rate base growth, dividend policy, 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. These forward-looking statements
represent our expectations only as of the date of this
presentation, and Edison International assumes no duty to update
them to reflect new information, events or circumstances. 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, costs incurred to mitigate the risk
of utility equipment causing future wildfires, costs incurred to
implement SCE's new customer service system and costs incurred as a
result of the COVID-19 pandemic;
- ability of SCE to implement its Wildfire Mitigation Plan,
including effectively implementing Public Safety Power Shut-Offs
when appropriate;
- 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 California Assembly Bill 1054 (“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 alleged to
be a substantial cause, including SCE's ability to maintain a valid
safety certification, SCE's ability to recover uninsured
wildfire-related costs from the insurance fund established under AB
1054 (“Wildfire Insurance Fund”), the longevity of the Wildfire
Insurance Fund, and the CPUC's interpretation of and actions under
AB 1054, including their interpretation of the new prudency
standard established under AB 1054;
- decisions and other actions by the California Public Utilities
Commission, the Federal Energy Regulatory Commission, the Nuclear
Regulatory Commission and other governmental authorities, including
decisions and actions related to nationwide or statewide crisis,
determinations of authorized rates of return or return on equity,
the recoverability of wildfire-related and mudslide-related costs,
issuance of SCE's wildfire safety certification, wildfire
mitigation efforts, and delays in executive, regulatory and
legislative actions;
- ability of Edison International or SCE to borrow funds and
access bank and capital markets on reasonable terms;
- 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;
- pandemics, such as COVID-19, and other events that cause
regional, statewide, national or global disruption, which could
impact, among other things, Edison International's and SCE's
business, operations, cash flows, liquidity and/or financial
results;
- 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;
- physical security of Edison International's and SCE's critical
assets and personnel and the cybersecurity of Edison
International's and SCE's critical information technology systems
for grid control, and business, employee and customer data;
- 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
Community Choice Aggregators (“CCA,” which are cities, counties,
and certain other public agencies with the authority to generate
and/or purchase electricity for their local residents and
businesses) and Electric Service Providers (entities that offer
electric power and ancillary services to retail customers, other
than electrical corporations (like SCE) and CCAs);
- 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 California Independent System Operator’s
transmission plans, and governmental approvals; and
- risks associated with the operation of transmission and
distribution assets and power generating facilities, including
public, contractor 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.
Additional information about risks and uncertainties, including
more detail about the factors described in this report, is
contained throughout this report and in the 2019 Form 10-K,
including the "Risk Factors" section. Readers are urged to read
this entire report, including information incorporated by
reference, as well as the 2019 Form 10-K, and carefully consider
the risks, uncertainties, and other factors that affect Edison
International's and SCE's businesses. Edison International and SCE
post or provide direct links (i) 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 in a section
titled "SCE Regulatory Highlights," (ii) to certain documents and
information related to Southern California wildfires which may be
of interest to investors in a section titled "Southern California
Wildfires," and (iii) to presentations, documents and other
information that may be of interest to investors in a section title
"Events and Presentations" at www.edisoninvestor.com 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. Readers should review future reports filed by
Edison International and SCE with the SEC.
Second Quarter Reconciliation
of Basic Earnings Per Share to Core Earnings Per Share
Three months ended June 30,
Six months ended June 30,
2020
2019
Change
2020
2019
Change
Earnings (loss) per share attributable to
Edison International
Continuing operations
SCE
$
1.02
$
1.28
$
(0.26)
$
1.64
$
2.18
$
(0.54)
Edison International Parent and Other
(0.17)
(0.08)
(0.09)
(0.27)
(0.13)
(0.14)
Edison International
0.85
1.20
(0.35)
1.37
2.05
(0.68)
Less: Non-core items
SCE
(0.08)
(0.38)
0.30
(0.20)
(0.16)
(0.04)
Edison International Parent and Other
(0.07)
—
(0.07)
(0.08)
—
(0.08)
Total non-core items
(0.15)
(0.38)
0.23
(0.28)
(0.16)
(0.12)
Core earnings (losses)
SCE
1.10
1.66
(0.56)
1.84
2.34
(0.50)
Edison International Parent and Other
(0.10)
(0.08)
(0.02)
(0.19)
(0.13)
(0.06)
Edison International
$
1.00
$
1.58
$
(0.58)
$
1.65
$
2.21
$
(0.56)
Note: Diluted earnings were $0.85 and
$1.20 per share for the three months ended June 30, 2020 and 2019,
respectively, and $1.36 and $2.05 per share for the six months
ended June 30, 2020 and 2019, respectively.
Second Quarter Reconciliation
of Basic Earnings Per Share to Core Earnings (in millions)
Three months ended June 30,
Six months ended June 30,
(in millions)
2020
2019
Change
2020
2019
Change
Net income (loss) attributable to Edison
International
Continuing operations
SCE
$
381
$
419
$
(38)
$
600
$
712
$
(112)
Edison International Parent and Other
(63)
(27)
(36)
(99)
(42)
(57)
Edison International
318
392
(74)
501
670
(169)
Less: Non-core items
SCE1,2,3,4,5,6
(32)
(123)
91
(74)
(51)
(23)
Edison International Parent and
Other2,7
(25)
—
(25)
(28)
—
(28)
Total non-core items
(57)
(123)
66
(102)
(51)
(51)
Core earnings (losses)
SCE
413
542
(129)
674
763
(89)
Edison International Parent and Other
(38)
(27)
(11)
(71)
(42)
(29)
Edison International
$
375
$
515
$
(140)
$
603
$
721
$
(118)
1 Includes amortization of SCE’s Wildfire
Insurance Fund expenses of $83 million ($60 million after-tax) and
$167 million ($120 million after-tax) for the quarter and
year-ended June 30, 2020, respectively.
2 Includes income tax benefit of $18
million and income tax expense of $3 million recorded in the first
quarter of 2020 for SCE and Edison International Parent and Other,
respectively, due to re-measurement of uncertain tax positions
related to the 2010 – 2012 California state tax filings currently
under audit.
3 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. The resolution determined that customers are only entitled to
excess deferred taxes which were included when setting rates and
other deferred tax re-measurement belongs to shareholders.
4 Includes a gain of $52 million ($37
million after-tax) recorded in 2020 and $4 million ($3 million
after-tax) recorded in 2019 for SCE's sale of San Onofre nuclear
fuel.
5 Includes expenses of $12 million ($9
million after-tax) recorded in 2020 for SCE's legal costs related
to 2017/2018 Wildfire/Mudslide events.
6 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
decision.
7 Includes a goodwill impairment charge of
$34 million ($25 million after-tax) recorded in 2020 for Edison
International Parent and Other related to Edison Energy stemming
from the economic impact of COVID-19.
Consolidated Statements of
Income
Edison International
Three months ended June 30,
Six months ended June 30,
(in millions, except per-share amounts,
unaudited)
2020
2019
2020
2019
Total operating revenue
$
2,987
$
2,812
$
5,777
$
5,636
Purchased power and fuel
1,068
1,135
1,996
2,140
Operation and maintenance
762
595
1,643
1,477
Wildfire Insurance Fund expense
83
—
167
—
Depreciation and amortization
489
321
973
801
Property and other taxes
103
93
214
203
Impairment and other
(18)
170
(18)
166
Other operating income
—
(2)
—
(3)
Total operating expenses
2,487
2,312
4,975
4,784
Operating income
500
500
802
852
Interest expense
(229)
(211)
(454)
(405)
Other income
81
55
133
93
Income before taxes
352
344
481
540
Income tax expense (benefit)
4
(78)
(80)
(190)
Net income
348
422
561
730
Preferred and preference stock dividend
requirements of SCE
30
30
60
60
Net income attributable to Edison
International common shareholders
$
318
$
392
$
501
$
670
Basic earnings per share:
Weighted average shares of common stock
outstanding
375
326
367
326
Basic earnings per common share
attributable to Edison International common shareholders:
$
0.85
$
1.20
$
1.37
$
2.05
Diluted earnings per share:
Weighted average shares of common stock
outstanding, including effect of dilutive securities
376
327
368
327
Diluted earnings per common share
attributable to Edison International common shareholders
$
0.85
$
1.20
$
1.36
$
2.05
Consolidated Balance Sheets
Edison International
(in millions, unaudited)
June 30, 2020
December 31, 2019
ASSETS
Cash and cash equivalents
$
524
$
68
Receivables, less allowances of $91 and
$50 accounts at respective dates
936
788
Accrued unbilled revenue
629
488
Inventory
382
364
Income tax receivables
108
118
Prepaid expenses
49
214
Regulatory assets
1,692
1,009
Wildfire Insurance Fund contributions
323
323
Other current assets
153
188
Total current assets
4,796
3,560
Nuclear decommissioning trusts
4,566
4,562
Other investments
84
64
Total investments
4,650
4,626
Utility property, plant and equipment,
less accumulated depreciation and amortization of $10,371 and
$9,958 at respective dates
45,386
44,198
Nonutility property, plant and equipment,
less accumulated depreciation of $90 and $86 at respective
dates
167
87
Total property, plant and
equipment
45,553
44,285
Regulatory assets
6,528
6,088
Wildfire Insurance Fund contributions
2,606
2,767
Operating lease right-of-use assets
672
693
Other long-term assets
2,246
2,363
Total long-term assets
12,052
11,911
Total assets
$
67,051
$
64,382
Consolidated Balance Sheets
Edison International
(in millions, except share amounts,
unaudited)
June 30, 2020
December 31, 2019
LIABILITIES AND EQUITY
Short-term debt
$
475
$
550
Current portion of long-term debt
1,029
479
Accounts payable
1,657
1,752
Accrued interest
312
261
Customer deposits
281
302
Regulatory liabilities
857
972
Current portion of operating lease
liabilities
65
80
Other current liabilities
1,223
1,127
Total current liabilities
5,899
5,523
Long-term debt
19,238
17,864
Deferred income taxes and credits
5,295
5,078
Pensions and benefits
656
674
Asset retirement obligations
3,013
3,029
Regulatory liabilities
8,395
8,385
Operating lease liabilities
607
613
Wildfire-related claims
4,561
4,568
Other deferred credits and other long-term
liabilities
2,941
3,152
Total deferred credits and other
liabilities
25,468
25,499
Total liabilities
50,605
48,886
Commitments and contingencies
Common stock, no par value (800,000,000
shares authorized; 378,207,496 and 361,985,133 shares issued and
outstanding at respective dates)
5,908
4,990
Accumulated other comprehensive loss
(65)
(69)
Retained earnings
8,410
8,382
Total Edison International's common
shareholders' equity
14,253
13,303
Noncontrolling interests – preferred and
preference stock of SCE
2,193
2,193
Total equity
16,446
15,496
Total liabilities and equity
$
67,051
$
64,382
Consolidated Statements of Cash
Flows
Edison International
Six months ended June 30,
(in millions, unaudited)
2020
2019
Cash flows from operating
activities:
Net income
$
561
$
730
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization
1,005
837
Allowance for equity during
construction
(51)
(49)
Impairment and other
(18)
166
Deferred income taxes
(58)
(182)
Wildfire Insurance Fund amortization
expense
167
—
Other
32
13
Nuclear decommissioning trusts
(62)
(72)
Changes in operating assets and
liabilities:
Receivables
(108)
(72)
Inventory
(19)
(49)
Accounts payable
14
221
Tax receivables and payables
31
65
Other current assets and liabilities
(23)
(423)
Regulatory assets and liabilities, net
(927)
(543)
Wildfire-related insurance receivable
73
—
Other noncurrent assets and
liabilities
8
(44)
Net cash provided by operating
activities
625
598
Cash flows from financing
activities:
Long-term debt issued, plus premium and
net of discount and issuance costs of $26 and $(18) for the
respective periods
2,726
1,682
Long-term debt repaid or repurchased
(814)
(41)
Term loan issued
1,275
1,750
Term loan repaid
(800)
(750)
Common stock issued
884
—
Short-term debt financing, net
(550)
(509)
Payments for stock-based compensation
(3)
(48)
Receipts from stock option exercises
14
25
Dividends and distribution to
noncontrolling interests
(60)
(60)
Dividends paid
(454)
(399)
Other
5
1
Net cash provided by financing
activities
2,223
1,651
Cash flows from investing
activities:
Capital expenditures
(2,514)
(2,235)
Proceeds from sale of nuclear
decommissioning trust investments
3,225
2,440
Purchases of nuclear decommissioning trust
investments
(3,163)
(2,368)
Other
60
27
Net cash used in investing
activities
(2,392)
(2,136)
Net increase in cash, cash equivalents and
restricted cash
456
113
Cash, cash equivalents and restricted cash
at beginning of period
70
152
Cash, cash equivalents and restricted
cash at end of period
$
526
$
265
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005899/en/
Investor Relations: Sam Ramraj, (626) 302-2540 Media Contact:
Jeff Monford, (626) 476-8120
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