Edison International Reports First Quarter 2020 Results

ROSEMEAD, Calif.–(BUSINESS WIRE)–Edison International (NYSE: EIX) today reported first quarter 2020 net income of $183 million, or $0.50 per share, compared to net income of $278 million, or $0.85 per share, in the first quarter 2019. As adjusted, first quarter 2020 core earnings were $228 million, or $0.63 per share, compared to core earnings of $206 million, or $0.63 per share, in the first quarter 2019.

Southern California Edison’s (SCE) first quarter 2020 net income of $219 million, or $0.60 per share, was lower compared to net income of $293 million, or $0.90 per share, in the first quarter 2019. SCE’s first quarter 2020 earnings per share (EPS) decreased by $0.30 from the prior year period, consisting of $0.04 of higher core EPS and $0.34 of higher non-core loss per share. Higher core EPS was primarily due to timing of the receipt of the 2018 General Rate Case (GRC) final decision in the second quarter of 2019 and higher Federal Energy Regulatory Commission (FERC) revenue, partially offset by the increase in shares outstanding and higher operation and maintenance expenses, primarily from higher vegetation management expenses.

SCE’s higher non-core loss per share was mainly attributable to the absence of $69 million, or $0.21 per share, of income tax benefits recorded in the first quarter 2019 related to changes in the allocation of deferred tax re-measurement between customers and shareholders as a result of a CPUC resolution, and an after-tax expense recorded in 2020 of $60 million, or $0.17 per share, from the amortization of SCE’s contributions to the Wildfire Insurance Fund. These were partially offset by an income tax benefit of $18 million, or $0.05 per share, recorded in 2020 due to re-measurement of uncertain tax positions related to the 2010-2012 California state tax filings currently under audit.

Edison International Parent and Other’s first quarter 2020 net loss of $36 million, or $0.10 loss per share, was higher than a net loss of $15 million, or $0.05 loss per share, reported in the first quarter 2019. Edison International Parent and Other’s first quarter 2020 loss per share increased by $0.05 compared to first quarter 2019, consisting of $0.04 of higher core loss per share and $0.01 of higher non-core loss per share. 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 income tax expense of $3 million, or $0.01 loss per share, recorded in 2020 due to re-measurement of uncertain tax positions related to the 2010-2012 California state tax filings currently under audit.

“Edison International remains focused on supporting our customers and our communities impacted by COVID-19. We also are focused on ensuring the safety and health of our employees and providing them with the resources necessary to maintain critical operations,” said Pedro J. Pizarro, president and chief executive officer of Edison International. “We continue to perform critical work related to public safety and reliability, while deferring non-critical outages when our communities are staying at home.”

Pizarro added, “Additionally, SCE continues to make significant progress to mitigate wildfire risk through hardening infrastructure, bolstering situational awareness capabilities and enhancing operational practices, while implementing enhanced data analytics and technology. We are executing these programs as expeditiously as possible as they are critical to ensuring the safety of our communities and are viewed as essential by the State.”

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 reaffirmed its earnings guidance range for 2020 as summarized in the following chart. See the presentation accompanying the company’s conference call for further information including key guidance assumptions.

2020 Earnings Guidance

 

 

2020 Earnings Guidance

 

2020 Earnings Guidance

 

as of February 27, 2020

 

as of April 30, 2020

 

Low

Mid

High

 

Low

High

EIX Basic EPS

$4.32

$4.47

$4.62

 

$4.19

$4.49

Less: Non-core Items*

 

(0.13)

(0.13)

EIX Core EPS

$4.32

$4.47

$4.62

 

$4.32

$4.62

* There were ($45) million, or ($0.13) per share of non-core items recorded for the three months ended March 31, 2020, calculated based on an assumed weighted average share count for 2020 which was originally provided on February 27, 2020.

First 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:

Thursday, April 30, 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:

1-866-397-8265 (US) and 1-203-369-0540 (Int’l) – Passcode: 5284

 

Telephone replay available through May 15, 2020

Webcast:

www.edisoninvestor.com

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 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 regulatory and legislative authorities, including decisions and actions related to 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 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 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.

First Quarter Reconciliation of Basic Earnings Per Share to Core Earnings Per Share

 

Three months ended

March 31,

 

 

 

2020

 

2019

 

Change

Earnings (loss) per share attributable to Edison International

 

 

 

 

 

Continuing operations

 

 

 

 

 

SCE

$

0.60

 

 

$

0.90

 

 

$

(0.30

)

Edison International Parent and Other

(0.10

)

 

(0.05

)

 

(0.05

)

Edison International

0.50

 

 

0.85

 

 

(0.35

)

Less: Non-core items

 

 

 

 

 

SCE

(0.12

)

 

0.22

 

 

(0.34

)

Edison International Parent and Other

(0.01

)

 

 

 

(0.01

)

Total non-core items

(0.13

)

 

0.22

 

 

(0.35

)

Core earnings (losses)

 

 

 

 

 

SCE

0.72

 

 

0.68

 

 

0.04

 

Edison International Parent and Other

(0.09

)

 

(0.05

)

 

(0.04

)

Edison International

$

0.63

 

 

$

0.63

 

 

$

 

Note: Diluted earnings were $0.50 and $0.85 per share for the three months ended March 31, 2020 and 2019, respectively.

 

First Quarter Reconciliation of Basic Earnings Per Share to Core Earnings (in millions)

 

Three months ended

March 31,

 

 

(in millions)

2020

 

2019

 

Change

Net income (loss) attributable to Edison International

 

 

 

 

 

Continuing operations

 

 

 

 

 

SCE

$

219

 

 

$

293

 

 

$

(74

)

Edison International Parent and Other

(36

)

 

(15

)

 

(21

)

Edison International

183

 

 

278

 

 

(95

)

Less: Non-core items

 

 

 

 

 

SCE1,2,3

(42

)

 

72

 

 

(114

)

Edison International Parent and Other2

(3

)

 

 

 

(3

)

Total non-core items

(45

)

 

72

 

 

(117

)

Core earnings (losses)

 

 

 

 

 

SCE

261

 

 

221

 

 

40

 

Edison International Parent and Other

(33

)

 

(15

)

 

(18

)

Edison International

$

228

 

 

$

206

 

 

$

22

 

1

Includes amortization of SCE’s Wildfire Insurance Fund expenses of $84 million ($60 million after-tax) for the quarter ended March 31, 2020.

2

Includes income tax benefit of $18 million and income tax expense of $3 million recorded in 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.

 
 

Consolidated Statements of Income

Edison International

 

 

 

 

 

Three months ended March 31,

(in millions, except per-share amounts, unaudited)

2020

 

2019

Total operating revenue

$

2,790

 

 

$

2,824

 

Purchased power and fuel

928

 

 

1,005

 

Operation and maintenance

881

 

 

882

 

Wildfire Insurance Fund expense

84

 

 

 

Depreciation and amortization

484

 

 

480

 

Property and other taxes

111

 

 

110

 

Other operating income

 

 

(5

)

Total operating expenses

2,488

 

 

2,472

 

Operating income

302

 

 

352

 

Interest expense

(225

)

 

(194

)

Other income

52

 

 

38

 

Income before taxes

129

 

 

196

 

Income tax benefit

(84

)

 

(112

)

Net income

213

 

 

308

 

Preferred and preference stock dividend requirements of SCE

30

 

 

30

 

Net income attributable to Edison International common shareholders

$

183

 

 

$

278

 

Basic earnings per share:

 

 

 

Weighted average shares of common stock outstanding

363

 

 

326

 

Basic earnings per common share attributable to Edison International common

Shareholders

$

0.50

 

 

$

0.85

 

Diluted earnings per share:

 

 

 

Weighted average shares of common stock outstanding, including effect of dilutive securities

364

 

 

327

 

Diluted earnings per common share attributable to Edison International common shareholders

$

0.50

 

 

$

0.85

 

 
 

Consolidated Balance Sheets

Edison International

 

 

 

 

(in millions, unaudited)

March 31,

2020

 

December 31,

2019

ASSETS

 

 

 

Cash and cash equivalents

$

1,337

 

 

$

68

 

Receivables, less allowances of $60 and $50 for uncollectible accounts at respective dates

795

 

 

788

 

Accrued unbilled revenue

409

 

 

488

 

Inventory

363

 

 

364

 

Income tax receivables

131

 

 

118

 

Prepaid expenses

158

 

 

214

 

Derivative assets

51

 

 

81

 

Regulatory assets

1,225

 

 

1,009

 

Wildfire Insurance Fund contributions

323

 

 

323

 

Other current assets

119

 

 

107

 

Total current assets

4,911

 

 

3,560

 

Nuclear decommissioning trusts

4,267

 

 

4,562

 

Other investments

74

 

 

64

 

Total investments

4,341

 

 

4,626

 

Utility property, plant and equipment, less accumulated depreciation and amortization of $10,147 and $9,958 at respective dates

44,733

 

 

44,198

 

Nonutility property, plant and equipment, less accumulated depreciation of $88 and $86 at respective dates

87

 

 

87

 

Total property, plant and equipment

44,820

 

 

44,285

 

Regulatory assets

6,294

 

 

6,088

 

Wildfire Insurance Fund contributions

2,687

 

 

2,767

 

Operating lease right-of-use assets

683

 

 

693

 

Other long-term assets

2,290

 

 

2,363

 

Total long-term assets

11,954

 

 

11,911

 

 

 

 

 

Total assets

$

66,026

 

 

$

64,382

 

 
 

Consolidated Balance Sheets

Edison International

 

 

 

 

(in millions, except share amounts, unaudited)

March 31,

2020

 

December 31,

2019

LIABILITIES AND EQUITY

 

 

 

Short-term debt

$

1,275

 

 

$

550

 

Current portion of long-term debt

901

 

 

479

 

Accounts payable

1,454

 

 

1,752

 

Customer deposits

298

 

 

302

 

Regulatory liabilities

764

 

 

972

 

Current portion of operating lease liabilities

74

 

 

80

 

Other current liabilities

1,482

 

 

1,388

 

Total current liabilities

6,248

 

 

5,523

 

Long-term debt

19,125

 

 

17,864

 

Deferred income taxes and credits

5,173

 

 

5,078

 

Pensions and benefits

664

 

 

674

 

Asset retirement obligations

3,027

 

 

3,029

 

Regulatory liabilities

8,113

 

 

8,385

 

Operating lease liabilities

609

 

 

613

 

Wildfire-related claims

4,568

 

 

4,568

 

Other deferred credits and other long-term liabilities

2,955

 

 

3,152

 

Total deferred credits and other liabilities

25,109

 

 

25,499

 

Total liabilities

50,482

 

 

48,886

 

Commitments and contingencies

 

 

 

Common stock, no par value (800,000,000 shares authorized; 363,476,346 and 361,985,133 shares issued and outstanding at respective dates)

5,085

 

 

4,990

 

Accumulated other comprehensive loss

(67

)

 

(69

)

Retained earnings

8,333

 

 

8,382

 

Total Edison International’s common shareholders’ equity

13,351

 

 

13,303

 

Noncontrolling interests – preferred and preference stock of SCE

2,193

 

 

2,193

 

Total equity

15,544

 

 

15,496

 

 

 

 

 

Total liabilities and equity

$

66,026

 

 

$

64,382

 

 
 

Consolidated Statements of Cash Flows

Edison International

 

 

 

Three months ended March 31,

(in millions, unaudited)

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income

$

213

 

 

$

308

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

Depreciation and amortization

501

 

 

498

 

Allowance for equity during construction

(21

)

 

(17

)

Deferred income taxes

(58

)

 

(114

)

Wildfire Insurance Fund amortization expense

84

 

 

 

Other

23

 

 

1

 

Nuclear decommissioning trusts

14

 

 

(73

)

Changes in operating assets and liabilities:

 

 

 

Receivables

(30

)

 

9

 

Inventory

1

 

 

(30

)

Accounts payable

(129

)

 

31

 

Tax receivables and payables

31

 

 

82

 

Other current assets and liabilities

41

 

 

(381

)

Regulatory assets and liabilities, net

(372

)

 

(96

)

Wildfire-related insurance receivable

58

 

 

 

Other noncurrent assets and liabilities

(41

)

 

(8

)

Net cash provided by operating activities

315

 

 

210

 

Cash flows from financing activities:

 

 

 

Long-term debt issued, net of premium, discount and issuance costs of $19 and $(13) for the respective periods

1,719

 

 

1,087

 

Long-term debt repaid

(40

)

 

(40

)

Term loan issued

1,275

 

 

750

 

Common stock issued

74

 

 

 

Short-term debt financing, net

(550

)

 

(538

)

Payments for stock-based compensation

(3

)

 

(41

)

Receipts from stock option exercises

13

 

 

22

 

Dividends and distribution to noncontrolling interests

(36

)

 

(36

)

Dividends paid

(226

)

 

(200

)

Other

5

 

 

5

 

Net cash provided by financing activities

2,231

 

 

1,009

 

Cash flows from investing activities:

 

 

 

Capital expenditures

(1,268

)

 

(1,074

)

Proceeds from sale of nuclear decommissioning trust investments

1,407

 

 

1,208

 

Purchases of nuclear decommissioning trust investments

(1,421

)

 

(1,135

)

Other

4

 

 

15

 

Net cash used in investing activities

(1,278

)

 

(986

)

Net increase in cash, cash equivalents and restricted cash

1,268

 

 

233

 

Cash, cash equivalents and restricted cash at beginning of period

70

 

 

152

 

Cash, cash equivalents and restricted cash at end of period

$

1,338

 

 

$

385

 

 

Contacts

Investor relations contact:
Sam Ramraj, (626) 302-2540

Media relations contact:
Ron Gales, (626) 302-7927

error: Content is protected !!