Edison International (NYSE: EIX) today reported first quarter
2019 net income of $278 million, or $0.85 per share, compared to
net income of $218 million, or $0.67 per share, in the first
quarter 2018. As adjusted, first quarter 2019 core earnings were
$206 million, or $0.63 per share, compared to core earnings of $262
million, or $0.80 per share, in the first quarter 2018.
Southern California Edison (SCE) received its proposed decision
from the California Public Utilities Commission (CPUC) on its 2018
General Rate Case (GRC) on April 12, 2019. However, it is SCE's
policy to account for regulatory decisions in the period in which
they were received. Consequently, during the first quarter 2019,
SCE recognized revenue from CPUC activities largely based on 2017
authorized base revenue requirements with reserves taken for known
items, including the July 2017 cost of capital decision and the Tax
Cuts and Jobs Act (Tax Reform). The revenue requirement ultimately
adopted by the CPUC will be retroactive to January 1, 2018.
SCE's first quarter 2019 earnings increased by $7 million, or
$0.02 per share, from the first quarter 2018, consisting of $72
million, or $0.22 per share, of higher non-core earnings and $65
million, or $0.20 per share, of lower core earnings. The decrease
in core earnings was primarily due to wildfire mitigation expenses
and higher net financing costs, partially offset by a 2018 refund
to customers for prior overcollections. The higher non-core
earnings for the first quarter 2019 were mainly related to the $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 first quarter 2019 loss
from continuing operations decreased by $53 million, or $0.16 per
share, compared to first quarter 2018, consisting of $9 million, or
$0.03 per share, of lower core losses and $44 million, or $0.13 per
share, of lower non-core losses. The decrease in core losses was
mainly due to lower corporate expenses and decreased losses at the
competitive businesses under Edison Energy Group. The lower
non-core losses for the first quarter 2019 were primarily related
to the absence of a $48 million, or $0.15 per share, after-tax
impairment charge recorded in 2018 resulting from an agreement to
sell SoCore Energy.
“We remain focused on mitigating increased wildfire risk and its
related financial impacts on our communities and the health of the
state’s electric utilities,” said Pedro Pizarro, president and
chief executive officer of Edison International. “Additionally, we
are focused on recent significant regulatory and policy
developments, including the strike force proposal led by Governor
Newsom’s administration, the issuance of our 2018 GRC proposed
decision, and the filing of both our CPUC cost of capital and FERC
transmission rate cases.”
Pizarro added, “To address significant rate base growth
opportunities and the capital structure changes requested in SCE’s
cost of capital proceeding, we announced a financing plan with a
balanced approach to issuing equity and debt. These opportunities
will enable us to continue supporting California’s clean energy
future.”
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.
2019 Financing Plan
Edison International has evaluated a range of potential funding
options to efficiently finance future investments at SCE. In the
next 12 months, Edison International expects to fund its net cash
requirements through capital market and bank financings, including
issuing additional debt and equity, as needed.
In April 2019, Edison International registered additional shares
of its common stock with the SEC. Edison International anticipates
issuing up to $1.5 billion of registered shares of common stock,
including through designated broker-dealers at prevailing market
prices (an at-the-market offering) and through its existing 401(k),
executive compensation and dividend reinvestment plans, and
anticipates using the proceeds for equity contributions to SCE and
for general corporate and working capital purposes. Additionally,
in April 2019, Edison International entered into a $1.0 billion
term loan. Of the proceeds of the term loan, $750 million was
contributed to SCE and the remainder of the proceeds will be used
for general corporate and working capital purposes.
2019 Earnings Guidance
Edison International will provide 2019 earnings guidance after a
final decision has been issued by the CPUC on the Southern
California Edison 2018 GRC. This is consistent with the company's
practice of not providing earnings guidance prior to a decision on
its GRC. See the presentation accompanying the company’s conference
call for further information.
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;
- 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
determinations of authorized rates of return or return on equity,
the 2018 GRC, the GS&RP application, the 2019 WMP, 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:
Tuesday, April 30, 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:
1-866-436-9392 (US) and 1-203-369-1038
(Int’l) - Passcode: 9856
Telephone replay available through May 16,
2019
Webcast:
www.edisoninvestor.com
First Quarter Reconciliation of Basic
Earnings Per Share to Core Earnings Per Share
Three months ended March 31, 2019
2018 Change Earnings (loss) per share
attributable to Edison International Continuing operations
SCE $ 0.90 $ 0.88 $ 0.02 Edison International Parent and
Other (0.05 ) (0.21 ) 0.16
Edison International 0.85 0.67
0.18 Less: Non-core items SCE 0.22 — 0.22 Edison
International Parent and Other — (0.13 )
0.13 Total non-core items 0.22
(0.13 ) 0.35 Core earnings (losses) SCE
0.68 0.88 (0.20 ) Edison International Parent and Other (0.05 )
(0.08 ) 0.03 Edison
International $ 0.63 $ 0.80
$ (0.17 )
Note: Diluted earnings were $0.85 and $0.67 per share for the
three months ended March 31, 2019 and 2018 respectively.
First Quarter Reconciliation of Basic
Earnings to Core Earnings (in millions)
Three months ended March 31, (in millions) 2019
2018 Change Net income (loss)
attributable to Edison International Continuing operations
SCE $ 293 $ 286 $ 7 Edison International Parent and Other
(15 ) (68 ) 53 Edison
International 278 218 60
Less: Non-core items SCE1 72 — 72 Edison International
Parent and Other2 — (44 ) 44
Total non-core items 72 (44 )
116 Core earnings (losses) SCE 221 286 (65 ) Edison
International Parent and Other (15 ) (24 )
9 Edison International $ 206
$ 262 $ (56 )
1
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
Losses in 2018 primarily related to
impairment and other charges of $66 million ($48 million after-tax)
resulting from Edison International's agreement to sell SoCore
Energy to a third party.
Consolidated Statements of
Income Edison International Three months
ended March 31,
(in millions, except per-share amounts,
unaudited)
2019
2018
Total operating revenue $ 2,824 $ 2,564
Purchased power and fuel 1,005 926 Operation and maintenance
882 675 Depreciation and amortization 480 462 Property and other
taxes 110 107 Impairment and other (4 ) 66 Other operating income
(1 ) (2 )
Total operating expenses 2,472
2,234
Operating income 352 330
Interest expense (194 ) (170 ) Other income and expenses 38
51
Income from continuing operations before
income taxes 196 211 Income tax benefit (112 )
(31 )
Income from continuing operations 308
242
Net income 308 242 Preferred and
preference stock dividend requirements of SCE 30 30 Other
noncontrolling interests — (6 )
Net income
attributable to Edison International common shareholders $ 278
$ 218
Amounts attributable to Edison
International common shareholders: Income from continuing
operations, net of tax $ 278 $ 218
Net income attributable to
Edison International common shareholders $ 278
$ 218
Basic earnings per share:
Weighted-average shares of common stock outstanding 326 326
Continuing operations $ 0.85 $ 0.67
Basic earnings per common share attributable to Edison
International common shareholders $ 0.85 $
0.67
Diluted earnings per share: Weighted-average
shares of common stock outstanding, including effect of dilutive
securities 327 327 Continuing operations $ 0.85
$ 0.67
Diluted earnings per common share
attributable to Edison International common shareholders: $
0.85 $ 0.67
Consolidated Balance Sheets Edison
International (in millions, unaudited)
March 31,2019
December 31,2018
ASSETS Cash and cash equivalents $ 328 $ 144 Receivables,
less allowances of $49 and $52 for uncollectible accounts at
respective dates 716 730 Accrued unbilled revenue 459 482 Inventory
312 282 Income tax receivables 192 191 Prepaid expenses 465 148
Derivative assets 101 171 Regulatory assets 1,286 1,133 Other
current assets 140 78
Total current
assets 3,999 3,359 Nuclear decommissioning
trusts 4,291 4,120 Other investments 76 63
Total investments 4,367 4,183 Utility
property, plant and equipment, less accumulated depreciation and
amortization of $9,671 and $9,566 at respective dates 41,678 41,269
Nonutility property, plant and equipment, less accumulated
depreciation of $82 at both dates 86 79
Total property, plant and equipment 41,764
41,348 Regulatory assets 5,268 5,380 Operating lease
right-of-use assets 933 — Other long-term assets 2,462
2,445
Total long-term assets 8,663
7,825
Total assets
$ 58,793
$ 56,715
Consolidated Balance Sheets Edison International
(in millions, except share amounts, unaudited)
March 31,2019
December 31,2018
LIABILITIES AND EQUITY Short-term debt $ 932 $ 720 Current
portion of long-term debt 79 79 Accounts payable 1,366 1,511
Accrued taxes 104 21 Customer deposits 303 299 Regulatory
liabilities 1,295 1,532 Current portion of operating lease
liabilities 157 — Other current liabilities 1,139
1,233
Total current liabilities 5,375
5,395
Long-term debt 15,683
14,632 Deferred income taxes and credits 4,685
4,576 Pensions and benefits 869 869 Asset retirement obligations
2,999 3,031 Regulatory liabilities 8,588 8,329 Operating lease
liabilities 776 — Wildfire-related claims 4,669 4,669 Other
deferred credits and other long-term liabilities 2,430
2,562
Total deferred credits and other
liabilities 25,016 24,036
Total
liabilities 46,074 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) 2,550 2,545 Accumulated other
comprehensive loss (58 ) (50 ) Retained earnings 8,034
7,964
Total Edison International's common
shareholders' equity 10,526 10,459 Noncontrolling interests –
preferred and preference stock of SCE 2,193
2,193
Total equity 12,719 12,652
Total liabilities and
equity $ 58,793 $ 56,715
Consolidated
Statements of Cash Flows Edison International
Three months ended March 31, (in millions, unaudited) 2019
2018
Cash flows from operating activities:
Net income $ 308 $ 242 Adjustments to reconcile to
net cash provided by operating activities: Depreciation and
amortization 498 479 Allowance for equity during construction (17 )
(22 ) Impairment and other (4 ) 66 Deferred income taxes and
investment tax credits (114 ) 4 Other 5 17 Nuclear decommissioning
trusts (73 ) (24 ) Changes in operating assets and liabilities:
Receivables 9 77 Inventory (30 ) (7 ) Accounts payable 31 (216 )
Tax receivables and payables 82 162 Other current assets and
liabilities (381 ) (277 ) Regulatory assets and liabilities, net
(96 ) 405 Other noncurrent assets and liabilities (8 )
(47 )
Net cash provided by operating activities 210
859
Cash flows from financing
activities: Long-term debt issued, net of discount and issuance
costs of $13 and $17 for the respective periods 1,087 1,783 Term
loan issued 750 — Long-term debt matured (40 ) (41 ) Short-term
debt financing, net (538 ) (2,261 ) Payments for stock-based
compensation (41 ) (10 ) Receipts from stock option exercises 22 2
Dividends to noncontrolling interests (36 ) (36 ) Dividends paid
(200 ) (197 ) Other 5 15
Net cash
provided by (used in) financing activities 1,009
(745 )
Cash flows from investing activities: Capital
expenditures (1,074 ) (1,137 ) Proceeds from sale of nuclear
decommissioning trust investments 1,208 931 Purchases of nuclear
decommissioning trust investments (1,135 ) (907 ) Other 15
16
Net cash used in investing
activities (986 ) (1,097 )
Net increase
(decrease) in cash, cash equivalent and restricted cash including
cash held for sale 233 (983 ) Less: Net increase in cash held
for sale — 43 Net increase (decrease)
in cash, cash equivalent and restricted cash 233
(1,026 ) Cash, cash equivalents and restricted cash at
beginning of period 152 1,132
Cash,
cash equivalents and restricted cash at end of period $
385 $ 106
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Investor relations contact:Sam Ramraj, (626) 302-2540
Media relations contact:Charles Coleman, (626)
302-7982
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