10-QPeriod: Q2 FY2012

EDISON INTERNATIONAL Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 31, 2012For Securities:EIX

Summary

Edison International's second quarter 2012 filing reveals a significant decrease in net income attributable to common shareholders, primarily driven by a substantial loss from its competitive power generation segment (EMG). While the electric utility segment (SCE) showed stable performance, EMG's operating losses widened due to lower energy prices and reduced generation. A major concern highlighted is EMG's precarious liquidity situation, with a significant upcoming debt maturity in June 2013, raising the possibility of a Chapter 11 bankruptcy filing. Separately, SCE is facing operational challenges at its San Onofre nuclear facility, leading to extended outages and significant replacement power costs. These costs are expected to be recoverable through regulatory mechanisms, but the uncertainty surrounding the plant's future operation and associated costs remains a key point of attention for investors. The company is actively managing its capital structure and liquidity through credit facilities and debt issuances.

Financial Highlights

43 data points
Beta

Revenue

$2.65B

Net Income

$98.00M

3.7% Net Margin

EPS (Diluted)

$0.22

Total Assets

$49.39B

Cash & Equivalents

$1.18B

Free Cash Flow

-$453.00M

Financial Statements
Beta
Revenue$2.65B
Operating Expenses$2.23B
Operating Income$420.00M
Interest Expense$134.00M
Net Income$98.00M
EPS (Basic)$0.23
EPS (Diluted)$0.22
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)334.00M

Key Highlights

  • 1Edison International reported a consolidated net income attributable to common shareholders of $74 million for the three months ended June 30, 2012, down from $176 million in the prior year period.
  • 2The competitive power generation segment (EMG) reported a net loss of $110 million for the quarter, a significant increase from a $31 million loss in the prior year, driven by lower energy prices and generation.
  • 3EMG's liquidity is a major concern, with the company facing potential bankruptcy if its obligations are not restructured, particularly the $500 million debt maturing in June 2013.
  • 4Southern California Edison (SCE) experienced extended outages at its San Onofre nuclear facility due to steam generator issues, incurring significant replacement power costs.
  • 5SCE's 2012 General Rate Case decision is pending, impacting current revenue recognition as higher expenses are not yet fully recovered.
  • 6The company replaced its revolving credit facilities with new, longer-term agreements to ensure liquidity.
  • 7Edison International's consolidated operating revenue increased slightly to $3.06 billion from $2.98 billion year-over-year for the quarter.

Frequently Asked Questions

The primary driver of the decline in Edison International's net income for the quarter was the significant increase in losses from its competitive power generation segment (EMG). Lower energy prices and reduced generation at Midwest Generation plants, coupled with higher fuel costs, contributed to widening operating losses in this segment.

The main concerns regarding EMG's financial health are its deteriorating liquidity and potential for bankruptcy. EMG has significant debt obligations, including a $500 million maturity in June 2013, and is facing ongoing operating losses. Without a successful restructuring of its obligations, EMG may need to file for Chapter 11 bankruptcy protection.

Southern California Edison (SCE) has experienced extended outages at its San Onofre nuclear facility due to issues with its steam generators. This has resulted in significant replacement power costs, which are expected to be recoverable through regulatory mechanisms subject to reasonableness review. However, the uncertainty surrounding the plant's future operation and the ultimate cost of repairs or potential replacement remains a key concern.

Edison International has taken steps to ensure liquidity by replacing its credit facilities with new, longer-term revolving credit agreements. The company also issues debt and preferred equity to fund its capital program and meet its obligations. However, the overarching liquidity concerns for EMG remain a significant challenge.