10-QPeriod: Q1 FY2013

EDISON INTERNATIONAL Quarterly Report for Q1 Ended Mar 31, 2013

Filed April 30, 2013For Securities:EIX

Summary

Edison International reported a significant increase in net income attributable to common shareholders for the first quarter of 2013 compared to the same period in 2012, driven primarily by improved performance at its subsidiary, Southern California Edison (SCE). SCE experienced higher operating revenue due to the finalization of its 2012 General Rate Case and lower operating expenses, including reduced costs associated with the San Onofre nuclear plant outage. However, the company's financial results and future outlook are significantly impacted by ongoing challenges. The most prominent issue is the continued outage of the San Onofre Nuclear Generating Station, which has led to substantial costs and regulatory scrutiny. Additionally, the bankruptcy of EME (Edison Mission Energy) has been deconsolidated, representing a significant non-core item. Investors should closely monitor the regulatory proceedings surrounding San Onofre and the eventual resolution of the EME bankruptcy for potential impacts on future financial performance and liquidity.

Financial Highlights

43 data points
Beta

Revenue

$2.63B

Net Income

$298.00M

11.3% Net Margin

EPS (Diluted)

$0.82

Total Assets

$45.16B

Cash & Equivalents

$115.00M

Free Cash Flow

-$473.00M

Financial Statements
Beta
Revenue$2.63B
Operating Expenses$2.14B
Operating Income$492.00M
Interest Expense$131.00M
Net Income$298.00M
EPS (Basic)$0.83
EPS (Diluted)$0.82
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)329.00M

Key Highlights

  • 1Edison International reported a substantial increase in net income attributable to common shareholders, rising to $271 million in Q1 2013 from $93 million in Q1 2012.
  • 2Southern California Edison (SCE), the main subsidiary, saw its net income available for common stock increase by $74 million year-over-year, primarily due to the finalization of its 2012 General Rate Case and lower operating expenses.
  • 3The San Onofre Nuclear Generating Station remains offline due to steam generator issues, incurring significant costs and facing ongoing regulatory investigations and potential disallowances by the CPUC.
  • 4EME (Edison Mission Energy) and its subsidiaries have filed for Chapter 11 bankruptcy protection, leading to its deconsolidation from Edison International's financial statements, with its operations classified as discontinued.
  • 5Despite operational improvements, the company faces ongoing regulatory and operational challenges, including the potential for material disallowances of San Onofre-related costs and the uncertainty surrounding the EME bankruptcy resolution.
  • 6Capital expenditures remain substantial, with SCE investing heavily in transmission, distribution, and generation infrastructure, totaling $979 million in Q1 2013.
  • 7The company's liquidity remains adequate, supported by available credit facilities, although potential collateral requirements related to derivative instruments and credit rating downgrades warrant attention.

Frequently Asked Questions

The primary driver for the increase in net income attributable to common shareholders was the improved performance of its subsidiary, Southern California Edison (SCE). This improvement was mainly due to the finalization of SCE's 2012 General Rate Case, which allowed for retroactive revenue recovery, and lower operating expenses, partly stemming from reduced costs associated with the San Onofre nuclear plant outage.

The most significant risks include the ongoing outage of the San Onofre Nuclear Generating Station, which is incurring substantial costs and facing intense regulatory scrutiny from the CPUC and NRC, potentially leading to cost disallowances. The bankruptcy of EME and its deconsolidation also presents uncertainty regarding potential residual liabilities and recovery of investment. Other risks involve regulatory decisions, capital market access, operational issues at power facilities, and environmental regulations.

The extended outage of San Onofre is a major financial concern. It has led to significant inspection, repair, and replacement power costs, which are being tracked in a memorandum account subject to CPUC review for cost recovery. The company is also engaged in a dispute with the steam generator supplier (MHI) and is pursuing insurance claims. There is a substantial risk of cost disallowances by the CPUC, which could materially affect Edison International's financial condition and results of operations. The future restart of the units and their operational capabilities remain uncertain.

EME and certain subsidiaries filed for Chapter 11 bankruptcy protection. Edison International deconsolidated EME effective December 17, 2012, and no longer consolidates its earnings or losses. EME's operations prior to this date are reported as discontinued operations. Edison International has recorded a full impairment of its investment in EME. While Edison International anticipates ceasing to own EME upon its emergence from bankruptcy as per a support agreement, uncertainties remain regarding the approval and consummation of the settlement transaction, and potential liabilities EME may have to Edison International.