10-QPeriod: Q2 FY2014

EDISON INTERNATIONAL Quarterly Report for Q2 Ended Jun 30, 2014

Filed July 31, 2014For Securities:EIX

Summary

Edison International (EIX) reported solid financial results for the second quarter and first half of 2014, demonstrating a significant recovery from the previous year's performance. Net income attributable to common shareholders for the quarter rose to $536 million ($1.63 per diluted share) from a loss of $94 million ($-0.29 per diluted share) in the prior year's comparable period. For the six-month period, net income was $712 million ($2.17 per diluted share), a substantial increase from $227 million ($0.54 per diluted share) in the first half of 2013. The strong performance was largely driven by improvements in continuing operations, particularly at Southern California Edison (SCE), which benefited from higher authorized revenues, income tax benefits, and lower operation and maintenance expenses. A significant contributor to the year-over-year improvement was the resolution of the San Onofre nuclear plant issues, with a settlement agreement impacting reported results. Additionally, the completion of the EME Chapter 11 bankruptcy proceedings and related settlement agreement provided a notable boost to earnings from discontinued operations. Investors should note the company's continued investment in its transmission and distribution system and the ongoing management of regulatory matters, including the San Onofre OII Settlement Agreement, which requires CPUC approval. While the company's liquidity remains strong, it is closely monitoring capital market conditions and regulatory decisions that could impact future financial performance.

Financial Highlights

42 data points
Beta

Revenue

$3.02B

Net Income

$566.00M

18.8% Net Margin

EPS (Diluted)

$1.63

Total Assets

$48.86B

Cash & Equivalents

$190.00M

Free Cash Flow

-$873.00M

Financial Statements
Beta
Revenue$3.02B
Operating Expenses$2.44B
Operating Income$575.00M
Interest Expense$139.00M
Net Income$566.00M
EPS (Basic)$1.64
EPS (Diluted)$1.63
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)329.00M

Key Highlights

  • 1Edison International reported a significant year-over-year increase in net income for both the second quarter and the first half of 2014.
  • 2Net income attributable to common shareholders for Q2 2014 was $536 million, compared to a net loss of $94 million in Q2 2013.
  • 3Diluted EPS for Q2 2014 was $1.63, a substantial improvement from $-0.29 in Q2 2013.
  • 4The company recognized income from discontinued operations of $184 million in Q2 2014, largely due to the EME Chapter 11 bankruptcy settlement.
  • 5Southern California Edison (SCE) benefited from higher authorized revenues, income tax benefits, and lower operating expenses.
  • 6The San Onofre OII Settlement Agreement, if approved by the CPUC, is expected to resolve regulatory issues related to the plant's retirement and is reflected in the financial results.
  • 7The company continues to invest in capital expenditures, with SCE projecting $3.6 billion to $4.1 billion for 2014.

Frequently Asked Questions

The significant increase in net income is driven by several factors, including improved performance from continuing operations at Southern California Edison (SCE), which benefited from higher authorized revenues, income tax benefits, and reduced operating expenses. Additionally, income from discontinued operations, primarily related to the EME Chapter 11 bankruptcy settlement, significantly contributed to the year-over-year improvement.

SCE entered into a settlement agreement concerning the San Onofre nuclear plant issues with various parties. This agreement, if approved by the California Public Utilities Commission (CPUC), will resolve regulatory issues related to the plant's retirement and associated costs. The company has recorded the estimated financial impacts of this settlement, which include disallowances and refunds, assuming its approval. While approval is not guaranteed, the company is working to obtain it.

Edison International and SCE use derivative financial instruments, such as forward commodity transactions, options, and swaps, to manage exposure to commodity price risk. These instruments are used to mitigate potential impacts from fluctuations in the market value of commodities like electricity and natural gas. The company also employs master netting agreements and collateral arrangements to mitigate credit risk from counterparties.

SCE continues to invest in its capital program, focusing on maintaining and expanding its transmission and distribution systems, and upgrading generation facilities. The company projects capital expenditures between $3.6 billion and $4.1 billion for 2014 and forecasts $15.1 billion to $17.2 billion for the period 2014-2017. Funding is expected to come from operating cash flows and capital market financings of debt and preferred equity, supplemented by available credit facilities.