10-QPeriod: Q2 FY2016

EDISON INTERNATIONAL Quarterly Report for Q2 Ended Jun 30, 2016

Filed July 28, 2016For Securities:EIX

Summary

Edison International (EIX) reported a net income of $276 million for the second quarter of 2016, a decrease from $379 million in the same period of 2015. This decline was primarily driven by a $69 million decrease in net income from its regulated utility, Southern California Edison (SCE), mainly due to lower income tax benefits and a $100 million income tax benefit recorded in the prior year. Despite these headwinds, SCE's core operations saw some positive impacts from the implementation of its 2015 General Rate Case decision. For the first six months of 2016, net income was $546 million, down from $678 million in the prior year. SCE's net income for the year-to-date period also decreased, impacted by regulatory refunds and higher operating expenses, partially offset by rate increases from the 2015 GRC decision. Edison International's competitive businesses continue to be not material to overall segment reporting, but showed increased losses year-over-year. The company forecasts capital expenditures between $7.9 billion and $8.1 billion for 2016-2017, with significant investments in distribution and transmission infrastructure.

Financial Highlights

41 data points
Beta

Revenue

$2.78B

Net Income

$308.00M

11.1% Net Margin

EPS (Diluted)

$0.85

Total Assets

$51.20B

Cash & Equivalents

$111.00M

Free Cash Flow

-$300.00M

Financial Statements
Beta
Revenue$2.78B
Operating Expenses$2.40B
Operating Income$381.00M
Interest Expense$144.00M
Net Income$308.00M
EPS (Basic)$0.86
EPS (Diluted)$0.85
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)330.00M

Key Highlights

  • 1Net income for the second quarter of 2016 was $276 million, down from $379 million in Q2 2015.
  • 2Southern California Edison (SCE) net income decreased by $69 million year-over-year due to lower income tax benefits.
  • 3A significant factor in the prior year's strong performance was a $100 million income tax benefit related to uncertain tax positions.
  • 4The company is undertaking a substantial capital program with forecasted expenditures of $7.9 billion to $8.1 billion for 2016-2017, primarily for transmission and distribution infrastructure.
  • 5SCE recognized revenue refunds totaling $133 million in Q2 2016 related to 2012-2014 incremental tax benefits.
  • 6The company's competitive businesses, though not material to overall results, reported increased losses.
  • 7Edison International maintained a solid debt-to-capitalization ratio below regulatory limits, indicating financial stability.

Frequently Asked Questions

The primary driver for the decrease in net income was lower income tax benefits, particularly a significant one-time benefit recorded in the second quarter of 2015. Additionally, SCE recognized revenue refunds in the current quarter related to past tax benefits, which impacted revenue.

Edison International forecasts substantial capital expenditures for 2016-2017. These investments are primarily directed towards transmission and distribution infrastructure. The company expects to fund these expenditures through operating cash flows, tax benefits, and capital market financings, and has a strong liquidity position with significant availability under its credit facilities.

Yes, several matters are ongoing. These include regulatory proceedings related to the San Onofre nuclear plant, potential challenges to energy efficiency incentive awards, and ongoing investigations into service interruptions in Long Beach. The company is also involved in legal claims against Mitsubishi Heavy Industries concerning the San Onofre steam generators. While the company believes the outcome of most of these matters will not materially affect its financial condition, some remain uncertain and are being closely monitored.

The competitive businesses, primarily within Edison Energy Group, are currently not material to Edison International's overall financial results. However, the report indicates an increase in losses from these segments year-over-year, attributed to higher operating and development costs and lower revenue from solar system sales. Edison Capital also saw a decrease in income due to the sale of its affordable housing investments portfolio.