10-QPeriod: Q3 FY2016

EDISON INTERNATIONAL Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 1, 2016For Securities:EIX

Summary

This 10-Q filing for Edison International (EIX) and its subsidiary Southern California Edison (SCE) for the quarter ended September 30, 2016, shows a slight decrease in net income attributable to Edison International, primarily driven by increased losses in its non-regulated competitive businesses. SCE's regulated utility operations performed more stably, with net income from continuing operations seeing a modest increase due to revenue from rate case decisions and incremental returns on infrastructure investments, partially offset by higher income tax expenses. Key financial developments include SCE's filing for its 2018 General Rate Case, requesting a revenue increase to support significant capital expenditures focused on grid modernization and reliability. The company forecasts substantial capital investments through 2020, emphasizing the importance of regulatory approval for these plans. While liquidity remains strong with significant availability under credit facilities, investors should monitor regulatory proceedings, particularly those related to San Onofre, Long Beach service interruptions, and future rate adjustments, as these could materially impact future earnings and operational costs.

Financial Highlights

43 data points
Beta

Revenue

$3.77B

Net Income

$451.00M

12.0% Net Margin

EPS (Diluted)

$1.27

Total Assets

$51.56B

Cash & Equivalents

$84.00M

Free Cash Flow

$125.00M

Financial Statements
Beta
Revenue$3.77B
Operating Expenses$3.07B
Operating Income$695.00M
Interest Expense$147.00M
Net Income$451.00M
EPS (Basic)$1.29
EPS (Diluted)$1.27
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)330.00M

Key Highlights

  • 1Edison International reported a net income of $419 million for the third quarter of 2016, a slight decrease from $421 million in the same period last year, primarily due to higher losses in competitive businesses.
  • 2Southern California Edison (SCE) recorded net income of $435 million from continuing operations for the third quarter of 2016, an increase from $389 million in the prior year, driven by higher revenue from rate case decisions.
  • 3SCE filed its 2018 General Rate Case (GRC) application, requesting a revenue requirement increase and proposing significant capital expenditures of up to $23.3 billion for 2016-2020, focusing on grid modernization and reliability.
  • 4The company highlighted ongoing regulatory proceedings, including the San Onofre OII Settlement Agreement review and an investigation into Long Beach service interruptions, which could lead to penalties or require adjustments.
  • 5Liquidity remains strong for both Edison International and SCE, with substantial available credit facilities, and SCE's debt-to-capitalization ratio remained well within covenant limits.
  • 6The company is actively managing its energy price risk through derivative instruments, with a net liability of $1.2 billion reported for derivative contracts as of September 30, 2016.
  • 7Edison International made a final payment of $214 million in September 2016 related to the EME Settlement Agreement.

Frequently Asked Questions

The net income attributable to Edison International decreased slightly to $419 million from $421 million in the prior year's third quarter. This was primarily due to increased losses from Edison International's non-regulated competitive businesses, which offset the stable performance of its regulated utility, Southern California Edison (SCE).

SCE forecasts capital expenditures of up to $23.3 billion for 2016-2020, with a significant portion focused on grid modernization and replacing aging infrastructure to enhance safety and reliability. These investments are outlined in its 2018 GRC filing and will be recovered through customer rates, meaning rate increases are anticipated to support these capital projects over the coming years.

Yes, several regulatory and legal matters are ongoing. These include the review of the San Onofre OII Settlement Agreement, an investigation into Long Beach service interruptions that could result in penalties, and potential impacts from changes in CPUC rules regarding ex parte communications. SCE is also involved in litigation related to the San Onofre nuclear plant and claims against Mitsubishi Heavy Industries. The outcomes of these proceedings could materially affect the company's financial condition and results of operations.

Both Edison International and SCE maintain strong liquidity positions. SCE has approximately $2.35 billion available under its revolving credit facility, and Edison International Parent has $732 million available under its facility. Their debt-to-capitalization ratios are well within covenant limits, indicating sound financial health and access to capital markets for future needs.