10-QPeriod: Q3 FY2017

EDISON INTERNATIONAL Quarterly Report for Q3 Ended Sep 30, 2017

Filed October 30, 2017For Securities:EIX

Summary

Edison International reported improved net income for the nine months ended September 30, 2017, primarily driven by stronger performance at its subsidiary, Southern California Edison (SCE). SCE's earnings benefited from regulatory rate adjustments and lower operation and maintenance expenses, despite some offsets from prior overcollections and higher financing costs. The company is navigating significant regulatory proceedings, notably the 2018 General Rate Case (GRC) and the ongoing San Onofre Nuclear Generating Station (San Onofre) settlement issues, which carry potential financial implications. Edison International is also evaluating strategic options for its competitive subsidiary, Edison Energy Group. Capital expenditures remain a focus, with significant investments planned for grid modernization and infrastructure upgrades, although recovery through regulated rates is subject to CPUC approval. Liquidity appears stable, with ample availability under credit facilities. Investors should monitor the outcomes of the 2018 GRC and the San Onofre proceedings, as these will be key drivers of future financial performance and regulatory certainty.

Financial Highlights

44 data points
Beta

Revenue

$3.67B

Net Income

$501.00M

13.6% Net Margin

EPS (Diluted)

$1.43

Total Assets

$53.59B

Cash & Equivalents

$117.00M

Free Cash Flow

$345.00M

Financial Statements
Beta
Revenue$3.67B
Operating Expenses$3.12B
Operating Income$553.00M
Interest Expense$162.00M
Net Income$501.00M
EPS (Basic)$1.44
EPS (Diluted)$1.43
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)328.00M

Key Highlights

  • 1Edison International's consolidated net income increased by $128 million for the nine months ended September 30, 2017, compared to the same period in 2016, largely due to improved performance at SCE.
  • 2SCE's earnings for the nine-month period increased by $73 million, driven by revenue escalation from the 2015 GRC decision and lower operation and maintenance expenses.
  • 3The company is actively engaged in the 2018 General Rate Case (GRC) proceeding, with proposed revenue requirements and capital expenditure requests subject to CPUC review.
  • 4The San Onofre nuclear plant's permanent retirement continues to be a significant factor, with ongoing CPUC proceedings regarding cost allocation and a recorded regulatory asset of $730 million.
  • 5Edison International is undertaking a strategic review of its competitive subsidiary, Edison Energy Group, exploring potential sale opportunities for SoCore Energy.
  • 6SCE's capital expenditure forecast for 2017-2020 is substantial, totaling $18.45 billion, with a significant portion allocated to traditional distribution and transmission infrastructure.
  • 7The company maintains a strong liquidity position, with approximately $2.15 billion available under its revolving credit facility at September 30, 2017.

Frequently Asked Questions

The primary driver of the improved financial performance was the stronger earnings generated by Southern California Edison (SCE), its main subsidiary. This was primarily attributed to revenue escalation from the 2015 General Rate Case (GRC) decision and a reduction in operation and maintenance expenses.

Key regulatory issues include the ongoing 2018 General Rate Case (GRC) proceeding, which will determine future revenue requirements and capital spending recovery. Additionally, the company is managing the complexities surrounding the permanent retirement of the San Onofre Nuclear Generating Station, with active proceedings at the CPUC concerning cost allocation and the potential impact of a previously approved settlement agreement. The outcome of the Power Charge Indifference Adjustment (PCIA) rulemaking is also a significant factor.

Edison International has completed a strategic review of Edison Energy Group's competitive businesses. The company is evaluating strategic options, including potential sale opportunities for its subsidiary SoCore Energy, while also consolidating management across Edison Energy Group. Edison Energy will continue to focus on energy services and managed portfolio solutions for large energy users.

SCE has a capital expenditure forecast of $18.45 billion for 2017-2020, with significant investments planned for traditional capital expenditures (distribution, transmission, generation) and grid modernization. Recovery of these expenditures through regulated rates is subject to CPUC approval, and the company is developing strategies to manage potential risks associated with the timing and approval of these investments, particularly for grid modernization projects.