10-QPeriod: Q1 FY2019

EDISON INTERNATIONAL Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 30, 2019For Securities:EIX

Summary

Edison International (EIX) reported first-quarter 2019 results with net income attributable to common shareholders of $278 million, or $0.85 per diluted share, an increase from $218 million, or $0.67 per diluted share, in the prior year period. This improvement was driven by a significant reduction in losses from Edison International Parent and Other segments, partly offset by slightly lower core earnings from Southern California Edison (SCE) due to wildfire mitigation expenses and higher financing costs. The company continues to navigate the significant financial and operational challenges posed by the 2017/2018 wildfire and mudslide events. While a liability of $4.7 billion was accrued in late 2018 for these events, the company is seeking recoveries from insurance and through regulated rates, though the recoverability of uninsured costs remains uncertain, particularly from the CPUC. Regulatory proceedings, including the 2018 General Rate Case and the 2019 wildfire mitigation plan, are ongoing and could materially impact future results and capital structure.

Financial Highlights

45 data points
Beta

Revenue

$2.82B

Net Income

$308.00M

10.9% Net Margin

EPS (Diluted)

$0.85

Total Assets

$58.79B

Cash & Equivalents

$328.00M

Free Cash Flow

-$864.00M

Financial Statements
Beta
Revenue$2.82B
Operating Expenses$2.47B
Operating Income$352.00M
Interest Expense$194.00M
Net Income$308.00M
EPS (Basic)$0.85
EPS (Diluted)$0.85
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)327.00M

Key Highlights

  • 1Edison International reported a year-over-year increase in net income attributable to common shareholders to $278 million in Q1 2019 from $218 million in Q1 2018, driven by reduced losses in non-utility segments.
  • 2Southern California Edison (SCE) experienced a decrease in core earnings due to wildfire mitigation expenses and higher net financing costs, despite a $7 million increase in overall SCE earnings.
  • 3The company accrued a $4.7 billion liability for the 2017/2018 wildfire and mudslide events, with expected insurance recoveries of $2.0 billion and FERC rate recoveries of $135 million, leaving significant uninsured exposure.
  • 4Regulatory proceedings remain a key focus, with the CPUC's proposed decision on the 2018 General Rate Case indicating potential impacts on authorized revenue and rate base, and ongoing development of wildfire mitigation plans.
  • 5SCE's capital expenditure forecast for 2019-2020 totals approximately $8.9 billion to $9.1 billion, including significant investments in wildfire mitigation.
  • 6Credit ratings for both Edison International and SCE were maintained at investment grade, albeit with negative outlooks, following recent downgrades, highlighting ongoing investor concerns.
  • 7SCE is seeking higher returns on equity (ROE) from both CPUC and FERC to compensate for current wildfire risk, including an additional 6% ROE request.

Frequently Asked Questions

Edison International reported net income attributable to common shareholders of $278 million, or $0.85 per diluted share, for the three months ended March 31, 2019. This represents an increase from $218 million, or $0.67 per diluted share, in the same period of the prior year. This improvement was primarily driven by lower losses in the Edison International Parent and Other segments.

The most significant challenge is the ongoing financial and operational impact of the 2017/2018 wildfire and mudslide events. The company has accrued a substantial liability for these events, and the ability to recover uninsured costs through regulated rates is uncertain. Additionally, ongoing regulatory proceedings, potential credit rating impacts, and significant capital expenditure requirements for wildfire mitigation and infrastructure upgrades present ongoing risks.

Edison International and SCE have accrued a $4.7 billion liability for the 2017/2018 wildfire and mudslide events. While they are seeking recoveries from insurance and through electric rates, the recoverability of uninsured costs, particularly from the CPUC, remains uncertain due to the prudency standards and the precedent set by previous regulatory decisions. The company is actively pursuing legislative and regulatory solutions to mitigate wildfire risk and liability.

SCE has a significant capital expenditure forecast for 2019-2020, totaling approximately $8.9 billion to $9.1 billion. This includes substantial investments in wildfire mitigation efforts under programs like the Grid Safety and Resiliency Program (GS&RP) and Wildfire Mitigation Plan (WMP). The company is also managing its rate base through regulatory proceedings like the General Rate Case (GRC).