10-QPeriod: Q1 FY2020

EDISON INTERNATIONAL Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 30, 2020For Securities:EIX

Summary

Edison International (EIX) and its subsidiary Southern California Edison (SCE) reported net income attributable to Edison International of $183 million for the first quarter of 2020, a decrease from $278 million in the same period of 2019. Core earnings, however, increased to $228 million from $206 million year-over-year, primarily driven by SCE's improved performance. The company continues to navigate significant wildfire-related liabilities, with an accrued liability of $4.5 billion for the 2017/2018 events, though offset by expected insurance recoveries and potential rate recovery. The ongoing COVID-19 pandemic presents emerging risks, impacting operations, supply chains, customer payments, and access to capital markets, with measures already in place to manage potential impacts. SCE's operational performance saw increases in operating revenue due to regulatory decisions and higher FERC revenue, partially offset by increased operation and maintenance costs, including vegetation management and wildfire mitigation efforts. The company's liquidity remains stable, supported by its credit facilities and capital market access, although proactive debt issuances were made in response to COVID-19 uncertainty.

Financial Highlights

46 data points
Beta

Revenue

$2.79B

Net Income

$213.00M

7.6% Net Margin

EPS (Diluted)

$0.50

Total Assets

$66.03B

Cash & Equivalents

$1.34B

Free Cash Flow

-$953.00M

Financial Statements
Beta
Revenue$2.79B
Operating Expenses$2.49B
Operating Income$302.00M
Interest Expense$225.00M
Net Income$213.00M
EPS (Basic)$0.50
EPS (Diluted)$0.50
Shares Outstanding (Basic)363.00M
Shares Outstanding (Diluted)364.00M

Key Highlights

  • 1Net income attributable to Edison International decreased by $95 million to $183 million in Q1 2020 compared to Q1 2019, primarily due to higher non-core losses at SCE.
  • 2Core earnings for Edison International increased by $22 million to $228 million in Q1 2020, driven by a $40 million increase in SCE's core earnings.
  • 3SCE incurred an $84 million expense in Q1 2020 for the amortization of contributions to the Wildfire Insurance Fund.
  • 4The company holds an accrued liability of $4.5 billion for the 2017/2018 Wildfire/Mudslide Events, with $1.7 billion in expected insurance recoveries and $113 million through FERC electric rates as of March 31, 2020.
  • 5The COVID-19 pandemic is noted as a significant emerging risk, potentially impacting operations, liquidity, and financial results, with measures like suspending disconnections for nonpayment already implemented.
  • 6SCE's operating revenue increased by $191 million, primarily due to the adoption of the 2018 General Rate Case (GRC) final decision and higher FERC revenue.
  • 7Capital expenditures for the first three months of 2020 totaled $1.0 billion, an increase from $856 million in the same period of 2019, though potential delays due to COVID-19 are being assessed.

Frequently Asked Questions

While the full impact of COVID-19 is still emerging, the pandemic caused an increase in the estimated allowance for uncollectible accounts of $8 million in Q1 2020. SCE suspended disconnections for nonpayment and implemented flexible payment plans for customers. The company anticipates a heightened level of bad debt expense to continue and expects to request recovery of certain costs through a COVID-19 pandemic protections memorandum account. Additionally, the pandemic may impact SCE's ability to execute planned work, capital projects, and affect liquidity and results of operations. Access to capital markets may also be restricted or more costly.

Edison International and SCE have an accrued liability of $4.5 billion for the 2017/2018 Wildfire/Mudslide Events as of March 31, 2020. They expect to incur a material loss related to these events. They are seeking to offset losses with $1.7 billion in expected insurance recoveries and $113 million through FERC electric rates. In Q1 2020, SCE recorded an $84 million expense for the amortization of contributions to the Wildfire Insurance Fund. Settlements have been reached with some local public entities for the Thomas, Koenigstein, Montecito Mudslides, and Woolsey Fires, totaling $360 million for the Thomas/Koenigstein/Montecito events and $210 million for the Woolsey Fire, with no admission of liability.

SCE's operating revenue increased by $191 million, primarily driven by the adoption of the 2018 GRC final decision which allowed for higher revenue recognition compared to the prior period based on 2017 authorized revenue. Higher FERC-related revenue also contributed. However, operation and maintenance costs increased by $128 million, largely due to higher vegetation management and wildfire mitigation costs, as well as increased employee benefit expenses. Wildfire insurance fund expense also contributed to higher costs.

SCE had approximately $2.8 billion available under its $3.0 billion credit facility and $451 million in cash on hand as of March 31, 2020. Edison International Parent had $1.5 billion in its credit facility and $886 million in cash. Both entities have proactively issued debt in March and April 2020 to enhance financing flexibility given potential market uncertainty due to COVID-19. They expect to fund future cash requirements through operating cash flows, capital market financings, and parent contributions as needed.