01—Abstract
Summary
Summary of the 8-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Edison International (EIX) reported fourth-quarter 2023 GAAP EPS of $0.99a and core EPS of $1.28, versus $1.09 GAAP and $1.15 core a year earlier.
Full-year 2023 GAAP EPS was $3.12b and core EPS was $4.76, above the midpoint of the initial $4.55–$4.85 guidance range, which management attributes to disciplined variability management and better-than-expected SCE operational variances. Net income attributable to EIX common shareholders was $1,197 million for 2023, up from $612 million in 2022, largely because 2022 included heavier wildfire-related charges. Core earnings were $1,825 million, up from $1,765 million.
The company introduced 2024 core EPS guidance of $4.75c–$5.05, which implies only modest growth. Management attributes this to about $0.16 higher interest on wildfire claims debt, a planned increase in O&M for reliability and operational excellence spending that lowers SCE operational variance, and higher parent interest expense after the absence of last year's preferred stock repurchase gain. It reiterated 5–7% core EPS CAGR targets for 2021–2025 and 2025–2028, with 2025 core EPS of $5.50–$5.90 implied.
The board raised the annual dividend 5.8% (the 20th consecutive annual increase) and declared a quarterly dividend of $0.78d per share. The key wildfire-related items are the 2017/2018 wildfire and mudslide claims, with best estimated total losses revised upward by $65 million. SCE filed a $2.4 billion cost recovery application for the TKM events, with a final decision possible as early as Q1 2025, and plans to file a Woolsey cost recovery application in Q3 2024.
Management notes that its 2025+ financial assumptions exclude these recoveries, which represent potential upside. Risks include regulatory outcomes, wildfire liability under AB 1054, and affordability pressures on rates.
02—Key points
Key Highlights
- Q4 2023 core EPS of $1.28 (GAAP $0.99) vs. $1.15 core in Q4 2022, driven by higher GRC escalation revenue and lower O&M, partly offset by higher interest expense.
- FY2023 core EPS of $4.76 (GAAP $3.12), above the midpoint of the $4.55–$4.85 guidance range, despite the CEMA decision shifting into 2024.
- 2024 core EPS guidance of $4.75–$5.05, with no non-core items assumed; implies modest growth due to ~$0.16 higher wildfire claims debt interest, lower SCE operational variance, and higher parent costs.
- Reiterated 5–7% core EPS CAGR targets for 2021–2025 and 2025–2028; 2025 core EPS guidance midpoint of $5.70 (range $5.50–$5.90) and rate base growth of ~6–8% for 2023–2028.
- $38–43 billion SCE capital plan for 2023–2028, with over 85% in distribution grid; SCE installed over 5,580 miles of covered conductor and plans 1,050 more miles in 2024.
- Dividend increased 5.8% to $0.78 quarterly, the 20th consecutive annual increase; management cites a dividend yield above 4%.
- 2017/2018 wildfire claims: best estimate of losses increased $65 million; TKM cost recovery application filed for $2.4 billion, and Woolsey application targeted for Q3 2024, not included in 2025+ financial assumptions.
03—Questions
Frequently Asked Questions
Did Edison International meet its 2023 earnings expectations?
Yes. FY2023 core EPS was $4.76, above the midpoint of the initial $4.55–$4.85 guidance range. Management noted that the pending CEMA decision shifted into 2024 and that a $0.04 gain from preferred stock repurchases contributed to results.
Why is 2024 EPS guidance growth modest?
Management cites three main factors: roughly $0.16 higher interest expense on wildfire claims debt, a $0.15–$0.34 lower SCE operational variance from planned O&M spending on reliability and operational excellence, and higher parent costs from the absence of last year's preferred repurchase gain and a full year of junior subordinated note interest.
What could drive upside beyond current guidance?
Management identified potential value not in its guidance: cost recovery for the 2017/2018 wildfire and mudslide events (about $6.4 billion in total cost recovery requests, including TKM's $2.4 billion), successful execution of operational excellence initiatives, and incremental CPUC and FERC growth investments such as NextGen ERP and AMI 2.0 (with $2 billion+ of FERC transmission investment expected).
Is the dividend safe, and how much is it growing?
The board raised the annual dividend 5.8% and declared a quarterly dividend of $0.78 per share, payable April 30, 2024. Management describes this as the 20th consecutive annual increase and targets a payout of 45–55% of SCE core earnings, with a current yield above 4%.
What are the main risks from wildfire liability and regulation?
Key risks include whether the CPUC allows recovery of uninsured wildfire-related costs, the effectiveness of AB 1054 in limiting liability, the 2025 GRC outcome, and potential disallowances. Management notes that wildfire claims debt interest (about $325 million pre-tax in 2024) is not currently recoverable in rates, pending cost recovery proceedings.
04—Continue