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Edison International 8-K Report, Financial Results (Jul 25, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed July 25, 2024
Period End
July 25, 2024
Security
EIX
In the record · 2016–202610-K1110-Q348-K186

EIX filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 186 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Feb ’18Feb ’18
  2. Material agreement8-K · Mar ’20Mar ’20
  3. Material agreement8-K · May ’22May ’22
  4. Leadership change8-K · Apr ’26Apr ’26

01—Abstract

Summary

Summary of the 8-K filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.

Edison International (EIX) reported second-quarter 2024 GAAP earnings of $1.14a per share ($439 million net income available to common shareholders) and core earnings of $1.23 per share ($475 million), up from $1.01 core EPS a year earlier.

The year-over-year improvement was driven primarily by higher revenue authorized in Track 4 of SCE's 2021 General Rate Case, a higher authorized return from the cost of capital mechanism, and recognition of previously unrecognized return on wildfire restoration rate base. These gains were partly offset by higher interest expense tied to debt used to fund wildfire claims payments. Year-to-date core EPS is $2.37b, and management reaffirmed 2024 core EPS guidance of $4.75 to $5.05 and its 5% to 7% core EPS growth targets for both 2021-2025 and 2025-2028.

The filing also announced a new share repurchase program of up to $200 millionc, effective July 29, 2024 and running through December 31, 2025. It is intended to offset dilution from long-term incentive compensation issuances, is funded from working capital, and carries no obligation to buy. Management also highlighted that SCE has completed 84% of its planned distribution-line hardening in high fire risk areas, that its 10-year load growth forecast is now 35% higher, and that the 2025 General Rate Case (GRC) is on track with partial settlements covering 12 areas.

Investors should note that GAAP results were materially affected by about $485 milliond ($1.26 per share) of non-core wildfire-related and other charges in the first half, primarily 2017/2018 Wildfire/Mudslide Event claims. For investors, the key takeaways are a solid first half with guidance reaffirmed, continued progress on wildfire mitigation and legacy claim resolution, and a long-term growth story anchored by rate base growth of roughly 6% to 8% and capital spending of $38 to $43 billion over 2023-2028. Key uncertainties remain the outcome of the 2025 GRC, the pending TKM cost recovery application (about $2.4 billion), the Woolsey cost recovery filing expected in Q3 2024, and the affordability of customer rates as investment grows.

02—Key points

Key Highlights

  1. Q2 2024 core EPS of $1.23 (vs. $1.01 in Q2 2023) and GAAP EPS of $1.14 (vs. $0.92); year-to-date core EPS of $2.37
  2. 2024 core EPS guidance of $4.75-$5.05 reaffirmed; 5%-7% core EPS CAGR targets reiterated for 2021-2025 and 2025-2028
  3. New share repurchase program of up to $200 million, effective July 29, 2024 through December 31, 2025, to offset dilution from employee equity compensation
  4. SCE's 2025 GRC on track with partial settlements in 12 areas (about 19% of O&M and 8% of capital requests); the utility projects ~$1.9 billion in annual revenue requirement increase in 2025
  5. SCE has completed 84% of planned distribution-line hardening in high fire risk areas and expects to approach 90% by end of 2025; estimated wildfire risk reduction of 85%-90%+
  6. Load growth forecast raised 35% over the 10-year horizon; SCE projects system average rate growth of about 2.6% CAGR through 2028, closely aligned with inflation
  7. Equity needs for 2025-2028 limited to about $400 million; $500 million parent debt issued in Q2 to complete the 2024 financing plan

03—Questions

Frequently Asked Questions

  1. Why did core earnings grow year over year in Q2 2024?

    Core EPS rose $0.22 to $1.23, mainly from higher CPUC revenue authorized in Track 4 of SCE's 2021 GRC, a higher authorized rate of return from the cost of capital mechanism, and recognition of previously unrecognized return on wildfire restoration rate base. Higher interest expense partly offset these gains.

  2. Is the company still on track to meet its 2024 earnings guidance?

    Yes. Management reaffirmed 2024 core EPS guidance of $4.75-$5.05. Basic EIX EPS guidance was lowered to $3.49-$3.79 from $3.59-$3.89 to reflect $1.26 per share of non-core items recorded in the first half, but the core range is unchanged. Guidance does not yet include any further CPUC decisions beyond CEMA.

  3. How large is the new share repurchase program and what is its purpose?

    The program authorizes up to $200 million of common stock repurchases through December 31, 2025, effective July 29, 2024. It is meant to offset dilution from shares issued under long-term incentive compensation plans. Timing and amount are at management's discretion, the program can be suspended at any time, and repurchased shares will be retired.

  4. What are the main risks to the long-term growth outlook?

    Key risks include the final outcome of the 2025 GRC, which underpins most of the 2025 EPS guidance; recovery of about $2.4 billion of TKM wildfire costs and the roughly $6.9 billion Woolsey cost recovery request; rising interest expense from wildfire claims debt; and affordability pressure on customer rates as capital spending rises. Wildfire liability under AB 1054 and potential penalties are also ongoing risks.

  5. How much of the legacy wildfire claims has the company resolved?

    As of July 18, 2024, SCE had resolved about 98% of TKM individual plaintiff claims and 92% of Woolsey individual plaintiff claims, with roughly 120 TKM and 720 Woolsey individual plaintiffs remaining. The best estimate of total losses for the 2017/2018 events is about $9.9 billion, with about $4 billion still remaining to be resolved.

04—Continue

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