01—Abstract
Summary
Summary of the 8-K filed October 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Edison International (EIX) reported third-quarter 2024 GAAP EPS of $1.33a (net income of $516 million) and core EPS of $1.51, up from $1.38 a year earlier.
Core earnings growth of 13 cents was driven mainly by higher CPUC revenue authorized in Track 4 of SCE's 2021 General Rate Case and a higher authorized rate of return from the cost of capital mechanism, partly offset by higher interest expense tied to wildfire claims debt. Year-to-date core EPS reached $3.88b. The company narrowed its 2024 core EPS guidance to $4.80-$5.00 from $4.75-$5.05, and reiterated its 5%-7% core EPS CAGR targets for 2021-2025 and 2025-2028.
The most important regulatory developments concern legacy wildfires. SCE reached a settlement with Cal Advocates on the Thomas/Montecito Mudslides (TKM) cost recovery application, which would authorize recovery of 60% of about $1.6 billionc in costs, pending CPUC approval expected in the first half of 2025. SCE also filed a cost recovery application for the Woolsey Fire seeking about $5.4 billion.
Management stressed that legacy-event recoveries are not included in its earnings targets, so a TKM approval and any Woolsey recovery would be additive. Management also said the 2025 General Rate Case (GRC) proposed decision is awaited, with a decision possibly in the first half of 2025, and that it will update its capital plan and 2025 guidance after that decision. Investors should note a negative development: a recent CPUC decision changed the cost of capital mechanism and lowered 2025 ROEs for California investor-owned utilities.
Management called the decision unfortunate and the process disappointing, but reiterated confidence in its 2025 core EPS guidance of $5.50d-$5.90. The company reiterated its 2025-2028 financing plan, which it says requires minimal equity, and its net-zero-by-2045 commitment.
02—Key points
Key Highlights
- Q3 2024 core EPS of $1.51 (vs. $1.38 in Q3 2023); GAAP EPS of $1.33 (vs. $0.40); YTD core EPS of $3.88
- 2024 core EPS guidance narrowed to $4.80-$5.00 from $4.75-$5.05; basic EPS guidance $3.37-$3.57 including $1.43 of non-core items
- TKM settlement with Cal Advocates would authorize recovery of 60% of ~$1.6 billion in costs, with a CPUC decision expected by 1H 2025; about $0.44 of 2025 core EPS upside not included in guidance
- Woolsey cost recovery application filed seeking ~$5.4 billion, with a proposed decision expected February 2026 and a final decision around March 2026 per SCE's proposed schedule
- Reiterated 5%-7% core EPS CAGR for 2021-2025 and 2025-2028, plus 2025 core EPS guidance of $5.50-$5.90 (not yet updated for the TKM settlement)
- 2025 GRC record complete and awaiting proposed decision; the GRC drives ~$1.9 billion of 2025 annual revenue requirement increase and an 8%-ish rate base CAGR range
- CPUC cost of capital decision lowered 2025 ROEs, a headwind management described as unfortunate, though it applies only to 2025
03—Questions
Frequently Asked Questions
Did Edison International beat or miss expectations for Q3 2024?
The filing does not include consensus estimates, so a beat or miss cannot be determined from it. Q3 2024 core EPS of $1.51 was up 13 cents year over year, driven by higher authorized GRC revenue and rates of return. Management described year-to-date performance as strong, aided partly by O&M timing, and narrowed full-year guidance to a range of $4.80-$5.00.
What does the TKM settlement mean for investors?
If approved by the CPUC, the settlement would authorize recovery of 60% of roughly $1.6 billion in costs tied to the Thomas Fire and Montecito Mudslides claims, plus $55 million of restoration costs. Management estimates about $0.44 of total 2025 core EPS upside and about $0.14 of annual benefit beyond 2025. The company stresses that this is not included in its earnings guidance, and it expects a decision in the first half of 2025.
What are the main risks to the 2025 outlook?
The key risks are the outcome of the 2025 GRC, including the proposed decision and final decision timing, which management expects in the first half of 2025, and a CPUC cost of capital decision that reduced 2025 ROEs. Other risks include interest rate and financing costs on wildfire-claim debt, and the outcome of the Woolsey cost recovery, which is still early in the proceeding. The filing also lists the standard forward-looking risk factors, including wildfire liability and regulatory risk.
How much is Edison International spending on capital, and how is it funded?
SCE's capital forecast is about $38-$43 billion for 2023-2028, with the GRC providing the foundation for growth, and rate base is projected to grow about 6%-8%. The 2025-2028 financing plan shows $27-$32 billion in capital spending, funded by about $25-$28 billion of operating cash flow, $8-$11 billion of incremental debt, and roughly $0.4 billion of equity, with dividends of $6-$7 billion. The company says this plan requires minimal equity.
Why is 2024 non-core EPS negative, and is it expected to continue?
Non-core items totaled $551 million (about $1.43 per share) through September 30, 2024, mainly 2017/2018 wildfire and mudslide claims and expenses, Other Wildfires claims, and Wildfire Insurance Fund expense. Q3 also included $44 million of severance costs. Management treats these as non-core because they are not representative of ongoing earnings. Future non-core items are not forecast, and the company's basic EPS guidance reflects only the items recorded through September 30.
04—Continue