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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 2023
Commission |
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Exact Name of Registrant |
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State or Other Jurisdiction of |
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IRS Employer |
1-9936 |
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EDISON INTERNATIONAL |
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California |
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95-4137452 |
1-2313 |
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SOUTHERN CALIFORNIA EDISON COMPANY |
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California |
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95-1240335 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ☐ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ☐ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ☐ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ☐ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Edison International:
Southern California Edison Company: None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
This current report and its exhibits include forward-looking statements. Edison International and Southern California Edison Company ("SCE") based these forward-looking statements on their current expectations and projections about future events in light of their knowledge of facts as of the date of this current report and their assumptions about future circumstances. These forward-looking statements are subject to various risks and uncertainties that may be outside the control of Edison International and SCE. Edison International and SCE have no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events, or otherwise. This current report should be read with Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent quarterly Report on Form 10-Q. Additionally, Edison International and SCE provide direct links to Edison International and SCE presentations, documents and other information at www.edisoninvestor.com (Presentations and Updates) in order to publicly disseminate such information.
Item 2.02Results of Operations and Financial Condition
On May 2, 2023, Edison International issued a press release reporting its financial results and the financial results for its subsidiary, Southern California Edison Company, for the quarter ended March 31, 2023. A copy of the press release is attached as Exhibit 99.1. On the same day, members of Edison International's management will speak to investors via a financial teleconference. Senior management's prepared remarks and accompanying presentation are attached as Exhibit 99.2 and Exhibit 99.3 to this report. The information furnished in this Item 2.02 and Exhibits 99.1, 99.2, and 99.3 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933.
Item 7.01Regulation FD Disclosure
Members of Edison International management will use the information in the presentation furnished as Exhibit 99.3 to this report in meetings with institutional investors and analysts and at investor conferences. The attached presentation will also be posted on www.edisoninvestor.com.
Item 9.01Financial Statements and Exhibits
(d) |
Exhibits |
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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99.2 |
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Edison International Q1 2023 Financial Results Conference Call Prepared Remarks dated May 2, 2023 |
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99.3 |
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Edison International Q1 2023 Financial Results Conference Call Presentation dated May 2,2023 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 2, 2023
Date: May 2, 2023
Exhibit 99.1
Investor Relations: Sam Ramraj, (626) 302-2540 |
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Media Contact: Jeff Monford, (626) 302-2255 |
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Edison International Reports First Quarter 2023 Results
| ● | First Quarter 2023 GAAP earnings per share of $0.81; Core EPS of $1.09 |
| ● | Completed significant portion of EIX 2023 financing plan with $500 million junior subordinated notes issuance |
| ● | Affirmed 2023 EPS guidance of $4.55-$4.85 and long-term EPS growth rate target of 5%-7% for 2021-2025 |
ROSEMEAD, Calif., May 2, 2023 — Edison International (NYSE: EIX) today reported first-quarter net income of $310 million, or $0.81 per share, compared to net income of $84 million, or $0.22 per share, in the first quarter of 2022. As adjusted, first-quarter core earnings were $416 million, or $1.09 per share, compared to core earnings of $407 million, or $1.07 per share, in the first quarter of 2022.
Southern California Edison’s first-quarter core earnings per share (EPS) increased year over year, primarily due to revenue from the escalation mechanism set forth in the 2021 General Rate Case final decision, partially offset by higher net interest expense.
Edison International Parent and Other’s first-quarter core loss per share increased year over year, primarily due to higher interest expense.
“We are pleased with our start to the year and are confident in affirming our 2023 core EPS guidance range,” said Pedro J. Pizarro, president and CEO of Edison International. “We continue to see a number of positives for the company in the near term and long term, which make us excited for the company’s future.”
Pizarro added, “In the near term, SCE continues its diligent execution of its Wildfire Mitigation Plan and has reduced the probability of losses from catastrophic wildfires by 75% to 80% compared to pre-2018 levels, predominantly from grid hardening measures that allow the utility to mitigate risk while keeping electricity flowing to customers. In the long term, transportation electrification is a key driver of SCE’s investment in the grid and for enabling customer affordability. We are already seeing customers start to embrace and adopt electric vehicles today — including operators of medium- and heavy-duty vehicle fleets.”
Edison International uses core earnings internally for financial planning and for analysis of performance. Core earnings are also used when communicating with investors and analysts regarding Edison International’s earnings results to facilitate comparisons of the company’s performance from period to period. Please see the attached tables for a reconciliation of core earnings to basic GAAP earnings.
Edison International Reports First Quarter 2023 Financial Results
Page 2 of 9
2023 Financing Plan
In March, Edison International Parent accomplished a significant portion of its 2023 financing plan by issuing $500 million of junior subordinated notes, due in 2053, which provide approximately $250 million of equity content, as viewed by rating agencies. The transaction was in line with company expectations and was significantly oversubscribed. The company expects to raise any additional equity this year through its internal programs, which are estimated to generate approximately $100 million. The total expected equity content is consistent with the $300 million to $400 million of equity content identified in the company’s 2023 financing plan.
2023 Earnings Guidance
The company affirmed its earnings guidance range for 2023 as summarized in the following chart. See the presentation accompanying the company’s conference call for further information and assumptions.
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2023 Earnings Guidance |
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2023 Earnings Guidance |
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as of Feb. 23, 2023 |
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as of May 2, 2023 |
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Low |
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High |
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Low |
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High |
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EIX Basic EPS |
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$ |
4.55 |
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$ |
4.85 |
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$ |
4.27 |
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$ |
4.57 |
Less: Non-core Items* |
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– |
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– |
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(0.28) |
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(0.28) |
EIX Core EPS |
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$ |
4.55 |
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$ |
4.85 |
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$ |
4.55 |
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$ |
4.85 |
* There were ($106) million, or ($0.28) per share of non-core items recorded for the three months ended March 31, 2023. Basic EIX EPS guidance only incorporates non-core items to March 31, 2023.
First Quarter 2023 Earnings Conference Call and Webcast Details
When: |
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Tuesday, May 2, 2023, 1:30-2:30 p.m. (Pacific time) |
Telephone Numbers: |
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1-888-673-9780 (U.S.) and 1-312-470-0178 (Int'l) — Passcode: Edison |
Telephone Replay: |
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1-866-405-7290 (U.S.) and 1-203-369-0603 (Int’l) — Passcode: 7345 |
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Telephone replay available through May 17, 2023, at 6 p.m. (Pacific time) |
Webcast: |
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www.edisoninvestor.com |
Edison International has posted its earnings conference call prepared remarks by the CEO and CFO, the teleconference presentation and Form 10-Q to the company’s investor relations website. These materials are available at www.edisoninvestor.com.
About Edison International
Edison International (NYSE: EIX) is one of the nation’s largest electric utility holding companies, providing clean and reliable energy and energy services through its independent companies. Headquartered in Rosemead, California, Edison International is the parent company of Southern California Edison Company, a utility that delivers electricity to 15 million people across Southern, Central and Coastal California. Edison International is also the parent company of Edison Energy LLC, a global energy advisory firm engaged in the business of providing integrated decarbonization and energy solutions to commercial, industrial and institutional customers.
Edison International Reports First Quarter 2023 Financial Results
Page 3 of 9
Appendix
Use of Non-GAAP Financial Measures
Edison International’s earnings are prepared in accordance with generally accepted accounting principles used in the United States and represent the company’s earnings as reported to the Securities and Exchange Commission. Our management uses core earnings and core earnings per share (EPS) internally for financial planning and for analysis of performance of Edison International and Southern California Edison. We also use core earnings and core EPS when communicating with analysts and investors regarding our earnings results to facilitate comparisons of the Company’s performance from period to period. Financial measures referred to as net income, basic EPS, core earnings, or core EPS also apply to the description of earnings or earnings per share.
Core earnings and core EPS are non-GAAP financial measures and may not be comparable to those of other companies. Core earnings and core EPS are defined as basic earnings and basic EPS excluding income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings. Basic earnings and losses refer to net income or losses attributable to Edison International shareholders. Core earnings are reconciled to basic earnings in the attached tables. The impact of participating securities (vested awards that earn dividend equivalents that may participate in undistributed earnings with common stock) for the principal operating subsidiary is not material to the principal operating subsidiary’s EPS and is therefore reflected in the results of the Edison International holding company, which is included in Edison International Parent and Other.
Safe Harbor Statement
Statements contained in this presentation about future performance, including, without limitation, operating results, capital expenditures, rate base growth, dividend policy, financial outlook, and other statements that are not purely historical, are forward-looking statements. These forward-looking statements reflect our current expectations; however, such statements involve risks and uncertainties. Actual results could differ materially from current expectations. These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances. Important factors that could cause different results include, but are not limited to the:
| ● | ability of SCE to recover its costs through regulated rates, including uninsured wildfire-related and debris flow-related costs, costs incurred to mitigate the risk of utility equipment causing future wildfires, costs incurred as a result of the COVID-19 pandemic, and increased costs due to supply chain constraints, inflation and rising interest rates; |
| ● | ability of SCE to implement its Wildfire Mitigation Plan and capital program; |
| ● | risks of regulatory or legislative restrictions that would limit SCE's ability to implement operational measures to mitigate wildfire risk, including Public Safety Power Shutoff ("PSPS") and fast curve settings, when conditions warrant or would otherwise limit SCE's operational practices relative to wildfire risk mitigation; |
| ● | risks associated with SCE implementing PSPS, including regulatory fines and penalties, claims for damages and reputational harm; |
| ● | ability of SCE to maintain a valid safety certification; |
| ● | ability of Edison International and SCE to obtain sufficient insurance at a reasonable cost, including insurance relating to wildfire-related claims, and to recover the costs of such insurance or, in the event liabilities exceed insured amounts, the ability to recover uninsured losses (including amounts paid for self-insured retention and co-insurance) from customers or other parties; |
| ● | extreme weather-related incidents (including events caused, or exacerbated, by climate change, such as wildfires, debris flows, flooding, droughts, high wind events and extreme heat events) and other natural disasters (such as earthquakes), which could cause, among other things, public safety issues, property damage, rotating outages and other operational issues (such as issues due to damaged infrastructure), PSPS activations and unanticipated costs; |
| ● | risk that California Assembly Bill 1054 ("AB 1054") does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires where utility facilities are alleged to be a substantial cause, including the longevity of the Wildfire Insurance Fund and the CPUC's interpretation of and actions under AB 1054, including its interpretation of the prudency standard clarified by AB 1054; |
| ● | ability of Edison International and SCE to effectively attract, manage, develop and retain a skilled workforce, including its contract workers; |
Edison International Reports First Quarter 2023 Financial Results
Page 4 of 9
| ● | decisions and other actions by the California Public Utilities Commission, the Office of Energy Infrastructure Safety of the California Natural Resources Agency, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and other governmental authorities, including decisions and actions related to nationwide or statewide crisis, determinations of authorized rates of return or return on equity, the recoverability of wildfire-related and debris flow-related costs, issuance of SCE's wildfire safety certification, wildfire mitigation efforts, approval and implementation of electrification programs, and delays in executive, regulatory and legislative actions; |
| ● | cost and availability of labor, equipment and materials, including as a result of supply chain constraints and inflation; |
| ● | ability of Edison International or SCE to borrow funds and access bank and capital markets on reasonable terms; |
| ● | risks associated with the decommissioning of San Onofre, including those related to worker and public safety, public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel and other radioactive material, delays, contractual disputes, and cost overruns; |
| ● | pandemics, such as COVID-19, and other events that cause regional, statewide, national or global disruption, which could impact, among other things, Edison International's and SCE's business, operations, cash flows, liquidity and/or financial results and cause Edison International and SCE to incur unanticipated costs; |
| ● | physical security of Edison International's and SCE's critical assets and personnel and the cybersecurity of Edison International's and SCE's critical information technology systems for grid control, and business, employee and customer data; |
| ● | risks associated with cost allocation resulting in higher rates for utility bundled service customers because of possible customer bypass or departure for other electricity providers such as Community Choice Aggregators ("CCA," which are cities, counties, and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses) and Electric Service Providers (entities that offer electric power and ancillary services to retail customers, other than electrical corporations (like SCE) and CCAs) ; |
| ● | risks inherent in SCE’s capital investment program, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, contractor performance, availability of labor, equipment and materials, weather, changes in the California Independent System Operator’s transmission plans, and governmental approvals; and |
| ● | risks associated with the operation of electrical facilities, including worker and public safety issues, the risk of utility assets causing or contributing to wildfires, failure, availability, efficiency, and output of equipment and facilities, and availability and cost of spare parts. |
Additional information about risks and uncertainties is contained in Edison International and SCE’s most recent combined Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent Quarterly Report(s) on Form 10-Q filed with the Securities and Exchange commission, including the "Risk Factors" sections. Readers are urged to read this entire release as well as the most recent Form 10-K and Form 10-Q (including information incorporated by reference), and carefully consider the risks, uncertainties, and other factors that affect Edison International's and SCE's businesses. Edison International and SCE post or provide direct links (i) to certain SCE and other parties' regulatory filings and documents with the CPUC and the FERC and certain agency rulings and notices in open proceedings in a section titled "SCE Regulatory Highlights," (ii) to certain documents and information related to Southern California wildfires which may be of interest to investors in a section titled "Southern California Wildfires," and (iii) to presentations, documents and other information that may be of interest to investors in a section titled "Presentations and Updates" at www.edisoninvestor.com in order to publicly disseminate such information.
These forward-looking statements represent our expectations only as of the date of this news release, and Edison International assumes no duty to update them to reflect new information, events or circumstances. Readers should review future reports filed by Edison International and SCE with the SEC.
Edison International Reports First Quarter 2023 Financial Results
Page 5 of 9
First Quarter Reconciliation of Basic Earnings Per Share to Core Earnings Per Share
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Three months ended |
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March 31, |
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2023 |
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2022 |
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Change |
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Earnings (loss) per share attributable to Edison International |
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SCE |
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$ |
0.97 |
|
$ |
0.38 |
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$ |
0.59 |
Edison International Parent and Other |
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(0.16) |
|
|
(0.16) |
|
|
— |
Edison International |
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0.81 |
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|
0.22 |
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|
0.59 |
Less: Non-core items |
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|
|
|
|
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SCE |
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(0.32) |
|
|
(0.85) |
|
|
0.53 |
Edison International Parent and Other |
|
|
0.04 |
|
|
— |
|
|
0.04 |
Total non-core items |
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(0.28) |
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(0.85) |
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|
0.57 |
Core earnings (loss) per share |
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|
|
|
|
|
|
|
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SCE |
|
|
1.29 |
|
|
1.23 |
|
|
0.06 |
Edison International Parent and Other |
|
|
(0.20) |
|
|
(0.16) |
|
|
(0.04) |
Edison International |
|
$ |
1.09 |
|
$ |
1.07 |
|
$ |
0.02 |
Note: Diluted earnings were $0.81 and $0.22 per share for the three months ended March 31, 2023 and 2022.
First Quarter Reconciliation of Basic Earnings Per Share to Core Earnings (in millions)
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Three months ended |
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March 31, |
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(in millions) |
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2023 |
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2022 |
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Change |
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Net income (loss) attributable to Edison International |
|
|
|
|
|
|
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|
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SCE |
|
$ |
370 |
|
$ |
147 |
|
$ |
223 |
Edison International Parent and Other |
|
|
(60) |
|
|
(63) |
|
|
3 |
Edison International |
|
|
310 |
|
|
84 |
|
|
226 |
Less: Non-core items |
|
|
|
|
|
|
|
|
|
SCE1,2,3 |
|
|
(124) |
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(323) |
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|
199 |
Edison International Parent and Other4 |
|
|
18 |
|
|
— |
|
|
18 |
Total non-core items |
|
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(106) |
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(323) |
|
|
217 |
Core earnings (loss) |
|
|
|
|
|
|
|
|
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SCE |
|
|
494 |
|
|
470 |
|
|
24 |
Edison International Parent and Other |
|
|
(78) |
|
|
(63) |
|
|
(15) |
Edison International |
|
$ |
416 |
|
$ |
407 |
|
$ |
9 |
1 |
Includes charges of $90 million ($65 million after-tax) and $396 million ($285 million after-tax) for 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries, for the three months ended March 31, 2023 and 2022, respectively. |
2 |
Includes charges of $52 million ($38 million after-tax) and $53 million ($38 million after-tax) from the amortization of SCE's contribution to the Wildfire Insurance Fund, for the three months ended March 31, 2023 and 2022, respectively. |
3 |
Includes a charge of $30 million ($21 million after-tax) for estimated losses related to the reasonableness review of recorded San Onofre Units 2 and 3 decommissioning costs in the 2021 NDCTP for the three months ended March 31, 2023. |
4 |
Includes customer revenues of $22 million ($18 million after-tax) related to an EIS insurance contract for the three months ended March 31, 2023. |
.
Edison International Reports First Quarter 2023 Financial Results
Page 6 of 9
Consolidated Statements of Income |
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Three months ended |
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March 31, |
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(in millions, except per-share amounts) |
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2023 |
|
2022 |
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Operating revenue |
|
$ |
3,966 |
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$ |
3,968 |
Purchased power and fuel |
|
|
1,318 |
|
|
1,037 |
Operation and maintenance |
|
|
1,084 |
|
|
1,487 |
Wildfire-related claims, net of insurance recoveries |
|
|
96 |
|
|
425 |
Wildfire Insurance Fund expense |
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|
52 |
|
|
53 |
Depreciation and amortization |
|
|
656 |
|
|
583 |
Property and other taxes |
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|
140 |
|
|
126 |
Other operating income |
|
|
— |
|
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(2) |
Total operating expenses |
|
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3,346 |
|
|
3,709 |
Operating income |
|
|
620 |
|
|
259 |
Interest expense |
|
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(361) |
|
|
(246) |
Other income |
|
|
119 |
|
|
68 |
Income before income taxes |
|
|
378 |
|
|
81 |
Income tax expense (benefit) |
|
|
13 |
|
|
(55) |
Net income |
|
|
365 |
|
|
136 |
Less: Preference stock dividend requirements of SCE |
|
|
29 |
|
|
26 |
Less: Preferred stock dividend requirement of Edison International |
|
|
26 |
|
|
26 |
Net income attributable to Edison International common shareholders |
|
$ |
310 |
|
$ |
84 |
Basic earnings per share: |
|
|
|
|
|
|
Weighted average shares of common stock outstanding |
|
|
383 |
|
|
381 |
Basic earnings per common share attributable to Edison International common shareholders |
|
$ |
0.81 |
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$ |
0.22 |
Diluted earnings per share: |
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|
|
|
|
|
Weighted average shares of common stock outstanding, including effect of dilutive securities |
|
|
384 |
|
|
382 |
Diluted earnings per common share attributable to Edison International common shareholders |
|
$ |
0.81 |
|
$ |
0.22 |
Edison International Reports First Quarter 2023 Financial Results
Page 7 of 9
Consolidated Balance Sheets |
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Edison International |
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March 31, |
|
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December 31, |
(in millions) |
|
2023 |
|
2022 |
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ASSETS |
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|
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Cash and cash equivalents |
|
$ |
836 |
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$ |
914 |
Receivables, less allowances of $323 and $347 for uncollectible accounts at respective dates |
|
|
1,451 |
|
|
1,695 |
Accrued unbilled revenue |
|
|
766 |
|
|
641 |
Inventory |
|
|
500 |
|
|
474 |
Prepaid expenses |
|
|
311 |
|
|
248 |
Regulatory assets |
|
|
2,817 |
|
|
2,497 |
Wildfire Insurance Fund contributions |
|
|
204 |
|
|
204 |
Other current assets |
|
|
325 |
|
|
397 |
Total current assets |
|
|
7,210 |
|
|
7,070 |
Nuclear decommissioning trusts |
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|
4,093 |
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|
3,948 |
Marketable securities |
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|
2 |
|
|
5 |
Other investments |
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|
62 |
|
|
50 |
Total investments |
|
|
4,157 |
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|
4,003 |
Utility property, plant and equipment, less accumulated depreciation and amortization of $12,505 and $12,260 at respective dates |
|
|
53,955 |
|
|
53,274 |
Nonutility property, plant and equipment, less accumulated depreciation of $108 and $106 at respective dates |
|
|
215 |
|
|
212 |
Total property, plant and equipment |
|
|
54,170 |
|
|
53,486 |
Regulatory assets (include $827 and $834 related to Variable Interest Entities "VIEs" at respective dates) |
|
|
8,151 |
|
|
8,181 |
Wildfire Insurance Fund contributions |
|
|
2,104 |
|
|
2,155 |
Operating lease right-of-use assets |
|
|
1,346 |
|
|
1,442 |
Long-term insurance receivables |
|
|
458 |
|
|
465 |
Other long-term assets |
|
|
1,258 |
|
|
1,239 |
Total long-term assets |
|
|
13,317 |
|
|
13,482 |
|
|
|
|
|
|
|
Total assets |
|
$ |
78,854 |
|
$ |
78,041 |
Edison International Reports First Quarter 2023 Financial Results
Page 8 of 9
Consolidated Balance Sheets |
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Edison International |
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|
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March 31, |
|
|
December 31, |
(in millions, except share amounts) |
|
2023 |
|
2022 |
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LIABILITIES AND EQUITY |
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|
|
|
|
|
Short-term debt |
|
$ |
1,645 |
|
$ |
2,015 |
Current portion of long-term debt |
|
|
2,214 |
|
|
2,614 |
Accounts payable |
|
|
1,795 |
|
|
2,359 |
Wildfire-related claims |
|
|
75 |
|
|
121 |
Customer deposits |
|
|
172 |
|
|
167 |
Regulatory liabilities |
|
|
425 |
|
|
964 |
Current portion of operating lease liabilities |
|
|
420 |
|
|
506 |
Other current liabilities |
|
|
1,620 |
|
|
1,601 |
Total current liabilities |
|
|
8,366 |
|
|
10,347 |
Long-term debt (include $809 related to VIEs at both dates) |
|
|
29,442 |
|
|
27,025 |
Deferred income taxes and credits |
|
|
6,280 |
|
|
6,149 |
Pensions and benefits |
|
|
413 |
|
|
422 |
Asset retirement obligations |
|
|
2,733 |
|
|
2,754 |
Regulatory liabilities |
|
|
8,555 |
|
|
8,211 |
Operating lease liabilities |
|
|
926 |
|
|
936 |
Wildfire-related claims |
|
|
1,600 |
|
|
1,687 |
Other deferred credits and other long-term liabilities |
|
|
2,990 |
|
|
2,988 |
Total deferred credits and other liabilities |
|
|
23,497 |
|
|
23,147 |
Total liabilities |
|
|
61,305 |
|
|
60,519 |
Commitments and contingencies |
|
|
|
|
|
|
Preferred stock (50,000,000 shares authorized; 1,250,000 shares of Series A and 750,000 shares of Series B issued and outstanding at respective dates) |
|
|
1,978 |
|
|
1,978 |
Common stock, no par value (800,000,000 shares authorized; 382,659,081 and 382,208,498 shares issued and outstanding at respective dates) |
|
|
6,223 |
|
|
6,200 |
Accumulated other comprehensive loss |
|
|
(9) |
|
|
(11) |
Retained earnings |
|
|
7,456 |
|
|
7,454 |
Total Edison International's shareholders' equity |
|
|
15,648 |
|
|
15,621 |
Noncontrolling interests – preference stock of SCE |
|
|
1,901 |
|
|
1,901 |
Total equity |
|
|
17,549 |
|
|
17,522 |
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
78,854 |
|
$ |
78,041 |
Edison International Reports First Quarter 2023 Financial Results
Page 9 of 9
Consolidated Statements of Cash Flows |
|
Edison International |
||||
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
||||
(in millions) |
|
2023 |
|
2022 |
||
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
365 |
|
$ |
136 |
Adjustments to reconcile to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
676 |
|
|
624 |
Allowance for equity during construction |
|
|
(36) |
|
|
(30) |
Deferred income taxes |
|
|
12 |
|
|
(55) |
Wildfire Insurance Fund amortization expense |
|
|
52 |
|
|
53 |
Other |
|
|
8 |
|
|
11 |
Nuclear decommissioning trusts |
|
|
(19) |
|
|
(34) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Receivables |
|
|
227 |
|
|
130 |
Inventory |
|
|
(29) |
|
|
(14) |
Accounts payable |
|
|
(508) |
|
|
(84) |
Tax receivables and payables |
|
|
(9) |
|
|
54 |
Other current assets and liabilities |
|
|
(329) |
|
|
(30) |
Derivative assets and liabilities, net |
|
|
(99) |
|
|
35 |
Regulatory assets and liabilities, net |
|
|
(296) |
|
|
259 |
Wildfire-related insurance receivable |
|
|
— |
|
|
(96) |
Wildfire-related claims |
|
|
(133) |
|
|
(196) |
Other noncurrent assets and liabilities |
|
|
28 |
|
|
29 |
Net cash (used in) provided by operating activities |
|
|
(90) |
|
|
792 |
Cash flows from financing activities: |
|
|
|
|
|
|
Long-term debt issued, net of discount and issuance costs of $19 and $20 for the respective periods |
|
|
1,681 |
|
|
1,713 |
Long-term debt repaid |
|
|
(401) |
|
|
(365) |
Short-term debt repaid |
|
|
(600) |
|
|
(518) |
Common stock issued |
|
|
10 |
|
|
4 |
Commercial paper borrowing (repayments), net |
|
|
960 |
|
|
(306) |
Dividends and distribution to noncontrolling interests |
|
|
(29) |
|
|
(32) |
Common stock dividends paid |
|
|
(277) |
|
|
(262) |
Preferred stock dividends paid |
|
|
(52) |
|
|
(46) |
Other |
|
|
24 |
|
|
17 |
Net cash provided by financing activities |
|
|
1,316 |
|
|
205 |
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(1,324) |
|
|
(1,207) |
Proceeds from sale of nuclear decommissioning trust investments |
|
|
951 |
|
|
867 |
Purchases of nuclear decommissioning trust investments |
|
|
(932) |
|
|
(833) |
Other |
|
|
— |
|
|
16 |
Net cash used in investing activities |
|
|
(1,305) |
|
|
(1,157) |
Net decrease in cash, cash equivalents and restricted cash |
|
|
(79) |
|
|
(160) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
917 |
|
|
394 |
Cash, cash equivalents and restricted cash at end of period |
|
$ |
838 |
|
$ |
234 |
Exhibit 99.2
Prepared Remarks of Edison International CEO and CFO
First Quarter 2023 Earnings Teleconference
May 2, 2023, 1:30 p.m. (PT)
Pedro Pizarro, President and Chief Executive Officer, Edison International
Edison International’s core EPS for first quarter 2023 was $1.09. We are pleased with our start to the year and are confident in affirming our 2023 core EPS guidance of $4.55 to $4.85. We also remain confident in delivering our long-term EPS growth target of 5 to 7% from 2021 through 2025. Maria will discuss our financial performance and outlook.
My key message today is that we continue to see a number of positives in the near term and long term, which make us excited for our company’s future. SCE’s actions to sustain and strengthen the electric grid, mitigate wildfires, and enable decarbonization through electrification are critically needed by California and are increasing our investment opportunity.
In the longer-term, our Pathway 2045 analysis highlights the continued investment in transmission and distribution needed to evolve the grid. This is being recognized by regulators in California. In 2021, the California ISO released a 20-year plan estimating about $30 billion of transmission investment needed through 2040, consistent with our Pathway analysis. Only a few weeks ago, CAISO published its Draft 2022–2023 Transmission Plan, with its current thinking on system needs over the next 10 years. Their draft plan calls for 46 transmission projects with a total estimated cost of $9.3 billion. Over $2 billion of that represents proposed incumbent projects for SCE, and over $5 billion represents FERC Order 1000 competitive projects within southern California for which SCE will be able to compete.
In the near-term, SCE continues its diligent execution of its Wildfire Mitigation Plan and has reduced the probability of losses from catastrophic wildfires by 75 to 80% compared to pre-2018 levels, predominantly from grid hardening measures that allow the utility to mitigate risk while keeping electricity flowing to customers. Thanks again to the many of you who visited us in person at our headquarters and heard directly from several of our leaders about the utility’s achievements and ongoing actions.
In March, SCE filed its 2023 through 2025 WMP with the Office of Energy Infrastructure Safety. Highlights of the plan are shown on page 3. Our number one priority remains the safety of the public, customers, workers, and first responders. In 2023, the utility is building on the work already accomplished while focusing on five key areas: continuing to harden the grid, ramping up targeted undergrounding work in severe risk areas, continuing to reduce PSPS impacts, expanding aerial fire suppression funding to year-round, and furthering technological advancements.
SCE’s flagship grid hardening program, covered conductor, remains its key mitigation measure. More than 2,850 additional miles of covered conductor will be installed between 2023 and 2025. By the end of 2025, SCE expects to have replaced more than 7,200 miles, or about three quarters, of overhead distribution power lines in high fire risk areas with covered conductor. SCE also plans to complete about 100 miles of undergrounding by 2025 to address the high risk presented by unique factors in certain areas, and plans to underground a total of 600 miles by the end of 2028. Additionally, to quickly suppress fires regardless of how they start and protect the communities SCE serves, the utility continues to partner with the LA County Fire Department, Orange County Fire Authority, and Ventura County Fire Department to expand their firefighting capabilities. As highlighted in the WMP, this support has been expanded to year-round aerial fire suppression from the Quick Reaction Force, made up of the world’s largest fire-suppression helicopters with unique night firefighting capabilities.
The WMP is adaptive and focused on furthering technological advancements to find new ways to mitigate wildfire risk. SCE is continuously developing new approaches and collaborating with other utilities, academia, and the energy sector to make our communities safer. The WMP highlights technologies, such as the Rapid Earth Current Limiter, Early Fault Detection, and using artificial intelligence, that will continue to advance our suite of wildfire mitigation measures.
A key long-term driver for SCE’s investment in the grid and for enabling customer affordability is transportation electrification. We aren’t just talking about regulatory policies or long-term forecasts here; we are seeing customers really start to embrace and adopt EVs today — including operators of medium- and heavy-duty vehicle fleets.
2
SCE was an early mover and has the country’s largest suite of transportation electrification programs led by an investor-owned utility, with over $800 million in approved funding for its Charge Ready programs, which include a program aimed at the medium- and heavy-duty segment. Momentum and customer interest have certainly increased, and we are beginning to see vehicle availability improvements in the heavy-duty segment, with more options available to order. SCE is currently working with nearly 200 sites to potentially support approximately 4,000 medium- and heavy-duty vehicles. Customers operating heavy-duty vehicles are requesting higher-powered chargers, resulting in larger load requests that may require additional distribution system upgrades to ensure adequate capacity is available. SCE continues to engage with these customers to understand when and where these vehicles will materialize to ensure the grid is ready. Beyond transportation electrification, building electrification is another critical opportunity to reduce GHG emissions. SCE has proposed a $677 million program to help catalyze the adoption of electric heat pumps, which is currently being reviewed by the CPUC.
I will conclude by noting that even as SCE makes substantial investment in the grid to keep the utility and the state on track for decarbonization and electrification efforts, affordability is always top-of-mind. SCE’s long-standing culture of actively pursuing and maintaining productivity improvement and cost control measures has enabled it to have the lowest system average rate among California IOUs. Some recent examples include the pending settlement agreement with TURN and Cal Advocates to move to a customer-funded wildfire self-insurance model and SCE’s operational excellence program, which includes over 600 employee-driven ideas with capital efficiency and O&M benefits. These include work planning, procurement, and technology as shown on page 4. Beyond these, we will constantly pursue new opportunities for digitization, automation, and generative AI to drive further improvements in customer interactions, asset data quality, and back-office efficiencies. The expected benefits should progressively increase as we accelerate implementation through 2024 and beyond, further benefiting affordability for SCE's customers.
3
Maria Rigatti, Executive Vice President and Chief Financial Officer, Edison International
In my comments today, I will discuss first quarter results, our 2023 EPS guidance, our 2023 financing plan, and other financial topics.
Starting with the first quarter of 2023, EIX reported core EPS of $1.09. As you can see from the year-over-year quarterly variance analysis shown on page 5, SCE’s first quarter earnings increased primarily due to GRC attrition year escalation. This was partially offset by higher net interest expense, driven by higher interest rates associated with funding 2017 and 2018 wildfire claims payments. At EIX Parent and Other, there was a negative variance of 4 cents, due to higher holding company interest expense.
I would now like to discuss SCE’s capital and rate base forecasts, shown on pages 6 and 7. These are consistent with last quarter’s disclosures. SCE will file its 2025 GRC application in mid-May and we will update our capital and rate base projections and extend them through 2028 at that time. Over the coming years, SCE will continue to invest in wildfire mitigation and increase its grid work to meet the needs of its customers while also supporting California’s leading role in building a carbon-free economy. You can see this increased investment begin in our projections for 2025 capital spending, which is just under $7 billion. As a point of reference, only 6 years ago, our annual capex was less than $4 billion.
Let me provide a brief update on the 2017 and 2018 Wildfire and Mudslide Events. As outlined on page 8, in the first quarter, SCE resolved about $148 million in individual plaintiff claims. This continued progress settling claims enables us to move further along in resolving these historical events. Naturally, as we proceed toward full resolution, we continue to gain more and more information. Each quarter we take our cumulative experience into account as we refine the best estimate. Consequently, SCE adjusted the best estimate upward by $90 million. More importantly, with this progress, the utility remains confident that it will file the TKM cost recovery application in the third quarter of this year. Our message is very clear — SCE will seek full CPUC cost recovery, excluding amounts foregone under the agreement with the Safety Enforcement Division or already recovered. SCE will show its strong, compelling case that it operated its system prudently and that it is in the public interest to authorize full cost recovery.
4
Turning to guidance, page 9 shows our 2023 EPS guidance and the key assumptions for modeling purposes. We are pleased with our start to the year and are confident in affirming our 2023 core EPS guidance of $4.55 to $4.85.
Progress related to the parent company’s 2023 financing plan is shown on page 10. In March, we issued $500 million of junior subordinated notes, which provided $250 million of equity content. The transaction was in line with our expectations, and we were pleased to see strong investor support for this offering, which was significantly oversubscribed. We expect to generate approximately $100 million of equity through internal programs, consistent with the $300 to 400 million of equity content in our financing plan.
To add another highlight on the financing front, just last week, SCE closed on its securitization financing for the final portion of the $1.6 billion in AB 1054 capital expenditures. SCE saw very robust investor engagement for this $775 million offering. This resulted in a cost-effective transaction for SCE’s customers and allowed the utility to repay an outstanding term loan, further improving its credit profile.
Please turn to page 11. In addition to growing investor support, we are seeing our strengthening business and credit profile reflected in the rating agencies’ outlooks. In February, Moody’s upgraded EIX and SCE’s credit ratings by one notch, reflecting the decline in wildfire risk facing SCE. Additionally, last week, Fitch upgraded EIX and SCE’s credit ratings by one notch, noting the meaningful decline in major wildfires linked to SCE’s equipment post-2018, despite elevated wildfire activity in California in 2020 and 2021, and ongoing efforts to enhance system resilience while mitigating reliance on and frequency of public safety power shutoffs.
Page 12 provides an update on the CPUC cost of capital mechanism. If the 12-month average of the Moody’s Baa utility bond index exceeds 5.37% at the end of September, SCE will file a Tier 2 advice letter to implement the adjustment to the 2024 ROE. The adjustment would be equal to half the difference between the average and 4.37%.
5
The mechanism also updates the authorized costs of debt and preferred equity. Through April 25, the measurement period average is around 5.7%. We will continue monitoring the cost of capital mechanism, which could result in significant upside to 2024 earnings should it trigger.
Looking ahead, we are reiterating our 5 to 7% EPS growth rate guidance from 2021 through 2025, which translates to 2025 EPS of $5.50 to $5.90. My management team and I are fully committed to delivering on this target. We will provide an update on our EPS growth rate projections through 2028 on our Q2 earnings call. With strong rate base growth as the underlying driver, coupled with the significant investment needed in our electric grid, we continue to be optimistic about the company’s growth prospects, both near and long term.
6
|
May 2, 2023 First Quarter 2023 Financial Results |
|
1 Statements contained in this presentation about future performance, including, without limitation, operating results, capital expenditures, rate base growth, dividend policy, financial outlook, and other statements that are not purely historical, are forward-looking statements. These forward-looking statements reflect our current expectations; however, such statements involve risks and uncertainties. Actual results could differ materially from current expectations. These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances. Important factors that could cause different results include, but are not limited to the: • ability of SCE to recover its costs through regulated rates, including uninsured wildfire-related and debris flow-related costs, costs incurred to mitigate the risk of utility equipment causing future wildfires, costs incurred as a result of the COVID-19 pandemic, and increased costs due to supply chain constraints, inflation, and rising interest rates; • ability of SCE to implement its Wildfire Mitigation Plan and capital program; • risks of regulatory or legislative restrictions that would limit SCE's ability to implement operational measures to mitigate wildfire risk, including Public Safety Power Shutoff (“PSPS”) and fast curve settings, when conditions warrant or would otherwise limit SCE's operational practices relative to wildfire risk mitigation; • risks associated with SCE implementing PSPS, including regulatory fines and penalties, claims for damages and reputational harm; • ability of SCE to maintain a valid safety certification; • ability of Edison International and SCE to obtain sufficient insurance at a reasonable cost, including insurance relating to wildfire-related claims, and to recover the costs of such insurance or, in the event liabilities exceed insured amounts, the ability to recover uninsured losses (including amounts paid for self-insured retention and co-insurance) from customers or other parties; • extreme weather-related incidents (including events caused, or exacerbated, by climate change, such as wildfires, debris flows, flooding, droughts, high wind events and extreme heat events) and other natural disasters (such as earthquakes), which could cause, among other things, public safety issues, property damage, rotating outages and other operational issues (such as issues due to damaged infrastructure), PSPS activations and unanticipated costs; • risk that California Assembly Bill 1054 (“AB 1054”) does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires where utility facilities are alleged to be a substantial cause, including the longevity of the Wildfire Insurance Fund and the CPUC's interpretation of and actions under AB 1054, including its interpretation of the prudency standard clarified by AB 1054; • ability of Edison International and SCE to effectively attract, manage, develop and retain a skilled workforce, including its contract workers; • decisions and other actions by the California Public Utilities Commission, the Office of Energy Infrastructure Safety of the California Natural Resources Agency, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and other governmental authorities, including decisions and actions related to nationwide or statewide crisis, determinations of authorized rates of return or return on equity, the recoverability of wildfire-related and debris flow-related costs, issuance of SCE's wildfire safety certification, wildfire mitigation efforts, approval and implementation of electrification programs, and delays in executive, regulatory and legislative actions; • cost and availability of labor, equipment and materials, including as a result of supply chain constraints and inflation; • ability of Edison International or SCE to borrow funds and access bank and capital markets on reasonable terms; • risks associated with the decommissioning of San Onofre, including those related to worker and public safety, public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel and other radioactive material, delays, contractual disputes, and cost overruns; • pandemics, such as COVID-19, and other events that cause regional, statewide, national or global disruption, which could impact, among other things, Edison International's and SCE's business, operations, cash flows, liquidity and/or financial results and cause Edison International and SCE to incur unanticipated costs; • physical security of Edison International's and SCE's critical assets and personnel and the cybersecurity of Edison International's and SCE's critical information technology systems for grid control, and business, employee and customer data; • risks associated with cost allocation resulting in higher rates for utility bundled service customers because of possible customer bypass or departure for other electricity providers such as Community Choice Aggregators (“CCA,” which are cities, counties, and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses) and Electric Service Providers (entities that offer electric power and ancillary services to retail customers, other than electrical corporations (like SCE) and CCAs); • risks inherent in SCE’s capital investment program, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, contractor performance, availability of labor, equipment and materials, weather, changes in the California Independent System Operator’s transmission plans, and governmental approvals; and • risks associated with the operation of electrical facilities, including worker and public safety issues, the risk of utility assets causing or contributing to wildfires, failure, availability, efficiency, and output of equipment and facilities, and availability and cost of spare parts. Other important factors are discussed under the headings “Forward-Looking Statements”, “Risk Factors” and “Management’s Discussion and Analysis” in Edison International’s Form 10-K and other reports filed with the Securities and Exchange Commission, which are available on our website: www.edisoninvestor.com. These filings also provide additional information on historical and other factual data contained in this presentation. Forward-Looking Statements May 2, 2023 |
|
2 Edison International First Quarter Highlights Q1 2023 EPS driven primarily by rate base earnings GAAP EPS: $0.81 Core EPS1 : $1.09 EIX issued $500 million junior subordinated notes achieving $250 million of equity content Substantial portion of EIX 2023 financing plan completed EIX affirms 2023 Core EPS guidance $4.55–4.85 2023 Core EPS1 SCE filed 2023–2025 Wildfire Mitigation Plan By end of 2025, SCE expects to have replaced about 75% of overhead lines in HFRA2 EIX reiterates long-term Core EPS growth rate 5–7% Core EPS CAGR 2021–20253 1. See Earnings Per Share Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix 2. Refers to overhead distribution infrastructure in SCE”s high fire risk area (HFRA) 3. Compound annual growth rate (CAGR) based on the midpoint of the initial 2021 EPS guidance range of $4.42–4.62 established September 16, 2021 May 2, 2023 |
|
3 SCE’s 2023–25 Wildfire Mitigation Plan (WMP) builds upon the accomplishments and lessons from the 2020–22 WMP May 2, 2023 In 2023, SCE is building on and extending the work already accomplished: – Continue hardening the grid, including transmission lines – Ramp up targeted undergrounding work in severe risk areas – Continue reducing PSPS impacts, particularly with Access & Functional Needs customers – Expand aerial fire suppression funding to year-round in 2023 – Further technological advancements Grid Design & Hardening Covered conductor & undergrounding Fire-resistant poles Protective devices & settings Inspections Aerial & ground Vegetation Management Line clearing, pole brushing, hazard tree assessments and remediations Situational Awareness Weather stations Wildfire cameras Fire spread modeling technology Advanced Technologies Early Fault Detection, Rapid Earth Fault Current Limiter, Artificial Intelligence and Machine Learning Public Safety Power Shutoff Critical care back-up batteries for eligible Medical Baseline customers Community Resource Centers & Community Crew Vehicles to support during PSPS events Aerial Fire Suppression Continue partnership with local fire agencies |
|
4 SCE’s operational excellence program includes >600 employee-driven ideas with capital and O&M benefits1 May 2, 2023 Major Themes Example High Impact Ideas Work Planning • Improve O&M cost efficiency by bundling work activities across inspections and repairs to reduce number of visits to the same asset • Optimize use of SCE's crews vs. contractors to perform construction and other tasks to manage costs while also developing employees' skills Procurement • Expand use of strategic sourcing to additional spend categories to secure better pricing • Optimize insourcing vs. outsourcing mix for certain work activities • Leverage reduced costs from vegetation management contractors to improve competitive bidding • Revise material management process at contractor warehouses Technology and Tools • Implement a single work management tool for vegetation management to optimize contractor assignments • Improve customer experience and lower service operating costs through self-service and optimized website 1. Financial benefits include O&M, costs recovered through balancing accounts, and capital expenditures |
|
5 First Quarter Earnings Summary May 2, 2023 1. See EIX Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix 2. For comparability, 2023 first quarter key EPS drivers are reported based on 2022 weighted-average share count of 380.7 million. 2023 first quarter weighted-average shares outstanding is 382.5 million 3. Includes $0.04 lower revenue related to higher tax benefits subject to balancing accounts and offset with income taxes 4. Includes $(0.16) recovered through regulatory mechanisms and offset with O&M $0.31, depreciation $(0.11), interest expense $(0.02) and property and other taxes $(0.02) Note: Diluted earnings were $0.81 and $0.22 per share for the three months ended March 31, 2023 and 2022, respectively Q1 2023 Q1 2022 Variance Basic Earnings Per Share (EPS) SCE $ 0.97 $ 0.38 $ 0.59 EIX Parent & Other (0.16) (0.16) — Basic EPS $ 0.81 $ 0.22 $ 0.59 Less: Non-core Items1 SCE $ (0.32) $ (0.85) $ 0.53 EIX Parent & Other 0.04 — 0.04 Total Non-core Items $ (0.28) $ (0.85) $ 0.57 Core Earnings Per Share (EPS) SCE $ 1.29 $ 1.23 $ 0.06 EIX Parent & Other (0.20) (0.16) (0.04) Core EPS $ 1.09 $ 1.07 $ 0.02 Key SCE EPS Drivers2 Lower revenue3,4 $ (0.03) GRC escalation 0.20 Other revenue (0.23) Lower O&M4 0.28 Wildfire-related claims 0.01 Higher depreciation4 (0.13) Higher net financing costs4 (0.16) Income taxes3 0.04 Other 0.05 Property and other taxes4 (0.04) Other income and expenses 0.09 Total core drivers $ 0.06 Non-core items1 0.53 Total $ 0.59 (0.04) Total core drivers $ (0.04) Non-core items1 0.04 Total $ — EIX EPS2 EIX Parent and Other |
|
6 5.4 5.7 6.0 5.8–5.9 6.7 Range 2021 2022 2023 2024 2025 2026 2027 2028 Case2 n/a n/a 5.7 5.2 5.3 SCE has significant capital expenditure opportunities driven by investments in the safety and reliability of the grid May 2, 2023 Capital deployment expected to increase in future GRC and other applications1 Capital Expenditures, $ in Billions 1. Forecast for 2024 includes amounts requested in track 4 of SCE’s 2021 GRC. Forecast for 2025 includes amounts currently expected to be requested in SCE’s 2025 GRC filing. Additionally, reflects non-GRC spending subject to future regulatory requests beyond GRC proceedings and FERC Formula Rate updates 2. Annual Range Case capital reflects variability associated with future requests based on management judgment, potential for permitting delays and other operational considerations; GRC forecast is in line with authorized spend over the 2021 GRC track 1 cycle Future Requests In mid-May, SCE will file 2025 GRC application and EIX will extend capex and rate base forecasts to 2028 – Continued grid hardening – Infrastructure replacement – Investment supporting load growth and decarbonization objectives |
|
7 From a 2021 base, rate base growth forecast of 7–9% through 2025, reflecting future incremental investment May 2, 2023 1. Weighted-average year basis. Excludes rate base associated with ~$1.6 billion of wildfire mitigation-related spend that shall not earn an equity return under AB 1054 2. Range Case rate base reflects capital expenditure Range Case forecast Strong rate base growth driven by wildfire mitigation and important grid work to support California’s leading role in pivoting to a carbon-free economy Rate Base1 , $ in Billions 35.3 38.6 41.9 44.8–45.0 49.5 2021 2022 2023 2024 2025 ~9% 2021–2025 CAGR Future Requests Range Case2 n/a n/a 41.6 43.9 47.2 |
|
8 SCE will request CPUC cost recovery for 2017/2018 events, with first application targeted for Q3 2023 May 2, 2023 2.4 0.5 5.1 0.9 8.8 Best Estimate of Total Losses 1. TKM: Collectively, the Thomas Fire, the Koenigstein Fire, and the Montecito Mudslides 2. After giving effect to all payment obligations under settlements entered into through March 31, 2023, including under the agreement with the Safety and Enforcement Division of the CPUC. As a result of management's first quarter 2023 review, a $90 million increase in estimated losses for the 2017/2018 Wildfire/Mudslide Events as of March 31, 2023, was recorded SCE continues to make substantial progress resolving claims Applications for CPUC cost recovery $ in Billions, as of March 31, 2023 Remaining2 First application will be for TKM1 – Now target filing in Q3 2023 – Currently expect to request ~$2 billion (settlements + financing and legal costs) – Plan to request securitization of approved amounts ▪ Rate sensitivity to securitization: ~0.08¢/kWh per $1 billion of recovery (vs. current system average rate of 25.1¢/kWh) Separate application for Woolsey Resolved Cost recovery request of ~$6 billion (+associated interest and legal costs) SED agreement Insurance and FERC recovery |
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9 EIX affirms 2023 core EPS guidance of $4.55–4.85 May 2, 2023 1. SCE is unable to conclude, at this time, that these amounts are probable of recovery; however, recovery will be sought as part of future cost recovery applications 2. 2023 guidance share count reflects shares outstanding as of Dec. 31, 2022. Dilution from shares issued during 2023 are reflected in EIX Parent and Other. 2023 YTD results based on weighted average share count in Q1 2023 Note: See Earnings Per Share Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix. All tax-effected information on this slide is based on our current combined statutory tax rate of approximately 28%. Totals may not add due to rounding 2023 YTD 2023 Guidance Rate Base EPS 1.33 5.68 SCE Operational Variances 0.10 0.48–0.75 SCE Costs Excluded from Authorized (0.14) (0.71) EIX Parent and Other Operational expense (0.02) (0.14)–(0.13) Interest expense, preferred dividends (incl. dilution) (0.18) (0.76)–(0.74) EIX Consolidated Core EPS 1.09 $4.55–4.85 Share Count (in millions)2 382.5 382.2 EIX 2023 Core Earnings Per Share Guidance Range Building from SCE Rate Base EPS Rate Base CPUC FERC Rate Base ($Bn) $34.3 $7.7 Equity Ratio 52.00% 47.50% ROE 10.05% 10.30% EPS $4.69 $0.99 Modeling Considerations AFUDC 0.33 2022 CEMA decision true-up 0.14 Wildfire fund debt cost (0.09) Wildfire claims debt cost1 (0.44) (to be requested for recovery) Exec. compensation not in rates (0.18) |
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10 Significant portion of EIX 2023 financing plan accomplished early in the year, with strong investor support for offering May 2, 2023 1. Financing plans are subject to change 2. Equity content based on S&P methodology $1,400 $400 2.95% senior notes due March $600 term loan due April EIX 2023 Debt Maturities EIX 2023 Financing Plan Status1 $ in Millions Expect to issue securities with $300–400 million of equity content: – In March, issued $500 million of junior subordinated notes ($250 million equity content2 ) – Expect to generate ~$100 million common equity via internal programs ($20 million complete YTD) Expect to issue parent debt for remainder $400 term loan due November ✓ ✓ ✓ As of March 31, 2023 |
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11 Strengthening business and credit profiles have improved rating agencies’ outlooks May 2, 2023 Completed $775 million securitization of AB 1054 capex in April1 Expect ~$2.1 billion of cash flow Q2 2023–2025 from approved and pending cost recovery applications Significant demand for recent debt issuances at EIX and SCE enabled best price and execution Most recent rating agency updates: – Fitch upgraded EIX and SCE in April 2023 – Moody’s upgraded EIX and SCE in Feb. 2023 – S&P continues to maintain stable outlook 1. Securitization of $730 million of AB 1054 capital expenditures plus associated financing costs SCE EIX Moody’s Baa1 Stable Baa2 Stable S&P BBB Stable BBB Stable Fitch BBB Stable BBB Stable Long-term Issuer Rating and Outlook As of May 1, 2023 |
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12 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 Oct. 1, 2022 Jan. 1, 2023 Apr. 1, 2023 Jul. 1, 2023 Oct. 1, 2023 CPUC cost of capital mechanism adjusts ROE; also resets costs of debt and preferred if triggered May 2, 2023 ROE adjustment based on 12- month average of Moody’s Baa utility bond rates, measured from October 1 to September 30 If index exceeds 100 bps deadband from benchmark, authorized ROE changes by half the difference for 2024. Further, costs of debt and preferred are updated Benchmark value based on trailing 12 months average of Moody’s Baa index as of September 30, 2022 — 4.37% An average Moody's Baa utility bond yield of 4.94% or higher from April 26, 2023, through Sept. 30, 2023, would trigger mechanism to adjust upward CPUC Cost of Capital Adjustment Mechanism (CCM) Moody’s Baa Utility Bond Index Rate (%), as of April 25, 2023 https://www.edison.com/_gallery/get_file/?file_id=63d432a6b3aed337c6e7381c&file_ext=.xlsx&page_id= Click here for link to spreadsheet illustrating CCM mechanics Current Period Moving Average: 5.72% Current Spot Rate: 5.42% Minimum Avg. Rate to Trigger: 4.94% Benchmark: 4.37% Dead-band |
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13 EIX offers double-digit total return potential May 2, 2023 9–11% total return opportunity4 before potential P/E multiple expansion driven by estimated 75–80% wildfire risk reduction5 , and ongoing utility and government wildfire mitigation efforts 1. Compound annual growth rate (CAGR) based on the midpoint of the 2021 Core EPS guidance range of $4.42–4.62 established on September 16, 2021 2. Based on EIX stock price on May 1, 2023 3. Building electrification programs subject to CPUC approval 4. At current P/E multiple. Excludes changes in P/E multiple and potential dividend growth 5. Risk reduction based on mitigations through December 31, 2022 5–7% core EPS CAGR1 2021 to 2025 Underpinned by strong rate base growth of ~7–9% $27–30 billion 2021–2025 capital program ~4% current dividend yield2 19 consecutive years of dividend growth Target dividend payout of 45–55% of SCE core earnings Investments in safety and reliability of the grid Wildfire mitigation execution reduces risk for customers Creates strong foundation for climate adaptation and the clean energy transition One of the strongest electrification profiles in the industry Industry-leading programs for transportation electrification and building electrification3 Potential for 35% load growth by 2035 and 60% by 2045 |
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Appendix |
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15 4.63 0.35 0.15 (0.19) 4.94 (0.24) 4.70 2022 Core EPS Rate Base Earnings SCE Operational Variances EIX Parent & Other Results Before Incr. WF Claims Debt Interest Incr. WF Claims Debt Interest 2023 Core EPS Guidance (@ Midpoint) Gap between 2023 rate base and core EPS growth largely driven by interest on debt for wildfire claims payments1 May 2, 2023 1. See Earnings Per Share Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix. Non-core items are presented as recorded 2. Includes SCE Operational variances plus interest expense on wildfire fund contribution debt and executive compensation not in rates. Excludes incremental interest expense on debt funding wildfire claims payments 3. Variance reflects 2022 expense of 8¢ related to financing of unmonetized tax benefits associated with wildfire claims payments previously categorized as an SCE Operational Variance Earnings from strong 8.5% 2023 rate base growth offset by higher interest expense 2022 Core EPS vs. 2023 Core EPS Guidance at Midpoint of $4.55–4.85 Range1 Higher debt balance as more claims settled and higher interest rates. Interest to be included in cost recovery applications +6.7% +1.5% GAAP EPS 1.61 Non-Core items primarily related to 2017/18 Events 3.02 2 2 1 3 GAAP EPS 4.42 Non-Core items 0.28 |
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16 EIX reaffirms 5–7% 2021–2025 EPS growth rate target, which would result in 2025 EPS of $5.50–5.901 May 2, 2023 1. Based on the midpoint of initial 2021 Core EPS guidance range of $4.42–4.62 established September 16, 2021. Growth in any given year can be outside the range 2. Components are rounded to the nearest 5 cents and based on EIX 2022 guidance share count of 381.4 million shares. For the purposes of this illustration, all costs and dilution associated with any equity content issued beyond 2022 are reflected in the EIX Parent and Other line. Actual financing activity may vary and is subject to change 3. Based on SCE’s currently-authorized CPUC ROE of 10.05% Component Modeling Considerations Rate Base EPS3 (based on capex levels) 6.35–6.75 • CPUC ROE of 10.05% and FERC ROE 10.3% • Does not include potential upside from Cost of Capital Mechanism (~$0.28 EPS per 50bps change in CPUC ROE) SCE Op. Variances 0.65–0.75 • Includes AFUDC of ~$0.30 to $0.35, regulatory applications, operational efficiencies, among other items SCE Costs Excluded from Authorized (0.70)–(0.65) • Primarily wildfire claims payment-related debt • Current interest rate assumption of 5.3% (sensitivity: ~1¢ EPS per ±20bps change) EIX Parent & Other (including dilution) (0.80)–(0.95) • Current interest rate assumption of 6.1% (sensitivity: ~1¢ EPS per ±20bps change) Pursuing opportunities to deliver 5–7% growth rate1 2025 Core Earnings per Share Component Ranges2 |
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17 Edison’s near-term debt maturities are manageable with ~26% tied to SCE’s operations or AB 1054 securitization May 2, 2023 Currently Outstanding Debt Maturities (2023–2027)1 2023 2024 2025 2026 2027 Variable Rate (SOFR+) SCE: Operational – – – – – SCE: AB 1054 Bridge 730 – – – – SCE: Wildfire Claims 400 1,000 – – – EIX Parent2 400 – – – – Total Variable Rate 1,530 1,000 – – – Fixed Rate SCE: Operational 1,035 – 900 – – SCE: Wildfire Claims 750 1,150 300 350 1,350 EIX Parent – 500 800 – 600 Total Fixed Rate 1,785 1,650 2,000 350 1,950 Total Debt1 SCE: Operational 1,035 – 900 – – SCE: AB 1054 Bridge 730 – – – – SCE: Wildfire Claims 1,150 2,150 300 350 1,350 EIX Parent 400 500 800 – 600 Total Debt 3,315 2,650 2,000 350 1,950 $ in Millions, as of March 31, 2023 SCE term loan bridges to 2023 securitization of AB 1054 capex (completed in April 2023); does not affect earnings SCE will seek cost recovery of claims settlements and associated interest3 1. Does not include commercial paper borrowings, amortization of secured recovery bonds issued by SCE Recovery Funding LLC. The table shows the 2023 mandatory purchase of $135 million of tax-exempt bonds as a maturity in 2023. The company may choose to remarket the tax-exempt bonds at that time. The bonds mature in 2033 2. Classified as short-term debt on the balance sheet 3. Refers to CPUC recovery of prudently-incurred actual losses and related costs in excess of insurance. Excludes insurance recoveries, FERC recoveries, and other ineligible amounts. SCE will include interest on debt issued to finance claims payments in recovery requests |
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18 SCE continues to fund wildfire claims payments with debt May 2, 2023 Series Principal Due Rate 2021B 400 4/3/23 SOFR + 64bps 2021D 350 4/3/23 0.700% 2021J 400 8/1/23 0.700% 2021C 400 4/1/24 SOFR + 83bps 2021E 700 4/1/24 1.100% Term Loan 600 5/7/24 Adj. SOFR + 90bps 2021K 450 8/1/24 0.975% 2022C 300 6/1/25 4.200% 2020C 350 2/1/26 1.200% 2022D 600 6/1/27 4.700% 2022F 750 11/1/27 5.850% 2023A 750 3/1/28 5.300% 2022E 350 6/1/52 5.450% Total $6,400 Annualized Interest1: ~$245 Wildfire Claims Payment-Related Debt Issuances $ in Millions except percentages, as of March 31, 2023 Interest expense not currently recoverable in rates, however, will be included in cost recovery applications for the 2017/2018 Wildfire/Mudslide Events SCE has waiver from CPUC, allowing exclusion with respect to certain non-cash charges to equity and associated debt for calculating SCE’s regulatory equity ratio – Extension of waiver pending decision from CPUC 1. Pre-tax. Based on SOFR of 4.91% as of March 31, 2023 |
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19 Q1 2023 Q1 2022 SCE $ 370 $ 147 EIX Parent & Other (60) (63) Basic Earnings $ 310 $ 8 4 Non-Core Items SCE 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries (90) (396) Wildfire Insurance Fund expense (52) (53) 2021 NDCTP estimated loss (30) — Income tax benefits1 48 126 Subtotal SCE (124) (323) EIX Parent & Other Customer revenues for EIS insurance contract 22 — Income tax expense2 (4) — Subtotal EIX Parent & Other 1 8 — Less: Total non-core items $ (106) $ (323) SCE 494 470 EIX Parent & Other (78) (63) Core Earnings $ 416 $ 407 Earnings Non-GAAP Reconciliations May 2, 2023 1. SCE non-core items are tax-effected at an estimated statutory rate of approximately 28% 2. Customer revenues for EIS insurance contract are tax-effected at an estimated statutory rate of approximately 20% Reconciliation of EIX GAAP Earnings to EIX Core Earnings Earnings (Losses) Attributable to Edison International, $ in Millions |
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20 EIX Core EPS Non-GAAP Reconciliations May 2, 2023 1. 2023 EPS drivers are presented based on weighted-average share counts of 382.5 million; 2022 EPS drivers are presented based on weighted-average share counts of 380.7 million 2. SCE non-core items are tax-effected at an estimated statutory rate of approximately 28% 3. Customer revenues for EIS insurance contract are tax-effected at an estimated statutory rate of approximately 20% Q1 2023 Q1 2022 Basic EPS $ 0.81 $ 0.22 Non-Core Items SCE 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries (0.24) (1.04) Wildfire Insurance Fund expense (0.14) (0.14) 2021 NDCTP estimated loss (0.08) — Income tax benefit2 0.14 0.33 Subtotal SCE (0.32) (0.85) EIX Parent & Other Customer revenues for EIS insurance contract 0.06 — Income tax expense3 (0.02) — Subtotal EIX Parent & Other 0.04 — Less: Total non-core items (0.28) (0.85) Core EPS $ 1.09 $ 1.07 Reconciliation of EIX Basic Earnings Per Share to EIX Core Earnings Per Share EPS Attributable to Edison International1 |
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21 Low High Basic EIX EPS $4.27 $4.57 Total Non-Core Items1 (0.28) (0.28) Core EIX EPS $4.55 $4.85 1. Non-core items are presented as they are recorded Earnings Per Share Non-GAAP Reconciliations May 2, 2023 Reconciliation of EIX Basic Earnings Per Share Guidance to EIX Core Earnings Per Share Guidance 2023 EPS Attributable to Edison International |
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22 Edison International's earnings are prepared in accordance with generally accepted accounting principles used in the United States. Management uses core earnings (losses) internally for financial planning and for analysis of performance. Core earnings (losses) are also used when communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of the company's performance from period to period. Core earnings (losses) are a non-GAAP financial measure and may not be comparable to those of other companies. Core earnings (losses) are defined as earnings attributable to Edison International shareholders less non-core items. Non-core items include income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as write downs, asset impairments and other income and expense related to changes in law, outcomes in tax, regulatory or legal proceedings, and exit activities, including sale of certain assets and other activities that are no longer continuing. A reconciliation of Non-GAAP information to GAAP information is included either on the slide where the information appears or on another slide referenced in this presentation. EIX Investor Relations Contact Sam Ramraj, Vice President Derek Matsushima, Principal Manager (626) 302-2540 (626) 302-3625 Sam.Ramraj@edisonintl.com Derek.Matsushima@edisonintl.com Use of Non-GAAP Financial Measures May 2, 2023 |
