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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): July 27, 2023
Commission |
|
Exact Name of Registrant |
|
State or Other Jurisdiction of |
|
IRS Employer |
1-9936 |
|
EDISON INTERNATIONAL |
|
California |
|
95-4137452 |
1-2313 |
|
SOUTHERN CALIFORNIA EDISON COMPANY |
|
California |
|
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 Reports 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 July 27, 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 June 30, 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 Q2 2023 Financial Results Conference Call Prepared Remarks dated July 27, 2023 |
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99.3 |
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Edison International Q2 2023 Financial Results Conference Call Presentation dated July 27, 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: July 27, 2023
Date: July 27, 2023
Exhibit 99.1
Investor Relations: Sam Ramraj, (626) 302-2540
Media Contact: Jeff Monford, (626) 476-8120
Edison International Reports Second Quarter 2023 Results
| ● | Second Quarter 2023 GAAP earnings per share of $0.92; Core EPS of $1.01 |
| ● | SCE has completed nearly 5,000 miles of covered conductor; now estimates it has reduced the probability of losses from catastrophic wildfires by 85% |
| ● | Reaffirmed 2023 EPS guidance of $4.55-$4.85 |
| ● | Reiterated long-term core EPS growth rate target of 5%-7% for 2021-2025 and introduced core EPS growth rate target of 5%-7% for 2025-2028 |
ROSEMEAD, Calif., July 27, 2023 — Edison International (NYSE: EIX) today reported second-quarter net income of $354 million, or $0.92 per share, compared to net income of $241 million, or $0.63 per share, in the second quarter of last year. As adjusted, second-quarter core earnings were $388 million, or $1.01 per share, compared to core earnings of $357 million, or $0.94 per share, in the second quarter of last year.
Southern California Edison’s second-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 and higher interest income on balancing account undercollections, partially offset by higher interest expense.
Edison International Parent and Other’s second-quarter core loss per share increased year over year, primarily due to higher interest expense.
“SCE is strategically positioned to make substantial investments in the reliability, resiliency and readiness of the grid,” said Pedro J. Pizarro, president and CEO of Edison International. “The utility is also well prepared for the wildfire season and has now replaced nearly 5,000 circuit miles of bare wire with covered conductor. SCE will continue to make substantial investments in wildfire mitigation to address the remaining wildfire risk on the system.”
Pizarro added, “Driven by Edison International’s impressive performance through the first half of the year, we are confident in delivering on our 2023 core EPS guidance. Further, based on the strength of SCE’s investment opportunities, we are targeting 5% to 7% EPS growth for 2025 through 2028, which provides a path toward $7 EPS potential for 2028. Underpinning this is the rate base growth driven by the essential investments to advance California’s clean energy transition.”
Edison International uses core earnings internally for financial planning and 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 to reconcile core earnings to basic GAAP earnings.
Edison International Reports Second Quarter 2023 Financial Results
Page 2 of 9
Long-Term Core EPS Growth Rate Guidance
The company reiterated its long-term core EPS growth rate target of 5%-7% for 2021-2025. In addition, the company introduced a core EPS growth rate target of 5%-7% for 2025-2028, with a starting point of the midpoint of Edison International’s 2025 core EPS guidance of $5.50 to $5.90.
2023 Earnings Guidance
The company reaffirmed 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 May 2, 2023 |
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as of July 27, 2023 |
||||||||
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Low |
|
High |
|
Low |
|
High |
||||
EIX Basic EPS |
|
$ |
4.27 |
|
$ |
4.57 |
|
$ |
4.18 |
|
$ |
4.48 |
Less: Non-core Items* |
|
|
(0.28) |
|
|
(0.28) |
|
|
(0.37) |
|
|
(0.37) |
EIX Core EPS |
|
$ |
4.55 |
|
$ |
4.85 |
|
$ |
4.55 |
|
$ |
4.85 |
* There were ($140) million, or ($0.37) per share of non-core items recorded for the six months ended June 30, 2023. Basic EIX EPS guidance only incorporates non-core items to June 30, 2023.
Second Quarter 2023 Earnings Conference Call and Webcast Details
When: |
|
Thursday, July 27, 1:30-2:30 p.m. (PDT) |
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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1-800-813-5534 (U.S.) and 1-203-369-3348 (Int’l) — Passcode: 6544 |
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Telephone replay available through Aug. 11 at 6 p.m. (PDT) |
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 providing integrated sustainability and energy solutions to commercial, industrial and institutional customers.
Edison International Reports Second 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, which is required to benefit from certain provisions of California Assembly Bill 1054 (“AB 1054”); |
| ● | 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 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 Second 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, 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, contractor performance, and cost overruns; |
| ● | ability of Edison International and SCE to obtain sufficient insurance at a reasonable cost or to maintain its customer funded self-insurance program, 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; |
| ● | 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 Second Quarter 2023 Financial Results
Page 5 of 9
Second Quarter Reconciliation of Basic Earnings Per Share to Core Earnings Per Share
|
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Three months ended |
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Six months ended |
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||||||||
|
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June 30, |
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|
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June 30, |
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|
||||||||
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|
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||
Earnings (loss) per share attributable to Edison International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCE |
|
$ |
1.09 |
|
$ |
0.79 |
|
$ |
0.30 |
|
$ |
2.06 |
|
$ |
1.18 |
|
$ |
0.88 |
Edison International Parent and Other |
|
|
(0.17) |
|
|
(0.16) |
|
|
(0.01) |
|
|
(0.33) |
|
|
(0.33) |
|
|
— |
Edison International |
|
|
0.92 |
|
|
0.63 |
|
|
0.29 |
|
|
1.73 |
|
|
0.85 |
|
|
0.88 |
Less: Non-core items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCE |
|
|
(0.14) |
|
|
(0.31) |
|
|
0.17 |
|
|
(0.46) |
|
|
(1.15) |
|
|
0.69 |
Edison International Parent and Other |
|
|
0.05 |
|
|
— |
|
|
0.05 |
|
|
0.09 |
|
|
— |
|
|
0.09 |
Total non-core items |
|
|
(0.09) |
|
|
(0.31) |
|
|
0.22 |
|
|
(0.37) |
|
|
(1.15) |
|
|
0.78 |
Core earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCE |
|
|
1.23 |
|
|
1.10 |
|
|
0.13 |
|
|
2.52 |
|
|
2.33 |
|
|
0.19 |
Edison International Parent and Other |
|
|
(0.22) |
|
|
(0.16) |
|
|
(0.06) |
|
|
(0.42) |
|
|
(0.33) |
|
|
(0.09) |
Edison International |
|
$ |
1.01 |
|
$ |
0.94 |
|
$ |
0.07 |
|
$ |
2.10 |
|
$ |
2.00 |
|
$ |
0.10 |
Note: Diluted earnings were $0.92 and $0.63 per share for the three months ended June 30, 2023 and 2022, respectively. Diluted earnings were $1.73 and $0.85 per share for the six months ended June 30, 2023 and 2022, respectively.
Second Quarter Reconciliation of Basic Earnings Per Share to Core Earnings (in millions)
|
|
Three months ended |
|
|
|
|
Six months ended |
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||||||||
|
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June 30, |
|
|
|
|
June 30, |
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|
|
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(in millions) |
|
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
||||||
Net income (loss) attributable to Edison International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCE |
|
$ |
420 |
|
$ |
302 |
|
$ |
118 |
|
$ |
790 |
|
$ |
449 |
|
$ |
341 |
Edison International Parent and Other |
|
|
(66) |
|
|
(61) |
|
|
(5) |
|
|
(126) |
|
|
(124) |
|
|
(2) |
Edison International |
|
|
354 |
|
|
241 |
|
|
113 |
|
|
664 |
|
|
325 |
|
|
339 |
Less: Non-core items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCE1,2,3,4,5,6,7 |
|
|
(51) |
|
|
(116) |
|
|
65 |
|
|
(175) |
|
|
(439) |
|
|
264 |
Edison International Parent and Other8 |
|
|
17 |
|
|
— |
|
|
17 |
|
|
35 |
|
|
— |
|
|
35 |
Total non-core items |
|
|
(34) |
|
|
(116) |
|
|
82 |
|
|
(140) |
|
|
(439) |
|
|
299 |
Core earnings (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCE |
|
|
471 |
|
|
418 |
|
|
53 |
|
|
965 |
|
|
888 |
|
|
77 |
Edison International Parent and Other |
|
|
(83) |
|
|
(61) |
|
|
(22) |
|
|
(161) |
|
|
(124) |
|
|
(37) |
Edison International |
|
$ |
388 |
|
$ |
357 |
|
$ |
31 |
|
$ |
804 |
|
$ |
764 |
|
$ |
40 |
1 |
Includes amortization of SCE's Wildfire Insurance Fund expenses of $53 million ($38 million after-tax) for the three months ended June 30, 2023 and 2022 and $105 million ($76 million after-tax) and $106 million ($76 million after-tax) for the six months ended June 30, 2023 and 2022, respectively. |
2 |
Includes charges for 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries of $12 million ($8 million after-tax) and $8 million ($6 million after-tax) for the three months ended June 30, 2023 and 2022 and $102 million ($73 million after-tax) and $404 million ($291 million after-tax) for the six months ended June 30, 2023 and 2022, respectively. |
3 |
Includes a charge of probable disallowance related to the reasonableness review of recorded San Onofre Units 2 and 3 decommissioning costs in the 2021 NDCTP of $30 million ($21 million after-tax) for the six months ended June 30, 2023. |
4 |
Includes a charge related to customer cancellations of certain ECS data services of $17 million ($12 million after-tax) for the three and six months ended June 30, 2023. |
5 |
Includes an insurance recovery of $10 million ($7 million after-tax) and a charge of $23 million ($16 million after-tax) after net of estimated insurance recoveries related to settlement of an employment litigation matter for the three and six months ended June 30, 2023 and 2022, respectively. |
6 |
Includes impairment charges of $64 million ($46 million after-tax) for the three and six months ended June 30, 2022, including $47 million ($34 million after-tax) related to SCE's CSRP settlement agreement and $17 million ($12 million after-tax) related to historical capital expenditures disallowed in SCE's track 3 of the 2021 GRC final decision. |
7 |
Includes a charge related to organizational realignment services of $14 million ($10 million after-tax) for the three and six months ended June 30, 2022. |
8 |
Includes customer revenues of $22 million ($17 million after-tax) and $44 million ($35 million after-tax) related to an EIS insurance contract for the three and six months ended June 30, 2023, respectively. |
Edison International Reports Second Quarter 2023 Financial Results
Page 6 of 9
Consolidated Statements of Income |
|
Edison International |
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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(in millions, except per-share amounts) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Operating revenue |
|
$ |
3,964 |
|
$ |
4,008 |
|
$ |
7,930 |
|
$ |
7,976 |
Purchased power and fuel |
|
|
1,147 |
|
|
1,304 |
|
|
2,465 |
|
|
2,341 |
Operation and maintenance |
|
|
1,241 |
|
|
1,361 |
|
|
2,325 |
|
|
2,848 |
Wildfire-related claims, net of insurance recoveries |
|
|
— |
|
|
2 |
|
|
96 |
|
|
427 |
Wildfire Insurance Fund expense |
|
|
53 |
|
|
53 |
|
|
105 |
|
|
106 |
Depreciation and amortization |
|
|
650 |
|
|
601 |
|
|
1,306 |
|
|
1,184 |
Property and other taxes |
|
|
149 |
|
|
120 |
|
|
289 |
|
|
246 |
Impairment, net of other operating income |
|
|
— |
|
|
63 |
|
|
— |
|
|
61 |
Total operating expenses |
|
|
3,240 |
|
|
3,504 |
|
|
6,586 |
|
|
7,213 |
Operating income |
|
|
724 |
|
|
504 |
|
|
1,344 |
|
|
763 |
Interest expense |
|
|
(392) |
|
|
(271) |
|
|
(753) |
|
|
(517) |
Other income |
|
|
128 |
|
|
66 |
|
|
247 |
|
|
134 |
Income before income taxes |
|
|
460 |
|
|
299 |
|
|
838 |
|
|
380 |
Income tax expense (benefit) |
|
|
51 |
|
|
7 |
|
|
64 |
|
|
(48) |
Net income |
|
|
409 |
|
|
292 |
|
|
774 |
|
|
428 |
Preference stock dividend requirements of SCE |
|
$ |
29 |
|
$ |
25 |
|
$ |
58 |
|
$ |
51 |
Preferred stock dividend requirement of Edison International |
|
|
26 |
|
|
26 |
|
|
52 |
|
|
52 |
Net income attributable to Edison International common shareholders |
|
$ |
354 |
|
$ |
241 |
|
$ |
664 |
|
$ |
325 |
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding |
|
|
383 |
|
|
381 |
|
|
383 |
|
|
381 |
Basic earnings per common share attributable to Edison International common shareholders |
|
$ |
0.92 |
|
$ |
0.63 |
|
$ |
1.73 |
|
$ |
0.85 |
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding, including effect of dilutive securities |
|
|
385 |
|
|
383 |
|
|
385 |
|
|
382 |
Diluted earnings per common share attributable to Edison International common shareholders |
|
$ |
0.92 |
|
$ |
0.63 |
|
$ |
1.73 |
|
$ |
0.85 |
Edison International Reports Second Quarter 2023 Financial Results
Page 7 of 9
Consolidated Balance Sheets |
|
Edison International |
||||
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
(in millions) |
|
2023 |
|
2022 |
||
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
195 |
|
$ |
914 |
Receivables, less allowances of $335 and $347 for uncollectible accounts at respective dates |
|
|
1,717 |
|
|
1,695 |
Accrued unbilled revenue |
|
|
756 |
|
|
641 |
Inventory |
|
|
511 |
|
|
474 |
Prepaid expenses |
|
|
88 |
|
|
248 |
Regulatory assets |
|
|
3,656 |
|
|
2,497 |
Wildfire Insurance Fund contributions |
|
|
204 |
|
|
204 |
Other current assets |
|
|
289 |
|
|
397 |
Total current assets |
|
|
7,416 |
|
|
7,070 |
Nuclear decommissioning trusts |
|
|
4,126 |
|
|
3,948 |
Other investments |
|
|
72 |
|
|
55 |
Total investments |
|
|
4,198 |
|
|
4,003 |
Utility property, plant and equipment, less accumulated depreciation and amortization of $12,662 and $12,260 at respective dates |
|
|
54,123 |
|
|
53,274 |
Nonutility property, plant and equipment, less accumulated depreciation of $111 and $106 at respective dates |
|
|
203 |
|
|
212 |
Total property, plant and equipment |
|
|
54,326 |
|
|
53,486 |
Regulatory assets (include $1,585 and $834 related to Variable Interest Entities "VIEs" at respective dates) |
|
|
8,621 |
|
|
8,181 |
Wildfire Insurance Fund contributions |
|
|
2,053 |
|
|
2,155 |
Operating lease right-of-use assets |
|
|
1,231 |
|
|
1,442 |
Long-term insurance receivables |
|
|
458 |
|
|
465 |
Other long-term assets |
|
|
1,248 |
|
|
1,239 |
Total long-term assets |
|
|
13,611 |
|
|
13,482 |
|
|
|
|
|
|
|
Total assets |
|
$ |
79,551 |
|
$ |
78,041 |
Edison International Reports Second Quarter 2023 Financial Results
Page 8 of 9
Consolidated Balance Sheets |
|
Edison International |
||||
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
(in millions, except share amounts) |
|
2023 |
|
2022 |
||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Short-term debt |
|
$ |
1,161 |
|
$ |
2,015 |
Current portion of long-term debt |
|
|
2,889 |
|
|
2,614 |
Accounts payable |
|
|
1,790 |
|
|
2,359 |
Wildfire-related claims |
|
|
71 |
|
|
121 |
Customer deposits |
|
|
173 |
|
|
167 |
Regulatory liabilities |
|
|
797 |
|
|
964 |
Current portion of operating lease liabilities |
|
|
315 |
|
|
506 |
Other current liabilities |
|
|
1,631 |
|
|
1,601 |
Total current liabilities |
|
|
8,827 |
|
|
10,347 |
Long-term debt (include $1,539 and $809 related to VIEs at respective dates) |
|
|
29,430 |
|
|
27,025 |
Deferred income taxes and credits |
|
|
6,429 |
|
|
6,149 |
Pensions and benefits |
|
|
409 |
|
|
422 |
Asset retirement obligations |
|
|
2,709 |
|
|
2,754 |
Regulatory liabilities |
|
|
8,735 |
|
|
8,211 |
Operating lease liabilities |
|
|
916 |
|
|
936 |
Wildfire-related claims |
|
|
1,309 |
|
|
1,687 |
Other deferred credits and other long-term liabilities |
|
|
3,093 |
|
|
2,988 |
Total deferred credits and other liabilities |
|
|
23,600 |
|
|
23,147 |
Total liabilities |
|
|
61,857 |
|
|
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; 383,248,837 and 382,208,498 shares issued and outstanding at respective dates) |
|
|
6,270 |
|
|
6,200 |
Accumulated other comprehensive loss |
|
|
(8) |
|
|
(11) |
Retained earnings |
|
|
7,553 |
|
|
7,454 |
Total Edison International's shareholders' equity |
|
|
15,793 |
|
|
15,621 |
Noncontrolling interests – preference stock of SCE |
|
|
1,901 |
|
|
1,901 |
Total equity |
|
|
17,694 |
|
|
17,522 |
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
79,551 |
|
$ |
78,041 |
Edison International Reports Second Quarter 2023 Financial Results
Page 9 of 9
Consolidated Statements of Cash Flows |
|
Edison International |
||||
|
|
|
|
|
|
|
|
|
Six months ended |
||||
|
|
June 30, |
||||
(in millions) |
|
2023 |
|
2022 |
||
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
774 |
|
$ |
428 |
Adjustments to reconcile to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,371 |
|
|
1,216 |
Allowance for equity during construction |
|
|
(75) |
|
|
(61) |
Impairment |
|
|
— |
|
|
64 |
Deferred income taxes |
|
|
63 |
|
|
(48) |
Wildfire Insurance Fund amortization expense |
|
|
105 |
|
|
106 |
Other |
|
|
30 |
|
|
40 |
Nuclear decommissioning trusts |
|
|
(60) |
|
|
(65) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Receivables |
|
|
(46) |
|
|
(81) |
Inventory |
|
|
(44) |
|
|
(19) |
Accounts payable |
|
|
(415) |
|
|
143 |
Tax receivables and payables |
|
|
(7) |
|
|
58 |
Other current assets and liabilities |
|
|
(100) |
|
|
(207) |
Derivative assets and liabilities, net |
|
|
(151) |
|
|
(22) |
Regulatory assets and liabilities, net |
|
|
(366) |
|
|
372 |
Wildfire-related insurance receivable |
|
|
6 |
|
|
(139) |
Wildfire-related claims |
|
|
(428) |
|
|
(609) |
Other noncurrent assets and liabilities |
|
|
55 |
|
|
62 |
Net cash provided by operating activities |
|
|
712 |
|
|
1,238 |
Cash flows from financing activities: |
|
|
|
|
|
|
Long-term debt issued, net of discount and issuance costs of $43 and $34 for the respective periods |
|
|
4,133 |
|
|
2,949 |
Long-term debt repaid |
|
|
(1,466) |
|
|
(372) |
Short-term debt issued |
|
|
675 |
|
|
600 |
Short-term debt repaid |
|
|
(1,730) |
|
|
(993) |
Common stock issued |
|
|
13 |
|
|
6 |
Commercial paper borrowing (repayments), net |
|
|
198 |
|
|
(497) |
Dividends and distribution to noncontrolling interests |
|
|
(58) |
|
|
(57) |
Common stock dividends paid |
|
|
(555) |
|
|
(524) |
Preferred stock dividends paid |
|
|
(52) |
|
|
(46) |
Other |
|
|
61 |
|
|
53 |
Net cash provided by financing activities |
|
|
1,219 |
|
|
1,119 |
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
|
(2,711) |
|
|
(2,708) |
Proceeds from sale of nuclear decommissioning trust investments |
|
|
1,967 |
|
|
2,106 |
Purchases of nuclear decommissioning trust investments |
|
|
(1,907) |
|
|
(2,041) |
Other |
|
|
1 |
|
|
15 |
Net cash used in investing activities |
|
|
(2,650) |
|
|
(2,628) |
Net decrease in cash, cash equivalents and restricted cash |
|
|
(719) |
|
|
(271) |
Cash, cash equivalents and restricted cash at beginning of period |
|
|
917 |
|
|
394 |
Cash, cash equivalents and restricted cash at end of period |
|
$ |
198 |
|
$ |
123 |
Exhibit 99.2
Prepared Remarks of Edison International CEO and CFO
Second Quarter 2023 Earnings Teleconference
July 27, 2023, 1:30 p.m. (PT)
Pedro Pizarro, President and Chief Executive Officer, Edison International
I would like to begin with three financial comments. First, driven by EIX’s impressive performance through June, we are confident in our 2023 core EPS guidance of $4.55 to $4.85. Second, we remain fully confident in — and committed to — delivering our long-term EPS growth target of 5 to 7% from 2021 through 2025. This target incorporates all known business headwinds, but does not factor in potential tailwinds, which could present significant upside. Third, based on the strength of SCE’s 2025 GRC application and other investment opportunities, we are providing EPS growth guidance of 5 to 7% for 2025 through 2028, which provides the path toward $7 in earnings per share potential for 2028. Underpinning this is the rate base growth driven by the essential investments to advance California’s clean energy transition. Importantly, these actions will maintain SCE’s cost leadership and the lowest system average rates for customers among California’s investor-owned utilities for the foreseeable future. We are proud of this commitment; I’ll share more on this later.
On the operational front, my two key messages today are: First, SCE is strategically positioned to make substantial investments in the reliability, resiliency, and readiness of the grid, as outlined in its 2025 GRC application; Second, SCE is well prepared for the wildfire season due to its successful grid hardening actions. I will also emphasize that core to all we do is sustainability, as Edison International remains at the forefront of the clean energy transition.
Please turn to page 3. On May 12, SCE filed its 2025 GRC Application. The overarching objectives are to ensure the grid is reliable, resilient, and ready. Reliable so that it can meet customers’ needs today and in the future. Resilient to protect public safety and the integrity of the grid. And ready to support the widespread electrification and decarbonization needed to meet California’s ambitious greenhouse gas reduction goals. These GHG-reduction goals are not just “stretch targets” — they are deeply embedded in the fabric of California’s most important legislative and policy frameworks.
Mindful of the longer-term costs of inaction when confronting the global climate crisis, SCE’s GRC reflects that urgent need for the State to rapidly electrify vast swaths of the economy, which is facing the fastest electricity demand growth in decades. To meet these objectives, SCE requested a 2025 base revenue requirement of $10.3 billion; an increase of $1.9 billion, or about 12% over total 2024 rates. This also represents a system average rate increase of 9% and an average residential customer bill increase of 10%.
The 2025 through 2028 period will be critical to achieving California's 2030 and 2045 climate goals. SCE will continue to make substantial investments in wildfire mitigation to address the remaining wildfire risk on the system. There is also a need to ramp up infrastructure replacement work, returning to historical levels of proactive replacement to safeguard reliability. Two key themes are always top-of-mind in any of SCE’s applications, and in how the company runs. Those are operational excellence and affordability for customers. We recognize that the investments in the grid are borne by customers, so we continuously look for ways to gain efficiencies and save customers money.
SCE has been building its capabilities in artificial intelligence and advancing the integration of technology into its operations. In 2018, SCE began to apply technology to some of its highest priority challenges including wildfire risk mitigation and data quality. SCE has implemented several computer vision algorithms as part of the T&D aerial inspection process to scan images and detect defects like broken cross arms and other failure risks that could lead to outages or ignitions. The utility is now leveraging its images, other data, and these algorithms to develop other predictive models that can identify and refine asset data to more efficiently operate the grid, enhance fire spread modeling, and better prioritize grid hardening efforts. Building on this and further leveraging tools such as artificial intelligence, robotic process automation and mobile solutions, SCE is ramping up its efforts around the customer experience, integrated grid planning and execution, and driving efficiencies in its support functions. Examples include predicting customer issues before they call and proactively addressing them or diverting them to the lowest cost, most effective channel; leveraging speech and image recognition in inspections to automatically fill out surveys and focus the inspections; and using generative AI to create first drafts of everything from communications to data request responses.
2
I’m proud that SCE is an early mover in implementing new technology that furthers its operational excellence and affordability goals.
Turning to page 4, let me give you a brief update on the 2017 and 2018 Wildfire and Mudslide Events. SCE is putting finishing touches on the TKM cost recovery application and expects to file in August. I reiterate that SCE will seek full CPUC cost recovery, excluding amounts already recovered or foregone under the agreement with the Safety and Enforcement Division. 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.
Looking at this year’s wildfire season, SCE's confidence in mitigating wildfires associated with its equipment continues to grow. Over the past couple of years, SCE has deployed covered conductor at a rate of approximately 100 miles per month and has now replaced nearly 5,000 circuit miles of bare wire with covered conductor since the inception of this program around four and a half years ago. In addition to this CPUC-endorsed grid hardening measure, SCE completes 360-degree inspections of its transmission and distribution structures that represent up to 99% of risk each year prior to peak fire season and performs repairs and replacements. SCE continues its robust vegetation management programs, inspecting 1.6 million trees across the service area annually and typically mitigating approximately 850,000. More than half of those trees are in high fire risk areas. In 2023, SCE plans to inspect over 130,000 trees that pose a threat of falling into SCE’s electrical equipment in the highest-risk locations.
Now let me give you some proof points of how well this is all working to reduce ignitions and their impacts. On fully covered segments, there have not been any ignitions due to failure of covered conductor. In 2021 and 2022, there were 98% fewer structures destroyed and 92% fewer acres burned than in 2017 and 2018. These and numerous other statistics are shown on page 5.
As it has since 2021, SCE uses a rigorous, insurance-industry modeling approach to estimate the probability of losses from catastrophic wildfires relative to the thresholds defined by AB 1054.
3
Incorporating SCE’s latest mitigation data into the industry-leading North America Wildfire HD Model, Moody’s RMS now estimates SCE has reduced the probability of losses from catastrophic wildfires by 85% compared to pre-2018 levels, as highlighted on page 6. Importantly, the contribution from public safety power shutoffs continues to decline and is now only 10%. SCE has been expeditiously hardening its grid since 2018, with 76% of distribution lines in HFRA expected to be hardened by year-end, which you can see on page 7. SCE anticipates ramping down its flagship mitigation measure, covered conductor, beginning in 2025, and largely completing its targeted undergrounding work by the end of 2028.
The state of California continues to allocate substantial funding to forest resiliency and fire suppression, including CAL FIRE crews and aerial resources. We were pleased that the approved state budget maintained $2.7 billion — 98% of the original proposal — over four years for critical investments restoring forest and wildland health to continue reducing the risk of catastrophic wildfires in the face of extreme climate conditions. To put the state’s commitment in context, the total 2023-24 CAL FIRE budget of $4.1 billion is double what was originally enacted in the 2017-18 budget and CAL FIRE’s staffing has increased by 74% since then.
Edison International remains at the forefront of the clean energy transition and continues to execute on its strategy and net-zero commitment. As climate change continues to challenge our world in unprecedented ways, I’m confident in the strength of our team to lead the transition affordably and effectively. We’re paving the way for a future powered by 100% carbon-free electricity, adapting our system to climate change, and supporting customers in reaching net-zero emissions. While the road ahead is long, our 2022 progress demonstrates our sense of urgency and ongoing commitment to sustainability. I encourage you to read our 2022 Sustainability Report for details about our accomplishments, goals, and long-term ESG commitments. I’ll highlight a few accomplishments, which are covered on pages 8 and 9: In 2022, SCE delivered 45% carbon-free power to customers, installed electric vehicle charging infrastructure to enable customers to add more than 500 medium- and heavy-duty electric vehicles, and installed or contracted for more than 1,800 megawatts of energy storage. By year-end, SCE’s energy storage portfolio totaled more than 5,000 megawatts, one of the largest in the nation.
4
Our team continues to forge coalitions nationally and internationally to address climate change and we are proud to lead the way on these initiatives and partnerships and to support our stakeholders. A future powered by clean electricity is upon us. We stand ready to make this future a reality — reliably, affordably, and sustainably.
Maria Rigatti, Executive Vice President and Chief Financial Officer, Edison International
In my comments today, I will discuss second quarter results, our 2023 EPS guidance, and provide some additional insight into our long-term core EPS growth expectations.
Starting with the second quarter of 2023, EIX reported core EPS of $1.01. As you can see from the year-over-year quarterly variance analysis shown on page 10, SCE’s second quarter earnings saw a 13-cent increase. Among the major items, GRC attrition year revenue escalation added 19 cents year over year. Additionally, higher FERC and other revenue added 4 cents and there was a 10-cent increase related to balancing account interest income. Partially offsetting this growth was an increase in interest expense of 16 cents, driven by higher interest rates associated with funding wildfire claims payments. At EIX Parent and Other, there was a negative variance of 6 cents primarily due to higher holding company interest expense. Overall, we are pleased with our performance through the first half of the year and are confident in delivering on our full-year core EPS guidance of $4.55 to $4.85, laid out on page 11, which we are reaffirming today.
I will now discuss SCE’s capital expenditure forecast, shown on page 12. Following SCE’s 2025 GRC filing in May, we introduced our 2023 through 2028 capital plan of $38 to $43 billion, underpinned by spending covered by SCE’s 2021 and 2025 general rate cases. During the 2025 GRC cycle, which extends through 2028, we project annual capital deployment to be in the $8 billion range, which is double the level from only six years ago. Over 85% of SCE’s investments are in its distribution grid. These are essential to meeting reliability, resiliency, and readiness objectives that support the widespread electrification and decarbonization needed to meet California’s greenhouse gas reduction goals.
5
You may ask, “how do you plan to finance this significant step-up in capex?” The vast majority will be financed with cash from operations and debt. Between 2025 and 2028, we expect our equity needs will be fulfilled using internal programs, which typically bring in about $100 million of equity annually, totaling about $400 million over the period. We expect this financing plan to keep us within the 15 to 17% FFO-to-debt range through 2028. As a reminder, this financing plan does not incorporate potential cost recovery in the legacy wildfire proceedings.
I want to highlight that SCE’s capital expenditure forecast does not include substantial additional capital deployment opportunities. There is at least $2 billion of potential investment that SCE will request in standalone applications over the next couple of years. As you may recall, filing standalone applications in California is typical when major projects are still in early stages at the time GRC testimony is developed. Let me give you some historical perspective. You can see on page 13 that SCE has obtained approvals of standalone applications for approximately $3 billion of capital spending over the past two rate case cycles. Discrete applications have contributed meaningful growth in the past, and we expect that to continue in the future. To wrap up my comments on the upside opportunities, CAISO’s recently approved transmission plan identified 17 projects that upgrade SCE’s existing facilities. As the incumbent transmission owner, these projects represent at least $2.3 billion of FERC transmission investment for SCE. The CAISO plan also identified $3 billion of competitive projects in southern California that SCE will be able to compete for. Turning to page 14, SCE’s GRC request supports approximately 6 to 8% rate base growth, starting from a 2023 base of $41.9 billion, which itself is nearly 20% higher than only two years ago. Rate base growth through 2028 is driven by the crucial grid infrastructure needed to facilitate California’s leading role in transitioning to a carbon-free economy.
Page 15 shows our progress in successfully executing the parent company’s 2023 financing plan. SCE and the parent issued debt during the quarter and both transactions were well within our average projected refinancing rates by 2025, further bolstering our confidence in achieving our 2025 EPS guidance.
6
Page 16 provides an update on the CPUC cost of capital mechanism. Given that the Moody’s Baa utility bond index is trading well above the deadband with only two months remaining in the annual measurement period, it is likely the mechanism will trigger. We believe an upward ROE adjustment is justified given the current interest rate environment has increased the utility cost of capital in line with the overall financial market. Once triggered, SCE will file an advice letter to implement the adjustment to the 2024 ROE, and update the costs of debt and preferred equity. The CPUC equity ratio will remain at 52% on an adjusted basis, consistent with the proposed decision issued yesterday afternoon to extend SCE’s capital structure waiver for two years or until final decisions have been made on cost recovery for the 2017 and 2018 events.
I’ve previously discussed our operational excellence program and noted that we would share updates along the way. SCE’s employee-driven ideas have identified O&M savings for customers that are already reflected in the GRC request. We work tirelessly to continue fleshing out these ideas and finding additional benefits for customers, irrespective of the GRC cycle. I’m pleased to share some tangible examples of our successful efforts to find efficiencies, which you can see on page 17.
Starting on the left side, in May, the CPUC approved SCE’s expanded wildfire self-insurance program, which saves customers approximately $160 million per year and has the potential for greater long-term savings.
In the category of work planning, we’ve successfully implemented our wildfire mitigation plan year in and year out and have continually found ways to improve. To give you an example, SCE programmatically inspects about 216,000 structures in high fire risk areas every year from the ground and the air, which in the past was performed by distinct teams. We have transformed the program by combining ground and aerial inspections into a single, 360-degree inspection process. This reduces driving time in the field, benefits safety for field personnel, and improves overall quality and customer experience. Through this effort, we expect to generate nearly $55 million in cumulative O&M savings.
7
In the category of procurement, we are successfully finding ways to buy better. We recently re-evaluated the prescription benefit provider in our healthcare plans and switched vendors, achieving about $50 million of cumulative O&M savings, while maintaining the level of benefits and service for our employees.
These are just representative examples that clearly demonstrate the value our team can uncover and implement in a short period of time. We are excited about such opportunities to provide savings to customers, and we will continue to share additional examples with you in the future.
Turning to our financial commitments, we remain confident in our 5 to 7% EPS growth rate guidance from 2021 through 2025. I reiterate our management team’s steadfast focus on delivering this growth. Additionally, for the 2025 to 2028 period, we expect to continue core EPS growth of 5 to 7%, which provides a pathway toward $7 earnings per share potential for 2028, shown on page 18. For you to further understand this pathway, we have also provided some key sensitivities on page 25 of the appendix. We see this long-term EPS growth as highly achievable for three primary reasons:
| ● | First, the core driver for this earnings trajectory is SCE’s strong rate base growth. |
| ● | Second, the headwinds we have navigated over the past couple of years will have mostly stabilized by 2025, allowing for a simplified growth story through 2028. These past headwinds included the cost of financing wildfire claims payments, driven by both the increase in legacy wildfire reserves and higher interest rate environment, the reduction in CPUC ROE, and issuance of preferred equity at the parent to strengthen the balance sheet. Taking these into consideration, you can see that the midpoint of our 2025 guidance provides a stable platform for a strong long-term growth trajectory. |
| ● | Third, this growth is achievable even without incorporating a few key items. We can achieve this growth at SCE’s current authorized ROEs and rate base forecast, without factoring in the additional capex potential I mentioned earlier or upside |
8
| to the cost of capital by 2028. Additionally, we have not incorporated potential cost recovery in the legacy wildfire proceedings, which clearly presents substantial upside value to our long-term earnings power and credit profile. |
Based on these factors, I want to underscore we see 5 to 7% growth as highly achievable. We firmly believe we can achieve our targeted growth, both for 2025 and 2028, based on SCE’s significant investment to ensure the grid is reliable, resilient, and ready for California’s economywide clean energy transition.
9
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JULY 27, 2023 SECOND QUARTER 2023 FINANCIAL RESULTS |
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Edison International | Second Quarter 2023 Earnings Call 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, which is required to benefit from certain provisions of California Assembly Bill 1054 (“AB 1054”); • 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 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, 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, contractor performance, and cost overruns; • ability of Edison International and SCE to obtain sufficient insurance at a reasonable cost or to maintain its customer funded self-insurance program, 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; • 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 |
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Edison International | Second Quarter 2023 Earnings Call 2 Second Quarter Highlights $0.92 Q2 GAAP EPS $1.01 Q2 Core EPS1 Introduced 5–7% Core EPS CAGR 2025–20283 Reiterated 5–7% Core EPS CAGR 2021–20252 1 Reaffirmed $4.55–4.85 2023 Core EPS Guidance1 Q2 performance remains on track; reaffirming 2023 core EPS guidance1 2 In May, SCE filed 2025 GRC and updated capital plan to $38–43 billion for 2023–2028 3 SCE approaches wildfire mitigation milestone: nearly 5,000 miles of covered conductor completed 4 Reiterate 2021–2025 core EPS growth rate target of 5–7% and introduce target of 5–7% for 2025–2028, starting from 2025 midpoint of $5.70 1. See Earnings Per Share Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix 2. Compound annual growth rate (CAGR) based on the midpoint of the initial 2021 EPS guidance range of $4.42–4.62 3. Compound annual growth rate (CAGR) based on the midpoint of the 2025 EPS guidance range of $5.50–5.90 2 |
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Edison International | Second Quarter 2023 Earnings Call 3 SCE’s 2025 GRC focuses on safely providing electric service for customers’ needs today and the clean energy transition Reliable Resilient Ready Improve the reliability of the grid so SCE can meet customers’ needs today and in the future Deploy programs that protect the safety of customers and the public Ensure the grid is ready to support widespread electrification and decarbonization |
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Edison International | Second Quarter 2023 Earnings Call 4 SCE will request CPUC cost recovery for 2017/2018 events, with first application targeted for August 2023 2.4 0.5 5.3 0.6 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 June 30, 2023, including under the agreement with the Safety and Enforcement Division of the CPUC Substantial progress resolving claims First application will be for TKM events $ in Billions, as of June 30, 2023 1 Remaining2 Target filing in August Expected request: – ~$2 billion (settlements + financing and legal costs) – Securitization of approved amounts ▪ TKM Application: ~$1.30/month for average residential customer bill ▪ System average rate sensitivity: Less than half a penny per kWh for each $1 billion of recovery (vs. current system average rate of 26.4¢/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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Edison International | Second Quarter 2023 Earnings Call 5 SCE is seeing numerous proof points and results from its substantial wildfire mitigation efforts since 2018 1. Measured by faults covered conductor is expected to mitigate per 100 circuit miles on fully covered circuits as compared to bare circuits from 2018-2022 in HFRA 2. Measured by average monthly tree caused circuit interruptions in HFRA in 2022 compared to the average from 2017-2019. 3. Measured as Total Defect Find Rate of Top Ignition Drivers (percentage of inspections) in 2022 as compared to 2019 (inception of program) for structures inspected every year 71% fewer faults on fully covered circuits1 53% fewer tree-caused faults2 No ignitions due to failure of covered conductor 61% lower defect find rate3 90% visual coverage of HFRA 98% fewer structures destroyed in 2021-22 compared to 2017-18 92% fewer acres burned in 2021-22 compared to 2017-18 99% less PSPS outage time on frequently impacted circuits in 2022 compared to 2019 4,950+ MILES OF COVERED CONDUCTOR 2 MILLION+ TRIMS AND REMOVALS IN HFRA 1 MILLION+ HFRA INSPECTIONS 1,660+ WEATHER STATIONS 180+ HD CAMERAS |
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Edison International | Second Quarter 2023 Earnings Call 6 Covered conductor deployment has reduced SCE’s use of PSPS for lowering wildfire risk 1. Baseline risk estimated by Risk Management Solutions, Inc. (Moody’s RMS) using its wildfire model, relying on the following data provided by SCE: the location of SCE’s assets, reported ignitions from 2014–2022, mitigation effectiveness and locations of installed covered conductor, tree removals, inspections, line clearing, fast curve settings, and PSPS de-energization criteria. 2. There are risks inherent in the simulation analysis, models and predictions of SCE and Moody’s RMS relating to the likelihood of and damage due to wildfires and climate change. As with any simulation analysis or model related to physical systems, particularly those with lower frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic wildfire events may differ from the results of the simulation analysis and models of Moody’s RMS and SCE. Range may vary for other loss thresholds 3. PSPS and System Hardening Values are estimated by SCE based on operational experience in 2018–2020 compared to the subsequent modeled years SCE’s wildfire risk mitigation is differentiated by its speed of hardening its infrastructure Estimated reduction in probability of losses from catastrophic wildfires compared to pre-2018 levels1,2,3 20% 55–60% 55–60% 65–70% 75–80% 85% 2018 2019 2020 2021 2022 Q2 2023 Public Safety Power Shutoffs (PSPS) (Contribution has declined from 100% to ~10%) Physical Mitigation (Grid hardening (e.g., covered conductor), inspections, vegetation management) ~125 ~495 ~1,480 ~2,980 ~4,400 Cumulative miles of covered conductor installed: Current 4,950+ |
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Edison International | Second Quarter 2023 Earnings Call 7 SCE has made significant progress hardening the grid to keep its communities safe ~7,200 ~4,400 1,200 ~3,100 ~900 ~16,800 Distribution Miles in HFRA ✓ ✓ By end of 2023, ~76% of total distribution lines in HFRA expected to be hardened Distribution lines already underground Completed hardening 2018–2022—primarily covered conductor Future planned hardening Bare wire until hardened during routine work in least risky areas Targeted for 20231 Total Circuit Miles of Distribution Lines in SCE’s High Fire Risk Area 1. Up to 1,200 miles targeted for 2023. Approximately 575 miles completed year-to-date as of June 30, 2023 1,200 |
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Edison International | Second Quarter 2023 Earnings Call 8 Edison’s 2022 sustainability achievements advanced our clean energy strategy and enhanced value to our stakeholders Climate Change Leadership in physical risk assessments, with SCE publishing one of the first climate adaptation vulnerability assessments in the industry Delivered 45% carbon-free power in terms of retail sales to SCE customers, 48% cleaner than the national average Contracted for 1,800 MW energy storage at SCE, bringing total to more than 5,000 MW owned or under contract at year-end — one of the largest portfolios in the nation Advised on 1,400+ MW of renewable energy power purchase agreements at Edison Energy, bringing total to 10,400 MW Operational Excellence 1,000+ MW of demand response program peak load reduction at SCE to help prevent rotating outages during September 2022 heat storm Met or exceeded nearly all Wildfire Mitigation Program targets at SCE Continued multiyear track record of having the lowest system average rate among California’s large investor-owned utilities at SCE Diversity, Equity & Inclusion $1M, four-year Lineworker Scholarship Program, focused on underrepresented talent, graduated its first cohort Spent $2.4B with diverse suppliers at SCE, representing 35.4% of SCE’s total procurement spend Developed organizational unit plans across Edison International and SCE to further integrate DEI into business Gender parity achieved among independent Board directors and maintained among senior leadership team |
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Edison International | Second Quarter 2023 Earnings Call 9 Edison International’s industry-leading ESG profile received wide-ranging recognition and awards in 2022 Climate Change Technology Transfer Awards Solar, Energy Storage and Load Management and Fuel Removal Assessment for Wildfire Mitigation — SCE (Electric Power Research Institute) Utility Project of the Year Electric Access System Enhancement — Distributed Energy Resource Interconnection Project — SCE (Smart Electric Power Alliance) Corporate Strategy to Advance Community and Climate Resilience — SCE (Center for Climate and Energy Solutions) Diversity, Equity & Inclusion Best Places to Work in 2022 (Glassdoor) — SCE Transparency Award “Highly Commended” (World 50 Inclusion & Diversity Impact Awards) Best Places to Work for LGBTQ+ Equality (Human Rights Campaign Foundation — Corporate Equality Index) Best Places to Work (Disability Equality Index — Disability:IN) Best Companies for Latinos (Latino Leaders Magazine) — SCE CII 5 Star Company (Hispanic Association of Corporate Responsibility) Leadership Diversity, Equity, Inclusion and Accessibility Visionaries Pedro Pizarro (Los Angeles Times B2B Publishing) 101 Most Influential Latinos Pedro Pizarro (Latino Leaders Magazine) Business Resource Groups Top 25 Diversity Impact Awards Women’s Roundtable, SCE BRG (The Global ERG Network) Governance “Trendsetter” 100% score on the CPA-Zicklin Index of Corporate Political Disclosure and Accountability (Center for Political Accountability) Diversity, Equity & Inclusion Awards Finalist (National Association of Corporate Directors) Top-rated governance score (Institutional Shareholder Services) “GB” (Gender-balanced) corporation (50/50 Women on Boards) Commitment to diverse leadership Edison International Board members Pedro Pizarro and Michael Camuñez (Latino Leaders Magazine) Operational Excellence “A” rating (Global Listed Infrastructure Organisation) America’s Most JUST Companies Top 50 (JUST Capital) ESG Leader of the Year WE3 Summit Innovator Awards, hosted by Smart Energy Water (SEW) and Zpryme |
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Edison International | Second Quarter 2023 Earnings Call 10 Key SCE EPS Drivers2 Revenue3,4 $ — GRC escalation 0.19 CPUC revenue - Other (0.23) FERC and other operating revenue 0.04 Lower O&M4 0.30 Higher depreciation4 (0.08) Higher net financing costs4 (0.16) Income taxes3 (0.01) Other 0.09 Property and other taxes4 (0.03) Other income and expenses 0.12 Results prior to impact from share dilution $ 0.14 Impact from share dilution (0.01) Total core drivers $ 0.13 Non-core items1 0.17 Total $ 0.30 (0.05) (0.01) Total core drivers $ (0.06) Non-core items1 0.05 Total $ (0.01) EIX EPS2 EIX Parent and Other EEG Second Quarter Earnings Summary 1. See EIX Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix 2. For comparability, 2023 second quarter key EPS drivers are reported based on 2022 weighted-average share count of 381.3 million. 2023 second quarter weighted-average shares outstanding is 383.1 million 3. Includes $0.02 higher revenue related to lower tax benefits subject to balancing accounts and offset with income taxes 4. Includes $(0.22) recovered through regulatory mechanisms and offset with O&M $0.31, depreciation $(0.06), interest expense $(0.01) and property and other taxes $(0.02) Note: Diluted earnings were $0.92 and $0.63 per share for the three months ended June 30, 2023 and 2022, respectively Q2 2023 Q2 2022 Variance Basic Earnings Per Share (EPS) SCE $ 1.09 $ 0.79 $ 0.30 EIX Parent & Other (0.17) (0.16) (0.01) Basic EPS $ 0.92 $ 0.63 $ 0.29 Less: Non-core Items1 SCE $ (0.14) $ (0.31) $ 0.17 EIX Parent & Other 0.05 — 0.05 Total Non-core Items $ (0.09) $ (0.31) $ 0.22 Core Earnings Per Share (EPS) SCE $ 1.23 $ 1.10 $ 0.13 EIX Parent & Other (0.22) (0.16) (0.06) Core EPS $ 1.01 $ 0.94 $ 0.07 |
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Edison International | Second Quarter 2023 Earnings Call 11 EIX reaffirms 2023 core EPS guidance of $4.55–4.85 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 Q2 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 2.66 5.68 SCE Operational Variances 0.15 0.48–0.75 SCE Costs Excluded from Authorized (0.29) (0.71) EIX Parent and Other Operational expense (0.05) (0.14)–(0.13) Interest expense, preferred dividends (incl. dilution) (0.37) (0.76)–(0.74) EIX Consolidated Core EPS $2.10 $4.55–4.85 Share Count (in millions)2 382.8 382.2 EIX 2023 Core Earnings Per Share Guidance Range Building from SCE Rate Base EPS Rate Base CPUC FERC Rate Base ($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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Edison International | Second Quarter 2023 Earnings Call 12 Capital deployment expected to increase in 2025–20281 Range Case2 $5.7 $5.7 $6.6 $6.7 $6.7 $6.4 $6.0 $6.2 $7.5 $8.0 $8.1 $7.7 2023 2024 2025 2026 2027 2028 GRC underpins ~$38–43 billion 2023–2028 capex forecast; substantial additional investment opportunities offer upside 1. Forecast for 2024 includes amounts requested in track 4 of SCE’s 2021 GRC. Forecast for 2025 includes amounts 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 CPUC GRC FERC Other Capital Expenditures, $ in Billions Forecast does not include substantial additional capital deployment opportunities 1. NextGen ERP 2. Advanced Metering Infrastructure (AMI) 2.0 3. Other potential investments in the grid supporting reliability, resilience, and readiness 4. FERC transmission At least $2bn $2.3bn+ |
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Edison International | Second Quarter 2023 Earnings Call 13 SCE has obtained approvals of standalone applications for ~$3 billion of capex over past two rate case cycles 2018 2019 2020 2021 2022 2023 $252 million for medium & heavy-duty transportation electrification $314 million light-duty transportation electrification $407 million for Grid Safety & Reliability Program $1,000 million for utility owned storage projects $465 million for wildfire mitigation $435 million for Customer Service Re-Platform project Standalone application approvals of incremental capital spending during 2018 and 2021 GRC cycles Only capital expenditure components of CPUC decisions shown below Electrification $566 million capex Wildfire Mitigation $872 million capex Storage & Other $1,435 million capex |
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Edison International | Second Quarter 2023 Earnings Call 14 GRC request supports ~6–8% rate base growth 2023–2028; substantial additional investment opportunities offer upside 1. Weighted-average year basis 2. Range Case rate base reflects capital expenditure Range Case forecast $41.9 $44.3 $49.7 $53.3 $57.0 $60.9 2023 2024 2025 2026 2027 2028 CPUC GRC FERC Other ~8% CAGR 2023–2028 Rate Base1 , $ in Billions Strong rate base growth driven by wildfire mitigation and important grid work to support California’s leading role in clean energy transition Range Case2 $41.6 $43.5 $48.0 $50.3 $52.6 $55.2 Forecast does not include substantial additional capital deployment opportunities 1. NextGen ERP 2. Advanced Metering Infrastructure (AMI) 2.0 3. Other potential investments in the grid supporting reliability, resilience, and readiness 4. FERC transmission At least $2bn $2.3bn+ |
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Edison International | Second Quarter 2023 Earnings Call 15 Significant portion of EIX 2023 financing plan accomplished early in the year, with strong investor support for offerings 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 ($55 million complete YTD) Expect to issue parent debt for remainder – In May, issued $600 million of senior unsecured debt @5.25% $400 term loan due November ✓ ✓ ✓ As of June 30, 2023 ✓ ✓ |
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Edison International | Second Quarter 2023 Earnings Call 16 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 ROE adjustment based on 12-month average of Moody’s Baa utility bond rates, measured from Oct. 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 4.05% or higher from July 20, 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 July 19, 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: 5.61% Minimum Avg. Rate to Trigger: 4.05% Benchmark: 4.37% Dead-band |
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Edison International | Second Quarter 2023 Earnings Call 17 SCE’s operational excellence efforts are producing O&M savings for its customers Insurance: Wildfire Self-Insurance Program – Expanded use of customer funded self-insurance in place since 2021 – Approved by CPUC in May – Potential for greater long-term savings Work Planning: Transformed Inspection Process – ~216,000 HFRA structures inspected every year – Combined ground and aerial inspections into single 360° inspection – Reduces drive time, benefits safety, and improves quality Procurement: Finding Ways to Buy Better – Reevaluated healthcare benefit providers – Switched vendors while maintaining level of employee benefits and service 1. Cumulative over 2025–2028 ~$160 million annually ~$50 million Over GRC cycle1 ~$55 million Over GRC cycle1 |
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Edison International | Second Quarter 2023 Earnings Call 18 EIX expects to continue 5–7% core EPS growth for 2025–20281 1. For 2025, represents the midpoint of the 2025 core EPS guidance range for $5.50–5.90 $5.70 $6.60–7.00 2025 Midpoint 2028 Achievable EPS growth for 2028 Core Earnings per Share Guidance1 1 Core driver for earnings trajectory is SCE’s strong rate base growth, driven by investing in the reliability, resilience, and readiness of the grid 2 2025–2028 core EPS growth achievable at current ROEs and projected interest rates 3 Stabilization of variables by 2025 allows for simplified growth story; opportunity to efficiently manage operational and financing costs to drive growth 4 For 2025 through 2028, we expect equity needs fulfilled using internal programs: ~$100 million/year 5–7% CAGR1 5 EPS guidance does not incorporate potential cost recovery for 2017/2018 Wildfire/Mudslide Events |
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Edison International | Second Quarter 2023 Earnings Call 19 EIX offers double-digit total return potential 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; CAGR for 2025–2028 based on the midpoint of 2025 Core EPS guidance range of $5.50–5.90 2. Based on EIX stock price on July 26, 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 June 30, 2023 5–7% core EPS CAGR1 2021–2025 and 2025–2028 Underpinned by strong rate base growth of ~6–8% $38–43 billion 2023–2028 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 9–11% total return opportunity4 before potential P/E multiple expansion driven by estimated 85% wildfire risk reduction5 , and ongoing utility and government wildfire mitigation efforts |
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ADDITIONAL INFORMATION |
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Edison International | Second Quarter 2023 Earnings Call 21 YTD 2023 YTD 2022 Variance Basic Earnings Per Share (EPS) SCE $ 2.06 $ 1.18 $ 0.88 EIX Parent & Other (0.33) (0.33) — Basic EPS $ 1.73 $ 0.85 $ 0.88 Less: Non-core Items1 SCE $ (0.46) $ (1.15) $ 0.69 EIX Parent & Other 0.09 — 0.09 Total Non-core Items $ (0.37) $ (1.15) $ 0.78 Core Earnings Per Share (EPS) SCE $ 2.52 $ 2.33 $ 0.19 EIX Parent & Other (0.42) (0.33) (0.09) Core EPS $ 2.10 $ 2.00 $ 0.10 Key SCE EPS Drivers2 Lower revenue3,4 $ (0.03) GRC escalation 0.39 CPUC revenue - Other (0.52) FERC and other operating revenue 0.10 Lower O&M4 0.58 Wildfire-related claims 0.01 Higher depreciation4 (0.21) Higher net financing costs4 (0.32) Income taxes3 0.03 Other 0.14 Property and other taxes4 (0.07) Other income and expenses 0.21 Results prior to impact from share dilution $ 0.20 Impact from share dilution (0.01) Total core drivers $ 0.19 Non-core items1 0.69 Total $ 0.88 (0.09) Total core drivers $ (0.09) Non-core items1 0.09 Total $ — EIX EPS2 EIX Parent and Other Year-to-Date Earnings Summary 1. See EIX Core EPS Non-GAAP Reconciliations and Use of Non-GAAP Financial Measures in Appendix 2. For comparability, 2023 year-to-date key EPS drivers are reported based on 2022 weighted-average share count of 380.9 million. 2023 year-to-date weighted-average shares outstanding is 382.8 million 3. Includes $0.02 lower revenue related to higher tax benefits subject to balancing accounts and offset with income taxes 4. Includes $(0.38) recovered through regulatory mechanisms and offset with O&M $0.62, depreciation $(0.17), interest expense $(0.04) and property and other taxes $(0.03) Note: Diluted earnings were $1.73 and $0.85 per share for the six months ended June 30, 2023 and 2022, respectively |
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Edison International | Second Quarter 2023 Earnings Call 22 Over 85% of SCE’s capital investments are in its distribution grid and essential to reliability, resiliency, and readiness objectives 1. Includes utility-owned storage Distribution Non-distribution 29% 18% 14% 13% 11% 9% 3% 3% Infrastructure Replacement Wildfire Mitigation Load Growth & New Service Connections Inspections & Maintenance Other Distribution1 Transmission Generation Electrification >85% distribution grid SCE forecasts investing $38–43 billion from 2023 to 2028 to support SCE’s wildfire mitigation strategy and clean energy transformation in California Percentage of 2023–2028 capital plan |
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Edison International | Second Quarter 2023 Earnings Call 23 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 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 4.33 Non-Core items 0.37 |
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Edison International | Second Quarter 2023 Earnings Call 24 EIX reaffirms 5–7% 2021–2025 EPS growth rate target, which would result in 2025 EPS of $5.50–5.901 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 purposes of this illustration, all costs and dilution associated with any equity content issued beyond 2022 are reflected in EIX Parent and Other. 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) 6.50–6.75 •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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Edison International | Second Quarter 2023 Earnings Call 25 Key 2028 Earnings Sensitivities Variable Sensitivity 2028 EPS1 (“Per year” amounts refer to 2025–2028) Capex & Rate Base Rate Base $100 million/year of capex 5¢ AFUDC (~45¢/share) Annual capex of $200 million 1¢ Requested ~$400 million increase in depreciation in 2025 GRC If requested increase not authorized +15–35¢ (on range case) Rates & Financing CPUC ROE (Currently 10.05%) 10 bps 7¢2 FERC ROE (Currently 10.30%) 10 bps 1¢2 Wildfire Debt Rate (4.6% weighted average portfolio) 20 bps 2¢ EIX Parent Debt Rate (5.0% weighted average portfolio) 20 bps 2¢ Equity (~$100 million/year 2025–2028) For each $10 million/year reduction +1¢ 1. Assumes ~390 million shares outstanding for 2028 2. Based on a CPUC / FERC rate base mix of 86% CPUC / 14% FERC and current authorized capital structures |
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Edison International | Second Quarter 2023 Earnings Call 26 Edison’s near-term debt maturities are manageable Currently Outstanding Debt Maturities (2023–2028)1 2023 2024 2025 2026 2027 2028 Variable Rate (SOFR+) SCE: Wildfire Claims – 1,000 – – – – Total Variable Rate – 1,000 – – – – Fixed Rate SCE: Operational 735 – 900 – – 439 SCE: Wildfire Claims 400 1,150 300 750 1,350 750 EIX Parent – 500 800 – 600 1,150 Total Fixed Rate 1,135 1,650 2,000 750 1,950 2,339 Total Debt1 SCE: Operational 735 – 900 – – 439 SCE: Wildfire Claims 400 2,150 300 750 1,350 750 EIX Parent – 500 800 – 600 1,150 Total Debt 1,135 2,650 2,000 750 1,950 2,339 $ in Millions, as of June 30, 2023 SCE will seek cost recovery of claims settlements and associated interest2 1. Does not include commercial paper borrowings or amortization of secured recovery bonds issued by SCE Recovery Funding LLC. The table shows 2023 mandatory purchase of $135 million of tax-exempt bonds as a maturity in 2023. The company may choose to remarket the bonds at that time. The bonds mature in 2033 2. 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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Edison International | Second Quarter 2023 Earnings Call 27 SCE continues to fund wildfire claims payments with debt Series Principal Due Rate 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% 2023C 400 6/1/26 4.900% 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 $6,050 Annualized Interest1: ~$244 Wildfire Claims Payment-Related Debt Issuances $ in Millions except percentages, as of June 30, 2023 Interest expense not currently recoverable in rates, however, will be included in 2017/2018 Wildfire/ Mudslide Events cost recovery applications SCE has waiver from CPUC, allowing exclusion with respect to certain current and future charges to equity and associated debt for calculating SCE’s regulatory equity ratio – CPUC has issued a proposed decision that would extend SCE’s waiver for two years (with ability to seek additional extension via application) or until CPUC makes a final determination on cost recovery for 2017/2018 Wildfire/ Mudslide Events 1. Pre-tax. Based on SOFR of 5.27% as of June 30, 2023 |
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Edison International | Second Quarter 2023 Earnings Call 28 Q2 2023 Q2 2022 YTD 2023 YTD 2022 SCE $ 420 $ 302 $ 790 $ 449 EIX Parent & Other (66) (61) (126) (124) Basic Earnings $ 354 $ 241 $ 664 $ 325 Non-Core Items SCE Wildfire Insurance Fund expense (53) (53) (105) (106) 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries (12) (8) (102) (404) 2021 NDCTP probable disallowance — — (30) — Customer cancellations of certain ECS data services (17) — (17) — Employment litigation matter, net of recoveries 10 (23) 10 (23) Impairments1 — (64) — (64) Organizational realignment charge — (14) — (14) Income tax benefits2 21 46 69 172 Subtotal SCE (51) (116) (175) (439) EIX Parent & Other Customer revenues for EIS insurance contract 22 — 44 — Income tax expense2 (5) — (9) — Subtotal EIX Parent & Other 1 7 — 3 5 — Less: Total non-core items $ (34) $ (116) $ (140) $ (439) SCE 471 418 965 888 EIX Parent & Other (83) (61) (161) (124) Core Earnings $ 388 $ 357 $ 804 $ 764 Earnings Non-GAAP Reconciliations 1. Impairment charges of $64 million recorded in 2022 include $47 million related to CSRP settlement and $17 million related to GRC track 3 final decision 2. SCE non-core items are tax-effected at an estimated statutory rate of approximately 28%; 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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Edison International | Second Quarter 2023 Earnings Call 29 EIX Core EPS Non-GAAP Reconciliations 1. 2023 EPS drivers are presented based on weighted-average share counts of 383.1 million and 382.8 million for Q2 and YTD, respectively; 2022 EPS drivers are presented based on weighted-average share counts of 381.3 million and 380.9 million for Q2 and YTD, respectively 2. Impairment charges of $(0.16) recorded in 2022 include $(0.12) related to CSRP settlement and $(0.04) related to GRC track 3 final decision 3. SCE non-core items are tax-effected at an estimated statutory rate of approximately 28%; customer revenues for EIS insurance contract are tax-effected at an estimated statutory rate of approximately 20% Q2 2023 Q2 2022 YTD 2023 YTD 2022 Basic EPS $ 0.92 $ 0.63 $ 1.73 $ 0.85 Non-Core Items SCE Wildfire Insurance Fund expense (0.14) (0.14) (0.28) (0.28) 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries (0.03) (0.02) (0.27) (1.06) 2021 NDCTP probable disallowance — — (0.08) — Customer cancellations of certain ECS data services (0.04) — (0.04) — Employment litigation matter, net of recoveries 0.03 (0.06) 0.03 (0.06) Impairments2 — (0.16) — (0.16) Organizational realignment charge — (0.04) — (0.04) Income tax benefit3 0.04 0.11 0.18 0.45 Subtotal SCE (0.14) (0.31) (0.46) (1.15) EIX Parent & Other Customer revenues for EIS insurance contract 0.06 — 0.12 — Income tax expense3 (0.01) — (0.03) — Subtotal EIX Parent & Other 0.05 — 0.09 — Less: Total non-core items (0.09) (0.31) (0.37) (1.15) Core EPS $ 1.01 $ 0.94 $ 2.10 $ 2.00 Reconciliation of EIX Basic Earnings Per Share to EIX Core Earnings Per Share EPS Attributable to Edison International1 |
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Edison International | Second Quarter 2023 Earnings Call 30 Low High Basic EIX EPS $4.18 $4.48 Total Non-Core Items1 (0.37) (0.37) Core EIX EPS $4.55 $4.85 1. Non-core items are presented as they are recorded Earnings Per Share Non-GAAP Reconciliations 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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Edison International | Second Quarter 2023 Earnings Call 31 Use of Non-GAAP Financial Measures 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 |
