Edison International
CEO : Dr. Pedro J. Pizarro
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 20.6% YoY | 21.3% | -51.4% | 2023-02-23 |
Pedro Pizarro says,
Financial Performance and Guidance
- Edison International’s core EPS for 2022 was $4.63, which was in the upper end of the initial guidance range.
- Introduced 2023 EPS guidance of $4.55 to $4.85 and reinforcing the long-term EPS growth target of 5% to 7% from 2021 through 2025.
SCE’s Wildfire Mitigation Plan and Progress
- SCE has reduced the probability of losses of catastrophic wildfires by 75% to 80% compared to pre-2018 levels.
- Approximately 74% of total distribution lines in high fire risk areas, or HFRA, including the 7,000 miles already underground, are expected to be hardened by year-end.
- Deployed about 1,400 circuit miles of covered conductor, bringing the total installations to around 4,400 circuit miles.
2017 and 2018 Wildfire and Mudslide Events
- SCE paid about $280 million in claims settlements in Q4 2022.
- SCE targets filing the TKM cost recovery application in Q3 2023 and expects to request about $2 billion in this first application.
SCE’s Key Management Focus Areas for 2023
- Safety is foundational to our values and success, and we are targeting reducing the rates of employee injuries by 15%.
- Utility plans to keep its pace of about 100 miles per month of covered conductor, reaching a total of 5,600 miles by year-end.
- Filing the first cost recovery application for the historical wildfires is a front-and-center focus area.
Electricity Usage Growth and Infrastructure Investment
- SCE projects about 2% annual growth from 2023 through 2035.
- Rapid expansion of electrification sharpens the need to make significant investments in SCE’s infrastructure.
- Investments in wildfire mitigation and increasing its grid work to support California’s leading role in building a carbon-free economy.
Maria Rigatti says,
Q4 2022 Results
- Edison International’s core EPS of $4.63 for 2022 was in the upper end of initial guidance range.
- EIX reported core EPS of $1.15 for Q4 2022, and SCE’s fourth-quarter earnings increased primarily due to GRC attrition year escalation.
2023 EPS Guidance
- EIX is initiating 2023 core EPS guidance of $4.55 to $4.85, with rate base growth as the primary driver.
- There is a gap between 2023 rate base and EPS growth, with higher interest expense at both the parent and SCE as the primary reason.
Financing Plan
- EIX parent financing needs of $1.4 billion are projected to be financed with a combination of securities with $300 million to 400 million of equity content and parent debt for the remainder.
- The financing plan is fully reflected in EPS guidance, and securities with equity content may include hybrid securities, internal programs, or the existing at-the-market program.
Rate Base Growth
- SCE continues to project strong rate base growth of 7% to 9% from 2021 to 2025, driven by investments in the safety and reliability of the grid.
- This rate base forecast also incorporates SCE’s current view of the requests to be made in the 2025 GRC, and other applications.
Customer Rates
- SCE reached a settlement agreement to move to a customer-funded wildfire self-insurance model, reducing the revenue requirement by an annualized $160 million and further driving down SCE’s system average rate.
- SCE’s system average rate is already the lowest among major California IOUs, and it is expected to be the lowest for the foreseeable future.
Q & A sessions,
2023 EPS Guidance
- Initiating 2023 core EPS guidance of $4.55 to $4.85
- Primary driver of year-over-year EPS growth is rate base growth, which is expected to be approximately 8.5% in 2023
- SCE operational variances have net contribution to guidance of $0.48 to $0.75 per share
- EIX Parent and Other expected to have total expense of $0.87 to $0.90 per share
Financing Plan
- Total parent financing needs projected to be $1.4 billion
- Expected to be financed with a combination of securities with $300 million to 400 million of equity content and parent debt for the remainder
- Issue securities with equity content to support investment grade credit ratings, which the company is firmly committed to maintaining
Rate Base Growth
- Projected strong rate base growth of 7% to 9% from 2021 to 2025
- SCE has significant capital expenditure opportunities driven by investments in safety and reliability of grid
- Forecast incorporates SCE’s current view of the requests to be made in the 2025 GRC, and other applications
Cost of Capital Mechanism
- Monitored as it could impact 2024 even though it’s not necessary to achieve 5% to 7% EPS CAGR in 2025
- If mechanism triggers, it would increase ROE by a minimum of 50 basis points, and each 50 basis points of ROE changes 2025 EPS by about $0.28
2025 EPS CAGR
- Reiterating 5% to 7% EPS growth rate guidance from 2021 through 2025, which translates to 2025 EPS of $5.50 to $5.90
- Incorporates assumptions to accommodate higher interest rate environment, but does not include the potential recovery of historical wildfire costs
No bad stock 