| | | | | |
| FOR IMMEDIATE RELEASE | Investor Relations: Sam Ramraj, (626) 302-2540 |
| Media Contact: Jeff Monford, (626) 476-8120 |
Edison International Reports Fourth Quarter and Full-Year 2020 Results
•Fourth Quarter 2020 GAAP EPS of $1.39; Core EPS of $1.19
•Full-Year 2020 GAAP EPS of $1.98; Core EPS of $4.52 exceeds midpoint of initial guidance range
•Edison International declares quarterly dividend of $0.6625 per share; annualized rate of $2.65 per share
•EIX will issue securities with up to $1 billion of equity content in 2021
ROSEMEAD, Calif., February 25, 2021 — Edison International (NYSE: EIX) today reported fourth quarter 2020 net income of $526 million, or $1.39 per share, compared to net income of $143 million, or $0.40 per share, in the fourth quarter 2019. As adjusted, fourth quarter 2020 core earnings were $451 million, or $1.19 per share, compared to core earnings of $355 million, or $0.99 per share, in the fourth quarter 2019.
Southern California Edison's (SCE) fourth quarter core earnings per share (EPS) was higher primarily from higher CPUC-related revenue due to the 2018 GRC decision's escalation mechanism, lower expenses from regulatory deferrals related to 2020 wildfire mitigation activities, a 2020 adjustment to 2018–2019 regulatory deferrals from the approval of the GRC track 2 settlement, and higher deferral of customer uncollectibles. These were partially offset by the increase in shares outstanding primarily associated with the equity offering in May 2020.
SCE's non-core loss per share was lower primarily due to lower charges for SCE's 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries, and gains from SCE's sale of San Onofre nuclear fuel.
Edison International Parent and Other's fourth quarter 2020 net income per share increased by $0.28 compared to fourth quarter 2019. The higher income per share was primarily due to a non-core gain from the sale of an investment in a lease of a hydroelectric power plant in Vidalia, Louisiana.
“In 2020, SCE made substantial progress on its comprehensive wildfire mitigation strategy. SCE accomplished the vast majority of its 2020 program targets and, in many cases, exceeded those goals, despite the challenges faced during the COVID-19 pandemic,” said Pedro J. Pizarro, president and CEO of Edison International. “Since the end of 2018, SCE’s execution of its wildfire mitigation strategy has reduced the risk of wildfires associated with utility infrastructure, despite a record-setting California wildfire season last year.”
Pizarro added, “SCE has also made significant progress toward resolving pending wildfire-related litigation. In total, SCE has resolved approximately two-thirds of the best estimate of total losses established last September. Looking ahead, SCE is planning for the critical role it plays in sustainability, particularly from the unique vantage point of a wires-focused business. This will include significant capital investment opportunities to support the electrification of transportation and buildings, as outlined in SCE’s Pathway 2045 and Reimagining the Grid white papers.”
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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Full-Year Earnings
For 2020, Edison International reported net income of $0.7 billion, or $1.98 per share, compared to $1.3 billion, or $3.78 per share, for 2019. As adjusted, Edison International's core earnings were $1.7 billion, or $4.52 per share, compared to $1.6 billion, or $4.70 per share, in 2019.
SCE's 2020 core EPS was lower due to the increase in shares outstanding primarily related to the equity offerings in July 2019 and May 2020. Operational results were higher primarily from higher CPUC-related revenue due to the 2018 GRC decision's escalation mechanism, lower expenses from regulatory deferrals related to 2020 wildfire mitigation activities, and a 2020 adjustment to 2018–2019 regulatory deferrals from the approval of the GRC track 2 settlement. These were partially offset primarily by a true-up related to the 2018 GRC decision in the second quarter of 2019 and, to a lesser extent, higher customer uncollectibles from the COVID-19 pandemic and expenses from SCE's response to the pandemic that were unable to be deferred to regulatory assets because they were not incremental to activities and expenses previously authorized for recovery.
SCE’s non-core loss per share was higher primarily due to higher charges for wildfire-related claims for the 2017/2018 Wildfire/Mudslide Events, net of recoveries, and higher amortization of SCE's contributions to the Wildfire Insurance Fund. These were partially offset by higher gains from SCE's sale of San Onofre nuclear fuel and the absence of an impairment charge resulting from SCE's 2018 GRC final decision recorded in the second quarter 2019.
Edison International Parent and Other’s 2020 loss per share decreased by $0.18 compared to 2019. Core loss per share was higher primarily due to higher interest expense as a result of increased borrowings. Non-core income per share was higher primarily due to a gain from the sale of an investment in a lease of a hydroelectric power plant in Vidalia, Louisiana recorded in 2020.
Edison International uses core earnings, which is a non-GAAP financial measure that adjusts for significant discrete items that management does not consider representative of ongoing earnings. Edison International management believes that core earnings provide more meaningful comparisons of performance from period to period. Please see the attached tables for a reconciliation of core earnings to basic GAAP earnings.
Financing Update
The company provided an update on its previously stated equity requirements. To enable SCE to continue to debt-finance the 2017/2018 Wildfire/Mudslide Events claims payments and maintain investment grade credit ratings at SCE and the parent company, Edison International will issue securities with up to $1 billion of equity content. The company expects to complete this financing activity in 2021. See the prepared remarks accompanying the company’s conference call for further information.
2021 Earnings Guidance
Edison International will provide 2021 earnings guidance after a final decision has been adopted by the CPUC on the Southern California Edison 2021 GRC, consistent with the company's prior practice.
Edison International and Southern California Edison Declare Dividends
Today, the Board of Directors of Edison International declared a quarterly common stock dividend of $0.6625 per share, payable on April 30, 2021, to shareholders of record on March 31, 2021. Additionally, the Board of Directors of Southern California Edison Company today declared dividends on preference stock. For more information, please see the related news release at www.edisoninvestor.com.
Fourth Quarter and Full-Year 2020 Earnings Conference Call and Webcast Details
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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| | | | | |
When: | Thursday, February 25, 2021, 1:30 p.m. (Pacific Time) |
Telephone Numbers: | 1-888-673-9780 (U.S.) and 1-312-470-0178 (Int'l) - Passcode: Edison |
Telephone Replay: | 1-888-296-6948 (U.S.) and 1-203-369-3028 (Int’l) - Passcode: 2548 Telephone replay available through March 12, 2021 |
Webcast: | www.edisoninvestor.com |
Edison International has posted its earnings conference call prepared remarks by the CEO and CFO, the teleconference presentation, and Form 10-K 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, a global energy advisory company delivering comprehensive, data-driven energy solutions to commercial and industrial users to meet their cost, sustainability and risk goals.
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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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 to implement SCE's new customer service system and costs incurred as a result of the COVID-19 pandemic;
•ability of SCE to implement its Wildfire Mitigation Plan;
•risks of regulatory or legislative restrictions that would limit SCE’s ability to implement Public Safety Power Shutoff (“PSPS”) when conditions warrant or would otherwise limit SCE’s operational PSPS practices;
•risks associated with implementing PSPS, including regulatory fines and penalties, claims for damages and reputational harm;
•ability of SCE to maintain a valid safety certification;
•ability to obtain sufficient insurance at a reasonable cost, including insurance relating to SCE's nuclear facilities and wildfire-related claims, and to recover the costs of such insurance or, in the event liabilities exceed insured amounts, the ability to recover uninsured losses from customers or other parties;
•extreme weather-related incidents (including events caused, or exacerbated, by climate change, such as wildfires, debris flows, 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, operational issues (such as rotating outages and issues due to damaged infrastructure), PSPS activations and unanticipated costs;
•risks associated with California Assembly Bill 1054 (“AB 1054”) effectively mitigating the significant risk 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
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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Insurance Fund and the CPUC's interpretation of and actions under AB 1054, including its interpretation of the new prudency standard established under AB 1054;
•decisions and other actions by the California Public Utilities Commission, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and other governmental authorities, including decisions and actions related to nationwide or statewide crisis, determinations of authorized rates of return or return on equity, the recoverability of wildfire-related and debris-flow-related costs, issuance of SCE's wildfire safety certification, wildfire mitigation efforts, and delays in executive, regulatory and legislative actions;
•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, delays, contractual disputes, and cost overruns;
•pandemics, such as COVID-19, and other events that cause regional, statewide, national or global disruption, which could impact, among other things, Edison International's and SCE's business, operations, cash flows, liquidity and/or financial results and cause Edison International and SCE to incur unanticipated costs;
•physical security of Edison International's and SCE's critical assets and personnel and the cybersecurity of Edison International's and SCE's critical information technology systems for grid control, and business, employee and customer data;
•risks associated with cost allocation resulting in higher rates for utility bundled service customers because of possible customer bypass or departure for other electricity providers such as Community Choice Aggregators (“CCA,” which are cities, counties, and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses) and Electric Service Providers (entities that offer electric power and ancillary services to retail customers, other than electrical corporations (like SCE) and CCAs);
•risks inherent in SCE's transmission and distribution infrastructure investment program, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs (payments due under power contracts in the event there is insufficient transmission to enable acceptance of power delivery), changes in the California Independent System Operator’s transmission plans, and governmental approvals; and
•risks associated with the operation of transmission and distribution assets and power generating 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, including more detail about the factors described in this report, is contained throughout this report and in the 2020 Form 10-K, including the "Risk Factors" section. Readers are urged to read this entire report, including information incorporated by reference, as well as the 2020 Form 10-K, 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 title "Events and Presentations" 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 Fourth Quarter and Full-Year 2020 Financial Results
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Fourth Quarter and Full-Year Reconciliation of Basic Earnings Per Share to Core Earnings Per Share
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | | | Twelve months ended December 31, | | |
| 2020 | | 2019 | | Change | | 2020 | | 2019 | | Change |
| Earnings (loss) per share attributable to Edison International | | | | | | | | |
| Continuing operations | | | | | | | | | | | |
| SCE | $ | 1.25 | | | $ | 0.54 | | | $ | 0.71 | | | $ | 2.17 | | | $ | 4.15 | | | $ | (1.98) | |
| Edison International Parent and Other | 0.14 | | | (0.14) | | | 0.28 | | | (0.19) | | | (0.37) | | | 0.18 | |
| | | | | | | | | | | |
| Edison International | 1.39 | | | 0.40 | | | 0.99 | | | 1.98 | | | 3.78 | | | (1.80) | |
| Less: Non-core items | | | | | | | | | | | |
| SCE | (0.05) | | | (0.54) | | | 0.49 | | | (2.72) | | | (0.86) | | | (1.86) | |
| Edison International Parent and Other | 0.25 | | | (0.05) | | | 0.30 | | | 0.18 | | | (0.06) | | | 0.24 | |
| | | | | | | | | | | |
| Total non-core items | 0.20 | | | (0.59) | | | 0.79 | | | (2.54) | | | (0.92) | | | (1.62) | |
| Core earnings (losses) | | | | | | | | | | | |
| SCE | 1.30 | | | 1.08 | | | 0.22 | | | 4.89 | | | 5.01 | | | (0.12) | |
| Edison International Parent and Other | (0.11) | | | (0.09) | | | (0.02) | | | (0.37) | | | (0.31) | | | (0.06) | |
| Edison International | $ | 1.19 | | | $ | 0.99 | | | $ | 0.20 | | | $ | 4.52 | | | $ | 4.70 | | | $ | (0.18) | |
Note: Diluted earnings were $1.39 and $0.40 per share for the three months ended December 31, 2020 and 2019, respectively, and $1.98 and $3.77 per share for the twelve months ended December 31, 2020 and 2019, respectively.
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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Fourth Quarter and Full-Year Reconciliation of Basic Earnings Per Share to Core Earnings (in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | | | Twelve months ended December 31, | | |
| (in millions) | 2020 | | 2019 | | Change | | 2020 | | 2019 | | Change |
| Net income (loss) attributable to Edison International | | | | | | | | |
| | | | | | | | | | | |
| SCE | $ | 474 | | | $ | 194 | | | $ | 280 | | | $ | 810 | | | $ | 1,409 | | | $ | (599) | |
| Edison International Parent and Other | 52 | | | (51) | | | 103 | | | (71) | | | (125) | | | 54 | |
| | | | | | | | | | | |
| Edison International | 526 | | | 143 | | | 383 | | | 739 | | | 1,284 | | | (545) | |
| Less: Non-core items | | | | | | | | | | | |
SCE1,2,3,4,5,6 | (21) | | | (194) | | | 173 | | | (1,015) | | | (293) | | | (722) | |
Edison International Parent and Other2,7,8 | 96 | | | (18) | | | 114 | | | 68 | | | (18) | | | 86 | |
| | | | | | | | | | | |
| Total non-core items | 75 | | | (212) | | | 287 | | | (947) | | | (311) | | | (636) | |
| Core earnings (losses) | | | | | | | | | | | |
| SCE | 495 | | | 388 | | | 107 | | | 1,825 | | | 1,702 | | | 123 | |
| Edison International Parent and Other | (44) | | | (33) | | | (11) | | | (139) | | | (107) | | | (32) | |
| Edison International | $ | 451 | | | $ | 355 | | | $ | 96 | | | $ | 1,686 | | | $ | 1,595 | | | $ | 91 | |
1 Includes amortization of SCE’s Wildfire Insurance Fund expenses of $84 million ($61 million after-tax) and $336 million ($242 million after-tax) for the quarter and year-ended December 31, 2020, respectively and $85 million ($61 million after-tax) and $152 million ($109 million after-tax) for the quarter and year-ended December 31, 2019, respectively.
2 Includes income tax benefit of $18 million and income tax expense of $3 million recorded in the first quarter of 2020 for SCE and Edison International Parent and Other, respectively, due to re-measurement of uncertain tax positions related to the 2010 – 2012 California state tax filings currently under audit.
3 Includes income tax benefits of $19 million and $88 million for the quarter and year-ended December 31, 2019, respectively for SCE related to changes in the allocation of deferred tax re-measurement between customers and shareholders as a result of a CPUC resolution issued in February 2019. The resolution determined that customers are only entitled to excess deferred taxes which were included when setting rates and other deferred tax re-measurement belongs to shareholders.
4 Includes gains of $70 million ($50 million after-tax) and $150 million ($108 million after-tax) for the quarter and year-ended December 31, 2020, respectively and $7 million ($5 million after-tax) and $11 million ($8 million after-tax) for the quarter and year-ended December 31, 2019, respectively for SCE's sale of San Onofre nuclear fuel.
5 Includes charges of $13 million ($10 million after-tax) and $1.2 billion ($899 million after-tax) for the quarter and year-ended December 31, 2020, respectively and $218 million ($157 million after-tax) for the fourth quarter of 2019 for SCE's 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries.
6 Includes an impairment charge of $170 million ($123 million after-tax) recorded in the second quarter of 2019 for SCE related to disallowed historical capital expenditures in SCE's 2018 GRC decision.
7 Includes goodwill impairment charges of $34 million ($25 million after-tax) recorded in the second quarter of 2020 for Edison International Parent and Other related to Edison Energy stemming from the economic impact of COVID-19 and $25 million ($18 million after-tax) recorded in the fourth quarter of 2019 for Edison Energy following a goodwill assessment.
8 Includes a gain of $132 million ($96 million after-tax) recorded in the fourth quarter of 2020 for Edison International Parent and Other's sale of of an investment in a lease of a hydroelectric power plant in Vidalia, Louisiana.
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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| | | | | | | | | | | | | | | | | | | | | | | |
| Consolidated Statements of Income | | | Edison International |
| | | | | | | |
| | Three months ended December 31, | | Twelve months ended December 31, |
| (in millions, except per-share amounts, unaudited) | 2020 | | 2019 | | 2020 | | 2019 |
| Total operating revenue | $ | 3,157 | | | $ | 2,970 | | | $ | 13,578 | | | $ | 12,347 | |
| Purchased power and fuel | 1,119 | | | 991 | | | 4,932 | | | 4,839 | |
| Operation and maintenance | 724 | | | 767 | | | 3,609 | | | 3,018 | |
| Wildfire-related claims, net of insurance recoveries | 25 | | | 255 | | | 1,328 | | | 255 | |
| Wildfire Insurance Fund expense | 84 | | | 85 | | | 336 | | | 152 | |
| Depreciation and amortization | 504 | | | 470 | | | 1,967 | | | 1,730 | |
| Property and other taxes | 110 | | | 97 | | | 438 | | | 399 | |
| Impairment and other (income) expense | (70) | | | 18 | | | (116) | | | 184 | |
| Gain on sale of lease interest and other operating income | (133) | | | — | | | (133) | | | (5) | |
| Total operating expenses | 2,363 | | | 2,683 | | | 12,361 | | | 10,572 | |
| Operating income | 794 | | | 287 | | | 1,217 | | | 1,775 | |
| | | | | | | |
| Interest expense | (226) | | | (222) | | | (902) | | | (841) | |
| Other income | 34 | | | 42 | | | 251 | | | 193 | |
| Income before income taxes | 602 | | | 107 | | | 566 | | | 1,127 | |
| Income tax expense (benefit) | 50 | | | (66) | | | (305) | | | (278) | |
| | | | | | | |
| | | | | | | |
| Net income | 552 | | | 173 | | | 871 | | | 1,405 | |
| Preferred and preference stock dividend requirements of SCE | 26 | | | 30 | | | 132 | | | 121 | |
| | | | | | | |
Net income attributable to Edison International common shareholders | $ | 526 | | | $ | 143 | | | $ | 739 | | | $ | 1,284 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Basic earnings per share: | | | | | | | |
| Weighted average shares of common stock outstanding | 378 | | | 360 | | | 373 | | | 340 | |
| | | | | | | |
| | | | | | | |
Basic earnings per common share attributable to Edison International common shareholders: | $ | 1.39 | | | $ | 0.40 | | | $ | 1.98 | | | $ | 3.78 | |
| Diluted earnings per share: | | | | | | | |
Weighted average shares of common stock outstanding, including effect of dilutive securities | 379 | | | 361 | | | 374 | | | 341 | |
| | | | | | | |
| | | | | | | |
| Diluted earnings per common share attributable to Edison International common shareholders | $ | 1.39 | | | $ | 0.40 | | | $ | 1.98 | | | $ | 3.77 | |
| | | | | | | |
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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| | | | | | | | | | | |
| Consolidated Balance Sheets | Edison International |
| | | |
| (in millions, unaudited) | December 31,
2020 | | December 31, 2019 |
| ASSETS | | | |
| Cash and cash equivalents | $ | 87 | | | $ | 68 | |
Receivables, less allowances of $188 and $50 for uncollectible accounts at respective dates | 1,130 | | | 788 | |
| Accrued unbilled revenue | 521 | | | 488 | |
| Insurance receivable | 708 | | | — | |
| Income tax receivables | 68 | | | 118 | |
| Inventory | 405 | | | 364 | |
| Prepaid expenses | 281 | | | 214 | |
| | | |
| Regulatory assets | 1,314 | | | 1,009 | |
| Wildfire Insurance Fund contributions | 323 | | | 323 | |
| Other current assets | 224 | | | 188 | |
| | | |
| Total current assets | 5,061 | | | 3,560 | |
| Nuclear decommissioning trusts | 4,833 | | | 4,562 | |
| Other investments | 53 | | | 64 | |
| Total investments | 4,886 | | | 4,626 | |
Utility property, plant and equipment, less accumulated depreciation and amortization of $10,681 and $9,958 at respective dates | 47,653 | | | 44,198 | |
Nonutility property, plant and equipment, less accumulated depreciation of $94 and $86 at respective dates | 186 | | | 87 | |
| Total property, plant and equipment | 47,839 | | | 44,285 | |
| | | |
| Regulatory assets | 7,120 | | | 6,088 | |
| Wildfire Insurance Fund contributions | 2,443 | | | 2,767 | |
| Operating lease right-of-use assets | 1,088 | | | 693 | |
| Long-term insurance receivables | 75 | | | 1715 | |
| Other long-term assets | 860 | | | 648 | |
| Total long-term assets | 11,586 | | | 11,911 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Total assets | $ | 69,372 | | | $ | 64,382 | |
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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| | | | | | | | | | | |
| Consolidated Balance Sheets | Edison International |
| | | |
| (in millions, except share amounts, unaudited) | December 31,
2020 | | December 31, 2019 |
| LIABILITIES AND EQUITY | | | |
| Short-term debt | $ | 2,398 | | | $ | 550 | |
| Current portion of long-term debt | 1,029 | | | 479 | |
| Accounts payable | 1,980 | | | 1,752 | |
| | | |
| | | |
| Customer deposits | 243 | | | 302 | |
| | | |
| Regulatory liabilities | 569 | | | 972 | |
| Current portion of operating lease liabilities | 215 | | | 80 | |
| Wildfire-related claims | 2,231 | | | — | |
| Other current liabilities | 1,612 | | | 1,388 | |
| | | |
| Total current liabilities | 10,277 | | | 5,523 | |
| Long-term debt | 19,632 | | | 17,864 | |
| Deferred income taxes and credits | 5,368 | | | 5,078 | |
| | | |
| Pensions and benefits | 563 | | | 674 | |
| Asset retirement obligations | 2,930 | | | 3,029 | |
| Regulatory liabilities | 8,589 | | | 8,385 | |
| Operating lease liabilities | 873 | | | 613 | |
| Wildfire-related claims | 2,281 | | | 4,568 | |
| Other deferred credits and other long-term liabilities | 2,910 | | | 3,152 | |
| Total deferred credits and other liabilities | 23,514 | | | 25,499 | |
| Total liabilities | 53,423 | | | 48,886 | |
| Commitments and contingencies | | | |
| | | |
Common stock, no par value (800,000,000 shares authorized; 378,907,147 and 361,985,133 shares issued and outstanding at respective dates) | 5,962 | | | 4,990 | |
| Accumulated other comprehensive loss | (69) | | | (69) | |
| Retained earnings | 8,155 | | | 8,382 | |
| Total Edison International's common shareholders' equity | 14,048 | | | 13,303 | |
| Noncontrolling interests – preferred and preference stock of SCE | 1,901 | | | 2,193 | |
| | | |
| Total equity | 15,949 | | | 15,496 | |
| | | |
| | | |
| | | |
| | | |
| Total liabilities and equity | $ | 69,372 | | | $ | 64,382 | |
Edison International Reports Fourth Quarter and Full-Year 2020 Financial Results
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| | | | | | | | | | | | | | | | | | | | |
| Consolidated Statements of Cash Flows | | Edison International |
| | |
| | | Years ended December 31, |
| (in millions, unaudited) | | 2020 | | 2019 | | 2018 |
| Cash flows from operating activities: | | | | | | |
| Net income (loss) | | $ | 871 | | | $ | 1,405 | | | $ | (316) | |
| Less: Income from discontinued operations | | — | | | — | | | 34 | |
| Income (loss) from continuing operations | | 871 | | | 1,405 | | | (350) | |
| Adjustments to reconcile to net cash provided by operating activities: | | | | | | |
| Depreciation and amortization | | 2,029 | | | 1,803 | | | 1,940 | |
| Allowance for equity during construction | | (121) | | | (101) | | | (104) | |
| Impairment and other (income) expense | | (116) | | | 184 | | | 78 | |
| Gain on sale of lease interest and other operating income | | (133) | | | (5) | | | (7) | |
| Deferred income taxes | | (296) | | | (284) | | | (527) | |
| Wildfire Insurance Fund amortization expense | | 336 | | | 152 | | | — | |
| Other | | 36 | | | 34 | | | 42 | |
| Nuclear decommissioning trusts | | (197) | | | (106) | | | (109) | |
| Contributions to Wildfire Insurance Fund | | (95) | | | (2,457) | | | — | |
| Changes in operating assets and liabilities: | | | | | | |
| Receivables | | (283) | | | (76) | | | (39) | |
| Inventory | | (43) | | | (83) | | | (49) | |
| Accounts payable | | 87 | | | 288 | | | (31) | |
| Tax receivables and payables | | 113 | | | 88 | | | 32 | |
| Other current assets and liabilities | | 4 | | | (13) | | | (79) | |
| | | | | | |
| Regulatory assets and liabilities, net | | (1,799) | | | (1,278) | | | (92) | |
| Wildfire-related insurance receivable | | 932 | | | 285 | | | (2,000) | |
| Wildfire-related claims | | (56) | | | (101) | | | 4,669 | |
| Other noncurrent assets and liabilities | | (6) | | | (42) | | | (197) | |
| | | | | | |
| | | | | | |
| Net cash provided by (used in) operating activities | | 1,263 | | | (307) | | | 3,177 | |
| Cash flows from financing activities: | | | | | | |
Long-term debt issued, plus premium and net of discount and issuance costs of $23, $(4) and $(63) for the respective periods | | 3,073 | | | 3,696 | | | 3,237 | |
| Long-term debt repaid or repurchased | | (1,099) | | | (82) | | | (654) | |
| Short-term debt borrowed | | 2,994 | | | 1,750 | | | — | |
| Short-term debt repaid | | (1,126) | | | (1,750) | | | — | |
| Common stock issued | | 912 | | | 2,391 | | | — | |
| | | | | | |
| Preferred and preference stock redeemed | | (308) | | | — | | | — | |
| Commercial paper and other short-term borrowing (repayments), net | | 304 | | | (172) | | | (1,611) | |
| | | | | | |
| | | | | | |
| Dividends and distribution to noncontrolling interests | | (118) | | | (121) | | | (121) | |
| Dividends paid | | (928) | | | (810) | | | (788) | |
| Other | | 23 | | | 1 | | | 19 | |
| | | | | | |
| | | | | | |
| Net cash provided by financing activities | | 3,727 | | | 4,903 | | | 82 | |
| Cash flows from investing activities: | | | | | | |
| Capital expenditures | | (5,484) | | | (4,877) | | | (4,509) | |
| Proceeds from sale of nuclear decommissioning trust investments | | 5,927 | | | 4,389 | | | 4,340 | |
| Purchases of nuclear decommissioning trust investments | | (5,730) | | | (4,283) | | | (4,231) | |
| Proceeds from sale of San Onofre nuclear fuel | | 158 | | | 11 | | | 3 | |
| | | | | | |
| Proceeds from sale of lease investment | | 132 | | | — | | | — | |
| Other | | 26 | | | 82 | | | 158 | |
| | | | | | |
| | | | | | |
| Net cash used in investing activities | | (4,971) | | | (4,678) | | | (4,239) | |
| | | | | | |
| | | | | | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | 19 | | | (82) | | | (980) | |
| Cash, cash equivalents and restricted cash at beginning of year | | 70 | | | 152 | | | 1,132 | |
| Cash, cash equivalents and restricted cash at end of year | | $ | 89 | | | $ | 70 | | | 152 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Prepared Remarks of Edison International CEO and CFO
Fourth Quarter 2020 Earnings Teleconference
February 25, 2021, 1:30 p.m. (PT)
Pedro Pizarro, President and Chief Executive Officer, Edison International
Let me start with sentiments of support for the residents of Texas and other states impacted physically and financially by last week’s frigid weather. Climate change is a major part of the story, and our industry must continue our collective efforts on climate mitigation and adaptation.
Today, Edison International reported core earnings per share of $4.52 for 2020. This exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago, and the decline was due to 44 cents of equity share dilution. On an operational basis excluding dilution, core EPS was 26 cents higher, driven by strong performance at SCE. Maria will discuss our financial performance in detail in her remarks.
In 2020, SCE made substantial progress on its comprehensive wildfire mitigation strategy. This continues to advance one of SCE’s top priorities — increasing grid resiliency to adapt to the changing climate and to protect public safety. SCE accomplished the vast majority of its 2020 program targets and, in many cases, exceeded those goals, despite the challenges we all faced during the COVID-19 pandemic. We have highlighted several measures of SCE’s progress and execution on page 2 of the slide deck we issued with our earnings release. Since the end of 2018, SCE’s execution of its wildfire mitigation strategy has reduced the risk of wildfires associated with utility infrastructure, despite a record-setting California wildfire season last year. For the second consecutive year, we do not believe damages from any wildfire alleged to be caused by SCE equipment will exceed insurance.
SCE is further accelerating its wildfire mitigation efforts. Earlier this month, the utility filed its 2021 Wildfire Mitigation Plan update, which describes how it has matured its wildfire mitigation capabilities and outlines the long-term plan to further advance risk-informed decision making, data management, grid hardening, and community engagement. A prime example is the covered conductor program, which will increase the percentage of distribution overhead circuit miles covered within SCE’s high fire risk areas from approximately 15% today to over 60% by the end of 2023, subject to CPUC approval. The utility continues to innovate and implement technology-based options, such as early fault detection, for reducing ignition risks. As described in its 2021 WMP, SCE estimates a 25% reduction in ignitions in high fire risk areas by 2022 as compared to 2020, assuming the same conditions as experienced in 2020.
SCE continues to improve its public safety power shutoff, or PSPS, operations, with public safety being the paramount consideration. SCE uses PSPS only when conditions warrant. Let me underscore the need for PSPS, despite the hardships it creates, by noting that in 2019 and 2020, post-PSPS patrols found at least 60 incidents of wind-related damage that could have potentially caused ignitions. In 2020, the installation of more weather stations and sectionalization devices, paired with the automation of existing devices, enabled SCE to limit PSPS footprints wherever possible, based on risk assessments, achieving a 22% reduction in customer minutes of interruption. That said, SCE recognizes there are opportunities to further improve the execution of PSPS and better support its customers. That was loud and clear in the January 19 letter from President Batjer, and in the CPUC and community input SCE leaders received during the 4 ½ hour PSPS hearing on January 26. All this especially underscored the need to improve SCE’s communications with customers, and the PSPS Action Plan filed on February 12 includes important near-term commitments to use this essential tool of last resort in a way that shows better care for our customers.
Beyond SCE, the state has been building on significant investments in its firefighting capabilities. In his 2021-22 budget, the Governor proposed an additional $1 billion to support a coordinated forest health and fire prevention strategy that maximizes technology and science-
based approaches to protect state lands. This includes prioritizing firebreaks around high-risk communities and grants for individual homeowners to harden their properties. Recognizing the need to move quickly, the Governor also proposed that $323 million of that billion would be for early action to start these prevention projects before the next fire season. For fire suppression, the budget adds funding to support 30 additional statewide fire crews and seven large air tankers. The state will continue phasing in Black Hawk helicopters, with seven expected to be in operation this fire season and another five in 2022. These new suppression resources will help the state move more quickly to combat wildfires before they become catastrophic. The Governor and the California Insurance Commission also announced a plan to establish statewide standards for home and community hardening that will reduce wildfire risk, and help make insurance available and affordable to residents and businesses.
Shifting to past wildfires, SCE has made significant progress toward resolving pending litigation. Last month, SCE resolved all insurance subrogation claims in the pending 2018 Woolsey Fire litigation. The utility continues to make solid progress settling remaining individual plaintiff claims across the 2017 and 2018 Wildfire and Mudslide Events. In total, SCE has resolved approximately two-thirds of the best estimate of total losses established last September. Maria will provide an update on the equity financing needs related to these events later on the call.
Turning to regulatory actions, we welcome the reappointment of CPUC President Batjer for a six-year term, subject to confirmation by the Senate. President Batjer’s leadership has energized the Commission’s implementation of the state’s greenhouse gas emission reduction goals. Yesterday, the CPUC hosted an en banc to share ideas about affordability across many stakeholders. Given the economic impacts of COVID-19, this is a timely discussion and follows on many years of SCE leadership to manage system average rate growth well below the other California utilities, which we were proud to see acknowledged by the Commission staff report and others. The discussion reinforced many of the issues we have raised in our Pathway 2045 analysis, including that the grid investments needed to decarbonize the economy and improve
local air quality through clean energy and electrification may increase electric costs but will actually result in greater affordability and equity, with the average customer spending 30% less across all forms of energy in 2045 than they do today thanks to the greater efficiency of electric technologies.
Looking ahead, SCE is planning for the critical role it plays in sustainability, particularly from the unique vantage point of a wires-focused business. This will include significant capital investment opportunities to support the electrification of transportation and buildings, as outlined in SCE’s Pathway 2045 and Reimagining the Grid white papers. The Governor’s budget proposal also underscores this with its proposed $1.5 billion comprehensive strategy to achieve zero-emission vehicle goals by 2035 and 2045. This includes infrastructure investments for, and improved access to, new and used zero-emission vehicles.
SCE has received CPUC approval for over $800 million to support electric vehicles, including investing in electric charging infrastructure for light-, medium-, and heavy-duty vehicles. The utility launched its Charge Ready 2 program, the largest light-duty EV charging program by an investor-owned utility in the US, which will support approximately 38,000 light-duty charging ports. Charge Ready Transport, SCE’s program to build charging infrastructure for medium- and heavy-duty vehicles, will grow through 2024, eventually building charging infrastructure to power 8,500 electric medium- and heavy-duty vehicles. SCE has also committed to a long-term goal to electrify its own vehicle fleet, including 100% of all light-duty vehicles by 2030. In the area of building electrification, SCE launched new programs in 2020 to incentivize heat pump installations and expects to continue to expand these offerings going forward.
Before I conclude, I would like to say that I am very proud of what our employees accomplished over the last year in spite of the COVID-19 pandemic. COVID-19 reshaped the way we do business and interact with our customers and communities, and we adapted to continue delivering an essential service. We cared for each other, whether working in the field or teleworking; we cared for our customers, providing relief for those facing economic challenges;
and we cared for our communities and their safety. Looking forward, I am excited about our near- and long-term business opportunities. SCE is well positioned as an electric-only utility, with investments highly aligned with the state’s — and now the Federal Government’s — long-term decarbonization goals. We will continue to accelerate our wildfire mitigation efforts, while building toward an equitable clean energy future.
Maria Rigatti, Executive Vice President and Chief Financial Officer, Edison International
My comments today will cover fourth quarter 2020 results, our capital expenditure and rate base forecasts, and an update on our financing plans for 2021.
Edison International reported core earnings of $1.19 per share for the fourth quarter 2020, an increase of 20 cents per share from the same period last year. Full year 2020 core EPS was $4.52, which exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago, and the decline was due to 44 cents of equity share dilution. On an operational basis excluding dilution, core EPS was 26 cents higher, driven by strong performance at SCE.
On page 3, you can see SCE’s key fourth quarter EPS drivers on the right-hand side. I would like to highlight four items that accounted for much of the variance.
First, EPS increased by 16 cents related to higher revenue. CPUC-related revenue contributed 22 cents of this increase due to the escalation mechanism from the 2018 GRC decision. There was also a negative variance of 11 cents primarily related to benefits captured in our tax balancing account. This is offset in the income tax line, with no effect on earnings. FERC and other operating revenue had a positive variance of 5 cents, largely due to higher rate base.
Second, O&M had a positive variance of 11 cents, primarily due to higher regulatory deferrals related to wildfire mitigation activities and customer uncollectibles, and from approval
of the GRC track 2 settlement. Third, depreciation had a negative variance of 7 cents due to higher rate base.
Lastly, SCE’s EPS in the quarter was lower by 7 cents because of dilution from the increase in shares outstanding primarily associated with the equity offering in May 2020.
I would now like to comment on SCE’s capital expenditure and rate base growth forecasts, which are shown on Page 4. We continue to see opportunities to significantly grow SCE’s rate base, driven by investments in electric infrastructure. The capital program reflects expenditures of $15 to $16 billion between 2021 and 2023. This represents compound annual rate base growth of 7.6% over two rate case periods at the request level. Our total capex forecast during this period is unchanged as we are awaiting a proposed decision in SCE’s 2021 GRC track 1. In 2020, SCE’s capital spending was $5.5 billion, approximately $400 million higher than forecast primarily as a result of higher fire restoration costs. For 2021, SCE has developed and will execute against a robust capital plan that targets key programs while maintaining flexibility in later years to adapt to levels authorized in the final GRC decision.
Please turn to page 5. While the Commission’s schedule calls for a proposed decision this quarter on track 1 of SCE’s 2021 GRC, based on the level of inquiry to date from the CPUC, compared to our past experience, we believe it is unlikely that SCE will receive a PD by the end of the first quarter. We remain hopeful that SCE will receive a PD in the second quarter. As a reminder, the CPUC can vote out a final decision no sooner than 30 days after it issues a proposed decision. Consistent with our prior practice, we will issue earnings guidance after we receive a final decision on the GRC.
Page 6 shows a summary of the substantial progress on receiving approvals for recovery of incremental wildfire mitigation costs. SCE expects to receive over $1 billion of cash flow through September 2022 as the utility implements CPUC approvals. This is in addition to ongoing securitization of AB 1054 capital. You may recall that, last quarter, the CPUC issued a
financing order authorizing SCE to securitize the first tranche of AB 1054 capital expenditures, approved in the Grid Safety & Resiliency Plan settlement. Yesterday, SCE successfully closed that securitization, issuing $338 million of AAA-rated recovery bonds. The proceeds will be used to repay short-term borrowings issued for AB 1054 capital expenditures. in January, the CPUC approved SCE’s GRC track 2 settlement, which allows SCE to request another financing order to securitize the approved AB 1054 capital expenditures and recover the O&M expense. Additionally, SCE filed a WEMA application for wildfire insurance premiums for the second half of 2020. If approved, SCE will recover $215 million beginning January 2022.
I would now like to provide an update on the approximately $1 billion equity issuance that we have discussed previously. As Pedro noted, SCE has been making significant progress resolving pending wildfire-related litigation and, thus far, has settled claims that represent approximately two-thirds of the best estimate that we established.
We continue to ground our financing plan in a framework that supports investment grade ratings by targeting consolidated FFO-to-Debt in the 15 to 17% range. To support this outcome, EIX will issue securities with up to $1 billion of equity content in 2021, consistent with the previously identified need. We will consider a range of approaches to achieve this equity content, including preferred equity, internal programs, and, if needed, our existing ATM program. We will be flexible regarding the specific timing and monitor market conditions to efficiently finance the need.
Beyond this year, we expect to have minimal equity needs associated with our ongoing capital program and will quantify these after receiving a final decision in the 2021 GRC.
Overall, the company is well-positioned to achieve the growth associated with the safety and resiliency investments being made in the grid and the longer-term opportunity associated with our clean energy objectives.
