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EDISON INTERNATIONAL (EIX)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024: Revenue $5.201B, GAAP EPS $1.33, Core EPS $1.51; operating income $995M; YoY uplift driven by higher CPUC-authorized revenue and cost of capital adjustments, partly offset by higher interest expense .
  • Guidance: Core EPS 2024 narrowed to $4.80–$5.00 (from $4.75–$5.05); Basic EPS guidance lowered to $3.37–$3.57 (from $3.49–$3.79) .
  • Regulatory catalysts: TKM settlement submitted (60% recovery, $1.6B), Woolsey cost recovery application filed ($5.4B); TKM approval expected H1 2025 with ~$0.30 one-time core EPS and ~$0.14 run-rate benefit; securitization proceeds targeted by YE 2025 .
  • Strategy: Reaffirmed 5–7% Core EPS CAGR for 2021–2025 and 2025–2028; growth underpinned by ~$38–$43B capex and ~6–8% rate base CAGR through 2028 .

What Went Well and What Went Wrong

What Went Well

  • Core EPS rose to $1.51 (vs. $1.38 YoY) on Track 4 CPUC revenue and higher authorized returns; GAAP EPS increased to $1.33 (vs. $0.40 YoY) .
  • Regulatory progress: Settlement agreement reached on TKM (60% WEMA/85% CEMA recovery), Woolsey application filed; decisions on TKM and 2025 GRC expected to solidify outlook through 2028 .
  • Wildfire mitigation execution: 6,100+ miles of covered conductor with 85% of distribution grid in HFRA hardened; management: “remarkable success… managing unprecedented climate challenges,” positioning for growth .

What Went Wrong

  • Higher interest expense from wildfire claims debt offset revenue tailwinds; CFO highlighted financing cost headwinds despite improved operations .
  • Severance costs of $44M pre-tax recognized in Q3; cost of capital mechanism changed for 2025 ROE, which management termed “unfortunate,” though long-term EPS commitments reiterated .
  • Continued wildfire-related non-core items still impacting reported results (e.g., wildfire insurance fund amortization, claims/legal costs), though YoY non-core EPS drag moderated (-$0.18 vs. -$0.98) .

Financial Results

Income Statement Summary (YoY)

MetricQ3 2023Q3 2024
Operating Revenue ($USD Billions)$4.702 $5.201
Operating Income ($USD Millions)$492 $995
Net Income Available to EIX Common ($USD Millions)$155 $516
Diluted EPS ($)$0.40 $1.32

EPS Breakdown (Basic and Core, by segment)

MetricQ3 2023Q3 2024
SCE Basic EPS ($)$0.62 $1.56
EIX Parent & Other Basic EPS ($)($0.22) ($0.23)
EIX Basic EPS ($)$0.40 $1.33
SCE Non-core EPS impact ($)($0.98) ($0.18)
EIX Core EPS ($)$1.38 $1.51

Sequential Core EPS (Q1→Q3 2024)

MetricQ1 2024Q2 2024Q3 2024
Core EPS ($)$1.13 $1.23 $1.51

Non-GAAP Adjustments (EPS impact)

MetricQ3 2023Q3 2024
Total Non-core Items (EPS impact) ($)($0.98) ($0.18)
Wildfire Insurance Fund Expense (EPS impact) ($)($0.14) ($0.09)

KPIs and Cash Flow (9M 2024 vs 9M 2023)

Metric9M 20239M 2024
Net Cash from Operations ($USD Billions)$2.546 $3.844
Capital Expenditures ($USD Billions)$3.991 $4.211
Long-term Debt ($USD Billions, period-end)$30.316 $32.303

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core EPS ($)FY 2024$4.75–$5.05 (as of Jul 25, 2024) $4.80–$5.00 (as of Oct 29, 2024) Narrowed
Basic EPS ($)FY 2024$3.49–$3.79 (as of Jul 25, 2024) $3.37–$3.57 (as of Oct 29, 2024) Lowered
Core EPS ($)FY 2025$5.50–$5.90 $5.50–$5.90 Maintained
Core EPS CAGR2021–20255–7% 5–7% Reaffirmed
Core EPS CAGR2025–20285–7% 5–7% Reaffirmed
TKM Settlement EPS Benefit2025~$0.30 one-time; ~$0.14 annual run-rate ~$0.30 one-time; ~$0.14 annual run-rate Additive (pending approval)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
Regulatory/legal (GRC, cost recovery)Strong progress in 2025 GRC with partial settlements; TKM case strength; Woolsey filing targeted Q3 TKM settlement submitted (60% WEMA/85% CEMA); Woolsey application filed; decisions expected H1 2025 Improving
Cost of capital (ROE)Mechanism upheld; expectation 10.75% ROE in 2025 (then changed later) Commission changed 2025 ROE mechanism; management disappointed but reiterated EPS commitments Mixed
Load growth & data centers/AI2–3% near-term growth; 35% higher 10-year forecast; diverse drivers Data center inference nearer load; growth embedded; affordability lens maintained Stable/positive
Wildfire mitigation & resilience85–88% risk reduction; extensive hardening 6,100+ miles covered conductor; 85% HFRA hardened; continued progress Improving
Capex & rate base trajectory~$38–$43B capex; 6–8% rate base CAGR through 2028 Capex/rate base outlook reiterated; upside from NextGen ERP, AMI 2.0, FERC projects Stable/positive
Net-zero plan & clean firm genElectrification and firm clean gen need highlighted Reaffirmed net-zero by 2045; retain existing gas fleet as insurance; 40% customer total energy cost reduction by 2045 Stable

Management Commentary

  • CEO (Pedro Pizarro): “With strong year-to-date performance, we are confident in narrowing our 2024 core EPS guidance… SCE continues to demonstrate its ability to navigate the regulatory landscape… Capital investment enabled by SCE’s General Rate Case is the driver for the growth… to achieve the clean energy transition.”
  • CFO (Maria Rigatti): “EIX reported core EPS of $1.51… EPS growth was primarily due to higher CPUC revenue authorized in Track 4 of the 2021 GRC and higher authorized rates of return… partially offset by higher interest expense associated with debt for wildfire claims payments.”
  • CEO (Pedro Pizarro): “We recently reaffirmed our net-zero commitment… California must retain its existing natural gas generation fleet as insurance… though the generators will run significantly less often.”

Q&A Highlights

  • Affordability and rate trajectory: Management expects SCE’s rate increases to align with local inflation through 2028; emphasized customer total energy bill reduction over time .
  • Capex prioritization and alternative funding: Ability to reprioritize capital within GRC and pursue separate applications (e.g., SB410/high-DER mechanisms) if needed .
  • TKM settlement implications: Potential to reduce equity needs and consider hybrids over time; oversight anchored by 15–17% FFO/debt framework .
  • GRC timing: All briefs filed; proposed decision expected first half of 2025; further settlements procedurally behind them .
  • ERP/AMI filings: NextGen ERP filing expected in ~6 months; AMI 2.0 toward end of 2025; multi-year spend including post-2028 .

Estimates Context

  • Wall Street consensus (S&P Global) data for Q3 2024 EPS and revenue were unavailable at time of analysis due to data limits, so a formal beat/miss vs consensus cannot be quantified. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Regulatory inflection: H1 2025 decisions on TKM settlement (securitization) and 2025 GRC are key catalysts; TKM could add ~$0.30 one-time and ~$0.14 run-rate to core EPS, with ~$1.6B securitization proceeds targeted by YE 2025 .
  • Earnings visibility: 2024 core EPS narrowed to $4.80–$5.00; 2025 core EPS maintained at $5.50–$5.90; long-term 5–7% CAGR reaffirmed, supported by rate base growth and disciplined financing (minimal equity needs) .
  • Interest expense headwind manageable: Higher financing costs linked to wildfire claims debt remain a drag, but expected recoveries and securitization should strengthen FFO/debt and reduce future interest burden .
  • Execution on resilience: Extensive grid hardening (6,100+ miles covered conductor; 85% HFRA hardened) lowers wildfire risk and supports confidence in regulatory outcomes .
  • Growth optionality: Upside from NextGen ERP, AMI 2.0, and $2B+ FERC transmission projects (mostly post-2028) enhances long-term capex and rate base trajectories .
  • Affordability narrative: Management committed to rate trajectories around inflation and customer total energy bill reductions over time; supports demand growth and regulatory goodwill .
  • Trading lens: Near-term stock reaction likely tied to regulatory momentum (TKM/ GRC), guidance stability, and clarity on 2025 ROE/cost of capital path; watch for securitization timing and incremental memo account recoveries .

Footnote: *Values retrieved from S&P Global.