Business Wire | Jul 28, 2020 04:05PM EDT

Edison International Reports Second Quarter and Year-to-Date 2020 Results

Jul. 28, 2020

ROSEMEAD, Calif.--(BUSINESS WIRE)--Jul. 28, 2020--Edison International (NYSE: EIX) today reported second quarter 2020 net income of $318 million, or $0.85 per share, compared to net income of $392 million, or $1.20 per share, in the second quarter 2019. As adjusted, second quarter 2020 core earnings were $375 million, or $1.00 per share, compared to core earnings of $515 million, or $1.58 per share, in the second quarter 2019.

Southern California Edison's (SCE) second quarter 2020 earnings per share (EPS) decreased by $0.26 from the prior year period, consisting of lower core EPS of $0.56 and lower non-core loss per share of $0.30. Lower core EPS was primarily due to the increase in shares outstanding related to the equity offerings in July 2019 and May 2020, the adoption of the 2018 GRC decision in the second quarter of 2019, and the timing of O&M expenses, partially offset by higher CPUC-related revenue due to the escalation mechanism as set forth in the 2018 GRC decision.

SCE's lower non-core loss per share was mainly attributable to the absence of $0.38 of disallowed historical capital expenditures in SCE's 2018 GRC decision recorded in the second quarter 2019, and a charge recorded in 2020 of $0.16 from the amortization of SCE's contributions to the Wildfire Insurance Fund. These were partially offset by a gain of $0.10 recorded in 2020 for SCE's sale of San Onofre nuclear fuel.

Edison International Parent and Other's second quarter 2020 loss per share increased by $0.09 compared to second quarter 2019, consisting of higher core loss per share of $0.02 and higher non-core loss per share of $0.07. The higher core loss per share was primarily due to higher interest expense, partially offset by the increase in shares outstanding. The higher non-core loss per share was mainly related to a goodwill impairment charge recorded in 2020 related to Edison Energy stemming from the economic impact of COVID-19.

"We are confident in our 2020 earnings guidance, although the timing of operations and maintenance expenses and deferrals of certain wildfire-related costs negatively impacted our core earnings per share for the quarter. These comparisons should improve in the second half of the year," said Pedro J. Pizarro, president and chief executive officer of Edison International. "I am proud of our team's steadfast performance during this COVID-19 pandemic, focusing on practices to ensure the safety and health of employees and critical operations for customers' benefit, including those laid out in SCE's 2020-2022 Wildfire Mitigation Plan."

Pizarro added, "While we anticipate another active fire season, SCE is entering this period better prepared than ever. In addition to advancing wildfire mitigation measures, the company has made improvements to Public Safety Power Shutoff, or PSPS, protocols since last year which we expect will reduce the number of customers affected by 30% under the same conditions as last year."

Year-to-Date Earnings

For the six months ended June 30, 2020, Edison International reported net income of $501 million, or $1.37 per share, compared to $670 million, or $2.05 per share, during the same period in 2019. As adjusted, Edison International's core earnings were $603 million, or $1.65 per share, compared to $721 million, or $2.21 per share, in the year-to-date period in 2019.

SCE's year-to-date 2020 EPS decreased $0.54 from the same period prior year, consisting of lower core EPS of $0.50 per share and higher non-core loss per share of $0.04. The decrease in SCE's core EPS was primarily due to the increase in shares outstanding related to the equity offerings in July 2019 and May 2020, the adoption of the 2018 GRC decision in the second quarter of 2019, and the timing of O&M expenses, partially offset by higher CPUC-related revenue due to the escalation mechanism as set forth in the 2018 GRC decision. SCE's higher non-core loss per share was mainly related to a charge of $0.32 recorded in 2020 from the amortization of SCE's contributions to the Wildfire Insurance Fund and the absence of $0.21 of income tax benefits 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. These were partially offset by a $0.09 higher gain for SCE's sale of San Onofre nuclear fuel and the absence of the $0.38 impairment charge resulting from the disallowance of certain historical capital expenditures in SCE's 2018 GRC final decision recorded in the second quarter 2019.

Edison International Parent and Other's year-to-date 2020 loss per share increased by $0.14 compared to the same period in 2019, consisting of higher core loss per share of $0.06 and higher non-core loss per share of $0.08. The increase in core loss per share was primarily due to higher interest expense, partially offset by the increase in shares outstanding. The higher non-core loss per share was mainly related to a goodwill impairment charge recorded in 2020 related to Edison Energy stemming from the economic impact of COVID-19.

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.

2020 Earnings Guidance

The company narrowed its earnings guidance range for 2020 as summarized in the following chart. See the presentation accompanying the company's conference call for further information.



2020 Earnings Guidance

2020 Earnings Guidance 2020 Earnings Guidance

as of April 30, 2020 as of July 28, 2020

Low High Low High

EIX Basic EPS $4.19 $4.49 $4.09 $4.34

Less: Non-core Items* (0.13) (0.13) (0.28) (0.28)

EIX Core EPS $4.32 $4.62 $4.37 $4.62

* There were ($102) million, or ($0.28) per share of non-core items recordedfor the six months ended June 30, 2020, calculated based on an assumed weightedaverage share count for 2020.

Second Quarter 2020 Earnings Conference Call Materials

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.

Reminder: Edison International Will Hold a Conference Call Today When: Tuesday, July 28, 2020, 1:30 p.m. (Pacific Time) Telephone Numbers: 1-888-673-9780 (US) and 1-312-470-0178 (Int'l) - Passcode: Edison Telephone Replay: 1-866-441-1051 (US) and 1-203-369-1058 (Int'l) - Passcode: 2548 Telephone replay available through August 11, 2020 Webcast: 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.

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 costs related to uninsured wildfire-related and mudslide-related liabilities, 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, including effectively implementing Public Safety Power Shut-Offs when appropriate; * 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; * 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 SCE's ability to maintain a valid safety certification, SCE's ability to recover uninsured wildfire-related costs from the insurance fund established under AB 1054 ("Wildfire Insurance Fund"), the longevity of the Wildfire Insurance Fund, and the CPUC's interpretation of and actions under AB 1054, including their 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 mudslide-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 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; * extreme weather-related incidents and other natural disasters (including earthquakes and events caused, or exacerbated, by climate change, such as wildfires), which could cause, among other things, public safety issues, property damage and operational issues; * 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 public, contractor and employee 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 2019 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 2019 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.

Second Quarter Reconciliation of Basic Earnings Per Share to Core Earnings PerShare

Three months ended Six months ended June 30, June 30,

2020 2019 Change 2020 2019 Change

Earnings (loss) per shareattributable to Edison International

Continuing operations

SCE $ 1.02 $ 1.28 $ (0.26) $ 1.64 $ 2.18 $ (0.54)

EdisonInternational (0.17) (0.08) (0.09) (0.27) (0.13) (0.14) Parent andOther

Edison 0.85 1.20 (0.35) 1.37 2.05 (0.68) International

Less:Non-core items

SCE (0.08) (0.38) 0.30 (0.20) (0.16) (0.04)

EdisonInternational (0.07) - (0.07) (0.08) - (0.08) Parent andOther

Totalnon-core (0.15) (0.38) 0.23 (0.28) (0.16) (0.12) items

Core earnings (losses)

SCE 1.10 1.66 (0.56) 1.84 2.34 (0.50)

EdisonInternational (0.10) (0.08) (0.02) (0.19) (0.13) (0.06) Parent andOther

Edison $ 1.00 $ 1.58 $ (0.58) $ 1.65 $ 2.21 $ (0.56) International

Note: Diluted earnings were $0.85 and $1.20 per share for the three monthsended June 30, 2020 and 2019, respectively, and $1.36 and $2.05 per share forthe six months ended June 30, 2020 and 2019, respectively.



Second Quarter Reconciliation of Basic Earnings Per Share to Core Earnings (inmillions)

Three months Six months ended ended June 30, June 30,

(in millions) 2020 2019 Change 2020 2019 Change

Net income (loss) attributable to Edison International

Continuing operations

SCE $ 381 $ 419 $ (38) $ 600 $ 712 $ (112)

EdisonInternational (63) (27) (36) (99) (42) (57) Parent and Other

Edison 318 392 (74) 501 670 (169) International

Less: Non-core items

SCE^1,2,3,4,5,6 (32) (123) 91 (74) (51) (23)

EdisonInternational (25) - (25) (28) - (28) Parent and Other^2,7

Total non-core (57) (123) 66 (102) (51) (51) items

Core earnings (losses)

SCE 413 542 (129) 674 763 (89)

EdisonInternational (38) (27) (11) (71) (42) (29) Parent and Other

Edison $ 375 $ 515 $ (140) $ 603 $ 721 $ (118) International

^1 Includes amortization of SCE's Wildfire Insurance Fund expenses of $83million ($60 million after-tax) and $167 million ($120 million after-tax) forthe quarter and year-ended June 30, 2020, respectively.

^2 Includes income tax benefit of $18 million and income tax expense of $3million recorded in the first quarter of 2020 for SCE and Edison InternationalParent and Other, respectively, due to re-measurement of uncertain taxpositions related to the 2010 - 2012 California state tax filings currentlyunder audit.

^3 Includes income tax benefits of $69 million recorded in 2019 for SCE relatedto changes in the allocation of deferred tax re-measurement between customersand shareholders as a result of a CPUC resolution issued in February 2019. Theresolution determined that customers are only entitled to excess deferred taxeswhich were included when setting rates and other deferred tax re-measurementbelongs to shareholders.

^4 Includes a gain of $52 million ($37 million after-tax) recorded in 2020 and$4 million ($3 million after-tax) recorded in 2019 for SCE's sale of San Onofrenuclear fuel.

^5 Includes expenses of $12 million ($9 million after-tax) recorded in 2020 forSCE's legal costs related to 2017/2018 Wildfire/Mudslide events.

^6 Includes an impairment charge of $170 million ($123 million after-tax)recorded in 2019 for SCE related to disallowed historical capital expendituresin SCE's 2018 GRC decision.

^7 Includes a goodwill impairment charge of $34 million ($25 million after-tax)recorded in 2020 for Edison International Parent and Other related to EdisonEnergy stemming from the economic impact of COVID-19.



Consolidated Statements of Income Edison International



Three months ended Six months ended June June 30, 30,

(in millions, except per-share 2020 2019 2020 2019amounts, unaudited)

Total operating revenue $ 2,987 $ 2,812 $ 5,777 $ 5,636

Purchased power and fuel 1,068 1,135 1,996 2,140

Operation and maintenance 762 595 1,643 1,477

Wildfire Insurance Fund expense 83 - 167 -

Depreciation and amortization 489 321 973 801

Property and other taxes 103 93 214 203

Impairment and other (18) 170 (18) 166

Other operating income - (2) - (3)

Total operating expenses 2,487 2,312 4,975 4,784

Operating income 500 500 802 852

Interest expense (229) (211) (454) (405)

Other income 81 55 133 93

Income before taxes 352 344 481 540

Income tax expense (benefit) 4 (78) (80) (190)

Net income 348 422 561 730

Preferred and preference stock 30 30 60 60 dividend requirements of SCE

Net income attributable to Edison $ 318 $ 392 $ 501 $ 670 International common shareholders

Basic earnings per share:

Weighted average shares of common 375 326 367 326 stock outstanding

Basic earnings per common shareattributable to Edison $ 0.85 $ 1.20 $ 1.37 $ 2.05 International commonshareholders:

Diluted earnings per share:

Weighted average shares of commonstock outstanding, including 376 327 368 327 effect of dilutive securities

Diluted earnings per common share attributable to Edison $ 0.85 $ 1.20 $ 1.36 $ 2.05International common shareholders



Consolidated Balance Sheets Edison International



(in millions, unaudited) June 30, December 2020 31, 2019

ASSETS

Cash and cash equivalents $ 524 $ 68

Receivables, less allowances of $91 and $50 accounts at 936 788 respective dates

Accrued unbilled revenue 629 488

Inventory 382 364

Income tax receivables 108 118

Prepaid expenses 49 214

Regulatory assets 1,692 1,009

Wildfire Insurance Fund contributions 323 323

Other current assets 153 188

Total current assets 4,796 3,560

Nuclear decommissioning trusts 4,566 4,562

Other investments 84 64

Total investments 4,650 4,626

Utility property, plant and equipment, less accumulateddepreciation and amortization of $10,371 and $9,958 at 45,386 44,198 respective dates

Nonutility property, plant and equipment, lessaccumulated depreciation of $90 and $86 at respective 167 87 dates

Total property, plant and equipment 45,553 44,285

Regulatory assets 6,528 6,088

Wildfire Insurance Fund contributions 2,606 2,767

Operating lease right-of-use assets 672 693

Other long-term assets 2,246 2,363

Total long-term assets 12,052 11,911

Total assets $ 67,051 $ 64,382



Consolidated Balance Sheets Edison International



(in millions, except share amounts, unaudited) June 30, December 2020 31, 2019

LIABILITIES AND EQUITY

Short-term debt $ 475 $ 550

Current portion of long-term debt 1,029 479

Accounts payable 1,657 1,752

Accrued interest 312 261

Customer deposits 281 302

Regulatory liabilities 857 972

Current portion of operating lease liabilities 65 80

Other current liabilities 1,223 1,127

Total current liabilities 5,899 5,523

Long-term debt 19,238 17,864

Deferred income taxes and credits 5,295 5,078

Pensions and benefits 656 674

Asset retirement obligations 3,013 3,029

Regulatory liabilities 8,395 8,385

Operating lease liabilities 607 613

Wildfire-related claims 4,561 4,568

Other deferred credits and other long-term liabilities 2,941 3,152

Total deferred credits and other liabilities 25,468 25,499

Total liabilities 50,605 48,886

Commitments and contingencies

Common stock, no par value (800,000,000 sharesauthorized; 378,207,496 and 361,985,133 shares issued 5,908 4,990 and outstanding at respective dates)

Accumulated other comprehensive loss (65) (69)

Retained earnings 8,410 8,382

Total Edison International's common shareholders' 14,253 13,303 equity

Noncontrolling interests - preferred and preference 2,193 2,193 stock of SCE

Total equity 16,446 15,496



Total liabilities and equity $ 67,051 $ 64,382



Consolidated Statements of Cash Flows Edison International



Six months ended June 30,

(in millions, unaudited) 2020 2019

Cash flows from operating activities:

Net income $ 561 $ 730

Adjustments to reconcile to net cash provided by operating activities:

Depreciation and amortization 1,005 837

Allowance for equity during construction (51) (49)

Impairment and other (18) 166

Deferred income taxes (58) (182)

Wildfire Insurance Fund amortization expense 167 -

Other 32 13

Nuclear decommissioning trusts (62) (72)

Changes in operating assets and liabilities:

Receivables (108) (72)

Inventory (19) (49)

Accounts payable 14 221

Tax receivables and payables 31 65

Other current assets and liabilities (23) (423)

Regulatory assets and liabilities, net (927) (543)

Wildfire-related insurance receivable 73 -

Other noncurrent assets and liabilities 8 (44)

Net cash provided by operating activities 625 598

Cash flows from financing activities:

Long-term debt issued, plus premium and net of discountand issuance costs of $26 and $(18) for the respective 2,726 1,682 periods

Long-term debt repaid or repurchased (814) (41)

Term loan issued 1,275 1,750

Term loan repaid (800) (750)

Common stock issued 884 -

Short-term debt financing, net (550) (509)

Payments for stock-based compensation (3) (48)

Receipts from stock option exercises 14 25

Dividends and distribution to noncontrolling interests (60) (60)

Dividends paid (454) (399)

Other 5 1

Net cash provided by financing activities 2,223 1,651

Cash flows from investing activities:

Capital expenditures (2,514) (2,235)

Proceeds from sale of nuclear decommissioning trust 3,225 2,440 investments

Purchases of nuclear decommissioning trust investments (3,163) (2,368)

Other 60 27

Net cash used in investing activities (2,392) (2,136)

Net increase in cash, cash equivalents and restricted 456 113 cash

Cash, cash equivalents and restricted cash at beginning 70 152 of period

Cash, cash equivalents and restricted cash at end of $ 526 $ 265 period



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