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Edison International (EIX) Q2 2024 Earnings Call Highlights: Strong Financial Performance and ...

GuruFocus News
·3 min read

  • Core EPS for Q2 2024: $1.23

  • Year-to-Date Core EPS: $2.37

  • 2024 Core EPS Guidance: $4.75 to $5.05

  • System Average Rate: $0.267 per kilowatt hour

  • Projected Rate Growth through 2028: 2.6%

  • Wildfire Risk Reduction: 85% to 88% compared to pre-2018

  • Carbon-Free Power Delivered in 2023: 52%

  • Energy Storage Contracted: Approximately 8,100 megawatts

  • Capital and Rate Base Forecast: Consistent with last quarter's disclosures

  • Equity Needs for 2025-2028: $400 million in total

Release Date: July 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Edison International (NYSE:EIX) reported strong financial performance with a core EPS of $1.23 for Q2 2024, contributing to a year-to-date core EPS of $2.37.

  • The company reaffirmed its 2024 core EPS guidance of $4.75 to $5.05, indicating confidence in achieving its financial targets.

  • Load growth trends are materializing sooner than expected, providing substantial CapEx opportunities and potential upside for the company.

  • Edison International (NYSE:EIX) has significantly improved its operational and financial risk profiles, with an estimated wildfire risk reduction of 85% to 88% compared to pre-2018 levels.

  • The company is leading efforts toward a carbon-neutral California, with sustainability at the core of its strategy, including delivering 52% carbon-free power to customers in 2023.

Negative Points

  • Higher interest expenses associated with debt for wildfire claims payments partially offset the EPS growth.

  • There are still unresolved issues in the General Rate Case (GRC), with a significant portion of the capital request not yet settled.

  • The company faces ongoing regulatory challenges, including the need to address the maturity of pre-fire mitigation measures criticized by Cal Advocates.

  • Edison International (NYSE:EIX) has substantial equity needs to fund its capital program over the next several years, although they are among the lowest in the industry.

  • The acceleration of load growth requires greater upgrades to the electric system, necessitating significant investments that could impact future rate base growth.

Q & A Highlights

Q: You've reached a partial settlement in the GRC representing 19% of O&M and 8% of the capital request. What are the key debates remaining, and what gives you confidence in a constructive final decision? A: Pedro Pizarro, President and CEO, stated that the interveners' positions still align with the rate base growth range, which is constructive. The SCE team has effectively demonstrated the need for investments in a reliable grid, and the proceeding remains on track, allowing focus on a narrower set of issues.

Q: With load growth materializing faster than expected, are you expecting incremental investment through 2028, and how would you finance it? A: Maria Rigatti, CFO, explained that the team is evaluating customer plans to determine investment timing. They have flexibility to reprioritize capital within the GRC cycle and may file separate applications for additional funding. Steven Powell, CEO of Southern California Edison, added that they are considering various funding approaches.

Q: Regarding the legacy wildfire cost application, are there any issues that remain debated, and would you settle for less than 100% recovery? A: Pedro Pizarro mentioned that while they are open to settlements, they cannot comment on specific elements of the case. Maria Rigatti noted that procedural steps will outline remaining issues, with hearings scheduled for later in the year.

Q: Are you trending towards the higher end of your full-year 2024 guidance range? A: Maria Rigatti expressed confidence in the guidance, reaffirming it and stating that they are on track to meet the range.

Q: How does the acceleration of load growth impact the attractiveness of the next-gen ERP system? A: Maria Rigatti highlighted that the next-gen ERP system will improve efficiency and is not in competition with load growth investments. The system is part of their broader strategy to maintain efficient operations while meeting customer demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.