8-K: Edison International Reports Strong First-Quarter 2025 Results, Affirms Full-Year Guidance

Edison International announces a profitable first quarter in 2025, driven by the TKM settlement, and reaffirms its core EPS guidance for the year.

Summary

• Edison International reported first-quarter net income of $1,436 million, or $3.73 per share, compared to a net loss of $11 million, or $0.03 per share, in the first quarter of last year.
• As adjusted, first-quarter core earnings were $528 million, or $1.37 per share, compared to core earnings of $438 million, or $1.13 per share, in the first quarter of last year.
• Southern California Edison's first-quarter 2025 core earnings per share (EPS) increased year over year, primarily due to a benefit to interest expense related to cost recoveries authorized under the TKM Settlement Agreement.
• Edison International Parent and Others first-quarter 2025 core loss per share increased year over year, primarily due to higher interest expense.
• The company affirmed its earnings guidance range for 2025, with a core EPS of $5.94-$6.34.
• Edison International continues to expect a 5-7% core EPS growth from 2025 to 2028, reaching $6.74-$7.14 in 2028.
• SCE is booking revenues at 2024 authorized levels, adjusted for the change in ROE, and will record a true-up when it receives a final decision in its 2025 General Rate Case.
• The CPUC's unanimous approval of the TKM settlement agreement signals a constructive California regulatory environment.
• SCE recently reached a settlement agreement with intervenors in its WMCE proceeding related to wildfire mitigation and restoration, which is awaiting CPUC approval.
• SCE filed its NextGen ERP application with the CPUC, seeking total capital investment of about $1.1 billion.
• SCE requested an ROE of 11.75% in its 2026 cost of capital application.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong earnings, reaffirmed guidance, and progress in key regulatory proceedings. While risks related to wildfires and regulatory challenges remain, the overall tone is optimistic and confident.

Positives

• Strong first-quarter earnings driven by the TKM settlement.
• Affirmed 2025 core EPS guidance and long-term growth expectations.
• Constructive regulatory environment in California, as evidenced by the TKM settlement approval.
• Significant progress in wildfire mitigation efforts, including undergrounding power lines.
• Potential for additional capital opportunities beyond the current plan, including investments in the distribution system and FERC transmission spending.
• Successful debt issuances with strong investor support.

Negatives

• Year-over-year comparison of earnings is not particularly meaningful due to the pending decision in SCE's 2025 General Rate Case.
• Edison International Parent and Others experienced a core loss per share increase due to higher interest expense.
• The Eaton Fire investigation is ongoing, and SCE may incur material losses in connection with the fire.
• SCE is booking revenues at 2024 authorized levels, adjusted for the change in ROE, and will record a true-up when it receives a final decision in its 2025 General Rate Case.

Risks

• The ongoing Eaton Fire investigation and potential material losses.
• Regulatory and legislative risks related to wildfire liability and cost recovery.
• Delays in regulatory decisions, such as the 2025 General Rate Case.
• Extreme weather-related incidents, such as wildfires and debris flows.
• Cybersecurity risks and physical security of critical assets.
• Ability to attract and retain a skilled workforce.
• Impact of affordability of customer rates on SCE's ability to execute its strategy.
• Actions by credit rating agencies to downgrade Edison International or SCE's credit ratings.

Future Outlook

Edison International is confident in meeting its 2025 EPS guidance and delivering a 5 to 7% core EPS CAGR through 2028. The company expects to refresh its projections and guidance following a final decision on the 2025 General Rate Case.

Management Comments

• Pedro J. Pizarro, president and CEO of Edison International, stated that the conversations they've had make them confident that stakeholders understand the criticality of addressing the issue and the important role the investor-owned utilities play in supporting California's growth and economic development.
• Pizarro added that they are working closely with state and county leaders and the communities of Altadena and Malibu to rebuild wildfire-impacted areas stronger than ever.
• Maria Rigatti, Executive Vice President and Chief Financial Officer, reinforced the company's confidence in delivering on its financial targets, citing a strong regulatory backdrop and robust rate base growth.

Industry Context

This announcement comes as California utilities face increasing pressure to mitigate wildfire risk and invest in grid modernization. Edison International's focus on wildfire mitigation, grid hardening, and clean energy transition aligns with the state's priorities and regulatory framework. The company's engagement with stakeholders and proactive approach to addressing wildfire risks are crucial in maintaining investor confidence and securing regulatory approvals.

Comparison to Industry Standards

• The requested ROE of 11.75% in SCE's 2026 cost of capital application is higher than the current authorized ROE of 10.33%, reflecting the increased risks associated with operating in California, particularly wildfire risks.
• Compared to other large investor-owned utilities, Edison International's capital expenditure plans are significant, driven by the need to upgrade infrastructure and mitigate wildfire risks.
• Companies like Pacific Gas and Electric Company (PG&E) and Sempra Energy also face similar challenges related to wildfire mitigation and regulatory scrutiny in California.
• SCE's plan to underground more than 150 circuit miles is a substantial investment in grid hardening, comparable to efforts by other utilities to reduce wildfire risk.

Management Changes

Legal Proceedings

• The Eaton Fire investigation is ongoing, and SCE may incur material losses in connection with the fire.
• Pending litigation related to the Eaton Fire.

Stakeholder Impact

• Customers will benefit from increased grid reliability and wildfire mitigation efforts.
• Shareholders will benefit from strong earnings and growth prospects.
• Employees will be impacted by the company's efforts to attract and retain a skilled workforce.
• Communities will benefit from the rebuilding of wildfire-impacted areas.

Next Steps

• SCE will file an application in Q2 for a financing order authorizing securitization related to the TKM settlement.
• Intervenor testimony is due in June for the Woolsey cost recovery proceeding.
• Rebuttal testimony is due in mid-July for the Woolsey cost recovery proceeding.
• A motion for consideration of settlement or joint statement is due in mid-August for the Woolsey cost recovery proceeding.
• SCE is awaiting a proposed decision on its 2025 General Rate Case.
• SCE is awaiting a scoping memo to set the procedural schedule for the NextGen Enterprise Resource Planning Program.
• SCE is awaiting a scoping memo to set the procedural schedule for the 2026 Cost of Capital application.
• SCE is awaiting a proposed decision on the settlement agreement with intervenors for the Wildfire Mitigation & Vegetation Management, Catastrophic Events (WMCE) proceeding.

Key Dates

Keywords

Edison International, Southern California Edison, Earnings, EPS, Wildfire Mitigation, Regulatory, TKM Settlement, General Rate Case, Capital Expenditures, Rate Base