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

Edison International announces first-quarter 2025 GAAP EPS of $3.73 and core EPS of $1.37, reaffirming its 2025 core EPS guidance and long-term growth targets.

Summary

• Edison International reported a 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 guidance of $5.94-$6.34.
• Edison International continues to expect to deliver a 5-7% core EPS growth from 2025 to 2028, translating to $6.74-$7.14 EPS in 2028.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong earnings, reaffirmed guidance, and progress on key regulatory proceedings. However, the ongoing investigation into the Eaton Fire and the potential for wildfire-related liabilities temper the overall outlook.

Positives

• First-quarter 2025 core EPS increased to $1.37 compared to $1.13 a year ago.
• The TKM settlement agreement was approved by the CPUC, signaling a constructive California regulatory environment.
• The WMCE settlement agreement with intervenors would authorize 100% of the capital expenditures along with 96% of the O&M.
• The company is confident in meeting its 2025 EPS guidance and delivering a 5 to 7% core EPS CAGR through 2028.
• SCE is making significant progress across numerous regulatory proceedings.
• EIX issued $550 million of senior notes, which successfully addresses parent debt needs for 2025.
• SCE issued $1.5 billion of long-term debt as part of its planned financings for the year.

Negatives

• The year-over-year comparison of core EPS is not particularly meaningful because SCE has not received a decision in its 2025 General Rate Case.
• Edison International Parent and Others first-quarter 2025 core loss per share increased year over year, primarily due to higher interest expense.
• SCE has not conclusively determined that its equipment was associated with the ignition of the Eaton Fire, but it is also not aware of evidence conclusively pointing to another source of ignition.

Risks

• The ability of SCE to recover its costs through regulated rates, timely or at all, including uninsured wildfire-related and debris flow-related costs.
• The cybersecurity of Edison International's and SCE's critical information technology systems.
• Risks associated with the operation and maintenance of electrical facilities, including the risk of utility assets causing or contributing to wildfires.
• Impact of affordability of customer rates on SCE's ability to execute its strategy.
• Ability of SCE to update its grid infrastructure to maintain system integrity and reliability, and meet electrification needs.
• The risk that California Assembly Bill 1054 (AB 1054) does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires.
• Potential for penalties or disallowances for non-compliance with applicable laws and regulations, including fines, penalties and disallowances related to wildfires where SCE's equipment is alleged to be associated with ignition.
• Extreme weather-related incidents (including events caused, or exacerbated, by climate change), such as wildfires, debris flows, flooding, droughts, high wind events and extreme heat events and other natural disasters (such as earthquakes).

Future Outlook

Edison International is confident in delivering on its financial targets, with a strong regulatory backdrop and robust rate base growth, coupled with the significant need for incremental grid investment. The company expects 5-7% Core EPS growth for 2025-2028, with a financing plan showing minimal equity needs.

Management Comments

• Pedro J. Pizarro, president and CEO of Edison International, stated, 'We have continued engaging with key stakeholders to find solutions to support the safety of the community and enhance California's industry-leading AB 1054 regulatory framework.'
• Pedro J. Pizarro added, 'We 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, Edison International, stated, 'With a strong regulatory backdrop and robust rate base growth, coupled with the significant need for incremental grid investment, we are well positioned to deliver on the company's nearand long-term growth expectations.'

Industry Context

This announcement reflects the ongoing challenges and opportunities for utilities in California, particularly regarding wildfire mitigation and grid modernization. The company's focus on regulatory engagement and cost recovery is consistent with industry trends, as utilities seek to balance the need for infrastructure investment with affordability for customers.

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 perceived higher risks associated with operating in California.
• The company's capital expenditure plans are significant, with a forecast of ~$38-43 billion for 2023-2028, driven by wildfire mitigation and grid modernization efforts.
• The company's focus on undergrounding power lines in High Fire Risk Areas is a proactive measure to reduce wildfire risk, which is becoming increasingly common among California utilities.

Management Changes

Legal Proceedings

• SCE's investigation into the Eaton Fire continues, and the company acknowledges the potential for material losses in connection with the fire due to pending litigation.
• SCE is requesting recovery of $5.4 billion of costs to resolve claims associated with the Woolsey fire and $84 million of restoration costs.

Stakeholder Impact

• Customers may see increased rates due to investments in wildfire mitigation and grid modernization.
• Shareholders are expected to benefit from the company's long-term EPS growth targets.
• Communities impacted by wildfires will benefit from SCE's efforts to rebuild infrastructure stronger than ever.
• Employees are affected by changes in management and the company's focus on safety and reliability.

Next Steps

• SCE will file an application in Q2 for a financing order authorizing securitization.
• 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.
• The CPUC is expected to issue a proposed decision on SCE's 2025 General Rate Case in the first half of the year.
• SCE will submit its 2026 Wildfire Mitigation Plan in May.
• SCE plans to file an application for its advanced metering infrastructure program to request funding to replace its smart meter fleet in 1Q26.

Key Dates

Keywords

Edison International, Southern California Edison, Core Earnings, EPS, Wildfire Mitigation, Regulatory Proceedings, General Rate Case, TKM Settlement, WMCE, NextGen ERP, Cost of Capital, Rate Base, Capital Expenditures, Grid Hardening, Eaton Fire