Edison International’s Earnings Call: Strong Performance Amid Challenges

Edison International ((EIX)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Edison International conveyed a generally positive sentiment, highlighting the company’s robust financial performance and regulatory achievements. The call also acknowledged the significant strides made in wildfire mitigation efforts. However, it was not without its challenges, as concerns were raised about the Southern California wildfires, ongoing investigations, and the necessity for legislative measures to mitigate potential financial uncertainties.

Strong Financial Performance

Edison International reported a core EPS of $4.93 for 2024, surpassing the midpoint of their guidance. This achievement underscores the company’s consistent ability to meet or exceed annual EPS guidance over the past two decades, showcasing its strong financial health and operational efficiency.

Dividend Increase

In a demonstration of confidence in its financial outlook, Edison International announced a 6.1% increase in its dividend, marking the 21st consecutive year of dividend growth. This increase reflects the company’s commitment to returning value to shareholders and its optimistic view of future financial performance.

Regulatory Approvals

The California Public Utilities Commission’s (CPUC) unanimous approval of the TKM settlement agreement allows Southern California Edison (SCE) to recover approximately $1.6 billion. This approval is indicative of a constructive cost recovery framework in California, which is crucial for the company’s financial stability.

Wildfire Mitigation Progress

Edison International has made significant progress in wildfire mitigation, with SCE installing over 6,400 miles of covered conductor and hardening nearly 90% of its distribution lines in high fire risk areas. These efforts are crucial in reducing the risk of wildfires and ensuring the safety and reliability of the power grid.

Impact of Southern California Wildfires

The Southern California wildfires pose ongoing challenges, with the cost of the Eaton fire still undetermined. Investigations are underway to determine if SCE’s equipment was involved, and several lawsuits have already been filed, highlighting the potential financial and reputational risks.

Potential Financial Uncertainty

Concerns were raised about the durability of the wildfire fund and the need for legislative solutions to address potential liabilities. Ensuring financial stability in the face of these uncertainties remains a critical focus for Edison International.

Challenges with Investigation Process

The investigation into the Eaton fire is complex and expected to be lengthy, with legal protocols contributing to delays. This prolonged process underscores the challenges Edison International faces in resolving these issues promptly.

Forward-Looking Guidance

Looking ahead, Edison International’s leadership expressed confidence in achieving their 2025 EPS guidance, with expectations of a 5% to 7% core EPS compound annual growth rate through 2028. The company plans to continue its investments in grid hardening and distribution system expansion, with further regulatory filings anticipated. The supportive regulatory framework provided by AB 1054 is expected to help manage liabilities and ensure financial stability, particularly concerning the potential impacts of the Eaton Fire.

In summary, Edison International’s earnings call reflected a strong financial performance and strategic regulatory successes, alongside proactive wildfire mitigation efforts. However, challenges related to the Southern California wildfires and potential financial uncertainties were also prominent. The company’s forward-looking guidance remains optimistic, with continued investments and regulatory support expected to drive future growth.