8-K: Edison International Reports Strong 2024 Results, Revises 2025 EPS Guidance Upward

Edison International announces fourth-quarter and full-year 2024 results, exceeding expectations and revising its 2025 core EPS guidance upward to $5.94-$6.34, including the impact of the TKM settlement.

Summary

• Edison International reported fourth-quarter 2024 core EPS of $1.05 and full-year 2024 core EPS of $4.93, exceeding the midpoint of its guidance.
• The company has revised its 2025 core EPS guidance to $5.94-$6.34, incorporating the impact of the TKM settlement.
• Edison International reaffirms its confidence in delivering a 5-7% core EPS CAGR through 2028, starting from a higher base of $5.84 in 2025.
• The TKM settlement was approved, authorizing $1.6 billion of cost recovery for a pre-AB 1054 wildfire.
• SCE has installed over 6,400 miles of covered conductor and hardened nearly 90% of its distribution lines in high fire risk areas.
• The company is actively engaged in discussions with stakeholders to strengthen the AB 1054 regulatory framework.
• Edison International's Board declared a first-quarter 2025 common stock dividend of 82.75 cents per share.
• SCE expects to file its TKM securitization application in March.
• The Woolsey cost recovery proceeding is underway, with intervenor testimony due in early June and rebuttal testimony in mid-July.
• SCE is focused on partnering with impacted communities on nearand long-term strategies to build back stronger.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, increased guidance, and progress in wildfire mitigation. While challenges remain, the overall tone is optimistic and confident.

Positives

• Edison International exceeded its 2024 core EPS guidance.
• The company has a strong track record of meeting or exceeding annual EPS guidance over the last two decades.
• The TKM settlement approval provides significant cost recovery for SCE.
• The company is making substantial progress in wildfire mitigation efforts.
• The dividend was increased for the 21st consecutive year.
• Jennifer Granholm, former U.S. Secretary of Energy, joined the board of directors of both EIX and SCE.

Negatives

• The cause of the Eaton Fire remains undetermined, and the investigation is ongoing.
• SCE's fourth-quarter 2024 core earnings per share (EPS) decreased year over year, primarily due to higher operation and maintenance expense and higher interest expense.
• Edison International Parent and Others fourth-quarter 2024 core loss per share increased year over year, primarily due to higher interest expense and gains on preferred stock repurchases in 2023.

Risks

• The ongoing investigation into the Eaton Fire and the potential for SCE equipment to be linked to the ignition.
• The catastrophic impact of recent wildfires underscores the importance of grid resiliency.
• The long-term durability of the Wildfire Fund is being brought into focus due to the magnitude of recent wildfires.
• The company faces risks associated with the operation and maintenance of electrical facilities, including the risk of utility assets causing or contributing to wildfires.
• The company faces risks associated with the decommissioning of San Onofre, including those related to worker and public safety, public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel and other radioactive material, delays, contractual disputes, and cost overruns.

Future Outlook

Edison International expects 5-7% Core EPS growth for 2025-2028, with a financing plan showing minimal equity needs. The company anticipates continued investments in grid safety, reliability, and the clean energy transition.

Management Comments

• Pedro Pizarro, president and CEO of Edison International, stated that SCE continues to execute its robust, risk-prioritized wildfire mitigation plan and will continue to invest in making its system safer.
• Pedro Pizarro noted that the company has been actively engaged in conversations with key stakeholders to find solutions to support the safety of the community, effectively manage customer costs, and reinforce confidence in California's utilities.
• Maria Rigatti, Executive Vice President and Chief Financial Officer, stated that SCE's capital plan is focused on replacing aging infrastructure, continuing grid hardening investments, and expanding the grid for future load growth.

Industry Context

This announcement comes as California utilities face increasing scrutiny over wildfire risks and the need for grid modernization. The approval of the TKM settlement and the ongoing discussions regarding AB 1054 highlight the regulatory and financial challenges and opportunities in the sector.

Comparison to Industry Standards

• Edison's commitment to grid hardening and wildfire mitigation aligns with industry best practices, as seen in companies like PG&E and Sempra Energy.
• The 5-7% EPS growth target is competitive within the utility sector, comparable to growth expectations for regulated utilities like NextEra Energy and Duke Energy.
• The dividend yield of approximately 6% is attractive compared to the average utility dividend yield.
• The company's engagement with stakeholders to strengthen AB 1054 reflects a proactive approach to addressing wildfire liabilities, similar to efforts by other California utilities.

Management Changes

Stakeholder Impact

• Shareholders benefit from the increased dividend and the potential for EPS growth.
• Customers benefit from the investments in grid safety and reliability.
• Communities impacted by wildfires benefit from the company's commitment to rebuilding and partnering on long-term strategies.
• Employees are recognized for their tireless efforts in managing the response to the southern California wildfires.

Next Steps

• SCE expects to file its TKM securitization application in March.
• The Woolsey cost recovery proceeding is underway, with intervenor testimony due in early June and rebuttal testimony in mid-July.
• SCE is awaiting a proposed decision from the ALJ on its 2025 General Rate Case.
• SCE will file an application for its NextGen ERP program later this year.
• SCE also plans to file an application for an advanced metering infrastructure program to replace and upgrade the first generation of smart meters.

Key Dates