Edison International’s Earnings Call: Balancing Confidence and Challenges

Edison International ((EIX)) has held its Q2 earnings call. Read on for the main highlights of the call.

Edison International’s recent earnings call presented a balanced sentiment, showcasing a firm confidence in their long-term financial guidance and regulatory progress. However, the call also highlighted current challenges, such as the unresolved Eaton Fire investigation and potential legislative impacts that could affect the company’s financial stability.

Strong Confidence in Financial Guidance

Edison International reaffirmed its 2025 earnings per share (EPS) guidance, projecting a range of $5.94 to $6.34. The company also expects a core EPS compound annual growth rate (CAGR) of 5% to 7% through 2028, demonstrating robust confidence in its financial trajectory.

Regulatory Progress

Significant progress has been made in regulatory proceedings by Southern California Edison (SCE), a subsidiary of Edison International. The California Public Utilities Commission’s (CPUC) final decisions in WMCE and WM/VM have provided certainty on cost recovery, contributing positively to the 2025 earnings guidance.

Wildfire Mitigation Efforts

SCE is set to invest $6.2 billion in wildfire mitigation from 2026 to 2028. The company has also launched an innovative AI-driven project, which has been recognized by the Edison Electric Institute (EEI), highlighting their commitment to enhancing safety and reliability.

Earnings Decline

The second quarter saw a decline in core earnings per share, dropping to $0.97 from $1.23 a year ago. This decrease was attributed to higher operating and maintenance expenses, as well as increased interest rates, which have impacted the company’s financial performance.

Unresolved Eaton Fire Investigation

Investigations into the Eaton Fire by SCE and the Los Angeles County Fire Department are still ongoing. The company has not provided additional disclosures regarding the ignition source or cost estimates, leaving some uncertainty in this area.

Potential Legislative Challenges

There are concerns regarding potential shareholder contributions in upcoming legislative actions related to AB 1054 enhancements. These could pose challenges to the company’s financial stability, depending on the legislative outcomes.

Forward-Looking Guidance

During the earnings call, Edison International provided updates on several key financial metrics. Despite a year-over-year decline in second quarter core EPS, the company remains confident in achieving its 2025 EPS guidance and long-term growth expectations. The proposed decision in SCE’s 2025 general rate case suggests a base revenue of $9.8 billion, supporting substantial investments in wildfire mitigation and grid modernization.

In summary, Edison International’s earnings call reflected a balanced sentiment, with confidence in long-term financial guidance and regulatory achievements. However, challenges such as the unresolved Eaton Fire investigation and potential legislative impacts were also highlighted. The company remains optimistic about its future financial performance, backed by strategic investments and regulatory progress.