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01/11 03:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed outlook. While there are positive elements like strong long-term EPS growth guidance and proactive wildfire mitigation strategies, concerns arise from regulatory challenges and potential financial impacts of securitization and wildfire fund contributions. The Q&A section reveals management's cautious stance on regulatory issues and lack of clear answers on key risks, which tempers the overall sentiment. The absence of a market cap limits the ability to gauge stock reaction magnitude, but the balanced positives and negatives suggest a neutral stock price movement.
Core Earnings Per Share (EPS) $0.97 for Q2 2025 compared to $1.23 in Q2 2024, a decrease. The year-over-year comparison is not particularly meaningful due to the absence of a final decision in SCE's 2025 general rate case. The variance was primarily driven by higher O&M expense and the net impact of regulatory decisions received in each period.
Base Revenue $9.8 billion authorized for 2025, which is 93% of SCE's requested revenue requirement. The reductions primarily relate to scope, pacing, or cost, not to the underlying need or effectiveness of the programs.
Wildfire Mitigation Capital Investments $6.2 billion anticipated for the 2026-2028 period. This includes investments in grid hardening, targeted undergrounding, and enhanced vegetation management. The plan reflects a commitment to public safety, risk reduction, and affordability.
Wildfire Mitigation and Vegetation Management Cost Recovery Authorized recovery of more than $300 million of O&M and $700 million of capital for historical wildfire mitigation and restoration. Additionally, $290 million of O&M and $99 million of capital were authorized for 2022 wildfire mitigation and vegetation management.
Securitized Bonds for Cost Recovery Application filed to issue securitized bonds to finance the recovery of about $1.6 billion related to the TKM proceeding. This allows for the issuance of recovery bonds with the highest possible credit rating, reducing financing costs for customers.
Advanced Waveform Anomaly Recognition Engine (AWARE): Uses real-time grid sensor data, AI, and machine learning to predict potential system issues, improving safety, reliability, and affordability.
Wildfire Recovery Compensation Program: Program to provide direct payments to individuals and businesses affected by wildfires, aiming to resolve claims quickly and minimize costs.
Wildfire Mitigation Investments: $6.2 billion planned for 2026-2028, including grid hardening, targeted undergrounding, and enhanced vegetation management.
Operational Excellence: 15-year track record of maintaining the lowest system average rate among California's major utilities through cost management and efficiency.
Regulatory Framework Enhancements: Engagement with California legislators to strengthen wildfire frameworks and address affordability issues.
Electrification and Infrastructure Investments: Investments in grid modernization and infrastructure replacement to support California's electrified future.
Eaton Fire Investigation and Lawsuits: The ongoing investigations into the Eaton Fire by SCE and the LA County Fire Department have not yet determined the ignition source, but SCE equipment may be associated with it. Numerous lawsuits have already been filed against SCE, and if SCE's equipment is found to be the cause, it could lead to significant financial liabilities and reputational damage.
Wildfire Mitigation and Costs: The proposed decision on SCE's 2025 general rate case reduces the scope of targeted undergrounding for wildfire mitigation, which could limit SCE's ability to mitigate wildfire risks effectively in vulnerable areas. Additionally, the January wildfires highlight the ongoing need for substantial investments in wildfire mitigation, which could strain financial resources.
Regulatory and Legislative Risks: Uncertainty around regulatory decisions, such as the 2025 general rate case and other proceedings, could impact SCE's ability to recover costs and maintain financial stability. Legislative discussions on affordability measures and securitization of capital could also affect credit quality and customer costs.
Infrastructure Replacement and Reliability: The proposed decision scales back the scope of infrastructure replacement programs, potentially delaying critical upgrades needed for reliability and electrification. This could impact SCE's ability to meet customer needs and state climate objectives.
Financial Performance and Cost Recovery: Higher O&M expenses and delays in regulatory decisions have impacted financial performance. SCE's ability to recover historical costs through securitization and other mechanisms remains uncertain, posing risks to financial stability.
2025 EPS Guidance: Edison International remains confident in its ability to meet its 2025 EPS guidance and deliver a 5% to 7% core EPS CAGR through 2028.
Wildfire Mitigation Investments: SCE anticipates investing $6.2 billion in wildfire mitigation from 2026 to 2028, including grid hardening, targeted undergrounding, and enhanced vegetation management.
2025 General Rate Case (GRC): The proposed decision would authorize base revenue of $9.8 billion in 2025, increasing to $11 billion by 2028. This supports significant capital investments in wildfire mitigation, grid modernization, and infrastructure replacement.
System Average Rate Growth: SCE projects its system average rate to grow at an inflation-like level through 2028, supported by operational excellence and cost management.
2026-2028 Wildfire Mitigation Plan: The plan includes comprehensive strategies to address wildfire risks, such as aerial firefighting assets, inspecting approximately 1 million trees annually, and revised Public Safety Power Shutoff criteria.
Capital Expenditure Forecast: SCE's capital expenditure and rate base forecasts remain unchanged while awaiting a final GRC decision. Substantial additional capital needs are anticipated beyond the GRC plan.
Long-Term EPS Growth: Edison International reaffirms its long-term EPS growth expectations of 5% to 7% from 2025 to 2028.
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The earnings call summary and Q&A reveal mixed sentiments. While the company demonstrates confidence in achieving EPS growth and has plans for wildfire mitigation and capital allocation, uncertainties remain. The Q&A highlights unclear timelines for liability estimates and EPS growth beyond 2025. Despite positive elements like EV adoption driving growth and regulatory clarity, the lack of explicit guidance and potential financial charges balance out the positives, resulting in a neutral sentiment.
The earnings call summary presents a mixed outlook. While there are positive elements like strong long-term EPS growth guidance and proactive wildfire mitigation strategies, concerns arise from regulatory challenges and potential financial impacts of securitization and wildfire fund contributions. The Q&A section reveals management's cautious stance on regulatory issues and lack of clear answers on key risks, which tempers the overall sentiment. The absence of a market cap limits the ability to gauge stock reaction magnitude, but the balanced positives and negatives suggest a neutral stock price movement.
The earnings call presents a mixed outlook. Positive elements include above-guidance EPS, robust wildfire mitigation investments, and a strong dividend declaration. However, concerns arise from potential liabilities related to wildfires, increased interest expenses, and legislative uncertainties. The Q&A reveals management's cautious stance on liability estimations and fund access, adding to investor uncertainty. The absence of a share repurchase program and the lack of clarity on wildfire legislation further neutralize the sentiment. Overall, the mixed signals and uncertainties result in a neutral prediction for stock price movement.
The earnings call reveals potential material losses from the Eaton Fire, regulatory uncertainties, and significant capital expenditure risks. While financial metrics showed growth, the lack of a share repurchase program and unresolved liabilities from the fire weigh negatively. The Q&A further highlights management's cautious stance on liabilities and regulatory outcomes, adding to investor concerns. Despite optimistic EPS guidance, the uncertainty and potential financial implications from the fire and regulatory challenges suggest a negative stock price reaction.
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