Edison International Tops Q2 Earnings on Solid Utility Sales

Edison International EIX reported solid second quarter 2014 results with its adjusted earnings of $1.08 per share well ahead of the Zacks Consensus Estimate of 83 cents by 30.1%. Earnings for the quarter also increased 36.7% from the year-ago figure of 79 cents per share.

This striking performance reflects impressive results from its prime affiliate Southern California Edison (SCE) backed by higher authorized revenues from rate base growth and income tax benefits.

 

Taking into account earnings of 4 cents per share from discontinued operations as well as a $1.12 per share charge related to the settlement agreement for San Onofre, the generally accepted accounting principles (GAAP) measure for the quarter was $1.64 per share as against a loss of 29 cents a year ago.

Total Revenue

Edison International's second quarter revenues were $3,016 million, down nearly 1% year over year. The top line however exceeded the Zacks Consensus Estimate of $2,958 million by almost 2%.

Operational Highlights

In the reported quarter, operations and maintenance expenses were down 21.7% year over year to $2,441 million. Total input cost including fuel and power purchase was $1,239 million in the second quarter compared with $1,157 million in the year-ago period.

Interest expense stood at $139 million compared with $133 million in the second quarter of 2013, primarily due to an increase in long-term debts.

Segment Results

Southern California Edison's second quarter adjusted earnings surged 32.1% to $1.11 per share from 84 cents earned in the year-ago quarter. The uptrend was attributable to higher authorized revenue from rate base growth and income tax benefits.

Edison International parent company and the other segment reported a narrower loss this quarter amounting to 3 cents per share compared with a loss of 5 cents per share in the year-ago period.

Financial Update

As of Jun 30, 2014, cash and cash equivalents were $190 million, up from $146 million as of Dec 31, 2013. Long-term debt (including current portion) was $10,826 million, higher than the 2013 year-end level of $10,426 million.

Net cash from operating activities during the first half of 2014 was $603 million versus $1,261 million in the comparable period last year.

Total capital expenditure during the first half amounted to $1,856 million compared with $1,834 million in the year-ago period.

Guidance

The company maintained its core earnings per share guidance in the range of $3.60–$3.80 for 2014.

Peer Comparison

CMS Energy Corp. CMS reported second quarter 2014 earnings per share of 30 cents both on an adjusted and GAAP basis. Quarterly earnings surpassed the Zacks Consensus Estimate of 26 cents by 15.4% and the year-ago number by a penny on higher revenues.

Entergy Corporation ETR posted second quarter 2014 operational earnings of $1.11 per share, higher than the year-ago number of $1.01 per share by 9.9%. However, earnings failed to surpass the Zacks Consensus Estimate of $1.14. Quarterly earnings increased on the back of strong performance from its Utility and Entergy Wholesale Commodities units.

American Electric Power Company Inc. AEP reported second quarter 2014 operating earnings of 80 cents per share, beating the Zacks Consensus Estimate of 75 cents by 6.7%. The quarterly figure also improved 9.6% from the year-ago adjusted profit of 73 cents per share. The upbeat performance was supported by investments in infrastructure and transmission as well as system improvement.

Our Take

Rosemead, CA-based Edison International, through its subsidiaries, engages in the supply of electric energy in central, coastal and southern California. The company's chief unit – SCE – operates in a supportive regulatory environment, which would allow the utility to grow to stronger levels in a rebounding economy. Through 2017, SCE continues to target 7–9% average annual rate base and earnings growth driven by infrastructure investment.

Edison International is focused on its transmission and distribution infrastructural development programs. It expects to spend $15.1 billion to $17.2 billion for the period 2014 to 2017 under its capital investment plan.

Edison International presently holds a Zacks Rank #2 (Buy).
 

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