Edison International Reports 2007 Third Quarter Results

November 02, 2007

November 2, 2007

  • Third quarter 2007 basic earnings per common share were $1.40, up 1% from the third quarter of 2006. Core earnings1 grew 7% to $1.41 per share primarily due to solid operating results across our major businesses.
  • Year-to-date basic earnings per common share were $2.69, down less than 1% from the prior period, while core earnings were $3.04 per share, up 25% from the prior year, driven by strong margins at Midwest Generation and Homer City, solid operating results at Southern California Edison Company (SCE), and lower net interest expense at Edison Mission Group (EMG). The change in non-core items more than offset the core increases.
  • The company now expects earnings to be at the high end of its guidance range of $3.24 to $3.59 for core earnings per share and $2.90 to $3.25 for reported earnings per share. 

Edison International Third Quarter Financial Highlights

 

 

 

Quarter Ended September 30,

Change

(In millions, except per share data)

2007

 2006

 

$

 

%

Basic earnings per common share

$1.40

$1.38

 

$0.02

 

1%

Core earnings per common share

$1.41

$1.32

 

$0.09

 

7%

Net income

$461

$458

 

$3

 

1%
Core earnings
$465
$436
$29
7%

1Core earnings is a non-GAAP financial measure; see reconciliation of core earnings to reported earnings and reconciliation of core earnings guidance to total earnings guidance below.


THIRD QUARTER EARNINGS SUMMARY

     ROSEMEAD, Calif., November 2, 2007 – Edison International (NYSE: EIX) today reported basic earnings per common share of $1.40 in the third quarter of 2007, compared to $1.38 basic earnings per common share in the same period last year. Excluding discontinued operations and other non-core items, third quarter core earnings per share were $1.41, up 7% over last year.    

     “Edison International continues to deliver strong financial results and advance its growth plans,” said John E. Bryson, chairman and CEO. “Our proposed five-year investment program at Southern California Edison is consistent with California energy policy goals. At EMG, capacity markets are demonstrating higher value for our generating fleet, and we continue to place new wind projects into construction.”

THIRD QUARTER EARNINGS DETAIL

Earnings from Continuing Operations

     SCE 2007 third quarter earnings from continuing operations were $0.80 per share compared to earnings of $0.81 per share in the same period last year.  SCE’s 2006 third quarter results include a $0.07 per share non-core benefit from a generator settlement. Excluding this item, SCE’s core earnings increased by $0.06 per share. This increase was primarily related to higher net revenue associated with the 2006 general rate case. Due to higher kilowatt-hour (kWh) sales from warmer weather during the summer months and the company’s rate design, electric utility revenue during the third quarter of each year is generally higher than other quarters.

     EMG 2007 third quarter earnings from continuing operations and core earnings were $0.64 per share compared to $0.62 per share in the same period last year. The improvement was primarily due to lower net interest expense from debt repayment and higher energy margins, partially offset by higher development and corporate costs.

Loss from Discontinued Operations

     Edison International’s losses from discontinued operations were $0.01 per share in each period, and were related to EMG’s former international projects. 

 

Quarter Ended September 30,

 

 

Earnings (Loss) Per Common Share (Unaudited)

2007

2006

 

Change


     Southern California Edison Company

$0.80

$0.81

 

$(0.01)

     Edison Mission Group

0.64

0.62

 

 0.02

     EIX parent company and other

(0.03)

(0.04)

 

0.01


EIX basic earnings per common share from continuing operations


1.41


1.39

 


0.02


Loss from discontinued operations

(0.01)

(0.01)

 


EIX basic earnings per common share

$1.40

$1.38

 

$0.02


EIX diluted earnings per common share
$1.39
$1.38
 

$0.01


 

Quarter Ended September 30,

 

 

Earnings (Loss) (in millions) (Unaudited)

2007

2006

 

Change


     Southern California Edison Company

$262

$263

 

$(1)

     Edison Mission Group

207

204

 

3

     EIX parent company and other

(4)

(7)

 

3


EIX income from continuing operations

465

460

 

5

Loss from discontinued operations

(4)

(2)

 

(2)

EIX net income

$461

$458

 

$3


 

Third Quarter Reconciliation of Core Earnings to Reported Earnings

 

Quarter Ended September 30,

 

 

Core Earnings1 (Loss) Per Common Share (Unaudited)

2007

2006

 

Change


     Southern California Edison Company

$0.80

$0.74

 

$0.06

     Edison Mission Group

0.64

0.62

 

0.02

     EIX parent company and other

(0.03)

(0.04)

 

0.01


EIX core earnings per share

1.41

1.32

 

0.09


 

Non-core items

 

 

 

 

     SCE – generator settlement

0.07

 

(0.07)

     EMG – loss from discontinued operations

(0.01)

(0.01)

 


Total non-core items

(0.01)

0.06

 

(0.07)


EIX basic earnings per common share

$1.40

$1.38

 

$0.02


 

 

Quarter Ended September 30,

 

 

Core Earnings1 (Loss) (in millions) (Unaudited)

2007

2006

 

Change


     Southern California Edison Company

$262

$239

 

$23

     Edison Mission Group

207

204

 

3

     EIX parent company and other

 (4)

(7)

 

3


EIX core earnings

465

436

 

29


 

Non-core items

 

 

 

 

     SCE – generator settlement

24

 

(24)

     EMG – loss from discontinued operations

(4)

(2)

 

(2)


Total non-core items

(4)

22

 

(26)


Total EIX net income

$461

$458

 

$3


1See Use of Non-GAAP Financial Measures. The impact of participating securities is included in EIX parent company earnings (loss) and was $(0.02) and $(0.03) per share for the quarter ended September 30, 2007 and 2006, respectively.

 

YEAR-TO-DATE EARNINGS SUMMARY

Edison International Year-to-Date Financial Highlights

 

 

Year-to-Date September 30,

Change

(In millions, except per share data)

2007

2006

 

$

%


Basic earnings per common share

$2.69

$2.71

 

$(0.02)

(1%)

Core earnings per common share

$3.04

$2.43

 

$0.61

25%

Net income

$887

$893

 

$(6)

(1%)

Core earnings

$1,003

$800

 

$203

25%


     Edison International recorded earnings of $2.69 per basic share for the nine-month period ending September 30, 2007, down less than 1% from the same period last year. Earnings from continuing operations of $2.69 per basic share compared to $2.48 per share for the prior period. Excluding earnings from discontinued operations and other non-core items, Edison International’s core earnings for the nine-month period were $3.04 per share, up 25% compared to $2.43 per share in the same period in 2006.

YEAR-TO-DATE EARNINGS DETAIL

Earnings from Continuing Operations

     SCE’s earnings from continuing operations in the first nine months of 2007 were $1.80 per share compared to $1.90 per share a year ago. SCE’s 2007 results include a non-core tax benefit of $0.10 per share primarily reflecting progress on an appeal with the Internal Revenue Service related to the income tax treatment of certain costs associated with environmental remediation.  SCE’s 2006 results include a non-core benefit of $0.25 per share related to resolution of an issue related to state income taxes and a generator settlement of $0.07 per share. Excluding non-core items, SCE’s core earnings were $1.70 per share, compared to $1.58 per share, in the same period last year. The increase is mainly due to higher net revenue associated with the 2006 general rate case decision and lower income taxes.

     EMG’s earnings from continuing operations for the first nine months of 2007 were $0.96 per share versus $0.68 per share in the same period last year. Both 2007 and 2006 results were impacted by non-core charges of $0.45 and $0.27 per share respectively, primarily associated with early debt extinguishment. Excluding non-core items, EMG’s core earnings were $1.41 per share compared to $0.95 per share last year. This increase primarily reflects higher energy margins at Midwest Generation and Homer City, higher project income, and higher contribution from Edison Capital, partially offset by higher development and corporate costs.

Earnings from Discontinued Operations

Edison International’s earnings per share from discontinued operations were immaterial for the nine-month period ending September 30, 2007 and $0.23 for the same period last year, with earnings resulting primarily from distributions from EMG’s Lakeland project in administrative receivership in the United Kingdom.

Year-to-Date September 30,

Earnings (Loss) Per Common Share (Unaudited)

2007

 

2006

 

Change


     Southern California Edison Company

$1.80

 

$1.90

 

$(0.10)

     Edison Mission Group

0.96

 

0.68

 

0.28

     EIX parent company and other

(0.07)

 

(0.10)

 

0.03


EIX basic earnings per common share from continuing
operations


2.69

 


2.48

 


0.21


Earnings from discontinued operations

 

0.23

 

(0.23)


EIX basic earnings per common share

$2.69

 

$2.71

 

$(0.02)


EIX diluted earnings per common share

$2.67

 

$2.71

 

$(0.04)


 

Year-to-Date September 30,

 

 

Earnings (Loss) (in millions) (Unaudited)

2007

 

2006

 

Change


     Southern California Edison Company

$587

 

$618

 

$(31)

     Edison Mission Group

313

 

221

 

92

     EIX parent company and other

(14)

 

(22)

 

8


EIX income from continuing operations

886

 

817

 

69


Income from discontinued operations

1

 

75

 

(74)

Cumulative effect of accounting change – net of tax

 

1

 

(1)


EIX net income

$887

 

$893

 

$(6)


 

Year-to-Date Reconciliation of Core Earnings to Reported Earnings

 

Year-to-date September  30,

 

 

Core Earnings1 (Loss) Per Common Share (Unaudited)

2007

 

2006

 

Change


     Southern California Edison Company

$1.70

 

$1.58

 

$0.12

     Edison Mission Group

1.41

 

0.95

 

0.46

     EIX parent company and other

(0.07)

 

(0.10)

 

0.03


EIX core earnings per share

3.04

 

2.43

 

0.61


 

Non-core items

 

 

 

 

 

     SCE – regulatory/tax items

0.10

 

0.25

 

(0.15)

     SCE – generator settlement

 

0.07

 

(0.07)

     EMG – early debt retirement

(0.45)

 

(0.27)

 

(0.18)

     EMG – earnings from discontinued operations

 

0.23

 

(0.23)


Total non-core items

(0.35)

 

0.28

 

(0.63)


 

EIX basic earnings per common share

$2.69

 

$2.71

 

$(0.02)


 

Year-to-date September 30,

 

Core Earnings1 (Loss) (in millions) (Unaudited)

2007

 

2006

 

Change


 Southern California Edison Company

$556

 

$513

$43

     Edison Mission Group

461

 

309

152

     EIX parent company and other

(14)

 

(22)

8


EIX core earnings

1,003

 

800

203


 

Non-core items

 

 

 

 

     SCE – regulatory/tax items

31

 

81

(50)

     SCE – generator settlement

 

24

(24)

     EMG – early debt retirement

(148)

 

(88)

(60)

     EMG – income from discontinued operations

1

 

75

(74)


Total non-core items

(116)

 

92

(208)



Cumulative effect of accounting change – net of tax




 

1



(1)



Total EIX net income

$887

 

$893

$(6)


1 See Use of Non-GAAP Financial Measures. The impact of participating securities is included in EIX parent company earnings (loss) and was $(0.03) per share for year-to-date September 30, 2007 and 2006.

 

Reconciliation of Core Earnings Guidance to Total Earnings Guidance


 

Core EPS1

 

 

 

 

2007 Guidance


 

   Southern California Edison Company

 

 

 

 

$1.97 – 2.07

 

   Edison Mission Group

 

 

 

 

  1.40 – 1.65

 

   EIX parent company and other

 

 

 

 

(0.13)


 

EIX core earnings per share

 

 

 

 

$3.24 – 3.59


 

 

Non-Core Items2

 

 

 

 

 

 

   Southern California Edison Company

 

 

 

 

0.10

 

   Edison Mission Group

 

 

 

 

(0.44)


 

          Total Non-Core Items

 

 

 

 

(0.34)


 

 

 

 

 

 

 


 

EIX basic earnings per common share

 

 

 

 

$2.90 – 3.25


 

1 The impact of participating securities is included in EIX parent company earnings (loss) and is ($0.04) per share.
2 2007 non-core items reflect refinancing costs of $(0.45) and $0.01 per share from discontinued operations for EMG, and a tax benefit of $0.10 per share for SCE.

Use of Non-GAAP Financial Measures

     Edison International’s earnings are prepared in accordance with generally accepted accounting principles used in the United States and represent the company’s earnings as reported to the Securities and Exchange Commission. Our management uses core earnings and EPS by principal operating subsidiary internally for financial planning and for analysis of performance. We also use core earnings and EPS by principal operating subsidiary as primary performance measurements when communicating with analysts and investors regarding our earnings results and outlook, as it allows us to more accurately compare the company’s ongoing performance across periods. Core earnings exclude discontinued operations and other non-core items and are reconciled to basic earnings per common share.

     EPS by principal operating subsidiary is based on the principal operating subsidiary net income and Edison International's weighted average outstanding common shares.  The impact of participating securities (vested stock options that earn dividend equivalents that may participate in undistributed earnings with common stock) for each principal operating subsidiary is not material to each principal operating subsidiary’s EPS and is therefore reflected in the results of the Edison International holding company, which we refer to as EIX parent company. EPS and core EPS by principal operating subsidiary are reconciled to basic earnings per common share.

Reminder:  Edison International Will Hold a Conference Call Today

     Today, Edison International will hold a conference call to discuss its third quarter 2007 financial results at 8 a.m. (Pacific Time).  Although two-way participation in the telephone call is limited to financial analysts and investors, all other interested parties are invited to participate in a “listen-only mode” by phone or through a simultaneous webcast at www.edisoninvestor.com.  A presentation accompanying management’s comments on the conference call will be available on the web site as well at www.edisoninvestor.com.  The domestic call-in number is (800) 356-8584 and the ID# is 11400.  In addition to the live simulcast, the webcast will remain posted at www.edisoninvestor.com and telephone replays will be available through Friday, November 9, 2007, at the following numbers:  (877) 693-4277 – for callers in the U.S.; and (402) 220-0042 – for international callers.  The ID# is 11401.

Risk Disclosure Statement

     Statements contained in this presentation about future performance, including, without limitation, earnings, asset and rate base growth, load growth, capital investments, and other statements that are not purely historical, are forward-looking statements.  These forward-looking statements reflect our current expectations; however, such statements involve risks and uncertainties.  Actual results could differ materially from current expectations.  Important factors that could cause different results are discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis” in Edison International’s 2006 Form 10-K and subsequent reports filed with the Securities and Exchange Commission and are available on our website: www.edisoninvestor.com. These forward-looking statements represent our expectations only as of the date of this presentation, and Edison International assumes no duty to update them to reflect new information, events or circumstances.

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Media Relations: Charles Coleman, (626) 302-7982
www.edisonnews.com

Investor Relations: Scott Cunningham, (626) 302-2540
www.edisoninvestor.com

# # #

Edison International, through its subsidiaries, is a generator and distributor of electric power and an investor in infrastructure and energy assets, including renewable energy.  Headquartered in Rosemead, California, Edison International is the parent company of Southern California Edison, the largest electric utility in California, and Edison Mission Group, a competitive power generation business and parent company to Edison Mission Energy and Edison Capital.