Edison International (EIX)

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Edison International (EIX)

Q4 2008 Earnings Call

March 2, 2009 11:00 am ET


Scott Cunningham – Vice President, Investor Relations

Theodore (Ted) F. Craver Jr. – Chairman, President and Chief Executive Officer

Jim Scilacci – Chief Financial Officer and Treasurer

Ronald Litzinger – Chairman, President and CEO of Edison Mission Group


Greg Gordon – Citigroup

Lasan Johong – RBC Capital Markets

Michael Lapides – Goldman Sachs

John Kiani – Deutsche Bank

Daniel Eggers – Credit Suisse

Hugh Wynne – Sanford C. Bernstein

Jonathan Arnold – BAS-ML

Michael Goldenburg – Luminous Management

Paul Patterson – Glenrock Associates

Charles Sharett – Credit Suisse



Good morning, my name is [Rachel] and I will be your conference operator today. At this time, I would like to welcome everyone to the Edison International fourth quarter 2008 financial teleconference. (Operator Instructions). Thank you, and Mr. Cunningham, you may begin your conference.

Scott Cunningham

Thanks, [Rachel], and good morning everyone. Our principal speakers this morning will be Ted Craver, our Chairman and CEO, and Jim Scilacci, Chief Financial Officer. After their remarks, there will be a Q&A period. Also with us to participate in Q&A are other members of the Edison Management Team.

The presentation of the company's [gens] 2008 financial review, together with the earnings press release and our 2008 Form 10-K filings, are available on our website at www.edisoninvestor.com. During this call, we will make forward-looking statements about the financial outlook for Edison International and its subsidiaries and about other future events. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our 10-K and other SEC filings, which we encourage you to read carefully.

The presentation also includes additional information, including certain outlook assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure. Please note, the core earnings refers to earnings per basic share or GAAP earnings, excluding non-core items and discontinued operations. Prior period core earnings and reconciliations to GAAP earnings referred to in this discussion are contained in the press releases archived on our website.

With that I'll turn the call over to Ted Craver.

Theodore (Ted) F. Craver Jr.

Thank you, Scott and good morning everyone. Edison International had a good year in 2008. Reported earnings increased 11% to $3.69 per share, while core earnings, which exclude certain non-core items and discontinued operations, increased 4% to $3.84 per share. As you know, we mostly focus on core earnings when we talk to investors.

Given some of the recent announcements on dividends from other companies, it is worth noting that last December we increased our common stock dividend for the fifth consecutive year, to an annual rate of $1.24 per share. Our longstanding dividend policy has been to look solely to Southern California Edison to support the dividend, and currently targets a payout of 45 to 55% of SCE's earnings. EMG earnings and cash are retained at EMG to support its capital requirement and growth.

Future dividend increases at Edison International will be balanced with our capital needs to support growth. Jim Scilacci will shortly cover the components of our record earnings at Edison International and its two principal subsidiaries last year.

I want to concentrate the remainder of my remarks on the outlook for 2009, and how we view the major trends in our business. Last year was difficult for investors, and while our stock price declined in line with the major market indexes, it underperformed relative to the utility sector. This same basic trend appears to be continuing thus far this year.

Presumably, a major reason for this is the natural exposure our competitive generation company, EMG, has to energy commodities during this down cycle period. The collapse in natural gas prices has been stunning, both in its extent and speed. While it has been helpful to SCE and its customers, it has hurt EMG's earnings.

We are unable to provide formal earnings guidance for Edison International at this time. We intend to provide 2009 guidance once we have the general rate case decided by the California Public Utilities Commission. The general rate case, or GRC as we call it, is critical in many ways, so with it still before the Public Utilities Commission to decide, we can't develop a firm view of SCE's earnings or finalize our Edison International outlook for 2009.

Before I move on, I want to make just a few comments on the GRC and the process at the Public Utilities Commission. The original PUC schedule called for a decision on our general rate case by the end of December. We thought we were finally going to receive a decision at the recent February 20th PUC meeting, but it was postponed. We hope to receive a final decision from the CPUC at their next meeting on March 12th.

The commissioners have under consideration both an administrative law judge proposed decision and an alternate decision proposed by the presiding commissioner of the case, President [Tevey]. These two options would have very different impacts on customer reliability, safety, Southern California jobs, and the economy of the region in which we serve.

The commissioners have heard from all sides and are hopefully far down the path in their decision process. In light of the pending commission decision, the timing of this investor call is quite awkward. It would be unwise and disrespectful for us to comment on the GRC anymore on this call, either in terms of the content or its impact on SCE. Therefore, we cannot take any questions on it during the Q&A session of this call. We know you understand this, and appreciate your cooperation.

Read the rest of this transcript for free on seekingalpha.com