Edison International (EIX)
Q2 2010 Earnings Call Transcript
August 5, 2010 11:00 am ET
Scott Cunningham – VP, IR
Ted Craver – Chairman, President and CEO
Jim Scilacci – EVP, CFO and Treasurer
John Fielder – President, Southern California Edison
Ron Litzinger – Chairman, President and CEO, Edison Mission Group
Lasan Johong – RBC Capital Markets
Jonathan Arnold – Deutsche Bank
Greg Gordon – Morgan Stanley
Michael Goldenberg – Luminus Management
Michael Lapides – Goldman Sachs
Hugh Wynne – Sanford Bernstein
Angie Storozynski – Macquarie
Steve Fleishman – Bank of America-Merrill Lynch
Ali Agha – SunTrust
James Dobson – Wunderlich Securities
Previous Statements by EIX
» Edison International Q4 2009 Earnings Call Transcript
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» Edison International Q2 2009 Earnings Call Transcript
I would now like to turn the call over to Mr. Scott Cunningham, Vice President of Investor Relations. Thank you. Mr. Cunningham, you may begin your conference.
Thanks and good morning everyone. Our principal speakers today will be Chairman and CEO, Ted Craver; and Chief Financial Officer, Jim Scilacci. Also with us are other members of the management team. The presentation that accompanies Jim’s financial review together with the earnings press release and our second quarter 10-Q filings are available on our Web site 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-Q and our other SEC filings. We encourage you to read these carefully. The presentation also includes additional information, including certain outlook assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure.
When we get to Q&A, please limit yourself to one question and one follow-up. If you have further questions, please return to the queue. We would like to give as many of you as possible an opportunity to ask a question.
With that, I’ll turn the call over to Ted.
Thank you, Scott, and good morning, everyone. Today, Edison International reported second quarter earnings of $1.05 per share, with core earnings of $0.62 per share, primarily some timing related events depressed earnings in the first half, and particularly the second quarter at Edison Mission Group.
We moved around several planned outages in the coal fleet, concentrating them into the second quarter of this year, which meant the plants weren’t producing or selling electricity, and had higher than normal maintenance expenses. Normalizing for these timing related items, our companies are performing well. In fact, they are performing in line or better than we anticipated.
We are reaffirming our core earnings guidance for the year at $3.15 per share to $3.45 per share. And at this point, it looks more likely that we will be toward the higher end of our range. As we explained in the past, the summer is very important for our commodity sensitive businesses. So, we’ll reassess our earnings guidance range next quarter after the summer months are completed.
I want to highlight several developments that should be important to our investors. An important milestone in the second quarter was the California State Franchise Tax Board’s acceptance of the tax positions from last year’s global tax settlement with the IRS.
Jim Scilacci will cover this more thoroughly in his remarks, but earnings, cash and equity are positively affected by this development which helps us more comfortably meet the capital requirements of our infrastructure investment program.
Last month, Southern California Edison installed its one millionth smart meter, a key milestone in our Edison SmartConnect program. By the end of 2012, we will have installed five million smart meters.
We spent years researching technologies, systems and devices to ensure the smart meters would provide a whole range of customer benefits before making our final investment decision.
We look forward to providing all of our customers the valuable features smart meters provide, enabling customers to closely monitor and manage their electricity usage. $1.6 billion program is just one component in our focused strategy to expand and renew essential distribution and transmission grids throughout the Southern California Edison service territory.
On July 19th, Southern California Edison submitted a notice of intent to file the utility’s 2012 to 2014 general rate case application. The notice is essentially a draft of the general rate case application and supporting testimony, expected to be filed in November of this year and enables the Commission staff to review the content in advance.
In the general rate case proceeding, SCE seeks authorization to collect revenues for operations and maintenance expenses as well as capital expenditures, representing approximately 40% of the total revenues it will need to serve its customers. The remaining 60% covers the cost of power plant fuel and purchased power, and is handled in other regulatory proceedings.
The GRC regulatory process will likely conclude in late 2011, with a decision by the California Public Utilities Commission that would be implemented in customer rates January 1, 2012. We have summarized the key elements of the notice of intent and the expected timeline in the appendix through our presentation.
As you know, we have been engaged in an extensive analysis of the environmental retrofit decisions before us at Edison Mission Group. The challenge has been to find a path that meets emissions compliance policies and provides enough flexibility to be commercially successful. We have been evaluating several technologies and approaches while anticipating future regulatory scenarios.