Abstract |1Q23_Edison International_JPMorgan

1. EIX beat earnings estimates for Q1 2023, but interest expenses led to increased corporate loss.

2. EIX reaffirmed EPS guidance for 2023 and its projected 2025 EPS growth rate of 5-7%.

3. In Q2, EIX will update its outlook through 2028 with details on capex/rate base/EPS growth and benefits from tailwinds.

4. EIX made slow progress in resolving wildfire/mudslide liabilities, with a modest upward revision in best estimates, and is targeting an initial TKM application in Q3.

EIX reported first-quarter 2023 adjusted earnings per share of $1.09, beating the median estimates of $1.03/$1.01 by JPMorgan and Wall Street. YoY, utility drivers included lower O&M and income taxes/other, before lower revenue, higher D&A, and higher financing costs. However, interest expense mainly drove the increased corporate loss, partially offsetting SCE's YoY climb of +6c.

The company reaffirmed its core EPS guidance of $4.55-4.85 for 2023, which beat the JP Morgan and Wall Street median estimates of $4.74/$4.73. The company also reaffirmed its 5-7% 2021-2025 EPS CAGR, indicating a projected 2025 EPS of $5.50-5.90.

In the second quarter, EIX is set to refresh its outlook through 2028, with updates on capex/rate base/EPS growth. The market is paying close attention to EPS growth in particular, as it has been a primary target for the company's current plan, and questions are arising about the base for future growth given that the 2023 outlook is below EIX's 5-7% growth rate. Management is expected to detail ROE and wildfire recovery assumptions, as well as electrification, transmission investment, and other tailwinds that could benefit EIX's outlook beyond 2025. The company has identified $2bn of incumbent projects and $5bn of local FERC Order 1000 projects in CAISO's draft transmission plan, which represent a longer-dated upside to current investment levels.

EIX made slow progress against the remaining $0.9bn best estimate of 2017/18 wildfire/mudslide liabilities by resolving only $148mm on the quarter. However, the best estimate saw a modest upward revision of +$90mm, indicating potentially narrowing uncertainty bounds as EIX works through the later stages of its claims process. The target for an initial TKM application remains in the third quarter, which is an important read on prudency language and commission thinking around inverse condemnation in a post-AB 1054 world.