Power generator and distributor Edison International (EIX) on Friday reported a loss for the second quarter that primarily reflected a charge related to a global tax settlement. Core earnings per share for the quarter edged down a penny, yet surpassed analysts' expectations by a wide margin. The company also narrowed its GAAP earnings forecast range and reaffirmed its core earnings outlook for the full year 2009.
In a statement, chairman and chief executive officer, Theodore Craver, Jr. said, "Although not reflected in our reported earnings, our second quarter core earnings are on track with our expectations for the quarter. We established several key milestones to accomplish this year and are pleased with the progress to date such as the completion of the global tax settlement with the IRS which removes a major uncertainty for investors."
Second Quarter Results
The Rosemead, California-based company reported a net loss of $16 million or $0.05 per share for the second quarter, compared to net income of $261 million or $0.79 per share in the prior-year quarter. Loss from continuing operations for the quarter was $9 million or $0.03 per share, compared to income of $262 million or $0.79 per share in the year-ago quarter.
The results for the latest quarter includes $262 million or $0.81 per share charge from finalizing a global settlement with the Internal Revenue Service in May 2009, resolving numerous federal income tax issues dating back to 1986 and the related termination of cross-border, leveraged leases.
Excluding the overall tax settlement charge and other non-core items, core earnings for the quarter were $253 million or $0.78 per share, lower than $262 million or $0.79 per share in comparable quarter a year ago. On average, seven analysts polled by Thomson Reuters estimated earnings of $0.52 per share for the second quarter. Analysts' estimates typically exclude special items.
Total operating revenues for the quarter dropped to $2.83 billion from $3.48 billion in the same quarter last year. Three Wall Street analysts had a consensus revenue estimate of 3.14 billion for the quarter.
Peer Performance
Among Edison's peers, San Diego, California-based Sempra Energy (SRE) reported last week a 19% year-over-year decline in profit for the second quarter, hurt by over 32% drop in quarterly revenues as well as an asset write off at a unit. Net earnings declined to $198 million or $0.80 per share from $244 million or $0.98 per share a year ago. Total quarterly revenues dropped to $1.69 billion from $2.50 billion generated last year.
Another peer, San Francisco, California-based PG&E Corp. (PCG) reported on Wednesday a year-over-year increase in profit for the second quarter to $388 million or $1.02 per share from $293 million or $0.80 per share, on lower operating expenses, despite a decline in electric and natural gas operating revenues. Quarterly operating revenues declined to $3.19 billion from $3.58 billion last year.
Segmental Details
Electric utility revenue for the second quarter decreased to $2.27 billion from $2.85 billion in the year-ago quarter. Competitive power generation revenue declined to $557 million from $612 million in the prior-year quarter. Financial services and other revenue for the quarter was $5 million, down from $16 million in the comparable quarter a year ago.
Electric utility company Southern California Edison, or SCE, a subsidiary of Edison International, reported a second quarter GAAP earnings from continuing operations of $499 million or $1.53 per share and core earnings of $199 million or $0.61 per share, sharply higher than GAAP earnings from continuing operations and core earnings of $157 million or $0.48 per share in the year-ago quarter, due to its 2009 General Rate Case decision as well as lower operating expenses due mainly to expense timing differences.
Another subsidiary, Edison Mission Group, or EMG, reported second quarter GAAP loss from continuing operations of $551 million or $1.69 per share and core earnings of $61 million or $0.19 per share, compared to GAAP earnings from continuing operations and core earnings of $112 million or $0.34 per share in the prior-year quarter.
Other Metrics
Edison International reported operating loss for the second quarter of $364 million, compared to operating income of $506 million in the prior-year quarter. Total operating expenses were $3.20 billion, higher than $2.97 billion in the year-ago quarter.
Operating expenses include fuel expenses of $328 million, lower than $554 million in the prior-year quarter, and purchased power expense of $583 million, sharply down from $1.03 billion in the year-ago quarter. The company recorded lease terminations and other expenses of $866 million compared to a gain of $56 million in the same quarter last year.
Interest expense, net of amounts capitalized, rose to $182 million from $165 million in the same quarter last year. The company recorded an income tax benefit of $524 million, compared to income expense of $83 million in the prior-year quarter.
Edison International ended the second quarter with cash and cash equivalents of $2.70 billion, compared to $1.07 billion at end of the prior-year quarter.
Half Yearly Highlights
For the first six months, Edison International reported net income of $234 million or $0.72 per share, lower than $559 million or $1.69 per share in the prior-year period. Income from continuing operations for the period dropped to $238 million or $0.73 per share from $565 million or $1.71 per share in the year-ago period.
Excluding the overall tax settlement charge and other non-core items, core earnings for the period were $512 million or $1.58 per share, lower than $565 million or $1.72 per share in comparable period a year ago.
Total operating revenues for the year-to-date period dropped to $5.65 billion from $6.59 billion in the same period last year.
Outlook
Looking ahead to fiscal 2009, in order to reflect the actual charge of $0.85 per share associated with the overall tax settlement and other expected non-core items, Edison International narrowed its GAAP earnings guidance to a range of $2.18 to $2.48 from the prior forecast range of $1.98 to $2.51 per share.
However, the company continues to expect core earnings for the year in the $2.90 to $3.20 per share range. The Street is looking for full-year 2009 earnings of $2.98 per share.
Stock Quote
In Friday's regular trading session, EIX is currently trading at $31.82, up $0.52 or 1.66% on a volume of 1.46 million shares. In the past 52-week period, the stock has been trading in a range of $23.09 to $47.48.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.