Good afternoon and welcome to the Edison International First Quarter 2020 Financial Teleconference. My name is Sue, and I will be your operator today. [Operator Instructions] Today's call is being recorded. And I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.

Thank you, Sue, and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro; and Executive Vice President and Chief Financial Officer, Maria Rigatti. Also in the call are other members of the management team. I would like to mention that we are doing this call with our Executives in different locations because of California's stay-at-home order. So please bear with us if you experience any technical difficulties on the call. Materials supporting today's call are available at www.edisoninvestor.com. These include our Form 10-K, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During this call, we will make forward-looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure. During the question-and-answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro.

Thanks Sam, and good afternoon, everyone. Let me begin by saying that our thoughts go out to those here in California and elsewhere who have been directly impacted by COVID-19, including colleagues from our Edison team. We are all facing an experience that is unprecedented and I know that your participation in today’s earnings call is likely not the routine it has been in the past. One thing that hasn’t changed in these times is our company’s commitment to the health and safety of the 13,000 women and men of Edison International and Southern California Edison, and the 15 million people and their communities who are served by SCE. This pandemic and stay-at-home orders put a spotlight on the role that the electric grid plays in all our lives. The Edison team is demonstrating their incredible commitment to continue to deliver this essential service to our customers during this historic time. I could not be prouder of our team for the way they have worked together to carry out our mission. I will dedicate much of my prepared remarks to our response to COVID-19, but first let me give you the quick financial headlines. Today, Edison International reported core earnings per share of $0.63 for the first quarter 2020, flat compared to the same period last year. Higher core EPS at SCE was fully offset by an increase in core loss per share at EIX Parent and Other. Maria will discuss our financial performance in more detail in her report. I will now turn to how the State of California has been responding to the COVID-19 crisis, how Edison has organized and responded, and how we are preparing and caring for our workforce. I will also share some of the ways in which SCE is helping customers navigate the effects…

Thanks Pedro. My comments today will cover first quarter 2020 results, our capital expenditure and rate base forecast, 2020 EPS guidance and other topics including the impact of COVID-19 on our operations and financial performance. As we have said previously, quarterly year-over-year comparisons are less meaningful given the timing of the 2018 GRC decision. Please turn to Page 3. Edison International reported core earnings of $0.63 per share, which was flat compared to the same period last year. Higher core EPS at SCE was fully offset by an increase in core loss per share at EIX Parent and Other, primarily due to interest expense. From the table on the right-hand side, you will see that SCE had a core EPS variance of positive $0.04 year-over-year. This was primarily driven by $0.12 of higher EPS from SCE core activities which was partially offset by $0.08 of share count dilution. There are a few items that accounted for the majority of the EPS variance at SCE. To begin with, higher revenues had a positive variance of $0.42. This was primarily driven by $0.37 of higher CPUC revenues mainly due to the adoption of the 2018 GRC final decision in Q2 2019. FERC revenues had a positive variance of $0.05 largely due to the increased equity layer, rate base growth and higher expenses. Higher O&M expenses negatively impacted year-over-year EPS by $0.28. The largest component was a $0.15 increase in vegetation management costs. This is due to a combination of higher wages and training mandated by the State’s new legislation SB 247 and an increase in the number of trims. We have discussed this in the past, but I want to pause here to summarize the methodology and impact of memo accounts. To begin, there are various expenses that qualify for tracking in…

Sue, please open the lines for questions. As a reminder, we request you to limit yourself to one question and one follow-up so everyone in line has the opportunity to ask questions.

[Operator Instructions] And that comes from Jonathan Arnold with Vertical Research Partners. You may go ahead.

Thank you for all the detail. Just one thing, I saw in the 10-Q I think that the wildfire - the WEMA memo accounts are up to something like just under $950 million. But could you just tie those to what you talked about in terms of the track to filing for - are those - is that a filing covering some of that number, or is that a separate piece? And then maybe an update on the WEMA proceeding itself.

Sure. So I think you're looking back in the notes where we show the regulatory accounts, the memo accounts, and the balancing accounts. From year-end to now that number has moved, I'll say, about $80 million. So we recorded about another $80 million in that account. So the increment that we recorded this year is actually in the next track that we will be filing with the Commission. So, if you recall, the costs incurred in 2020 are actually part of the track that gets filed in Q1 of 2021. So we'll continue to accumulate these costs. And that account that you were looking at, or in the notes, so it's line item that you're looking at, is not just the WEMA account. It's the alphabet soup of wildfire related memo accounts.

But the Track 2 filing you talked about encompasses some of that balance. Is that correct?

That's right. The Track 2 that we filed for is seeking recovery for about $500 million of revenue requirement, and we would expect to see that decision in the early part of next year.

I see. Okay.

The WEMA, which is primarily aimed at or associated with insurance costs, that proceeding is a little bit ahead of the Track 2 proceeding, and we are - the CDC is in the process of determining whether evidentiary hearings are required. And so, we will understand whether or not those are required and could potentially - those could take place in June and then a decision will be forthcoming following that. Right now, the parties have been asked to meet and confer to see if they actually need evidentiary hearing.

Okay. And then maybe just as my follow-up, what are the prospects to starting to work down some of these balances coming out in 2020, and then how has your view on that evolved since last quarter?

So I think the timing is reasonably the same, in terms of where we think the proceedings will play out. The one thing I'd say is there is always the issue of trying to get on - you get a decision and you have to get on a calendar 30 days later to get the proposed decision, then we have to roll it into rates. So there could be some variability as a result of that. But things are still a reasonably in the same place as they were last quarter.

The next question is from Steve Fleishman with Wolfe Research. You may go ahead.

So just - I wanted to just make a clarification. You did reaffirm your 2020 guidance, including your current view of the impact of COVID, and is that correct? And is your commentary related to all the moving pieces in the bridge, so to speak, more just about kind of dealing with just the exact way you get there, but do you think you'll be within this range? Is that right?

Yes, on a lot of moving pieces. But Maria?

I agree with Pedro. I think that we reaffirmed the range. I think there are a lot of moving pieces. And so we do want to build that bridge, because I think it - I'll tell you, I think if I try to keep - if we try to keep putting things in very, very precise buckets, it would convey level of precision that I think would question. So I think we're just trying to be straightforward with the guidance range, and that things are still moving, and we'll be able to provide maybe more specificity as we move on through the year obviously. But right now, that's where we are.

Got it. And just so I get it, because I think if you get into every detail of how California mechanisms work, it's probably - it's kind of getting too much into the trees and not the forest. So just - if I'm going back up to the forest, the overall view, despite the timing of when you record things and all the different components of this, is that you do have tracking mechanisms that recover a lot of the volatility of revenue and cost, such that a lot of the issue is just the timing intra-quarter, and the way you account for things. It's not the overall picture of the forest, there's a lot of these -most of these issues are recovered.

Yes, I think especially memo accounts definitely create that intra-quarter year-over-year kind of variability, just because of the way the mechanics work in methodology. But I completely agree that there is a lot of mechanisms in California, some of them 40 years old, at this point, that allow us to recover a variety of costs that are under recovery or under collections avail.

And let me just add one piece here, just maybe even - not even in the forest level, this might be up at the clouds level. But the reality is that when you think about all those moving pieces, if you bring it down to actual things that we're doing, there are so many decisions we've had to make and steps along the way in terms of how we are changing, how our workforce is working, what things we need to be providing our teleworking employees to do the work efficiently from home, our folks in the field, what things they need to be doing, different practices to be able to keep them safe out there, and help to our part to slow down the spread of COVID-19. And so, it's good we have all the tracking accounts. There will come a time, obviously, when we'll need to not only have the amounts track, but we'll need to demonstrate that those were prudent decisions that we made. That's why we have so much process around this in terms of the IND I described, and the crisis management council, and senior oversight over that myriad decisions. But the other piece around this is, we are having discussions informally with the CPUC, with the Governor's office, with others involved, because this is not just about how we're thinking about things, but it's about how the State overall is looking at managing through the crisis, through the pandemic, and then looking at the building blocks that will allow the State, the economy, and our company to go back to whatever the new normal is after this. And so, we're also trying to do what we're doing not in a vacuum, but consulting policymakers, consulting peer utilities in the State, outside the State. So I think that all helps bolster the case for - we're trying to do all this prudently, and it should ultimately have a good shot recovery.

The next question is from Michael Lapides with Goldman Sachs. You may go ahead.

One easy one, which is on the BURBA. How much lag is there? Meaning, how quickly does the BURBA true-up? So if demand is down, call it 10%, in a quarter or in two quarters, and for earnings purposes, there is no impact, but from a cash flow purpose, there is an impact, how does the mechanism work from a timing perspective?

Michael, it's Maria. So, BURBA gets put into rates at the beginning of every year. So it's an annual true-up.

Got it. So in other words, if you've got kind of a - I'll use the term lost revenue number, pick a number whatever it is, that lost revenue number gets put in the rates at the beginning of next year, along with any other rate adjustments?

That is how it's been working, yes.

It's been working that way for many, many, many years.

And it's an automatic process? Or do you have to actually file for the BURBA, go through a docket, get regulatory approval to get update?

BURBA works a little bit differently than ERA. You're thinking probably of our purchase power accounts, recovery accounts that they actually file, and go through, and kind of talk to people about, and then you had a decision, then we that into rates. With BURBA, what happens is it just really goes into rates automatically at the beginning of the year.

Got it. And then one rate base growth or CapEx question. On your CapEx slide, you've got a list of things that are not included in that. And I think the last one on the list was transmission infrastructure. Can you just remind us what you're referring to, or what that implies?

So, I think you're looking at something that says what the long-term growth drivers are, and one of them is transmission infrastructure. We do have - some of our FERC transmission projects are certainly in the rate base calculations that we've provided here, but I think this reference is to, in California, as we move to electrifying more of the economy, will more transmission be needed, when will that be needed, and it would be a growth opportunity as that plays out over time. The CISO has not yet put out their plans for the longer-term transmission to this point.

And just to piggyback on that remember, Michael, that the [indiscernible] ends of developing the overall plan, the user based on input - develop that based on input that they get from transmission owners and other market participants to be sent in and identify brand new projects in [indiscernible] call centers are open to competition, to the extent that they identify projects that are upgrades or extensions of existing projects, then the utility, as transmission owner, has a right of first refusal. And so, we don't know what their plan will be in the future for 2030, or 2045, or what have you. But I think it's probably reasonable to expect there might be some combination of projects that are extensions upgrades of existing lines that we would have - or SCE would have that right of first refusal on, and some other projects might renew completed projects.

The next question is from Julien Dumoulin-Smith with Bank of America. You may go ahead.

So I wanted to follow up on where Steve was a second ago here and just make sure we're crystal clear about this. Maria, when you're talking about missing the forest or the trees here, and the whole conversation, I mean ultimately, the variability is pretty strictly intra-quarter. And ultimately, when you think about this netting, this netting dynamic simply reduces the ultimate amount that you're seeking from the CPUC in this new COVID account, and to the extent to which that you're seeking some net number from them and you're not able to offset everything, that number is still going to be deferred, and that's not necessarily going to show up on your income statement as an expense. Can you tell me how you're going to account for it, just to make sure I'm not missing the conceptual point that you're raising of added volatility this year?

So, the variability obviously covers not just COVID things but you - probably earlier in my prepared remarks, I talked about just memo accounts, and how that's working around wildfire mitigation as well. So there is a little bit of activity going on in both of those areas. So there is some variability around more than just COVID. In the COVID space, correct, we are going to be tracking all of our costs, be looking at whether or not those are costs that were just amplifications of things that were already authorized in the GRC. And so, we would be first recording all in the GRC authorized amounts, and then only would be able to defer expenses. We also go through our standard process of probability of recovery, because that's part of our quarterly process as well. And then we also have to be tracking savings that relate to these categories in terms of things that are being driven by COVID-19 government directives. And I gave an example of travel. That's a really easy one right because frankly, none of us is traveling right now. So we'll have to go through that process, and I think it could create some variability across the year. And then I think we're also going to always be looking at some of those other categories as well. And we want to make sure that we manage across all of them. And that's why, while we're reaffirming the guidance range, we didn't want to provide that level of specificity with every piece part every component with what we know today.

Got it. And if I can follow up here, so obviously, there's a lot of earnings generations, but cash flow generations and working capital generations. I presume, given your commentary is unchanged with respect to equity cumulatively for the year, that the quantum of working capital involved with respect to decoupling, or with respect to COVID, or the litany of other accounts that you just alluded to, that fundamentally does not drive any changes in how you're thinking about balance sheet considerations, FFO metrics, et cetera, et cetera. And that's - even within that, doesn't necessarily change this notion of latitude on timing as well, I presume.

There's lot in there. So obviously, we're very focused on cash flows and customer payment behaviors, et cetera. We did put in an additional credit facility, but I mentioned earlier that was really focused on a certain sliver of our capital spending. So the AB 1054 capital spending, the amounts that will ultimately be securitized. So we put that into place so that would also free up our - I'll say normal course credit facilities. We have the $3 billion credit facility down at SCE, which would be the one that was aimed at customer payment issues, et cetera. But, yes, so we have been managing and putting into place various facilities that we think really help us manage the cash flow and liquidity impact. In terms of your question on the equity plan for the year, I think we announced that back in Q4. We still have the same plan. The term loan that we put in place at EIX obviously gives us flexibility around timing there. But we certainly are still have the same I'll say financing philosophy, which is to create opportunity to invest in SCE's growth opportunities, as well as to maintain investment grade ratings at both the FDE and the EIX. So we will be continuing with our plan. I think the rating agencies are very - I think find the California regulatory constructs around some of the issues we're facing with COVID-19 to be very helpful. But we're still going to be pursuing our financing plan.

Our next question is from Jeremy Tonet with JP Morgan. You may go ahead.

Just wanted to clarify here, when it comes to the earnings in not putting the bridge here that you've done in the past. Just want to clarify that not necessarily indicating the lower end of the range here, just that there is too much uncertainty right now for you to kind of provide this type of dynamic. Is that the right way to think about this?

I mean, and I think Maria captured well earlier, we're reaffirming the whole guidance range. We're not providing that bridge to a midpoint, and we're just pointing out that there are a lot of moving parts and pieces right now. But we've reaffirmed the range.

Got it. That's helpful there. And then just wanted to turn to equity funding real quick for a second. Just given really the unprecedented volatility we're seeing in the capital markets here, just wondering if in any way this has altered your strategy for raising equity, be it looking at blocks for ATM or timing of either. And also, given that a portion of 2019 equity was carried into 2020, would you consider doing equity further at this point if volatility in the marketplace continues?

So Jeremy I think kind of tying back to one of the earlier questions, the 2020 financing plan that we announced in Q4 is still our financing plan. What we've done to help in terms of flexibility is put the term loan in up at EIX, which, if you look at the quantum, is about the same. But our plan for 2020 continues to be our plan.

The next question is from Stephen Byrd with Morgan Stanley. You may go ahead.

I wanted to just touch first on the PSPS commentary, Pedro, that you gave. It sounds like there's been a lot of work that's been done, thinking about shut off approaches. Would you mind just talking a little bit more about how that might look different this year in terms of whether it be scope duration or just approach? Any further color around sort of how that might look this year compared to last year.

Sure. Yes, happy to do that. And so, like I said in the comments, there's been a lot of work going on really all through since last year. Just to remind you of last year's performance, I think it was generally similar to San Diego Gas & Electric, when you look at the percent of customers who were out throughout that. I'd call it 2% or so of the population was impacted at some point or other. And that I think was the product for a lot of years of investment in areas like sectionalizing our distribution circuits on average in high fire risk area. We can subdivide our circuit into four. So there's a high fire risk portion of that circuit, but there's three portions that are non-high fire risk. You can take one part, and not the three parts, and that limits scope. So that was one major item. And then, the other major item last year was the fact that we - particularly comparing to our colleagues at PG&E, what they have been working towards is now, we have the ability to be energized based on actual conditions, as opposed to a 48-hour ahead forecast. So, those two were really helpful last year. You look forward, what happened since last year? I thought it's good to anchor you in the starting point. We've been working on further refining. Let me start with the forecasting piece. There's been a lot of work that's been done to further refine our modeling capabilities, make them more granular tighter, tighter grid, if you will, that should allow us to have a higher fidelity in a mapping and modeling forecasting capability that should, we believe, allow us to just be a bit more targeted around it. Another advancement since last year I…

That's extremely helpful. And just one separate question on your EV infrastructure program. Would you mind just providing a high-level update on the status of that program in terms of implementation, key milestones from here, just kind of thinking about the pace of that rollout as you try to meet the increased EV penetration in the state? How do we generally stand on the pace of that program?

Sure. So remember - I'll summarize this as key large programs. One is the heavy - sort medium and heavy duty charge ready transport program, for which we already have full CPUC approval and the $340 million range or so and that's a multi-year program. And then the second large program is our Charge Ready program. There, we've had approval for- we had a pilot that had been approved to the tune around $22 million or so. We had an extension of that. Basically gave us about the same amount to continue in pilot mode or a bridge mode, while the CPUC considers our larger application for what would be around a $750 million program all ended in capital and O&M but $550 million of that I think is capital. And so that application is sitting at the CPUC. I believe they have extended the deadline for considering it until June 30 of this year. When the extended that six months ago or four months ago when the six-month extension they - I think it's Commissioner [Virchow] who is the lead Commissioner on this docket and he said he expected that will be a PD out early in the year. I don't think we've seen a PD out yet but certainly, understandably, there's a lot going on with the COVID impacts, et cetera, but we have not heard anything different from the June 30 deadline that they've talked so we look forward to hopefully getting that approved in that timeframe. In the meantime, we made a lot of progress in terms of both deployments on the Charge Ready transport and the passenger vehicle Charge Ready. I will tell you through this COVID period some of that work has slowed down just because it requires working in close proximity. Probably it's less essential than say, working on a pole to keep the lights on, and customers and sales may not be ready on the customer premise to have somebody come in and work on the installation stuff. So, there has been some slowdown in that and that's one of the pieces we're looking at. How does that ramp back up as we follow the lead of the governor and the state and re-opening up the economy. But I think that there's a long-term need for that. That continues unabated and in fact, some of the early discussions of the Governor's Task Force has been all about how - again as I think I mentioned, this is not just about the near-term reopening but how do you bolster the economy for the long term and clean energy and electrification are viewed as a big part of that long-term plan for the state.

Thank you. And that was the last question. I will now turn the call back to Mr. Sam Ramraj.

Thank you, Sue. And thanks everyone for joining us today. Please call us if you have any follow-up questions. This concludes the conference call. You may now disconnect.