SCE Trust II TR PFD SECS 5.1%

What they do

SCE is a regulated electric utility that delivers electricity to customers across Southern, Central and Coastal California. It is a wholly-owned subsidiary of Edison International (NYSE: EIX), which files consolidated reports combining SCE and the parent. SCE also acts as servicer for SCE Recovery Funding LLC, a wholly-owned securitization subsidiary that has issued recovery bonds under indentures with The Bank of New York Mellon Trust Company, N.A. Principal offices are at 2244 Walnut Grove Avenue, Rosemead, California.

Revenue drivers

• Regulated electric utility operations — SCE earns revenue from delivering electricity to 15 million people in its California service territory, with results driven primarily by California Public Utilities Commission rate decisions; the second-quarter 2026 year-over-year EPS increase was attributed to adoption of the 2025 GRC final decision in the third quarter of 2025.
• SCE Recovery Funding LLC securitization — SCE is depositor and sponsor of this wholly-owned issuing entity, which issued recovery bonds under indentures dated February 24, 2021, February 15, 2022, and April 27, 2023; SCE serves as Servicer.
• Edison International parent and other — Segment-level core loss per share decreased year over year in the second quarter of 2026, primarily due to lower preferred stock dividends, partially offset by higher interest expense.

Recent performance

Edison International reported second-quarter 2026 net income of $534 million, or $1.39 per share, versus $343 million, or $0.89 per share, in the second quarter of 2025. Core earnings were $592 million, or $1.54 per share, compared with $374 million, or $0.97 per share, a year earlier. SCE's second-quarter 2026 core EPS increased year over year, primarily due to adoption of the 2025 GRC final decision in the third quarter of 2025. Second-quarter revenue was $4.36 billion at June 30, 2026 versus $4.54 billion at June 30, 2025. Non-core items of ($77) million, or ($0.20) per share, were recorded for the six months ended June 30, 2026.

Strategy

Management says SCE is making its wildfire mitigation approach increasingly location-specific, consequence-informed and adaptive, using better data, advanced wildfire modeling and climate-informed analysis to direct mitigation to areas of greatest safety benefit while focusing on affordability. The company also cited continued progress on the Wildfire Recovery Compensation Program. Edison International reaffirmed 2026 core EPS guidance of $5.90-$6.20. Management expressed continued confidence in delivering 5-7% core EPS growth from 2025-2030.

Risks

• Wildfire exposure — SCE operates in a wildfire-prone California service territory and management highlighted wildfire mitigation and progress on the Wildfire Recovery Compensation Program as ongoing priorities.
• Interest expense and capital structure — Edison International parent and other core loss per share decreased year over year primarily due to lower preferred stock dividends, partially offset by higher interest expense, and SCE carried $37.09 billion of long-term debt at June 30, 2026.
• Regulatory dependence — SCE's results depend on California Public Utilities Commission decisions; the second-quarter 2026 core EPS increase was primarily due to adoption of the 2025 GRC final decision in the third quarter of 2025.
• Thin equity relative to assets — At June 30, 2026, SCE reported total assets of $96.17 billion, total liabilities of $77.08 billion, and shareholder equity of $17.53 billion, with cash and equivalents of only $242.0 million.

Outlook

Edison International reaffirmed 2026 core EPS guidance of $5.90-$6.20 and basic EPS guidance of $5.70-$6.00, incorporating non-core items only through June 30, 2026. Management stated continued confidence in delivering 5-7% core EPS growth from 2025-2030. The company described a strong first half of 2026 as reinforcing confidence in the full-year outlook.