SRE
Sempra
NYSE
8-K: Sempra Announces 2024 Results, Raises Capital Plan to $56 Billion, and Updates EPS Guidance
Sentiment:
Earnings Release
25 February 2025 10:54 AM
Sempra reports its 2024 financial results, highlighted by a raised five-year capital plan to $56 billion and adjusted EPS guidance for 2025 and 2026.
Worse than expected
Full-year 2024 GAAP earnings decreased compared to 2023.
The revision of the full-year 2025 EPS guidance range to $4.30 to $4.70 may be viewed negatively.
Summary
- Sempra reported full-year 2024 GAAP earnings of $2.82 billion, or $4.42 per diluted share, compared to $3.03 billion, or $4.79 per diluted share, in 2023.
- Adjusted full-year 2024 earnings were $2.97 billion, or $4.65 per diluted share, compared to $2.92 billion, or $4.61 per diluted share in 2023.
- The company announced a record five-year capital plan of $56 billion, with over half earmarked for Texas.
- Sempra is targeting a final investment decision (FID) for Port Arthur LNG Phase 2 in 2025.
- 2025 EPS guidance is adjusted to $4.30 to $4.70, and 2026 EPS guidance is issued at $4.80 to $5.30.
- The long-term EPS growth rate is increased to 7% to 9%.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly positive. While GAAP earnings decreased, the increased capital plan and long-term growth outlook provide a positive outlook. The revised 2025 EPS guidance is a concern, but the 2026 guidance and growth rate target offer reassurance.
Positives
- The company's record five-year capital plan of $56 billion indicates strong investment in future growth.
- The increase in Oncor's capital plan by 50% demonstrates significant growth in the Texas energy market.
- The CPUC's decision on Sempra California's general rate cases improves investment visibility through 2027.
- Sempra Infrastructure's progress on LNG projects and strong commercial interest in Port Arthur LNG Phase 2 are positive indicators.
- The increase in the company's common stock dividend to $2.58 per share on an annualized basis is favorable for shareholders.
Negatives
- Full-year 2024 GAAP earnings decreased compared to 2023.
- The revision of the full-year 2025 EPS guidance range to $4.30 to $4.70 may be viewed negatively.
Risks
- The success of business development efforts, construction projects, acquisitions, divestitures, and other significant transactions, including risks related to being able to make a final investment decision, completing construction projects or other transactions on schedule and budget, realizing anticipated benefits from any of these efforts if completed, obtaining third-party consents and approvals and third parties honoring their contracts and commitments.
- Changes to our capital expenditure plans and their potential impact on rate base or other growth.
- Litigation, arbitration, property disputes and other proceedings, and changes (i) to laws and regulations, including those related to tax and the energy industry in Mexico, (ii) due to the results of elections, and (iii) in trade and other foreign policy, including the imposition of tariffs by the U.S. and foreign countries.
- Cybersecurity threats, including by state and state-sponsored actors, of ransomware or other attacks on our systems or the systems of third parties with which we conduct business, including the energy grid or other energy infrastructure.
- The availability, uses, sufficiency, and cost of capital resources and our ability to borrow money or otherwise raise capital on favorable terms and meet our obligations, which can be affected by, among other things, (i) actions by credit rating agencies to downgrade our credit ratings or place those ratings on negative outlook, (ii) instability in the capital markets, and (iii) fluctuating interest rates and inflation.
- The impact on affordability of San Diego Gas & Electric Company's (SDG&E) and Southern California Gas Company's (SoCalGas) customer rates and their cost of capital and on SDG&E's, SoCalGas and Sempra Infrastructure's ability to pass through higher costs to customers due to (i) volatility in inflation, interest rates and commodity prices, (ii) with respect to SDG&E's and SoCalGas' businesses, the cost of meeting the demand for lower carbon and reliable energy in California, and (iii) with respect to Sempra Infrastructure's business, volatility in foreign currency exchange rates.
- The impact of climate policies, laws, rules, regulations, trends and required disclosures, including actions to reduce or eliminate reliance on natural gas, increased uncertainty in the political or regulatory environment for California natural gas distribution companies, the risk of nonrecovery for stranded assets, and uncertainty related to emerging technologies.
- Weather, natural disasters, pandemics, accidents, equipment failures, explosions, terrorism, information system outages or other events, such as work stoppages, that disrupt our operations, damage our facilities or systems, cause the release of harmful materials or fires or subject us to liability for damages, fines and penalties, some of which may not be recoverable through regulatory mechanisms or insurance or may impact our ability to obtain satisfactory levels of affordable insurance.
- The availability of electric power, natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid or pipeline and storage systems or limitations on the injection and withdrawal of natural gas from storage facilities.
- Oncor Electric Delivery Company LLC's (Oncor) ability to reduce or eliminate its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor's independent directors or a minority member director; and other uncertainties, some of which are difficult to predict and beyond our control.
Future Outlook
Sempra anticipates a decisive decade of growth, supported by a record five-year capital plan and an increased long-term EPS growth rate. The company is targeting a final investment decision for Port Arthur LNG Phase 2 in 2025 and expects significant opportunities to deploy incremental capital through the end of the decade and beyond.
Management Comments
- With the reset of our guidance in 2025, we are setting a new foundation for a decisive decade of growth, said Jeffrey W. Martin, chairman and CEO of Sempra.
- We are also announcing a record five-year capital plan of $56 billion and raising the company's long-term EPS growth rate to 7%-9%, said Jeffrey W. Martin, chairman and CEO of Sempra.
- Our team is excited about our new five-year capital plan, which is designed to help meet the energy needs of customers today and tomorrow, while significantly expanding our projected utility rate base by roughly 10% annually, said Karen Sedgwick, executive vice president and chief financial officer of Sempra.
- When considering the long-term trends in Sempra's core markets, we are confident there will be significant opportunities to deploy incremental capital through the end of the decade and beyond, said Karen Sedgwick, executive vice president and chief financial officer of Sempra.
Industry Context
Sempra's focus on expanding its energy grid in Texas aligns with the state's rapid growth and increasing energy demand. The company's investments in LNG infrastructure reflect the growing global demand for cleaner and more secure energy sources. The emphasis on wildfire and climate resilience in California addresses the increasing risks associated with climate change in the region.
Comparison to Industry Standards
- Sempra's capital expenditure plan of $56 billion is significant compared to other major utility companies like NextEra Energy and Duke Energy, reflecting its commitment to growth and infrastructure development.
- The targeted EPS growth rate of 7% to 9% is competitive within the utility sector, which typically sees more moderate growth rates.
- Sempra's focus on LNG projects positions it well to capitalize on the increasing global demand, similar to companies like Cheniere Energy and Tellurian.
- The company's investments in renewable energy and grid modernization align with industry trends towards cleaner energy and improved grid reliability, comparable to initiatives by companies like Iberdrola and Enel.
Stakeholder Impact
- Shareholders will benefit from the increased dividend and potential for long-term growth.
- Customers in Texas and California can expect improved energy infrastructure and reliability.
- Employees may see increased opportunities due to the company's expansion plans.
Next Steps
- Sempra Infrastructure continues to hold substantial, active discussions with world-class companies for participation in the Phase 2 project.
- The company is targeting a final investment decision in 2025, pending the execution of definitive commercial agreements, obtaining permits and securing financing, among other factors.
- Oncor is contemplating filing a comprehensive base rate review later this year.
Key Dates
- 2017: Implementation of the Tax Cuts and Jobs Act (TCJA)
- June 1, 2019: Effective date of Electric Transmission Owner Formula Rate (TO5) adder refund provision
- March 20, 2025: Record date for common stock dividend
- April 1, 2025: Record date for preferred stock dividend
- April 15, 2025: Payment date for common and preferred stock dividends
- Feb. 25, 2025: Date of report and press release announcing financial results
Keywords
SRE
Sempra
NYSE
Sector: Utilities
Filings with Classifications
Better than expected
23 June 2025 6:56 AM
Regulatory Update
- The new Unified Tracker Mechanism (UTM) is expected to improve Oncor's earnings, cash flows, and credit metrics.
- The UTM is projected to improve Oncor's earned annual returns on equity by approximately 50 to 100 basis points.
- The mechanism allows for more timely recovery of capital investments, reducing regulatory lag compared to previous methods.
Capital raise
13 May 2025 4:20 PM
Debt Offering Announcement
- Southern California Gas Company is raising $1.1 billion through the issuance of first mortgage bonds.
- The funds are intended for general corporate purposes.
Capital raise
8 May 2025 8:07 PM
Quarterly Report
- Sempra established an ATM program providing for the offer and sale of shares of Sempra common stock having an aggregate gross sales price of up to $3.0 billion.
- Sempra entered into forward sale agreements under the ATM program with Bank of America, N.A. and Wells Fargo Bank, N.A.
Better than expected
8 May 2025 8:07 PM
Quarterly Report
- Sempra's Q1 2025 earnings attributable to common shares increased to $906 million, or $1.39 per share, compared to $801 million, or $1.27 per share, in the prior year.
Better than expected
8 May 2025 10:53 AM
Earnings Release
- Sempra's first-quarter 2025 GAAP earnings increased to $906 million ($1.39 per diluted share) from $801 million ($1.26 per diluted share) in the first quarter of 2024.
- Adjusted first-quarter 2025 earnings rose to $942 million ($1.44 per diluted share) from $854 million ($1.34 per diluted share) in 2024.
Better than expected
28 March 2025 4:14 PM
Proxy Statement
- Sempra's three-year total shareholder return far outpaced the return of the S&P 500 Utilities Index and more than tripled the returns of the S&P 500 and S&P 500 Utilities Indices since the beginning of this century (from December 31, 1999 through December 31, 2024).
Capital raise
25 March 2025 4:17 PM
Debt Offering
- San Diego Gas & Electric Company is raising $850 million through the issuance of 5.400% First Mortgage Bonds, Series CCCC, due 2035.
- The net proceeds are estimated to be approximately $842.1 million after deducting the underwriting discount but before deducting the Companys estimated offering expenses.
Worse than expected
25 February 2025 4:57 PM
Annual Report
- Earnings attributable to common shares decreased from $3.030 billion in 2023 to $2.817 billion in 2024.
- Total revenue decreased from $16.720 billion in 2023 to $13.185 billion in 2024.
Delay expected
25 February 2025 4:57 PM
Annual Report
- The ECA LNG Phase 1 project is expected to commence commercial operations in the spring of 2026, which is later than previously anticipated.
- The first and second trains of the PA LNG Phase 1 project are expected to commence commercial operations in 2027 and 2028, respectively, which is later than previously anticipated.
Capital raise
25 February 2025 4:57 PM
Annual Report
- Sempra established an ATM program providing for the offer and sale of shares of Sempra common stock having an aggregate gross sales price of up to $3.0 billion.
- Sempra entered into a forward sale agreement under the ATM program for the sale of 2,909,274 shares of Sempra common stock.
Worse than expected
25 February 2025 10:54 AM
Earnings Release
- Full-year 2024 GAAP earnings decreased compared to 2023.
- The revision of the full-year 2025 EPS guidance range to $4.30 to $4.70 may be viewed negatively.
Capital raise
21 November 2024 4:05 PM
Debt Offering
- Sempra closed a public offering of $400 million of 6.625% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055 and $600 million of 6.550% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055.
- The total proceeds to Sempra from the sale of the notes were approximately $990 million, after deducting underwriting discounts but before deducting offering expenses estimated at $1.7 million.
Capital raise
6 November 2024 3:40 PM
Quarterly Report
- Sempra established an ATM program to offer and sell shares of common stock with an aggregate gross sales price of up to $3.0 billion.
- The company intends to use the net proceeds for working capital and other general corporate purposes, including to partly finance anticipated increases to its long-term capital plan and to repay outstanding commercial paper and potentially other indebtedness.
Worse than expected
6 November 2024 3:40 PM
Quarterly Report
- Sempra's third quarter earnings were worse than the same period last year due to lower revenues and higher interest expenses.
- Sempra California's earnings were worse than the same period last year due to lower income tax benefits and higher net interest expenses.
- Sempra Texas Utilities' earnings were worse than the same period last year due to lower equity earnings from Oncor Holdings.
Worse than expected
6 November 2024 10:50 AM
Quarterly Report
- Third-quarter 2024 GAAP and adjusted earnings were lower compared to the same period in 2023.
- The company has lowered its full-year 2024 GAAP EPS guidance range.
Capital raise
6 November 2024 10:50 AM
Quarterly Report
- The company has put in place a $3 billion at-the-market (ATM) equity offering program to support general corporate purposes including its future financing needs.
Capital raise
9 September 2024 4:02 PM
Debt Offering Announcement
- Sempra has raised $1.25 billion through the issuance of junior subordinated notes.
- The net proceeds to the company are approximately $1.238 billion after deducting underwriting discounts.
Capital raise
9 August 2024 4:45 PM
Debt Issuance Announcement
- Southern California Gas Company is raising $600 million through the issuance of First Mortgage Bonds.
- The net proceeds are estimated to be approximately $593.2 million after deducting the underwriting discount.
Worse than expected
6 August 2024 3:48 PM
Quarterly Report
- Sempra's year-to-date earnings were worse than the same period last year, primarily due to lower income tax benefits and unrealized losses on commodity derivatives.
Capital raise
6 August 2024 3:48 PM
Quarterly Report
- Sempra completed an offering of 19,242,010 shares of its common stock in November 2023.
- Sempra has forward sale agreements for 17,142,858 shares of its common stock, which may be settled no later than December 31, 2024.
Worse than expected
6 August 2024 10:54 AM
Quarterly Report
- Sempra's adjusted earnings for the second quarter of 2024 were lower than the same period in 2023.
- Sempra's adjusted earnings for the first six months of 2024 were also lower than the same period in 2023.
Delay expected
6 August 2024 10:54 AM
Quarterly Report
- The Energa Costa Azul LNG Phase 1 project has experienced labor and productivity challenges, which has delayed the expected mechanical completion and first LNG to 2025, with commercial operations targeted for spring 2026.
Capital raise
31 May 2024 4:02 PM
Debt Offering Announcement
- Sempra raised $500 million through the issuance of junior subordinated notes.
- The proceeds will be used for general corporate purposes.
Worse than expected
7 May 2024 4:29 PM
Quarterly Report
- Sempra's earnings were worse than expected due to lower natural gas prices and unrealized losses on commodity derivatives.
- Sempra California's earnings were worse than expected due to lower CPUC base operating margin and higher interest expenses.
- Sempra Infrastructure's earnings were worse than expected due to unrealized losses on commodity derivatives and lower transportation revenues.
Capital raise
7 May 2024 4:29 PM
Quarterly Report
- Sempra completed an offering of 17,142,858 shares of common stock in November 2023.
- The company expects to settle forward sale agreements related to the offering by December 31, 2024, which may result in additional cash proceeds.
- Sempra may elect cash settlement or net share settlement for all or a portion of its obligations under the forward sale agreements.
Worse than expected
7 May 2024 11:02 AM
Quarterly Report
- Sempra's GAAP earnings decreased from $969 million in Q1 2023 to $801 million in Q1 2024.
- Adjusted earnings also decreased from $922 million in Q1 2023 to $854 million in Q1 2024.
Better than expected
17 April 2024 4:18 PM
Proxy Statement Supplement
- Sempra achieved record revenue of $16.7B in 2023.
- GAAP EPS has grown at a 22.9% CAGR and adjusted EPS has grown at a 10.3% CAGR from 2018-2023.
- Sempra increased its five-year capital plan by 20% to $48 billion.
Better than expected
25 March 2024 8:01 AM
Proxy Statement
- Sempra's business strategy helped the company deliver a series of record financial results in 2023.
- The company's total shareholder return has outpaced the return of the S&P 500 Utilities Index during the past one, three and five years.
- Sempra California reduced methane emissions by approximately 70% from 2015 levels through 2022.
- 2023 annual bonuses were achieved at 176% of target based on performance on ABP Earnings, Safety Measures, and Sustainability Measures.
- The overall payout for the 2021-2023 LTIP awards based on relative TSR and EPS growth was 163% of target.
Capital raise
19 March 2024 4:21 PM
Debt Issuance Announcement
- San Diego Gas & Electric is raising $600 million through the issuance of first mortgage bonds.
- The net proceeds are estimated to be approximately $588.7 million after deducting the underwriting discount but before deducting the company's estimated offering expenses.
Capital raise
18 March 2024 4:40 PM
Debt Issuance Announcement
- Southern California Gas Company raised $500 million through the issuance of First Mortgage Bonds.
- The proceeds will be used for general corporate purposes.
Capital raise
14 March 2024 4:01 PM
Debt Offering Announcement
- Sempra has raised $600 million through the issuance of 6.875% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2054.
- The net proceeds to the company were approximately $594 million after deducting underwriting discounts but before other expenses.
Capital raise
13 March 2024 4:08 PM
Debt Offering Announcement
- Southern California Gas Company is raising $500 million through the issuance of First Mortgage Bonds.
- The net proceeds are estimated to be approximately $492.4 million after deducting underwriting discounts.
Better than expected
27 February 2024 10:55 AM
Annual Results
- Sempra's full-year 2023 GAAP earnings of $3.03 billion were significantly better than the $2.09 billion reported in 2022.
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