8-K: Sempra Announces Second Quarter 2024 Earnings, Oncor Reaches Settlement on System Resiliency Plan

Sempra reported second-quarter 2024 GAAP earnings of $713 million, or $1.12 per diluted share, and announced a settlement in principle for Oncor's System Resiliency Plan.

Summary

• Sempra's second-quarter 2024 GAAP earnings were $713 million, or $1.12 per diluted share, compared to $603 million, or $0.95 per diluted share, in the second quarter of 2023.
• Adjusted earnings for the second quarter of 2024 were $567 million, or $0.89 per diluted share, compared to $594 million, or $0.94 per diluted share, in the same period last year.
• For the first six months of 2024, Sempra's GAAP earnings were $1.514 billion, or $2.38 per diluted share, compared to $1.572 billion, or $2.49 per diluted share, in the first half of 2023.
• Adjusted earnings for the first six months of 2024 were $1.421 billion, or $2.24 per diluted share, compared to $1.516 billion, or $2.40 per diluted share, in the first half of 2023.
• Oncor reached a settlement in principle for its System Resiliency Plan, which involves approximately $3 billion in potential capital investments over three years.
• Sempra is updating its full-year 2024 GAAP EPS guidance range to $4.74 to $5.04, while affirming its full-year 2024 adjusted EPS guidance range of $4.60 to $4.90 and its full-year 2025 EPS guidance range of $4.90 to $5.25.
• The company is also affirming its projected long-term EPS growth rate of approximately 6% to 8%.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to increased GAAP earnings and reaffirmed guidance, but tempered by lower adjusted earnings and delays in the Energa Costa Azul LNG project.

Positives

• Sempra's GAAP earnings for the second quarter of 2024 showed a significant increase compared to the same period in 2023.
• Oncor's settlement in principle for the System Resiliency Plan is a positive step for future infrastructure development.
• Sempra is reaffirming its adjusted EPS guidance for 2024 and 2025, indicating confidence in its financial outlook.
• The company's long-term EPS growth rate projection remains strong at approximately 6% to 8%.
• The completion of the Wildfire and Climate Resilience Center by San Diego Gas & Electric Co. is a positive development for climate adaptation and resiliency.
• The progress on Port Arthur LNG Phase 2, including the agreement with Aramco, demonstrates strong interest in Sempra's LNG projects.
• Oncor's increased number of interconnection requests indicates growing demand for new infrastructure in its service territory.

Negatives

• Sempra's adjusted earnings for the second quarter of 2024 decreased compared to the same period in 2023.
• Construction at Energa Costa Azul LNG Phase 1 has experienced labor and productivity challenges.
• Sempra's GAAP earnings for the first six months of 2024 were slightly lower than the same period in 2023.
• Adjusted earnings for the first six months of 2024 were also lower than the same period in 2023.

Risks

• The final decision on Sempra California's rate requests is pending and could impact future revenue.
• The implementation of Oncor's System Resiliency Plan is subject to documentation and approval by the Public Utility Commission of Texas.
• The Energa Costa Azul LNG Phase 1 project is facing labor and productivity challenges, which could delay completion.
• Sempra's financial results are subject to various risks, including regulatory decisions, macroeconomic trends, and cybersecurity threats.
• The company's performance is also subject to the impact of climate policies and natural disasters.

Future Outlook

Sempra is updating its full-year 2024 GAAP EPS guidance range to $4.74 to $5.04, while affirming its full-year 2024 adjusted EPS guidance range of $4.60 to $4.90 and its full-year 2025 EPS guidance range of $4.90 to $5.25. The company is also affirming its projected long-term EPS growth rate of approximately 6% to 8%.

Management Comments

• At Sempra, we are pleased with the strength of our financial performance through the first half of the year, said Jeffrey W. Martin, chairman and CEO of Sempra.
• Our company is well-positioned for continued growth across each of our business platforms, which are benefitting from ongoing electrification, economic development, and demand for safe, reliable and cleaner energy.

Industry Context

This announcement reflects the ongoing trends in the energy sector, including the increasing demand for cleaner energy, the expansion of renewable energy infrastructure, and the growing importance of grid resilience. The settlement of Oncor's System Resiliency Plan aligns with the industry's focus on upgrading and modernizing energy infrastructure. The progress in LNG projects also highlights the global demand for secure energy sources.

Comparison to Industry Standards

• Sempra's performance is being compared to other large utility and energy infrastructure companies such as NextEra Energy, Duke Energy, and Southern Company.
• The company's adjusted EPS of $0.89 for the second quarter is being benchmarked against the average EPS of its peers in the utility sector.
• The capital expenditure of $4.217 billion for the first six months of 2024 is being compared to the capital spending of other companies in the energy infrastructure space.
• The progress of Sempra's LNG projects, particularly Port Arthur LNG, is being compared to similar projects by companies like Cheniere Energy and Tellurian.
• The 6-8% long-term EPS growth rate is being assessed against the growth projections of other major utility and energy companies.

Stakeholder Impact

• Shareholders will be impacted by the updated earnings guidance and the progress of key projects.
• Employees will be affected by the ongoing operations and development activities.
• Customers will benefit from the expansion and modernization of energy networks.
• Suppliers will be involved in the various construction and development projects.
• Creditors will be interested in the company's financial performance and debt management.

Next Steps

• Sempra will continue to work on the implementation of Oncor's System Resiliency Plan.
• The company will await the final decision on Sempra California's rate requests.
• Sempra will focus on completing the construction of Energa Costa Azul LNG Phase 1.
• The company will continue to develop the Port Arthur LNG Phase 2 project.
• Sempra will broadcast a live discussion of its earnings results over the internet.

Key Dates

Keywords

Sempra, Earnings, Oncor, System Resiliency Plan, LNG, Port Arthur LNG, Energa Costa Azul, California Utilities, Adjusted EPS, GAAP Earnings, Infrastructure, Renewable Energy