8-K: Sempra Announces Solid First-Quarter 2025 Results, Updates Full-Year EPS Guidance

Sempra reported a strong first quarter in 2025, driven by focus on financial performance and strategic initiatives, and updated its full-year EPS guidance.

Summary

• Sempra reported first-quarter 2025 GAAP earnings of $906 million, or $1.39 per diluted share, compared to $801 million, or $1.26 per diluted share, in the first quarter of 2024.
• Adjusted first-quarter 2025 earnings were $942 million, or $1.44 per diluted share, compared to $854 million, or $1.34 per diluted share, in 2024.
• Oncor is executing a $36.1 billion five-year capital plan.
• Oncor had approximately 1,100 active transmission point of interconnection requests in queue, a 35% increase compared to the end of first-quarter 2024.
• ERCOT updated its estimated cost for the Permian Basin Reliability Plan (PBRP) to approximately $15 billion.
• ERCOT estimated that the cost of either plan to serve the load projection of 150 gigawatts by 2030 would be approximately $20 billion.
• Sempra California is focused on connecting people to safe, reliable and cleaner energy, serving roughly 25 million consumers.
• SDGE and SoCalGas filed applications to update their respective costs of capital with the CPUC for the period of 2026 to 2028.
• Sempra Infrastructure is advancing five significant construction projects, including LNG projects in the U.S. Gulf coast and northern Mexico.
• Energa Costa Azul LNG Phase 1 continues to target start-up of commercial operations in spring of 2026, and construction at Port Arthur LNG Phase 1 remains on time and on budget.
• Sempra is updating its full-year 2025 GAAP EPS guidance range to $4.25 $4.65 and affirming its full-year 2025 adjusted EPS guidance range of $4.30 to $4.70.
• The company is also affirming its full-year 2026 EPS guidance range of $4.80 to $5.30 and has guided to the high-end or above its projected long-term EPS compound annual growth rate of 7% to 9% for 2025 through 2029.
• Sempra Infrastructure is targeting the sales of Ecogas Mxico, S. de R.L. de C.V., and a minority stake in Sempra Infrastructure Partners (SI Partners).

Sentiment

Score: 8

Explanation: The document presents a positive outlook with increased earnings, strategic growth initiatives, and reaffirmed guidance. The planned asset sales are expected to be accretive, further boosting investor confidence.

Positives

• Sempra reported increased GAAP and adjusted earnings for the first quarter of 2025 compared to 2024.
• Oncor is progressing with its significant capital plan and experiencing growth in interconnection requests.
• Sempra California is advancing strategic programs to modernize energy networks.
• Sempra Infrastructure is making progress on key construction projects.
• The company has reaffirmed its full-year 2025 and 2026 EPS guidance and long-term growth targets.
• The planned sales of Ecogas Mxico and a minority stake in Sempra Infrastructure Partners are expected to be accretive to earnings and enhance credit.

Negatives

• The report mentions potential impacts from foreign currency and inflation on monetary positions in Mexico.
• The report mentions net unrealized losses on commodity derivatives and interest rate swaps related to the Port Arthur LNG Phase 1 project.

Risks

• California wildfires and potential liabilities remain a risk.
• Regulatory decisions and actions by various bodies could impact the company's operations and financial performance.
• The success of business development efforts and construction projects is subject to various risks, including regulatory approvals and third-party performance.
• Changes in trade and foreign policy, as well as laws and regulations, could affect the company's business.
• Cybersecurity threats pose a risk to the company's systems and infrastructure.
• Volatility in inflation, interest rates, and commodity prices could impact affordability for customers and the company's ability to pass through costs.
• Climate policies and regulations could lead to stranded assets and uncertainty related to emerging technologies.
• Weather events, natural disasters, and other disruptions could impact operations and subject the company to liabilities.
• Oncor's ability to pay dividends could be affected by regulatory and governance requirements.
• The sales transactions are subject to reaching agreement on acceptable pricing and other terms, securing required regulatory and other approvals, finalizing definitive contracts, and other factors and considerations.

Future Outlook

Sempra is focused on delivering safer and more reliable energy, advancing strategic programs, and progressing with key construction projects. The company expects to complete the sales transactions of Ecogas Mxico and a minority stake in Sempra Infrastructure Partners over the next 12-18 months, which are expected to be accretive to earnings and enhance credit. Sempra has guided to the high-end or above its projected long-term EPS compound annual growth rate of 7% to 9% for 2025 through 2029.

Management Comments

• We are pleased to report a solid quarter for Sempra, which is the direct result of continued focus on delivering strong financial performance while making steady progress on our strategic initiatives, said Jeffrey W. Martin, chairman and CEO of Sempra.
• We remain committed to our disciplined growth strategy, which centers on delivering safer and more reliable energy to the nearly 40 million consumers we serve, said Jeffrey W. Martin, chairman and CEO of Sempra.
• These value creation initiatives aim to increase long-term value for shareholders, employees, customers and other stakeholders, said Martin.
• In the first quarter, we made steady progress against our plan of execution, said Martin.
• As we extend this work across 2025, we expect to advance the companys ability to deliver improved earnings growth and drive enhanced benefits for consumers and communities across our service territories, said Martin.

Industry Context

Sempra's focus on LNG projects aligns with the strong global demand for cleaner and more secure energy. The growth in electricity demand in Texas, as highlighted by ERCOT's new winter peak demand, underscores the importance of Oncor's infrastructure investments. The CPUC's approval of RNG procurement contracts reflects California's commitment to methane emissions reduction goals.

Comparison to Industry Standards

• Sempra's growth strategy mirrors that of NextEra Energy, Inc. (NEE), which also focuses on regulated utilities and renewable energy projects.
• The $36.1 billion five-year capital plan of Oncor is comparable to the infrastructure investments being made by companies like American Electric Power (AEP) to modernize their grids.
• Sempra's LNG projects are in line with the global trend of increasing LNG exports, similar to projects undertaken by Cheniere Energy, Inc. (LNG).
• The company's focus on renewable energy and emissions reduction aligns with the sustainability goals of companies like Xcel Energy Inc. (XEL).

Stakeholder Impact

• Shareholders will benefit from increased earnings and potential value creation initiatives.
• Customers will benefit from safer, more reliable, and cleaner energy.
• Employees will benefit from the company's focus on safety and operational excellence.
• Communities will benefit from the company's investments in infrastructure and sustainable business practices.

Next Steps

• Oncor continues to prepare for a comprehensive base rate proceeding utilizing a test year of calendar year 2024, with filing currently targeted for the second quarter of 2025.
• A final decision from the CPUC is expected by the end of the year regarding SDGE and SoCalGas' applications to update their respective costs of capital with the CPUC for the period of 2026 to 2028.
• More details on the progress of the sales of Ecogas Mxico and a minority stake in Sempra Infrastructure Partners will be shared in the second quarter earnings call.
• The sales transactions are expected to be completed over the next 12-18 months.

Key Dates

Keywords

Sempra, Earnings, Oncor, Infrastructure, LNG, California, Utilities, Financial Results