SRE
Sempra
NYSE
8-K: Sempra Reports Mixed First Quarter Results Amidst Infrastructure Investments and Regulatory Developments
Sentiment:
Quarterly Report
7 May 2024 11:02 AM
Sempra's first-quarter 2024 earnings decreased compared to the same period last year, while the company progresses with significant infrastructure projects and navigates regulatory changes.
Worse than expected
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.
Summary
- Sempra reported a GAAP earnings of $801 million, or $1.26 per diluted share, for the first quarter of 2024, down from $969 million, or $1.53 per diluted share, in the first quarter of 2023.
- Adjusted earnings for the first quarter of 2024 were $854 million, or $1.34 per diluted share, compared to $922 million, or $1.46 per diluted share, in the same period last year.
- The company is investing heavily in infrastructure, including a $3 billion system resiliency plan in Texas and the construction of the Cimarrn wind project with an estimated cost of $550 million.
- Sempra California is working on hydrogen blending projects and expanding electric vehicle charging infrastructure.
- Oncor has seen a 20% increase in active generation and large commercial and industrial transmission point-of-interconnection requests compared to the first quarter of 2023.
- Sempra Infrastructure's Energa Costa Azul LNG Phase 1 is over 80% complete and is expected to commence operations in the summer of 2025.
- Sempra has updated its full-year 2024 GAAP EPS guidance range to $4.52 to $4.82, while affirming its adjusted EPS guidance range of $4.60 to $4.90 and its 2025 EPS guidance range of $4.90 to $5.25.
- The company is also maintaining its long-term EPS growth rate projection of 6% to 8%.
Sentiment
Score: 6
Explanation: The sentiment is moderately positive due to the company's ongoing investments in infrastructure and renewable energy, but tempered by the decrease in earnings compared to the previous year and some negative impacts from foreign currency and derivatives.
Positives
- Sempra is making significant investments in infrastructure projects, including renewable energy and grid modernization.
- The company is progressing with the construction of key projects like Energa Costa Azul LNG and the Cimarrn wind project.
- Sempra is actively involved in developing clean energy solutions, such as hydrogen blending and electric vehicle infrastructure.
- Oncor is experiencing strong growth in its service territory, with increased demand for electricity.
- Sempra is recognized for its sustainability practices and high-performance culture.
- The company has reaffirmed its long-term EPS growth rate of 6% to 8%.
Negatives
- Sempra's GAAP and adjusted earnings for the first quarter of 2024 decreased compared to the same period in 2023.
- The company experienced equity losses from write-offs related to rate base disallowances in Texas.
- Sempra faced negative impacts from foreign currency and inflation on its monetary positions in Mexico.
- There were net unrealized losses on derivatives in the first quarter of 2024.
Risks
- Sempra faces risks related to California wildfires, including potential liability for damages.
- Regulatory decisions and actions by various bodies could impact the company's operations and financial results.
- The success of business development efforts and construction projects is subject to various risks, including delays and cost overruns.
- Macroeconomic trends and capital market instability could affect the company's ability to raise capital.
- Cybersecurity threats pose a risk to Sempra's systems and infrastructure.
- Climate and sustainability policies could impact the company's operations and investments.
- Weather events, natural disasters, and other disruptions could affect the company's operations and financial performance.
- Oncor's ability to pay dividends could be impacted by regulatory and governance requirements.
Future Outlook
Sempra is updating its full-year 2024 GAAP earnings per common share (EPS) guidance range to $4.52 to $4.82, affirming its full-year 2024 adjusted EPS guidance range of $4.60 to $4.90, and affirming 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 6% to 8%.
Management Comments
- Jeffrey W. Martin, chairman and CEO of Sempra, stated that the company is off to a great start in 2024 and is seeing strong economic growth in its core markets.
- He also mentioned that Sempra's infrastructure-centered strategy positions them well to modernize and expand the energy grid.
Industry Context
This announcement reflects the ongoing trend of energy companies investing in renewable energy and grid modernization projects. Sempra's focus on infrastructure development aligns with the industry's move towards a more sustainable and resilient energy system. The company's activities in hydrogen blending and electric vehicle infrastructure also reflect the broader industry's efforts to decarbonize.
Comparison to Industry Standards
- Sempra's decrease in earnings is not uncommon in the utility sector, where companies often face fluctuations due to regulatory changes, weather patterns, and economic conditions. For example, companies like NextEra Energy and Duke Energy have also reported varying quarterly results.
- The $3 billion system resiliency plan by Oncor is a significant investment, comparable to similar grid modernization efforts by other large utilities such as American Electric Power and Southern Company.
- The Cimarrn wind project's 320 MW capacity is a notable addition to Sempra's renewable energy portfolio, aligning with the industry's push for more wind and solar power, similar to projects by companies like Iberdrola and Enel.
- The progress of Energa Costa Azul LNG Phase 1 is in line with the global trend of increasing LNG export capacity, with projects similar to those of Cheniere Energy and Tellurian.
Stakeholder Impact
- Shareholders may be concerned about the decrease in earnings but encouraged by the company's long-term growth prospects.
- Customers in California and Texas will benefit from improved grid reliability and access to cleaner energy.
- Employees will be involved in the execution of major infrastructure projects.
- Suppliers and contractors will benefit from the company's capital expenditures.
- Creditors will be monitoring the company's financial performance and debt levels.
Next Steps
- Sempra will continue to develop and implement its infrastructure projects.
- The company will await a proposed decision in the second quarter of 2024 and a final decision before year-end regarding the general rate cases before the CPUC.
- Oncor expects to begin implementing its system resiliency plan in 2025, pending approval from the Public Utility Commission of Texas.
- Sempra will continue to monitor and manage risks related to regulatory changes, cybersecurity, and other factors.
Key Dates
- May 7, 2024: Date of the earnings report and press release.
- March 31, 2024: End of the first quarter for which financial results are reported.
- Summer 2025: Expected commencement of commercial operations for Energa Costa Azul LNG Phase 1.
- Late 2025: Expected commencement of energy generation for the Cimarrn wind project.
Keywords
Sempra, Earnings, Infrastructure, Renewable Energy, LNG, Oncor, California, Texas, Hydrogen, Electric Vehicles, Grid Modernization
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.
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.
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.
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.
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.
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
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.
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 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.
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.
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.
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.
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 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.
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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