SRE
Sempra
NYSE
10-Q: Sempra Reports Mixed Q1 Results Amidst Regulatory and Market Volatility
Sentiment:
Quarterly Report
7 May 2024 4:29 PM
Sempra's first quarter results show a decrease in earnings, influenced by lower natural gas prices and regulatory adjustments, alongside growth in its Texas utilities segment.
Worse than expected
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
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.
Summary
- Sempra's Q1 2024 earnings attributable to common shares were $801 million, down from $969 million in Q1 2023.
- The Sempra California segment saw a decrease in earnings to $582 million, primarily due to lower CPUC base operating margin and higher net interest expense.
- Sempra Texas Utilities experienced a significant increase in earnings to $183 million, driven by higher equity earnings from Oncor Holdings.
- Sempra Infrastructure's earnings decreased to $131 million, mainly due to unrealized losses on commodity derivatives and lower transportation revenues in Mexico.
- The company's natural gas revenues decreased significantly to $2.1 billion, reflecting lower natural gas prices and volumes.
- Electric revenues saw a slight increase to $1.1 billion, driven by higher transmission revenues and incremental capital projects.
- Sempra's cost of natural gas decreased to $554 million, while the cost of electric fuel and purchased power decreased to $89 million.
- Operating and maintenance expenses remained relatively stable at $1.2 billion.
Sentiment
Score: 5
Explanation: The document presents a mixed picture with some positive developments in the Texas utilities segment, but overall, the results are worse than the previous year due to lower natural gas prices and unrealized losses on commodity derivatives. The company is facing several risks and challenges, which tempers the overall sentiment.
Positives
- Sempra Texas Utilities experienced a significant increase in earnings, driven by higher equity earnings from Oncor Holdings.
- Sempra's interest expense decreased by $61 million, primarily due to lower interest expense at Sempra Infrastructure.
- Sempra's income tax expense decreased by $204 million, primarily due to lower pretax income and higher income tax benefits from flow-through items.
Negatives
- Sempra's overall earnings decreased by $168 million compared to the same period last year.
- Sempra California's earnings decreased due to lower CPUC base operating margin and higher interest expenses.
- Sempra Infrastructure's earnings decreased due to unrealized losses on commodity derivatives and lower transportation revenues.
- Natural gas revenues decreased significantly due to lower prices and volumes.
Risks
- Sempra is exposed to risks related to regulatory decisions, particularly regarding the CPUC's General Rate Case.
- The company faces risks related to land disputes and permit challenges affecting its Energa Costa Azul facility.
- Sempra is subject to risks related to the volatility of commodity prices, particularly natural gas and electricity.
- The company is exposed to risks related to the potential revocation of self-supply permits in Mexico.
- Sempra faces risks related to the Aliso Canyon natural gas storage facility, including potential closure and impairment.
- The company is exposed to risks related to the Wildfire Fund and potential liabilities from wildfires.
- Sempra is subject to risks related to the ongoing litigation and regulatory proceedings related to the Aliso Canyon gas leak.
- Sempra is exposed to risks related to the potential impact of the minimum tax directive.
Future Outlook
Sempra expects to meet its cash requirements through cash flows from operations, unrestricted cash, borrowings, and other financing transactions. The company is focused on developing and expanding its portfolio of projects, including LNG, pipeline, and renewable energy projects. The company anticipates that the net gains currently recorded in AOCI related to cash flow hedges will be reclassified into earnings during the next 12 months.
Management Comments
- Management is focused on maintaining investment-grade credit ratings.
- Management is focused on managing the risks associated with regulatory decisions, commodity price volatility, and project development.
Industry Context
The results reflect the ongoing volatility in the energy markets, particularly in natural gas prices, and the impact of regulatory decisions on utility operations. The company's focus on infrastructure development aligns with the broader industry trend towards energy transition and increased demand for LNG.
Comparison to Industry Standards
- Sempra's performance in the Texas utilities segment, driven by Oncor, is consistent with the trend of regulated utilities benefiting from increased capital investments and customer growth.
- The decrease in Sempra Infrastructure's earnings due to commodity derivatives is a common challenge for companies with significant exposure to energy markets, similar to other companies in the sector.
- The decrease in natural gas revenues is consistent with the broader trend of lower natural gas prices in the first quarter of 2024, impacting other companies in the natural gas sector.
- The company's focus on renewable energy projects, such as the Cimarrn Wind project, aligns with the industry's move towards cleaner energy sources, similar to other companies in the sector.
Stakeholder Impact
- Shareholders are impacted by the decrease in earnings and the volatility in the energy markets.
- Customers may be impacted by changes in rates due to regulatory decisions and cost recovery mechanisms.
- Employees may be impacted by changes in the company's financial performance and strategic direction.
- Suppliers and creditors may be impacted by changes in the company's financial condition and ability to meet its obligations.
Next Steps
- Sempra will continue to pursue the necessary rights-of-way and permits for the re-routed portion of the Sonora pipeline.
- Sempra expects to receive a proposed decision on SDG&E's 2024 GRC in the second quarter of 2024.
- Sempra expects to receive a proposed decision on SDG&E's wildfire mitigation plan costs in late 2024.
- Sempra will continue to evaluate the potential development of the Cameron LNG Phase 2 project and expects to make a final investment decision in the first half of 2025.
- Sempra will continue to progress with the CFE on the negotiation of definitive agreements for the Vista Pacifico LNG project.
- Sempra will continue to monitor the legal and regulatory matters affecting its operations in Mexico.
Legal Proceedings
- Sempra is involved in ongoing litigation related to the Aliso Canyon natural gas leak.
- Sempra is involved in land disputes and permit challenges affecting its Energa Costa Azul facility.
- Sempra is involved in litigation related to regulatory and other actions by the Mexican government.
- Sempra is involved in litigation related to the 2022 Permit for the Port Arthur LNG project.
Related Party Transactions
- Sempra has transactions with unconsolidated affiliates, including Oncor Holdings, Cameron LNG JV, and TAG Norte.
- Sempra has a tax sharing arrangement with Oncor Holdings.
- Sempra has a support agreement for CFIN.
Key Dates
- October 23, 2015: SoCalGas discovered the leak at the Aliso Canyon natural gas storage facility.
- February 11, 2016: The natural gas leak at SoCalGas's Aliso Canyon facility was stopped.
- July 2019: Enactment of the Wildfire Legislation.
- July 2020: Sempra entered into a Support Agreement for the benefit of CFIN.
- June 2021: Sempra Infrastructure received a distribution of $165 million from the SDSRA.
- March 2021: The Mexican government published a decree with amendments to Mexicos Electricity Industry Law.
- November 2021: Sempra loaned $300 million to KKR Pinnacle.
- May 2022: SDG&E and SoCalGas filed their 2024 GRC applications.
- August 2, 2023: Sempra's board of directors declared a two-for-one stock split.
- November 2023: Sempra completed the offering of 17,142,858 shares of common stock.
- January 2024: The CPUC directed SDG&E and SoCalGas to offer long-term repayment plans to eligible residential customers.
- February 2024: The CPUC approved an interim cost recovery mechanism for SDG&E's wildfire mitigation plan.
- March 2024: SDG&E issued $600 million aggregate principal amount of 5.55% first mortgage bonds.
- March 2024: SoCalGas issued $500 million aggregate principal amount of 5.6% first mortgage bonds.
- March 2024: Sempra issued $600 million of 6.875% fixed-to-fixed reset rate junior subordinated notes.
- May 2, 2024: Sempra filed an amendment to its articles of incorporation to revoke series A and B preferred stock.
Keywords
Sempra, Earnings, Natural Gas, Electricity, CPUC, Oncor, LNG, Infrastructure, Regulatory, Commodity Prices, Texas Utilities, California, Aliso Canyon, Wildfire Fund
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.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.