SRE
Sempra
NYSE
10-Q: Sempra Reports Mixed Q2 Results Amid Regulatory and Market Volatility
Sentiment:
Quarterly Report
6 August 2024 3:48 PM
Sempra's Q2 2024 results show a complex picture with increased earnings in some segments offset by challenges in others, alongside significant regulatory and market influences.
Worse than expected
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
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.
Summary
- Sempra's Q2 2024 earnings were $713 million, compared to $603 million in Q2 2023, while year-to-date earnings were $1.514 billion, down from $1.572 billion in the same period last year.
- Sempra California saw a decrease in earnings due to lower income tax benefits and regulatory awards, offset by higher CPUC base operating margin and electric transmission margin.
- Sempra Texas Utilities experienced an increase in earnings driven by higher equity earnings from Oncor Holdings, due to rate updates, increased transmission billing units, and customer growth.
- Sempra Infrastructure's earnings increased in Q2 due to favorable foreign currency and inflation effects, but decreased year-to-date due to unrealized losses on commodity derivatives and lower transportation revenues.
- The company's revenue decreased to $3.011 billion in Q2 2024 from $3.335 billion in Q2 2023, and to $6.651 billion year-to-date from $9.895 billion in the same period last year, primarily due to lower natural gas revenues.
- Sempra's cost of natural gas decreased significantly, reflecting lower average natural gas prices and volumes.
- The company's capital expenditures for property, plant, and equipment were $3.830 billion year-to-date, compared to $4.282 billion in the same period last year.
Sentiment
Score: 5
Explanation: The document presents a mixed picture with both positive and negative aspects. While some segments show growth, others face challenges, and the overall financial performance is slightly worse than the previous year. The company is also exposed to various risks, which tempers the overall sentiment.
Positives
- Sempra Texas Utilities experienced a significant increase in earnings due to strong performance at Oncor Holdings.
- Sempra Infrastructure benefited from favorable foreign currency and inflation effects in Q2 2024.
- Sempra's cost of natural gas decreased significantly, reflecting lower average natural gas prices and volumes.
- Sempra's operating and maintenance expenses decreased in both Q2 and year-to-date.
Negatives
- Sempra California's earnings decreased due to lower income tax benefits and regulatory awards.
- Sempra Infrastructure's year-to-date earnings decreased due to unrealized losses on commodity derivatives and lower transportation revenues.
- Sempra's revenue decreased due to lower natural gas revenues.
- Sempra's parent and other segment saw an increase in losses year-to-date.
Risks
- Sempra is exposed to risks related to regulatory decisions, investigations, and actions by various regulatory bodies.
- The company faces risks related to cybersecurity threats, including ransomware attacks on its systems or those of third parties.
- Sempra is exposed to risks related to the availability, uses, sufficiency, and cost of capital resources.
- The company faces risks related to the impact of climate policies, laws, and regulations, including actions to reduce or eliminate reliance on natural gas.
- Sempra is exposed to risks related to weather, natural disasters, pandemics, accidents, equipment failures, and other events that could disrupt operations.
- The company faces risks related to the availability of electric power, natural gas, and natural gas storage capacity.
- Sempra is exposed to risks related to Oncor's ability to reduce or eliminate its quarterly dividends due to regulatory and governance requirements.
Future Outlook
Sempra expects to meet its cash requirements through cash flows from operations, unrestricted cash, borrowings, and other financing transactions. The company is also progressing with the development of several projects, including the Cameron LNG Phase 2 project, ECA LNG Phase 1 and Phase 2 projects, and the Port Arthur LNG Phase 1 and Phase 2 projects.
Industry Context
The report reflects the ongoing challenges and opportunities in the energy sector, including regulatory changes, market volatility, and the transition to cleaner energy sources. The company's focus on infrastructure development and expansion aligns with broader industry trends.
Comparison to Industry Standards
- Sempra's performance in the regulated utility sector is comparable to other large utilities in California, such as Edison International, which also face similar regulatory and environmental challenges.
- The company's investments in LNG projects are in line with the global trend of increasing demand for natural gas and LNG, similar to projects undertaken by companies like Cheniere Energy and Tellurian.
- Sempra's focus on renewable energy projects, such as the Cimarrón Wind project, reflects the industry's shift towards cleaner energy sources, similar to initiatives by NextEra Energy and SunPower.
- The company's financial metrics, such as revenue and earnings per share, are within the range of other large energy companies, but are subject to fluctuations due to regulatory and market conditions.
Stakeholder Impact
- Shareholders may be impacted by the company's financial performance and the risks associated with its operations.
- Employees may be impacted by changes in the company's operations and financial performance.
- Customers may be impacted by changes in rates and service quality.
- Suppliers may be impacted by changes in the company's operations and financial performance.
- Creditors may be impacted by changes in the company's financial performance and credit ratings.
Next Steps
- Sempra expects to settle the forward sale agreements entirely by the physical delivery of shares of its common stock no later than December 31, 2024.
- SDG&E expects to file with the FERC in the fourth quarter of 2024 a new rate request to be effective January 1, 2025.
- SDG&E expects to submit in late 2024 an additional request to the CPUC in its 2024 GRC, known as a Track 3 request, for review and recovery of its 2023 wildfire mitigation plan costs.
- Sempra Infrastructure expects the ECA LNG Phase 1 project to commence commercial operations in the spring of 2026.
- Sempra Infrastructure expects the first and second trains of the PA LNG Phase 1 project to commence commercial operations in 2027 and 2028, respectively.
- Sempra Infrastructure expects the Cimarrón Wind project to begin generating energy in late 2025 and commence commercial operations in the first half of 2026.
Legal Proceedings
- SDG&E is involved in lawsuits challenging aspects of its franchise agreements with the City of San Diego.
- SoCalGas is facing ongoing litigation related to the Aliso Canyon natural gas storage facility leak.
- Sempra Infrastructure is involved in land disputes and permit challenges affecting its ECA Regas Facility.
- Sempra Infrastructure is involved in litigation related to regulatory and other actions by the Mexican government.
- Port Arthur LNG is involved in litigation related to its Clean Air Act permits.
Related Party Transactions
- Sempra has a tax sharing arrangement with Oncor Holdings.
- Sempra has loans due to and from various unconsolidated affiliates.
- SDG&E has amounts due to and from SoCalGas and Sempra.
- SoCalGas has amounts due to and from SDG&E and Sempra.
Key Dates
- October 23, 2015: SoCalGas discovered the leak at the Aliso Canyon natural gas storage facility.
- July 2019: The Wildfire Legislation was signed into law in California.
- July 2020: Sempra entered into a Support Agreement for the benefit of CFIN.
- 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 19,242,010 shares of its common stock.
- January 2024: CPUC directed SDG&E and SoCalGas to offer long-term repayment plans to eligible residential customers.
- March 2024: SDG&E and SoCalGas issued first mortgage bonds.
- March 2024: Sempra issued $600 million of 6.875% fixed-to-fixed reset rate junior subordinated notes.
- May 2024: Sempra issued $500 million of 6.875% fixed-to-fixed reset rate junior subordinated notes.
- May 2024: SoCalGas entered into a $500 million, 364-day term loan facility.
- June 2024: SDG&E exercised its right to terminate the TO5 settlement with FERC.
- August 1, 2024: Number of shares outstanding of Sempra common stock: 633,145,875 shares.
Keywords
Sempra, Utilities, Energy Infrastructure, Natural Gas, Electric, LNG, Regulatory, Oncor, Sempra Infrastructure, Financial Results
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.
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.
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 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.