8-K: Sempra Reports Mixed Q3, Advances Key Infrastructure Projects

Sempra reported a significant GAAP earnings decline for Q3 2025 but saw adjusted earnings growth and affirmed long-term guidance, driven by strategic asset sales and major infrastructure investments.

Summary

• Sempra reported third-quarter 2025 GAAP earnings of $77 million ($0.12 per diluted share), a decrease from $638 million ($1.00 per diluted share) in Q3 2024.
• Adjusted earnings for Q3 2025 increased to $728 million ($1.11 per diluted share) from $566 million ($0.89 per diluted share) in Q3 2024.
• Year-to-date 2025 GAAP earnings were $1.444 billion ($2.21 per diluted share), down from $2.152 billion ($3.38 per diluted share) in the first nine months of 2024.
• Year-to-date 2025 adjusted earnings rose to $2.253 billion ($3.45 per diluted share) from $1.987 billion ($3.12 per diluted share) in the first nine months of 2024.
• Sempra is selling a 45% equity interest in Sempra Infrastructure Partners to affiliates of KKR, expected to close in Q2-Q3 2026.
• Oncor anticipates more than a 30% increase in its roll-forward 2026-2030 base capital plan, building on its $36 billion 2025-2029 plan.
• California enacted Senate Bill 254, establishing an up to $18 billion wildfire fund continuation account, enhancing financial protections for investor-owned electric utilities.
• Sempra Infrastructure reached a final investment decision to advance Port Arthur LNG Phase 2, which is fully subscribed with 20-year sales and purchase agreements.

Sentiment

Score: 7

Explanation: While GAAP earnings saw a significant decline, adjusted earnings showed growth, and the company is making substantial progress on strategic initiatives, including major asset sales and infrastructure investments. Long-term guidance remains affirmed, indicating confidence in future performance despite current GAAP headwinds.

Positives

• Adjusted earnings for Q3 2025 increased to $728 million ($1.11 diluted EPS) from $566 million ($0.89 diluted EPS) in Q3 2024.
• Year-to-date 2025 adjusted earnings grew to $2.253 billion ($3.45 diluted EPS) from $1.987 billion ($3.12 diluted EPS) in the first nine months of 2024.
• Oncor expects over a 30% increase in its 2026-2030 base capital plan, signaling significant future investment and growth.
• Oncor's active large commercial and industrial interconnection queue increased by approximately 60% year-over-year, including 210 gigawatts from data centers, indicating strong demand.
• California Senate Bill 254 established an up to $18 billion wildfire fund continuation account, strengthening financial stability for state utilities.
• SDG&E and SoCalGas are pursuing cost-saving measures projected to save customers over $300 million between 2026 and 2031.
• Sempra Infrastructure reached a final investment decision for Port Arthur LNG Phase 2, which is fully subscribed with long-term offtake agreements, demonstrating project execution and market demand.
• Sempra affirmed its full-year 2025 adjusted EPS guidance range of $4.30 to $4.70 and its full-year 2026 EPS guidance range of $4.80 to $5.30.
• The company affirmed its guidance to the high-end or above its projected long-term EPS compound annual growth rate of 7% to 9% for 2025 through 2029.

Negatives

• GAAP earnings for Q3 2025 significantly decreased to $77 million ($0.12 diluted EPS) from $638 million ($1.00 diluted EPS) in Q3 2024.
• Year-to-date 2025 GAAP earnings declined to $1.444 billion ($2.21 diluted EPS) from $2.152 billion ($3.38 diluted EPS) in the first nine months of 2024.
• Sempra Infrastructure reported a segment loss attributable to common shares of $(580) million in Q3 2025, compared to earnings of $230 million in Q3 2024, and a year-to-date loss of $(362) million compared to earnings of $652 million year-to-date 2024.

Risks

• Potential liability for California wildfires, regardless of fault, and inability to recover all or a substantial portion of costs from insurance, the wildfire fund, or rates.
• Adverse decisions, denials of cost recovery, audits, investigations, or other actions by regulatory bodies (CPUC, FERC, PUCT, etc.) and governmental jurisdictions.
• Risks associated with business development efforts, construction projects, acquisitions, and divestitures, including failure to reach final investment decisions, negotiate definitive contracts, complete projects on schedule and budget, or realize anticipated benefits.
• Changes to capital expenditure plans and their potential impact on rate base or other growth.
• Changes in trade and foreign policy, laws, and regulations, including those related to tax and the energy industry in the U.S. and Mexico.
• Litigation, arbitration, property disputes, and other proceedings.
• Cybersecurity threats, including ransomware or other attacks on systems or energy infrastructure.
• Availability, uses, sufficiency, and cost of capital resources, and the ability to borrow money or raise capital on favorable terms, affected by credit rating actions, capital market instability, and fluctuating interest rates and inflation.
• Impact on affordability of customer rates and cost of capital due to volatility in inflation, interest rates, commodity prices, tariffs, and foreign currency exchange rates.
• Impact of climate policies, laws, rules, regulations, and trends, including actions to reduce or eliminate reliance on natural gas, increased uncertainty for California natural gas distribution companies, and risk of nonrecovery for stranded assets.
• Weather, natural disasters, pandemics, accidents, equipment failures, explosions, terrorism, information system outages, or other events that disrupt operations, damage facilities, or cause liability.
• Availability of electric power, natural gas, and natural gas storage and transportation capacity, including disruptions from transmission grid or pipeline failures.
• Oncor's ability to reduce or eliminate its quarterly dividends due to regulatory and governance requirements and commitments.

Future Outlook

Sempra updated its full-year 2025 GAAP EPS guidance range to $3.05 to $3.45, reflecting actual results through the third quarter. The company affirmed its full-year 2025 adjusted EPS guidance range of $4.30 to $4.70 and its full-year 2026 EPS guidance range of $4.80 to $5.30. Sempra also affirmed its guidance to achieve the high-end or above its projected long-term EPS compound annual growth rate of 7% to 9% for the period 2025 through 2029. Strategic initiatives, including the sale of a 45% equity interest in Sempra Infrastructure Partners and the advancement of Port Arthur LNG Phase 2, are expected to drive future value creation.

Management Comments

• "We are pleased with another solid quarter of financial performance," said Jeffrey W. Martin, chairman and CEO of Sempra.
• "We continue to make significant progress on our near-term value creation initiatives and we are pleased with our year-to-date financial results."

Industry Context

Sempra's focus on significant infrastructure investments, particularly in Texas with Oncor's expanded capital plan and in LNG export facilities with Port Arthur LNG Phase 2, aligns with broader North American energy transition and energy security trends. The increased demand from data centers and industrial sectors in Oncor's service territory reflects the growing electrification and industrial expansion in key economic hubs. In California, the enactment of Senate Bill 254 addresses a critical industry-wide challenge of wildfire risk and liability, providing enhanced financial protection for utilities. The proposed cost-saving measures by SDG&E and SoCalGas reflect an industry-wide push for affordability and modernization in utility services.

Comparison to Industry Standards

• Oncor expects to be responsible for more than half of the investment for the Electric Reliability Council of Texas, Inc. (ERCOT) 765-kV Strategic Transmission Expansion Plan, demonstrating a leading role in critical transmission infrastructure development within Texas.

Stakeholder Impact

• **Shareholders**: Mixed financial results with a significant GAAP earnings decline but growth in adjusted earnings. Strategic asset sales and increased capital plans for infrastructure projects could drive future value. Long-term EPS growth guidance is affirmed.
• **Customers**: SDG&E and SoCalGas are pursuing cost-saving measures projected to save customers over $300 million between 2026 and 2031. Oncor's investments in transmission and distribution lines aim to increase electric reliability. The wildfire fund continuation account enhances financial protection for utilities, potentially stabilizing rates.
• **Employees**: SoCalGas plans to close its remaining branch offices and transition to a digital-first service model, which may impact employees in those offices.
• **Suppliers**: Increased capital spending by Oncor (30%+ increase in 2026-2030 plan) and the advancement of six major Sempra Infrastructure projects, including Port Arthur LNG Phase 2, will likely create significant opportunities for suppliers and contractors.
• **Creditors**: The strategic sale of an equity interest in Sempra Infrastructure Partners and ongoing capital raises (debt issuances, noncontrolling interest contributions) impact the company's capital structure and financial strength, which is relevant for creditors.

Next Steps

• Close the strategic transaction to sell a 45% equity interest in Sempra Infrastructure Partners to KKR affiliates (expected Q2-Q3 2026).
• Continue to advance the sales process for Ecogas México, S. de R.L. de C.V.
• Continue to advance Oncor's pending base rate review, including settlement discussions with parties and a scheduled hearing on the merits in mid-November.
• Implement cost-saving measures at SDG&E (discontinuing select energy efficiency programs) and SoCalGas (closing remaining branch offices and transitioning to a digital-first service model).
• Continue development, construction, and operation of Port Arthur LNG Phase 2 and other major LNG projects on North America's Pacific and Gulf Coasts.
• Sempra will broadcast a live discussion of its earnings results over the internet on November 5, 2025, at 12 p.m. ET.

Key Dates

Recommendation

While Sempra reported a substantial decline in GAAP earnings for Q3 and YTD 2025, its adjusted earnings showed positive growth. The company is actively executing on significant strategic initiatives, including the sale of a 45% equity interest in Sempra Infrastructure Partners and the final investment decision for Port Arthur LNG Phase 2, which are expected to create long-term value. Oncor's increased capital plan and strong interconnection queue signal robust growth in Texas. The affirmation of long-term adjusted EPS growth guidance provides a positive outlook. However, the significant GAAP decline warrants caution, suggesting a 'hold' position to allow investors to monitor the impact of these strategic moves and the reconciliation of GAAP and adjusted performance in future periods.

Keywords

Sempra, Earnings Report, Q3 2025, Financial Results, Adjusted EPS, GAAP EPS, Sempra Infrastructure Partners, KKR, Oncor, Capital Plan, Port Arthur LNG Phase 2, Wildfire Fund, California Utilities, Energy Infrastructure, Utility Sector, LNG, Transmission and Distribution