8-K: Sempra Announces 2024 Results, Raises Capital Plan to $56 Billion, and Updates EPS Guidance

Sempra reports its 2024 financial results, highlighted by a raised five-year capital plan to $56 billion and adjusted EPS guidance for 2025 and 2026.

Summary

• Sempra reported full-year 2024 GAAP earnings of $2.82 billion, or $4.42 per diluted share, compared to $3.03 billion, or $4.79 per diluted share, in 2023.
• Adjusted full-year 2024 earnings were $2.97 billion, or $4.65 per diluted share, compared to $2.92 billion, or $4.61 per diluted share in 2023.
• The company announced a record five-year capital plan of $56 billion, a 16% increase from the prior plan.
• Sempra is increasing its projected long-term EPS growth rate to 7% to 9%.
• Sempra is revising its full-year 2025 EPS guidance range to $4.30 to $4.70.
• The company is issuing full-year 2026 EPS guidance of $4.80 to $5.30.
• Oncor's new five-year capital plan of $36 billion represents a 50% increase over last year's plan.
• In 2024, Oncor invested close to $4.7 billion to support the growing needs of its customers.
• In 2024, demand for electricity reached an all-time high of 5,032 megawatts in San Diego Gas & Electric's (SDGE) service territory.
• Cameron LNG Phase 1 loaded nearly 200 cargoes in 2024.
• Energa Costa Azul LNG Phase 1 continues to target the start-up of commercial operations in spring of 2026.
• Sempra's board of directors declared a $0.645 per share quarterly dividend on the company's common stock, payable April 15, 2025.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While GAAP earnings decreased, the increased capital plan and long-term EPS growth rate target suggest a positive outlook. The revised 2025 EPS guidance is a concern, but the 2026 guidance and overall growth strategy provide some reassurance.

Positives

• Sempra's adjusted earnings increased slightly from 2023.
• The company's five-year capital plan has increased to $56 billion, indicating significant investment in future growth.
• The long-term EPS growth rate is projected to be 7% to 9%, suggesting strong future performance.
• Oncor's capital plan increased by 50%, driven by diverse investment opportunities.
• Oncor saw a 27% increase in new transmission interconnection requests as compared to 2023.
• Cameron LNG Phase 1 continues to deliver superior production of liquefied natural gas (LNG) and loaded nearly 200 cargoes in 2024.
• The dividend on the company's common stock increased to $2.58 per share on an annualized basis.

Negatives

• GAAP earnings decreased compared to 2023.
• The company is revising its full-year 2025 EPS guidance range to $4.30 to $4.70.
• The reported financial results reflect certain significant items as described on an after-tax basis in the table of GAAP earnings, reconciled to adjusted earnings, for the fourth quarter and full-year 2024 and 2023.

Risks

• The company's forward-looking statements are subject to various risks and uncertainties, including regulatory actions, litigation, cybersecurity threats, and weather-related events.
• The success of business development efforts, construction projects, acquisitions, divestitures, and other significant transactions, including risks related to (i) being able to make a final investment decision, (ii) completing construction projects or other transactions on schedule and budget, (iii) realizing anticipated benefits from any of these efforts if completed, (iv) obtaining third-party consents and approvals and (v) third parties honoring their contracts and commitments.
• Changes to our capital expenditure plans and their potential impact on rate base or other growth.
• The availability, uses, sufficiency, and cost of capital resources and our ability to borrow money or otherwise raise capital on favorable terms and meet our obligations, which can be affected by, among other things, (i) actions by credit rating agencies to downgrade our credit ratings or place those ratings on negative outlook, (ii) instability in the capital markets, and (iii) fluctuating interest rates and inflation.
• The impact of climate policies, laws, rules, regulations, trends and required disclosures, including actions to reduce or eliminate reliance on natural gas, increased uncertainty in the political or regulatory environment for California natural gas distribution companies, the risk of nonrecovery for stranded assets, and uncertainty related to emerging technologies.

Future Outlook

Sempra anticipates significant opportunities to deploy incremental capital through the end of the decade and beyond, driven by long-term trends in its core markets. The company is targeting a final investment decision in 2025 for Port Arthur LNG Phase 2 and expects Energa Costa Azul LNG Phase 1 to start commercial operations in spring of 2026.

Management Comments

• With the reset of our guidance in 2025, we are setting a new foundation for a decisive decade of growth, said Jeffrey W. Martin, chairman and CEO of Sempra.
• We are also announcing a record five-year capital plan of $56 billion and raising the company's long-term EPS growth rate to 7%-9%, said Jeffrey W. Martin, chairman and CEO of Sempra.
• Our team is excited about our new five-year capital plan, which is designed to help meet the energy needs of customers today and tomorrow, while significantly expanding our projected utility rate base by roughly 10% annually, said Karen Sedgwick, executive vice president and chief financial officer of Sempra.

Industry Context

Sempra's increased capital plan and focus on Texas reflect the growing demand for energy infrastructure in the region. The company's investments in LNG projects align with the global demand for cleaner and more secure energy sources. The emphasis on wildfire and climate resilience in California addresses the increasing risks associated with climate change.

Comparison to Industry Standards

• Sempra's long-term EPS growth rate target of 7-9% is competitive with other large-cap utility companies.
• The $56 billion capital plan is substantial, reflecting significant investment in infrastructure development and expansion.
• Sempra's focus on LNG projects positions it to capitalize on the growing global demand for natural gas, similar to companies like Cheniere Energy and Tellurian.
• The company's investments in renewable energy and grid modernization align with industry trends towards cleaner energy sources and improved grid reliability, comparable to initiatives by NextEra Energy and Duke Energy.

Stakeholder Impact

• Shareholders can expect increased dividends and potential long-term growth.
• Customers will benefit from improved energy infrastructure and reliability.
• Employees will have opportunities for growth and development within the expanding company.
• Suppliers will see increased demand for their products and services.
• Creditors will be impacted by the company's increased debt levels to fund its capital plan.

Next Steps

• Sempra will continue to execute its five-year capital plan.
• The company will target a final investment decision for Port Arthur LNG Phase 2 in 2025.
• Energa Costa Azul LNG Phase 1 is expected to start commercial operations in spring of 2026.
• Oncor is contemplating filing a comprehensive base rate review later this year.

Key Dates