01—Abstract
Summary
Summary of the 10-K filed February 27, 2020. Cited figures are marked; the original filing is the authoritative source.
Sempra Energy (SRE) reported solid financial results for the fiscal year ending December 31, 2019, driven by strong performance across its utility operations in California and Texas, as well as its international energy infrastructure business in Mexico.
The company continued its strategic portfolio optimization, progressing with the divestiture of its South American businesses, expected to close in the first half of 2020, and completing the sale of its renewable energy assets. Significant investments were made in its Texas utility operations through the acquisition of an interest in Oncor and Sharyland Utilities. Furthermore, the Sempra LNG segment saw progress with the commencement of commercial operations for Train 1 of the Cameron LNG JV project.
Key financial metrics showed improvement, with increased earnings and EPS compared to the previous year, supported by constructive regulatory outcomes for its California utilities and growth in its Texas segment. The company's outlook remains focused on expanding its North American energy infrastructure footprint while maintaining a strong financial position.
02—Key points
Key Highlights
- Sempra Energy reported increased earnings and EPS in 2019, driven by growth in utility operations and strategic asset sales.
- The company made significant progress on its portfolio optimization strategy, including the sale of South American businesses and remaining U.S. wind assets.
- Investment in Texas utilities was strengthened through acquisitions of interests in Oncor and Sharyland Utilities.
- The Cameron LNG JV project advanced with the commencement of commercial operations for Train 1.
- California utilities (SDG&E and SoCalGas) received constructive regulatory decisions regarding revenue requirements and cost of capital.
- The company maintained an investment-grade credit rating across Sempra Energy, SDG&E, and SoCalGas.
- Capital expenditures in 2019 totaled $3.7 billion, primarily focused on transmission and distribution improvements at regulated utilities.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 27, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $10.83B$10.10B | +7.2% |
| Interest Expense | $1.08B$886.00M | +21.6% |
| Net Income | $2.06B$924.00M | +122.4% |
| EPS (Basic) | $3.70$1.73 | +114.5% |
| EPS (Diluted) | $3.65$1.71 | +113.2% |
| Shares Outstanding (Basic) | 555.81M536.14M | +3.7% |
| Shares Outstanding (Diluted) | 564.07M539.70M | +4.5% |
05—Questions
Frequently Asked Questions
What was Sempra Energy's overall financial performance in 2019?
Sempra Energy reported an increase in earnings attributable to common shares to $2.055 billion in 2019, up from $924 million in 2018. Diluted EPS also increased to $7.29 in 2019 from $3.42 in 2018. This improvement was driven by higher earnings from its utility operations, equity earnings from Oncor Holdings, and strategic divestitures.
What are the key strategic initiatives Sempra Energy focused on in 2019?
Sempra Energy continued its strategy to simplify its business and focus on North American energy infrastructure. Key initiatives included progressing with the sale of its South American businesses, selling its U.S. renewable energy assets, and investing in its Texas utility operations by acquiring interests in Oncor Holdings and Sharyland Utilities. The company also saw advancements in its Sempra LNG segment with the commencement of commercial operations at Cameron LNG JV.
What were the significant risks and challenges highlighted in the filing?
The company identified several key risks, including those related to California wildfires and potential liabilities, regulatory actions and decisions in the jurisdictions where it operates, the success of construction projects and acquisitions, cybersecurity threats, and commodity price volatility. Specific concerns were raised regarding SoCalGas's Aliso Canyon facility leak and SDG&E's wildfire mitigation and insurance coverage.
How did the company manage its capital structure and liquidity?
Sempra Energy aimed to maintain its investment-grade credit ratings by managing its capital structure through a mix of debt and equity. It had access to significant committed lines of credit and commercial paper programs to support its liquidity needs. The company also engaged in asset sales and planned capital expenditures, with a focus on funding from operations, available cash, and further financing activities.
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