10-QPeriod: Q2 FY2015

SEMPRA Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 4, 2015For Securities:SRESREA

Summary

Sempra Energy reported solid financial results for the six months ending June 30, 2015, with a notable increase in net income to $732 million, up from $516 million in the prior year period. This growth was driven by a combination of factors across its segments, including improved pipeline earnings in Sempra Mexico, higher base operating margins for its California utilities (SDG&E and SoCalGas), and a significant gain from the sale of the Mesquite Power plant by Sempra Natural Gas. The company also benefited from lower natural gas and electricity costs, contributing to improved operational efficiency. While SoCalGas experienced a year-over-year decrease in quarterly earnings due to a new seasonal revenue recognition method, its year-to-date performance showed substantial improvement. Investments in infrastructure, particularly in Sempra Mexico's pipeline projects and Sempra Renewables' solar facilities, are progressing, reflecting the company's commitment to growth and expansion in its diverse energy portfolio. Sempra Energy maintained strong liquidity with significant available credit, positioning it well to fund ongoing capital expenditures and strategic initiatives.

Financial Highlights

49 data points
Beta

Revenue

$2.37B

Net Income

$295.00M

12.5% Net Margin

EPS (Diluted)

$0.58

Total Assets

$40.01B

Cash & Equivalents

$636.00M

Free Cash Flow

-$278.00M

Financial Statements
Beta
Revenue$2.37B
Interest Expense$139.00M
Net Income$295.00M
EPS (Basic)$0.59
EPS (Diluted)$0.58
Shares Outstanding (Basic)496.20M
Shares Outstanding (Diluted)503.00M

Key Highlights

  • 1Net income increased significantly to $732 million for the first six months of 2015, up from $516 million in the same period of 2014.
  • 2Sempra Natural Gas recorded a $36 million gain on the sale of the Mesquite Power plant in April 2015.
  • 3Sempra Mexico's pipeline earnings increased due to new projects coming online, contributing to overall segment growth.
  • 4California Utilities (SDG&E and SoCalGas) saw improved earnings driven by higher authorized operating margins and favorable regulatory adjustments.
  • 5SoCalGas adopted a new seasonal revenue recognition method, impacting quarterly comparisons but not full-year results.
  • 6Sempra Energy maintained robust liquidity, with $3.5 billion in available unused credit on its committed lines of credit at June 30, 2015.
  • 7Capital expenditures for the year were projected at approximately $3.5 billion, supporting ongoing infrastructure development across various segments.

Frequently Asked Questions

The increase in earnings was driven by several factors, including a $36 million gain from the sale of the Mesquite Power plant by Sempra Natural Gas, higher pipeline earnings in Sempra Mexico due to new projects, improved operating margins for the California Utilities (SDG&E and SoCalGas), and favorable resolutions of prior years' income tax items. Lower costs for electricity and natural gas also contributed positively.

SoCalGas adopted a new accounting method requiring seasonal recognition of annual core gas authorized revenue starting in 2015. While this change impacted quarterly year-over-year comparisons, causing a decrease in quarterly earnings for SoCalGas, it did not affect the full-year revenue or earnings. The company expects substantially all of its annual earnings to be recognized in the first and fourth quarters going forward.

Sempra Energy projected approximately $3.5 billion in capital expenditures for 2015. This includes about $2.4 billion for its California Utilities (SDG&E and SoCalGas) for improvements to distribution, transmission, and storage systems, and pipeline safety. Another $1.1 billion is allocated to other subsidiaries for capital projects in Mexico and South America, and the development of LNG, natural gas, and renewable generation projects.

Sempra Renewables is actively developing and investing in renewable energy projects. In March 2015, it acquired the Black Oak Getty Wind project, and its solar projects like Copper Mountain Solar 2 and 3 are operational or nearing completion, with new power sale agreements in place. The company expects continued investment in wind and solar projects, with planned in-service dates through 2016.