Summary
Sempra Energy (SRE) reported a net loss of $561 million for the second quarter of 2018, a significant swing from a net income of $259 million in the prior year's quarter. This loss was largely driven by substantial impairment charges totaling $1.5 billion, primarily related to the planned divestiture of certain non-utility natural gas storage assets and U.S. wind and solar assets within its Sempra LNG & Midstream and Sempra Renewables segments, respectively. The acquisition of Oncor Holdings, now reported as the Sempra Texas Utility segment, contributed $114 million in equity earnings, though it is accounted for under the equity method due to ring-fencing measures. Financially, the company saw a considerable increase in cash used in investing activities, largely due to the $9.57 billion acquisition of its interest in Oncor. The company also increased its reliance on debt, with long-term debt rising significantly to fund the Oncor acquisition and other operational needs. Despite these challenges, Sempra Energy's core utility operations, particularly SDG&E and SoCalGas, demonstrated stable earnings, with positive contributions from authorized rate increases and operational efficiencies. However, the company is facing increased scrutiny from credit rating agencies, with negative outlooks from Moody's and S&P due to wildfire liabilities, regulatory uncertainty in California, and increased leverage from the Oncor acquisition.
Financial Highlights
48 data points| Revenue | $2.17B |
| Operating Income | -$585.00M |
| Interest Expense | $228.00M |
| Net Income | -$561.00M |
| EPS (Basic) | $0.09 |
| EPS (Diluted) | $0.09 |
| Shares Outstanding (Basic) | 531.60M |
| Shares Outstanding (Diluted) | 531.60M |
Key Highlights
- 1Sempra Energy reported a net loss of $561 million for Q2 2018, a significant deterioration from a net income of $259 million in Q2 2017.
- 2The company recorded substantial impairment charges of $1.5 billion related to the planned divestiture of certain non-utility natural gas storage and U.S. renewable energy assets.
- 3The acquisition of Oncor Holdings, now the Sempra Texas Utility segment, contributed equity earnings of $114 million but is accounted for using the equity method.
- 4Cash used in investing activities surged due to the $9.57 billion acquisition of the Oncor interest, and debt financing increased significantly to support this transaction and other operations.
- 5Credit rating agencies Moody's and S&P have expressed concerns, leading to negative outlooks on Sempra Energy, SDG&E, and SoCalGas, citing wildfire liabilities, California regulatory environment, and increased leverage.
- 6SoCalGas continues to manage significant costs and potential liabilities associated with the Aliso Canyon natural gas leak, estimating total costs at $1.014 billion, with $987 million probable of recovery from insurance.
- 7SDG&E is appealing a CPUC decision that denied recovery of wildfire costs, impacting its ability to recover past expenses.