What drove the significant increase in Sempra Energy's earnings for the nine months ended September 30, 2019?

The substantial increase in earnings was driven by a combination of factors across its business segments. Key contributors included the retroactive application of favorable regulatory rate case decisions for the California Utilities (SDG&E and SoCalGas), improved equity earnings from Oncor Holdings in Sempra Texas Utilities due to strategic acquisitions and operational performance, and the sale of certain assets within Sempra Renewables and Sempra LNG, partially offset by impairments in prior periods. Additionally, the reclassification of South American businesses to discontinued operations and subsequent tax benefits also contributed to the net income increase.

How is Sempra Energy positioning its business for future growth?

Sempra Energy is strategically refocusing on North American energy infrastructure development. This is evidenced by the plan to sell its South American businesses, with expected closings in early 2020, and proceeds intended to be reinvested in growth opportunities within North America. The company is also actively developing major LNG export projects like Cameron LNG and Port Arthur LNG, which are key components of its long-term growth strategy.

SRE/SREA 10-Q Quarterly Report Q3 FY2019 — Revenue, Net Income, EPS

Q: What is the current status of the Aliso Canyon natural gas storage facility leak and its financial impact?

SoCalGas continues to manage costs and liabilities associated with the Aliso Canyon natural gas storage facility leak. As of September 30, 2019, SoCalGas estimates total costs related to the leak to be $1.099 billion, with approximately $1.069 billion expected to be recovered from insurance. The company has accrued $45 million in Reserve for Aliso Canyon Costs and $9 million in Deferred Credits and Other, and recorded $354 million as an Insurance Receivable for Aliso Canyon Costs. While substantial portions of the costs are expected to be covered by insurance, ongoing litigation and regulatory proceedings could lead to additional costs and potential impacts on cash flows and financial condition.

Summary

Sempra Energy (SRE) reported robust financial performance for the nine months ended September 30, 2019, with significant year-over-year increases in earnings and diluted EPS attributable to common shares. This growth was driven by strong contributions across its key segments, particularly Sempra Texas Utilities, Sempra Mexico, and the California Utilities (SDG&E and SoCalGas). The positive results for the California utilities were boosted by retroactive rate case decisions, while Sempra Texas saw improved earnings from Oncor's acquisition of InfraREIT. However, investors should note the ongoing significant costs and potential liabilities related to the Aliso Canyon natural gas storage facility leak at SoCalGas, which continues to impact operations and incur expenses, although a substantial portion is expected to be recovered through insurance. Furthermore, Sempra Energy is progressing with the divestiture of its South American businesses, expected to close in early 2020, which will allow a strategic focus on North American infrastructure development. The company also highlighted its participation in the California Wildfire Fund, a significant initiative aimed at mitigating wildfire risks, with SDG&E having made its initial shareholder contribution.

Financial Highlights

48 data points

Beta

Revenue

$2.76B

Net Income

$813.00M

0.3% Net Margin

EPS (Diluted)

$1.42

Total Assets

$64.58B

Cash & Equivalents

$106.00M

Free Cash Flow

-$525.00M

Financial Statements

Beta

Revenue	$2.76B
Operating Income	$653.00M
Interest Expense	$279.00M
Net Income	$813.00M
EPS (Basic)	$1.47
EPS (Diluted)	$1.42
Shares Outstanding (Basic)	554.80M
Shares Outstanding (Diluted)	591.60M

Key Highlights

1Sempra Energy reported a substantial increase in earnings attributable to common shares for the first nine months of 2019 to $1.608 billion, up from $60 million in the prior year period, with diluted EPS rising to $5.74 from $0.23.
2The California Utilities (SDG&E and SoCalGas) saw improved earnings, largely due to the retroactive application of the 2019 General Rate Case final decisions, which boosted revenues and positively impacted net income.
3Sempra Texas Utilities' earnings increased significantly due to higher equity earnings from Oncor Holdings, driven by the InfraREIT acquisition and improved operational performance.
4SoCalGas continues to manage costs and potential liabilities related to the Aliso Canyon natural gas storage facility leak, with an estimated cost of $1.099 billion, of which $1.069 billion is expected to be recovered from insurance.
5Sempra Energy is actively divesting its South American businesses, with sales of Peruvian and Chilean operations expected to close in the first quarter of 2020, allowing for a strategic focus on North American infrastructure growth.
6SDG&E recorded a Wildfire Fund asset and made an initial shareholder contribution, reflecting its participation in the California Wildfire Fund established by new legislation to address wildfire risks.

SEMPRA Quarterly Report for Q3 Ended Sep 30, 2019

Summary

Financial Highlights

Key Highlights

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