10-QPeriod: Q1 FY2020

SEMPRA Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 4, 2020For Securities:SRESREA

Summary

Sempra Energy (SRE) reported a solid first quarter of 2020, with net income increasing significantly to $947 million ($2.53 diluted EPS) from $518 million ($1.59 diluted EPS) in the prior year period. This growth was driven by strong performance across its segments, particularly Sempra Mexico and Sempra LNG, which benefited from operational start-ups and favorable foreign currency impacts. The California Utilities, SDG&E and SoCalGas, also showed improved earnings due to regulatory rate adjustments and a recovery in operational margins. The company highlighted its stable liquidity position, supported by significant available credit facilities, despite the emerging economic uncertainties posed by the COVID-19 pandemic. Management is actively monitoring the pandemic's impact and has taken steps to ensure operational continuity and customer support.

Financial Highlights

46 data points
Beta

Revenue

$3.03B

Net Income

$760.00M

25.1% Net Margin

EPS (Diluted)

$1.26

Total Assets

$68.29B

Cash & Equivalents

$2.25B

Free Cash Flow

$308.00M

Financial Statements
Beta
Revenue$3.03B
Operating Income$867.00M
Interest Expense$280.00M
Net Income$760.00M
EPS (Basic)$1.30
EPS (Diluted)$1.26
Shares Outstanding (Basic)585.58M
Shares Outstanding (Diluted)627.85M

Key Highlights

  • 1Net income surged to $947 million, a substantial increase from $518 million in Q1 2019, with diluted EPS rising to $2.53 from $1.59.
  • 2Strong performance in Sempra Mexico (up $134 million in earnings) and Sempra LNG (up $70 million in earnings) drove overall consolidated results.
  • 3SDG&E and SoCalGas reported improved earnings due to higher CPUC base operating margins and favorable regulatory outcomes, including retroactive rate adjustments.
  • 4The company maintained a strong liquidity position with $2.25 billion in unrestricted cash and cash equivalents and $4.01 billion in available unused credit facilities at the end of the quarter.
  • 5Sempra Energy is actively managing the impact of COVID-19, ensuring critical infrastructure operations continue while implementing customer protection measures.
  • 6Discontinued operations from South American businesses contributed positively to earnings, with a tax benefit of $7 million in the quarter, reflecting the ongoing sale process.
  • 7Capital expenditures remained robust at $1.096 billion, focused on utility infrastructure and energy projects across its segments.

Frequently Asked Questions

The significant increase in earnings was primarily driven by strong performance in Sempra Mexico, benefiting from favorable foreign currency and inflation effects, and Sempra LNG, which saw improved equity earnings from the commencement of commercial operations at its Cameron LNG JV project. Additionally, the California Utilities (SDG&E and SoCalGas) experienced improved earnings due to higher authorized revenues and favorable regulatory adjustments.

Sempra Energy has identified its operations as critical infrastructure and is ensuring business continuity while prioritizing employee and customer safety. The company is implementing customer protection measures, such as suspending disconnections and waiving late fees, and is tracking incremental costs associated with these measures, seeking recovery through regulatory mechanisms. Management is actively monitoring the pandemic's evolving economic and operational impacts.

Sempra Energy has completed the sale of its Peruvian businesses and expects to close the sale of its Chilean businesses in the second quarter of 2020. The proceeds from these sales are intended to support capital investments in North America and strengthen the balance sheet. These operations are presented as discontinued operations for all periods presented.