10-QPeriod: Q3 FY2024

SEMPRA Quarterly Report for Q3 Ended Sep 30, 2024

Filed November 6, 2024For Securities:SRESREA

Summary

Sempra reported a decrease in revenues and net income for the nine months ended September 30, 2024, compared to the same period in the prior year. Total revenues decreased by 28.7% to $9.43 billion, and net income attributable to common shares fell by 8.2% to $2.15 billion. This decline was primarily driven by lower energy-related business revenues, impacted by softer commodity prices and reduced trading gains, as well as lower natural gas and electric revenues in Sempra California due to lower natural gas prices and volumes. The company also noted an increase in interest expense and lower income tax benefits. Despite these headwinds, Sempra California's earnings remained substantial, supported by regulatory rate base growth and higher authorized cost of capital. Sempra Texas Utilities saw an increase in earnings, driven by rate updates and customer growth at Oncor. Sempra Infrastructure's earnings were impacted by lower commodity derivative gains and reduced volumes in its renewables business, although positive foreign currency and inflation impacts provided some offset. The company ended the period with a solid liquidity position and available unused credit, while also actively managing its capital structure through debt issuances and common stock offerings.

Financial Highlights

43 data points
Beta

Revenue

$2.78B

Net Income

$649.00M

23.4% Net Margin

EPS (Diluted)

$1.00

Total Assets

$93.75B

Cash & Equivalents

$560.00M

Free Cash Flow

$1.02B

Financial Statements
Beta
Revenue$2.78B
Net Income$649.00M
EPS (Basic)$1.01
EPS (Diluted)$1.00
Shares Outstanding (Basic)633.75M
Shares Outstanding (Diluted)638.06M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2024, decreased by 28.7% to $9.43 billion compared to $13.23 billion in the prior year.
  • 2Net income attributable to common shares for the nine months ended September 30, 2024, decreased by 8.2% to $2.15 billion compared to $2.29 billion in the prior year.
  • 3Sempra California experienced a decline in earnings due to lower natural gas and electric revenues, primarily driven by lower commodity prices and volumes, as well as reduced income tax benefits.
  • 4Sempra Texas Utilities (Oncor) reported higher earnings driven by rate updates reflecting increased invested capital, customer growth, and new base rates.
  • 5Sempra Infrastructure's earnings were impacted by lower commodity derivative gains, reduced renewable volumes, and lower natural gas prices, though foreign currency impacts provided some positive offset.
  • 6The company has an "at-the-market" (ATM) equity offering program with an aggregate gross sales price of up to $3.0 billion, initiated on November 6, 2024.
  • 7Sempra's credit ratings remained at investment grade levels, with Moody's, S&P, and Fitch maintaining stable outlooks for Sempra and SDG&E, while S&P assigned a negative outlook to SoCalGas' credit rating.

Frequently Asked Questions

Sempra's revenues and net income declined primarily due to lower commodity prices and volumes impacting Sempra California's natural gas and electric businesses. Sempra Infrastructure also saw reduced earnings due to lower commodity derivative gains and decreased renewable energy volumes. Additionally, higher interest expenses and lower income tax benefits across segments contributed to the overall decline.

Sempra expects to meet its cash requirements through operating cash flows, existing cash balances, borrowings under committed credit facilities, new debt issuances, equity offerings (including its ATM program), and distributions from equity investments. The company maintains a solid liquidity position with significant available unused credit and continues to manage its capital structure to maintain its investment-grade credit ratings.

Sempra California (SDG&E and SoCalGas) recorded revenues based on 2023 authorized levels as the final decision for the 2024 General Rate Case (GRC) was pending at the reporting date. A proposed decision was issued, and a final decision was expected by the end of the year. Furthermore, the CPUC issued a final decision to modify the Cost of Capital Mechanism (CCM), which will reduce authorized ROE starting in 2025. SDG&E is also seeking recovery of wildfire mitigation plan costs through separate GRC tracks.

Sempra faces risks including California wildfires, regulatory decisions, cybersecurity threats, capital availability, and commodity price volatility. The company also highlighted risks associated with its ATM program, particularly the potential for forward sale agreements to be accelerated, leading to share dilution. Legal and environmental matters, especially in Mexico, also pose potential risks.