01—Abstract
Summary
Summary of the 8-K filed May 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Sempra (NYSE: SRE) reported first-quarter 2024 GAAP earnings of $801 milliona, or $1.26 per diluted share, down from $969 million, or $1.53 per diluted share, in Q1 2023.
On an adjusted basis, earnings were $854 millionb, or $1.34 per diluted share, versus $922 million, or $1.46 per diluted share a year earlier. The year-over-year decline was driven mainly by lower Sempra California and Sempra Infrastructure earnings, partly offset by a sharp increase at Sempra Texas Utilities (Oncor equity earnings). Non-GAAP adjustments in the quarter were modest: a $41 million after-tax Mexico monetary-position impact and a $12 million net unrealized loss on commodity derivatives.
Operationally, the quarter featured a nearly $3 billionc system resiliency plan filed by Oncor under Texas House Bill 2555, which the PUCT may take up to 180 days to review, with implementation expected in 2025. Oncor's queue of generation and large C&I transmission interconnection requests rose 20% year over year to 781. At Sempra Infrastructure, the Energía Costa Azul LNG Phase 1 project was more than 80% complete and remains on track for summer 2025 commercial operations, and the company reached a final investment decision on the 320 MW Cimarrón wind project (about $550 million capex, expected online late 2025).
Quarterly capital expenditures and investments rose to $2.1 billiond from $1.9 billion. Sempra updated its 2024 GAAP EPS guidance to $4.52–$4.82 to reflect Q1 actuals, while affirming 2024 adjusted EPS guidance of $4.60–$4.90, 2025 EPS guidance of $4.90–$5.25, and a long-term EPS growth rate of 6%–8%. Investors should note that California rate case revenues were recorded at 2023 authorized levels pending a CPUC proposed decision expected in Q2 2024 and a final decision by year-end.
02—Key points
Key Highlights
- GAAP EPS of $1.26 vs. $1.53 a year ago (down ~18%); adjusted EPS of $1.34 vs. $1.46 (down ~8%).
- Sempra Texas Utilities earnings rose to $183M from $83M, while Sempra California fell to $582M from $618M and Sempra Infrastructure fell to $131M from $315M.
- Oncor filed a ~$3B system resiliency plan under Texas HB 2555; PUCT review may take up to 180 days, with implementation expected in 2025.
- Full-year 2024 GAAP EPS guidance lowered to $4.52–$4.82 (reflecting Q1 actuals); adjusted EPS guidance of $4.60–$4.90 and 2025 guidance of $4.90–$5.25 affirmed.
- Energía Costa Azul LNG Phase 1 is over 80% complete and on track for summer 2025 commercial operations; Port Arthur LNG Phase 1 construction is also on schedule.
- Final investment decision reached on the 320 MW Cimarrón wind project (~$550M capex), supported by a 20-year PPA with Silicon Valley Power.
- Total debt rose meaningfully: long-term debt and finance leases increased to $29.5B from $27.8B, and cash increased to $606M from $236M, with operating cash flow of $1.85B.
03—Questions
Frequently Asked Questions
Why did Sempra's GAAP earnings decline compared with the first quarter of 2023?
GAAP earnings fell to $801M from $969M, largely because Sempra Infrastructure earnings dropped to $131M from $315M and Sempra California earnings dipped to $582M from $618M. The prior-year quarter also included a $217M net unrealized gain on commodity derivatives (excluded from adjusted results), which compares unfavorably with a $12M loss in 2024. Partly offsetting this, Sempra Texas Utilities earnings more than doubled to $183M.
Is Sempra changing its 2024 earnings outlook?
Only on a GAAP basis. The GAAP EPS guidance was updated to $4.52–$4.82 to reflect Q1 actuals, while the adjusted EPS guidance of $4.60–$4.90 and the 2025 EPS guidance of $4.90–$5.25 were affirmed. The long-term EPS growth target of 6%–8% also remains unchanged.
What is the significance of Oncor's system resiliency plan?
Oncor filed a plan for nearly $3 billion of capital investment over three years covering grid hardening, cyber protection, vegetation management, wildfire mitigation and new technology. It is the first plan filed under Texas HB 2555, which is designed to speed cost recovery for approved resiliency spending. The PUCT has up to 180 days to review, and Oncor expects implementation to begin in 2025. Approval would support the rate-base growth that underpins Sempra Texas's earnings outlook.
What is the status of California rate cases and how could they affect earnings?
A proposed decision on Sempra California's general rate cases is expected in Q2 2024, with a final CPUC decision anticipated before year-end. Meanwhile, the company recorded first-quarter CPUC revenues based on 2023 authorized levels. Investors should watch for the proposed decision, since the final authorized revenue requirement could result in true-up adjustments to recognized revenue.
What are the main growth projects at Sempra Infrastructure?
Energía Costa Azul LNG Phase 1 is more than 80% complete and is on track to begin commercial operations in summer 2025. Port Arthur LNG Phase 1 construction is also on schedule. In addition, Sempra reached a final investment decision on the Cimarrón wind project, a 320 MW facility expected to generate power in late 2025 under a 20-year PPA with Silicon Valley Power. Capital expenditures and investments at the segment were $790M in the quarter.
04—Continue