01—Abstract
Summary
Summary of the 8-K filed November 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Sempra (NYSE: SRE) reported third-quarter 2024 GAAP earnings of $638 milliona, or $1.00 per diluted share, versus $721 million, or $1.14, in the same period of 2023.
Adjusted earnings were $566 millionb, or $0.89 per diluted share, compared with $685 million, or $1.08, a year earlier. The year-over-year decline was driven largely by a $67 million after-tax Mexico foreign currency and inflation impact (a gain excluded from adjusted results) and weaker results at Sempra California and Sempra Infrastructure. For the first nine months, GAAP EPS was $3.38 and adjusted EPS was $3.12, both below the prior-year levels of $3.63 and $3.48.
Results do not yet reflect the pending California general rate case decision. Management updated full-year 2024 GAAP EPS guidance to $4.86c–$5.16 to reflect actual results through the third quarter, and affirmed adjusted EPS guidance of $4.60–$4.90 and 2025 adjusted EPS guidance of $4.90–$5.25. It also affirmed a long-term EPS growth rate of roughly 6–8% and established a $3 billion at-the-market equity program to fund future financing needs.
The most notable forward-looking development is at Oncor, where management now expects a 40–50% increase to its previously announced $24 billiond five-year capital plan, with an update due on the February 2025 earnings call. Sempra California's proposed rate case decision, which would apply retroactively to January 1, is expected by year-end.
Investors should weigh the strong growth outlook at Oncor and the LNG build-out at Sempra Infrastructure against near-term earnings pressure, regulatory uncertainty in California, and rising capital needs that will likely require continued equity and debt issuance. The filing is a furnished (not filed) 8-K under Item 2.02, so its contents are not incorporated into Sempra's other SEC filings.
02—Key points
Key Highlights
- Q3 2024 GAAP EPS of $1.00 (vs. $1.14) and adjusted EPS of $0.89 (vs. $1.08); the year-over-year decline reflects weaker Sempra California and Sempra Infrastructure contributions.
- Full-year 2024 GAAP EPS guidance updated to $4.86–$5.16; adjusted EPS guidance of $4.60–$4.90 and 2025 adjusted EPS guidance of $4.90–$5.25 were affirmed.
- Oncor expects a 40–50% increase to its $24 billion five-year capital plan, driven by System Resiliency Plan spending (~$3 billion) and Permian Basin transmission needs, with details due in February 2025.
- Sempra announced a $3 billion at-the-market equity program to support general corporate purposes and future financing needs, signaling potential share dilution.
- Sempra California's general rate case proposed decision is pending, with a final decision expected by year-end and revenues retroactive to January 1, 2024; nine-month results do not yet reflect it.
- Sempra Infrastructure made progress on LNG projects: ECA LNG Phase 1 targets commercial operation in spring 2026, and Port Arthur LNG Phase 1 construction remains on schedule and on budget.
- Nine-month GAAP net income attributable to common shares fell to $2.152 billion from $2.293 billion, while nine-month operating cash flow declined to $3.54 billion from $5.13 billion, pressured by working capital changes.
03—Questions
Frequently Asked Questions
Why did Sempra's reported earnings decline in the third quarter of 2024?
GAAP earnings fell to $638 million from $721 million, and adjusted earnings fell to $566 million from $685 million. Segment results show lower earnings at Sempra California ($247 million vs. $290 million) and Sempra Infrastructure ($230 million vs. $223 million, roughly flat), with Texas Utilities down ($261 million vs. $305 million). Higher depreciation, interest expense, and parent costs also weighed on results, partly offset by a Mexico currency and inflation gain that is excluded from adjusted earnings.
What does the Oncor capital plan increase mean for investors?
Management expects a 40–50% increase to Oncor's previously announced five-year capital plan of $24 billion, which would imply roughly $34–36 billion. Because the additional projects are incremental to the existing plan, they could support rate base growth and earnings over time, though they will also require substantial funding and regulatory approval. Investors should watch the February 2025 update for specifics on timing and financing.
Why is Sempra issuing up to $3 billion in equity through an at-the-market program?
The company stated the program supports general corporate purposes, including future financing needs. Given the capital-intensive plans at Oncor, Sempra California, and Sempra Infrastructure, this program provides flexibility to raise equity over time. It may dilute existing shareholders, although the filing does not specify expected issuance timing or amounts.
Has Sempra changed its earnings outlook for 2024 and 2025?
Sempra updated its 2024 GAAP EPS guidance to $4.86–$5.16 to reflect actual results through the third quarter. It affirmed 2024 adjusted EPS guidance of $4.60–$4.90 and 2025 adjusted EPS guidance of $4.90–$5.25, along with a long-term EPS growth rate of approximately 6–8%. The guidance excludes Mexico currency and inflation effects and unrealized derivative gains and losses.
What regulatory events could materially affect Sempra's results soon?
The most significant near-term event is the California Public Utilities Commission's final decision on Sempra California's general rate case, expected by year-end, with revenues applied retroactively to January 1, 2024. Oncor's System Resiliency Plan is also under review by the Public Utility Commission of Texas and is expected to be finalized in 2024. The nine-month results do not yet reflect the California decision.
04—Continue