01—Abstract
Summary
Summary of the 8-K filed February 25, 2025. Cited figures are marked; the original filing is the authoritative source.
Sempra (NYSE: SRE) reported full-year 2024 GAAP earnings of $2.82 billiona, or $4.42 per diluted share, down from $3.03 billion, or $4.79, in 2023.
Adjusted full-year 2024 earnings rose to $2.97 billionb, or $4.65 per share, from $4.61 in 2023. Fourth-quarter GAAP earnings were $665 million, or $1.04 per share, versus $1.16 a year earlier, while adjusted Q4 earnings were $960 million, or $1.50 per share, up from $1.13. The GAAP decline was driven largely by a $330 million tax charge from a valuation allowance on foreign tax credits and a $104 million regulatory disallowance tied to a FERC order on the California ISO adder refund, both excluded from adjusted results.
Management set a record five-year 2025-2029 capital plan of roughly $56 billionc, up 16% from the prior plan, with over 90% directed to regulated utilities in Texas and California and over half earmarked for Texas. The company expects utility rate base to grow about 10% annually. Full-year 2025 EPS guidance was revised down to $4.30-$4.70, attributed to recent and planned regulatory matters and a higher-cost environment, while 2026 guidance was issued at $4.80-$5.30 and the long-term EPS growth target was raised to 7%-9%.
Other catalysts include a targeted 2025 final investment decision on Port Arthur LNG Phase 2, supported by a non-binding offtake HOA, a proposed Saudi Aramco equity investment, and a fixed-price EPC contract with Bechtel. The quarterly common dividend increases to $0.645d per share, or $2.58 annualized, from $2.48. Investors should weigh the strong capital growth outlook against the near-term EPS guidance reset, persistent regulatory risk, and the balance-sheet expansion required to fund the plan, as long-term debt rose to about $31.6 billion from $27.8 billion.
02—Key points
Key Highlights
- FY2024 GAAP EPS of $4.42 (down from $4.79) and adjusted EPS of $4.65 (up from $4.61); the $330M foreign tax credit valuation allowance charge and $104M FERC-driven regulatory disallowance were the main GAAP drags.
- Record five-year 2025-2029 capital plan of ~$56B (up 16%), with over 90% in regulated utilities and ~53% of the plan at Texas utilities (Oncor's plan rose 50% to $36B).
- 2025 EPS guidance revised down to $4.30-$4.70 due to regulatory matters and a higher-cost environment; 2026 guidance set at $4.80-$5.30 (about 12% growth off the 2025 midpoint).
- Long-term EPS growth target raised to 7%-9%, and utility rate base expected to grow roughly 10% annually.
- Port Arthur LNG Phase 2 targeted for final investment decision in 2025, with a non-binding offtake HOA, a proposed Saudi Aramco equity stake, and a fixed-price Bechtel EPC contract, all subject to definitive agreements, permits and financing.
- Quarterly common dividend raised to $0.645 per share ($2.58 annualized vs. $2.48), payable April 15, 2025.
- Balance sheet expansion: long-term debt and finance leases rose to $31.6B from $27.8B, and cash increased to $1.6B; Q4 GAAP results included a $330M tax item and other one-time items.
03—Questions
Frequently Asked Questions
Why did GAAP earnings decline in 2024 while adjusted earnings increased?
GAAP EPS fell to $4.42 from $4.79 mainly because of a $330M income tax charge from a valuation allowance on foreign tax credits and a $104M after-tax regulatory disallowance tied to a FERC order requiring refunds of the California ISO adder. Adjusted EPS, which excludes these and other items such as Mexico currency and inflation effects and unrealized derivative gains and losses, rose to $4.65 from $4.61.
Why was 2025 EPS guidance lowered, and what does 2026 look like?
Management cited recent and planned regulatory matters and a higher-cost environment for the revised 2025 range of $4.30-$4.70. The company issued 2026 guidance of $4.80-$5.30, representing about 12% growth from the 2025 guidance midpoint, and raised its long-term EPS growth target to 7%-9%.
How will the $56 billion capital plan be funded, and what does it mean for growth?
The filing does not detail the funding mix. The plan is expected to expand utility rate base by roughly 10% annually, and it includes contributions from partners at Port Arthur and other joint ventures, with NCI owners' share of Sempra Infrastructure capex estimated at $7.0B. Investors should monitor future debt and equity issuance, given that long-term debt rose about $3.9B in 2024 and noncontrolling interests grew to $6.5B.
What are the key risks and near-term catalysts to watch?
Key catalysts include the 2025 final investment decision on Port Arthur LNG Phase 2, the Oncor comprehensive base rate review expected later in 2025, and Energía Costa Azul LNG Phase 1 start-up in spring 2026. Risks include California wildfire liability, regulatory disallowances such as the FERC adder refund, Mexican currency and inflation exposure, and the financing needs of the large capital program.
Is the dividend growing, and is it safe?
The quarterly common dividend rises to $0.645 per share, an annualized $2.58 versus $2.48 in 2024, a roughly 4% increase. The filing does not discuss payout coverage, but the adjusted EPS of $4.65 in 2024 covers the annualized dividend by a comfortable margin, and the 2025 guidance midpoint of $4.50 still supports the payout.
04—Continue