Why did Sempra's GAAP earnings fall so sharply in the third quarter?

GAAP earnings were $77 million ($0.12 per diluted share) versus $638 million ($1.00) a year earlier, primarily because of a $514 million after-tax income tax expense tied to management's decision to classify SI Partners as held for sale, a $78 million foreign tax credit valuation allowance charge, and a $32 million Mexico currency and inflation impact. These items are excluded from adjusted earnings, which rose to $728 million ($1.11 per share).

What is the status of the SI Partners equity sale to KKR?

Sempra agreed to sell a 45% equity interest in Sempra Infrastructure Partners to affiliates of KKR. The transaction is expected to close in the second or third quarter of 2026, subject to regulatory and other approvals and closing conditions. The sale supports Sempra's value creation initiatives to simplify the business and fund its capital program.

What does the Oncor capital plan update mean for investors?

Oncor now expects its roll-forward 2026–2030 base capital plan to be more than 30% larger than its $36 billion 2025–2029 base plan, driven by its share of ERCOT 765-kV transmission investment and strong load growth. Higher rate base could support earnings growth at Oncor, though investors should note that the company's base rate review is still pending, with a hearing on the merits scheduled for mid-November 2025.

Did Sempra change its earnings guidance?

Sempra lowered its full-year 2025 GAAP EPS guidance to $3.05–$3.45 to reflect results through the third quarter. It affirmed full-year 2025 adjusted EPS guidance of $4.30–$4.70, 2026 adjusted EPS guidance of $4.80–$5.30, and its long-term EPS compound annual growth rate target of 7%–9% for 2025–2029, with the company targeting the high end or above.

What are the main risks highlighted in the filing?

Key risks include the timing and terms of the SI Partners and Ecogas Mexico sales, regulatory approvals, the potential for further tax items tied to held-for-sale classification, California wildfire liability and recovery, Oncor's pending rate case and the possibility of settlement outcomes, foreign currency and inflation effects in Mexico, and the capital needs of a record capital program that could affect credit ratings and borrowing costs.

SRE/SREA 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 5, 2025. Cited figures are marked; the original filing is the authoritative source.

Sempra (SRE) reported third-quarter 2025 GAAP earnings of $77 million^a, or $0.12 per diluted share, down sharply from $638 million, or $1.00, a year earlier.

The decline is driven largely by a $514 million^b after-tax income tax charge tied to classifying Sempra Infrastructure Partners (SI Partners) as held for sale, plus a $78 million charge from a foreign tax credit valuation allowance and a $32 million after-tax Mexico currency and inflation effect. Adjusted earnings rose to $728 million, or $1.11 per share, from $566 million, or $0.89, and nine-month adjusted EPS reached $3.45 versus $3.12. Segment results show Sempra California and Sempra Texas Utilities contributing steadily, while Sempra Infrastructure posted a $580 million third-quarter loss, largely due to the tax charge flowing through its results.

Strategically, the quarter was dominated by the agreement to sell a 45% equity interest in SI Partners to affiliates of KKR, expected to close in Q2–Q3 2026 subject to approvals, and an ongoing sales process for Ecogas Mexico. Sempra also reached a final investment decision on Port Arthur LNG Phase 2, which is fully subscribed under 20-year offtake agreements. At Oncor, management expects a more than 30% increase in its 2026–2030 base capital plan over the prior $36 billion^c 2025–2029 plan, supported by strong load growth, including a large commercial and industrial interconnection queue up about 60% year over year.

Management updated full-year 2025 GAAP EPS guidance to $3.05^d–$3.45 and affirmed adjusted EPS guidance of $4.30–$4.70, along with 2026 adjusted EPS guidance of $4.80–$5.30 and a 7%–9% long-term EPS growth target. For investors, the key takeaway is that the GAAP headline is distorted by non-cash, held-for-sale tax items, while underlying earnings and the capital-plan growth at Oncor remain the primary drivers of the investment case. The pending SI Partners sale and its eventual tax and accretion effects, along with Oncor's pending base rate case, are the principal items to monitor.

02—Key points

Key Highlights

GAAP Q3 2025 EPS of $0.12 versus $1.00 a year ago, mainly due to a $514 million after-tax tax charge from classifying SI Partners as held for sale.
Adjusted Q3 2025 EPS of $1.11, up from $0.89, and nine-month adjusted EPS of $3.45 versus $3.12.
Agreement to sell a 45% equity interest in SI Partners to KKR affiliates, expected to close Q2–Q3 2026, pending regulatory approvals.
Port Arthur LNG Phase 2 reached final investment decision, with capacity fully subscribed under 20-year sales and purchase agreements.
Oncor expects its 2026–2030 base capital plan to rise more than 30% from its $36 billion 2025–2029 plan; its large C&I interconnection queue grew about 60% year over year.
Full-year 2025 GAAP EPS guidance lowered to $3.05–$3.45; adjusted EPS guidance of $4.30–$4.70 and 2026 adjusted EPS guidance of $4.80–$5.30 affirmed.
California SB 254 creates up to an $18 billion wildfire fund continuation account; SDG&E and SoCalGas cost-saving measures projected to save customers over $300 million from 2026 to 2031.

03—Questions

Frequently Asked Questions

Why did Sempra's GAAP earnings fall so sharply in the third quarter?
GAAP earnings were $77 million ($0.12 per diluted share) versus $638 million ($1.00) a year earlier, primarily because of a $514 million after-tax income tax expense tied to management's decision to classify SI Partners as held for sale, a $78 million foreign tax credit valuation allowance charge, and a $32 million Mexico currency and inflation impact. These items are excluded from adjusted earnings, which rose to $728 million ($1.11 per share).
What is the status of the SI Partners equity sale to KKR?
Sempra agreed to sell a 45% equity interest in Sempra Infrastructure Partners to affiliates of KKR. The transaction is expected to close in the second or third quarter of 2026, subject to regulatory and other approvals and closing conditions. The sale supports Sempra's value creation initiatives to simplify the business and fund its capital program.
What does the Oncor capital plan update mean for investors?
Oncor now expects its roll-forward 2026–2030 base capital plan to be more than 30% larger than its $36 billion 2025–2029 base plan, driven by its share of ERCOT 765-kV transmission investment and strong load growth. Higher rate base could support earnings growth at Oncor, though investors should note that the company's base rate review is still pending, with a hearing on the merits scheduled for mid-November 2025.
Did Sempra change its earnings guidance?
Sempra lowered its full-year 2025 GAAP EPS guidance to $3.05–$3.45 to reflect results through the third quarter. It affirmed full-year 2025 adjusted EPS guidance of $4.30–$4.70, 2026 adjusted EPS guidance of $4.80–$5.30, and its long-term EPS compound annual growth rate target of 7%–9% for 2025–2029, with the company targeting the high end or above.
What are the main risks highlighted in the filing?
Key risks include the timing and terms of the SI Partners and Ecogas Mexico sales, regulatory approvals, the potential for further tax items tied to held-for-sale classification, California wildfire liability and recovery, Oncor's pending rate case and the possibility of settlement outcomes, foreign currency and inflation effects in Mexico, and the capital needs of a record capital program that could affect credit ratings and borrowing costs.

04—Continue

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