Why did GAAP earnings fall so much in 2025 while adjusted earnings held steady?

GAAP results were hit by items management excludes from adjusted earnings. The largest were a $457 million after-tax regulatory disallowance charge at Sempra California (mostly the $432 million Track 2 final decision), a $512 million net income tax expense tied to classifying SI Partners and Ecogas as held for sale, and $180 million of losses from Mexican foreign currency and inflation effects. Sempra's 2024 GAAP results also included a $330 million tax charge related to a foreign tax credit valuation allowance that does not recur in the same form in 2025.

What does the raised capital plan mean for future growth?

The $65 billion 2026 to 2030 plan is up 17% from the prior $55.5 billion plan on a Capital Plan basis, and is weighted heavily toward Texas (59% of the Capital Plan), with Oncor as the main driver, and California (36%). Because capex is concentrated in regulated rate base, it supports the company's EPS growth outlook through 2030. The additional $9 billion of potential investment is a further upside option rather than part of the base plan, and rate base growth depends on regulatory approvals.

How will the KKR and Ecogas transactions affect Sempra's earnings and balance sheet?

Sempra will reduce its SI Partners ownership from 70% to 25% upon closing of the 45% sale, moving that interest to equity-method accounting. The $10 billion sale is expected to bring in substantial cash to fund the utility capex plan and reduce leverage. However, the filing notes that any gains are excluded from 2026 guidance because purchase prices depend on closing adjustments, tax items and currency movements. The transactions are subject to price adjustments, approvals and closing conditions, and are expected to close in Q2 to Q3 2026.

Is the dividend safe, and how fast is it growing?

The board declared a quarterly dividend of $0.6575 per share, payable April 15, 2026 to holders of record on March 19, 2026. That is an annualized $2.63 per share, up from $2.58 in 2025, an increase of roughly 2%. Dividend coverage is comfortable relative to 2026 adjusted EPS guidance of $4.80 to $5.30, roughly 1.8x to 2.0x. The filing does not discuss payout policy changes beyond this declaration.

What are the key risks investors should watch in this filing?

Key risks include the outcome of regulatory proceedings, particularly the Track 2 decision at Sempra California and the risk of further disallowances. Other risks include Mexican foreign currency and inflation volatility, which drives large swings in GAAP earnings, and the execution of the two asset sales. Sempra's financing needs are substantial: 2025 PP&E capex was $10.6 billion against $4.6 billion of operating cash flow, and short-term debt rose to $4.2 billion. Wildfire liability in California and the ability to finance the expanded capex plan on favorable terms are also flagged in the forward-looking statements.

SRE/SREA 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 26, 2026. Cited figures are marked; the original filing is the authoritative source.

Sempra reported full-year 2025 GAAP earnings of $1.80 billion^a, or $2.75 per diluted share, down from $2.82 billion, or $4.42, in 2024.

Adjusted earnings were $3.07 billion^b, or $4.69 per diluted share, up from $4.65. The GAAP decline was driven mainly by a $432 million after-tax charge from regulatory disallowances tied to the Track 2 final decision at Sempra California, and a $512 million full-year tax charge from classifying SI Partners and Ecogas as held for sale. Fourth-quarter GAAP earnings were $352 million, or $0.54 per diluted share, versus $665 million, or $1.04, a year earlier.

Adjusted fourth-quarter earnings were $841 million^c, or $1.28 per share, versus $1.50. Management is positioning the company around a larger utility-focused plan. Sempra raised its five-year 2026 to 2030 capital plan to approximately $65 billion, up from $56 billion, with over 95% directed to regulated utilities in Texas and California.

It also identified up to $9 billion^d of additional potential capex through 2030, mostly for Oncor's grid expansion. The company affirmed 2026 adjusted EPS guidance of $4.80 to $5.30, issued 2027 guidance of $5.10 to $5.70, and set a 2030 outlook of $6.70 to $7.50. The quarterly dividend was raised to $0.6575 per share, or $2.63 annualized.

The portfolio is being reshaped through two asset sales. KKR affiliates will acquire a 45% equity stake in Sempra Infrastructure Partners for $10 billion, and SI Partners agreed to sell Ecogas Mexico for about $500 million.

Both transactions are expected to close in the second or third quarter of 2026, subject to price adjustments, approvals and closing conditions. Investors should monitor execution risk on these deals, the regulatory outcome of the Track 2 decision, and the company's growing debt load, with short-term debt at $4.2 billion and operating cash flow of $4.6 billion against $10.6 billion of PP&E capex in 2025.

02—Key points

Key Highlights

FY2025 GAAP EPS was $2.75 (vs. $4.42 in 2024); adjusted EPS rose to $4.69 from $4.65, with adjusted earnings of $3.07 billion.
Q4 2025 GAAP EPS was $0.54 (vs. $1.04), largely due to a $432 million after-tax regulatory disallowance charge at Sempra California from the 2024 GRC Track 2 final decision; Q4 adjusted EPS was $1.28 (vs. $1.50).
Five-year 2026 to 2030 capital plan raised to about $65 billion from $56 billion, with over 95% in regulated utilities in Texas and California, plus up to $9 billion of potential incremental capex through 2030.
Guidance: 2026 adjusted EPS affirmed at $4.80 to $5.30; 2027 issued at $5.10 to $5.70; 2030 outlook of $6.70 to $7.50.
Quarterly dividend increased to $0.6575 per share ($2.63 annualized, up from $2.58), payable April 15, 2026.
Capital recycling: KKR affiliates to acquire a 45% stake in Sempra Infrastructure Partners for $10 billion, and Ecogas Mexico to be sold for about $500 million; both expected to close in Q2 to Q3 2026.
Sempra Infrastructure segment swung to a $160 million loss in 2025 from $911 million earnings in 2024, while Sempra Texas Utilities earnings rose to $861 million from $781 million, reflecting Oncor's improved returns under the Unified Tracker Mechanism.

03—Questions

Frequently Asked Questions

Why did GAAP earnings fall so much in 2025 while adjusted earnings held steady?
GAAP results were hit by items management excludes from adjusted earnings. The largest were a $457 million after-tax regulatory disallowance charge at Sempra California (mostly the $432 million Track 2 final decision), a $512 million net income tax expense tied to classifying SI Partners and Ecogas as held for sale, and $180 million of losses from Mexican foreign currency and inflation effects. Sempra's 2024 GAAP results also included a $330 million tax charge related to a foreign tax credit valuation allowance that does not recur in the same form in 2025.
What does the raised capital plan mean for future growth?
The $65 billion 2026 to 2030 plan is up 17% from the prior $55.5 billion plan on a Capital Plan basis, and is weighted heavily toward Texas (59% of the Capital Plan), with Oncor as the main driver, and California (36%). Because capex is concentrated in regulated rate base, it supports the company's EPS growth outlook through 2030. The additional $9 billion of potential investment is a further upside option rather than part of the base plan, and rate base growth depends on regulatory approvals.
How will the KKR and Ecogas transactions affect Sempra's earnings and balance sheet?
Sempra will reduce its SI Partners ownership from 70% to 25% upon closing of the 45% sale, moving that interest to equity-method accounting. The $10 billion sale is expected to bring in substantial cash to fund the utility capex plan and reduce leverage. However, the filing notes that any gains are excluded from 2026 guidance because purchase prices depend on closing adjustments, tax items and currency movements. The transactions are subject to price adjustments, approvals and closing conditions, and are expected to close in Q2 to Q3 2026.
Is the dividend safe, and how fast is it growing?
The board declared a quarterly dividend of $0.6575 per share, payable April 15, 2026 to holders of record on March 19, 2026. That is an annualized $2.63 per share, up from $2.58 in 2025, an increase of roughly 2%. Dividend coverage is comfortable relative to 2026 adjusted EPS guidance of $4.80 to $5.30, roughly 1.8x to 2.0x. The filing does not discuss payout policy changes beyond this declaration.
What are the key risks investors should watch in this filing?
Key risks include the outcome of regulatory proceedings, particularly the Track 2 decision at Sempra California and the risk of further disallowances. Other risks include Mexican foreign currency and inflation volatility, which drives large swings in GAAP earnings, and the execution of the two asset sales. Sempra's financing needs are substantial: 2025 PP&E capex was $10.6 billion against $4.6 billion of operating cash flow, and short-term debt rose to $4.2 billion. Wildfire liability in California and the ability to finance the expanded capex plan on favorable terms are also flagged in the forward-looking statements.

04—Continue

← View all 8-K filings