(Sempra, 27.Feb.2020) — Sempra Energy reported full-year 2019 earnings of $2.1 billion, or $7.29 per diluted share, up from $924 million, or $3.42 per diluted share, in 2018. On an adjusted basis, the company’s full-year 2019 earnings were $1.9 billion, or $6.78 per diluted share, compared to $1.5 billion, or $5.57 per diluted share, in 2018.
“This year has been one of the strongest in our company’s history,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy. “Our earnings results are a direct reflection of our sharper strategic focus and ongoing execution of our mission to be North America’s premier energy infrastructure company. Supported by our high-performance culture, our dedicated employees will carry this momentum into 2020 as we continue to focus on our vision of delivering energy with purpose by connecting millions of consumers to safe, resilient and affordable energy.”
In the fourth quarter 2019, Sempra Energy reported earnings of $447 million, or $1.55 per diluted share, compared with earnings of $864 million, or $3.03 per diluted share, in the fourth quarter 2018. On an adjusted basis, fourth quarter 2018 earnings were $431 million, or $1.56 per diluted share.
These financial results reflect certain significant items, as described on an after-tax basis in the following table of GAAP earnings, reconciled to adjusted earnings, for the fourth quarter and full-year 2019 and 2018.
Earlier this week, Sempra Energy’s board of directors approved an 8% increase to the company’s dividend, to $4.18 per common share from $3.87 per common share, on an annualized basis. On average, Sempra Energy has increased its dividend by more than 10% annually for the last decade.
OPERATING HIGHLIGHTS
The company made progress on its strategy to focus on transmission and distribution infrastructure in the most attractive markets in North America.
In January, the California Public Utilities Commission issued a final decision approving an extension of the General Rate Case (GRC) cycle to four years on a go-forward basis. This change applies to San Diego Gas & Electric’s (SDG&E) and Southern California Gas Co.’s recently approved GRC. As a transitional step, both utilities’ GRC cycle will be extended to five years, covering the years 2019 through 2023. Extending the GRC cycle is a constructive development that is expected to benefit all stakeholders by delivering future visibility to the utilities’ robust capital programs to enhance safety and resilience.
Earlier this month, SDG&E filed its comprehensive 2020 Wildfire Mitigation Plan, a strategic three-year program. This program is a continuation of SDG&E’s efforts over the last decade to help mitigate infrastructure-related wildfires and to help increase the safety of its customers, workforce and the communities it serves. The 2020 Wildfire Mitigation Plan includes initiatives announced in October under SDG&E’s Fire Safe 3.0 program, an innovative portfolio of continuous improvement initiatives to increase wildfire safety. The Fire Safe 3.0 program involves partnering with academic, government and public safety professionals to implement artificial intelligence, satellite wildfire alerts and a new Vegetation Risk index, among other strategies.
To meet the growing needs of its customers in Texas, Oncor Electric Delivery Co. LLC (Oncor) recently announced a new five-year capital plan of approximately $11.9 billion. The increase will help to support population growth in West Texas and the Dallas-Fort Worth area, as well as to strengthen and expand the grid in Oncor’s service territory. Additionally, Sempra Energy took a positive step in growing its presence in Texas through the announcement of a new “Center of Excellence” in Houston. The office, which is expected to open later this year, will serve as a regional headquarters as Sempra Energy advances its high-growth business strategy in Texas.
Sempra Energy continues to be focused on its goal of developing liquefied natural gas (LNG) infrastructure that can deliver up to 45 million tonnes per annum (Mtpa) of LNG to the largest world markets, which would make Sempra Energy one of North America’s largest developers of LNG-export infrastructure projects.
Train 2 of the Cameron LNG liquefaction-export infrastructure project recently achieved substantial completion and is expected to commence commercial operations under Cameron LNG’s tolling agreements in the coming days. The facility began producing LNG from Train 2 in December 2019. Train 1 began commercial operations in August 2019 and Train 3 remains on schedule and is expected to start commercial operations in the third quarter of 2020. Sempra Energy’s share of full-year run-rate earnings from the first three trains at Cameron LNG are projected to be between $400 million and $450 million annually after all three trains achieve commercial operations under Cameron LNG’s tolling agreements.
The potential Port Arthur LNG liquefaction-export infrastructure project under development in Jefferson County, Texas, continues to advance with a final investment decision targeted for third quarter 2020. In January, Sempra LNG signed an Interim Project Participation Agreement (IPPA) with Aramco Services Company, a subsidiary of Saudi Aramco, for the proposed Port Arthur LNG project. The IPPA represents another milestone for both companies after having signed a heads of agreement in May 2019 for the potential purchase of 5 Mtpa of LNG and a 25% equity investment in the project. In December 2018, Port Arthur LNG entered into an agreement with Polish Oil & Gas Company for the sale and purchase of 2 Mtpa of LNG per year.
A final investment decision for the Energía Costa Azul (ECA) LNG liquefaction-export infrastructure project, under development in Baja California, Mexico, is expected later this quarter. TechnipFMC has been selected as the engineering, procurement and construction (EPC) contractor for the proposed project. ECA LNG expects to sign a lump-sum, turn-key EPC contract for Phase 1 of the project in the coming days.
In 2019, Sempra Energy announced two agreements that would conclude the company’s planned sale of its South American businesses for combined expected after-tax proceeds of approximately $4.55 to $4.85 billion in cash, subject to adjustments and satisfaction of closing conditions. Both transactions, one to sell Sempra Energy’s equity interests in its Peruvian businesses and the other to sell its equity interests in its Chilean businesses, continue to advance and are expected to be completed in the next four to eight weeks.
EARNINGS GUIDANCE
Sempra Energy’s full-year 2020 GAAP EPS guidance range is $12.78 to $14.26 and includes the estimated gain on the sale of the company’s South American businesses. Today, the company affirmed its full-year 2020 adjusted EPS guidance range of $6.70 to $7.50. Sempra Energy also issued its full-year 2021 EPS guidance range of $7.50 to $8.10.
NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures include Sempra Energy’s adjusted earnings and adjusted EPS for the fourth quarter of 2018 and full-year 2019 and 2018, adjusted diluted weighted-average common shares outstanding for the fourth quarter of 2018, and 2020 adjusted EPS guidance range. See Table A for additional information regarding these non-GAAP financial measures.
INTERNET BROADCAST
Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 12 p.m. ET with senior management of the company. Access is available by logging onto the website at www.sempra.com. For those unable to log onto the live webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (888) 203-1112 and entering passcode 1455338.
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