(Sempra, 5.May.2022) — Sempra (NYSE: SRE) (BMV: SRE) today announced first-quarter 2022 earnings of $612mn, or $1.93 per diluted share, compared to first-quarter 2021 earnings of $874mn, or $2.87 per diluted share. On an adjusted basis, the company’s first-quarter 2022 earnings were $924mn, or $2.91 per diluted share, compared to $900 million, or $2.95 per diluted share, in 2021.
“At Sempra, we understand the importance of energy security as a critical part of the transition to a lower-carbon future. That is why our investments in North American energy networks are designed to improve the safety and reliability of our services for the benefit of our customers and the communities we serve,” said Jeffrey W. Martin, chairman and chief executive officer of Sempra. “Also, as first quarter results demonstrate, our track record of operational excellence, commitment to safety and disciplined capital allocation creates the opportunity to deliver another strong year of financial performance.”
The reported financial results reflect certain significant items as described on an after-tax basis in the following table of GAAP (generally accepted accounting principles in the United States of America) earnings, reconciled to adjusted earnings, for the first quarter of 2022 and 2021.
| Three months ended | ||||
| March 31, | ||||
| (Dollars and shares in millions, except EPS) | 2022 | 2021 | ||
| (Unaudited) | ||||
| GAAP Earnings | $612 | $874 | ||
| Impacts Associated with Aliso Canyon Litigation1 | 66 | – | ||
| Impact from Foreign Currency and Inflation and Associated Undesignated Derivatives | 75 | (3) | ||
| Net Unrealized Losses on Commodity Derivatives | 51 | 29 | ||
| Deferred Income Tax Expense Associated with the Change in our Indefinite Reinvestment Assertion Related to the Pending Sale of a Non-Controlling Interest to ADIA | 120 | – | ||
| Adjusted Earnings2 | $924 | $900 | ||
| Diluted Weighted-Average Common Shares Outstanding | 317 | 308 | ||
| GAAP EPS3,4 | $1.93 | $2.87 | ||
| Diluted Weighted-Average Common Shares Outstanding | 317 | 308 | ||
| Adjusted EPS2,3,4 | $2.91 | $2.95 |
| 1Related to five property developer claims, four of which were settled in Q1-2022. |
| 2See Table A for information regarding non-GAAP financial measures and descriptions of adjustments. |
| 3For Q1-2021, preferred dividends of $10mn are added back to GAAP earnings and adjusted earnings because of the dilutive effect of Series B mandatory convertible preferred stock. |
| 4For Q1-2022, higher weighted-average shares are driven by the IEnova exchange offer, partially offset by share repurchases of $300mn in Q4-2021 and $200mn in Q1-2022. |
Sempra California
During the quarter, San Diego Gas & Electric Co. (SDG&E) and the U.S. Forest Service announced the completion of the Cleveland National Forest fire hardening and safety project, which is helping to reinforce the San Diego region’s community fire safety and electric system hardening efforts. The $700mn project was part of a decade-long collaboration with local, state and federal agencies to improve the fire resistance of electric infrastructure throughout approximately 880 square miles of SDG&E’s service territory.
Last month, SDG&E and Southern California Gas Co. (SoCalGas) filed their 2023 cost of capital applications to update their cost of capital for 2023 through 2025 and expect a decision later this year. Later this month, both utilities expect to file their general rate cases with the California Public Utilities Commission to update their authorized revenue requirements for 2024 through 2027.
Sempra Texas
In Texas, Oncor Electric Delivery Company LLC is executing on its five-year capital plan by expanding and modernizing the transmission and distribution infrastructure within its service territory to support strong demographic growth. In the first quarter, Oncor recorded a 78% increase in new transmission point of interconnection requests compared to the prior year. Additionally, during the quarter, Oncor connected approximately 16,000 premises to the grid and upgraded approximately 380 miles of power lines as a result of continued growth in its service territory.
In 2021, the Public Utility Commission of Texas (PUCT) approved a request to extend Oncor’s rate case filing deadline to June of 2022. Oncor plans to file its rate case with the PUCT later this month.
Sempra Infrastructure
Sempra Infrastructure is working to expand its North American infrastructure network through the development of its liquefied natural gas (LNG) portfolio that is uniquely positioned to serve customers in both the Pacific and Atlantic markets. The company also is continuing to support growing integration of North American energy markets through its US-Mexico cross-border infrastructure business.
To support its growth, the company took steps to advance the development of its Cameron LNG Phase 2 expansion project with its partners at the Cameron LNG joint venture. These include a non-binding Heads of Agreement, which provides the commercial framework for the expansion of the facility by adding a fourth LNG train and also increasing the production capacity of the existing three trains through debottlenecking activities. Furthermore, the company and Cameron LNG entered into a project development agreement, which provides for the management and funding of the ongoing development work that is necessary to prepare for a final investment decision. Concurrent with these activities, Cameron LNG is also conducting a competitive Front-End Engineering Design process. This development work is targeted to be completed in the summer of 2023 and the company expects to be in a position to make a final investment decision thereafter.
In March, the company announced a non-binding memorandum of understanding (MOU) with TotalEnergies for the company’s Vista Pacífico LNG project under development in Mexico. The referenced MOU for the Vista Pacífico project contemplates TotalEnergies contracting for approximately one-third of the long-term export production, as well as TotalEnergies’ participation as a minority equity investor in the project.
Sempra expects to close the sale of a non-controlling 10% interest in Sempra Infrastructure Partners to a subsidiary of Abu Dhabi Investment Authority (ADIA) for $1.785bn in cash in the second quarter, subject to customary closing adjustments and conditions. Upon closing, Sempra will own a 70% controlling interest in Sempra Infrastructure Partners.
Sustainable Business Practices
Sempra’s focus on sustainability is central to its corporate strategy with an unwavering focus on safety, resilience, energy security and climate security. Sempra’s newly published 2021 Corporate Sustainability Report highlights the company’s commitment to sustainable business practices, including its proactive management of environmental, social and governance risks and opportunities across its three growth platforms. These practices include aligning the company’s portfolio with long-term macroeconomic, market and policy trends, strengthening operational excellence by enhancing safety, climate resilience and affordability, and capturing new investments in infrastructure that support increasingly diversified and cleaner forms of energy.
Earnings Guidance
Sempra is updating its full-year 2022 GAAP earnings per common share (EPS) guidance range to $7.11 to $7.71, affirming its full-year 2022 adjusted EPS guidance range of $8.10 to $8.70, and affirming its full-year 2023 EPS guidance range of $8.60 to $9.20.
Non-GAAP Financial Measures
Non-GAAP financial measures include Sempra’s adjusted earnings, adjusted EPS and adjusted EPS guidance range. See Table A for additional information regarding these non-GAAP financial measures.
Internet Broadcast
Sempra 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 company’s website, sempra.com. For those unable to log on to the live webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (888) 203-1112 and entering passcode 3600295.
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