- Achieved Strong Safety and Operational Results
- Targeting Port Arthur LNG Phase 1 FID Q1-2023
- Affirming 2023 EPS Guidance Range
- Reiterating Long-Term 6-8% Compound Annual EPS Growth Rate
According to the company’s website press release on February 28, 2023, Sempra (NYSE: SRE) (BMV: SRE) reported fourth-quarter 2022 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $438 million or $1.39 per diluted share, compared to GAAP earnings of $604 million or $1.90 per diluted share in the fourth quarter of 2021. On an adjusted basis, fourth-quarter 2022 earnings were $743 million or $2.35 per diluted share, compared to $688 million or $2.16 per diluted share in the fourth quarter of 2021.
The company also reported full-year 2022 GAAP earnings of $2.09 billion or $6.62 per diluted share, compared to $1.25 billion or $4.01 per diluted share in 2021, which includes after-tax charges associated with litigation and regulatory matters of $199 million and $1,148 million in 2022 and 2021, respectively. On an adjusted basis, the company’s full-year 2022 earnings were $2.92 billion or $9.21 per diluted share, compared to $2.64 billion or $8.43 per diluted share in 2021.
The reported 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 2022 and 2021.
Common and Preferred Dividends
Sempra’s board of directors declared a $1.19 per share quarterly dividend on the company's common stock, which is payable April 15, 2023, to common stock shareholders of record as of March 22, 2023. The declared quarterly dividend represents an increase of the company's common stock dividend to $4.76 per share, on an annualized basis, from $4.58 per share in 2022.
Additionally, Sempra’s board of directors declared a semi-annual dividend of $24.375 per share on the company’s 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C. The preferred stock dividends will be payable April 15, 2023, to preferred stock shareholders of record at the close of business on April 1, 2023.
Track Record of Disciplined Growth
Over the last five years, Sempra has been successful in simplifying its business model and improving its position as a leader in some of North America’s largest economic markets. Moreover, the company has increased the scope and scale of its three business platforms — Sempra California, Sempra Texas and Sempra Infrastructure. This has allowed the company to also increase its recurring cash flows and substantially improve its financial performance.
Looking ahead, Sempra remains strategically focused on sustainable growth across its three business platforms underpinned by investments in energy infrastructure supporting electrification, lower carbon fuel sources and energy security in some of North America’s leading markets. Across its various businesses, the company is pursuing a portfolio of opportunities to continue improving safety, bolstering reliability and supporting the delivery of increasingly clean and more affordable sources of energy.
Sempra California
Sempra California’s San Diego Gas & Electric Co. (SDG&E) and Southern California Gas Co. (SoCalGas) achieved strong safety results in 2022 while continuing to enhance reliability and support California’s ambitious clean energy goals. Throughout 2022, the utilities advanced strategic programs to better serve customers including modernizing their energy networks with a focus on safety, reliability and climate resiliency.
SDG&E is advancing state-of-the-art wildfire mitigation and resiliency solutions to further reinforce community fire safety and electric system hardening efforts in the San Diego region. The utility has now hardened 100% of transmission assets in its Tier 3 high-fire threat areas and continues to work toward hardening the remaining areas vulnerable to the threat of wildfires. These enhancements include the completion of the Cleveland National Forest fire hardening and safety project, a $700 million 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.
SoCalGas achieved an important milestone for its Aspire 2045 strategy, receiving California Public Utilities Commission (CPUC) approval to establish a memorandum account to track the costs of feasibility studies for its Angeles Link green hydrogen infrastructure proposal. The CPUC also directed SoCalGas to include this green hydrogen infrastructure system proposal as part of California’s application to the U.S. Department of Energy (DOE) for Hydrogen Hub federal funding.
The ongoing general rate cases that SDG&E and SoCalGas filed with the CPUC in the spring of 2022 establish the foundation for future growth of this platform, and a proposed decision is scheduled to be issued in the second quarter of 2024. SDG&E and SoCalGas also received a final decision authorizing their cost of capital applications, which maintained their existing authorized equity layers and updated their costs of debt, and equity rates of return to 9.95% and 9.8%, respectively, for the 2023 through 2025 period, both subject to an existing adjustment mechanism.
Sempra Texas
In Texas, Oncor continues to demonstrate a strong commitment to safety and operational excellence while executing on its robust capital plan.
Oncor advanced its operational execution in 2022, constructing new projects to support growth across Texas and increase reliability for the Electric Reliability Council of Texas (ERCOT) market. The utility placed more than $1 billion of transmission projects into service in 2022, including placement of 13 new substations and 18 new switching stations into service and approximately 340 miles of new or upgraded high-voltage transmission lines. Additionally, in 2022, Oncor experienced a 53% increase in active generation and retail transmission interconnection requests. This strong momentum is driven by continued high demand for renewable energy and business growth across Oncor’s service territory.
In addition, Oncor recently announced a new Vehicle-to-Grid (V2G) collaboration with Toyota Motor North America (Toyota) to study the impacts and benefits of V2G transactions on the grid. This V2G pilot project will examine the interconnectivity between Toyota battery electric vehicles (BEV’s) and utilities, providing insight into the ways Oncor can reliably provide the necessary infrastructure to support growth of electric vehicles across Texas. This effort represents the first collaboration of its kind between Oncor and an automotive original equipment manufacturer and the first utility collaboration for Toyota around BEV’s.
Oncor continues to advance its base rate review with the Public Utility Commission of Texas and anticipates a final order to be issued around the end of the first quarter of 2023. Oncor’s board of directors is expected to review a long-term financial plan following receipt of a final order in the base rate review.
Sempra Infrastructure
Sempra Infrastructure is advancing its three integrated business lines — liquefied natural gas (LNG) and net-zero solutions, energy networks and clean power. With projects competitively positioned on both the Gulf and Pacific Coasts of North America, Sempra Infrastructure is assisting with energy security and decarbonization in North America and globally.
Throughout 2022, Sempra Infrastructure achieved a number of key milestones. Cameron LNG Phase 1 continues to exceed original production expectations while unlocking efficiencies and achieving a strong safety record. The company also brought online the fuels terminal in Puebla, which is the sister terminal to the marine facility in Veracruz. At its Pacific Coast assets, Energía Sierra Juarez Phase 2 wind farm, with 108 megawatts of capacity, reached commercial operations and construction of the Energía Costa Azul LNG (ECA LNG) Phase 1 project continues to make substantial construction progress.
Sempra Infrastructure continues to advance marketing efforts for its various LNG development projects to help meet global demand for U.S. LNG. The company recently completed the marketing phase for Phase 1 of the Port Arthur LNG development project, and it is now fully subscribed at 10.5 Mtpa of definitive, long-term contracts with top-tier counterparties. The company is targeting a final investment decision for Port Arthur LNG Phase 1 before the end of the first quarter of 2023.
In addition, the Cameron LNG Phase 2 development project remains on track for completion of the competitive front-end engineering design process in the summer of this year. Additional opportunities for future investment include ECA LNG Phase 2 and Vista Pacífico LNG, both of which received DOE approval in December to export U.S.- sourced natural gas in the form of LNG from Mexico to non-Free Trade Agreement countries.
Earnings Guidance
Sempra is reaffirming its full-year 2023 earnings per common share (EPS) guidance range of $8.60 to $9.20. The company is also reiterating its long-term projected EPS compound annual growth rate of approximately 6% to 8% based on the midpoint of 2023 EPS guidance range.
Non-GAAP Financial Measures
Non-GAAP financial measures include Sempra’s adjusted earnings and adjusted EPS. 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 the company’s senior management. Access is available by logging onto the Investors section of the company’s website, sempra.com/investors. The webcast will be available on replay a few hours after its conclusion at sempra.com/investors.
About Sempra
Sempra is a leading North American energy infrastructure company that helps meet the daily energy needs of nearly 40 million consumers. As the owner of one of the largest energy networks on the continent, Sempra is helping to electrify and decarbonize some of the world’s most significant economic markets, including California, Texas, Mexico and the LNG export market. The company is also consistently recognized as a leader in sustainable business practices and for its long-standing commitment to building a high-performance culture focused on safety, leadership and workforce development, and diversity and inclusion. Investor’s Business Daily named Sempra the top-ranked utility in the U.S. for environmental, social and governance scores and financial performance. Sempra was also included on the Dow Jones Sustainability North America Index for the 12th consecutive year. More information about Sempra is available at sempra.com and on Twitter @Sempra.
