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Nov 7, 2018

Sempra Energy Reports Higher Third-Quarter 2018 Earnings

- Preliminary Commercial Agreements Announced for Continued Development of LNG Export Projects in Louisiana, Mexico
- InfraREIT-Sharyland Transaction to Expand Texas Regulated Transmission Platform
- $1.54 Billion Pending Sale of U.S. Solar Assets Advances Asset Portfolio Optimization

SAN DIEGO, Nov. 7, 2018 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported third-quarter 2018 earnings of $274 million, or $0.99 per diluted share, up from $57 million, or $0.22 per diluted share, in the third quarter 2017.           

On an adjusted basis, Sempra Energy's third-quarter 2018 earnings increased to $339 million, or $1.23 per diluted share, from $265 million, or $1.04 per diluted share, in the third quarter 2017.

"The most recent quarter was very strong – credit goes to our employees," said Jeffrey W. Martin, CEO of Sempra Energy. "All of our businesses contributed to our third-quarter operating results. We are building momentum, successfully executing on several major initiatives to advance our strategic vision of becoming North America's premier energy infrastructure company. Our agreement to sell our U.S. solar assets is important. We expect to utilize capital from our solar asset sales to significantly expand our regulated Texas utility platform through Oncor's acquisition of InfraREIT and our acquisition of a 50-percent interest in Sharyland. We also have made significant progress toward our goal of becoming a market leader in North American liquefied natural gas (LNG) exports, recently securing preliminary commercial agreements for development of several LNG export projects."

For the first nine months of 2018, Sempra Energy's earnings were $60 million, or $0.22 per diluted share, compared with $757 million, or $2.99 per diluted share, in the first nine months last year. Adjusted earnings for the first nine months of 2018 were $1.07 billion, or $4 per diluted share, compared with $979 million, or $3.87 per diluted share, in the first nine months of 2017.

These results reflect certain significant items as described in the following table of GAAP earnings reconciled to adjusted earnings (on an after-tax basis) for the third quarter and first nine months of 2018 and 2017:

                       
       

 Three months ended 

 

 

 Nine months ended 

 
       

 September 30, 

 

 September 30, 

 
 

(Unaudited; dollars, except EPS, and shares, in millions)

 

2018

 

2017

 

2018

 

2017

 
                       
 

GAAP Earnings(1)

 

$            274

 

$              57

 

$              60

 

$            757

 
                       
 

Impairment of Non-Utility Natural Gas Storage Assets

 

-

 

-

 

755

 

-

 
                       
 

Impairment of U.S. Wind Equity Method Investments

 

-

 

-

 

145

 

-

 
                       
 

Impairment of Investment in RBS Sempra Commodities

 

65

 

-

 

65

 

-

 
                   

-

 
 

Impact from the Tax Cuts and Jobs Act of 2017

 

-

 

-

 

25

 

-

 
                       
 

Impacts Associated with Aliso Canyon Litigation

 

-

 

-

 

22

 

-

 
                       
 

Write-off of Wildfire Regulatory Asset

 

-

 

208

 

-

 

208

 
                       
 

Adjustments Related to Termoeléctrica de Mexicali (TdM)

 

-

 

-

 

-

 

42

 
                       
 

Recoveries Related to 2016 Permanent Release of Pipeline Capacity

 

-

 

-

 

-

 

(28)

 
                       
 

Adjusted Earnings(1)

 

$            339

 

$            265

 

$        1,072

 

$            979

 
                       
                       
 

Diluted weighted-average shares outstanding

 

276

 

253

 

268

 

253

 
                       
 

GAAP Earnings Per Diluted Share(1)

 

$          0.99

 

$          0.22

 

$          0.22

 

$          2.99

 
                       
 

Adjusted Earnings Per Diluted Share(1)

 

$          1.23

 

$          1.04

 

$          4.00

 

$          3.87

 
                       
   

1)

Attributable to common shares. Sempra Energy adjusted earnings and adjusted earnings per share are non-GAAP financial measures. See Table A for information regarding non-GAAP financial measures and descriptions of adjustments above.

OPERATING HIGHLIGHTS

Earlier today, Sempra Energy announced that its IEnova and Sempra LNG & Midstream subsidiaries have signed three Heads of Agreements (HOAs) with affiliates of Total S.A., Mistui & Co., Ltd., and Tokyo Gas Co., Ltd., for the full export capacity of Phase 1 of the Energia Costa Azul (ECA) LNG liquefaction project located in Baja California, Mexico. The HOAs contemplate the parties negotiating and finalizing definitive 20-year LNG sales-and-purchase agreements, with each of the companies purchasing approximately 0.8 million tonnes per annum (Mtpa) of LNG. ECA LNG Phase 1 is expected to include one liquefaction train capable of producing approximately 2.4 Mtpa of LNG.

Earlier this week, Sempra Energy announced a Memorandum of Understanding (MOU) with Total S.A. that contemplates Total potentially contracting for up to 9 Mtpa of LNG offtake from Sempra Energy's LNG export development projects, including the approximately 0.8 Mtpa at ECA LNG Phase 1, as described above, and at Cameron LNG Phase 2. On Nov. 2, Sempra Energy announced that Cameron LNG has initiated the commissioning process for the first liquefaction train of Phase 1 of the Louisiana joint-venture export project. Commissioning is the last step before the start-up process, when the liquefaction trains become fully operational and LNG can be exported from the facility. The first three liquefaction trains that comprise Cameron LNG Phase 1 are expected to be producing LNG in 2019.

On Oct. 18, Sempra Energy announced that it and Oncor have entered into agreements under which Oncor will acquire 100 percent of the equity interests of InfraREIT, Inc. for $1.275 billion, excluding certain transaction costs, and Sempra Energy will acquire a 50-percent limited-partnership interest in a holding company that will own Sharyland Utilities, LP, for approximately $98 million. Sempra Energy expects to utilize approximately $1.12 billion, excluding certain transaction costs, from the company's pending solar asset sales to help fund the transaction, which is slated for completion in mid-2019, subject to regulatory approvals, lender consents and customary closing conditions.

On Sept. 20, Sempra Renewables entered into an agreement to sell all of its U.S. operating solar assets, one U.S. wind generation facility, and its solar and battery storage development projects to a subsidiary of Consolidated Edison for $1.54 billion, subject to regulatory approvals and customary closing conditions. The sales process for the other announced asset sales – U.S. wind and U.S. non-utility natural gas storage assets – is ongoing.

Sempra Energy's Mexican subsidiary IEnova continues to expand its liquids business with the recent acquisition of a 51-percent equity interest in the Manzanillo marine terminal development project. IEnova will build the terminal, which is estimated to cost approximately $200 million, of which IEnova's share would be approximately $100 million. The project is expected to commence commercial operations in late 2020 and 50 percent of the terminal's capacity already is contracted to Trafigura Mexico, S.A. de C.V. In recent months, IEnova also announced new capacity agreements for the Baja Refinados and Topolobampo liquids terminals, both of which are now fully contracted.

EARNINGS GUIDANCE 

Today, Sempra Energy reaffirmed its 2018 GAAP earnings-per-share guidance range of $2.83 to $3.44 and 2018 adjusted earnings-per-share guidance range of $5.30 to $5.80.

NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures include Sempra Energy's adjusted earnings and adjusted earnings per share for the third-quarter and nine-month periods in 2018 and 2017, as well as the adjusted 2018 earnings-per-share guidance range. Additional information regarding these non-GAAP financial measures is in Table A of the third-quarter financial tables.

INTERNET BROADCAST

Sempra Energy will webcast a live discussion of its earnings results today at 12 p.m. EST 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 9587918.

Sempra Energy, a San Diego-based energy services holding company with 2017 revenues of more than $11 billion, is the utility holding company with the largest U.S. customer base. The Sempra Energy companies' approximately 20,000 employees serve more than 40 million consumers worldwide.

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by words such as "believes," "expects," "anticipates," "plans," "estimates," "projects," "forecasts," "contemplates," "assumes," "depends," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "target," "pursue," "outlook," "maintain," or similar expressions or when we discuss  our guidance, strategy, plans, goals, vision, opportunities, projections, initiatives, objectives or intentions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements.

Factors, among others, that could cause our actual results and future actions to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: actions and the timing of actions, including decisions, new regulations, and issuances of permits and other authorizations by the California Public Utilities Commission, U.S. Department of Energy, California Department of Conservation's Division of Oil, Gas, and Geothermal Resources, Federal Energy Regulatory Commission, U.S. Environmental Protection Agency, Pipeline and Hazardous Materials Safety Administration, Los Angeles County Department of Public Health, Public Utility Commission of Texas, states, cities and counties, and other regulatory and governmental bodies in the U.S. and other countries in which we operate; the timing and success of business development efforts, major acquisitions such as our interest in Oncor, and construction projects, including risks in (i) timely obtaining or maintaining permits and other authorizations, (ii) completing construction projects on schedule and on budget, (iii) obtaining the consent and participation of partners and counterparties and their ability to fulfill contractual commitments, and (iv) not realizing anticipated benefits; the resolution of civil and criminal litigation and regulatory investigations; deviations from regulatory precedent or practice that result in a reallocation of benefits or burdens among shareholders and ratepayers; denial of approvals of proposed settlements; and delays in, or disallowance or denial of, regulatory agency authorizations to recover costs in rates from customers or regulatory agency approval for projects required to enhance safety and reliability; and moves to reduce or eliminate reliance on natural gas; the greater degree and prevalence of wildfires in California in recent years and risk that we may be found liable for damages regardless of fault, such as where inverse condemnation applies, and risk that we may not be able to recover any such costs in rates from customers in California; the availability of electric power and natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid, limitations on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures; risks posed by actions of third parties who control the operations of our investments; weather conditions, natural disasters, accidents, equipment failures, computer system outages, explosions, terrorist attacks and other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause wildfires and subject us to third-party liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance (including costs in excess of applicable policy limits), may be disputed by insurers or may otherwise not be recoverable through regulatory mechanisms or may impact our ability to obtain satisfactory levels of affordable insurance; cybersecurity threats to the energy grid, storage and pipeline infrastructure, the information and systems used to operate our businesses and the confidentiality of our proprietary information and the personal information of our customers and employees; our ability to successfully execute our plan to divest certain non-utility assets within the anticipated timeframe, if at all, or that such plan may not yield the anticipated benefits; actions of activist shareholders, which could impact the market price of our equity and debt securities and disrupt our operations as a result of, among other things, requiring significant time and attention by management and our board of directors; changes in capital markets, energy markets and economic conditions, including the availability of credit and the liquidity of our investments; and volatility in inflation, interest and currency exchange rates and commodity prices and our ability to effectively hedge the risk of such volatility; the impact of recent federal tax reform and uncertainty as to how it may be applied, and our ability to mitigate adverse impacts; actions by credit rating agencies to downgrade our credit ratings or those of our subsidiaries or to place those ratings on negative outlook and our ability to borrow at favorable interest rates; changes in foreign and domestic trade policies and laws, including border tariffs, and revisions to or replacement of international trade agreements, such as the North American Free Trade Agreement, that may increase our costs or impair our ability to resolve trade disputes; the ability to win competitively bid infrastructure projects against a number of strong and aggressive competitors; expropriation of assets by foreign governments and title and other property disputes; the impact on reliability of San Diego Gas & Electric's (SDG&E) electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources; the impact on competitive customer rates due to the growth in distributed and local power generation and from possible departing retail load resulting from customers transferring to Direct Access and Community Choice Aggregation or other forms of distributed and local power generation and the potential risk of nonrecovery for stranded assets and contractual obligations; Oncor Electric Delivery Company LLC's (Oncor) ability to eliminate or reduce its quarterly dividends due to regulatory capital requirements and commitments, or the determination by Oncor's independent directors or a minority member director to retain such amounts to meet future requirements; and other uncertainties, some of which may be difficult to predict and are beyond our control.

These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov. Investors should not rely unduly on any forward-looking statements. These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.

Sempra South American Utilities, Sempra North American Infrastructure, Sempra LNG & Midstream, Sempra Renewables, Sempra Mexico, Sempra Texas Utility, Oncor Electric Delivery Company LLC (Oncor) and Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) are not the same companies as the California utilities, San Diego Gas & Electric Company (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra South American Utilities, Sempra North American Infrastructure, Sempra LNG & Midstream, Sempra Renewables, Sempra Mexico, Sempra Texas Utility, Oncor and IEnova are not regulated by the California Public Utilities Commission.

SEMPRA ENERGY

Table A

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
 

Three months ended

September 30,

 

Nine months ended

September 30,

(Dollars in millions, except per share amounts)

2018

 

2017(1)

 

2018

 

2017(1)

 

(unaudited)

REVENUES

             

Utilities

$

2,460

   

$

2,277

   

$

7,248

   

$

7,172

 

Energy-related businesses

480

   

402

   

1,218

   

1,071

 

Total revenues

2,940

   

2,679

   

8,466

   

8,243

 
               

EXPENSES AND OTHER INCOME

             

Utilities:

             

Cost of electric fuel and purchased power

(675)

   

(650)

   

(1,778)

   

(1,730)

 

Cost of natural gas

(255)

   

(190)

   

(782)

   

(903)

 

Energy-related businesses:

             

Cost of natural gas, electric fuel and purchased power

(119)

   

(97)

   

(257)

   

(226)

 

Other cost of sales

(17)

   

(21)

   

(54)

   

(5)

 

Operation and maintenance

(819)

   

(759)

   

(2,383)

   

(2,226)

 

Depreciation and amortization

(380)

   

(378)

   

(1,158)

   

(1,106)

 

Franchise fees and other taxes

(131)

   

(114)

   

(352)

   

(325)

 

Write-off of wildfire regulatory asset

   

(351)

   

   

(351)

 

Impairment losses

(4)

   

(1)

   

(1,304)

   

(72)

 

Other income, net

97

   

40

   

196

   

322

 

Interest income

22

   

12

   

76

   

26

 

Interest expense

(232)

   

(165)

   

(685)

   

(493)

 

Income (loss) before income taxes and equity earnings of unconsolidated subsidiaries

427

   

5

   

(15)

   

1,154

 

Income tax (expense) benefit

(167)

   

84

   

127

   

(378)

 

Equity earnings

74

   

13

   

50

   

26

 

Net income

334

   

102

   

162

   

802

 

Earnings attributable to noncontrolling interests

(24)

   

(45)

   

(12)

   

(44)

 

Mandatory convertible preferred stock dividends

(36)

   

   

(89)

   

 

Preferred dividends of subsidiary

   

   

(1)

   

(1)

 

Earnings attributable to common shares

$

274

   

$

57

   

$

60

   

$

757

 
               

Basic earnings per common share

$

1.00

   

$

0.23

   

$

0.23

   

$

3.01

 

Weighted-average number of shares outstanding, basic (thousands)

273,944

   

251,692

   

265,963

   

251,425

 
               

Diluted earnings per common share

$

0.99

   

$

0.22

   

$

0.22

   

$

2.99

 

Weighted-average number of shares outstanding, diluted (thousands)

275,907

   

253,364

   

267,644

   

252,987

 
 

(1) 

As adjusted for the retrospective adoption of Accounting Standards Update (ASU) 2017-07 and a reclassification to conform to current year presentation.

SEMPRA ENERGY
Table A (Continued)

RECONCILIATION OF SEMPRA ENERGY ADJUSTED EARNINGS TO SEMPRA ENERGY GAAP EARNINGS (Unaudited)

Sempra Energy Adjusted Earnings and Adjusted Earnings Per Common Share exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2018 and 2017 as follows:

Three months ended September 30, 2018:

  • $(65) million impairment of RBS Sempra Commodities LLP (RBS Sempra Commodities) equity method investment at Parent and other

Three months ended September 30, 2017:

  • $(208) million write-off of wildfire regulatory asset at San Diego Gas & Electric Company (SDG&E)

Nine months ended September 30, 2018:

  • $(65) million impairment of RBS Sempra Commodities equity method investment
  • $(755) million impairment of certain non-utility natural gas storage assets in the southeast U.S. at Sempra LNG & Midstream
  • $(145) million other-than-temporary impairment of certain U.S. wind equity method investments at Sempra Renewables
  • $(22) million impacts associated with Aliso Canyon natural gas storage facility litigation at Southern California Gas Company (SoCalGas)
  • $(25) million income tax expense to adjust the Tax Cuts and Jobs Act of 2017 (TCJA) provisional amounts

Nine months ended September 30, 2017:

  • $(208) million write-off of wildfire regulatory asset at SDG&E
  • $(47) million impairment of Termoeléctrica de Mexicali (TdM) assets that were held for sale until June 2018 at Sempra Mexico
  • $5 million deferred income tax benefit on the TdM assets that were held for sale
  • $28 million of recoveries related to 2016 permanent release of pipeline capacity at Sempra LNG & Midstream

Sempra Energy Adjusted Earnings and Adjusted Earnings Per Common Share are non-GAAP financial measures (GAAP represents accounting principles generally accepted in the United States of America). Because of the significance and/or nature of the excluded items, management believes that these non-GAAP financial measures provide a meaningful comparison of the performance of Sempra Energy's business operations from 2018 to 2017 and to future periods. Non-GAAP financial measures are supplementary information that should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. The table below reconciles for historical periods these non-GAAP financial measures to Sempra Energy GAAP Earnings and GAAP Diluted Earnings Per Common Share, which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.    

 

Pretax
amount

Income tax
(benefit)
expense(1)

Non-
controlling
interests

Earnings

 

Pretax
amount

Income tax
(benefit)
expense(1)

Non-
controlling
interests

Earnings

(Dollars in millions, except per share amounts)

Three months ended September 30, 2018

 

Three months ended September 30, 2017

Sempra Energy GAAP Earnings

     

$

274

         

$

57

 

Excluded items:

                 

Impairment of investment in RBS Sempra Commodities

$

65

 

$

 

$

 

65

   

$

 

$

 

$

 

 

Write-off of wildfire regulatory asset

 

 

 

   

351

 

(143)

 

 

208

 

Sempra Energy Adjusted Earnings

       

$

339

         

$

265

 
                   

Diluted earnings per common share:

                 

Sempra Energy GAAP Earnings

     

$

0.99

         

$

0.22

 

Sempra Energy Adjusted Earnings

     

$

1.23

         

$

1.04

 

Weighted-average number of shares outstanding, diluted (thousands)

     

275,907

         

253,364

 
                   
 

Nine months ended September 30, 2018

 

Nine months ended September 30, 2017

Sempra Energy GAAP Earnings

     

$

60

         

$

757

 

Excluded items:

                 

Impairment of investment in RBS Sempra Commodities

$

65

 

$

 

$

 

65

   

$

 

$

 

$

 

 

Impairment of non-utility natural gas storage assets

1,300

 

(499)

 

(46)

 

755

   

 

 

 

 

Impairment of U.S. wind equity method investments

200

 

(55)

 

 

145

   

 

 

 

 

Impacts associated with Aliso Canyon litigation

1

 

21

 

 

22

   

 

 

 

 

Impact from the TCJA

 

25

 

 

25

   

 

 

 

 

Write-off of wildfire regulatory asset

 

 

 

   

351

 

(143)

 

 

208

 

Impairment of TdM assets held for sale

 

 

 

   

71

 

 

(24)

 

47

 

Deferred income tax benefit associated with TdM

 

 

 

   

 

(8)

 

3

 

(5)

 

Recoveries related to 2016 permanent release of pipeline capacity

 

 

 

   

(47)

 

19

 

 

(28)

 

Sempra Energy Adjusted Earnings

     

$

1,072

         

$

979

 
                   

Diluted earnings per common share:

                 

Sempra Energy GAAP Earnings

     

$

0.22

         

$

2.99

 

Sempra Energy Adjusted Earnings

     

$

4.00

         

$

3.87

 

Weighted-average number of shares outstanding, diluted (thousands)

     

267,644

         

252,987

 
 

(1) 

Except for adjustments that are solely income tax and tax related to outside basis differences, income taxes were primarily calculated based on applicable statutory tax rates. Income taxes associated with TdM were calculated based on the applicable statutory tax rate, including translation from historic to current exchange rates. An income tax benefit of $12 million associated with the 2017 TdM impairment has been fully reserved.

SEMPRA ENERGY
Table A (Continued)

RECONCILIATION OF SEMPRA ENERGY 2018 ADJUSTED EARNINGS-PER-SHARE GUIDANCE RANGE TO SEMPRA ENERGY 2018 GAAP EARNINGS-PER-SHARE GUIDANCE RANGE (Unaudited)

Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance Range of $5.30 to $5.80 excludes items (after the effects of income taxes and, if applicable, noncontrolling interests) as follows:

  • $(965) million in impairments of certain assets and equity method investments
  • $(22) million impacts associated with Aliso Canyon natural gas storage facility litigation
  • $(25) million income tax expense to adjust the TCJA provisional amounts
  • $340 million - $370 million estimated gain on sale, net of $128 million - $139 million(1) income tax expense, of the Sempra Renewables operating solar assets, Broken Bow 2 wind generation facility and its solar and battery storage development projects (the Renewables Sale) that is expected to close near the end of 2018

Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance is a non-GAAP financial measure. Because of the significance and/or nature of the excluded items, management believes this non-GAAP financial measure provides additional clarity into the ongoing results of the business and the comparability of such results to prior and future periods and also as a base for projected earnings-per-share compound annual growth rate. Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance should not be considered an alternative to Earnings-Per-Share Guidance determined in accordance with GAAP. The table below reconciles Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance Range to Sempra Energy 2018 GAAP Earnings-Per-Share Guidance Range, which we consider to be the most directly comparable financial measure calculated in accordance with GAAP.

 

Full-Year 2018

Sempra Energy GAAP Earnings-Per-Share Guidance Range

$

2.83

 

to

$

3.44

 

Excluded items:

     
 

Impairments of certain assets and equity method investments

3.55

   

3.55

 
 

Impacts associated with Aliso Canyon litigation

0.08

   

0.08

 
 

Impact from the TCJA

0.09

   

0.09

 
 

Estimated gain on the Renewables Sale

(1.25)

   

(1.36)

 

Sempra Energy Adjusted Earnings-Per-Share Guidance Range

$

5.30

 

to

$

5.80

 

Weighted-average number of shares outstanding, diluted (millions)

   

272

 
 

(1)

Income taxes on estimated gain were calculated based on applicable statutory tax rates.

 

SEMPRA ENERGY

Table B

             

CONDENSED CONSOLIDATED BALANCE SHEETS

       

(Dollars in millions)

September 30,
2018

 

December 31,
2017(1)

 

(unaudited)

   

Assets

     

Current assets:

     

Cash and cash equivalents

$

212

   

$

288

 

Restricted cash

73

   

62

 

Accounts receivable, net

1,663

   

1,584

 

Due from unconsolidated affiliates

43

   

37

 

Income taxes receivable

99

   

110

 

Inventories

345

   

307

 

Regulatory assets

92

   

325

 

Fixed-price contracts and other derivatives

96

   

66

 

Greenhouse gas allowances

339

   

299

 

Assets held for sale

1,881

   

127

 

Other

202

   

136

 

Total current assets

5,045

   

3,341

 
       

Other assets:

     

Restricted cash

3

   

14

 

Due from unconsolidated affiliates

682

   

598

 

Regulatory assets

1,469

   

1,517

 

Nuclear decommissioning trusts

1,042

   

1,033

 

Investment in Oncor Holdings

9,553

   

 

Other investments

2,561

   

2,527

 

Goodwill

2,363

   

2,397

 

Other intangible assets

229

   

596

 

Dedicated assets in support of certain benefit plans

443

   

455

 

Insurance receivable for Aliso Canyon costs

474

   

418

 

Deferred income taxes

116

   

170

 

Greenhouse gas allowances

275

   

93

 

Sundry

852

   

792

 

Total other assets

20,062

   

10,610

 

Property, plant and equipment, net

35,498

   

36,503

 

Total assets

$

60,605

   

$

50,454

 
 
   

(1)

Derived from audited financial statements. 

 

SEMPRA ENERGY

Table B (Continued)

             

CONDENSED CONSOLIDATED BALANCE SHEETS

       

(Dollars in millions)

September 30,
2018

 

December 31,
2017(1)

 

(unaudited)

   

Liabilities and Equity

     

Current liabilities:

     

Short-term debt

$

2,897

   

$

1,540

 

Accounts payable

1,375

   

1,523

 

Due to unconsolidated affiliates

7

   

7

 

Dividends and interest payable

495

   

342

 

Accrued compensation and benefits

356

   

439

 

Regulatory liabilities

284

   

109

 

Current portion of long-term debt

1,464

   

1,427

 

Fixed-price contracts and other derivatives

63

   

109

 

Customer deposits

172

   

162

 

Reserve for Aliso Canyon costs

161

   

84

 

Greenhouse gas obligations

339

   

299

 

Liabilities held for sale

156

   

49

 

Other

722

   

545

 

Total current liabilities

8,491

   

6,635

 
       

Long-term debt

21,335

   

16,445

 
       

Deferred credits and other liabilities:

     

Customer advances for construction

146

   

150

 

Due to unconsolidated affiliates

36

   

35

 

Pension and other postretirement benefit plan obligations, net of plan assets

1,052

   

1,148

 

Deferred income taxes

2,231

   

2,767

 

Deferred investment tax credits

25

   

28

 

Regulatory liabilities

3,974

   

3,922

 

Asset retirement obligations

2,750

   

2,732

 

Fixed-price contracts and other derivatives

235

   

316

 

Greenhouse gas obligations

102

   

 

Deferred credits and other

1,117

   

1,136

 

Total deferred credits and other liabilities

11,668

   

12,234

 

Equity:

     

Sempra Energy shareholders' equity

16,617

   

12,670

 

Preferred stock of subsidiary

20

   

20

 

Other noncontrolling interests

2,474

   

2,450

 

Total equity

19,111

   

15,140

 

Total liabilities and equity

$

60,605

   

$

50,454

 
   

(1)

Derived from audited financial statements.

 

SEMPRA ENERGY

Table C

             

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             
       

Nine months ended September 30,

(Dollars in millions)

 

2018

 

2017(1)

   

(unaudited)

Cash Flows from Operating Activities

       

Net income

 

$

162

   

$

802

 

Adjustments to reconcile net income to net cash provided by operating activities:

       

Depreciation and amortization

 

1,158

   

1,106

 

Deferred income taxes and investment tax credits

 

(289)

   

302

 

Write-off of wildfire regulatory asset

 

   

351

 

Impairment losses

 

1,304

   

72

 

Equity earnings

 

(50)

   

(26)

 

Fixed-price contracts and other derivatives

 

(44)

   

(142)

 

Other

 

139

   

18

 

Net change in other working capital components

 

444

   

229

 

Insurance receivable for Aliso Canyon costs

 

(56)

   

64

 

Changes in other noncurrent assets and liabilities, net

 

(177)

   

(72)

 

Net cash provided by operating activities

 

2,591

   

2,704

 
         

Cash Flows from Investing Activities

       

Expenditures for property, plant and equipment

 

(2,815)

   

(2,880)

 

Expenditures for investments and acquisitions

 

(9,921)

   

(110)

 

Proceeds from sale of assets

 

7

   

12

 

Distributions from investments

 

9

   

25

 

Purchases of nuclear decommissioning trust assets

 

(703)

   

(1,082)

 

Proceeds from sales of nuclear decommissioning trust assets

 

703

   

1,082

 

Advances to unconsolidated affiliates

 

(84)

   

(321)

 

Repayments of advances to unconsolidated affiliates

 

71

   

8

 

Other

 

29

   

6

 

Net cash used in investing activities

 

(12,704)

   

(3,260)

 
         

Cash Flows from Financing Activities

       

Common dividends paid

 

(645)

   

(561)

 

Preferred dividends paid

 

(53)

   

 

Preferred dividends paid by subsidiary

 

(1)

   

(1)

 

Issuances of mandatory convertible preferred stock, net of $41 in offering costs

 

2,259

   

 

Issuances of common stock, net of $41 in offering costs in 2018

 

2,261

   

37

 

Repurchases of common stock

 

(20)

   

(15)

 

Issuances of debt (maturities greater than 90 days)

 

8,628

   

2,395

 

Payments on debt (maturities greater than 90 days)

 

(2,967)

   

(1,829)

 

Increase in short-term debt, net

 

707

   

475

 

Proceeds from sales of noncontrolling interest, net of $1 in offering costs

 

90

   

 

Net distributions to noncontrolling interests

 

(101)

   

(109)

 

Settlement of cross-currency swaps

 

(33)

   

 

Other

 

(80)

   

(11)

 

Net cash provided by financing activities

 

10,045

   

381

 
         

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(8)

   

11

 
         

Decrease in cash, cash equivalents and restricted cash

 

(76)

   

(164)

 

Cash, cash equivalents and restricted cash, January 1

 

364

   

425

 

Cash, cash equivalents and restricted cash, September 30

 

$

288

   

$

261

 
   

(1) 

As adjusted for the retrospective adoption of ASU 2016-15 and ASU 2016-18.

 

SEMPRA ENERGY

Table D

               

SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITIONS

               
 

Three months ended

September 30,

 

Nine months ended

September 30,

(Dollars in millions)

2018

 

2017

 

2018

 

2017

 

(unaudited)

Earnings (Losses)

             

SDG&E

$

205

   

$

(28)

   

$

521

   

$

276

 

SoCalGas

(14)

   

7

   

244

   

268

 

Sempra Texas Utility

154

   

   

283

   

 

Sempra South American Utilities

50

   

42

   

140

   

134

 

Sempra Mexico

44

   

66

   

161

   

105

 

Sempra Renewables

34

   

15

   

(54)

   

49

 

Sempra LNG & Midstream

16

   

(4)

   

(764)

   

24

 

Parent and other

(215)

   

(41)

   

(471)

   

(99)

 

Total

$

274

   

$

57

   

$

60

   

$

757

 
               
               
 

Three months ended

September 30,

 

Nine months ended

September 30,

(Dollars in millions)

2018

 

2017

 

2018

 

2017

 

(unaudited)

Capital Expenditures, Investments and Acquisitions

             

SDG&E

$

343

   

$

359

   

$

1,194

   

$

1,122

 

SoCalGas

344

   

351

   

1,127

   

1,033

 

Sempra Texas Utility

   

   

9,278

   

 

Sempra South American Utilities

54

   

62

   

161

   

139

 

Sempra Mexico

152

   

38

   

320

   

265

 

Sempra Renewables

9

   

261

   

46

   

361

 

Sempra LNG & Midstream

65

   

16

   

202

   

53

 

Parent and other

5

   

4

   

408

   

17

 

Total

$

972

   

$

1,091

   

$

12,736

   

$

2,990

 

 

SEMPRA ENERGY

Table E

 

OTHER OPERATING STATISTICS (Unaudited)

 
 

Three months ended

September 30,

 

Nine months ended

September 30,

UTILITIES

2018

 

2017

 

2018

 

2017

               

SDG&E and SoCalGas

             
 

Gas sales (Bcf)(1)

55

   

56

   

244

   

253

 
 

Transportation (Bcf)(1)

163

   

184

   

447

   

488

 
 

Total deliveries (Bcf)(1)

218

   

240

   

691

   

741

 
               
 

Total gas customer meters (thousands)

       

6,874

   

6,835

 
                 

SDG&E

             
 

Electric sales (millions of kWhs)(1)

4,493

   

4,443

   

11,493

   

11,772

 
 

Direct Access and Community Choice Aggregation (millions of kWhs)

1,009

   

957

   

2,680

   

2,530

 
 

Total deliveries (millions of kWhs)(1)

5,502

   

5,400

   

14,173

   

14,302

 
               
 

Total electric customer meters (thousands)

       

1,456

   

1,440

 
               

Oncor(2)

             
 

Total deliveries (millions of kWhs)

38,163

   

   

77,476

   

 
 

Total electric customer meters (thousands)

       

3,607

   

 
               

Ecogas

             
 

Natural gas sales (Bcf)

1

   

7

   

7

   

22

 
 

Natural gas customer meters (thousands)

       

121

   

120

 
               

Chilquinta Energía

             
 

Electric sales (millions of kWhs)

701

   

699

   

2,209

   

2,201

 
 

Tolling (millions of kWhs)

75

   

26

   

218

   

70

 
 

Total deliveries (millions of kWhs)

776

   

725

   

2,427

   

2,271

 
                 
 

Electric customer meters (thousands)

       

718

   

700

 
               

Luz Del Sur

             
 

Electric sales (millions of kWhs)

1,641

   

1,647

   

5,099

   

5,321

 
 

Tolling (millions of kWhs)

595

   

478

   

1,736

   

1,384

 
 

Total deliveries (millions of kWhs)

2,236

   

2,125

   

6,835

   

6,705

 
                 
 

Electric customer meters (thousands)

       

1,125

   

1,093

 
               

ENERGY-RELATED BUSINESSES

             
               

Power generated and sold (millions of kWhs)

             

Sempra Mexico(3)

1,450

   

1,327

   

3,846

   

3,032

 

Sempra Renewables(4)

1,189

   

894

   

3,763

   

3,100

 
   

(1) 

Includes intercompany sales.

   

(2) 

Includes 100 percent of the electric deliveries and customer meters of Oncor Electric Delivery Company LLC (Oncor), in which we hold an 80.25-percent interest through our March 2018 acquisition of our equity method investment in Oncor Electric Delivery Holdings Company LLC (Oncor Holdings). Total deliveries for the nine months ended September 30, 2018 only include volumes from the March 9, 2018 acquisition date.

   

(3) 

Includes power generated and sold at the TdM natural gas-fired power plant and the Ventika wind power generation facilities. Also includes 50 percent of total power generated and sold at the Energía Sierra Juárez wind power generation facility, in which Sempra Energy has a 50-percent ownership interest. Energía Sierra Juárez is not consolidated within Sempra Energy, and the related investment is accounted for under the equity method.

   

(4)  

Includes 50 percent of total power generated and sold related to solar and wind projects in which Sempra Energy has a 50-percent ownership. These subsidiaries are not consolidated within Sempra Energy, and the related investments are accounted for under the equity method. On June 25, 2018, our board of directors approved a plan to sell all U.S. wind and solar assets and investments.

 

SEMPRA ENERGY

Table F (Unaudited)

 

STATEMENTS OF OPERATIONS DATA BY SEGMENT

                                     

Three months ended September 30, 2018

(Dollars in millions)

SDG&E

 

SoCalGas

 

Sempra
Texas
Utility

 

Sempra
South
American
Utilities

 

Sempra
Mexico

 

Sempra
Renewables

 

Sempra
LNG &
Midstream

 

Consolidating
Adjustments,
Parent &
Other

   

Total

                                     

Revenues

$

1,299

   

$

802

   

$

   

$

375

   

$

410

   

$

38

   

$

147

   

$

(131)

     

$

2,940

 

Cost of sales and other expenses

(825)

   

(656)

   

   

(277)

   

(201)

   

(24)

   

(131)

   

98

     

(2,016)

 

Depreciation and amortization

(174)

   

(141)

   

   

(14)

   

(45)

   

   

(2)

   

(4)

     

(380)

 

Impairment losses

   

   

   

   

(4)

   

   

   

     

(4)

 

Other income, net

24

   

3

   

   

1

   

66

   

   

   

3

     

97

 

Income (loss) before interest and tax(1)

324

   

8

   

   

85

   

226

   

14

   

14

   

(34)

     

637

 

Net interest (expense) income

(55)

   

(29)

   

   

(4)

   

(13)

   

(3)

   

7

   

(113)

     

(210)

 

Income tax (expense) benefit

(53)

   

7

   

   

(23)

   

(126)

   

2

   

(6)

   

32

     

(167)

 

Equity earnings (losses), net

   

   

154

   

   

(28)

   

12

   

   

(64)

     

74

 

(Earnings) losses attributable to noncontrolling interests

(11)

   

   

   

(8)

   

(15)

   

9

   

1

   

     

(24)

 

Preferred dividends

   

   

   

   

   

   

   

(36)

     

(36)

 

Earnings (losses)

$

205

   

$

(14)

   

$

154

   

$

50

   

$

44

   

$

34

   

$

16

   

$

(215)

     

$

274

 
                                     

Three months ended September 30, 2017

(Dollars in millions)

SDG&E

 

SoCalGas

 

Sempra
Texas
Utility

 

Sempra
South
American
Utilities

 

Sempra
Mexico

 

Sempra
Renewables

 

Sempra
LNG &
Midstream

 

Consolidating
Adjustments,
Parent &
Other

   

Total

                                     

Revenues

$

1,236

   

$

684

   

$

   

$

376

   

$

336

   

$

26

   

$

152

   

$

(131)

     

$

2,679

 

Cost of sales and other expenses(2)

(773)

   

(547)

   

   

(295)

   

(152)

   

(22)

   

(154)

   

112

     

(1,831)

 

Depreciation and amortization

(170)

   

(132)

   

   

(14)

   

(41)

   

(9)

   

(10)

   

(2)

     

(378)

 

Impairment losses

(351)

   

   

   

   

(1)

   

   

   

     

(352)

 

Other income, net(2)

20

   

13

   

   

2

   

3

   

   

1

   

1

     

40

 

(Loss) income before interest and tax(1)(3)

(38)

   

18

   

   

69

   

145

   

(5)

   

(11)

   

(20)

     

158

 

Net interest (expense) income

(53)

   

(25)

   

   

(4)

   

(14)

   

(2)

   

5

   

(60)

     

(153)

 

Income tax benefit (expense)

72

   

14

   

   

(18)

   

(34)

   

9

   

2

   

39

     

84

 

Equity earnings, net(3)

   

   

   

1

   

2

   

7

   

3

   

     

13

 

(Earnings) losses attributable to noncontrolling interests

(9)

   

   

   

(6)

   

(33)

   

6

   

(3)

   

     

(45)

 

(Losses) earnings

$

(28)

   

$

7

   

$

   

$

42

   

$

66

   

$

15

   

$

(4)

   

$

(41)

     

$

57

 
   

(1) 

Management believes Income (Loss) Before Interest and Tax is a useful measurement of our segments' performance because it can be used to evaluate the effectiveness of our operations exclusive of interest and income tax, neither of which is directly relevant to the efficiency of those operations.

   

(2) 

As adjusted for the retrospective adoption of ASU 2017-07.

   

(3) 

As adjusted for a reclassification to conform to current year presentation.

 

SEMPRA ENERGY

Table F (Unaudited)

 

STATEMENTS OF OPERATIONS DATA BY SEGMENT

                                     

Nine months ended September 30, 2018

(Dollars in millions)

SDG&E

 

SoCalGas

 

Sempra
Texas
Utility

 

Sempra
South
American
Utilities

 

Sempra
Mexico

 

Sempra
Renewables

 

Sempra
LNG &
Midstream

 

Consolidating
Adjustments,
Parent &
Other

   

Total

                                     

Revenues

$

3,405

   

$

2,700

   

$

   

$

1,190

   

$

1,028

   

$

103

   

$

330

   

$

(290)

     

$

8,466

 

Cost of sales and other expenses

(2,133)

   

(1,934)

   

   

(915)

   

(453)

   

(68)

   

(324)

   

221

     

(5,606)

 

Depreciation and amortization

(509)

   

(414)

   

   

(43)

   

(131)

   

(27)

   

(24)

   

(10)

     

(1,158)

 

Impairment losses