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Aug 2, 2019

Sempra Energy Reports Second-Quarter 2019 Earnings

- Sempra Energy Grows Transmission and Distribution Footprint in Texas
- Recent California Legislation Reduces SDG&E Wildfire Risk
- Four Commissioning Cargoes Sent from Cameron LNG to Global Markets to Date

SAN DIEGO, Aug. 2, 2019 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported second-quarter 2019 earnings of $354 million, or $1.26 per diluted share, compared to second-quarter 2018 losses of $561 million, or $2.11 per diluted share. On an adjusted basis, the company's second-quarter 2019 earnings were $309 million, or $1.10 per diluted share, compared to $361 million, or $1.35 per diluted share, in the second quarter 2018.

"We're pleased with the financial and operational progress we've made so far this year," said Jeffrey W. Martin, chairman and CEO of Sempra Energy. "We've set a clear mission to be North America's premier energy infrastructure company and I am proud of the steps we've taken to capitalize on the once-in-a-generation opportunity created by the need to develop energy infrastructure that supports the trend toward cleaner energy and greater exports of North America's energy."

Sempra Energy's earnings for the first six months of 2019 were $795 million, or $2.85 per diluted share, compared with losses of $214 million, or $0.82 per diluted share, in the first six months of 2018. Adjusted earnings for the first six months of 2019 were $843 million, or $3.03 per diluted share, compared with $733 million, or $2.78 per diluted share, in the first six months of 2018.

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 second quarter and first six months of 2019 and 2018.

                     
     

 Three months ended 

 

 Six months ended 

 
     

 June 30 

 

 June 30 

 
 

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

 

2019

 

2018

 

2019

 

2018

 
                 
 

GAAP Earnings (Losses)

 

$  354

 

$              (561)

 

$  795

 

$              (214)

 
                     
 

Gain on Sale of U.S. Wind Assets

(45)

 

-

 

(45)

 

-

 
                     
 

Tax Impacts from Expected Sale of South American Businesses(1)

-

 

-

 

93

 

-

 
                     
 

Impairment of Non-utility U.S. Natural Gas Storage Assets

 

-

 

755

 

-

 

755

 
                     
 

Impairment of U.S. Wind Equity Method Investments

 

-

 

145

 

-

 

145

 
                     
 

Impacts Associated with Aliso Canyon Litigation

 

-

 

22

 

-

 

22

 
                     
 

Impact from the Tax Cuts and Jobs Act of 2017

-

 

-

 

-

 

25

 
                     
 

Adjusted Earnings(2)

 

$  309

 

$                361

 

$  843

 

$                733

 
                     
                     
 

Diluted Weighted-Average Common Shares Outstanding

 

280

 

268

 

278

 

264

 
                     
 

GAAP Earnings (Losses) Per Diluted Common Share

 

$ 1.26

 

 $         (2.11)(3)

 

$ 2.85

 

 $         (0.82)(3)

 
                     
 

Adjusted Earnings Per Diluted Common Share(2)

 

$ 1.10

 

$              1.35

 

$ 3.03

 

$              2.78

 
                     

 

   

1)

$103 million increase to adjusted earnings due to change in indefinite reinvestment assertion of basis differences in discontinued operations, partially offset by $10 million reduction in tax valuation allowance against certain net operating loss carryforwards at Parent & Other.

2)

Sempra Energy Adjusted Earnings and Adjusted Earnings per Common Share (Adjusted EPS) are non-GAAP financial measures. See Table A for information regarding non-GAAP financial measures and descriptions of the adjustments above.

3)

Weighted-average common shares outstanding for the three months and six months ended June 30, 2018 used to calculate EPS exclude common stock equivalents as they are antidilutive given the net loss in these periods.

OPERATING HIGHLIGHTS

San Diego Gas & Electric (SDG&E) recently elected to contribute approximately $452 million to a wildfire recovery fund that was created as a result of the efforts of Gov. Gavin Newsom and the California Legislature. The legislation helps to reduce SDG&E's exposure to wildfire risk by addressing issues related to catastrophic wildfires in the state of California, including greater clarity of cost recovery standards and requirements, additional wildfire mitigation, establishment of a wildfire recovery fund, a cap on liability, and the formation of the California Wildfire Safety Advisory Board.

SDG&E and Southern California Gas Co. expect a proposed decision in the coming weeks for their 2019 General Rate Case from the California Public Utilities Commission. A final decision is expected by year end.

Sempra Energy expects substantial completion of the first liquefaction train of the Cameron LNG export project in Hackberry, La., in the coming days, with commercial operations to begin in mid-August. This follows the first commissioning cargo of liquefied natural gas (LNG) from Train 1, which was announced in May.

Sempra Energy's LNG development projects are continuing to advance, including a heads of agreement (HOA) signed between Sempra LNG and Aramco Services Company in May. The HOA anticipates the negotiation and finalization of a definitive 20-year LNG sale-and-purchase agreement for 5 million tonnes per annum of LNG offtake from the Port Arthur LNG export project under development.

Sempra Energy continued to grow its transmission and distribution footprint in Texas through Oncor Electric Delivery Company LLC's acquisition of InfraREIT, Inc., and Sempra Energy's acquisition of an indirect 50% limited-partnership interest in Sharyland Utilities, L.L.C. These acquisitions were completed in May and funded with a portion of the proceeds from Sempra Energy's completed sales of its U.S. solar, wind and certain non-utility natural gas storage assets.

The sales process of Sempra Energy's equity interests in its South American businesses, including its 83.6% stake in Luz del Sur S.A.A. in Peru and 100% stake in Chilquinta Energía S.A. in Chile, continues to make good progress.

2019 EARNINGS GUIDANCE

Sempra Energy today affirmed its 2019 adjusted earnings-per-share guidance range of $5.70 to $6.30.

NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures include Sempra Energy's adjusted earnings and adjusted earnings per common share for both the second quarter and first six months of 2019 and 2018, and 2019 adjusted earnings-per-share guidance. 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 7726556.

Sempra Energy's mission is to be North America's premier energy infrastructure company. With 2018 reported revenues of more than $11.6 billion, the San Diego- based company is the utility holding company with the largest U.S. customer base. The Sempra Energy companies' more than 20,000 employees are focused on delivering energy with purpose to approximately 40 million consumers worldwide. Sempra Energy has been consistently recognized for its leadership in diversity and inclusion, and social responsibility, and is a member of the S&P 500 Utilities Index and the Dow Jones Utility Index.

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, mission, 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: the greater degree and prevalence of wildfires in California in recent years and the 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 or otherwise, including due to insufficient amounts in the wildfire fund; actions and the timing of actions, including decisions, investigations, new regulations and issuances of permits and other authorizations and renewal of franchises by the Comisión Federal de Electricidad (CFE), California Public Utilities Commission, U.S. Department of Energy, California Department of Conservation's Division of Oil, Gas, and Geothermal Resources, Los Angeles County Department of Public Health, U.S. Environmental Protection Agency, Federal Energy Regulatory Commission, Pipeline and Hazardous Materials Safety Administration, 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 success of business development efforts, construction projects, and major acquisitions, divestitures and internal structural changes, including risks in (i) obtaining or maintaining authorizations; (ii) completing construction projects on schedule and budget; (iii) obtaining the consent of partners; (iv) counterparties' ability to fulfill contractual commitments; (v) winning competitively bid infrastructure projects; (vi) the ability to complete contemplated acquisitions and/or divestitures and the disruptions caused by such efforts; and (vii) the ability to realize anticipated benefits from any of these efforts once completed; the resolution of civil and criminal litigation, regulatory investigations and proceedings, and arbitrations; 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; 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; delays in, 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 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; expropriation of assets, the failure to honor the terms of contracts by foreign governments and state-owned entities such as the CFE, and other property disputes; 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 fires 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; actions of activist shareholders, which could impact the market price of our securities and disrupt our operations as a result of, among other things, requiring significant time by management and our board of directors; changes in capital markets, energy markets and economic conditions, including the availability of credit; volatility in currency exchange, interest and inflation rates and commodity prices and our ability to effectively hedge the risk of such volatility; the impact of federal or state tax reform and our ability to mitigate adverse impacts; 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 impact at San Diego Gas & Electric Company on competitive customer rates and reliability of electric transmission and distribution systems 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 other regulatory and governance commitments, including the determination by a majority of 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, Sempra Renewables, Sempra Mexico, Sempra Texas Utilities, 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, Sempra Renewables, Sempra Mexico, Sempra Texas Utilities, Oncor and IEnova are not regulated by the California Public Utilities Commission.

SEMPRA ENERGY

Table A

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
 

Three months ended

 June 30,

 

Six months ended
June 30,

(Dollars in millions, except per share amounts; shares in thousands)

2019

 

2018(1)

 

2019

 

2018(1)

 

(unaudited)

REVENUES

             

Utilities

$

1,895

   

$

1,820

   

$

4,410

   

$

4,010

 

Energy-related businesses

335

   

355

   

718

   

701

 

Total revenues

2,230

   

2,175

   

5,128

   

4,711

 
               

EXPENSES AND OTHER INCOME

             

Utilities:

             

Cost of natural gas

(136)

   

(179)

   

(667)

   

(527)

 

Cost of electric fuel and purchased power

(263)

   

(320)

   

(519)

   

(591)

 

Energy-related businesses cost of sales

(63)

   

(70)

   

(171)

   

(139)

 

Operation and maintenance

(838)

   

(742)

   

(1,670)

   

(1,483)

 

Depreciation and amortization

(389)

   

(377)

   

(772)

   

(749)

 

Franchise fees and other taxes

(112)

   

(104)

   

(242)

   

(221)

 

Impairment losses

   

(1,300)

   

   

(1,300)

 

Gain on sale of assets

66

   

   

66

   

 

Other income (expense), net

28

   

(56)

   

110

   

96

 

Interest income

21

   

18

   

42

   

47

 

Interest expense

(258)

   

(228)

   

(518)

   

(434)

 

Income (loss) from continuing operations before income taxes
and equity earnings (losses)

286

   

(1,183)

   

787

   

(590)

 

Income tax (expense) benefit

(47)

   

602

   

(89)

   

360

 

Equity earnings (losses)

118

   

(4)

   

219

   

(25)

 

Income (loss) from continuing operations, net of income tax

357

   

(585)

   

917

   

(255)

 

Income from discontinued operations, net of income tax

78

   

55

   

36

   

83

 

Net income (loss)

435

   

(530)

   

953

   

(172)

 

(Earnings) losses attributable to noncontrolling interests

(45)

   

(5)

   

(86)

   

12

 

Mandatory convertible preferred stock dividends

(35)

   

(25)

   

(71)

   

(53)

 

Preferred dividends of subsidiary

(1)

   

(1)

   

(1)

   

(1)

 

Earnings (losses) attributable to common shares

$

354

   

$

(561)

   

$

795

   

$

(214)

 
               

Basic earnings (losses) per common share:

             

Earnings (losses) from continuing operations attributable to common shares

$

1.03

   

$

(2.29)

   

$

2.82

   

$

(1.08)

 

Earnings from discontinued operations attributable to common shares

$

0.26

   

$

0.18

   

$

0.07

   

$

0.26

 

Earnings (losses) attributable to common shares

$

1.29

   

$

(2.11)

   

$

2.89

   

$

(0.82)

 

Weighted-average common shares outstanding

274,987

   

265,837

   

274,831

   

261,906

 
               

Diluted earnings (losses) per common share:

             

Earnings (losses) from continuing operations attributable to common shares

$

1.01

   

$

(2.29)

   

$

2.78

   

$

(1.08)

 

Earnings from discontinued operations attributable to common shares

$

0.25

   

$

0.18

   

$

0.07

   

$

0.26

 

Earnings (losses) attributable to common shares

$

1.26

   

$

(2.11)

   

$

2.85

   

$

(0.82)

 

Weighted-average common shares outstanding

279,619

   

265,837

   

278,424

   

261,906

 
     

(1) 

Amounts have been retrospectively adjusted for discontinued operations.

SEMPRA ENERGY
Table A (Continued)

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

Sempra Energy Adjusted Earnings and Adjusted Earnings Per Common Share (Adjusted EPS) exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2019 and 2018 as follows:

Three months ended June 30, 2019:

  • $45 million gain on the sale of certain Sempra Renewables assets

Three months ended June 30, 2018:

  • $(755) million impairment of certain non-utility natural gas storage assets in the southeast U.S. at Sempra LNG
  • $(145) million other-than-temporary impairment of certain U.S. wind equity method investments at Sempra Renewables
  • $(22) million impacts associated with Aliso Canyon litigation at Southern California Gas Company (SoCalGas)

Six months ended June 30, 2019:

  • $45 million gain on the sale of certain Sempra Renewables assets

Associated with holding the South American businesses for sale:

  • $(103) million income tax expense from outside basis differences in our South American businesses primarily related to the change in our indefinite reinvestment assertion from our decision in January 2019 to hold these businesses for sale
  • $10 million income tax benefit from a reduction in a valuation allowance against certain net operating loss (NOL) carryforwards as a result of our decision to sell our South American businesses

Six months ended June 30, 2018:

  • $(755) million impairment of certain non-utility natural gas storage assets at Sempra LNG
  • $(145) million other-than-temporary impairment of certain U.S. wind equity method investments at Sempra Renewables
  • $(22) million impacts associated with Aliso Canyon litigation at SoCalGas
  • $(25) million income tax expense to adjust Tax Cuts and Jobs Act of 2017 (TCJA) provisional amounts

Sempra Energy Adjusted Earnings and Adjusted EPS 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 business operations to prior and 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 (Losses) and GAAP EPS, which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.

 

Pretax
amount

Income tax
expense
(benefit)(1)

Earnings

 

Pretax
amount

Income tax
(benefit)
expense(1)

Non-
controlling
interests

(Losses)
earnings

 

(Dollars in millions, except per share amounts; shares in thousands)

Three months ended June 30, 2019

 

Three months ended June 30, 2018

 

Sempra Energy GAAP Earnings (Losses)

   

$

354

         

$

(561)

   

Excluded items:

                 

Gain on sale of certain Sempra Renewables assets

$

(61)

 

$

16

 

(45)

   

$

 

$

 

$

 

   

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

   

Sempra Energy Adjusted Earnings

   

$

309

         

$

361

   
                   

Diluted earnings (losses) per common share:

                 

Sempra Energy GAAP EPS

   

$

1.26

         

$

(2.11)

 

(2) 

Sempra Energy Adjusted EPS

   

$

1.10

         

$

1.35

   

Weighted-average common shares outstanding, diluted – GAAP

   

279,619

         

267,536

 

(2) 

                   
 

Six months ended June 30, 2019

 

Six months ended June 30, 2018

 

Sempra Energy GAAP Earnings (Losses)

   

$

795

         

$

(214)

   

Excluded items:

                 

Gain on sale of certain Sempra Renewables assets

$

(61)

 

$

16

 

(45)

   

$

 

$

 

$

 

   

Associated with holding the South American businesses for sale:

                   

Change in indefinite reinvestment assertion of basis differences in discontinued operations

 

103

 

103

   

 

 

 

   

Reduction in tax valuation allowance against certain NOL carryforwards

 

(10)

 

(10)

   

 

 

 

   

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

   

Sempra Energy Adjusted Earnings

   

$

843

         

$

733

   
                   

Diluted earnings (losses) per common share:

                 

Sempra Energy GAAP EPS

   

$

2.85

         

$

(0.82)

 

(2) 

Sempra Energy Adjusted EPS

   

$

3.03

         

$

2.78

   

Weighted-average common shares outstanding, diluted – GAAP

   

278,424

         

263,584

 

(2) 

   

(1) 

Except for adjustments that are solely income tax and tax related to outside basis differences, income taxes on pretax amounts were primarily calculated based on applicable statutory tax rates.

   

(2) 

In both the three months and six months ended June 30, 2018, total weighted-average potentially dilutive securities of 1.7 million were not included in the computation of GAAP losses per common share since to do so would have decreased the loss per share.

SEMPRA ENERGY
Table A (Continued)

SEMPRA ENERGY 2019 ADJUSTED EPS GUIDANCE RANGE (Unaudited)

Sempra Energy 2019 Adjusted EPS Guidance Range of $5.70 to $6.30 excludes:

  • $103 million income tax expense from outside basis differences in our South American businesses primarily related to the change in our indefinite reinvestment assertion from our decision in January 2019 to hold these businesses for sale.
  • $10 million income tax benefit from a reduction in a valuation allowance against certain NOL carryforwards as a result of our decision to sell our South American businesses.
  • $45 million after-tax gain related to the April 2019 sale of the remaining U.S. renewables assets and investments to American Electric Power Company, Inc.
  • any potential charge from San Diego Gas & Electric Company's (SDG&E) $322.5 million initial contribution in September 2019 and annual contributions of $12.9 million in each of the next 10 years to the California wildfire fund pursuant to the wildfire legislation that was recently signed into law. We are evaluating the accounting and tax treatment of the initial and annual contributions.
  • any potential gain from the planned sale of our South American businesses. Because the sale process for the planned divestiture of our South American businesses initiated in January 2019 is ongoing, the terms and structure of any potential sale transaction(s) are unknown, including the terms that would impact the final income tax expense resulting from the expected change in our assertion regarding indefinite reinvestment of foreign undistributed earnings, including timing and amounts of repatriation of such earnings.

Sempra Energy 2019 Adjusted EPS Guidance is a non-GAAP financial measure. Because of the significance and nature of the excluded items, management believes that this non-GAAP financial measure provides a meaningful comparison of the performance of business operations to prior and future periods. Sempra Energy 2019 Adjusted EPS Guidance should not be considered an alternative to GAAP EPS Guidance. 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. Due to the uncertainty surrounding the accounting and tax treatment of SDG&E's contributions to the California wildfire fund and the terms and structure of any potential transaction(s) associated with the planned sale of our South American businesses, 2019 GAAP EPS Guidance, the most directly comparable financial measure calculated in accordance with GAAP, is inestimable.

SEMPRA ENERGY

Table B

             

CONDENSED CONSOLIDATED BALANCE SHEETS

       

(Dollars in millions)

June 30,
2019

 

December
31,
2018(1)

 

(unaudited)

   

Assets

     

Current assets:

     

Cash and cash equivalents

$

168

   

$

102

 

Restricted cash

50

   

35

 

Accounts receivable, net

1,242

   

1,535

 

Due from unconsolidated affiliates

23

   

37

 

Income taxes receivable

106

   

60

 

Inventories

214

   

258

 

Regulatory assets

195

   

138

 

Greenhouse gas allowances

61

   

59

 

Assets held for sale

   

713

 

Assets held for sale in discontinued operations

445

   

459

 

Other

279

   

249

 

Total current assets

2,783

   

3,645

 
       

Other assets:

     

Restricted cash

21

   

21

 

Due from unconsolidated affiliates

710

   

644

 

Regulatory assets

1,780

   

1,589

 

Nuclear decommissioning trusts

1,044

   

974

 

Investment in Oncor Holdings

10,930

   

9,652

 

Other investments

2,082

   

2,320

 

Goodwill

1,602

   

1,602

 

Other intangible assets

219

   

224

 

Dedicated assets in support of certain benefit plans

409

   

416

 

Insurance receivable for Aliso Canyon costs

381

   

461

 

Deferred income taxes

150

   

141

 

Greenhouse gas allowances

416

   

289

 

Right-of-use assets – operating leases

600

   

 

Assets held for sale in discontinued operations

3,453

   

3,259

 

Sundry

865

   

962

 

Total other assets

24,662

   

22,554

 

Property, plant and equipment, net

35,282

   

34,439

 

Total assets

$

62,727

   

$

60,638

 
 

(1) 

Derived from audited financial statements, which have been retrospectively adjusted for discontinued operations.

 

SEMPRA ENERGY

Table B (Continued)

             

CONDENSED CONSOLIDATED BALANCE SHEETS

       

(Dollars in millions)

June 30,
2019

 

December
31,
2018(1)

 

(unaudited)

   

Liabilities and Equity

     

Current liabilities:

     

Short-term debt

$

2,395

   

$

2,024

 

Accounts payable, net

1,200

   

1,298

 

Due to unconsolidated affiliates

9

   

10

 

Dividends and interest payable

490

   

480

 

Accrued compensation and benefits

299

   

440

 

Regulatory liabilities

349

   

105

 

Current portion of long-term debt and finance leases

2,156

   

1,644

 

Reserve for Aliso Canyon costs

46

   

160

 

Greenhouse gas obligations

61

   

59

 

Liabilities held for sale in discontinued operations

336

   

368

 

Other

836

   

935

 

Total current liabilities

8,177

   

7,523

 
       

Long-term debt and finance leases

21,199

   

20,903

 
       

Deferred credits and other liabilities:

     

Due to unconsolidated affiliates

38

   

37

 

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

1,135

   

1,143

 

Deferred income taxes

2,626

   

2,321

 

Deferred investment tax credits

23

   

24

 

Regulatory liabilities

4,026

   

4,016

 

Asset retirement obligations

2,815

   

2,786

 

Greenhouse gas obligations

225

   

131

 

Liabilities held for sale in discontinued operations

1,090

   

1,013

 

Deferred credits and other

1,939

   

1,493

 

Total deferred credits and other liabilities

13,917

   

12,964

 

Equity:

     

Sempra Energy shareholders' equity

17,440

   

17,138

 

Preferred stock of subsidiary

20

   

20

 

Other noncontrolling interests

1,974

   

2,090

 

Total equity

19,434

   

19,248

 

Total liabilities and equity

$

62,727

   

$

60,638

 
 

(1) Derived from audited financial statements, which have been retrospectively adjusted for discontinued operations.

 

SEMPRA ENERGY

Table C

             

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             
       

Six months ended June 30,

(Dollars in millions)

 

2019

 

2018(1)

   

(unaudited)

Cash Flows from Operating Activities

       

Net income (loss)

 

$

953

   

$

(172)

 

Less: Income from discontinued operations, net of income tax

 

(36)

   

(83)

 

Income (loss) from continuing operations, net of income tax

 

917

   

(255)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

       

Depreciation and amortization

 

772

   

749

 

Deferred income taxes and investment tax credits

 

(12)

   

(432)

 

Impairment losses

 

   

1,300

 

Gain on sale of assets

 

(66)

   

 

Equity (earnings) losses

 

(219)

   

25

 

Share-based compensation expense

 

39

   

33

 

Fixed-price contracts and other derivatives

 

(28)

   

(9)

 

Other

 

(4)

   

45

 

Intercompany activities with discontinued operations, net

 

64

   

42

 

Net change in other working capital components

 

84

   

268

 

Insurance receivable for Aliso Canyon costs

 

80

   

(84)

 

Changes in other noncurrent assets and liabilities, net

 

(104)

   

(157)

 

Net cash provided by continuing operations

 

1,523

   

1,525

 

Net cash provided by discontinued operations

 

181

   

148

 

Net cash provided by operating activities

 

1,704

   

1,673

 
         

Cash Flows from Investing Activities

       

Expenditures for property, plant and equipment

 

(1,651)

   

(1,834)

 

Expenditures for investments and acquisition

 

(1,391)

   

(9,823)

 

Proceeds from sale of assets

 

902

   

1

 

Purchases of nuclear decommissioning trust assets

 

(497)

   

(487)

 

Proceeds from sales of nuclear decommissioning trust assets

 

497

   

487

 

Advances to unconsolidated affiliates

 

(16)

   

(81)

 

Repayments of advances to unconsolidated affiliates

 

9

   

1

 

Intercompany activities with discontinued operations, net

 

(2)

   

(8)

 

Other

 

13

   

39

 

Net cash used in continuing operations

 

(2,136)

   

(11,705)

 

Net cash used in discontinued operations

 

(131)

   

(112)

 

Net cash used in investing activities

 

(2,267)

   

(11,817)

 
         

Cash Flows from Financing Activities

       

Common dividends paid

 

(483)

   

(416)

 

Preferred dividends paid

 

(71)

   

(28)

 

Preferred dividends paid by subsidiary

 

(1)

   

(1)

 

Issuances of mandatory convertible preferred stock, net of $32 in offering costs

 

   

1,693

 

Issuances of common stock, net of $38 in offering costs in 2018

 

20

   

2,090

 

Repurchases of common stock

 

(18)

   

(20)

 

Issuances of debt (maturities greater than 90 days)

 

2,630

   

7,328

 

Payments on debt (maturities greater than 90 days) and finance leases

 

(871)

   

(1,799)

 

(Decrease) increase in short-term debt, net

 

(444)

   

1,265

 

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

 

   

85

 

Purchases of and distributions to noncontrolling interests

 

(31)

   

(9)

 

Intercompany activities with discontinued operations, net

 

   

70

 

Other

 

(37)

   

(104)

 

Net cash provided by continuing operations

 

694

   

10,154

 

Net cash used in discontinued operations

 

(83)

   

(44)

 

Net cash provided by financing activities

 

611

   

10,110

 
         

Effect of exchange rate changes in continuing operations

 

   

 

Effect of exchange rate changes in discontinued operations

 

   

(3)

 

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

 

   

(3)

 
         

Increase (decrease) in cash, cash equivalents and restricted cash, including discontinued operations

 

48

   

(37)

 

Cash, cash equivalents and restricted cash, including discontinued operations, January 1

 

246

   

364

 

Cash, cash equivalents and restricted cash, including discontinued operations, June 30

 

$

294

   

$

327

 
 

(1) 

Amounts have been retrospectively adjusted for discontinued operations.     

 

SEMPRA ENERGY

Table D

           

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

           
   

Three months ended
June 30,

 

Six months ended
June 30,

(Dollars in millions)

 

2019

 

2018(1)

 

2019

 

2018(1)

 

(unaudited)

Earnings (Losses) Attributable to Common Shares

         

SDG&E

 

$

143

   

$

146

   

$

319

   

$

316

 

SoCalGas

 

30

   

33

   

294

   

258

 

Sempra Texas Utilities

 

113

   

114

   

207

   

129

 

Sempra Mexico

 

73

   

97

   

130

   

117

 

Sempra Renewables

 

46

   

(109)

   

59

   

(88)

 

Sempra LNG

 

6

   

(764)

   

11

   

(780)

 

Parent and other

 

(127)

   

(126)

   

(244)

   

(235)

 

Discontinued operations

 

70

   

48

   

19

   

69

 

Total

 

$

354

   

$

(561)

   

$

795

   

$

(214)

 
           
           
   

Three months ended
June 30,

 

Six months ended
June 30,

(Dollars in millions)

 

2019

 

2018(1)

 

2019

 

2018(1)

 

(unaudited)

Capital Expenditures, Investments and Acquisitions

         

SDG&E

 

$

352

   

$

376

   

$

708

   

$

851

 

SoCalGas

 

335

   

380

   

659

   

783

 

Sempra Texas Utilities

 

1,226

   

117

   

1,282

   

9,278

 

Sempra Mexico

 

157

   

81

   

242

   

168

 

Sempra Renewables

 

2

   

6

   

2

   

37

 

Sempra LNG

 

90

   

91

   

146

   

137

 

Parent and other

 

3

   

10

   

3

   

403

 

Total

 

$

2,165

   

$

1,061

   

$

3,042

   

$

11,657

 
   

(1) 

Amounts have been retrospectively adjusted for discontinued operations.

 

SEMPRA ENERGY

Table E

         

OTHER OPERATING STATISTICS (Unaudited)

       
         
 

Three months ended
June 30,

 

Six months ended
June 30,

UTILITIES

2019

 

2018

 

2019

 

2018

               

SDG&E and SoCalGas

             
 

Gas sales (Bcf)(1)

75

   

76

   

214

   

189

 
 

Transportation (Bcf)(1)

124

   

137

   

268

   

284

 
 

Total deliveries (Bcf)(1)

199

   

213

   

482

   

473

 
               
 

Total gas customer meters (thousands)

       

6,902

   

6,865

 
                 

SDG&E

             
 

Electric sales (millions of kWhs)(1)

3,244

   

3,394

   

6,826

   

7,000

 
 

Direct Access and Community Choice Aggregation (millions of kWhs)

848

   

926

   

1,688

   

1,671

 
 

Total deliveries (millions of kWhs)(1)

4,092

   

4,320

   

8,514

   

8,671

 
               
 

Total electric customer meters (thousands)

       

1,463

   

1,453

 
               

Oncor(2)

             
 

Total deliveries (millions of kWhs)

31,516

   

32,658

   

61,628

   

39,313

 
 

Total electric customer meters (thousands)

       

3,655

   

3,590

 
               

Ecogas

             
 

Natural gas sales (Bcf)

1

   

   

2

   

6

 
 

Natural gas customer meters (thousands)

       

126

   

121

 
               

ENERGY-RELATED BUSINESSES

             
               

Power generated and sold (millions of kWhs)

             

Sempra Mexico

             
 

Termoeléctrica de Mexicali (TdM)

693

   

824

   

1,830

   

1,777

 
 

Wind and solar(3)

445

   

351

   

690

   

619

 
 

(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 six months ended June 30, 2018 only include volumes from the March 9, 2018 acquisition date.

   

(3) 

Includes 50 percent of the 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.

 

SEMPRA ENERGY

 Table F (Unaudited)

STATEMENTS OF OPERATIONS DATA BY SEGMENT

                               
                                 

Three months ended June 30, 2019

                               

(Dollars in millions)

SDG&E

 

SoCalGas

 

Sempra
Texas
Utilities

 

Sempra
Mexico

 

Sempra
Renewables

 

Sempra
LNG

 

Consolidating
Adjustments,
Parent &
Other

   

Total

                                   

Revenues

$

1,094

   

$

806

   

$

   

$

318

   

$

3

   

$

86

   

$

(77)

     

$

2,230

 

Cost of sales and other expenses

(642)

   

(599)

   

   

(130)

   

(9)

   

(88)

   

56

     

(1,412)

 

Depreciation and amortization

(189)

   

(148)

   

   

(46)

   

   

(3)

   

(3)

     

(389)

 

Gain on sale of assets

   

   

   

   

61

   

   

5

     

66

 

Other income (expense), net

19

   

1

   

   

17

   

   

   

(9)

     

28

 

Income (loss) before interest and tax(1)

282

   

60

   

   

159

   

55

   

(5)

   

(28)

     

523

 

Net interest (expense) income

(101)

   

(33)

   

   

(10)

   

1

   

13

   

(107)

     

(237)

 

Income tax (expense) benefit

(35)

   

4

   

   

(44)

   

(14)

   

(2)

   

44

     

(47)

 

Equity earnings (losses), net

   

   

113

   

4

   

2

   

   

(1)

     

118

 

(Earnings) losses attributable to noncontrolling interests

(3)

   

   

   

(36)

   

2

   

   

     

(37)

 

Preferred dividends

   

(1)

   

   

   

   

   

(35)

     

(36)

 

Earnings (losses) from continuing operations

$

143

   

$

30

   

$

113

   

$

73

   

$

46

   

$

6

   

$

(127)

     

284

 

Earnings from discontinued operations

                             

70

 

Earnings attributable to common shares

                             

$

354

 
                                   

Three months ended June 30, 2018(2)

                               

(Dollars in millions)

SDG&E

 

SoCalGas

 

Sempra
Texas
Utilities

 

Sempra
Mexico

 

Sempra
Renewables

 

Sempra
LNG

 

Consolidating
Adjustments,
Parent &
Other

   

Total

                                   

Revenues

$

1,051

   

$

772

   

$

   

$

310

   

$

40

   

$

79

   

$

(77)

     

$

2,175

 

Cost of sales and other expenses

(667)

   

(565)

   

   

(123)

   

(23)

   

(91)

   

54

     

(1,415)

 

Depreciation and amortization

(169)

   

(138)

   

   

(43)

   

(14)

   

(11)

   

(2)

     

(377)

 

Impairment losses

   

   

   

   

   

(1,300)

   

     

(1,300)

 

Other income (expense), net

25

   

13

   

   

(95)

   

   

   

1

     

(56)

 

Income (loss) before interest and tax(1)

240

   

82

   

   

49

   

3

   

(1,323)

   

(24)

     

(973)

 

Net interest (expense) income

(52)

   

(25)

   

   

(14)

   

(3)

   

6

   

(122)

     

(210)

 

Income tax (expense) benefit

(42)

   

(23)

   

   

55

   

58

   

506

   

48

     

602

 

Equity earnings (losses), net

   

   

114

   

71

   

(187)

   

1

   

(3)

     

(4)

 

(Earnings) losses attributable to noncontrolling interests

   

   

   

(64)

   

20

   

46

   

     

2

 

Preferred dividends

   

(1)

   

   

   

   

   

(25)

     

(26)

 

Earnings (losses) from continuing operations

$

146

   

$

33

   

$

114

   

$

97

   

$

(109)

   

$

(764)

   

$

(126)

     

(609)

 

Earnings from discontinued operations

                             

48

 

Losses attributable to common shares

                             

$

(561)

 
 

(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) 

Amounts have been retrospectively adjusted for discontinued operations.

 

SEMPRA ENERGY

Table F (Unaudited)

STATEMENTS OF OPERATIONS DATA BY SEGMENT

                               
                                   

Six months ended June 30, 2019

                               

(Dollars in millions)

SDG&E

 

SoCalGas

 

Sempra
Texas
Utilities

 

Sempra
Mexico

 

Sempra
Renewables

 

Sempra
LNG

 

Consolidating
Adjustments,
Parent &
Other

   

Total

                                   

Revenues

$

2,239

   

$

2,167

   

$

   

$

701

   

$

10

   

$

227

   

$

(216)

     

$

5,128

 

Cost of sales and other expenses

(1,339)

   

(1,512)

   

   

(322)

   

(20)

   

(230)

   

154

     

(3,269)

 

Depreciation and amortization

(375)

   

(295)

   

   

(90)

   

   

(5)

   

(7)

     

(772)

 

Gain on sale of assets

   

   

   

   

61

   

   

5

     

66

 

Other income, net

41

   

17

   

   

36

   

   

   

16

     

110

 

Income (loss) before interest and tax(1)

566

   

377

   

   

325

   

51

   

(8)

   

(48)

     

1,263

 

Net interest (expense) income

(203)

   

(67)

   

   

(21)

   

8

   

23

   

(216)

     

(476)

 

Income tax (expense) benefit

(40)

   

(15)

   

   

(116)

   

(4)

   

(6)

   

92

     

(89)

 

Equity earnings (losses), net

   

   

207

   

6

   

5

   

2

   

(1)

     

219

 

Earnings attributable to noncontrolling interests

(4)

   

   

   

(64)

   

(1)

   

   

     

(69)

 

Preferred dividends

   

(1)

   

   

   

   

   

(71)

     

(72)

 

Earnings (losses) from continuing operations

$

319

   

$

294

   

$

207

   

$

130

   

$

59

   

$

11

   

$

(244)

     

776

 

Earnings from discontinued operations

                             

19

 

Earnings attributable to common shares

                             

$

795

 
                                   

Six months ended June 30, 2018(2)