Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
 
 
 
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
Date of Report
 
(Date of earliest event reported):
August 2, 2019

 
SEMPRA ENERGY
(Exact name of registrant as specified in its charter)

 
 
 
 
 
CALIFORNIA
 
1-14201
 
33-0732627
(State or other jurisdiction of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)

 
 
 
488 8th AVENUE, SAN DIEGO, CALIFORNIA
 
92101
(Address of principal executive offices)
 
(Zip Code)

 
 
Registrant's telephone number, including area code
(619) 696-2000

 
 
(Former name or former address, if changed since last report.)








 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
[   ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[   ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[   ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[   ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class
 
 
 
Trading Symbol
Name of Each Exchange on Which Registered
Sempra Energy Common Stock, without par value
 
 
 
SRE
NYSE
 
 
 
 
 
 
Sempra Energy 6% Mandatory Convertible Preferred Stock, Series A,
SREPRA
NYSE
$100 liquidation preference
 
 
 
 
 
 
 
 
 
Sempra Energy 6.75% Mandatory Convertible Preferred Stock, Series B,
SREPRB
NYSE
$100 liquidation preference
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sempra Energy 5.75% Junior Subordinated Notes Due 2079,
SREA
NYSE
$25 par value
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company [ ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]








FORM 8-K

Item 2.02 Results of Operations and Financial Condition.

The information furnished in this Item 2.02 and in Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing of Sempra Energy, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

On August 2, 2019, Sempra Energy issued a press release announcing consolidated earnings of $354 million, or $1.26 per diluted share of common stock, for the second quarter of 2019. The press release has been posted on Sempra Energy’s website (www.sempra.com) and a copy is attached as Exhibit 99.1.

Concurrently with the website posting of such press release and as noted therein, Sempra Energy also posted its Statements of Operations Data by Segment for the three months and six months ended June 30, 2019 and 2018. A copy of such information is attached as Exhibit 99.2.


Item 9.01 Financial Statements and Exhibits.
  
Exhibits

99.1 August 2, 2019 Sempra Energy News Release (including tables).

99.2 Sempra Energy’s Statements of Operations Data by Segment for the three months and six months ended June 30, 2019 and 2018.










SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
SEMPRA ENERGY,
 
(Registrant)
 
 
Date: August 2, 2019
By: /s/ Peter R. Wall
 
Peter R. Wall
Vice President, Controller and Chief Accounting Officer
 



Exhibit
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13038638&doc=4
NEWS RELEASE

 
 
 
 
 
Media Contact:
Amber Albrecht
 
 
 
 
Sempra Energy
 
 
 
 
(877) 340-8875
 
 
 
 
media@sempra.com
 
 
 
 
 
 
 
 
Financial Contact:
Lindsay Gartner
 
 
 
 
Sempra Energy
 
 
 
 
(877) 736-7727
 
 
 
 
investor@sempra.com
 
 
 


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 - 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 June 30
 
Six months ended 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.



Exhibit
Exhibit 99.2


 
         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.



Exhibit 99.2


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         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