Press release details

• Achieved Strong Safety and Operational Results
• Targeting Port Arthur LNG Phase 1 FID Q1-2023
• Affirming 2023 EPS Guidance Range 
• Reiterating Long-Term 6-8% Compound Annual EPS Growth Rate

SAN DIEGO, Feb. 28, 2023 /PRNewswire/ -- Sempra (NYSE: SRE) (BMV: SRE) today reported fourth-quarter 2022 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $438 million or $1.39 per diluted share, compared to GAAP earnings of $604 million or $1.90 per diluted share in the fourth quarter of 2021. On an adjusted basis, fourth-quarter 2022 earnings were $743 million or $2.35 per diluted share, compared to $688 million or $2.16 per diluted share in the fourth quarter of 2021.

The company also reported full-year 2022 GAAP earnings of $2.09 billion or $6.62 per diluted share, compared to $1.25 billion or $4.01 per diluted share in 2021, which includes after-tax charges associated with litigation and regulatory matters of $199 million and $1,148 million in 2022 and 2021, respectively. On an adjusted basis, the company's full-year 2022 earnings were $2.92 billion or $9.21 per diluted share, compared to $2.64 billion or $8.43 per diluted share in 2021.

The reported financial results reflect certain significant items as described on an after-tax basis in the following table of GAAP earnings, reconciled to adjusted earnings, for the fourth quarter and full-year 2022 and 2021.

Common and Preferred Dividends

Sempra's board of directors declared a $1.19 per share quarterly dividend on the company's common stock, which is payable April 15, 2023, to common stock shareholders of record as of March 22, 2023. The declared quarterly dividend represents an increase of the company's common stock dividend to $4.76 per share, on an annualized basis, from $4.58 per share in 2022.

Additionally, Sempra's board of directors declared a semi-annual dividend of $24.375 per share on the company's 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C. The preferred stock dividends will be payable April 15, 2023, to preferred stock shareholders of record at the close of business on April 1, 2023.

Track Record of Disciplined Growth

Over the last five years, Sempra has been successful in simplifying its business model and improving its position as a leader in some of North America's largest economic markets. Moreover, the company has increased the scope and scale of its three business platforms — Sempra California, Sempra Texas and Sempra Infrastructure. This has allowed the company to also increase its recurring cash flows and substantially improve its financial performance.

Looking ahead, Sempra remains strategically focused on sustainable growth across its three business platforms underpinned by investments in energy infrastructure supporting electrification, lower carbon fuel sources and energy security in some of North America's leading markets. Across its various businesses, the company is pursuing a portfolio of opportunities to continue improving safety, bolstering reliability and supporting the delivery of increasingly clean and more affordable sources of energy.

Sempra California

Sempra California's San Diego Gas & Electric Co. (SDG&E) and Southern California Gas Co. (SoCalGas) achieved strong safety results in 2022 while continuing to enhance reliability and support California's ambitious clean energy goals. Throughout 2022, the utilities advanced strategic programs to better serve customers including modernizing their energy networks with a focus on safety, reliability and climate resiliency.

SDG&E is advancing state-of-the-art wildfire mitigation and resiliency solutions to further reinforce community fire safety and electric system hardening efforts in the San Diego region. The utility has now hardened 100% of transmission assets in its Tier 3 high-fire threat areas and continues to work toward hardening the remaining areas vulnerable to the threat of wildfires. These enhancements include the completion of the Cleveland National Forest fire hardening and safety project, a $700 million decade-long collaboration with local, state and federal agencies to improve the fire resistance of electric infrastructure throughout approximately 880 square miles of SDG&E's service territory.

SoCalGas achieved an important milestone for its Aspire 2045 strategy, receiving California Public Utilities Commission (CPUC) approval to establish a memorandum account to track the costs of feasibility studies for its Angeles Link green hydrogen infrastructure proposal. The CPUC also directed SoCalGas to include this green hydrogen infrastructure system proposal as part of California's application to the U.S. Department of Energy (DOE) for Hydrogen Hub federal funding.

The ongoing general rate cases that SDG&E and SoCalGas filed with the CPUC in the spring of 2022 establish the foundation for future growth of this platform, and a proposed decision is scheduled to be issued in the second quarter of 2024. SDG&E and SoCalGas also received a final decision authorizing their cost of capital applications, which maintained their existing authorized equity layers and updated their costs of debt, and equity rates of return to 9.95% and 9.8%, respectively, for the 2023 through 2025 period, both subject to an existing adjustment mechanism.

Sempra Texas 

In Texas, Oncor continues to demonstrate a strong commitment to safety and operational excellence while executing on its robust capital plan.

Oncor advanced its operational execution in 2022, constructing new projects to support growth across Texas and increase reliability for the Electric Reliability Council of Texas (ERCOT) market. The utility placed more than $1 billion of transmission projects into service in 2022, including placement of 13 new substations and 18 new switching stations into service and approximately 340 miles of new or upgraded high-voltage transmission lines. Additionally, in 2022, Oncor experienced a 53% increase in active generation and retail transmission interconnection requests. This strong momentum is driven by continued high demand for renewable energy and business growth across Oncor's service territory.

In addition, Oncor recently announced a new Vehicle-to-Grid (V2G) collaboration with Toyota Motor North America (Toyota) to study the impacts and benefits of V2G transactions on the grid. This V2G pilot project will examine the interconnectivity between Toyota battery electric vehicles (BEV's) and utilities, providing insight into the ways Oncor can reliably provide the necessary infrastructure to support growth of electric vehicles across Texas. This effort represents the first collaboration of its kind between Oncor and an automotive original equipment manufacturer and the first utility collaboration for Toyota around BEV's.

Oncor continues to advance its base rate review with the Public Utility Commission of Texas and anticipates a final order to be issued around the end of the first quarter of 2023. Oncor's board of directors is expected to review a long-term financial plan following receipt of a final order in the base rate review.

Sempra Infrastructure 

Sempra Infrastructure is advancing its three integrated business lines — liquefied natural gas (LNG) and net-zero solutions, energy networks and clean power. With projects competitively positioned on both the Gulf and Pacific Coasts of North America, Sempra Infrastructure is assisting with energy security and decarbonization in North America and globally.

Throughout 2022, Sempra Infrastructure achieved a number of key milestones. Cameron LNG Phase 1 continues to exceed original production expectations while unlocking efficiencies and achieving a strong safety record. The company also brought online the fuels terminal in Puebla, which is the sister terminal to the marine facility in Veracruz. At its Pacific Coast assets, Energía Sierra Juarez Phase 2 wind farm, with 108 megawatts of capacity, reached commercial operations and construction of the Energía Costa Azul LNG (ECA LNG) Phase 1 project continues to make substantial construction progress.

Sempra Infrastructure continues to advance marketing efforts for its various LNG development projects to help meet global demand for U.S. LNG. The company recently completed the marketing phase for Phase 1 of the Port Arthur LNG development project, and it is now fully subscribed at 10.5 Mtpa of definitive, long-term contracts with top-tier counterparties. The company is targeting a final investment decision for Port Arthur LNG Phase 1 before the end of the first quarter of 2023.

In addition, the Cameron LNG Phase 2 development project remains on track for completion of the competitive front-end engineering design process in the summer of this year. Additional opportunities for future investment include ECA LNG Phase 2 and Vista Pacífico LNG, both of which received DOE approval in December to export U.S.-sourced natural gas in the form of LNG from Mexico to non-Free Trade Agreement countries.

Earnings Guidance

Sempra is reaffirming its full-year 2023 earnings per common share (EPS) guidance range of $8.60 to $9.20. The company is also reiterating its long-term projected EPS compound annual growth rate of approximately 6% to 8% based on the midpoint of 2023 EPS guidance range.

Non-GAAP Financial Measures

Non-GAAP financial measures include Sempra's adjusted earnings and adjusted EPS. See Table A for additional information regarding these non-GAAP financial measures.

Internet Broadcast

Sempra will broadcast a live discussion of its earnings results over the internet today at 12 p.m. ET with the company's senior management. Access is available by logging onto the Investors section of the company's website, sempra.com/investors. The webcast will be available on replay a few hours after its conclusion at sempra.com/investors.

About Sempra

Sempra is a leading North American energy infrastructure company that helps meet the daily energy needs of nearly 40 million consumers. As the owner of one of the largest energy networks on the continent, Sempra is helping to electrify and decarbonize some of the world's most significant economic markets, including California, Texas, Mexico and the LNG export market. The company is also consistently recognized as a leader in sustainable business practices and for its long-standing commitment to building a high-performance culture focused on safety, leadership and workforce development, and diversity and inclusion. Investor's Business Daily named Sempra the top-ranked utility in the U.S. for environmental, social and governance scores and financial performance. Sempra was also included on the Dow Jones Sustainability North America Index for the 12th consecutive year. More information about Sempra is available at sempra.com and on Twitter @Sempra.

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future, involve risks and uncertainties, and are not guarantees. Future results may differ materially from those expressed or implied in any forward-looking statement. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise.

In this press release, forward-looking statements can be identified by words such as "believes," "expects," "intends," "anticipates," "contemplates," "plans," "estimates," "projects," "forecasts," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "in process," "construct," "develop," "opportunity," "initiative," "target," "outlook," "optimistic," "maintain," "continue," "progress," "advance," "goal," "aim," "commit," or similar expressions, or when we discuss our guidance, priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations.

Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include risks and uncertainties relating to: California wildfires, including that we may be found liable for damages regardless of fault and that we may not be able to recover all or a substantial portion of costs from insurance, the wildfire fund established by California Assembly Bill 1054, rates from customers or a combination thereof; decisions, investigations, inquiries, regulations, issuances or revocations of permits or other authorizations, renewals of franchises, and other actions by (i) the California Public Utilities Commission (CPUC), Comisión Reguladora de Energía, U.S. Department of Energy, U.S. Federal Energy Regulatory Commission, Public Utility Commission of Texas, and other governmental and regulatory bodies and (ii) the U.S., Mexico and states, counties, cities and other jurisdictions therein and in other countries in which we do business; the success of business development efforts, construction projects and acquisitions and divestitures, including risks in (i) being able to make a final investment decision, (ii) completing construction projects or other transactions on schedule and budget, (iii) realizing anticipated benefits from any of these efforts if completed, and (iv) obtaining the consent or approval of partners or other third parties, including governmental and regulatory bodies; litigation, arbitrations, property disputes and other proceedings, and changes to laws and regulations, including those related to the energy industry in Mexico; cybersecurity threats, including by state and state-sponsored actors, of ransomware or other attacks on our systems or the systems of third-parties with which we conduct business, including the energy grid or other energy infrastructure, all of which have become more pronounced due to recent geopolitical events, such as the war in Ukraine; our ability to borrow money on favorable terms and meet our debt service obligations, including due to (i) actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook or (ii) rising interest rates and inflation; failure of foreign governments, state-owned entities and our counterparties to honor their contracts and commitments; the impact on affordability of San Diego Gas & Electric Company's (SDG&E) and Southern California Gas Company's (SoCalGas) customer rates and their cost of capital and on SDG&E's, SoCalGas' and Sempra Infrastructure's ability to pass through higher costs to current and future customers due to (i) volatility in inflation, interest rates and commodity prices, (ii) with respect to SDG&E's and SoCalGas' businesses, the cost of the clean energy transition in California, (iii) with respect to SDG&E's business, departing retail load resulting from additional customers transferring to Community Choice Aggregation and Direct Access, and (iv) with respect to Sempra Infrastructure's business, volatility in foreign currency exchange rates; the impact of climate and sustainability policies, laws, rules, disclosures, and trends, including actions to reduce or eliminate reliance on natural gas, increased uncertainty in the political or regulatory environment for California natural gas distribution companies and the risk of nonrecovery for stranded assets; our ability to incorporate new technologies into our businesses, including those designed to support governmental and private party energy and climate goals; weather, natural disasters, pandemics, accidents, equipment failures, explosions, terrorism, information system outages or other events that disrupt our operations, damage our facilities or systems, cause the release of harmful materials, cause fires or subject us to liability for damages, fines and penalties, some of which may not be recoverable through regulatory mechanisms, may be disputed or not covered by insurers, or may impact our ability to obtain satisfactory levels of affordable insurance; the availability of electric power, natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid, pipeline system or limitations on the withdrawal of natural gas from storage facilities; Oncor Electric Delivery Company LLC's (Oncor) ability to eliminate or reduce its quarterly dividends due to regulatory and governance requirements and commitments, including by actions of Oncor's independent directors or a minority member director; changes in tax and trade policies, laws and regulations, including tariffs, revisions to international trade agreements and sanctions, such as those that have been imposed and that may be imposed in the future in connection with the war in Ukraine, which may increase our costs, reduce our competitiveness, impact our ability to do business with certain counterparties, or impair our ability to resolve trade disputes; and other uncertainties, some of which are difficult to predict and beyond our control.

These risks and uncertainties are further discussed in the reports that Sempra 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, sec.gov, and on Sempra's website, sempra.com. Investors should not rely unduly on any forward-looking statements.

Sempra Infrastructure, Sempra Infrastructure Partners, Sempra Texas, Sempra Texas Utilities, Oncor and Infraestructura Energética Nova, S.A.P.I. de C.V. (IEnova) are not the same companies as the California utilities, SDG&E or SoCalGas, and Sempra Infrastructure, Sempra Infrastructure Partners, Sempra Texas, Sempra Texas Utilities, Oncor and IEnova are not regulated by the CPUC.

None of the website references in this press release are active hyperlinks, and the information contained on, or that can be accessed through, any such website is not, and shall not be deemed to be, part of this document.

 

 

SEMPRA ENERGY
Table A (Continued)

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

Sempra Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests (NCI)) in 2022 and 2021 as follows:

Three months ended December 31, 2022:

• $(75) million impact from foreign currency and inflation on our monetary positions in Mexico
• $(247) million net unrealized losses on commodity derivatives
• $17 million net unrealized gains on a contingent interest rate swap related to the proposed initial phase of the Port Arthur LNG liquefaction project (PA LNG Phase 1 project)

Three months ended December 31, 2021:

• $(16) million impact associated with Aliso Canyon natural gas storage facility litigation at Southern California Gas Company (SoCalGas)
• $(3) million impact from foreign currency and inflation on our monetary positions in Mexico and associated undesignated derivatives
• $129 million net unrealized gains on commodity derivatives
• $(30) million in charges associated with hedge termination costs and a write-off of unamortized debt issuance costs from the early redemptions of debt at Sempra Infrastructure in October 2021
• $(92) million in charges associated with make-whole premiums and a write-off of unamortized discount and debt issuance costs from the early redemptions of debt at Parent and other in December 2021
• $(72) million net income tax expense related to the utilization of a deferred income tax asset upon completing the sale of a 20% NCI in Sempra Infrastructure Partners, LP (SI Partners) to KKR Pinnacle Investor L.P. (KKR) in October 2021

Year ended December 31, 2022:

• $(199) million impact associated with Aliso Canyon natural gas storage facility litigation and regulatory matters at SoCalGas
• $(164) million impact from foreign currency and inflation on our monetary positions in Mexico
• $(355) million net unrealized losses on commodity derivatives
• $17 million net unrealized gains on a contingent interest rate swap related to the proposed PA LNG Phase 1 project
• $(120) million deferred income tax expense associated with the change in our indefinite reinvestment assertion as a result of progress in obtaining regulatory approvals necessary to close the sale of a 10% NCI in SI Partners to Abu Dhabi Investment Authority (ADIA)

Year ended December 31, 2021:

• $(1,148) million impact associated with Aliso Canyon natural gas storage facility litigation at SoCalGas
• $(44) million impact from foreign currency and inflation on our monetary positions in Mexico and associated undesignated derivatives
• $(47) million net unrealized losses on commodity derivatives
• $(30) million in charges associated with hedge termination costs and a write-off of unamortized debt issuance costs from the early redemptions of debt at Sempra Infrastructure in October 2021
• $(92) million in charges associated with make-whole premiums and a write-off of unamortized discount and debt issuance costs from the early redemptions of debt at Parent and other in December 2021
• $(72) million net income tax expense related to the utilization of a deferred income tax asset upon completing the sale of a 20% NCI in SI Partners to KKR in October 2021
• $50 million equity earnings from investment in RBS Sempra Commodities LLP, which represents a reduction to an estimate of our obligations to settle pending value added tax (VAT) matters and related legal costs at our equity method investment at Parent and other

Sempra Adjusted Earnings and Adjusted EPS are non-GAAP financial measures (GAAP represents generally accepted accounting principles in the United States of America). These non-GAAP financial measures exclude significant items that are generally not related to our ongoing business activities and/or are infrequent in nature. These non-GAAP financial measures also exclude the impact from foreign currency and inflation effects on our monetary positions in Mexico and associated undesignated derivatives and unrealized gains and losses on commodity derivatives, which we expect to occur in future periods, and which can vary significantly from one period to the next. Exclusion of these items is useful to management and investors because it provides a meaningful comparison of the performance of Sempra's 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 GAAP Earnings and GAAP EPS, which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.

 

 

 

 

 

 

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SOURCE Sempra

Media Contact: Patricia Kakridas, Sempra, (877) 340-8875, media@sempra.com; Financial Contact: Jenell McKay, Sempra, (877) 736-7727, investor@sempra.com