SAN DIEGO — Sempra Energy reported second-quarter 2020 earnings of $2.239 billion, or $7.61 per diluted share, compared to second-quarter 2019 earnings of $354 million, or $1.26 per diluted share.
On an adjusted basis, the company‘s second-quarter 2020 earnings were $485 million, or $1.65 per diluted share, compared to $309 million, or $1.10 per diluted share, in the second quarter of 2019.
“Our year-to-date financial results set us up well to post strong results for the full year in 2020 and are a credit to the dedication and teamwork of our employees who have continued to deliver for our stakeholders amid the pandemic and a challenging economic backdrop,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy in announcing the results August 5.
“Over the last several years, the disciplined execution of our North American strategy has made our company stronger,” Martin said. “This can be seen in the quality and strength of our earnings, as well as the visibility we now have to our future growth.”
Sempra Energy’s earnings for the first six months of 2020 were $2.999 billion, or $9.91 per diluted share, compared with earnings of $795 million, or $2.85 per diluted share, in the first six months of 2019. Adjusted earnings for the first six months of 2020 were $1.417 billion, or $4.76 per diluted share, compared to $843 million, or $3.03 per diluted share, in the first six months of 2019.
The reported financial results reflect certain significant items reconciled to adjusted earnings for the second quarter and first six months of 2020 and 2019.
Executing on a Disciplined Strategy
Sempra Energy completed the sales of its South American businesses in June, marking the conclusion of its broad, two-year capital rotation plan. The company’s investments are now focused on transmission and distribution energy infrastructure in the most attractive markets in North America, including California, Texas, Mexico and North America’s liquefied natural gas (LNG) export market.
In total, including the sales of the company’s South American businesses and its U.S. renewables businesses and non-utility natural gas storage assets, the company has generated approximately $8.3 billion in total gross proceeds from these divestitures. The recent sale of the company’s Chilean businesses remains subject to post-closing adjustments. Proceeds from these transactions are being used to further bolster the company’s strong liquidity position, strengthen the balance sheet, support the execution of its robust capital plan and return value to shareholders.
As part of Sempra Energy’s goal of returning additional value to shareholders, the company recently completed a $500 million share buyback program. It also received authorization from its Board of Directors to repurchase an additional $2 billion of shares at future dates. Sempra Energy’s capital allocation strategy has enabled the company to return approximately $13 billion to common shareholders since 2000 through cash dividends and common share repurchases.
Advancing Record Capital Plans at U.S. Utilities
Sempra Energy, including its ownership share in amounts funded by unconsolidated entities, is projected to invest a record $32 billion in capital over its 2020-2024, five-year plan with a focus on improving the safety and reliability of its transmission and distribution utility businesses in California and Texas.
Both San Diego Gas & Electric Co. (SDG&E) and Southern California Gas Co. (SoCalGas) continue to successfully execute on their infrastructure investments. More than 80% of their investments are allocated to enhance safety and reliability, including wildfire mitigation programs at SDG&E.
Since 2007, SDG&E has invested over $2 billion to help mitigate wildfire risk in and around its service territory. The utility continues to employ the latest technologies under its Fire Safe 3.0 program – such as artificial intelligence-based predictive models and high-speed weather data – to help advance the safety of its communities. SoCalGas is also investing in collaborative research and development related to hydrogen and power-to-gas technology. SoCalGas has already deployed a demonstration of power-to-gas technology at the National Renewable Energy Laboratory where green hydrogen produced from electrolysis powered by solar panels is converted to pipeline quality methane for storage and later use.
In Texas, Oncor Electric Delivery Company LLC (Oncor) is executing on its capital plan. Approximately 90% of the projects in Oncor’s transmission budget through 2021 can commence construction without any further approvals. Oncor has connected approximately 20,000 new premises in the second quarter. Oncor is also on pace to surpass the number of new requests for transmission interconnections it received in 2019, which is predominantly driven by an increase in utility scale solar generation activity. Despite the impacts of COVID-19, Oncor believes it will continue to have a steady increase in interconnection requests for the remainder of 2020.
Continuing Progress on Energy Infrastructure Projects
Phase 1 of the Cameron LNG export facility is expected to reach full commercial operations in the coming days, marking the start of full run-rate earnings and cash flows. The facility is expected to generate nearly $12 billion of after-debt-service cash flow for Sempra Energy during the 20-year contract period. Train 3 at the Cameron LNG facility reached substantial completion on July 31.
Sempra Energy continues to work closely with the highest levels of the Mexican government on obtaining a 20-year export permit for Phase 1 of the proposed Energía Costa Azul (ECA) LNG liquefaction-export infrastructure project under development in Baja California, Mexico. Phase 1 of the proposed project, developed by Sempra LNG and Infraestructura Energética Nova, S.A.B. de C.V. (IEnova), is planned to be a single-train LNG export facility with an initial offtake capacity of approximately 2.5 million tonnes per annum. The project would enable the production of LNG in Baja California, with a view toward diversifying the region’s energy supplies, lowering the price of energy and supporting strategic exports to growing Asian markets.
Driving Sustainable Value
Sempra Energy is focused on creating sustainable value for shareholders, employees, customers and communities. In May, Sempra Energy published its 12th corporate sustainability report, highlighting the company’s strategies to achieve resilient operations and continue a leadership position in sustainable business practices. The full report is available on the Sustainability page of the company’s website.
Sempra Energy continues to prioritize the safety and well-being of its employees, customers, partners and communities through the COVID-19 pandemic. The company has been engaging with public health authorities to implement health and safety guidelines for the protection of its customers and employees who are providing essential energy services to hospitals, healthcare facilities, first responders and others on the frontline of the COVID-19 pandemic. Face coverings, physical distancing, increased sanitization, temperature checks and other measures have been implemented for employees who are currently reporting to their work locations, and those same safety protocols will be in place when other employees return to the office.
Sempra Energy is updating its full-year 2020 GAAP earnings-per-common-share (EPS) guidance range to $12.59 to $13.19 from $12.38 to $13.32, primarily reflecting completion of the sale of its South American businesses. The company is also reaffirming its full-year 2020 adjusted EPS guidance range that was increased to $7.20 to $7.80 on June 30, 2020.
Additionally, the company is reaffirming its full-year 2021 EPS guidance range of $7.50 to $8.10, driven primarily by strong execution at its U.S. utility businesses.
Non-GAAP Financial Measures
Non-GAAP financial measures include Sempra Energy’s adjusted earnings and adjusted EPS for the second quarters and first six months of 2020 and 2019, and full-year 2020 adjusted EPS guidance. See Table A for additional information regarding these non-GAAP financial measures.
Sempra Energy held a live discussion of its earnings results on August 5. The teleconference is available on replay by dialing 888-203-1112 and entering passcode 3865285.
About Sempra Energy
Sempra Energy’s mission is to be North America’s premier energy infrastructure company. With more than $60 billion in total assets in 2019, the San Diego-based company is the utility holding company with the largest U.S. customer base. The Sempra Energy companies’ more than 18,000 employees deliver energy with purpose to over 35 million consumers. The company is focused on the most attractive markets in North America, including California, Texas, Mexico and the LNG export market. Sempra Energy has been consistently recognized for its leadership in sustainability, and diversity and inclusion, and is a member of the S&P 500 Utilities Index and the Dow Jones Utility Index. The company was also named one of the “World’s Most Admired Companies” for 2020 by Fortune Magazine.
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