Sempra Energy Announces Third-Quarter 2017 Earnings
SAN DIEGO, Oct. 30, 2017 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported third-quarter 2017 earnings of $57 million, or $0.22 per diluted share, compared with third-quarter 2016 earnings of $622 million, or $2.46 per diluted share.
On an adjusted basis, Sempra Energy's third-quarter 2017 earnings increased to $265 million, or $1.04 per diluted share, from $259 million, or $1.02 per diluted share, in the third quarter 2016. Adjusted earnings excluded a $208 million after-tax impairment in the most recent quarter related to a proposed decision by administrative law judges with the California Public Utilities Commission (CPUC) denying the request by San Diego Gas & Electric (SDG&E) to recover costs related to the 2007 San Diego wildfires. Adjusted earnings in last year's third quarter excluded a $350 million after-tax remeasurement gain related to the acquisition of PEMEX's share of the Gasoductos de Chihuahua (GdC) joint venture by Sempra Energy's Mexican subsidiary IEnova, a $78 million after-tax gain on the sale of EnergySouth and net after-tax losses of $65 million related to the planned sale of IEnova's Termoeléctrica de Mexicali (TdM) power plant.
For the first nine months of 2017, Sempra Energy's earnings were $757 million, or $2.99 per diluted share, compared with $991 million, or $3.93 per diluted share, in the first nine months of 2016. Adjusted earnings for the first nine months of 2017 increased to $979 million, or $3.87 per diluted share, from $884 million, or $3.51 per diluted share, for the first nine months of 2016.
These results reflect certain significant items as described in the following table of GAAP earnings, reconciled to adjusted earnings on an after-tax basis, for the third quarter and first nine months of 2017 and 2016:
Three months Nine months
ended September 30, ended September 30,
------------------- -------------------
(Unaudited; Dollars, except
EPS, and shares, in
millions) 2017 2016 2017 2016
---- ---- ---- ----
GAAP Earnings $57 $622 $757 $991
SDG&E
Impairment of Wildfire
Regulatory Asset 208 - 208 -
Tax Repairs Adjustments
Related to General Rate
Case (GRC) - - - 31
SoCalGas
Tax Repairs Adjustments
Related to GRC - - - 49
Sempra Mexico
Gain in Connection with
Gasoductos de Chihuahua
(GdC) Acquisition - (350) - (350)
Impairments and Losses
Related to Termoeléctrica
de Mexicali (TdM) Held For
Sale - 65 42 91
Sempra LNG & Midstream
Gain on Sale of EnergySouth - (78) - (78)
(Recoveries) Losses Related
to Permanent Releases of
Pipeline Capacity - - (28) 123
Loss Related to Sale of
Investment in Rockies
Express Pipeline - - - 27
Adjusted Earnings(1) $265 $259 $979 $884
---- ---- ---- ----
Diluted weighted-average
shares outstanding 253 252 253 252
GAAP EPS $0.22 $2.46 $2.99 $3.93
Adjusted Earnings(1) $1.04 $1.02 $3.87 $3.51
(1) Sempra
Energy
adjusted
earnings
and
adjusted
earnings
per share
are non-
GAAP
financial
measures.
See Table A
in the
appendix
for
information
regarding
non-GAAP
financial
measures
and
descriptions
of
adjustments
above.
"Based on our strong operating and financial performance through the first nine months, we are on track for one of the best years in our history," said Debra L. Reed, chairman, president and CEO of Sempra Energy. "During the third quarter, we saw continued growth in our utility and infrastructure businesses, while laying the groundwork for a significant new growth platform with our agreement to acquire a majority stake in Oncor."
On Aug. 21, Sempra Energy entered into an agreement to acquire Energy Future Holdings Corp. (EFH), the indirect owner of approximately 80 percent of Oncor Electric Delivery Company LLC (Oncor), the largest electric utility in Texas. In September, the U.S. Bankruptcy Court for the District of Delaware approved EFH's entry into the merger agreement with Sempra Energy and, earlier this month, Sempra Energy and Oncor filed a joint Change-in-Control application with the Public Utility Commission of Texas (PUCT). On Oct. 16, the PUCT set a procedural schedule to complete a review of Sempra Energy's and Oncor's case within 180 days, by early April 2018. The EFH transaction closing remains subject to further approvals by the Bankruptcy Court, the PUCT and the Federal Energy Regulatory Commission, among other approvals and closing conditions. Sempra Energy expects the transaction to close in the first half of 2018.
SEMPRA UTILITIES
San Diego Gas & Electric
SDG&E recorded a net loss of $28 million in the third quarter 2017, compared with earnings of $183 million in last year's third quarter, due primarily to the $208 million after-tax impairment related to cost recovery for the 2007 San Diego wildfires, as SDG&E has determined that its regulatory asset no longer meets the probability threshold for recovery under applicable accounting guidance. The CPUC has yet to issue a final ruling in the cost-recovery proceeding.
For the first nine months of 2017, SDG&E's earnings were $276 million, compared with $419 million in the same period last year. SDG&E's earnings for the first nine months of 2017 included the third-quarter 2017 wildfires-related impairment. In last year's second quarter, SDG&E recorded an after-tax charge of $31 million, refunding to ratepayers the benefits from tax repairs deductions, related to the final 2016 General Rate Case Decision.
Southern California Gas Co.
Earnings for Southern California Gas Co. (SoCalGas) were $7 million in the third quarter 2017, compared with no earnings in last year's third quarter.
SoCalGas' nine-month earnings were $268 million in 2017, compared with $198 million in 2016. In last year's second quarter, SoCalGas recorded an after-tax charge of $49 million, refunding to ratepayers the benefits from tax repairs deductions, related to the final 2016 General Rate Case Decision.
Sempra South American Utilities
In the third quarter 2017, Sempra South American Utilities had earnings of $42 million, compared with $46 million in last year's third quarter.
For the first nine months of 2017, earnings for Sempra South American Utilities were $134 million, compared with $127 million in the first nine months of 2016.
SEMPRA INFRASTRUCTURE
Sempra Mexico
Third-quarter earnings for Sempra Mexico were $66 million in 2017, compared with $332 million in 2016. In last year's third quarter, Sempra Mexico's results included the $350 million after-tax remeasurement gain related to the GdC acquisition, offset by the $65 million after-tax charge related to the planned sale of TdM.
For the nine-month period, Sempra Mexico had earnings of $105 million in 2017, compared with $407 million in 2016.
On Oct. 6, IEnova announced it agreed to acquire an additional stake in the Los Ramones II Norte pipeline from Pemex Transformación Industrial, increasing IEnova's indirect ownership stake to 50 percent from 25 percent. The 452-km pipeline, which commenced operations in February 2016, transports natural gas from Nuevo Leon to San Luis Potosí in central Mexico.
Sempra Renewables
Earnings for Sempra Renewables in the third quarter 2017 were $15 million, compared with $17 million in the third quarter 2016.
During the first nine months of 2017, earnings for Sempra Renewables were $49 million, up from $43 million during the same period last year.
Sempra LNG & Midstream
In the third quarter 2017, Sempra LNG & Midstream recorded a net loss of $4 million, compared with earnings of $77 million in the third quarter 2016, due to the $78 million after-tax gain from the sale of EnergySouth in last year's third quarter.
For the first nine months of 2017, Sempra LNG & Midstream had earnings of $24 million, compared with a net loss of $104 million in the first nine months of 2016. Sempra LNG & Midstream recorded a $28 million after-tax recovery in the second quarter 2017 related to last year's permanent releases of certain pipeline capacity, compared with a related $123 million after-tax loss in 2016.
EARNINGS GUIDANCE
Today, Sempra Energy updated its GAAP 2017 earnings-per-share guidance range to $4.13 to $4.43 from the prior range of $4.95 to $5.25, resulting from the impairment in the third quarter 2017 related to SDG&E's cost recovery for the 2007 San Diego wildfires. The company said it expects its adjusted 2017 earnings per share to be at the upper end of its guidance range of $5 to $5.30.
NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures include Sempra Energy's adjusted earnings and adjusted earnings per share for the third-quarter and nine-month periods in 2017 and 2016, as well as the adjusted 2017 earnings-per-share guidance range. Additional information regarding these non-GAAP financial measures is in the appendix on Table A of the third-quarter financial tables.
INTERNET BROADCAST
Sempra Energy will webcast a live discussion of its earnings results today at 12 p.m. EDT 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 9618086.
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2016 revenues of more than $10 billion. The Sempra Energy companies' more than 16,000 employees serve approximately 32 million consumers worldwide.
This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by words such as "believes," "expects," "anticipates," "plans," "estimates," "projects," "forecasts," "contemplates," "assumes," "depends," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "target," "pursue," "outlook," "maintain," or similar expressions or discussions of guidance, strategies, plans, goals, 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 actual results and future actions to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: actions and the timing of actions, including decisions, new regulations, and issuances of permits and other authorizations by the California Public Utilities Commission, U.S. Department of Energy, California Division of Oil, Gas, and Geothermal Resources, Federal Energy Regulatory Commission, U.S. Environmental Protection Agency, Pipeline and Hazardous Materials Safety Administration, Los Angeles County Department of Public Health, states, cities and counties, and other regulatory and governmental bodies in the United States and other countries in which we operate; the timing and success of business development efforts and construction projects, including risks in obtaining or maintaining permits and other authorizations on a timely basis, risks in completing construction projects on schedule and on budget, and risks in obtaining the consent and participation of partners; the resolution of civil and criminal litigation and regulatory investigations; deviations from regulatory precedent or practice that result in a reallocation of benefits or burdens among shareholders and ratepayers; modifications of settlements; delays in, or disallowance or denial of, regulatory agency authorizations to recover costs in rates from customers (including with respect to regulatory assets associated with the San Onofre Nuclear Generating Station facility and 2007 wildfires) or regulatory agency approval for projects required to enhance safety and reliability; the availability of electric power, natural gas and liquefied natural gas, and natural gas pipeline and storage capacity, including disruptions caused by failures in the transmission grid, moratoriums or limitations on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures; changes in energy markets; volatility in commodity prices; moves to reduce or eliminate reliance on natural gas; the impact on the value of our investment in natural gas storage and related assets from low natural gas prices, low volatility of natural gas prices and the inability to procure favorable long-term contracts for storage services; risks posed by actions of third parties who control the operations of our investments, and risks that our partners or counterparties will be unable or unwilling to fulfill their contractual commitments; 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 greenhouse gases, radioactive materials and harmful emissions, cause wildfires and subject us to third-party liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance (including costs in excess of applicable policy limits) or may be disputed by insurers; 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; capital markets and economic conditions, including the availability of credit and the liquidity of our investments; fluctuations in inflation, interest and currency exchange rates and our ability to effectively hedge the risk of such fluctuations; changes in the tax code as a result of potential federal tax reform, uncertainty as to what proposals will be enacted, if any, and, if enacted, how they would be applied; changes in foreign and domestic trade policies and laws, including border tariffs, revisions to international trade agreements, such as the North American Free Trade Agreement, and changes that make our exports less competitive or otherwise restrict our ability to export or resolve trade disputes; the ability to win competitively bid infrastructure projects against a number of strong and aggressive competitors; expropriation of assets by foreign governments and title and other property disputes; the impact on reliability of San Diego Gas & Electric Company's (SDG&E) electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources; the impact on competitive customer rates due to the growth in distributed and local power generation and the corresponding decrease in demand for power delivered through SDG&E's electric transmission and distribution system 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; and other uncertainties, some of which may be difficult to predict and are beyond our control.
Additional forward-looking statements include, but are not limited to, statements about the anticipated benefits of the proposed merger involving Sempra Energy, Energy Future Holdings Corp. (EFH) and EFH's indirect interest in Oncor Electric Delivery Company LLC (Oncor), including future financial or operating results of Sempra Energy or Oncor, Sempra Energy's, EFH's or Oncor's plans, objectives, expectations or intentions, the expected financing plans for the transaction, the expected timing of completion of the transaction, and other statements that are not historical facts. Important factors that could cause actual results and future actions to differ materially from those described in any such forward-looking statements include risks and uncertainties relating to: the risk that Sempra Energy, EFH or Oncor may be unable to obtain bankruptcy court and governmental and regulatory approvals required for the merger, or that required bankruptcy court and governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the transaction or be onerous to Sempra Energy; the risk that a condition to closing of the merger may not be satisfied, including receipt of a satisfactory supplemental private letter ruling from the Internal Revenue Service; the risk that the transaction may not be completed for other reasons, or may not be completed on the terms or timing currently contemplated; the risk that the anticipated benefits from the transaction may not be fully realized or may take longer to realize than expected; the risk that Sempra Energy may be unable to obtain the external financing necessary to pay the consideration and expenses related to the merger on terms favorable to Sempra Energy, if at all; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; and the diversion of management time and attention to merger-related issues and related legal, accounting and other costs, whether or not the merger is completed.
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, and on the company's website at www.sempra.com. 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 Infrastructure, Sempra LNG & Midstream, Sempra Renewables, Sempra Mexico and Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) are not the same as the California Utilities, San Diego Gas & Electric Company (SDG&E) or Southern California Gas Company (SoCalGas), and are not regulated by the California Public Utilities Commission.
SEMPRA ENERGY
Table A
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
------------- -------------
(Dollars in millions,
except per share
amounts) 2017 2016 2017 2016
--------------------- ---- ---- ---- ----
(unaudited)
REVENUES
Utilities $2,277 $2,264 $7,172 $6,700
Energy-related businesses 402 271 1,071 613
Total revenues 2,679 2,535 8,243 7,313
EXPENSES AND OTHER INCOME
Utilities:
Cost of electric fuel and
purchased power (650) (604) (1,730) (1,680)
Cost of natural gas (190) (208) (903) (702)
Energy-related businesses:
Cost of natural gas,
electric fuel and
purchased power (97) (95) (226) (213)
Other cost of sales (21) (32) (5) (293)
Operation and maintenance (762) (703) (2,207) (2,109)
Depreciation and
amortization (378) (328) (1,106) (970)
Franchise fees and other
taxes (114) (108) (325) (315)
Impairment of wildfire
regulatory asset (351) - (351) -
Other impairment losses (1) (132) (72) (154)
Gain on sale of assets 2 131 2 131
Equity earnings, before
income tax 10 12 31 4
Remeasurement of equity
method investment - 617 - 617
Other income, net 41 26 301 98
Interest income 12 7 26 19
Interest expense (165) (136) (493) (421)
Income before income
taxes and equity
earnings (losses) of
certain unconsolidated
subsidiaries 15 982 1,185 1,325
Income tax benefit
(expense) 84 (282) (378) (284)
Equity earnings (losses),
net of income tax 3 19 (5) 69
Net income 102 719 802 1,110
Earnings attributable to
noncontrolling interests (45) (97) (44) (118)
Preferred dividends of
subsidiary - - (1) (1)
--- --- --- ---
Earnings $57 $622 $757 $991
=== ==== ==== ====
Basic earnings per common
share $0.23 $2.48 $3.01 $3.96
===== ===== ===== =====
Weighted-average number
of shares outstanding,
basic (thousands) 251,692 250,386 251,425 250,073
======= ======= ======= =======
Diluted earnings per
common share $0.22 $2.46 $2.99 $3.93
===== ===== ===== =====
Weighted-average number
of shares outstanding,
diluted (thousands) 253,364 252,405 252,987 251,976
======= ======= ======= =======
Dividends declared per
share of common stock $0.82 $0.76 $2.47 $2.27
===== ===== ===== =====
SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY
ADJUSTED EARNINGS TO SEMPRA
ENERGY GAAP EARNINGS
(Unaudited)
Sempra Energy Adjusted Earnings
and Adjusted Earnings Per Share
exclude items (after the
effects of income taxes and, if
applicable, noncontrolling
interests) in 2017 and 2016 as
follows:
Three months ended September 30,
2017:
-- $(208) million impairment of wildfire regulatory asset at SDG&E
Three months ended September 30,
2016:
-- $350 million noncash gain from the remeasurement of our equity method investment in IEnova Pipelines (formerly Gasoductos de Chihuahua or GdC), a 50-50 joint venture between our Mexican subsidiary, IEnova, and Petróleos Mexicanos (PEMEX), in connection with IEnova's September 2016 acquisition of PEMEX's 50-percent interest in GdC
-- $78 million gain at Sempra LNG & Midstream on the September 2016 sale of EnergySouth Inc., the parent company of Mobile Gas and Willmut Gas
-- $(90) million impairment of Sempra Mexico's Termoeléctrica de Mexicali (TdM) assets held for sale
-- $25 million reduction of deferred income tax liability related to the impairment in carrying value of TdM's assets
Nine months ended September 30,
2017:
-- $(208) million impairment of wildfire regulatory asset at SDG&E
-- $(47) million impairment of TdM assets held for sale
-- $5 million deferred income tax benefit on the TdM assets held for sale
-- $28 million of recoveries related to 2016 permanent releases of pipeline capacity
Nine months ended September 30,
2016:
-- $350 million noncash gain from the remeasurement of our equity method investment in IEnova Pipelines
-- $78 million gain on the sale of EnergySouth
-- $(123) million losses from the permanent releases of pipeline capacity at Sempra LNG & Midstream
-- $(80) million adjustments related to tax repairs deductions reallocated to ratepayers as a result of the 2016 General Rate Case Final Decision (2016 GRC FD) at the California Utilities
-- $(27) million impairment charge related to Sempra LNG & Midstream's investment in Rockies Express Pipeline LLC (Rockies Express)
-- $(90) million impairment of TdM assets held for sale
-- $(1) million deferred income tax expense on the TdM assets held for sale
Sempra Energy Adjusted Earnings
and Adjusted Earnings Per Share
are non-GAAP financial
measures (GAAP represents
accounting principles generally
accepted in the United States
of America). Because of the
significance and/or nature of
the excluded items, management
believes that these non-GAAP
financial measures provide a
Pretax Income tax Non- Earnings Pretax Income tax Non- Earnings
amount (benefit) controlling amount expense controlling
expense(1) interests (benefit)(1) interests
--------- --------- ------------ ---------
(Dollars in millions, except
per share amounts) Three months ended September 30, 2017 Three months ended September 30, 2016
---------------------------- ------------------------------------- -------------------------------------
Sempra Energy GAAP Earnings $57 $622
Excluded items:
Impairment of wildfire
regulatory asset $351 $(143) $ - 208 $ - $ - $ - -
Remeasurement gain in
connection with GdC
acquisition - - - - (617) 185 82 (350)
Gain on sale of EnergySouth - - - - (130) 52 - (78)
Impairment of TdM assets held
for sale - - - - 131 (20) (21) 90
Reduction of deferred income
tax liability associated with
TdM - - - - - (31) 6 (25)
Sempra Energy Adjusted
Earnings $265 $259
==== ====
Diluted earnings per common
share:
Sempra Energy GAAP Earnings $0.22 $2.46
===== =====
Sempra Energy Adjusted
Earnings $1.04 $1.02
===== =====
Weighted-average number of
shares outstanding, diluted
(thousands) 253,364 252,405
------- -------
Nine months ended September 30, 2017 Nine months ended September 30, 2016
------------------------------------ ------------------------------------
Sempra Energy GAAP Earnings $757 $991
Excluded items:
Impairment of wildfire
regulatory asset $351 $(143) $ - 208 $ - $ - $ - -
Impairment of TdM assets held
for sale 71 - (24) 47 131 (20) (21) 90
Deferred income tax (benefit)
expense associated with TdM - (8) 3 (5) - 1 - 1
Recoveries related to 2016
permanent releases of
pipeline capacity (47) 19 - (28) - - - -
Remeasurement gain in
connection with GdC
acquisition - - - - (617) 185 82 (350)
Gain on sale of EnergySouth - - - - (130) 52 - (78)
Permanent releases of pipeline
capacity - - - - 206 (83) - 123
SDG&E tax repairs adjustments
related to 2016 GRC FD - - - - 52 (21) - 31
SoCalGas tax repairs
adjustments related to 2016
GRC FD - - - - 83 (34) - 49
Impairment of investment in
Rockies Express - - - - 44 (17) - 27
Sempra Energy Adjusted
Earnings $979 $884
==== ====
Diluted earnings per common
share:
Sempra Energy GAAP Earnings $2.99 $3.93
===== =====
Sempra Energy Adjusted
Earnings $3.87 $3.51
===== =====
Weighted-average number of
shares outstanding, diluted
(thousands) 252,987 251,976
---------------------------- ------- -------
(1) Income taxes
were
calculated
based on
applicable
statutory
tax rates,
except for
adjustments
that are
solely
income tax.
Income taxes
associated
with TdM
were
calculated
based on the
applicable
statutory
tax rate,
including
translation
from
historic to
current
exchange
rates. An
income tax
benefit of
$12 million
associated
with the
2017 TdM
impairment
has been
fully
reserved.
SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY 2017 ADJUSTED
EARNINGS-PER-SHARE GUIDANCE RANGE TO SEMPRA
ENERGY 2017 GAAP EARNINGS-PER-SHARE GUIDANCE
RANGE (Unaudited)
Sempra Energy 2017 Adjusted Earnings-Per-
Share Guidance Range of $5.00 to $5.30
excludes items (after the effects of income
taxes and, if applicable, noncontrolling
interests) as follows:
? $(208) million impairment of wildfire regulatory asset at SDG&E
? $(47) million impairment of Sempra Mexico's TdM assets held for sale
? $5 million deferred income tax benefit on the TdM assets held for sale
? $28 million of recoveries related to 2016 permanent release of pipeline capacity
Sempra Energy 2017 Adjusted
Earnings-Per-Share Guidance is
a non-GAAP financial measure.
Because of the significance and/
or nature of the excluded items,
management believes this non-
GAAP financial measure provides
additional clarity into the
ongoing results of the business
and the comparability of such
results to prior and future
periods and also as a base for
projected earnings-per-share
compound annual growth rate.
Sempra Energy 2017 Adjusted
Earnings-Per-Share Guidance
should not be considered an
alternative to Earnings-Per-
Share Guidance determined in
accordance with GAAP. The table
below reconciles Sempra Energy
2017 Adjusted Earnings-Per-
Share Guidance Range to Sempra
Energy 2017 GAAP Earnings-Per-
Share Guidance Range, which we
consider to be the most directly
comparable financial measure
calculated in accordance with
GAAP.
Full-Year 2017
--------------
Sempra Energy GAAP Earnings-Per-Share Guidance Range $4.13 to $4.43
Excluded items(1):
Impairment of wildfire regulatory asset 0.82 0.82
Impairment of TdM assets held for sale 0.18 0.18
Deferred income tax benefit associated with TdM (0.02) (0.02)
Recoveries related to 2016 permanent release of pipeline capacity (0.11) (0.11)
----- -----
Sempra Energy Adjusted Earnings-Per-Share Guidance Range $5.00 to $5.30
===== =====
Weighted-average number of shares outstanding, diluted (thousands) 254,000
------------------------------- -------
(1) The effects of income taxes and noncontrolling interests for excluded items are provided
in the reconciliation
of Sempra Energy GAAP Earnings to Sempra Energy Adjusted Earnings above.
SEMPRA ENERGY
Table B
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in
millions) September 30, December 31,
2017 2016(1)
--- ---- ------
(unaudited)
Assets
Current assets:
Cash and cash
equivalents $189 $349
Restricted cash 59 66
Accounts receivable,
net 1,387 1,554
Due from
unconsolidated
affiliates 31 26
Income taxes
receivable 118 43
Inventories 296 258
Regulatory balancing
accounts -
undercollected 170 259
Fixed-price
contracts and other
derivatives 174 83
Assets held for sale 117 201
Other 337 271
Total current assets 2,878 3,110
----- -----
Other assets:
Restricted cash 13 10
Due from
unconsolidated
affiliates 506 201
Regulatory assets 3,186 3,414
Nuclear
decommissioning
trusts 1,041 1,026
Investments 2,128 2,097
Goodwill 2,393 2,364
Other intangible
assets 537 548
Dedicated assets in
support of certain
benefit plans 435 430
Insurance receivable
for Aliso Canyon
costs 542 606
Deferred income
taxes 132 234
Sundry 954 815
Total other assets 11,867 11,745
Property, plant and
equipment, net 35,384 32,931
------ ------
Total assets $50,129 $47,786
======= =======
Liabilities and Equity
Current liabilities:
Short-term debt $2,498 $1,779
Accounts payable 1,333 1,476
Due to
unconsolidated
affiliates 10 11
Dividends and
interest payable 386 319
Accrued compensation
and benefits 334 409
Regulatory balancing
accounts -
overcollected 278 122
Current portion of
long-term debt 1,423 913
Fixed-price
contracts and other
derivatives 105 83
Customer deposits 149 158
Reserve for Aliso
Canyon costs 42 53
Liabilities held for
sale 47 47
Other 589 557
--- ---
Total current
liabilities 7,194 5,927
----- -----
Long-term debt 14,803 14,429
------ ------
Deferred credits and other
liabilities:
Customer advances
for construction 148 152
Pension and other
postretirement
benefit plan
obligations, net of
plan assets 1,238 1,208
Deferred income
taxes 4,090 3,745
Deferred investment
tax credits 28 28
Regulatory
liabilities arising
from removal
obligations 2,774 2,697
Asset retirement
obligations 2,482 2,431
Fixed-price
contracts and other
derivatives 301 405
Deferred credits and
other 1,569 1,523
----- -----
Total deferred
credits and other
liabilities 12,630 12,189
------ ------
Equity:
Total Sempra Energy
shareholders'
equity 13,265 12,951
Preferred stock of
subsidiary 20 20
Other noncontrolling
interests 2,217 2,270
----- -----
Total equity 15,502 15,241
------ ------
Total liabilities
and equity $50,129 $47,786
======= =======
(1) Derived from
audited
financial
statements.
SEMPRA ENERGY
Table C
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30,
-------------------------------
(Dollars in millions) 2017 2016
-------------------- ---- ----
(unaudited)
Cash Flows from Operating Activities
Net income $802 $1,110
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,106 970
Deferred income taxes and investment
tax credits 302 170
Impairment of wildfire regulatory
asset 351 -
Other impairment losses 72 154
Gain on sale of assets (2) (131)
Equity earnings, net (26) (73)
Remeasurement of equity method
investment - (617)
Fixed-price contracts and other
derivatives (142) 39
Other 20 50
Net change in other working capital
components 229 224
Insurance receivable for Aliso
Canyon costs 64 (339)
Changes in other assets (137) (4)
Changes in other liabilities 71 138
Net cash provided by operating
activities 2,710 1,691
----- -----
Cash Flows from Investing Activities
Expenditures for property, plant and
equipment (2,880) (3,087)
Expenditures for investments and
acquisition of businesses, (110) (1,212)
net of cash and cash equivalents
acquired
Proceeds from sale of assets, net of
cash sold 12 761
Distributions from investments 25 23
Purchases of nuclear decommissioning
and other trust assets (1,082) (418)
Proceeds from sales by nuclear
decommissioning and other trusts 1,082 486
Increases in restricted cash (293) (53)
Decreases in restricted cash 298 71
Advances to unconsolidated
affiliates (321) (12)
Repayments of advances to
unconsolidated affiliates 8 11
Other 1 (2)
--- ---
Net cash used in investing
activities (3,260) (3,432)
------ ------
Cash Flows from Financing Activities
Common dividends paid (561) (510)
Preferred dividends paid by
subsidiary (1) (1)
Issuances of common stock 37 40
Repurchases of common stock (15) (55)
Issuances of debt (maturities
greater than 90 days) 2,395 2,013
Payments on debt (maturities greater
than 90 days) (1,829) (1,298)
Increase in short-term debt, net 475 1,636
Deposit for sale of noncontrolling
interest - 78
Net distributions to noncontrolling
interests (109) (43)
Other (11) (12)
--- ---
Net cash provided by financing
activities 381 1,848
--- -----
Effect of exchange rate changes on
cash and cash equivalents 9 8
--- ---
(Decrease) increase in cash and cash
equivalents (160) 115
Cash and cash equivalents, January 1 349 403
Cash and cash equivalents, September
30 $189 $518
==== ====
SEMPRA ENERGY
Table D
SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITION OF BUSINESSES
Three months ended Nine months ended
September 30, September 30,
------------- -------------
(Dollars in millions) 2017 2016 2017 2016
-------------------- ---- ---- ---- ----
(unaudited)
(Losses) Earnings
Sempra Utilities:
San Diego Gas & Electric $(28) $183 $276 $419
Southern California Gas 7 - 268 198
Sempra South American Utilities 42 46 134 127
Sempra Infrastructure:
Sempra Mexico 66 332 105 407
Sempra Renewables 15 17 49 43
Sempra LNG & Midstream (4) 77 24 (104)
Parent and other (41) (33) (99) (99)
--- --- --- ---
Earnings $57 $622 $757 $991
=== ==== ==== ====
Three months ended Nine months ended
September 30, September 30,
------------- -------------
(Dollars in millions) 2017 2016 2017 2016
-------------------- ---- ---- ---- ----
(unaudited)
Capital Expenditures,
Investments and Acquisition of
Businesses
Sempra Utilities:
San Diego Gas & Electric $359 $357 $1,122 $959
Southern California Gas 351 299 1,033 949
Sempra South American Utilities 62 51 139 133
Sempra Infrastructure:
Sempra Mexico 38 1,226 265 1,366
Sempra Renewables 261 261 361 739
Sempra LNG & Midstream 16 44 53 136
Parent and other 4 9 17 17
--- --- --- ---
Consolidated Capital
Expenditures, Investments and
Acquisition of Businesses $1,091 $2,247 $2,990 $4,299
====== ====== ====== ======
SEMPRA ENERGY
Table E
OTHER OPERATING STATISTICS (Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
UTILITIES 2017 2016 2017 2016
--------- ---- ---- ---- ----
SDG&E and SoCalGas
Gas Sales (Bcf)(1) 56 56 253 242
Transportation
(Bcf)(1) 184 185 488 477
--- --- --- ---
Total Deliveries
(Bcf)(1) 240 241 741 719
--- --- --- ---
Total Gas Customers (Thousands) 6,835 6,799
Electric Sales
(Millions of kWhs)(1) 4,443 4,377 11,772 11,662
Direct Access
(Millions of kWhs) 957 967 2,530 2,573
--- --- ----- -----
Total Deliveries
(Millions of kWhs)(1) 5,400 5,344 14,302 14,235
----- ----- ------ ------
Total Electric Customers
(Thousands) 1,440 1,432
Other Utilities
Natural Gas Sales (Bcf)
Sempra Mexico 7 7 22 22
Mobile Gas(2) - 9 - 33
Willmut Gas(2) - - - 2
Natural Gas Customers
(Thousands)
Sempra Mexico 120 117
Mobile Gas(2) - 84
Willmut Gas(2) - 19
Electric Sales (Millions of
kWhs)
Peru 1,647 1,771 5,321 5,607
Chile 699 680 2,201 2,161
Electric Customers (Thousands)
Peru 1,093 1,071
Chile 700 684
ENERGY-RELATED BUSINESSES
-------------------------
Sempra Infrastructure
Power Sold (Millions of kWhs)
Sempra Mexico(3) 1,327 1,102 3,032 2,347
Sempra Renewables(4) 894 649 3,100 2,141
Sempra LNG & Midstream 373 383 867 847
(1) Includes
intercompany
sales.
(2) On September
12, 2016,
Sempra LNG &
Midstream
completed the
sale of the
parent
company of
Mobile Gas
and Willmut
Gas.
(3) Includes power
sold at the
Termoeléctrica
de Mexicali
natural gas-
fired power
plant and in
2017, at the
Ventika wind
power
generation
facilities
acquired in
December
2016. Also
includes 50
percent of
total power
sold at the
Energía
Sierra Juárez
wind power
generation
facility, in
which Sempra
Energy has a
50-percent
ownership
interest.
Energía
Sierra Juárez
is not
consolidated
within Sempra
Energy, and
the related
investment is
accounted for
under the
equity
method.
(4) Includes 50
percent of
total power
sold related
to solar and
wind projects
in which
Sempra Energy
has a
50-percent
ownership.
These
subsidiaries
are not
consolidated
within Sempra
Energy, and
the related
investments
are accounted
for under the
equity
method.
SEMPRA ENERGY
Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
Three months ended September 30, 2017
(Dollars in millions) SDG&E SoCalGas Sempra South Sempra Mexico Sempra Sempra LNG & Consolidating
American Renewables Midstream Adjustments,
Utilities Parent &
Other Total
-------------------- ----- -------- ------------- ------------- ----------- ------------- -------------- -----
Revenues $1,236 $684 $376 $336 $26 $152 $(131) $2,679
Cost of sales and other
expenses (769) (542) (296) (153) (22) (154) 104 (1,832)
Depreciation and
amortization (170) (132) (14) (41) (9) (10) (2) (378)
Impairments (351) - - (1) - - - (352)
Equity earnings, before
income tax - - - - 7 3 - 10
Other income, net 16 8 3 4 - 1 9 41
--- --- --- --- --- --- ---
(Loss) income before
interest and tax (1) (38) 18 69 145 2 (8) (20) 168
Net interest (expense)
income (2) (53) (25) (4) (14) (2) 5 (60) (153)
Income tax benefit
(expense) 72 14 (18) (34) 9 2 39 84
Equity earnings, net of
income tax - - 1 2 - - - 3
(Earnings) losses
attributable to
noncontrolling interests (9) - (6) (33) 6 (3) - (45)
(Losses) earnings $(28) $7 $42 $66 $15 $(4) $(41) $57
==== === === === === === ==== ===
Three months ended September 30, 2016
(Dollars in millions) SDG&E SoCalGas Sempra South Sempra Mexico Sempra Sempra LNG & Consolidating
American Renewables Midstream Adjustments,
Utilities Parent &
Other Total
-------------------- ----- -------- ------------- ------------- ----------- ------------- -------------- -----
Revenues $1,209 $686 $385 $196 $12 $164 $(117) $2,535
Cost of sales and other
expenses (725) (526) (302) (121) (14) (163) 101 (1,750)
Depreciation and
amortization (161) (121) (14) (15) (1) (12) (4) (328)
Impairments - (1) - (131) - - - (132)
Gain on sale of assets - - 1 - - 130 - 131
Equity earnings, before
income tax - - - - 12 - - 12
Remeasurement of equity
method investment - - - 617 - - - 617
Other income (expense),
net 11 8 3 (7) - 1 10 26
--- --- --- --- --- --- ---
Income (loss) before
interest and tax (1) 334 46 73 539 9 120 (10) 1,111
Net interest (expense)
income (2) (49) (25) (4) (3) 1 8 (57) (129)
Income tax (expense)
benefit (91) (21) (17) (142) 7 (51) 33 (282)
Equity earnings, net of
income tax - - 1 18 - - - 19
(Earnings) losses
attributable to
noncontrolling interests (11) - (7) (80) - - 1 (97)
Earnings (losses) $183 $ - $46 $332 $17 $77 $(33) $622
==== === === === ==== === === ==== ====
(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) Includes
interest
income,
interest
expense and
preferred
dividends of
subsidiary.
SEMPRA ENERGY
Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
Nine months ended September 30, 2017
(Dollars in millions) SDG&E SoCalGas Sempra South Sempra Mexico Sempra Sempra LNG & Consolidating
American Renewables Midstream Adjustments,
Utilities Parent &
Other Total
-------------------- ----- -------- ------------- ------------- ----------- ------------- -------------- -----
Revenues $3,351 $2,695 $1,169 $873 $74 $406 $(325) $8,243
Cost of sales and other
expenses (2,036) (1,891) (916) (404) (57) (353) 263 (5,394)
Depreciation and
amortization (499) (384) (40) (114) (28) (31) (10) (1,106)
Impairments (351) - - (72) - - - (423)
Equity earnings, before
income tax - - - - 25 6 - 31
Other income, net 49 28 8 191 1 2 22 301
--- --- --- --- --- --- ---
Income (loss) before
interest and tax (1) 514 448 221 474 15 30 (50) 1,652
Net interest (expense)
income (2) (151) (77) (13) (61) (7) 14 (173) (468)
Income tax (expense)
benefit (72) (103) (57) (278) 25 (17) 124 (378)
Equity earnings (losses),
net of income tax - - 2 (7) - - - (5)
(Earnings) losses
attributable to
noncontrolling interests (15) - (19) (23) 16 (3) - (44)
Earnings (losses) $276 $268 $134 $105 $49 $24 $(99) $757
==== ==== ==== ==== === === ==== ====
Nine months ended September 30, 2016
(Dollars in millions) SDG&E SoCalGas Sempra South Sempra Mexico Sempra Sempra LNG & Consolidating
American Renewables Midstream Adjustments,
Utilities Parent &
Other Total
-------------------- ----- -------- ------------- ------------- ----------- ------------- -------------- -----
Revenues $3,192 $2,336 $1,170 $481 $25 $384 $(275) $7,313
Cost of sales and other
expenses (1,985) (1,637) (937) (289) (40) (653) 229 (5,312)
Depreciation and
amortization (478) (355) (41) (47) (4) (37) (8) (970)
Impairments - (23) - (131) - - - (154)
Gain on sale of assets - - 1 - - 130 - 131
Equity earnings (losses),
before income tax - - - - 30 (26) - 4
Remeasurement of equity
method investment - - - 617 - - - 617
Other income (expense),
net 38 24 10 (11) 1 2 34 98
--- --- --- --- --- --- ---
Income (loss) before
interest and tax (1) 767 345 203 620 12 (200) (20) 1,727
Net interest (expense)
income (2) (145) (72) (14) (8) 2 19 (185) (403)
Income tax (expense)
benefit (204) (75) (46) (170) 29 77 105 (284)
Equity earnings, net of
income tax - - 3 66 - - - 69
Losses (earnings)
attributable to
noncontrolling interests 1 - (19) (101) - - 1 (118)
Earnings (losses) $419 $198 $127 $407 $43 $(104) $(99) $991
==== ==== ==== ==== === ===== ==== ====
(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) Includes
interest
income,
interest
expense and
preferred
dividends of
subsidiary.
[SRE-F]
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SOURCE Sempra Energy
