Sempra Energy Reports Strong Third-Quarter 2019 Earnings
SAN DIEGO, Nov. 1, 2019 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported third-quarter 2019 earnings of $813 million, or $2.84 per diluted share, up from $274 million, or $0.99 per diluted share, in the third quarter 2018. On an adjusted basis, the company's third-quarter 2019 earnings were $425 million, or $1.50 per diluted share, compared to $339 million, or $1.23 per diluted share, in the third quarter 2018.
"At Sempra Energy, we laid out a plan last year to increasingly focus on core markets where we can produce the best results for our stakeholders," said Jeffrey W. Martin, chairman and CEO of Sempra Energy. "With our recently announced agreements to sell our South American businesses, it reflects our ongoing commitment to simplify our strategy. Our year-to-date financial results are a product of that more focused strategy, and the hard work and dedication of all of our employees."
Sempra Energy's earnings for the first nine months of 2019 were $1.61 billion, or $5.74 per diluted share, compared with earnings of $60 million, or $0.23 per diluted share, in the first nine months of 2018. Adjusted earnings for the first nine months of 2019 were $1.46 billion, or $5.23 per diluted share, compared with $1.07 billion, or $4.00 per diluted share, in the first nine 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 third quarter and first nine months of 2019 and 2018.
Three months ended Nine months ended
September 30
September 30
(Unaudited; Dollars, except EPS, and shares, in millions) 2019 2018 2019 2018(1)
GAAP Earnings $813 $274 $1,608 $60
Retroactive Impact of 2019 GRC FD for First Half of 2019 (196)
Gain on Sale of U.S. Wind Assets (45)
Tax Impacts from Expected Sale of South American
Businesses (192) (99)(2)
Impacts Associated with Aliso Canyon Litigation 22
Impairment of U.S. Wind Equity Method Investments 145
Impairment of Non-utility U.S. Natural Gas Storage Assets 755
Impairment of Investment in RBS Sempra Commodities 65 65
Impacts from the Tax Cuts and Jobs Act of 2017 25
Adjusted Earnings(3) $425 $339 $1,464 $1,072
Adjusted Diluted Weighted-Average Common Shares Outstanding(3) 283(4) 276 280 268(5)
Adjusted Earnings Per Diluted Common Share(3) $1.50 $1.23 $5.23 $4.00
Diluted Weighted-Average Common Shares Outstanding 296 276 280 266
GAAP Earnings Per Diluted Common Share
$2.84(4) $0.99 $5.74 $0.23
1) Amounts have been retrospectively
adjusted for discontinued
operations.
2) Includes $89 million income tax
benefit due to change in indefinite
reinvestment assertion of basis
differences and structure of sale
of discontinued operations, and $10
million to reduce a tax valuation
allowance against certain net
operating loss (NOL) carryforwards
at Parent and Other.
3) Sempra Energy adjusted earnings,
adjusted EPS and adjusted diluted
weighted-average common shares
outstanding are non-GAAP financial
measures. See Table A for
information regarding non-GAAP
financial measures and descriptions
of the adjustments above.
4) In the three months ended September
30, 2019, because the assumed
conversion of the series A
preferred stock is dilutive for
GAAP Earnings, the numerator used
to calculate GAAP EPS includes an
add-back of $26 million of series
A preferred stock dividends
declared in that quarter. However,
because the assumed conversion is
antidilutive for the lower adjusted
earnings, 13,238 series A preferred
stock shares are not included in
the denominator used to calculate
adjusted EPS.
5) In the nine months ended September
30, 2018, the total weighted-
average potentially dilutive stock
options and restricted stock units
of 736 and common shares sold
forward of 945 were not included in
the denominator used to calculate
GAAP EPS due to the losses from
continuing operations attributable
to common shares, but have been
added to the denominator used to
calculate Adjusted EPS.
OPERATING HIGHLIGHTS
Sempra LNG
Sempra Energy is continuing to advance its liquefied natural gas (LNG) development projects.
Sempra Energy announced in October that it has entered into a memorandum of understanding (MOU) with Mitsui & Co., Ltd. (Mitsui) reflecting the parties' preliminary agreement for Mitsui's participation in the Cameron LNG Phase 2 project, and a future expansion of the Energía Costa Azul (ECA) LNG project in Baja California, Mexico. The MOU is non-binding and contemplates the continued mutual support for the development of Cameron LNG Phase 2, including Mitsui's potential purchase of up to one-third of the available capacity of the project, as well as the potential offtake of approximately 1 million tonnes per annum of LNG and equity participation in a future expansion of ECA LNG.
In September, Sempra LNG also entered into a MOU with China Three Gorges Corporation regarding potential cooperation in supplying LNG to support demand growth in China, including the growth of natural gas power generation.
In August, the Cameron LNG liquefaction-export project in Hackberry, La., began commercial operations at Train 1 of the facility. The project, including Trains 2 and 3, is over 96% complete. Commissioning of Train 2 is underway, and the previously disclosed project timeline remains unchanged.
California Utilities
In September, San Diego Gas & Electric and Southern California Gas Co. received a final decision in the utilities' 2019 General Rate Case. The increased revenue requirements will enable the utilities to invest in critical energy infrastructure with a focus on enhancing safety and reliability for the communities they serve.
Texas Utilities
Oncor Electric Delivery Company LLC (Oncor) has increased its five-year capital plan. The increase is related to growth seen in and around Oncor's service territory. The infrastructure investments will help to facilitate renewables integration in Texas, support growth in West Texas and the Dallas-Fort Worth area, and strengthen and expand the grid in Oncor's service territory for the benefit of Oncor's customers and the communities it serves. Oncor now plans to spend approximately $11.9 billion between 2020 and 2024.
Sempra Mexico
Infraestructura Energética Nova, S.A.B. de C.V. (IEnova), Sempra Energy's Mexican subsidiary, continues to develop infrastructure that provides Mexico access to cleaner, more affordable and more reliable energy.
In August, IEnova reached constructive resolutions with the Federal Electricity Commission and the Mexican government on the Sur de Texas-Tuxpan pipeline and Guaymas-El Oro pipeline. Shortly thereafter, the Sur de Texas-Tuxpan pipeline, a joint venture with TC Energy Corporation, commenced commercial operations in September.
Announced Sale of South American Businesses
Sempra Energy recently announced two agreements that would conclude the company's planned sale of its South American businesses for combined proceeds of approximately $5.82 billion in cash, subject to adjustments and satisfaction of closing conditions. Both transactions, one to sell Sempra Energy's equity interests in its Peruvian businesses and the other to sell its equity interests in its Chilean businesses, are expected to be completed in the first quarter of 2020.
EARNINGS GUIDANCE
On a GAAP basis, the company's earnings-per-common-share (EPS) guidance range for full-year 2019 is $6.50 to $7.00. Sempra Energy today raised its 2019 adjusted EPS guidance from a range of $5.70 to $6.30 to a range of $6.00 to $6.50. The company also issued its full-year 2020 GAAP EPS guidance range of $12.78 to $14.26 and affirmed its full-year 2020 adjusted EPS guidance range of $6.70 to $7.50.
NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures include Sempra Energy's adjusted earnings and adjusted EPS for both the third quarter and first nine months of 2019 and 2018, adjusted diluted weighted-average common shares outstanding for the third quarter of 2019 and the first nine months of 2018, and 2020 and 2019 adjusted EPS 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 6278133.
Sempra Energy's mission is to be North America's premier energy infrastructure company. With more than $60 billion in total assets reported in 2018, 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 deliver energy with purpose to approximately 40 million consumers worldwide. 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 diversity and inclusion, and sustainability, 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 the risk that we may not be able to recover any such costs from insurance, the California wildfire fund or in rates from customers in California or otherwise; 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' financial ability or otherwise 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; 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; 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; risks posed by actions of third parties who control the operations of our investments; 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; 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; 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; changes in capital markets, energy markets and economic conditions, including the availability of credit; and volatility in foreign currency exchange, interest and inflation rates and commodity prices and our ability to effectively hedge the risk of such volatility; 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; actions of activist shareholders, which could disrupt our operations by, among other things, requiring significant time by management and our board of directors; the impact of federal or state tax reform and our ability to mitigate adverse impacts; 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, and on the company's website, 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 North American Infrastructure, Sempra LNG, 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 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
Nine months ended
September 30, September 30,
(Dollars in millions,
except per share
amounts; shares in
thousands) 2019 2018(1) 2019 2018(1)
(unaudited)
REVENUES
Utilities $
2,398 $
2,102 $
6,808 $
6,112
Energy-related
businesses 360 463 1,078 1,164
Total revenues 2,758 2,565 7,886 7,276
EXPENSES AND OTHER INCOME
Utilities:
Cost of natural gas (122) (255) (789) (782)
Cost of electric fuel
and purchased power (410) (446) (929) (1,037)
Energy-related
businesses cost of
sales (94) (119) (265) (258)
Operation and
maintenance (845) (792) (2,515) (2,275)
Depreciation and
amortization (402) (366) (1,174) (1,115)
Franchise fees and
other taxes (127) (131) (369) (352)
Impairment losses (43) (4) (43) (1,304)
(Loss) gain on sale of
assets (3) 63
Other (expense) income,
net (7) 96 103 192
Interest income 22 19 64 66
Interest expense (279) (222) (797) (656)
Income (loss) from
continuing operations
before income taxes 448 345 1,235 (245)
and equity earnings
Income tax (expense)
benefit (61) (139) (150) 221
Equity earnings 266 74 485 49
Income from continuing
operations, net of
income tax 653 280 1,570 25
Income from
discontinued
operations, net of
income tax 256 54 292 137
Net income 909 334 1,862 162
Earnings attributable
to noncontrolling
interests (60) (24) (146) (12)
Mandatory convertible
preferred stock
dividends (36) (36) (107) (89)
Preferred dividends of
subsidiary - (1) (1)
Earnings attributable
to common shares $
813 $
274 $
1,608 $
60
Basic earnings per common share:
Earnings attributable
to common shares $
2.93 $
1.00 $
5.83 $
0.23
Weighted-average
common shares
outstanding 277,360 273,944 275,684 265,963
Diluted earnings per common share:
Earnings attributable
to common shares $
2.84 $
0.99 $
5.74 $
0.23
Weighted-average
common shares
outstanding 295,789 275,907 279,809 265,963
(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 (Unaudited)
Sempra Energy Adjusted Earnings and Adjusted Diluted 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 September 30, 2019:
-- $196 million incremental revenue increases for the first six months of
2019 from the retroactive application of the final decision in the 2019
General Rate Case (GRC FD) at the California Utilities
Associated with holding the South American businesses for sale:
-- $192 million income tax benefit associated with outside basis
differences in our South American businesses primarily related to a
change in the anticipated structure of the sale of those businesses
Three months ended September 30, 2018:
-- $(65) million impairment of RBS Sempra Commodities LLP (RBS Sempra
Commodities) equity method investment at Parent and other
Nine months ended September 30, 2019:
-- $45 million gain on the sale of certain Sempra Renewables assets
Associated with holding the South American businesses for sale:
-- $89 million income tax benefit 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 those businesses for sale and a change in the anticipated structure
of the sale
-- $10 million income tax benefit to reduce a valuation allowance against
certain net operating loss (NOL) carryforwards as a result of our
decision to sell our South American businesses
Nine months ended September 30, 2018:
-- $(22) million impacts associated with Aliso Canyon natural gas storage
facility litigation at Southern California Gas Company (SoCalGas)
-- $(145) million other-than-temporary impairment of certain U.S. wind
equity method investments at Sempra Renewables
-- $(755) million impairment of certain non-utility natural gas storage
assets at Sempra LNG
-- $(65) million impairment of RBS Sempra Commodities equity method
investment
-- $(25) million income tax expense to adjust the Tax Cuts and Jobs Act of
2017 (TCJA) provisional amounts
Sempra Energy Adjusted Earnings, Weighted-Average Common Shares Outstanding - Adjusted 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 Sempra Energy'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 Energy GAAP Earnings, Weighted-Average Common Shares Outstanding - GAAP and GAAP Diluted Earnings Per Common Share (GAAP EPS), which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.
SEMPRA ENERGY
Table A (Continued)
Pretax Income Earnings Pretax Income Non- Earnings
amount tax amount tax controlling
expense expense interests
(benefit)(1) (benefit)(1)
(Dollars in millions, except per
share amounts; shares in thousands)
Three months ended
Three months ended
September 30, 2019 September 30, 2018
Sempra Energy GAAP Earnings $
813 $
274
Excluded items:
SDG&E retroactive impact of 2019 GRC
FD for first half of 2019 $
(92) $
26 (66)
$
$
$
SoCalGas retroactive impact of 2019
GRC FD for first half of 2019 (181) 51 (130)
Associated with holding the South
American businesses for sale:
Change in indefinite reinvestment
assertion of basis differences and
structure of sale of discontinued
operations (192) (192)
Impairment of investment in RBS
Sempra Commodities 65 65
Sempra Energy Adjusted Earnings $
425 $
339
Diluted earnings per common share:
Sempra Energy GAAP Earnings(2) $
839 $
274
Weighted-average common shares
outstanding, diluted - GAAP 295,789 275,907
Sempra Energy GAAP EPS $
2.84 $
0.99
Sempra Energy Adjusted Earnings for
Adjusted EPS $
425 $
339
Weighted-average common shares
outstanding, diluted - Adjusted(2) 282,551 275,907
Sempra Energy Adjusted EPS $
1.50 $
1.23
Nine months ended
Nine months ended
September 30, 2019 September 30, 2018
Sempra Energy GAAP Earnings $
1,608 $
60
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 and
structure of sale of discontinued
operations (89) (89)
Reduction in tax valuation allowance
against certain NOL carryforwards (10) (10)
Impacts associated with Aliso Canyon
litigation 1 21 22
Impairment of U.S. wind equity method
investments 200 (55) 145
Impairment of non-utility natural
gas storage assets 1,300 (499) (46) 755
Impairment of investment in RBS
Sempra Commodities 65 65
Impact from the TCJA 25 25
Sempra Energy Adjusted Earnings $
1,464 $
1,072
Diluted earnings per common share:
Sempra Energy GAAP
Earnings $
1,608 $
60
Weighted-average common shares
outstanding, diluted - GAAP 279,809 265,963
Sempra Energy GAAP EPS $
5.74 $
0.23
Sempra Energy Adjusted Earnings for
Adjusted EPS $
1,464 $
1,072
Weighted-average common shares
outstanding, diluted - Adjusted(3) 279,809 267,644
Sempra Energy Adjusted EPS $
5.23 $
4.00
(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 the three months ended September
30, 2019, because the assumed
conversion of the series A
preferred stock is dilutive for
GAAP Earnings, the numerator used
to calculate GAAP EPS includes an
add-back of $26 million of series
A preferred stock dividends
declared in that quarter. However,
because the assumed conversion is
antidilutive for the lower
Adjusted Earnings, 13,238 series A
preferred stock shares are not
included in the denominator used
to calculate Adjusted EPS.
(3) In the nine months ended September
30, 2018, the total weighted-
average potentially dilutive stock
options and restricted stock units
of 736 and common shares sold
forward of 945 were not included
in the denominator used to
calculate GAAP EPS due to the
losses from continuing operations
attributable to common shares, but
have been added to the denominator
used to calculate Adjusted EPS.
SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY 2019 ADJUSTED EPS GUIDANCE RANGE TO SEMPRA ENERGY 2019 GAAP EPS GUIDANCE RANGE (Unaudited)
Sempra Energy 2019 Adjusted EPS Guidance Range of $6.00 to $6.50 excludes items as follows:
-- $45 million gain on the sale of certain Sempra Renewables assets
Associated with holding the South American businesses for sale:
-- $89 million income tax benefit 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 those businesses for sale and a change in the anticipated structure
of the sale
-- $10 million income tax benefit to reduce a valuation allowance against
certain NOL carryforwards as a result of our decision to sell our South
American businesses
Sempra Energy 2019 Adjusted EPS Guidance is a non-GAAP financial measure. Because of the significance and/or nature of the excluded items, management believes that this non-GAAP financial measure provides a meaningful comparison of the performance of Sempra Energy's business operations to prior and future periods. Sempra Energy 2019 Adjusted EPS Guidance should not be considered an alternative to Sempra Energy 2019 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. The table below reconciles Sempra Energy 2019 Adjusted EPS Guidance Range to Sempra Energy 2019 GAAP EPS Guidance Range, which we consider to be the most directly comparable financial measure calculated in accordance with GAAP.
Full-Year 2019
Sempra Energy GAAP EPS Guidance Range $
6.50 to $
7.00
Excluded items:
(0.16) (0.16)
Gain on sale of certain Sempra Renewables assets
Associated with holding the South American businesses
for sale:
(0.31) (0.31)
Change in indefinite reinvestment assertion of basis
differences and structure of sale of discontinued
operations
(0.03) (0.03)
Reduction in tax valuation allowance against certain NOL
carryforwards
Sempra Energy Adjusted EPS Guidance Range $
6.00 to $
6.50
Weighted-average common shares outstanding, diluted
(millions) 283
---
SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY 2020 ADJUSTED EPS GUIDANCE RANGE TO SEMPRA ENERGY 2020 GAAP EPS GUIDANCE RANGE (Unaudited)
Sempra Energy 2020 Adjusted EPS Guidance Range of $6.70 to $7.50 excludes approximately $1.8 billion to $2.0 billion estimated after-tax gain on the sale of our South American businesses, net of approximately $1.2 billion of income tax expense, which was calculated primarily based on applicable statutory tax rates.
Sempra Energy 2020 Adjusted EPS Guidance is a non-GAAP financial measure. Because of the significance and/or nature of the excluded item, management believes that this non-GAAP financial measure provides a meaningful comparison of the performance of Sempra Energy's business operations to prior and future periods. Sempra Energy 2020 Adjusted EPS Guidance should not be considered an alternative to Sempra Energy 2020 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. The table below reconciles Sempra Energy 2020 Adjusted EPS Guidance Range to Sempra Energy 2020 GAAP EPS Guidance Range, which we consider to be the most directly comparable financial measure calculated in accordance with GAAP.
Full-Year 2020
Sempra Energy GAAP EPS Guidance Range $
12.78 to $
14.26
Excluded item:
Estimated gain on sale of South American businesses (6.08) (6.76)
Sempra Energy Adjusted EPS Guidance Range $
6.70 to $
7.50
Weighted-average common shares outstanding, diluted
(millions) 296
---
SEMPRA ENERGY
Table B
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions) September 30, December 31,
2019 2018(1)
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $
106 $
102
Restricted cash 28 35
Accounts receivable, net 1,431 1,535
Dividends receivable from
discontinued operations 422
Due from unconsolidated
affiliates 40 37
Income taxes receivable 98 60
Inventories 270 258
Regulatory assets 183 138
Greenhouse gas allowances 59 59
Assets held for sale - 713
Assets held for sale in
discontinued operations 720 459
Other 309 249
Total current assets 3,666 3,645
Other assets:
Restricted cash 3 21
Due from unconsolidated
affiliates 712 644
Regulatory assets 1,942 1,589
Nuclear decommissioning
trusts 1,049 974
Investment in Oncor Holdings 11,145 9,652
Other investments 2,076 2,320
Goodwill 1,602 1,602
Other intangible assets 216 224
Dedicated assets in support
of certain benefit plans 439 416
Insurance receivable for
Aliso Canyon costs 354 461
Deferred income taxes 157 141
Greenhouse gas allowances 483 289
Right-of-use assets -
operating leases 595
Wildfire fund 381
Assets held for sale in
discontinued operations 3,395 3,259
Sundry 850 962
Total other assets 25,399 22,554
Property, plant and
equipment, net 35,520 34,439
Total assets $
64,585 $
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) September 30, December 31,
2019 2018(1)
(unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $
3,588 $
2,024
Accounts payable, net 1,129 1,298
Due to unconsolidated
affiliates 12 10
Dividends and interest
payable 517 480
Accrued compensation and
benefits 362 440
Regulatory liabilities 445 105
Current portion of long-
term debt and finance
leases 1,623 1,644
Reserve for Aliso Canyon
costs 45 160
Greenhouse gas
obligations 59 59
Liabilities held for sale
in discontinued
operations 804 368
Other 914 935
Total current liabilities 9,498 7,523
Long-term debt and
finance leases 20,995 20,903
Deferred credits and other liabilities:
Due to unconsolidated
affiliates 39 37
Pension and other
postretirement benefit
plan obligations, net of
plan assets 1,120 1,143
Deferred income taxes 2,360 2,321
Deferred investment tax
credits 22 24
Regulatory liabilities 3,823 4,016
Asset retirement
obligations 2,824 2,786
Greenhouse gas
obligations 281 131
Liabilities held for sale
in discontinued
operations 1,023 1,013
Deferred credits and
other 2,049 1,493
Total deferred credits
and other liabilities 13,541 12,964
Equity:
Sempra Energy
shareholders' equity 18,620 17,138
Preferred stock of
subsidiary 20 20
Other noncontrolling
interests 1,911 2,090
Total equity 20,551 19,248
Total liabilities and
equity $
64,585 $
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
Nine months ended September 30,
(Dollars in millions) 2019 2018(1)
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $
1,862 $
162
Less: Income from
discontinued operations,
net of income tax (292) (137)
Income from continuing
operations, net of income
tax 1,570 25
Adjustments to reconcile
net income to net cash
provided by operating
activities 741 2,084
Intercompany activities
with discontinued
operations, net 184 72
Net change in other working
capital components (200) 491
Insurance receivable for
Aliso Canyon costs 107 (56)
Wildfire fund, current and
noncurrent (323)
Changes in other noncurrent
assets and liabilities,
net (250) (177)
Net cash provided by
continuing operations 1,829 2,439
Net cash provided by
discontinued operations 289 220
Net cash provided by
operating activities 2,118 2,659
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property,
plant and equipment (2,590) (2,654)
Expenditures for
investments and
acquisition (1,449) (9,921)
Proceeds from sale of
assets 899 1
Decrease in cash from
deconsolidation of Otay
Mesa VIE (8)
Purchases of nuclear
decommissioning trust
assets (728) (703)
Proceeds from sales of
nuclear decommissioning
trust assets 728 703
Advances to unconsolidated
affiliates (16) (81)
Repayments of advances to
unconsolidated affiliates 12 4
Intercompany activities
with discontinued
operations, net (257) (18)
Other 33 38
Net cash used in continuing
operations (3,376) (12,631)
Net cash used in
discontinued operations (63) (161)
Net cash used in investing
activities (3,439) (12,792)
CASH FLOWS FROM FINANCING ACTIVITIES
Common dividends paid (734) (645)
Preferred dividends paid (107) (53)
Issuances of mandatory
convertible preferred
stock, net - 2,259
Issuances of common stock,
net 757 2,261
Repurchases of common stock (23) (20)
Issuances of debt
(maturities greater than
90 days) 3,269 8,458
Payments on debt
(maturities greater than
90 days) and finance
leases (2,500) (2,836)
Increase in short-term
debt, net 888 715
Proceeds from sale of
noncontrolling interests,
net 5 90
Purchases of noncontrolling
interests (30)
Contributions from
(distributions to)
noncontrolling interests,
net 171 (88)
Intercompany activities
with discontinued
operations, net (128) 70
Other (42) (112)
Net cash provided by
continuing operations 1,526 10,099
Net cash provided by (used
in) discontinued
operations 49 (34)
Net cash provided by
financing activities 1,575 10,065
Effect of exchange rate
changes in continuing
operations -
Effect of exchange rate
changes in discontinued
operations (3) (8)
Effect of exchange rate
changes on cash, cash
equivalents and restricted
cash (3) (8)
Increase (decrease) in
cash, cash equivalents and
restricted cash, including
discontinued operations 251 (76)
Cash, cash equivalents and
restricted cash, including
discontinued operations,
January 1 246 364
Cash, cash equivalents and
restricted cash, including
discontinued operations,
September 30 $
497 $
288
(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
Nine months ended
September 30, September 30,
(Dollars in millions) 2019 2018(1) 2019 2018(1)
(unaudited)
Earnings (Losses) Attributable to Common Shares
SDG&E $
263 $
205 $
582 $
521
SoCalGas 143 (14) 437 244
Sempra Texas Utilities 212 154 419 283
Sempra Mexico 84 44 214 161
Sempra Renewables 34 59 (54)
Sempra LNG 2 16 13 (764)
Parent and other (139) (211) (383) (446)
Discontinued operations 248 46 267 115
Total $
813 $
274 $
1,608 $
60
Three months ended
Nine months ended
September 30, September 30,
(Dollars in millions) 2019 2018(1) 2019 2018(1)
(unaudited)
Capital Expenditures, Investments and Acquisitions
SDG&E $
363 $
343 $
1,071 $
1,194
SoCalGas 360 344 1,019 1,127
Sempra Texas Utilities 56 1,338 9,278
Sempra Mexico 178 152 420 320
Sempra Renewables 9 2 46
Sempra LNG 37 65 183 202
Parent and other 3 5 6 408
Total $
997 $
918 $
4,039 $
12,575
(1) Amounts have been retrospectively
adjusted for discontinued
operations.
SEMPRA ENERGY
Table E
OTHER OPERATING STATISTICS (Unaudited)
Three months ended
Nine months ended
September 30,
September 30,
UTILITIES 2019 2018 2019 2018
SDG&E and SoCalGas
Gas sales
(Bcf)(1) 57 55 271 244
Transportation
(Bcf)(1) 156 163 424 447
Total
deliveries
(Bcf)(1) 213 218 695 691
Total gas
customer
meters
(thousands) 6,912 6,874
SDG&E
Electric sales
(millions of
kWhs)(1) 3,970 4,493 10,796 11,493
Direct Access
and Community
Choice
Aggregation
(millions of
kWhs) 952 1,009 2,640 2,680
Total
deliveries
(millions of
kWhs)(1) 4,922 5,502 13,436 14,173
Total electric
customer
meters
(thousands) 1,468 1,456
Oncor
(2)
Total
deliveries
(millions of
kWhs) 40,834 38,163 102,462 77,476
Total electric
customer
meters
(thousands) 3,673 3,607
Ecogas
Natural gas
sales (Bcf) 1 2 7
Natural gas
customer
meters
(thousands) 129 121
ENERGY-RELATED BUSINESSES
Power generated and sold
Sempra Mexico
Termoeléctrica
de Mexicali
(TdM)
(millions of
kWhs) 1,032 1,145 2,862 2,922
Wind and solar
(millions of
kWhs)(3) 419 305 1,109 924
(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 nine
months ended September 30, 2018
only include volumes from the
March 9, 2018 acquisition date.
(3) Includes 50 percent of the total
power generated and sold at the
Energía Sierra Juárez wind power
generation facility, in which
Sempra Energy has a 50-percent
ownership interest. Energía Sierra
Juárez is not consolidated within
Sempra Energy, and the related
investment is accounted for under
the equity method.
SEMPRA ENERGY
Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
Three months ended September 30, 2019
(Dollars in millions) SDG&E SoCalGas Sempra Sempra Sempra Sempra Consolidating Total
Texas Mexico Renewables LNG Adjustments,
Utilities Parent &
Other
Revenues $
1,427 $
975
$ $
357
$ $
100 $
(101) $
2,758
Cost of sales and other expenses (802) (571) (174) (120) 69 (1,598)
Depreciation and amortization (196) (154) (46) (2) (4) (402)
Impairment losses (6) (37) (43)
Loss on sale of assets - (3) (3)
Other income (expense), net 19 1 (30) 3 (7)
Income (loss) before interest
and tax(1) 442 214 107 (22) (36) 705
Net interest (expense) income (105) (36) (10) 4 (110) (257)
Income tax (expense) benefit (71) (35) 2 43 (61)
Equity earnings, net - 212 37 17 266
(Earnings) losses attributable
to noncontrolling interests (3) (50) 1 (52)
Preferred dividends - (36) (36)
Earnings (losses) from
continuing operations $
263 $
143 $
212 $
84
$ $
2 $
(139) 565
Earnings from discontinued operations 248
Earnings attributable to common shares $
813
Three months ended September 30, 2018
(2)
(Dollars in millions) SDG&E SoCalGas Sempra Texas Sempra Mexico Sempra Sempra Consolidating
Renewables Adjustments,
Parent & Total
Utilities LNG Other
Revenues $
1,299 $
802
$ $
410 $
38 $
147 $
(131) $
2,565
Cost of sales and other expenses (825) (656) (201) (24) (131) 94 (1,743)
Depreciation and amortization (174) (141) (45) (2) (4) (366)
Impairment losses - (4) (4)
Other income, net 24 3 66 3 96
Income (loss) before interest
and tax(1) 324 8 226 14 14 (38) 548
Net interest (expense) income (55) (29) (13) (3) 7 (110) (203)
Income tax (expense) benefit (53) 7 (126) 2 (6) 37 (139)
Equity earnings (losses), net - 154 (28) 12 (64) 74
(Earnings) losses attributable
to noncontrolling interests (11) (15) 9 1 (16)
Preferred dividends - (36) (36)
Earnings (losses) from
continuing operations $
205 $
(14) $
154 $
44 $
34 $
16 $
(211) 228
Earnings from discontinued operations 46
Earnings attributable to common shares $
274
(1) Management believes Income (Loss)
Before Interest and Tax is a useful
measurement of our segments'
performance because it can be used
to evaluate the effectiveness of our
operations exclusive of interest and
income tax, neither of which is
directly relevant to the efficiency
of those operations.
(2) Amounts have been retrospectively
adjusted for discontinued
operations.
SEMPRA ENERGY
Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
Nine months ended September 30, 2019
(Dollars in millions) SDG&E SoCalGas Sempra Sempra Sempra Sempra Consolidating Total
Texas Mexico Renewables LNG Adjustments,
Utilities Parent &
Other
Revenues $
3,666 $
3,142
$ $
1,058 $
10 $
327 $
(317) $
7,886
Cost of sales and other expenses (2,141) (2,083) (496) (20) (350) 223 (4,867)
Depreciation and amortization (571) (449) (136) (7) (11) (1,174)
Impairment losses (6) (37) (43)
Gain on sale of assets - 61 2 63
Other income, net 60 18 6 19 103
Income (loss) before interest
and tax(1) 1,008 591 432 51 (30) (84) 1,968
Net interest (expense) income (308) (103) (31) 8 27 (326) (733)
Income tax (expense) benefit (111) (50) (116) (4) (4) 135 (150)
Equity earnings (losses), net - 419 43 5 19 (1) 485
(Earnings) losses attributable
to noncontrolling interests (7) (114) (1) 1 (121)
Preferred dividends - (1) (107) (108)
Earnings (losses) from
continuing operations $
582 $
437 $
419 $
214 $
59 $
13 $
(383) 1,341
Earnings from discontinued operations 267
Earnings attributable to common shares $
1,608
Nine months ended September 30, 2018
(2)
(Dollars in millions) SDG&E SoCalGas Sempra Texas Sempra Sempra Sempra Consolidating
Renewables Adjustments,
Parent & Total
Utilities Mexico LNG Other
Revenues $
3,405 $
2,700
$ $
1,028 $
103 $
330 $
(290) $
7,276
Cost of sales and other expenses (2,133) (1,934) (453) (68) (324) 208 (4,704)
Depreciation and amortization (509) (414) (131) (27) (24) (10) (1,115)
Impairment losses - (4) (1,300) (1,304)
Other income, net 77 49 64 2 192
Income (loss) before interest
and tax(1) 840 401 504 8 (1,318) (90) 345
Net interest (expense) income (158) (81) (42) (9) 18 (318) (590)
Income tax (expense) benefit (151) (75) (226) 67 488 118 221
Equity earnings (losses), net - 283 2 (170) 1 (67) 49
(Earnings) losses attributable
to noncontrolling interests (10) (77) 50 47 10
Preferred dividends - (1) (89) (90)
Earnings (losses) from
continuing operations $
521 $
244 $
283 $
161 $
(54) $
(764) $
(446) (55)
Earnings from discontinued operations 115
Earnings attributable to common shares $
60
(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.
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SOURCE Sempra Energy
