Sempra Energy Reports Second-Quarter 2020 Earnings Results

SAN DIEGO, Aug. 5, 2020 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today 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. "Over the last several years, the disciplined execution of our North American strategy has made our company stronger. 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, as described on an after-tax basis in the following table of GAAP earnings, reconciled to adjusted earnings, for the second quarter and first six months of 2020 and 2019.






                                                                      
         Three months ended       
       Six months ended


                                                                          
          June 30,              
         June 30,



     
     
              (Dollars, except EPS, and shares, in millions)                            2020                         2019      2020    2019



                                                                        
         
              (Unaudited)


     
     GAAP Earnings                                                                      $2,239                         $354    $2,999    $795




     
     Gain on Sale of South American Businesses                                         (1,754)                              (1,754)




     
     Losses from Investment in RBS Sempra Commodities LLP                                                                       100




     
     Impacts Associated with Aliso Canyon Litigation                                                                             72




     
     Tax Impacts from Expected Sale of South American Businesses                                                                        93




     
     Gain on Sale of U.S. Wind Assets                                                                                 (45)            (45)




     
     Adjusted Earnings(1)                                                                 $485                         $309    $1,417    $843







     
     GAAP Diluted Weighted-Average Common Shares Outstanding                               294                          280       308     278


     
     GAAP Earnings Per Diluted Common Share(2)                                           $7.61                        $1.26     $9.91   $2.85




     
     Adjusted Diluted Weighted-Average Common Shares Outstanding(1)                        294                          280       313     278


     
     Adjusted Earnings Per Diluted Common Share(1),(3)                                   $1.65                        $1.10     $4.76   $3.03


               1)               Represents a non-GAAP
                                 financial measure. See Table
                                 A for information regarding
                                 non-GAAP financial measures.


                               To calculate YTD-2020 GAAP
                                 EPS, preferred dividends of
                                 $52 million are added back to
                                 GAAP Earnings because of the
                                 dilutive effect of Series A
                                 mandatory convertible
               2)                preferred stock.


                               To calculate YTD-2020
                                 Adjusted EPS, preferred
                                 dividends of $71 million are
                                 added back to Adjusted
                                 Earnings because of the
                                 dilutive effect of Series A
                                 and Series B mandatory
               3)                convertible preferred stock.

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.

Earnings Guidance
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.

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 on to the live webcast, the teleconference will be available on replay a few hours after its conclusion 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.

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. Forward-looking statements are based on assumptions with respect to the future, involve risks and uncertainties, and are not guarantees of performance. Future results may differ materially from those expressed in the forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.

In this press release, forward-looking statements can be identified by words such as "believes," "expects," "anticipates," "plans," "estimates," "projects," "forecasts," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "target," "pursue," "outlook," "maintain," or similar expressions, or when we discuss our guidance, strategy, goals, vision, mission, opportunities, projections or intentions.

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: California wildfires and the risk that we may be found liable for damages regardless of fault and the risk that we may not be able to recover any such costs from insurance, the wildfire fund established by California Assembly Bill 1054 or in rates from customers; decisions, investigations, regulations, issuances of permits and other authorizations, renewal of franchises, and other actions by (i) the Comisión Federal de Electricidad, California Public Utilities Commission (CPUC), U.S. Department of Energy, Public Utility Commission of Texas, and other regulatory and governmental bodies and (ii) states, cities, counties and other jurisdictions in the U.S., Mexico and other countries in which we operate or do business; the success of business development efforts, construction projects and major acquisitions and divestitures, including risks in (i) the ability to make a final investment decision and completing construction projects on schedule and budget, (ii) obtaining the consent of partners, (iii) counterparties' financial or other ability to fulfill contractual commitments, (iv) the ability to complete contemplated acquisitions, and (v) the ability to realize anticipated benefits from any of these efforts once completed; the impact of the COVID-19 pandemic on our (i) ability to commence and complete capital and other projects and obtain regulatory approvals, (ii) supply chain and current and prospective counterparties, contractors, customers, employees and partners, (iii) liquidity, resulting from bill payment challenges experienced by our customers, including in connection with a CPUC-ordered suspension of service disconnections, decreased stability and accessibility of the capital markets and other factors, and (iv) ability to sustain operations and satisfy compliance requirements due to social distancing measures or if employee absenteeism were to increase significantly; the resolution of civil and criminal litigation, regulatory inquiries, investigations and proceedings, and arbitrations; actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook and our ability to borrow at favorable interest rates; moves to reduce or eliminate reliance on natural gas and the impact of the extreme volatility and unprecedented decline of oil prices on our businesses and development projects; weather, natural disasters, accidents, equipment failures, computer system outages and other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause fires and subject us to 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; 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 of foreign governments and state-owned entities to honor the terms of contracts, and property disputes; the impact at San Diego Gas & Electric Company (SDG&E) on competitive customer rates and reliability due to the growth in distributed and local power generation, including from departing retail load resulting from customers transferring to Direct Access, Community Choice Aggregation or other forms of distributed or local power generation, and the 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 and governance requirements and commitments, including by actions of Oncor's independent directors or a minority member director; 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 trade policies, laws and regulations, including tariffs and revisions to or replacement of international trade agreements, such as the newly effective United States-Mexico-Canada Agreement, that may increase our costs or impair our ability to resolve trade disputes; the impact of changes to U.S. federal and state and foreign tax laws 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.

Sempra North American Infrastructure, Sempra LNG, Sempra Mexico, Sempra Texas Utilities, Oncor and Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) are not the same companies as the California utilities, SDG&E or Southern California Gas Company, and Sempra North American Infrastructure, Sempra LNG, Sempra Mexico, Sempra Texas Utilities, Oncor and IEnova are not regulated by the CPUC.


                                                                                                                          
              
              SEMPRA ENERGY
                                                                                                                        
              
            
                Table A





       
                
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




                                                                                    
             Three months ended                       
             Six months ended
                                                                                              June 30,                                          June 30




       (Dollars in millions, except per share amounts; shares in thousands)             2020                      2019                2020                             2019

    ---

                                                                                                                  
          (unaudited)



       REVENUES



       Utilities                                                                               $
              2,233                           $
              1,895                $
          4,898  $
       4,410



       Energy-related businesses                                                         293                               335                                         657             718




       Total revenues                                                                  2,526                             2,230                                       5,555           5,128





       EXPENSES AND OTHER INCOME



       Utilities:



       Cost of natural gas                                                             (131)                            (136)                                      (468)          (667)



       Cost of electric fuel and purchased power                                       (260)                            (263)                                      (489)          (519)



       Energy-related businesses cost of sales                                          (51)                             (63)                                      (110)          (171)



       Operation and maintenance                                                       (898)                            (838)                                    (1,849)        (1,670)



       Depreciation and amortization                                                   (412)                            (389)                                      (824)          (772)



       Franchise fees and other taxes                                                  (121)                            (112)                                      (258)          (242)



       Gain on sale of assets                                                                                              66                                                         66



       Other income (expense), net                                                        62                                28                                       (192)            110



       Interest income                                                                    22                                21                                          49              42



       Interest expense                                                                (274)                            (258)                                      (554)          (518)




       Income from continuing operations before income taxes and equity earnings         463                               286                                         860             787



       Income tax (expense) benefit                                                    (168)                             (47)                                         39            (89)



       Equity earnings                                                                   233                               118                                         496             219




       Income from continuing operations, net of income tax                              528                               357                                       1,395             917



       Income from discontinued operations, net of income tax                          1,777                                78                                       1,857              36




       Net income                                                                      2,305                               435                                       3,252             953



       Earnings attributable to noncontrolling interests                                (28)                             (45)                                      (179)           (86)



       Preferred dividends                                                              (37)                             (35)                                       (73)           (71)



       Preferred dividends of subsidiary                                                 (1)                              (1)                                        (1)            (1)




       Earnings attributable to common shares                                                  $
              2,239                             $
              354                $
          2,999    $
       795






       Basic earnings per common share (EPS):



       Earnings                                                                                 $
              7.64                            $
              1.29                $
          10.24   $
       2.89




       Weighted-average common shares outstanding                                    293,060                           274,987                                     292,925         274,831






       Diluted EPS:



       Earnings                                                                                 $
              7.61                            $
              1.26                 $
          9.91   $
       2.85




       Weighted-average common shares outstanding                                    294,155                           279,619                                     307,962         278,424

SEMPRA ENERGY
Table A (Continued)

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

Sempra Energy Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2020 and 2019 as follows:

Three months ended June 30, 2020:

    --  $1,754 million gain on the sale of our South American businesses

Three months ended June 30, 2019:

    --  $45 million gain on the sale of certain Sempra Renewables assets

Six months ended June 30, 2020:

    --  (72) million from impacts associated with Aliso Canyon natural gas
        storage facility litigation at Southern California Gas Company
        (SoCalGas)
    --  $(100) million equity losses at RBS Sempra Commodities LLP, which
        represent an estimate of our obligations to settle pending tax matters
        and related legal costs at our equity method investment at Parent and
        Other
    --  $1,754 million gain on the sale of our South American businesses

Six months ended June 30, 2019:

    --  $45 million gain on the sale of certain Sempra Renewables assets

Associated with holding the South American businesses for sale:

    --  $(103) million income tax expense from outside basis differences in our
        South American businesses primarily related to the change in our
        indefinite reinvestment assertion from our decision in January 2019 to
        hold those businesses for 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

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 EPS, which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.


                                                                                                                          
              
          SEMPRA ENERGY

                                                                                                                       
              
          Table A (Continued)




                                                                               Pretax amount                  Income tax expense                             Earnings                Pretax amount     Income tax expense                                  Earnings
                                                                                                                        (benefit)(1)                                                                   (benefit)(1)




       (Dollars in millions, except per share amounts; shares in thousands)                
           Three months ended June 30, 2020                                                                
              Three months ended June 30, 2019

    ---


       Sempra Energy GAAP Earnings                                                                                                                                    $
       2,239                                                                                    $
         354



       Excluded items:





        Gain on sale of South American businesses                                            $
           (2,915)                                        $
             1,161                                              (1,754)                     
          $                
             $



        Gain on sale of certain Sempra Renewables assets                                                                                                                                                                         (61)               16                        (45)




       Sempra Energy Adjusted Earnings                                                                                                                                  $
       485                                                                                    $
         309






       Diluted EPS:





        Weighted-average common shares outstanding, diluted                                                                                                 294,155                                                                                      279,619



        Sempra Energy GAAP EPS                                                                                                                                         $
       7.61                                                                                   $
         1.26










       Sempra Energy Adjusted EPS                                                                                                                                      $
       1.65                                                                                   $
         1.10





                                                                                                 
            Six months ended June 30, 2020

                                                                                                                                                                                                  
     Six months ended June 30, 2019




       Sempra Energy GAAP Earnings                                                                                                                                    $
       2,999                                                                                    $
         795



       Excluded items:



        Impacts associated with Aliso Canyon litigation                                         $
            100                                          $
             (28)                                                  72                      
          $                
             $



        Losses from investment in RBS Sempra Commodities LLP                           100                                                                                      100



        Gain on sale of South American businesses                                  (2,915)                                        1,161                                     (1,754)



        Gain on sale of certain Sempra Renewables assets                                                                                                                                                                         (61)               16                        (45)



        Associated with holding the South American businesses for sale:



       Change in indefinite reinvestment assertion of basis differences in                                                                                                                                                                         103                         103


       discontinued operations



       Reduction in tax valuation allowance against certain NOL                                                                                                                                                                                   (10)                       (10)


       carryforwards




       Sempra Energy Adjusted Earnings                                                                                                                                $
       1,417                                                                                    $
         843






       Diluted EPS:



        Sempra Energy GAAP Earnings                                                                                                                                   $
       2,999                                                                                    $
         795



        Add back dividends for dilutive series A preferred stock                                                                                                 52




        Sempra Energy GAAP Earnings for GAAP EPS                                                                                                                      $
       3,051                                                                                    $
         795




        Weighted-average common shares outstanding, diluted - GAAP                                                                                          307,962                                                                                      278,424



        Sempra Energy GAAP EPS                                                                                                                                         $
       9.91                                                                                   $
         2.85






        Sempra Energy Adjusted Earnings                                                                                                                               $
       1,417                                                                                    $
         843



        Add back dividends for dilutive series A and series B preferred stock                                                                                    71




       Sempra Energy Adjusted Earnings for Adjusted EPS                                                                                                               $
       1,488                                                                                    $
         843




       Weighted-average common shares outstanding, diluted - Adjusted(2)                                                                                    312,575                                                                                      278,424



       Sempra Energy Adjusted EPS                                                                                                                                      $
       4.76                                                                                   $
         3.03




     
     
     (1) 
      
      Except for adjustments that are solely income tax and tax related to outside basis differences, income taxes were primarily calculated based on applicable statutory tax rates. We did not record an income tax benefit for the equity losses from

               
      
      our investment in RBS Sempra Commodities LLP because, even though a portion of the liabilities may be deductible under United Kingdom tax law, it is not probable that the deduction will reduce United Kingdom taxes.



     
     
     (2) 
      
      In the six months ended June 30, 2020, the denominator used to calculate Adjusted EPS includes an add-back of an additional 4,613 shares for the dilutive effect of the series B mandatory convertible preferred stock.

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 $7.20 to $7.80 excludes items (after the effects of income taxes and, if applicable, noncontrolling interests) as follows:

    --  $(72) million from impacts associated with Aliso Canyon natural gas
        storage facility litigation at SoCalGas
    --  $(100) million equity losses at RBS Sempra Commodities LLP, which
        represents an estimate of our obligations to settle pending tax matters
        and related legal costs at our equity method investment at Parent and
        Other
    --  $1,754 million gain on the sale of our South American businesses, plus
        estimated post-closing adjustments with respect to the sale of our
        Chilean businesses

Sempra Energy 2020 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 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(1)                                $
             12.59   to             $
      13.19


        Excluded items:


                                     Impacts
                                       associated
                                       with Aliso
                                       Canyon
                                       litigation

                                                     0.25                              0.25


                                     Losses from
                                       investment
                                       in RBS
                                       Sempra
                                       Commodities
                                       LLP

                                                     0.34                              0.34


                                      Gain on sale
                                       of South
                                       American
                                       businesses

                                                   (5.98)                           (5.98)


        Sempra Energy Adjusted EPS
         Guidance Range                                    $
             7.20   to              $
      7.80


        Weighted-average common
         shares outstanding, diluted
         (millions)(2)                                                          293

    ---




     
     
     (1) Sempra Energy's prior GAAP EPS
                guidance range for full-year
                2020 of $12.38 to $13.32 has
                been updated to reflect the
                actual gain on sale of our South
                American businesses, plus
                estimated post-closing
                adjustments with respect to the
                sale of our Chilean businesses.
                It also reflects a decrease in
                weighted-average common shares
                outstanding from recent
                repurchases of Sempra Energy
                common stock under an
                accelerated share repurchase
                program.



     
     
     (2) Weighted-average common shares
                outstanding does not include the
                dilutive effect of mandatory
                convertible preferred stock, as
                they are assumed to be
                antidilutive for full-year
                2020. If such mandatory
                convertible preferred stock were
                dilutive for the full year, the
                2020 GAAP EPS Guidance Range
                would differ from the range
                presented above.




                                                              
              
                SEMPRA ENERGY


                                                                 
              
                Table B





     
                
                  CONDENSED CONSOLIDATED BALANCE SHEETS




      (Dollars in millions)                              June 30,                                      December 31,
                                                              2020
                                                                                                      2019(1)


                                                       (unaudited)



     ASSETS



     Current assets:


      Cash and cash equivalents                                         $
              4,894                              $
        108



     Restricted cash                                           33                                         31


      Accounts receivable - trade,
       net                                                   1,022                                      1,261


      Accounts receivable - other,
       net                                                     406                                        455


      Due from unconsolidated
       affiliates                                               91                                         32


      Income taxes receivable                                  121                                        112



     Inventories                                              267                                        277



     Regulatory assets                                        303                                        222


      Greenhouse gas allowances                                 80                                         72


      Assets held for sale in
       discontinued operations                                   -                                       445


      Other current assets                                     423                                        324


      Total current assets                                   7,640                                      3,339





     Other assets:



     Restricted cash                                            3                                          3


      Due from unconsolidated
       affiliates                                              603                                        742



     Regulatory assets                                      1,973                                      1,930


      Nuclear decommissioning
       trusts                                                1,062                                      1,082


      Investment in Oncor Holdings                          11,758                                     11,519



     Other investments                                      2,197                                      2,103



     Goodwill                                               1,602                                      1,602


      Other intangible assets                                  208                                        213


      Dedicated assets in support
       of certain benefit plans                                463                                        488


      Insurance receivable for
       Aliso Canyon costs                                      505                                        339


      Deferred income taxes                                    224                                        155


      Greenhouse gas allowances                                552                                        470


      Right-of-use assets -
       operating leases                                        578                                        591



     Wildfire fund                                            378                                        392


      Assets held for sale in
       discontinued operations                                   -                                     3,513


      Other long-term assets                                   694                                        732



     Total other assets                                    22,800                                     25,874


      Property, plant and
       equipment, net                                       37,945                                     36,452



     Total assets                                                     $
              68,385                           $
        65,665






     
                
                  (1) 
                
                Derived from audited financial statements.


                                      
              
                SEMPRA ENERGY


                                   
              
                Table B (Continued)





     
                
                  CONDENSED CONSOLIDATED BALANCE SHEETS




      (Dollars in millions)                         June 30,                                    December 31,
                                                         2020
                                                                                              2019(1)


                                                  (unaudited)



     LIABILITIES AND EQUITY



     Current liabilities:


      Short-term debt                                            $
              3,143                            $
      3,505


      Accounts payable - trade                          1,302                                          1,234


      Accounts payable - other                            145                                            179


      Due to unconsolidated
       affiliates                                           9                                              5


      Dividends and interest
       payable                                            539                                            515


      Accrued compensation and
       benefits                                           350                                            476


      Regulatory liabilities                              569                                            319


      Current portion of long-
       term debt and finance
       leases                                           2,285                                          1,526


      Reserve for Aliso Canyon
       costs                                              256                                              9


      Greenhouse gas
       obligations                                         80                                             72


      Liabilities held for sale
       in discontinued
       operations                                           -                                           444


      Other current liabilities                           917                                            866


      Total current liabilities                         9,595                                          9,150




      Long-term debt and
       finance leases                                  20,535                                         20,785




      Deferred credits and other liabilities:


      Due to unconsolidated
       affiliates                                         267                                            195


      Pension and other
       postretirement benefit
       plan obligations, net of
       plan assets                                      1,068                                          1,067


      Deferred income taxes                             2,574                                          2,577


      Deferred investment tax
       credits                                             20                                             21


      Regulatory liabilities                            3,432                                          3,741


      Asset retirement
       obligations                                      2,950                                          2,923


      Greenhouse gas
       obligations                                        402                                            301


      Liabilities held for sale
       in discontinued
       operations                                           -                                         1,052


      Deferred credits and
       other                                            2,156                                          2,048


      Total deferred credits
       and other liabilities                           12,869                                         13,925



     Equity:


      Sempra Energy
       shareholders' equity                            23,606                                         19,929


      Preferred stock of
       subsidiary                                          20                                             20


      Other noncontrolling
       interests                                        1,760                                          1,856



     Total equity                                     25,386                                         21,805


      Total liabilities and
       equity                                                   $
              68,385                           $
      65,665





                                  (1)  
                
                Derived from audited financial statements.


                                                                                                
       
       SEMPRA ENERGY


                                                                                                  
       
        Table C





     
                
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




                                                                                                                      
         Six months ended June 30,



     (Dollars in millions)                                                                                                2020                       2019



                                                                                                                         
              (unaudited)



     CASH FLOWS FROM OPERATING ACTIVITIES



       Net income                                                                                                                $
              3,252                 $
     953



       Less: Income from discontinued operations, net of income tax                                                    (1,857)                               (36)



       Income from continuing operations, net of income tax                                                              1,395                                 917



       Adjustments to reconcile net income to net cash provided by operating activities                                    429                                 482



       Intercompany activities with discontinued operations, net                                                                                               64



       Net change in other working capital components                                                                      375                                  84



       Insurance receivable for Aliso Canyon costs                                                                       (166)                                 80



       Changes in other noncurrent assets and liabilities, net                                                              35                               (104)



       Net cash provided by continuing operations                                                                        2,068                               1,523



       Net cash (used in) provided by discontinued operations                                                          (1,041)                                181



     
                  Net cash provided by operating activities                                                            1,027                               1,704





     CASH FLOWS FROM INVESTING ACTIVITIES



       Expenditures for property, plant and equipment                                                                  (2,198)                            (1,651)



       Expenditures for investments and acquisitions                                                                     (140)                            (1,391)



       Proceeds from sale of assets                                                                                          5                                 902



       Purchases of nuclear decommissioning trust assets                                                                 (797)                              (497)



       Proceeds from sales of nuclear decommissioning trust assets                                                         797                                 497



       Advances to unconsolidated affiliates                                                                              (25)                               (16)



       Repayments of advances to unconsolidated affiliates                                                                                                      9



       Intercompany activities with discontinued operations, net                                                                                              (2)



       Other                                                                                                                17                                  13



       Net cash used in continuing operations                                                                          (2,341)                            (2,136)



       Net cash provided by (used in) discontinued operations                                                            5,195                               (131)



     
                  Net cash provided by (used in) investing activities                                                  2,854                             (2,267)





     CASH FLOWS FROM FINANCING ACTIVITIES



       Common dividends paid                                                                                             (567)                              (483)



       Preferred dividends paid                                                                                           (71)                               (71)



       Issuances of preferred stock                                                                                        891



       Issuances of common stock                                                                                            13                                  20



       Repurchases of common stock                                                                                        (64)                               (18)



       Issuances of debt (maturities greater than 90 days)                                                               4,059                               2,630



       Payments on debt (maturities greater than 90 days) and finance leases                                           (1,970)                              (871)



       Decrease in short-term debt, net                                                                                (1,871)                              (444)



       Advances from unconsolidated affiliates                                                                              64



       Purchases of noncontrolling interests                                                                              (27)                               (28)



       Other                                                                                                              (16)                               (41)



       Net cash provided by continuing operations                                                                          441                                 694



       Net cash provided by (used in) discontinued operations                                                              401                                (83)



     
                  Net cash provided by financing activities                                                              842                                 611





     Effect of exchange rate changes in continuing operations                                                              (7)



     Effect of exchange rate changes in discontinued operations                                                            (3)



       Effect of exchange rate changes on cash, cash equivalents and restricted cash                                      (10)





     Increase in cash, cash equivalents and restricted cash, including discontinued operations                           4,713                                  48



     Cash, cash equivalents and restricted cash, including discontinued operations, January 1                              217                                 246



     Cash, cash equivalents and restricted cash, including discontinued operations, June 30                                      $
              4,930                 $
     294


                                                                                       
              
                SEMPRA ENERGY


                                                                                          
              
                Table D





     
                
                  SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITIONS




                                                                     Three months ended June 30,                                 Six months ended June 30,



      (Dollars in millions)                                  2020                                   2019                              2020                    2019



                                                                                             
              (unaudited)


                   Earnings (Losses)
                    Attributable to Common
                    Shares



     SDG&E                                                              $
              193                                       $
              143                          $
        455    $
       319



     SoCalGas                                                   146                                       30                                           449                    294


      Sempra Texas Utilities                                     144                                      113                                           249                    207



     Sempra Mexico                                               61                                       73                                           252                    130


      Sempra Renewables                                                                                   46                                                                  59



     Sempra LNG                                                  61                                        6                                           136                     11


      Parent and other                                         (141)                                   (127)                                         (389)                 (244)


      Discontinued operations                                  1,775                                       70                                         1,847                     19




     Total                                                            $
              2,239                                       $
              354                        $
        2,999    $
       795






                                                                        Three months ended June 30,                                 Six months ended June 30,



      (Dollars in millions)                                     2020                                   2019                              2020                    2019



                                                                                             
              (unaudited)


                   Capital Expenditures,
                    Investments and
                    Acquisitions



     SDG&E                                                              $
              448                                       $
              352                          $
        850    $
       708



     SoCalGas                                                   497                                      335                                           885                    659


      Sempra Texas Utilities                                      53                                    1,226                                           139                  1,282



     Sempra Mexico                                              151                                      157                                           321                    242


      Sempra Renewables                                                                                    2                                                                   2



     Sempra LNG                                                  90                                       90                                           137                    146


      Parent and other                                             3                                        3                                             6                      3




     Total                                                            $
              1,242                                     $
              2,165                        $
        2,338  $
       3,042


                                                        
              
            SEMPRA ENERGY


                                                           
              
            Table E





     
                
                  OTHER OPERATING STATISTICS (Unaudited)




                                         Three months ended June 30,                      Six months ended June
                                                                                                      30,



                                                                2020                                        2019          2020           2019



     UTILITIES


                                  SDG&E and SoCalGas


        Gas sales (Bcf)(1)                                        71                                          75           200            214


        Transportation (Bcf)(1)                                       129                                        124            277            268


        Total deliveries (Bcf)(1)                                       200                                        199            477            482




      Total gas customer meters
       (thousands)                                                                                                     6,943          6,902




                                  SDG&E


        Electric sales (millions of
         kWhs)(1)                                              3,124                                       3,244         6,584          6,826


      Direct Access and Community
       Choice Aggregation
       (millions of kWhs)                                        847                                         848         1,616          1,688


        Total deliveries (millions
         of kWhs)(1)                                           3,971                                       4,092         8,200          8,514




      Total electric customer
       meters (thousands)                                                                                              1,478          1,463




                                  Oncor

                                                                   (2)


      Total deliveries (millions
       of kWhs)                                               31,038                                      31,516        61,458         61,628


      Total electric customer
       meters (thousands)                                                                                              3,723          3,655




                                  Ecogas


      Natural gas sales (Bcf)                                         1                                          1              2              2


      Natural gas customer meters
       (thousands)                                                                                                       136            126






      ENERGY-RELATED BUSINESSES


      Power generated and sold


                                  Sempra Mexico


      Termoeléctrica de Mexicali
       (TdM) (millions of kWhs)                                       457                                        693          1,283          1,830


        Wind and solar (millions of
         kWhs)(3)                                                381                                         445           803            690




     
     
     (1) 
      
      Include intercompany sales.



     
     
     (2) 
      
      Includes 100% of the electric deliveries and customer meters of Oncor Electric Delivery Company LLC (Oncor), in which we hold an indirect 80.25% interest through our investment

               
      
      in Oncor Electric Delivery Holdings Company LLC.



     
     
     (3) 
      
      Includes 50% of the total power generated and sold at the Energía Sierra Juárez wind power generation facility, in which Sempra Energy has a 50% ownership interest. Energía

               
      
      S
              
              
                ierra Juárez is not consolidated within Sempra Energy, a
              
              
                nd the related investment is accounted for under the equity method.


                                                                                                                            
            
        SEMPRA ENERGY


                                                                                                                          
           
        Table F (Unaudited)



     
                
                  STATEMENTS OF OPERATIONS DATA BY SEGMENT





     
                Three months ended June 30, 2020


      (Dollars in millions)                     SDG&E                      SoCalGas            Sempra         Sempra Mexico                    Sempra
                                                                                                                                        Renewables                   Sempra                  Consolidating                             Total
                                                                                       Texas                                                                LNG             Adjustments,
                                                                                     Utilities                                                                              Parent & Other






     Revenues                                          $
              1,235           $
             1,010        
           $                                         $
       275                    
         $                                          $
        69            $
      (63)        $
      2,526


      Cost of sales and other
       expenses                                 (690)                       (611)                        1                     (111)                                              (74)                             24                                  (1,461)


      Depreciation and
       amortization                             (197)                       (162)                                              (47)                                               (3)                           (3)                                   (412)


      Other income (expense),
       net                                         18                          (2)                                               36                                                                               10                                       62


      Income (loss) before
       interest and tax(1)                        366                          235                        1                       153                                                (8)                          (32)                                     715


      Net interest (expense)
       income                                   (103)                        (39)                                             (17)                                                 3                           (96)                                   (252)


      Income tax (expense)
       benefit                                   (70)                        (49)                                             (54)                                              (18)                             23                                    (168)


      Equity earnings, net                                                                            143                         6                                                 84                                                                    233


      (Earnings) losses
       attributable to
       noncontrolling
       interests                                                                                                              (27)                                                                               1                                     (26)


      Preferred dividends                                                     (1)                                                                                                                             (37)                                    (38)


      Earnings (losses) from
       continuing operations                              $
              193             $
             146                    $
           144                            $
       61                    
         $                                          $
        61           $
      (141)  464


      Earnings from
       discontinued
       operations(2)                                                                                                                                                                                                 1,775


      Earnings attributable
       to common shares                                                                                                                                                                                                    $
       2,239






     
                Three months ended June 30, 2019


      (Dollars in millions)                     SDG&E                      SoCalGas            Sempra         Sempra Mexico                    Sempra
                                                                                                                                        Renewables                   Sempra                  Consolidating                         Total
                                                                                       Texas                                                                LNG             Adjustments,
                                                                                     Utilities                                                                              Parent & Other






     Revenues                                          $
              1,094             $
             806        
           $                                         $
       318                               $
        3                                $
        86            $
      (77)        $
      2,230


      Cost of sales and other
       expenses                                 (642)                       (599)                                             (130)                   (9)                        (88)                             56                                  (1,412)


      Depreciation and
       amortization                             (189)                       (148)                                              (46)                                               (3)                           (3)                                   (389)


      Gain on sale of assets                                                                                                                          61                                                          5                                       66


      Other income (expense),
       net                                         19                            1                                                17                                                                              (9)                                      28


      Income (loss) before
       interest and tax(1)                        282                           60                                               159                     55                          (5)                          (28)                                     523


      Net interest (expense)
       income                                   (101)                        (33)                                             (10)                     1                           13                          (107)                                   (237)


      Income tax (expense)
       benefit                                   (35)                           4                                              (44)                  (14)                         (2)                            44                                     (47)


      Equity earnings
       (losses), net                                                                                  113                         4                      2                                                        (1)                                     118


      (Earnings) losses
       attributable to
       noncontrolling
       interests                                  (3)                                                                         (36)                     2                                                                                               (37)


      Preferred dividends                                                     (1)                                                                                                                             (35)                                    (36)


      Earnings (losses) from
       continuing operations                              $
              143              $
             30                    $
           113                            $
       73                              $
        46                                 $
        6           $
      (127)  284


      Earnings from
       discontinued
       operations                                                                                                                                                                                                       70


      Earnings attributable
       to common shares                                                                                                                                                                                                      $
       354


     
     
     (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 $1,754 million gain on the sale of our South American businesses in the second quarter of 2020.


                                                                                                                                
              
               SEMPRA ENERGY


                                                                                                                              
             
               Table F (Unaudited)



     
                
                  STATEMENTS OF OPERATIONS DATA BY SEGMENT





     
                Six months ended June 30, 2020


      (Dollars in millions)                     SDG&E                      SoCalGas            Sempra             Sempra                          Sempra                      Sempra                   Consolidating                           Total
                                                                                        Texas              Mexico                      Renewables                       LNG             Adjustments,
                                                                                      Utilities                                                                                        Parent & Other






     Revenues                                          $
              2,504            $
              2,405         
             $                                                $
          584                 
              $                                   $
        192             $
       (130)          $
      5,555


      Cost of sales and other
       expenses                               (1,369)                       (1,483)                                                (248)                                                    (161)                                87                               (3,174)


      Depreciation and
       amortization                             (398)                         (321)                                                (94)                                                      (5)                              (6)                                (824)


      Other income (expense),
       net                                         49                             28                                                (247)                                                                                      (22)                                (192)


      Income (loss) before
       interest and tax(1)                        786                            629                                                  (5)                                                       26                              (71)                                1,365


      Net interest (expense)
       income                                   (203)                          (78)                                                (31)                                                        9                             (202)                                (505)


      Income tax (expense)
       benefit                                  (128)                         (101)                                                 253                                                      (41)                               56                                    39


      Equity earnings
       (losses), net                                                                                   249                           206                                                       141                             (100)                                  496


      (Earnings) losses
       attributable to
       noncontrolling
       interests                                                                                                                  (171)                                                        1                                 1                                 (169)


      Preferred dividends                                                       (1)                                                                                                                                          (73)                                 (74)


      Earnings (losses) from
       continuing operations                              $
              455              $
              449                     $
             249                                  $
          252                 
              $                                   $
        136             $
       (389)  1,152


      Earnings from
       discontinued
       operations(2)                                                                                                                                                                                                                1,847


      Earnings attributable
       to common shares                                                                                                                                                                                                                   $
       2,999






     
                Six months ended June 30, 2019


      (Dollars in millions)                     SDG&E                      SoCalGas            Sempra             Sempra                          Sempra                      Sempra                   Consolidating                           Total
                                                                                        Texas              Mexico                      Renewables                       LNG             Adjustments,
                                                                                      Utilities                                                                                        Parent & Other






     Revenues                                          $
              2,239            $
              2,167         
             $                                                $
          701                                $
      10                           $
        227             $
       (216)          $
      5,128


      Cost of sales and other
       expenses                               (1,339)                       (1,512)                                                (322)                         (20)                       (230)                               154                               (3,269)


      Depreciation and
       amortization                             (375)                         (295)                                                (90)                                                      (5)                              (7)                                (772)


      Gain on sale of assets                                                                                                                                      61                                                             5                                    66


      Other income, net                            41                             17                                                   36                                                                                         16                                   110


      Income (loss) before
       interest and tax(1)                        566                            377                                                  325                            51                          (8)                             (48)                                1,263


      Net interest (expense)
       income                                   (203)                          (67)                                                (21)                            8                           23                             (216)                                (476)


      Income tax (expense)
       benefit                                   (40)                          (15)                                               (116)                          (4)                         (6)                               92                                  (89)


      Equity earnings
       (losses), net                                                                                   207                             6                             5                            2                               (1)                                  219


      Earnings attributable
       to noncontrolling
       interests                                  (4)                                                                              (64)                          (1)                                                                                              (69)


      Preferred dividends                                                       (1)                                                                                                                                          (71)                                 (72)


      Earnings (losses) from
       continuing operations                              $
              319              $
              294                     $
             207                                  $
          130                                $
      59                            $
        11             $
       (244)    776


      Earnings from
       discontinued
       operations                                                                                                                                                                                                                      19


      Earnings attributable
       to common shares                                                                                                                                                                                                                     $
       795




     
     
     (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 $1,754 million gain on the sale of our South American businesses in the second quarter of 2020.

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