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SOUTHERN CALIFORNIA GAS CO (SOCGP)·Q2 2024 Earnings Summary

Executive Summary

  • Sempra reported Q2 2024 GAAP EPS of $1.12 and adjusted EPS of $0.89; total revenues were $3.01B, down year-over-year as utility fuel costs normalized and energy-related businesses moderated .
  • Sempra California’s quarter highlighted regulatory progress and decarbonization initiatives: SoCalGas filed three RNG contracts under SB 1440 and ARCHES received initial DOE hydrogen hub funding that includes new SoCalGas infrastructure .
  • Guidance was updated: 2024 GAAP EPS raised to $4.74–$5.04; 2024 adjusted EPS affirmed at $4.60–$4.90; 2025 EPS affirmed at $4.90–$5.25; long-term growth 6–8% .
  • Stock reaction catalysts: CPUC GRC decision expected before year-end with rates retroactive to Jan 1 (potential uplift to California earnings), Oncor’s ~$3B System Resiliency Plan settlement in principle, and ECA LNG Phase 1 delay to spring 2026 (a headwind partly offset by optimizations) .

What Went Well and What Went Wrong

What Went Well

  • SoCalGas advanced decarbonization: filed three RNG contracts under SB 1440; ARCHES hydrogen hub funding includes new SoCalGas infrastructure to help decarbonize heavy transport and ports .
  • Texas growth strong: Oncor reached a settlement in principle on the ~$3B System Resiliency Plan and continued broad load expansion, including data centers and manufacturing; 814 active interconnection requests (+13% YoY) .
  • Recognition and customer programs: SoCalGas earned ENERGY STAR Partner of the Year (second consecutive year) with $14M rebates and large energy savings; continued climate leadership and community grant programs .

What Went Wrong

  • ECA LNG Phase 1 delayed to spring 2026 due to contractor labor/productivity challenges; Sempra expects ~$300M incremental capital for its net share but targets mid-teens returns remain intact .
  • Consolidated revenues fell YoY (Q2 2024 $3.01B vs $3.34B) and adjusted EPS declined YoY (Q2 2024 $0.89 vs $0.94), reflecting lower energy-related businesses revenue and FX impacts .
  • California earnings benefited less from tax/regulatory items vs prior year; CPUC base revenues remained at 2023 authorized levels pending GRC, with true-up expected later (timing uncertainty until final order) .

Financial Results

Consolidated Performance (Sempra)

MetricQ4 2023Q1 2024Q2 2024
Total Revenues ($USD Billions)$3.49 $3.64 $3.01
GAAP Diluted EPS ($)$1.16 $1.26 $1.12
Adjusted Diluted EPS ($)$1.13 $1.34 $0.89
Income Before Income Taxes & Equity Earnings ($USD Millions)$452 $705 $308

Segment Breakdown (Statements of Operations by Segment)

MetricQ4 2023Q1 2024Q2 2024
Sempra California Revenues ($USD Millions)$2,920 $3,141 $2,625
Sempra Infrastructure Revenues ($USD Millions)$586 $519 $409
Sempra Texas Utilities Equity Earnings ($USD Millions)$148 $185 $204
Sempra California Earnings Attributable to Common ($USD Millions)$500 $582 $316
Sempra Infrastructure Earnings Attributable to Common ($USD Millions)$131 $131 $291
Sempra Texas Utilities Earnings Attributable to Common ($USD Millions)$146 $183 $202

California Utility KPIs (Sempra California; includes SoCalGas)

KPIQ4 2023Q1 2024Q2 2024
Gas Sales (Bcf)89 122 78
Transportation (Bcf)150 142 120
Total Gas Deliveries (Bcf)239 264 198
Electric Sales (million kWh)974 935 661
Total Electric Deliveries (million kWh)4,201 4,104 3,553
Total Gas Customer Meters (thousands)7,078 7,089 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2024$4.52–$4.82 $4.74–$5.04 Raised
Adjusted EPSFY 2024$4.60–$4.90 $4.60–$4.90 Maintained
GAAP/Adjusted EPSFY 2025$4.90–$5.25 $4.90–$5.25 Maintained
LT EPS GrowthMulti-year~6–8% ~6–8% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
CPUC GRC timing and retroactivityProposed decision targeted for 2Q24; settlement on portions; rates to be retroactive Proposed decision “later this summer,” final by year-end; retroactive to Jan 1 emphasized Progressing; timing intact
SoCalGas decarbonization (RNG, hydrogen)Sustainability leadership and goals; hydrogen blending application; awards SB 1440 RNG contracts filed; ARCHES DOE hub tranche signed; SoCalGas infra included Advancing execution
Texas load growth & resiliencyStrong capital plan; premise growth; legislative/regulatory support SRP settlement in principle; 814 interconnection requests (+13% YoY); 25 substations; 175 miles transmission Strengthening growth
ECA LNG timelineECA ~80% complete; on track for summer 2025 ECA ~85% complete; COD delayed to spring 2026; ~$300M incremental capital; returns intact Timing push-out
Port Arthur LNG Phase 2Commercial progress; permits advancing HOA with Aramco; fixed-price EPC with Bechtel; 24/7 construction authorization; DOE pause not expected to impact timing De-risking path
AI/technology initiativesSDG&E resilience tech; recognition SDG&E wildfire/climate resilience center: AI-enabled tools, drones, fault detection Scaling capabilities

Management Commentary

  • “We continue our focus on safety and operational excellence… supporting our confidence in a projected long-term EPS growth rate of 6% to 8%” — Jeff Martin (CEO) .
  • “At SoCalGas… ARCHES forecasts California will need 17 million tonnes per year of hydrogen… SoCalGas has proposed Angeles Link…” — Karen Sedgwick (CFO) .
  • “ECA COD will be delayed until the spring of 2026… we still expect to maintain strong integrated financial returns” — Karen Sedgwick (CFO) .
  • “Estimated increase in capital for Sempra’s net share [of ECA] to be about $300 million… target levered returns mid-teens remain” — Jeff Martin (CEO) .
  • “SRP settlement in principle… allows investments to begin late in Q4 2024, subject to approval” — Allen Nye (Oncor CEO) .

Q&A Highlights

  • ECA delay and capital: ~$300M incremental capital; offsets via asset optimization and operational efficiencies; guidance reaffirmed for 2024/2025 .
  • Texas SRP path: settlement in principle; definitive settlement filing targeted by Aug 16; investments may begin late 2024 pending PUCT approval .
  • Permian transmission plan: ERCOT proposed $13–$15B by 2038; Oncor expects to be a “heavy participant” given system footprint; updates likely in coming months .
  • California GRC: proposed decision later summer; final by year-end; rates retroactive to Jan 1; strong alignment with state priorities (safety, reliability, clean energy) .

Estimates Context

  • Wall Street consensus (S&P Global) for SOCGP and SRE Q2 2024 was unavailable through our data service at time of analysis; as a result, we cannot assess beat/miss versus consensus in this recap [GetEstimates errors].
  • Given unavailability, portfolio managers should monitor post-call estimate revisions for Sempra consolidated and segment narratives via brokers and S&P Global when accessible.

Key Takeaways for Investors

  • California rate case retroactivity is a near-term catalyst; final order before year-end could lift Sempra California earnings, with SoCalGas benefiting from updated authorized revenues .
  • Texas remains a secular growth engine: SRP settlement adds resiliency capital; data center and C&I demand support sustained rate base growth and equity earnings from Oncor .
  • ECA LNG delay is a manageable headwind; targeted returns intact via inflation protections and transportation optimizations; execution risk remains until COD .
  • Hydrogen/RNG optionality: SoCalGas’ SB 1440 RNG contracts and ARCHES hub participation position the utility for decarbonization-linked infra investment and regulatory support .
  • Recognition and customer programs (ENERGY STAR, grants) highlight continuing demand-side efficiency and community engagement, supporting affordability narratives in rate proceedings .
  • Watch for Q3/Q4 updates: SRP settlement details, GRC proposed decision, potential Port Arthur Phase 2 commercial progress and DOE permitting developments .
  • Preferred dividend continuity (SoCalGas) provides income stability; Q2 announcements reaffirm regular payments, supporting SOCGP instruments in income portfolios .

Additional Relevant Q2 Press Releases (SoCalGas)

  • Declared preferred dividends (payable July 15; $0.375/share per preferred series) .
  • ENERGY STAR Partner of the Year (second consecutive year); $14M rebate savings for customers .
  • Climate leadership recognition (Organizational Leadership Award; ASPIRE 2045 progress) .
  • Community climate grants program: up to $50,000 per nonprofit; long-standing community investment track record .

All data points and quotes are sourced from company filings and press releases: Sempra Q2 2024 8-K, Q2 2024 earnings call transcript, Q1 2024 8-K, Q4 2023 8-K, and SoCalGas press releases. Citations embedded inline.