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SOUTHERN CALIFORNIA GAS CO (SOCGP)·Q3 2025 Earnings Summary

Executive Summary

  • Solid operational quarter at the California utilities within Sempra despite a GAAP EPS downdraft from discrete tax items; adjusted EPS rose to $1.11, up 25% y/y, on stronger California margin and Texas equity earnings, while GAAP EPS fell to $0.12 on a $514M tax expense tied to classifying Sempra Infrastructure Partners as held for sale .
  • California update: SB 254 established up to an $18B continuation account to stabilize the state wildfire fund; SDG&E and SoCalGas are pursuing CPUC approvals for cost-saving measures, including closing SoCalGas’ remaining branch offices and moving to a digital-first model, with combined customer savings projected over $300M (2026–2031) .
  • Parent-level (Sempra) guidance: FY25 GAAP EPS lowered to $3.05–$3.45 (from $4.05–$4.45), FY25 adjusted EPS maintained at $4.30–$4.70, and FY26 EPS maintained at $4.80–$5.30; management reiterated bias to the high-end or above its 7%–9% long-term EPS CAGR framework (2025–2029) .
  • Potential catalysts: clarity on Oncor’s base rate review and roll-forward capital plan (management flagged a 30%+ increase to 2026–2030 base plan) and execution of SoCalGas/SDG&E affordability initiatives; Sempra plans to unveil 2026–2030 capital plan on its February call .

What Went Well and What Went Wrong

  • What Went Well

    • California margin and tax helped adjusted performance: CFO cited $47M higher CPUC-based operating margin (net of opex) and $32M benefit from accelerated software deduction (OB-3) at Sempra California, supporting adjusted EPS growth .
    • Regulatory de-risking in California: SB 254 strengthens the wildfire fund’s stability and liquidity; viewed by management as significant de-risking for California electric IOUs .
    • Texas momentum continues: on the call, management highlighted strong LC&I interconnection activity and indicated Oncor’s 2026–2030 base plan is expected to rise 30%+; parent prioritizing Texas for capital allocation .

  • What Went Wrong

    • GAAP EPS/earnings optics: GAAP earnings fell sharply to $77M ($0.12) vs $638M ($1.00) y/y, driven by a $514M tax expense related to held-for-sale classification of SI Partners and other tax items, obscuring underlying strength .
    • Mexico FX/inflation and derivatives volatility: quarter included negative impacts from FX/inflation on monetary positions in Mexico and net unrealized losses on commodity derivatives (non-GAAP add-backs) .
    • California throughput softness: Sempra California total gas deliveries declined y/y (197 vs 211 Bcf) with lower transportation volumes, partially offset by higher gas sales; points to demand/throughput mix headwinds .

Financial Results

Note: SOCGP (SoCalGas) is a subsidiary registrant. Company press release/8-K financials are reported at Sempra consolidated and segment levels. SOCGP standalone quarterly fundamentals below are from S&P Global (no published consensus for SOCGP).

SOCGP standalone financials (S&P Global; USD):

MetricQ3 2024Q2 2025Q3 2025
Revenues ($)$1,054,000,000*$1,268,000,000*$1,181,000,000*
EBITDA ($)$212,000,000*$409,000,000*$302,000,000*
EBITDA Margin (%)20.11%*32.26%*25.57%*
Net Income ($)-$14,000,000*$85,000,000*$46,000,000*
Cash from Operations ($)$324,000,000*$363,000,000*$284,000,000*
Values retrieved from S&P Global.*

Sempra consolidated and segments (USD, Q3 only):

MetricQ3 2024Q3 2025
Sempra Revenues$2,776M $3,151M
GAAP EPS (diluted)$1.00 $0.12
Adjusted EPS (diluted)$0.89 $1.11
Sempra California Revenues$2,256M $2,613M
Sempra California Earnings Attributable to Common$247M $370M
Sempra Texas Utilities Earnings Attributable to Common$261M $306M
Sempra Infrastructure Earnings Attributable to Common$230M -$580M

Selected KPIs – Sempra California (proxy for SoCalGas/SDG&E operating activity):

KPIQ3 2024Q3 2025
Gas Sales (Bcf)54 56
Transportation (Bcf)157 141
Total Gas Deliveries (Bcf)211 197
Total Gas Customer Meters (thousands)7,107 7,126

Consensus vs Actuals (SOCGP): S&P Global shows no Wall Street consensus for SOCGP EPS or revenue; actuals above are shown for context. Values retrieved from S&P Global.*

Guidance Changes

(Company-level, Sempra consolidated)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2025$4.05 – $4.45 $3.05 – $3.45 Lowered
Adjusted EPS (Non-GAAP)FY 2025$4.30 – $4.70 $4.30 – $4.70 Maintained
EPSFY 2026$4.80 – $5.30 (affirmed) $4.80 – $5.30 Maintained
Long-term EPS CAGR2025–20297%–9% (guide) High-end or above of 7%–9% targeted Maintained Bias Up

Management disclosed non-GAAP adjustments underpinning the FY25 adjusted EPS framework (e.g., FX/inflation in Mexico, derivative marks, interest rate swaps, tax items related to assets held for sale) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Capital recycling (SI Partners, Ecogas)Targeting sales of Ecogas and minority SI stake to be accretive; 12–18 month timeline .Signed LOI with KKR; plan to sell 45% of SI Partners; closing expected mid-2026 .Execution progressing; timelines defined.
Texas growth/Oncor capexQ1: ERCOT PBRP and regional plan ~$35B; Oncor expects to build significant portion .Oncor anticipates 30%+ increase in 2026–2030 base capital plan; 55–60 GW capital opportunity cited through 2030; prioritizing Texas for capital .Upsized plan; stronger focus on TX.
California policy/wildfire fundQ1: CPUC proceedings underway; RNG contract approval at SoCalGas; SDG&E storage expansion .SB 254 continuation account up to $18B; de-risking California IOUs; SOCalGas digital-first cost actions with projected $300M+ 2026–2031 savings (with SDG&E) .De-risking progress; affordability actions.
LNG/Infrastructure executionQ1: Port Arthur LNG Phase 1 on time/budget; ECA LNG targeting spring 2026 .Port Arthur LNG Phase 2 FID; ECA ~95% complete, first LNG spring 2026; Cameron ~95% complete .Projects advancing; visibility improved.
Supply chain readinessNot emphasized previously.Oncor supply chain capacity highlighted; Midlothian hub supports five-year plan and 765 kV equipment commitments .Focus on execution readiness.
AI/technologyNot a focus previously in utility ops.CEO frames AI deployment as secular trend along electrification; strategic positioning narrative .Strategic framing, not a financial driver yet.

Management Commentary

  • “Earlier this morning, we reported third quarter 2025 adjusted EPS of $1.11… we’re affirming full year 2025 adjusted EPS guidance range of $4.30–$4.70… and our 2026 EPS guidance range of $4.80–$5.30.” — Jeff Martin, CEO .
  • “At Sempra California, we had $76 million [benefit], primarily from higher income tax benefits… [including] $32 million associated with the election to accelerate deductions for self-developed software… and $47 million from higher CPUC-based operating margin net of operating expenses.” — Karen Sedgwick, CFO .
  • “As customer growth continues to accelerate and the transmission expansion plans advance, Oncor anticipates a substantial increase to its 2026–2030 capital plan.” — Karen Sedgwick, CFO .
  • “In September, California enacted Senate Bill 254… This important development enhances financial protections for the state’s investor-owned electric utilities… SDG&E [and] SoCalGas… plan to close [SoCalGas’] remaining branch offices and transition to a digital-first service model… projected to save customers over $300 million between 2026 and 2031.” — Sempra 8-K news release .

Q&A Highlights

  • Equity/financing capacity: Proceeds from SI Partners transaction expected to remove common equity needs in the 2025–2029 plan; management focused on “fortressing” the balance sheet; equity remains a tool if needed over time .
  • Oncor capex and returns: 30%+ increase to 2026–2030 base plan expected, with upside potentially lifting total opportunity to $55–$60B; UTM and updated test year expected to improve earned ROE vs 9.7% authorization .
  • Supply chain execution: Oncor described robust logistics and early procurement for 765 kV equipment; management expressed confidence in meeting the Permian plan by 2030 .
  • Guidance cadence: Management affirmed FY25 adjusted EPS and FY26 EPS; suggested potential to finish FY25 in upper half of range; fuller 2026–2027 update expected in February .

Estimates Context

  • SOCGP (SoCalGas) consensus: S&P Global shows no published analyst consensus for SOCGP; thus, no “beat/miss” vs Street can be determined for Q3 2025. Values retrieved from S&P Global.*
  • Sempra consolidated context: Management affirmed FY25 adjusted EPS guidance and FY26 EPS guidance; GAAP EPS range reduced due to discrete tax effects from held-for-sale classification (non-operational) .

Key Takeaways for Investors

  • Underlying California utility performance improved (margin and tax benefits), supporting non-GAAP EPS growth despite one-off tax items depressing GAAP results; the quality-of-earnings narrative remains constructive into year-end .
  • California policy backdrop de-risked further via SB 254; SoCalGas’ shift to digital-first plus other affordability measures aims to moderate bill pressure and support regulatory outcomes (>$300M 2026–2031 projected savings with SDG&E) .
  • Texas remains the growth engine; Oncor’s 30%+ capital plan step-up and strong LC&I pipeline (including data centers) underpin multi-year rate base growth and equity earnings contributions to Sempra .
  • LNG platform execution (ECA nearing completion; Port Arthur Phase 2 FID) extends EBITDA visibility through decade-end, aiding capital recycling and balance sheet strategy .
  • Near-term catalysts: resolution path on Oncor base rate review; February roll-forward capital plan (2026–2030); CPUC decisions (GRC Track 2, TO-6, cost of capital) that can influence California returns and funding costs .
  • For SOCGP holders (preferreds), stable utility fundamentals and California de-risking are supportive, with an ongoing cadence of preferred dividends (e.g., declared $0.375/share series for Jan 15, 2026) .

Appendix: Additional Context and Sources

  • Sempra Q3 2025 results and reconciliation tables; segment data and KPIs; California/Texas/LNG updates .
  • Sempra Q2 2025 results and prior guidance ranges; segment tables .
  • Sempra Q1 2025 results; segment and KPI tables .
  • Sempra Q3 2025 earnings call transcript (selected excerpts) .
  • SOCGP press releases: preferred dividend declarations (Aug 28 and Nov 18, 2025); energy efficiency program outcomes (July 30, 2025) .

Notes on data:

  • SOCGP standalone quarterly financials are from S&P Global and do not have published Street consensus. Values retrieved from S&P Global.*