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SOUTHERN CALIFORNIA GAS CO (SOCGP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 consolidated results: Revenue $3.76B (+7.6% YoY), GAAP EPS $1.04 (-10.3% YoY), Adjusted EPS $1.50 (+32.7% YoY), driven by stronger segment earnings in Sempra California (which includes SoCalGas) and non-GAAP adjustments .
  • Management reset 2025 EPS guidance to $4.30–$4.70 on regulatory headwinds (CA GRC final decision, removal of FERC CAISO ROE adder) and an expected early Oncor rate case; issued 2026 EPS guidance $4.80–$5.30 and raised long-term EPS growth to 7–9% .
  • Capital plan raised to $56B for 2025–2029 (+16% vs prior), with Oncor’s plan at $36B and a goal for ~50% of earnings from Texas by decade-end, underscoring T&D-led growth and resiliency investment .
  • SoCalGas operational backdrop: CPUC authorized Aliso Canyon storage at 68.6 Bcf (80% capacity), affirming gas’ reliability role; SoCalGas declared regular preferred dividends ($0.375/share), and advanced hydrogen storage RD&D with NREL/GKN Hydrogen .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EPS expansion: Q4 2024 Adjusted EPS rose to $1.50 from $1.13 YoY; full-year Adjusted EPS $4.65 vs $4.61 in 2023, reflecting segment strength and non-GAAP adjustments management considers more comparable across periods .
  • Sempra California segment earnings strengthened: Q4 2024 earnings attributable to common shares rose to $701MM from $500MM YoY, aided by transmission margin, AFUDC equity and CPUC-based operating margin .
  • Strategic growth positioning: Capital plan lifted to $56B; Oncor’s $36B plan with clear line-of-sight to incremental ~$12B opportunities and rising long-term EPS growth target to 7–9% (“decisive decade of growth”) .
    • “With the reset of our guidance in 2025, we are setting a new foundation for a decisive decade of growth.” — Jeff Martin, CEO .

What Went Wrong

  • 2025 guidance reset: 2025 EPS guidance cut to $4.30–$4.70 (from prior $4.90–$5.25) on CA GRC impacts, CPUC ROE cut (-42bps), removal of 50bps FERC CAISO adder, and earnings headwinds during Oncor’s contemplated base rate review .
  • GAAP EPS decline: Q4 GAAP EPS fell to $1.04 from $1.16 YoY despite revenue growth, reflecting currency/inflation effects in Mexico, derivative marks, and tax valuation allowance changes .
  • LNG schedule slippage: ECA LNG Phase 1 COD now targeted for spring 2026 (labor/productivity issues), pressuring near-term infrastructure earnings trajectory; management reaffirmed long-term returns and Port Arthur Phase 1 schedule .

Financial Results

MetricQ1 2024Q2 2024Q4 2024
Revenue ($USD Billions)$3.64 $3.01 $3.76
GAAP EPS ($)$1.26 $1.12 $1.04
Adjusted EPS ($)$1.34 $0.89 $1.50

Segment earnings attributable to common shares (quarterly):

SegmentQ4 2023 ($MM)Q4 2024 ($MM)
Sempra California$500 $701
Sempra Texas Utilities$146 $135
Sempra Infrastructure$131 $259
Parent & Other($40) ($430)
Total$737 $665

Segment revenue (quarterly):

Segment Revenues ($MM)Q4 2023Q4 2024
Sempra California$2,920 $3,360
Sempra Infrastructure$586 $416
Segment Totals$3,506 $3,776
Consolidating Adjustments, Parent & Other($15) ($18)
Consolidated Revenues$3,491 $3,758

SoCalGas/Sempra California operating KPIs:

KPIQ4 2023Q4 2024FY 2023FY 2024
Gas Sales (Bcf)89 95 369 349
Transportation (Bcf)150 141 588 560
Total Gas Deliveries (Bcf)239 236 957 909
Total Gas Customer Meters (000s)——7,078 7,132

Notes:

  • Q4 revenue and EPS are consolidated Sempra; Sempra California segment includes SDG&E and SoCalGas .
  • SOCGP does not report standalone EPS in the 8‑K; segment metrics shown are the most granular available .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (GAAP/Adjusted)FY 2025$4.90–$5.25 (EPS) $4.30–$4.70 (EPS) Lowered
EPSFY 2026—$4.80–$5.30 New
Long-term EPS GrowthMulti-year~6–8% 7–9% Raised
Consolidated Capital Plan2024–2028 vs 2025–2029$48.0B $55.5–$56.0B (~$56B) Raised (+16%)
Dividend (Sempra common)Annualized$2.48 (2024) $2.58 (2025) Increased
Oncor Base Rate ReviewFiling timingNext review expected later (2027 cadence) Contemplated filing in 2025 Accelerated
SoCalGas Aliso Canyon OpsCPUC decision—Authorized 68.6 Bcf (~80% capacity) Affirmed reliability
SoCalGas Preferred DividendsQ4 declaration—$0.375/share; payable Jan 15, 2025 Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 & Q-1)Current Period (Q4)Trend
California GRC & ROEGRC decision expected by YE 2024; rates retroactive; cost of capital mechanism in place Final GRC decision reduced plan assumptions; CPUC ROE -42bps; FERC removed 50bps CAISO adder Regulatory headwind intensified
Texas growth & Oncor rate caseSRP settlement in principle (~$3B); exceptional load growth; potential future CapEx increases Oncor $36B plan; contemplating 2025 base rate case; incremental ~$12B opportunities Growth accelerating; rate reset near-term drag
LNG portfolio (ECA & Port Arthur)ECA COD delayed to spring 2026; PA Phase 1 on time/on budget; PA Phase 2 progressing ECA delay reaffirmed; PA1 on track; PA2 targeting 2025 FID (Aramco HOA; fixed-price EPC with Bechtel) Execution steady; PA2 de-risking
Wildfire mitigation & reliabilitySDG&E wildfire leadership, resilience center; AB 1054 fund framework Review of AB 1054 mechanism; SDG&E’s contributions ~2% of fund; liability cap context Continued focus; policy stability
Hydrogen/Decarbonization (SoCalGas)ARCHES hub; Angeles Link proposal Solid-state hydrogen storage demo with NREL/GKN Hydrogen; SoCalGas funding & RD&D Advancing pilots
Financing & equityATM established; balanced sources/uses; FFO-to-debt focus Equity front-loading; hybrids; potential asset recycling at SI; ratings metrics to be met Proactive funding
Macro: interest rates/currencyFX/inflation impacts in Mexico; interest expense variability FX/inflation/tax valuation allowance items cited; higher parent interest Mixed headwind

Management Commentary

  • “With the reset of our guidance in 2025, we are setting a new foundation for a decisive decade of growth…record five-year capital plan of $56 billion and raising the company’s long-term EPS growth rate to 7%–9%.” — Jeff Martin, CEO .
  • “At SoCalGas, the CPUC issued a final decision authorizing the Aliso Canyon natural gas storage facility to operate at 68.6 billion cubic feet or 80% of the site’s capacity…” — Karen Sedgwick, CFO .
  • “As of December 31, 2024, the total amount of commercial and industrial load seeking transmission interconnection equaled 137 gigawatts…approximately 250% increase from 2023.” — Allen Nye, CEO of Oncor .
  • “We’re revising our full-year 2025 EPS guidance range to $4.30 to $4.70…also increasing projected long-term EPS growth rate to 7% to 9%.” — Karen Sedgwick, CFO .

Q&A Highlights

  • Guidance rebase and trajectory: Management expects to deliver “9% or higher” EPS CAGR across 2025–2029 despite the 2025 reset; emphasized disciplined capital allocation to Texas growth and transparent communication on intra-period lumpiness .
  • Oncor earned ROEs: Near-term earned ROE ~8–9% due to tracker lag and backward test year; filing more periodic rate cases aims to strengthen earnings toward authorized returns (9.7%) .
  • ECA delay and offsets: ECA COD spring 2026 confirmed; management highlighted optimization of transportation capacity and long-term returns; PA Phase 1 on schedule; PA Phase 2 targeting 2025 FID .
  • Financing strategy: Mix of operating cash flow, new debt, hybrids, ATM equity, and possible SI asset recycling (e.g., Mexico) to maintain ratings metrics (FFO/debt); equity weighted to front-end with buybacks later .
  • Regulatory clarity: California cost-of-capital filing upcoming; opportunity to improve returns; Texas legislative backdrop viewed as constructive for reliability and capital structure .

Estimates Context

  • S&P Global consensus estimates for SOCGP/Sempra Q4 2024 were unavailable at time of analysis due to data-access limits; therefore, no “beat/miss vs estimates” comparison is provided [GetEstimates error]. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Near-term caution, medium-term confidence: 2025 EPS reset is a negative surprise, but management’s plan implies ≥9% EPS CAGR through 2029 on Texas-led utility growth and LNG execution .
  • Texas is the engine: Oncor’s $36B base plan plus ~$12B incremental opportunities and SRP resiliency investments support rate base compounding and earnings mix shift toward higher-valued regulated assets .
  • California is stabilizing: Final GRC and ROE adjustments dampen 2025, but CPUC authorization for Aliso Canyon and continued wildfire mitigation underpin reliable gas system operations (supportive for SoCalGas) .
  • Capital discipline and funding: Expect proactive equity/hybrid usage up front and potential SI asset recycling; watch rating-agency metrics and financing cadence as catalysts .
  • LNG optionality: Despite ECA delays, PA Phase 1 remains on track; PA Phase 2 de-risking via HOA and EPC continuity could be a 2025 FID catalyst, adding contracted cash flow visibility .
  • Dividend durability: Sempra’s annualized dividend increased to $2.58; SoCalGas preferred dividends declared as regular quarterly payments—supportive for income-oriented holders .
  • Watch regulatory developments: California cost-of-capital, Texas legislative session, and FERC outcomes (TO ROE) are key drivers for returns and valuation multiple .

Appendix: Additional Q4 Press Releases Relevant to SoCalGas

  • Solid-state hydrogen storage demonstration with NREL and GKN Hydrogen; SoCalGas contributed funding and collaboration through 2026 .
  • SoCalGas declared regular quarterly preferred dividends ($0.375/share), payable Jan 15, 2025 .
  • Community initiatives (LRA grants; South LA community garden) underscore ESG commitments under ASPIRE 2045 .