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SEMPRA (SRE)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 adjusted EPS of $0.89 and GAAP EPS of $1.00, down year-over-year, with consolidated revenue of $2.78B vs. $3.33B in Q3 2023 as lower gas prices and energy-related revenues weighed on topline .
  • Management affirmed 2024 adjusted EPS guidance of $4.60–$4.90 and 2025 EPS of $4.90–$5.25; GAAP EPS guidance raised to $4.86–$5.16. Sempra also established a $3B ATM equity program to fund a growing capex plan, notably at Oncor .
  • Oncor signaled a 40–50% increase to its 5-year capital plan (from $24B) driven by ERCOT growth, data center/AI load, and the Permian Plan—reinforcing a multi-year transmission-led growth runway .
  • California CPUC GRC proposed decision (PD) would increase 2024 revenue requirements (SDG&E +10.5%, SoCalGas +14.8%); final decision expected by year-end and retroactive to Jan. 1, 2024—an earnings true-up catalyst .

What Went Well and What Went Wrong

  • What Went Well

    • Texas growth and transmission tailwinds: Oncor expects a 40–50% uplift to its 5-year capex plan; ERCOT Permian Basin Reliability Plan (≥$13B total) and extra-high voltage initiatives underpin long-duration capex visibility .
    • LNG/Infrastructure execution: Port Arthur LNG Phase 1 on time and on budget; ECA LNG Phase 1 construction advancing with target commercial operations in spring 2026; GRO pipeline expected in-service in Q4 2024 .
    • Management confidence and capital access: 2024 and 2025 EPS guidance affirmed; $3B ATM adds flexible funding to support growth while maintaining balance sheet strength .

  • What Went Wrong

    • YoY earnings and revenue decline: Adjusted EPS fell to $0.89 (vs. $1.08) and revenue to $2.78B (vs. $3.33B), pressured by lower gas and energy-related revenues and tax/interest dynamics at Sempra California .
    • Oncor quarterly profitability down: Q3 net income of $324M (vs. $380M), driven by higher interest/depreciation and O&M, partly offset by higher revenues and customer growth .
    • California cost of capital headwind: CPUC Phase 2 cost of capital decision lowers ROEs by 42 bps and reduces future trigger magnitude; management sees offsetting positives but near-term ROE pressure is a watch item .

Financial Results

Consolidated results: revenue and EPS (chronological order, oldest → newest)

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Revenue ($B)$3.33 $3.64 $3.01 $2.78
GAAP EPS ($)$1.14 $1.26 $1.12 $1.00
Adjusted EPS ($)$1.08 $1.34 $0.89 $0.89

Margins (computed; EBIT from “income before income taxes and equity earnings” plus net interest; EBIT margin = EBIT/Revenue)

MarginQ3 2023Q1 2024Q2 2024Q3 2024
Net Income Margin (%)25.6% (0.854/3.334) 24.2% (0.881/3.640) 28.9% (0.871/3.011) 27.3% (0.759/2.776)
EBIT Margin (%)17.7% (0.589/3.334) 27.4% (0.997/3.640) 20.0% (0.602/3.011) 18.4% (0.511/2.776)

Notes:

  • Q1 EBIT equals segment total “Income before interest and tax” of $0.997B . Q2 EBIT equals $0.602B . Q3 EBIT computed as 0.200 + 0.328 − 0.017 = $0.511B using “Income before income taxes and equity earnings,” “Interest expense,” and “Interest income” . Net income margins use “Net income” .

Segment earnings and revenues

Metric ($MM)Q3 2023Q3 2024
Segment earnings attributable to common: Sempra California290 247
Segment earnings: Sempra Texas Utilities305 261
Segment earnings: Sempra Infrastructure223 230
Segment earnings: Parent & Other(97) (100)
Segment revenues: Sempra California (Q3)—2,256
Segment revenues: Sempra Infrastructure (Q3)—538
Total Revenues (Q3)3,334 2,776

KPIs and operating stats (Q3 2024 unless noted)

  • SDG&E peak demand record: >5 GW in September; ~150 MW above 2014 peak .
  • Oncor deliveries: 46,208 GWh (Q3 2024) vs. 47,736 GWh (Q3 2023) .
  • Oncor POI queue: 884 active requests; LC&I 379 (+23% YoY), including 103 GW potential large-load additions, of which ~82 GW data center/AI .
  • Oncor premise growth ~2% long-term; +19,000 premises in Q3; 800+ miles built/upgraded; eight substations placed in service .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2024$4.74–$5.04 (as of Q2) $4.86–$5.16 Raised
Adjusted EPSFY 2024$4.60–$4.90 $4.60–$4.90 Maintained
EPSFY 2025$4.90–$5.25 $4.90–$5.25 Maintained
Long-term EPS growthMulti-year~6–8% ~6–8% Maintained
Capital plan (Oncor)2025e–2029e$24B base (prior plan) +40–50% expected increase Raised (prelim)
Equity financingN/A—$3B ATM established New
DividendQuarterly—$0.62 per share payable Jan 15, 2025 (declared Nov 7) Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
AI/Data center demand in TexasOncor SRP filed (~$3B); strong LC&I and semiconductor/data center growth; 814 active POI requests at Q2 end 884 active POIs; 103 GW large-load potential; ~82 GW AI-related; 40–50% capex plan rise guided Accelerating demand and capex
CPUC GRC (California)PD expected by YE 2024; rates retroactive Jan 1 PD details: 2024 revenue req. SDG&E +10.5%, SoCalGas +14.8%; ROE lowered 42 bps in CCM Phase 2; final decision expected YE 2024 Progressing; mixed (rate relief vs. ROE)
LNG portfolio (ECA, Port Arthur)ECA ~85% complete; Port Arthur Phase 1 under construction; Phase 2 HOA with Aramco; EPC in place PA LNG Phase 1 on time/on budget; ECA target commercial ops spring 2026; GRO pipeline in-service Q4 2024; PA2 awaiting DOE non-FTA export permit H1 2025; Aramco HOA 5 MTPA/25% equity Executing; timelines reiterated
Financing strategyNo ATM previously referenced$3B ATM established to fund growth Added flexibility
Permian/Transmission strategyUnder study and settlement developments PUCT approved Permian Plan (≥$13B); Oncor expects significant share; EHV grid vision advancing Visibility improving

Management Commentary

  • “We believe the best low-risk and high-growth play on AI is high voltage transmission… Oncor is expected to build more high-voltage transmission this decade than any other company in America.” — Jeffrey W. Martin, CEO .
  • “Given ongoing economic expansion in Texas… we’re expecting a significant increase in our roll forward 5-year capital plan of anywhere between 40% to 50% from our current capital plan.” — Allen Nye, Oncor CEO .
  • “For general corporate purposes and to finance our growing capital campaign, we are establishing an at-the-market equity program of $3 billion.” — Karen Sedgwick, CFO .
  • “ECA LNG Phase 1… commercial operations online in spring 2026… GRO pipeline… before the end of the year. Port Arthur Phase 1 is on time and on budget.” — Management remarks .
  • “The proposed decision increases the revenue requirement in 2024 by 10.5% for SDG&E and 14.8% for SoCalGas… [but] lowers ROEs by 42 bps.” — CFO on CPUC PD and cost of capital .

Q&A Highlights

  • Long-term EPS growth: Management remains comfortable with 6–8% and aims to exceed the high end with expanding opportunity set (AI/transmission) .
  • Equity plan: $3B ATM is an additional tool; details on timing/sources and uses expected with February capital plan update; management comfortable with $3B size .
  • California PD: Some constructive elements; company seeking improvements on undergrounding and integrity management while proposing tax offsets to aid affordability .
  • Oncor 765 kV vs. 345 kV: PUCT decision due by May 2025; larger voltage could imply higher capex needs; EHV plan envisioned statewide over phases .
  • LNG permitting: DOE non-FTA export permit for Port Arthur Phase 2 expected to be resolved in H1 next year; Aramco HOA supports commercialization .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was not retrievable in this session due to data access limits; therefore, we cannot quantify beat/miss vs. consensus at this time (S&P Global data unavailable in this session).*
  • Directionally, management did not claim a consensus beat; focus was on reaffirmed 2024 adjusted EPS and 2025 EPS ranges, and stronger medium-term capex/growth visibility .

Key Takeaways for Investors

  • Transmission-led super-cycle: Texas load growth (data centers/AI, Permian) underpins a 40–50% step-up in Oncor’s 5-year capex outlook—supporting sustained rate base and earnings growth .
  • Funding in place: The $3B ATM provides incremental flexibility to fund higher growth without relying solely on traditional offerings; fuller capital plan (through 2029) due in February .
  • California decision catalyst: CPUC GRC final decision expected by YE 2024 with retroactive revenue application to Jan. 1—potential earnings true-up, albeit with ROE headwinds partially offset by regulatory mechanisms .
  • LNG execution: Port Arthur LNG Phase 1 is progressing on time/budget; ECA LNG on-track for spring 2026 commercial operations; Port Arthur Phase 2 commercialization progressing with Aramco HOA while awaiting DOE permit .
  • Near-term print: Q3 showed YoY declines in revenue and EPS; mix shift and macro (commodity) headwinds offset by regulatory and capex trackers—investment case is more about multi-year compounding than quarterly cadence .
  • Watchlist: PUCT rulings (SRP approval; 345 vs. 765 kV), CPUC final GRC, DOE export permit timing (PA2), and the pace of AI/data center interconnections in ERCOT .

— — —

Non-GAAP adjustments in Q3: Exclusions included $67M FX/inflation impacts in Mexico and $5M net unrealized derivative gains, reconciling GAAP EPS $1.00 to adjusted EPS $0.89 .

Appendix: Additional Q3 Operating Detail

  • Q3 revenues by business line: Utilities—Natural Gas $1,195M; Electric $1,069M; Energy-related businesses $512M .
  • Capex (Q3): Sempra CA $1,117M; Sempra TX $193M; Sempra Infrastructure $824M; Total $2,136M .
  • Oncor: Q3 2024 net income $324M (vs. $380M), drivers included higher interest and depreciation due to increased invested capital, and higher O&M, offset by rate mechanisms and growth .

Citations: Earnings press release and 8-K ; Q3 call transcript ; Oncor Q3 release ; Q2/Q1 releases ; Dividend release .

*Estimates note: S&P Global consensus values were not accessible in this session; comparison to Street estimates is therefore not included.