Exhibit 99.1
NEWS RELEASE
| Media Contact: | Linda Pazin | |||||||||||||
| Sempra Energy | ||||||||||||||
| (877) 340-8875 | ||||||||||||||
| media@sempra.com | ||||||||||||||
| Financial Contact: | Lindsay Gartner | |||||||||||||
| Sempra Energy | ||||||||||||||
| (877) 736-7727 | ||||||||||||||
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SEMPRA ENERGY REPORTS
THIRD-QUARTER 2020 EARNINGS RESULTS
•GAAP and Adjusted EPS Guidance Expected at High End of 2020 Range
•Cameron LNG Phase 1 Achieves Full Commercial Operations
•Oncor Announces Higher Five-Year Capital Plan of $12.2 Billion
•Sempra Recognized Nationally for High-Performance Culture
SAN DIEGO, Nov. 5, 2020 – Sempra Energy (NYSE: SRE) today reported third-quarter 2020 earnings of $351 million, or $1.21 per diluted share, compared to third-quarter 2019 earnings of $813 million, or $2.84 per diluted share. On an adjusted basis, the company’s third-quarter 2020 earnings were $380 million, or $1.31 per diluted share, compared to $425 million, or $1.50 per diluted share, in the third quarter of 2019. Sempra Energy's earnings for the first nine months of 2020 were $3.35 billion, or $11.43 per diluted share, compared with earnings of $1.61 billion, or $5.74 per diluted share, in the first nine months of 2019. Adjusted earnings for the first nine months of 2020 were $1.8 billion, or $6.10 per diluted share, compared to $1.46 billion, or $5.23 per diluted share, in the first nine months of 2019.
“We are excited to advance our leadership position in the most attractive markets in North America – California, Texas, Mexico and the LNG export market – with an unrelenting commitment to safety and operational excellence. Our investments in critical new energy infrastructure support economic prosperity, community wellbeing and the energy transition,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy. “Our strategy of investing in a high-growth infrastructure platform supports long-term, stable cash flows, attractive economic returns and improved earnings visibility.”
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 third quarter and first nine months of 2020 and 2019.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars, except EPS, and shares, in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| GAAP Earnings | $ | 351 | $ | 813 | $ | 3,350 | $ | 1,608 | ||||||||||||||||||||||||||||||||||||
| Loss (Gain) on Sale of South American Businesses | 7 | — | (1,747) | — | ||||||||||||||||||||||||||||||||||||||||
| Losses from Investment in RBS Sempra Commodities LLP | — | — | 100 | — | ||||||||||||||||||||||||||||||||||||||||
| Impacts Associated with Aliso Canyon Litigation and Regulatory Matters | 22 | — | 94 | — | ||||||||||||||||||||||||||||||||||||||||
Tax Impacts from Holding the South American Businesses for Sale | — | (192) | — | (99) | ||||||||||||||||||||||||||||||||||||||||
| Gain on Sale of U.S. Wind Assets | — | — | — | (45) | ||||||||||||||||||||||||||||||||||||||||
| SDG&E Retroactive Impact of 2019 GRC FD for first half of 2019 | — | (66) | ||||||||||||||||||||||||||||||||||||||||||
| SoCalGas Retroactive Impact of 2019 GRC FD for first half of 2019 | — | (130) | ||||||||||||||||||||||||||||||||||||||||||
Adjusted Earnings(1) | $ | 380 | $ | 425 | $ | 1,797 | $ | 1,464 | ||||||||||||||||||||||||||||||||||||
| GAAP Diluted Weighted-Average Common Shares Outstanding | 291 | 296 | 293 | 280 | ||||||||||||||||||||||||||||||||||||||||
GAAP Earnings Per Diluted Common Share(2) | $ | 1.21 | $ | 2.84 | $ | 11.43 | $ | 5.74 | ||||||||||||||||||||||||||||||||||||
Adjusted Diluted Weighted-Average Common Shares Outstanding(1) | 291 | 283 | 307 | 280 | ||||||||||||||||||||||||||||||||||||||||
Adjusted Earnings Per Diluted Common Share(1),(3) | $ | 1.31 | $ | 1.50 | $ | 6.10 | $ | 5.23 | ||||||||||||||||||||||||||||||||||||
1) Represents a non-GAAP financial measure. See Table A for information regarding non-GAAP financial measures.
2) To calculate Q3-2019 GAAP EPS, preferred dividends of $26 million are added back to GAAP Earnings because of the dilutive effect of Series A mandatory convertible preferred stock.
3) To calculate YTD-2020 Adjusted EPS, preferred dividends of $78 million are added back to Adjusted Earnings because of the dilutive effect of Series A mandatory convertible preferred stock.
Advancing Critical Energy Infrastructure in North America
In August, Phase 1 of the Cameron LNG export facility in Hackberry, Louisiana, reached full commercial operations under Cameron LNG’s tolling agreements. This marked the start of full run-rate earnings and cash flows. Sempra Energy’s share of full run-rate earnings from the Phase 1 project is expected to be between $400 million and $450 million annually, with no commodity or volumetric exposure. Due to the structure of the tolling agreements at Cameron LNG, Sempra Energy does not expect any earnings impact as a result of the recent outages due to Hurricanes Laura and Delta on the U.S. Gulf Coast.
Sempra Energy continues to work closely with local authorities as well as the highest levels of the Mexican government to advance the export permit process for Energía Costa Azul (ECA) LNG Phase 1. The company expects to reach a final investment decision in the fourth quarter of 2020.
Phase 1 of ECA LNG’s project is planned to be built and operated by Sempra LNG and Infraestructura Energética Nova, S.A.B. de C.V. (IEnova), Sempra Energy’s subsidiary in Mexico, as a single-train liquefaction facility. Last year, ECA LNG received authorization from the U.S. Department of Energy to export U.S.-produced natural gas to Mexico and to re-export liquefied natural gas (LNG) to countries that do not have a free-trade agreement with the U.S.
ECA LNG has successfully secured definitive 20-year sale-and-purchase agreements with Mitsui & Co., Ltd. and an affiliate of Total SE for the purchase of approximately 2.5 Mtpa of LNG from Phase 1 of the project.
In another development, the U.S. Department of Energy extended the terms of the export authorizations for Phase 1 of the proposed Port Arthur LNG export project through Dec. 31, 2050.
Additionally, IEnova is advancing construction of its Gulf of Mexico network of fuel terminals. All three terminals are backed by take-or-pay contracts with Valero Energy Corp. and, once completed, should contribute nearly 3.4 million barrels of combined refined products storage capacity, while improving Mexico’s energy security. Notably, the Veracruz terminal is situated in the largest Mexican port on the Gulf Coast and is expected to be one of the largest terminals in Mexico.
Executing Capital Plans and Driving Sustainability at U.S. Utilities
Oncor Electric Delivery Company LLC (Oncor) today announced its 2021-2025 capital plan of $12.2 billion. This is a $300 million increase over Oncor’s previous 2020-2024 capital plan and is a result of new growth capital required across the system, increased maintenance on the transmission system, including investments to enhance the safety and reliability of service, and continued investment in technology and innovation. Additionally, Oncor recently issued its inaugural sustainable bond with proceeds expected to finance or refinance expenditures with minority- and women-owned business suppliers.
San Diego Gas & Electric Co. (SDG&E) and Southern California Gas Co. (SoCalGas) continue to execute on their record five-year capital investment plans. These plans are centered on enhancing safety, improving system reliability, and reducing energy-related emissions. Further, SDG&E has announced a new sustainability strategy that includes a commitment to place two green hydrogen projects into service by 2022, aiming to offer long-duration energy storage, increased system resiliency and reduced carbon intensity. In addition, SoCalGas has announced its participation in three research and development projects that are designed to advance fuel cell technology for trucking and transit and near-zero emissions natural gas technology for rail locomotives.
Investing in a High-Performing Culture
Sempra Energy is committed to creating long-term value by managing environmental, social and governance risks and opportunities. The company has a long-standing history of prioritizing diversity and inclusion to advance its high-performance culture and is continuing to build upon those efforts.
Last month, Sempra Energy received three awards recognizing its leadership position in diversity, inclusion and sustainability. Forbes and JUST Capital named Sempra Energy to the Forbes JUST 100 list, which is intended to recognize companies that are doing right by all their stakeholders, including employees, customers, communities, the environment and shareholders.
Additionally, Sempra Energy received the National Association of Corporate Directors' NXT Award, recognizing boards for their excellence in utilizing diversity and inclusion as a strategy for building long-term value for their companies. The National Organization on Disability also recently recognized Sempra Energy as a 2020 Leading Disability Employer for adopting exemplary employment practices for people with disabilities.
Earnings Guidance
As a result of the company’s strong execution and financial results, Sempra Energy is reaffirming and guiding to the high end of both its full-year 2020 GAAP earnings-per-common-share (EPS) guidance range of $12.50 to $13.10 and adjusted EPS guidance range of $7.20 to $7.80. Additionally, Sempra Energy is reaffirming its full-year 2021 EPS guidance range of $7.50 to $8.10.
Non-GAAP Financial Measures
Non-GAAP financial measures include Sempra Energy’s adjusted earnings and adjusted EPS for the third quarters and first nine months of 2020 and 2019, adjusted diluted weighted-average common shares outstanding for the first nine months of 2020 and third quarter of 2019, and full-year 2020 adjusted EPS guidance range. 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 8857186.
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 at the end of 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.
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This press release contains statements that 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. 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, including 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, renewals 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, counties, cities 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, (ii) completing construction projects on schedule and budget, (iii) the ability to realize anticipated benefits from any of these efforts once completed, and (iv) obtaining the consent of partners; 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 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 of natural gas from 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 tax and trade policies, laws and regulations, including tariffs and revisions to or replacement of international trade agreements, such as the United States-Mexico-Canada Agreement, that may increase our costs or impair our ability to resolve trade disputes; 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 September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| (Dollars in millions, except per share amounts; shares in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Utilities | $ | 2,301 | $ | 2,398 | $ | 7,199 | $ | 6,808 | |||||||||||||||
| Energy-related businesses | 343 | 360 | 1,000 | 1,078 | |||||||||||||||||||
| Total revenues | 2,644 | 2,758 | 8,199 | 7,886 | |||||||||||||||||||
| EXPENSES AND OTHER INCOME | |||||||||||||||||||||||
| Utilities: | |||||||||||||||||||||||
| Cost of natural gas | (114) | (122) | (582) | (789) | |||||||||||||||||||
| Cost of electric fuel and purchased power | (429) | (410) | (918) | (929) | |||||||||||||||||||
| Energy-related businesses cost of sales | (90) | (94) | (200) | (265) | |||||||||||||||||||
| Operation and maintenance | (1,044) | (845) | (2,893) | (2,515) | |||||||||||||||||||
| Depreciation and amortization | (418) | (402) | (1,242) | (1,174) | |||||||||||||||||||
| Franchise fees and other taxes | (139) | (127) | (397) | (369) | |||||||||||||||||||
| Impairment losses | (1) | (43) | (1) | (43) | |||||||||||||||||||
| (Loss) gain on sale of assets | — | (3) | — | 63 | |||||||||||||||||||
| Other income (expense), net | 29 | (7) | (163) | 103 | |||||||||||||||||||
| Interest income | 27 | 22 | 76 | 64 | |||||||||||||||||||
| Interest expense | (264) | (279) | (818) | (797) | |||||||||||||||||||
| Income from continuing operations before income taxes and equity earnings | 201 | 448 | 1,061 | 1,235 | |||||||||||||||||||
| Income tax expense | (99) | (61) | (60) | (150) | |||||||||||||||||||
| Equity earnings | 326 | 266 | 822 | 485 | |||||||||||||||||||
| Income from continuing operations, net of income tax | 428 | 653 | 1,823 | 1,570 | |||||||||||||||||||
| (Loss) income from discontinued operations, net of income tax | (7) | 256 | 1,850 | 292 | |||||||||||||||||||
| Net income | 421 | 909 | 3,673 | 1,862 | |||||||||||||||||||
| Earnings attributable to noncontrolling interests | (22) | (60) | (201) | (146) | |||||||||||||||||||
| Preferred dividends | (48) | (36) | (121) | (107) | |||||||||||||||||||
| Preferred dividends of subsidiary | — | — | (1) | (1) | |||||||||||||||||||
| Earnings attributable to common shares | $ | 351 | $ | 813 | $ | 3,350 | $ | 1,608 | |||||||||||||||
| Basic earnings per common share (EPS): | |||||||||||||||||||||||
| Earnings | $ | 1.21 | $ | 2.93 | $ | 11.48 | $ | 5.83 | |||||||||||||||
| Weighted-average common shares outstanding | 289,490 | 277,360 | 291,771 | 275,684 | |||||||||||||||||||
| Diluted EPS: | |||||||||||||||||||||||
| Earnings | $ | 1.21 | $ | 2.84 | $ | 11.43 | $ | 5.74 | |||||||||||||||
| Weighted-average common shares outstanding | 290,582 | 295,789 | 292,935 | 279,809 | |||||||||||||||||||
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 September 30, 2020:
▪$(22) million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters at Southern California Gas Company (SoCalGas)
▪$(7) million reduction to the gain on sale of our Chilean businesses as a result of post-closing adjustments
Three months ended September 30, 2019:
▪$196 million incremental revenue increases for the first six months of 2019 from the retroactive application of the final decision in the 2019 General Rate Case (GRC FD) at the California Utilities
Associated with holding the South American businesses for sale:
▪$192 million income tax benefit associated with outside basis differences in our South American businesses primarily related to a change in the anticipated structure of the sale of those businesses
Nine months ended September 30, 2020:
▪$(94) million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters at 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
▪$1,747 million gain on the sale of our South American businesses
Nine months ended September 30, 2019:
▪$45 million gain on the sale of certain Sempra Renewables assets
Associated with holding the South American businesses for sale:
▪$89 million income tax benefit 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 and a change in the anticipated structure of the 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 (benefit) expense(1) | Earnings | Pretax amount | Income tax expense (benefit)(1) | Earnings | ||||||||||||||||||||||||
| (Dollars in millions, except per share amounts; shares in thousands) | Three months ended September 30, 2020 | Three months ended September 30, 2019 | |||||||||||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 351 | $ | 813 | |||||||||||||||||||||||||
| Excluded items: | |||||||||||||||||||||||||||||
Impacts associated with Aliso Canyon litigation and regulatory matters | $ | 27 | $ | (5) | 22 | $ | — | $ | — | — | |||||||||||||||||||
| Reduction to gain on sale of Chilean businesses | 16 | (9) | 7 | — | — | — | |||||||||||||||||||||||
| SDG&E retroactive impact of 2019 GRC FD for first half of 2019 | — | — | — | (92) | 26 | (66) | |||||||||||||||||||||||
| SoCalGas retroactive impact of 2019 GRC FD for first half of 2019 | — | — | — | (181) | 51 | (130) | |||||||||||||||||||||||
Associated with holding the South American businesses for sale: | |||||||||||||||||||||||||||||
Change in indefinite reinvestment assertion of basis differences and structure of sale of discontinued operations | — | — | — | — | (192) | (192) | |||||||||||||||||||||||
| Sempra Energy Adjusted Earnings | $ | 380 | $ | 425 | |||||||||||||||||||||||||
| Diluted EPS: | |||||||||||||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 351 | $ | 813 | |||||||||||||||||||||||||
Add back dividends for dilutive series A preferred stock | — | 26 | |||||||||||||||||||||||||||
Sempra Energy GAAP Earnings for GAAP EPS | $ | 351 | $ | 839 | |||||||||||||||||||||||||
Weighted-average common shares outstanding, diluted – GAAP | 290,582 | 295,789 | |||||||||||||||||||||||||||
| Sempra Energy GAAP EPS | $ | 1.21 | $ | 2.84 | |||||||||||||||||||||||||
Sempra Energy Adjusted Earnings for Adjusted EPS | $ | 380 | $ | 425 | |||||||||||||||||||||||||
Weighted-average common shares outstanding, diluted – Adjusted(2) | 290,582 | 282,551 | |||||||||||||||||||||||||||
Sempra Energy Adjusted EPS | $ | 1.31 | $ | 1.50 | |||||||||||||||||||||||||
| Nine months ended September 30, 2020 | Nine months ended September 30, 2019 | ||||||||||||||||||||||||||||
| Sempra Energy GAAP Earnings | $ | 3,350 | $ | 1,608 | |||||||||||||||||||||||||
| Excluded items: | |||||||||||||||||||||||||||||
| Impacts associated with Aliso Canyon litigation and regulatory matters | $ | 127 | $ | (33) | 94 | $ | — | $ | — | — | |||||||||||||||||||
| Losses from investment in RBS Sempra Commodities LLP | 100 | — | 100 | — | — | — | |||||||||||||||||||||||
| Gain on sale of South American businesses | (2,899) | 1,152 | (1,747) | — | — | — | |||||||||||||||||||||||
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 and structure of sale of discontinued operations | — | — | — | — | (89) | (89) | |||||||||||||||||||||||
Reduction in tax valuation allowance against certain NOL carryforwards | — | — | — | — | (10) | (10) | |||||||||||||||||||||||
| Sempra Energy Adjusted Earnings | $ | 1,797 | $ | 1,464 | |||||||||||||||||||||||||
| Diluted EPS: | |||||||||||||||||||||||||||||
Sempra Energy GAAP Earnings | $ | 3,350 | $ | 1,608 | |||||||||||||||||||||||||
Weighted-average common shares outstanding, diluted – GAAP | 292,935 | 279,809 | |||||||||||||||||||||||||||
| Sempra Energy GAAP EPS | $ | 11.43 | $ | 5.74 | |||||||||||||||||||||||||
Sempra Energy Adjusted Earnings | $ | 1,797 | $ | 1,464 | |||||||||||||||||||||||||
Add back dividends for dilutive series A preferred stock | 78 | — | |||||||||||||||||||||||||||
Sempra Energy Adjusted Earnings for Adjusted EPS | $ | 1,875 | $ | 1,464 | |||||||||||||||||||||||||
Weighted-average common shares outstanding, diluted – Adjusted(3) | 307,405 | 279,809 | |||||||||||||||||||||||||||
Sempra Energy Adjusted EPS | $ | 6.10 | $ | 5.23 | |||||||||||||||||||||||||
(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 three months ended September 30, 2019, because the assumed conversion of the series A preferred stock is antidilutive for Adjusted Earnings, 13,238 series A preferred stock shares are excluded from the denominator used to calculate Adjusted EPS.
(3) In the nine months ended September 30, 2020, because the assumed conversion of the series A preferred stock is dilutive for Adjusted Earnings, 14,470 series A preferred stock shares are added back to the denominator used to calculate Adjusted EPS.
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 $7.80 excludes items (after the effects of income taxes and, if applicable, noncontrolling interests) as follows:
▪$(94) million from impacts associated with Aliso Canyon natural gas storage facility litigation and regulatory matters at 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
▪$1,747 million gain on the sale of our South American 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) | $ | 12.50 | to | $ | 13.10 | ||||||||||||
| Excluded items: | |||||||||||||||||
| Impacts associated with Aliso Canyon litigation and regulatory matters | 0.32 | 0.32 | |||||||||||||||
| Losses from investment in RBS Sempra Commodities LLP | 0.34 | 0.34 | |||||||||||||||
| Gain on sale of South American businesses | (5.96) | (5.96) | |||||||||||||||
| 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 has been updated to reflect additional impacts associated with the Aliso Canyon natural gas storage facility litigation and regulatory matters, and post-closing adjustments with respect to the sale of our Chilean businesses.
(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) | September 30, 2020 | December 31, 2019(1) | |||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 3,515 | $ | 108 | |||||||
| Restricted cash | 28 | 31 | |||||||||
| Accounts receivable – trade, net | 1,067 | 1,261 | |||||||||
| Accounts receivable – other, net | 418 | 455 | |||||||||
| Due from unconsolidated affiliates | 46 | 32 | |||||||||
| Income taxes receivable | 152 | 112 | |||||||||
| Inventories | 309 | 277 | |||||||||
| Regulatory assets | 386 | 222 | |||||||||
| Greenhouse gas allowances | 66 | 72 | |||||||||
| Assets held for sale in discontinued operations | — | 445 | |||||||||
| Other current assets | 407 | 324 | |||||||||
| Total current assets | 6,394 | 3,339 | |||||||||
| Other assets: | |||||||||||
| Restricted cash | 3 | 3 | |||||||||
| Due from unconsolidated affiliates | 617 | 742 | |||||||||
| Regulatory assets | 1,740 | 1,930 | |||||||||
| Nuclear decommissioning trusts | 1,057 | 1,082 | |||||||||
| Investment in Oncor Holdings | 11,962 | 11,519 | |||||||||
| Other investments | 1,455 | 2,103 | |||||||||
| Goodwill | 1,602 | 1,602 | |||||||||
| Other intangible assets | 205 | 213 | |||||||||
| Dedicated assets in support of certain benefit plans | 469 | 488 | |||||||||
| Insurance receivable for Aliso Canyon costs | 504 | 339 | |||||||||
| Deferred income taxes | 199 | 155 | |||||||||
| Greenhouse gas allowances | 598 | 470 | |||||||||
| Right-of-use assets – operating leases | 563 | 591 | |||||||||
| Wildfire fund | 371 | 392 | |||||||||
| Assets held for sale in discontinued operations | — | 3,513 | |||||||||
| Other long-term assets | 699 | 732 | |||||||||
| Total other assets | 22,044 | 25,874 | |||||||||
| Property, plant and equipment, net | 38,784 | 36,452 | |||||||||
| Total assets | $ | 67,222 | $ | 65,665 | |||||||
(1) Derived from audited financial statements.
| SEMPRA ENERGY | |||||||||||
| Table B (Continued) | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (Dollars in millions) | September 30, 2020 | December 31, 2019(1) | |||||||||
| (unaudited) | |||||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | $ | 772 | $ | 3,505 | |||||||
| Accounts payable – trade | 1,129 | 1,234 | |||||||||
| Accounts payable – other | 163 | 179 | |||||||||
| Due to unconsolidated affiliates | 6 | 5 | |||||||||
| Dividends and interest payable | 563 | 515 | |||||||||
| Accrued compensation and benefits | 412 | 476 | |||||||||
| Regulatory liabilities | 373 | 319 | |||||||||
| Current portion of long-term debt and finance leases | 2,890 | 1,526 | |||||||||
| Reserve for Aliso Canyon costs | 268 | 9 | |||||||||
| Greenhouse gas obligations | 66 | 72 | |||||||||
| Liabilities held for sale in discontinued operations | — | 444 | |||||||||
| Other current liabilities | 993 | 866 | |||||||||
| Total current liabilities | 7,635 | 9,150 | |||||||||
| Long-term debt and finance leases | 21,770 | 20,785 | |||||||||
| Deferred credits and other liabilities: | |||||||||||
| Due to unconsolidated affiliates | 271 | 195 | |||||||||
| Pension and other postretirement benefit plan obligations, net of plan assets | 999 | 1,067 | |||||||||
| Deferred income taxes | 2,696 | 2,577 | |||||||||
| Deferred investment tax credits | 22 | 21 | |||||||||
| Regulatory liabilities | 3,410 | 3,741 | |||||||||
| Asset retirement obligations | 2,961 | 2,923 | |||||||||
| Greenhouse gas obligations | 456 | 301 | |||||||||
| Liabilities held for sale in discontinued operations | — | 1,052 | |||||||||
| Deferred credits and other | 2,146 | 2,048 | |||||||||
| Total deferred credits and other liabilities | 12,961 | 13,925 | |||||||||
| Equity: | |||||||||||
| Sempra Energy shareholders’ equity | 23,228 | 19,929 | |||||||||
| Preferred stock of subsidiary | 20 | 20 | |||||||||
| Other noncontrolling interests | 1,608 | 1,856 | |||||||||
| Total equity | 24,856 | 21,805 | |||||||||
| Total liabilities and equity | $ | 67,222 | $ | 65,665 | |||||||
(1) Derived from audited financial statements.
| SEMPRA ENERGY | |||||||||||
| Table C | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| Nine months ended September 30, | |||||||||||
| (Dollars in millions) | 2020 | 2019 | |||||||||
| (unaudited) | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 3,673 | $ | 1,862 | |||||||
| Less: Income from discontinued operations, net of income tax | (1,850) | (292) | |||||||||
| Income from continuing operations, net of income tax | 1,823 | 1,570 | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | 692 | 741 | |||||||||
| Intercompany activities with discontinued operations, net | — | 184 | |||||||||
| Net change in other working capital components | (137) | (200) | |||||||||
| Distributions from investments | 429 | 163 | |||||||||
| Insurance receivable for Aliso Canyon costs | (165) | 107 | |||||||||
| Wildfire fund, current and noncurrent | — | (323) | |||||||||
| Changes in other noncurrent assets and liabilities, net | 38 | (413) | |||||||||
| Net cash provided by continuing operations | 2,680 | 1,829 | |||||||||
| Net cash (used in) provided by discontinued operations | (1,051) | 289 | |||||||||
| Net cash provided by operating activities | 1,629 | 2,118 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Expenditures for property, plant and equipment | (3,313) | (2,590) | |||||||||
| Expenditures for investments and acquisitions | (229) | (1,449) | |||||||||
| Proceeds from sale of assets | 22 | 899 | |||||||||
| Distributions from investments | 761 | 9 | |||||||||
| Purchases of nuclear decommissioning trust assets | (1,091) | (728) | |||||||||
| Proceeds from sales of nuclear decommissioning trust assets | 1,091 | 728 | |||||||||
| Advances to unconsolidated affiliates | (32) | (16) | |||||||||
| Repayments of advances to unconsolidated affiliates | 7 | 12 | |||||||||
| Intercompany activities with discontinued operations, net | — | (257) | |||||||||
| Other | 13 | 16 | |||||||||
| Net cash used in continuing operations | (2,771) | (3,376) | |||||||||
| Net cash provided by (used in) discontinued operations | 5,186 | (63) | |||||||||
| Net cash provided by (used in) investing activities | 2,415 | (3,439) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Common dividends paid | (872) | (734) | |||||||||
| Preferred dividends paid | (107) | (107) | |||||||||
| Issuances of preferred stock | 890 | — | |||||||||
| Issuances of common stock | 10 | 757 | |||||||||
| Repurchases of common stock | (565) | (23) | |||||||||
| Issuances of debt (maturities greater than 90 days) | 5,934 | 3,269 | |||||||||
| Payments on debt (maturities greater than 90 days) and finance leases | (4,387) | (2,500) | |||||||||
| (Decrease) increase in short-term debt, net | (1,871) | 888 | |||||||||
| Advances from unconsolidated affiliates | 64 | — | |||||||||
| Purchases of noncontrolling interests | (178) | (30) | |||||||||
| Contributions from noncontrolling interests, net of distributions | — | 171 | |||||||||
| Intercompany activities with discontinued operations, net | — | (128) | |||||||||
| Other | (29) | (37) | |||||||||
| Net cash (used in) provided by continuing operations | (1,111) | 1,526 | |||||||||
| Net cash provided by discontinued operations | 401 | 49 | |||||||||
| Net cash (used in) provided by financing activities | (710) | 1,575 | |||||||||
| Effect of exchange rate changes in continuing operations | (2) | — | |||||||||
| Effect of exchange rate changes in discontinued operations | (3) | (3) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (5) | (3) | |||||||||
| Increase in cash, cash equivalents and restricted cash, including discontinued operations | 3,329 | 251 | |||||||||
| Cash, cash equivalents and restricted cash, including discontinued operations, January 1 | 217 | 246 | |||||||||
| Cash, cash equivalents and restricted cash, including discontinued operations, September 30 | $ | 3,546 | $ | 497 | |||||||
| SEMPRA ENERGY | ||||||||||||||||||||||||||||||||
| Table D | ||||||||||||||||||||||||||||||||
| SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITIONS | ||||||||||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
| (Dollars in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||||||
| Earnings (Losses) Attributable to Common Shares | ||||||||||||||||||||||||||||||||
| SDG&E | $ | 178 | $ | 263 | $ | 633 | $ | 582 | ||||||||||||||||||||||||
| SoCalGas | (24) | 143 | 425 | 437 | ||||||||||||||||||||||||||||
| Sempra Texas Utilities | 209 | 212 | 458 | 419 | ||||||||||||||||||||||||||||
| Sempra Mexico | 50 | 84 | 302 | 214 | ||||||||||||||||||||||||||||
| Sempra Renewables | — | — | — | 59 | ||||||||||||||||||||||||||||
| Sempra LNG | 71 | 2 | 207 | 13 | ||||||||||||||||||||||||||||
| Parent and other | (126) | (139) | (515) | (383) | ||||||||||||||||||||||||||||
| Discontinued operations | (7) | 248 | 1,840 | 267 | ||||||||||||||||||||||||||||
| Total | $ | 351 | $ | 813 | $ | 3,350 | $ | 1,608 | ||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
| (Dollars in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||||||
| Capital Expenditures, Investments and Acquisitions | ||||||||||||||||||||||||||||||||
| SDG&E | $ | 473 | $ | 363 | $ | 1,323 | $ | 1,071 | ||||||||||||||||||||||||
| SoCalGas | 460 | 360 | 1,345 | 1,019 | ||||||||||||||||||||||||||||
| Sempra Texas Utilities | 86 | 56 | 225 | 1,338 | ||||||||||||||||||||||||||||
| Sempra Mexico | 122 | 178 | 443 | 420 | ||||||||||||||||||||||||||||
| Sempra Renewables | — | — | — | 2 | ||||||||||||||||||||||||||||
| Sempra LNG | 63 | 37 | 200 | 183 | ||||||||||||||||||||||||||||
| Parent and other | — | 3 | 6 | 6 | ||||||||||||||||||||||||||||
| Total | $ | 1,204 | $ | 997 | $ | 3,542 | $ | 4,039 | ||||||||||||||||||||||||
| SEMPRA ENERGY | ||||||||||||||||||||||||||
| Table E | ||||||||||||||||||||||||||
| OTHER OPERATING STATISTICS (Unaudited) | ||||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| UTILITIES | ||||||||||||||||||||||||||
| SDG&E and SoCalGas | ||||||||||||||||||||||||||
Gas sales (Bcf)(1) | 57 | 57 | 257 | 271 | ||||||||||||||||||||||
Transportation (Bcf)(1) | 174 | 156 | 451 | 424 | ||||||||||||||||||||||
Total deliveries (Bcf)(1) | 231 | 213 | 708 | 695 | ||||||||||||||||||||||
| Total gas customer meters (thousands) | 6,953 | 6,912 | ||||||||||||||||||||||||
| SDG&E | ||||||||||||||||||||||||||
Electric sales (millions of kWhs)(1) | 4,063 | 3,970 | 10,647 | 10,796 | ||||||||||||||||||||||
| Direct Access and Community Choice Aggregation (millions of kWhs) | 914 | 952 | 2,530 | 2,640 | ||||||||||||||||||||||
Total deliveries (millions of kWhs)(1) | 4,977 | 4,922 | 13,177 | 13,436 | ||||||||||||||||||||||
| Total electric customer meters (thousands) | 1,480 | 1,468 | ||||||||||||||||||||||||
Oncor(2) | ||||||||||||||||||||||||||
| Total deliveries (millions of kWhs) | 39,084 | 40,834 | 100,542 | 102,462 | ||||||||||||||||||||||
| Total electric customer meters (thousands) | 3,744 | 3,673 | ||||||||||||||||||||||||
| Ecogas | ||||||||||||||||||||||||||
| Natural gas sales (Bcf) | — | — | 2 | 2 | ||||||||||||||||||||||
| Natural gas customer meters (thousands) | 137 | 129 | ||||||||||||||||||||||||
| ENERGY-RELATED BUSINESSES | ||||||||||||||||||||||||||
| Power generated and sold | ||||||||||||||||||||||||||
| Sempra Mexico | ||||||||||||||||||||||||||
| Termoeléctrica de Mexicali (TdM) (millions of kWhs) | 893 | 1,032 | 2,176 | 2,862 | ||||||||||||||||||||||
Wind and solar (millions of kWhs)(3) | 432 | 419 | 1,304 | 1,109 | ||||||||||||||||||||||
(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.