• Adjusted EPS (2024): $4.65, just below the midpoint of guidance range.
• 2025 EPS Guidance: Revised to $4.30 to $4.70.
• 2026 EPS Guidance: Projected range of $4.80 to $5.30, representing roughly a 12% growth rate from the midpoint of 2025 guidance.
• Annualized Dividend: Increased to $2.58 per share, marking the 15th consecutive year of increases.
• 2024 Adjusted Earnings: Approximately $3 billion.
• 2024 GAAP Earnings: $2,817 million or $4.42 per share.
• 2024 Capital Deployment: Nearly $10 billion across three business lines.
• Five-Year Capital Plan (2025-2029): $56 billion, a 16% increase over the prior plan.
• Oncor Capital Plan (2025-2029): $36 billion, a 50% increase over the previous plan.
• 2024 Rate Base: $56 billion, projected to expand to over $91 billion by 2029.
• 2024 Fourth Quarter GAAP Earnings: $665 million or $1.04 per share.
• 2024 Fourth Quarter Adjusted Earnings: $960 million or $1.50 per share.
• Long-term EPS Growth Rate: Raised to 7% to 9%.
• Sempra Texas Growth: Expected to account for over half of the $56 billion five-year capital plan.

• Warning! GuruFocus has detected 11 Warning Signs with SRE.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sempra (NYSE:SRE) announced a new record capital plan of $56 billion for 2025 to 2029, representing a 16% increase over the prior plan.
• The company delivered a total return of 21% in 2024 and a solid total return over the last three years of 45%, which compares favorably to the utility sector.
• Sempra (NYSE:SRE) is raising its projected long-term EPS growth rate to 7% to 9%, with expectations to exceed this range in the 2025 to 2029 period.
• Oncor, a subsidiary of Sempra (NYSE:SRE), is experiencing significant growth, with a new five-year capital plan totaling $36 billion, an increase of 50% over the previous plan.
• Sempra (NYSE:SRE) announced an increase in the company's annualized dividend for the 15th consecutive year to $2.58 per share.

Negative Points

• Sempra (NYSE:SRE) revised its 2025 EPS guidance range to $4.30 to $4.70, which falls below prior expectations.
• The company is facing regulatory challenges, including a 42 basis point decrease in return on equity determined by the CPUC and the removal of a 50 basis point CAISO adder by FERC.
• Higher interest expenses are anticipated due to increased capital investments and changes in interest rates.
• The delay in ECA LNG Phase 1 COD until spring of 2026 and recent changes to natural gas price assumptions are impacting Sempra Infrastructure's guidance.
• Sempra (NYSE:SRE) is experiencing regulatory lag in Texas, impacting Oncor's earned ROEs, which are currently between 8% and 9%.

Q & A Highlights

Q: Can you explain the factors leading to the revised 2025 guidance and how they impact future growth? A: Jeffrey Martin, CEO, explained that the revised guidance reflects lower expectations due to several factors, including the California GRC decision, the removal of the FERC CAISO adder, and Oncor's decision to file a base rate review earlier than planned. These changes are expected to create a new foundation for future growth, with a focus on long-term EPS growth of 7% to 9%.

Q: How does the growth in Texas impact Sempra's long-term strategy and capital allocation? A: E. Allen Nye, CEO of Oncor, highlighted the unprecedented growth in Texas, particularly in transmission points of interconnection and large commercial and industrial (LC&I) customers. This growth supports a $36 billion capital plan for Oncor, with potential additional investments of $12 billion. Sempra is focusing its capital allocation on Texas to leverage this growth and improve long-term earnings.

Q: What are the implications of the upcoming Oncor rate case filing, and how will it affect earnings? A: Jeffrey Martin, CEO, stated that Oncor's decision to file a base rate review is expected to put downward pressure on 2025 earnings but is considered the right move for long-term growth. The filing will help update revenue requirements to reflect higher costs and support Oncor's financial strength amid rapid growth.

Q: How is Sempra addressing the challenges in California, particularly regarding wildfire risk and regulatory changes? A: Karen Sedgwick, CFO, discussed Sempra's efforts to mitigate wildfire risk through investments in safety and reliability. The company is also navigating regulatory changes, including the cost of capital mechanism and potential legislative actions to strengthen the wildfire fund. Sempra remains focused on running a safe business and supporting legislation that reduces risk.

Q: What are Sempra's plans for financing its capital investments, and how will it impact the balance sheet? A: Jeffrey Martin, CEO, outlined a financing strategy that includes operating cash flows, debt, hybrids, and equity issuances. Sempra plans to use asset sales at Sempra Infrastructure to efficiently fund its capital plan. The company aims to maintain a strong balance sheet while supporting its growth initiatives.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.