Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sempra (SRE, Financial) reported adjusted EPS of $0.89 for the third quarter and year-to-date adjusted EPS of $3.12, affirming their full-year 2024 adjusted EPS guidance range.
- Oncor, a subsidiary of Sempra, is experiencing robust growth with a 40% to 50% increase in its five-year capital plan, driven by strong demand in Texas, particularly from AI and data centers.
- Sempra Infrastructure is well-positioned to capitalize on global LNG demand, with ongoing projects like Port Arthur Phase 1 and ECA LNG Phase 1 progressing as planned.
- Sempra (SRE) is strategically positioned in the two largest U.S. economies, Texas and California, providing a strong platform for future growth.
- The company is implementing a $3 billion at-the-market equity program to efficiently fund its growing capital expenditures and maintain a strong balance sheet.
Negative Points
- Sempra (SRE) is awaiting a final decision on the California General Rate Case (GRC), which could impact earnings retroactively to the beginning of 2024.
- The proposed decision in California's GRC includes lower attrition year revenue increases, potentially affecting capital expenditure plans for SoCalGas and SDG&E.
- Sempra (SRE) reported a decrease in third-quarter 2024 GAAP earnings compared to the same period last year, with earnings of $638 million or $1 per share.
- The company faces challenges in managing system safety and reliability, particularly in areas requiring additional investments for integrity management and wildfire mitigation.
- Sempra (SRE) is navigating regulatory processes and awaiting permits for key projects, such as the DOE non-FTA export permit for Port Arthur Phase 2, which could delay project timelines.
Q & A Highlights
Q: Jeff, regarding demand growth and sector EPS growth trending higher than historical norms, do you see EPS growth above the 6% to 8% range with the capital investments coming up?
A: Jeffrey Martin, CEO: We believe we're in a significant growth period for the utility sector, often referred to as a super cycle. We expect growth through this decade and into the next. While we traditionally target 6% to 8% growth, we have visibility to more opportunities and aim to exceed the high end of that range.
Q: On the $3 billion ATM, is that fully funding your anticipated CapEx increases, or could there be more equity needed, especially for SIP?
A: Jeffrey Martin, CEO: We conduct a comprehensive bottom-up process to allocate capital. The $3 billion ATM is an additional tool in our toolbox, and we feel comfortable with this amount. We'll provide more details on our February call.
Q: Can you provide a breakdown of the 40% to 50% growth range for Oncor? Is it related to the Permian Basin or load growth?
A: Allen Nye, CEO of Oncor: We see strong growth across all customer categories, including residential, transmission, and large load customers. The Permian Basin and ERCOT's transmission backbone are significant growth drivers. We have over 500 projects seeking interconnection, with a notable increase in large load customer requests.
Q: Regarding the LNG business, are there any changes to the outlook due to administration changes, and is the permit the last factor for Port Arthur Phase 2 FID?
A: Justin Bird, CEO of Sempra Infrastructure: We continue to advance Port Arthur with increased interest and better terms. We have a 20-year agreement with Aramco and are waiting for the DOE non-FTA export permit, expected to be resolved in the first half of next year.
Q: On the California case, you mentioned affordability and tax-related benefits. How much could this impact rates for customers?
A: Jeffrey Martin, CEO: We are focused on operating safely and working with stakeholders to propose additional funding while finding ways to reduce costs. We have proposed tax benefits to lessen the impact on customers, and we are confident in reaching a constructive outcome this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
