Sempra Energy recently reported third-quarter 2015 earnings of $248 million, or $0.99 per diluted share, compared with $348 million, or $1.39 per diluted share, in last year’s third quarter.For the first nine months of 2015, Sempra Energy’s earnings were $980 million, or $3.91 per diluted share, up from $864 million, or $3.45 per diluted share, in the first nine months of 2014.
“Through three quarters, we are on track to exceed our 2015 financial and operational objectives, so we have raised our adjusted earnings guidance for the year,” said Debra L. Reed, chairman and CEO of Sempra Energy. “During the third quarter, our California utilities made good progress in their General Rate Cases and our other businesses continued with their construction activities on major projects, including the Cameron LNG liquefaction-export facility.”
Sempra Energy’s nine-month results in 2015 included a $36 million after-tax gain on the sale of the second block of Sempra U.S. Gas & Power’s Mesquite Power facility, $7 million after tax in liquefied natural gas (LNG) liquefaction development expenses and a benefit of $13 million after tax for San Diego Gas & Electric (SDG&E), due to the reduction in the loss related to the San Onofre Nuclear Generating Station (SONGS). In the first nine months of 2014, SDG&E recorded a $9 million charge related to the closure of SONGS. Excluding items in both years, Sempra Energy’s adjusted earnings in the first nine months of 2015 were $938 million, or $3.75 per diluted share, up from $873 million, or $3.49 per diluted share, in the first nine months of last year.
Beginning in the first quarter 2015, Southern California Gas Co. (SoCalGas) adopted an order by the California Public Utilities Commission (CPUC) to recognize revenues from the utility’s core activities on a seasonally adjusted basis (seasonality). The application of seasonality in revenues will result in substantially all of SoCalGas’ annual earnings being reported in the first and fourth quarters of the year, but will not affect full-year operating earnings or cash flow.Sempra Energy’s third-quarter 2015 earnings reflected $113 million lower earnings at SoCalGas due to seasonality, compared with the third quarter 2014. For the first nine months of 2015, Sempra Energy’s earnings were $48 million lower at SoCalGas due to seasonality, compared with the same period last year. Sempra Energy will see a $48 million after-tax benefit at SoCalGas in the fourth quarter related to seasonality.
San Diego Gas & Electric
Earnings for SDG&E in the third quarter 2015 were $170 million, up from $157 million in the third quarter 2014, primarily due to higher CPUC base margin and higher earnings from electric transmission operations.For the first nine months of 2015, SDG&E’s earnings were $443 million, up from $379 million in the first nine months last year. Excluding the SONGS-related items in the first quarters of 2015 and 2014, SDG&E’s adjusted earnings for the first nine months of 2015 were $430 million, compared with $388 million in the first nine months of 2014.
Southern California Gas Co.
SoCalGas recorded a loss of $8 million in the third quarter 2015, compared with earnings of $98 million in last year’s third quarter. The reduction in earnings was due primarily to seasonality of revenues, which had a $113 million negative impact for the most recent quarter.For the first nine months of 2015, SoCalGas’ earnings were $276 million in 2015, up from $256 million in the same period last year.On Sept. 11, SoCalGas and SDG&E filed multi-party settlement agreements in their General Rate Cases for 2016-18 at the CPUC. Sempra Energy expects the CPUC to issue a draft decision in the proceeding in the first quarter 2016.
Sempra South American Utilities
In the third quarter 2015, earnings for Sempra South American Utilities increased to $43 million from $32 million in the third quarter 2014, due primarily to higher operating earnings and lower income-tax expense.For the first nine months of 2015, earnings for Sempra South American Utilities were $129 million, up from $109 million in the same period last year.
Third-quarter earnings for Sempra Mexico were $63 million in 2015, unchanged from last year. In last year’s third quarter, Sempra Mexico recorded a $14 million benefit related to the sale of a 50-percent equity interest in the first phase of the Energía Sierra Juárez wind project.For the nine-month period, Sempra Mexico had earnings of $160 million in 2015, up from $139 million in 2014.As disclosed previously, Sempra Energy’s Mexican subsidiary, IEnova, is planning to raise approximately $1.3 billion in a public offering to finance its acquisition of PEMEX’s 50-percent equity interest in IEnova’s and PEMEX’s shared joint venture. After taking into account IEnova’s equity offering, including Sempra Energy’s expected participation in the offering, the acquisition is anticipated to be about $0.05-per-share accretive to Sempra Energy’s earnings per share in 2016, growing to about $0.10 per share by 2019.
SEMPRA U.S. GAS & POWER
Earnings for Sempra Renewables in the third quarter 2015 were $15 million, compared with $17 million in the third quarter 2014.During the first nine months of 2015, earnings for Sempra Renewables were $47 million, compared with $63 million in the first nine months of 2014. Nine-month earnings for Sempra Renewables in 2014 included a $16 million first-quarter benefit from the sale of a 50-percent equity interest in the Copper Mountain Solar 3 facility.
Sempra Natural Gas
Sempra Natural Gas had third-quarter earnings of $1 million in 2015, compared with earnings of $26 million in 2014, due primarily to a Louisiana state income-tax benefit in 2014.For the first nine months of 2015, Sempra Natural Gas had earnings of $43 million, up from $39 million in the same period last year.
Sempra Energy today raised its 2015 adjusted earnings-per-share guidance range to $4.95 to $5.15 from $4.60 to $5. Both the new and prior adjusted guidance for 2015 exclude the increase in earnings from the reduction in the SONGS-closure-related loss and the earnings impact from expenses related to potential LNG development. Additionally, the new and prior adjusted guidance for 2015 exclude the $36 million benefit from the sale of the second block of the Mesquite Power natural gas-fired generating facility and any gain from IEnova’s acquisition of PEMEX’s interest in their joint venture.
NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures include adjusted earnings for the nine-month periods in 2015 and 2014 for Sempra Energy and SDG&E, as well as Sempra Energy’s 2015 adjusted earnings guidance. Additional information regarding these non-GAAP financial measures is in the appendix on Table A of the third-quarter financial tables.