Dba Sempra · NYSE:SRE
Dba Sempra — Q4 2020 Earnings Presentation
44 slides from Dba Sempra's earnings presentation, Feb 25, 2021
Slide 1: Fourth Quarter 2020 Earnings Results
SEMPRA ENERGY Fourth Quarter 2020 Earnings Results February 25, 2021
Slide 2: Information Regarding Forward-Looking Statements
INFORMATION REGARDING FORWARD- LOOKING STATEMENTS This presentation 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
Slide 3: Table of Contents
TABLE OF CONTENTS • Executive Summary • 2020 Accomplishments • U.S. Utilities Platform • Infrastructure Platform • Business Updates • Financial Update • 2021 Priorities • Key Takeaways 3
Slide 4: Executive Summary
EXECUTIVE SUMMARY Advancing our mission to be North America’s premier energy infrastructure company Reporting Q4-2020 adjusted earnings per common share (EPS) of $1.90 compared to Q4-2019 1 EPS of $1.55 1 Reporting strong FY-2020 adjusted EPS of $8.03 compared to FY-2019 adjusted EPS of $6.78 Progre
Slide 5: 2020 Accomplishments
2020 ACCOMPLISHMENTS ✓ Realigned business strategy to ✓ Announced proposed Sempra STRATEGIC help enable the energy transition Infrastructure Partners 4 transactions ✓ Completed multi-year capital ✓ Launched sustainability strategy rotation program at SDG&E ✓ Deployed record ~$7B capital ✓ Reached FI
Slide 6: U.S. Utilities Platform
U.S. UTILITIES PLATFORM ONE OF NORTH AMERICA’S LARGEST ENERGY NETWORKS1 $2B+ Adjusted Earnings2 ~$37B Rate Base3 ~36M Consumers Served 284,000+ mi T+D Lines1 ~56,000 EVs in SDG&E’s service territory4 5 • 10.1% Authorized Blended ROE6 ~35% of TX electricity delivered by Oncor • ~74% CA and TX Electri
Slide 7: Sempra Infrastructure Partners Value Proposition
SEMPRA INFRASTRUCTURE PARTNERS 1 VALUE PROPOSITION SEMPRA’S OBJECTIVES Simplify our business model Highlight value of infrastructure platform Renewables Support cross-border renewables Expand LNG growth LNG Improve business strength + scale Energy Networks Strengthen balance sheet Advancing the inte
Slide 8: Sempra Infrastructure Partners Demonstrative Timeline Update
SEMPRA INFRASTRUCTURE PARTNERS 1 DEMONSTRATIVE TIMELINE UPDATE ✓Dec 2020 ✓Feb 2021 Announce Receive Announced Advanced sale of NCI in regulatory and integrated bid + diligence Sempra other approvals transactions process Infrastructure to close sale Partners of NCI NON-CONTROLLING INTEREST SALE Q4 20
Slide 9: Business Updates
BUSINESS UPDATES • U.S. Utilities executed record ~$5.8B 2020 capital program focused on safety and reliability, exceeding 2019 by ~25%1 • SoCalGas achieved ~20% methane reductions below 2015 levels in 2020, which is five years earlier than mandated2 U.S. UTILITIES • Oncor connected ~77,000 premises
Slide 10: Q4 + FY-2020 Financial Results
Q4 + FY-2020 FINANCIAL RESULTS Three months ended Years ended December 31, December 31, (Dollars, except EPS, and shares, in millions) 2020 2019 2020 2019 (Unaudited) GAAP Earnings $ 414 $ 447 $ 3,764 $ 2,055 Gain on Sale of South American Businesses - - (1,747) - Impacts Associated with Aliso Canyo
Slide 11: FY-2020 Adjusted Earnings Drivers
FY-2020 ADJUSTED EARNINGS DRIVERS 1 $41M $8M $2,350M $51M 4 $57M 3 $63M $81M $284M 1 2 $1,911M ($146M) FY-2019 Sale of Cameron CA Utilities Lower CA Utilities Higher LNG Other FY-2020 South LNG Base Parent Regulatory TX Utilities Marketing America Earnings Operating Losses Decisions Earnings Operati
Slide 12: Strong Financial Execution
STRONG FINANCIAL EXECUTION Adjusted Earnings + Adjusted EPS1 Executed disciplined capital rotation program while delivering top-tier adjusted $8.03 EPS growth2 $6.78 Transacted ~$27B enterprise value while:3 $5.57 $2,350M • Improving strategic alignment $5.42 $1,911M • Improving earnings quality wit
Slide 13: 5-Year Capital Plan
5-YEAR CAPITAL PLAN 2021 – 2025 Base Capital Plan3 U.S. Utilities • ~90% of Sempra’s 5-year capital plan is dedicated to U.S. Utilities 1 Sempra • ~$1.1B increase in 2021 – 2022 capital plan SoCalGas Texas $9.2B Utilities • U.S. Utilities capital plan driven by focus on $9.8B 4 safety, reliability a
Slide 14: Projected Rate Base Growth
PROJECTED RATE BASE GROWTH U.S. Utilities Rate Base ($B)1 $55.5 $52.8 $49.8 $46.4 $42.4 $24.0 $22.8 $36.8 $21.6 ~70% $20.4 Avg. Projected $18.9 Electric $17.5 Rate Base $8.8 $8.3 $7.9 $7.3 $6.6 $5.7 $5.6 $5.1 $5.5 $5.2 $2.6 $4.9 $2.5 $2.3 $4.5 $2.1 $1.8 $1.5 $12.5 $13.6 $14.4 $10.2 $11.4 $8.2 2020A
Slide 15: 2021 Priorities
2021 PRIORITIES KEY ACTION ITEMS Close proposed IEnova exchange offer + simplify Execute health + safety programs to help mitigate 1 COVID-19 risk for our employees 6 Sempra LNG + IEnova ownership under Sempra Infrastructure Partners 2 Maintain a sharp focus on safety + operational Close proposed sa
Slide 16: Sempra Value Proposition
SEMPRA VALUE PROPOSITION ✓ Top-tier T+D infrastructure platform in attractive markets ✓ Robust capital investments + rate base growth ✓ Strong earnings visibility + EPS growth ✓ Sustainable dividend growth 1 ✓ Commitment to innovation, sustainability + leadership 1. The amount and timing of dividend
Slide 17: Summary
SUMMARY Advanced our mission to be North America’s premier energy infrastructure company, even in a challenging economic and operating environment in 2020 1 Reporting Q4-2020 adjusted EPS of $1.90 compared to Q4-2019 EPS of $1.55 1 Reporting strong FY-2020 adjusted EPS of $8.03 compared to FY-2019 a
Slide 18: Appendix
APPENDIX 18
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHTS 2019 2020 ACTUALS1 ACTUALS1 2 $1.9B ADJUSTED EARNINGS $2.4B 3 $6.0B CAPITAL DEPLOYED $7.0B 4 $25.7B NET DEBT $23.2B U.S. UTILITY AUTHORIZED 10.0% BLENDED ROE 5 10.1% $1.0B COMMON DIVIDENDS PAID $1.2B $65.7B TOTAL ASSETS $66.6B 1. Amounts are approximate. 2. Adjusted Earnings is
Slide 20: Strengthening Balance Sheet
STRENGTHENING BALANCE SHEET Total Debt-to-Capitalization1 Achieved key targeted metrics ✓ FFO-to-Debt of 17% 2 57% 56% ✓ Debt-to-Capitalization of 49% 54% Sale of Solar Completed capital rotation program Assets resulting in a strengthened balance sheet Sale of Sale of Wind 49% Midstream Assets Asset
Slide 21: 2020 ESG Achievements
2020 ESG ACHIEVEMENTS 1 Cleaner Energy Decarbonization Leadership Energy Transition • SDG&E service territory has ~16% • SoCalGas is on track to meet its • LNG has potential to lower global rooftop solar and has the #1 solar goal of ~5% renewable natural gas emissions through displacement of E penet
Slide 22: LNG Projects Overview
LNG PROJECTS OVERVIEW Nameplate Offtake 1 2 2 Project Capacity Capacity Status OPERATIONS • Full commercial operations under tolling agreements achieved CAMERON ~15 Mtpa ~12 Mtpa • Full run-rate $400M – $450M earnings LNG PHASE 1 3 • DOE FTA and Non-FTA authorizations to 2050 • FID achieved and full
Slide 23: SoCalGas Hydrogen Demonstration Projects
HYDROGEN DEMONSTRATION PROJECTS Project Technology Overview UTILITIES BLENDING • Test hydrogen blending impact on pipeline integrity in order to gain understanding of how to safely incorporate CA hydrogen, a zero-emission fuel, to be stored and used in the gas distribution system. This is the first
Slide 24: Appendix: Business Unit Earnings
APPENDIX Business Unit Earnings 24
Slide 25: SDG&E
SDG&E Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) SDG&E GAAP Earnings $ 191 $ 185 $ 824 $ 767 Q4-2020 earnings are higher than Q4-2019 earnings primarily due to: • $20M higher income tax benefits from flow-through items, partially of
Slide 26: SoCalGas
SOCALGAS Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) SoCalGas GAAP Earnings $ 79 $ 204 $ 504 $ 641 Impacts Associated with Aliso Canyon Litigation and Regulatory Matters 139 - 233 - SoCalGas Adjusted Earnings1 $ 218 $ 204 $ 737 $ 641
Slide 27: Sempra Texas Utilities
SEMPRA TEXAS UTILITIES Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) Sempra Texas Utilities GAAP Earnings $ 121 $ 109 $ 579 $ 528 Q4-2020 earnings are higher than Q4-2019 earnings primarily due to higher equity earnings driven by: • In
Slide 28: Sempra Mexico
SEMPRA MEXICO 1 Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) Sempra Mexico GAAP (Losses) Earnings $ (43) $ 39 $ 259 $ 253 Q4-2020 losses compared to Q4-2019 earnings primarily due to: • $86M unfavorable impact from foreign currency an
Slide 29: Sempra LNG
SEMPRA LNG Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) Sempra LNG GAAP Earnings (Losses) $ 113 $ (19) $ 320 $ (6) Q4-2020 earnings compared to Q4-2019 losses primarily due to: • $99M higher equity earnings from Cameron LNG JV primari
Slide 30: Parent & Other
PARENT & OTHER Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) Parent & Other GAAP Losses $ (47) $ (132) $ (562) $ (515) Losses from Investment in RBS Sempra Commodities LLP - - 100 - 1 Reduction in Tax Valuation Allowance Against Certai
Slide 31: Discontinued Operations (Sempra South American Utilities)
DISCONTINUED OPERATIONS 1 (SEMPRA SOUTH AMERICAN UTILITIES) Three months ended Years ended December 31, December 31, (Dollars in millions) 2020 2019 2020 2019 (Unaudited) Discontinued Operations GAAP Earnings $ - $ 61 $ 1,840 $ 328 Gain on Sale of South American Businesses - - (1,747) - Change in In
Slide 32: Appendix: Non-GAAP Financial Measures + Other Reconciliations
APPENDIX Non-GAAP Financial Measures + Other Reconciliations 32
Slide 33: Adjusted Earnings and Adjusted EPS (Unaudited)
ADJUSTED EARNINGS AND ADJUSTED EPS (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: In the three months ended December 31, 2020: • $(139)M from impacts associated w
Slide 34: Adjusted Earnings and Adjusted EPS (Unaudited)
ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) Pretax Income tax (benefit) Pretax Income tax expense amount expense1 Earnings amount (benefit)1 Earnings (Dollars in millions, except per share amounts; shares in thousands) Three months ended December 31, 2020 Three months ended December 31, 2019 Semp
Slide 35: Adjusted Earnings (Losses) by Business Units (Unaudited)
ADJUSTED EARNINGS (LOSSES) BY BUSINESS UNITS (UNAUDITED) 1 Three months ended December 31, 2020 Sempra Sempra (Dollars in millions) Texas Sempra Parent & Discontinued Energy SDG&E SoCalGas Utilities Mexico Sempra LNG Other Operations Consolidated GAAP Earnings (Losses) $ 191 $ 79 $ 121 $ (43) $ 113
Slide 36: 2020 U.S. Utilities Adjusted Earnings (Unaudited)
2020 U.S. UTILITIES ADJUSTED EARNINGS 1 (UNAUDITED) Income tax 2 (Dollars in millions) Pretax amount benefit Earnings Year ended December 31, 2020 U.S. Utilities GAAP Earnings $ 1,907 Excluded items: Impacts Associated with Aliso Canyon Litigation and Regulatory Matters $ 307 $ (74) 233 U.S. Utiliti
Slide 37: 2020 Adjusted EPS Guidance Range (Unaudited)
2020 ADJUSTED 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: • $(233)M from impacts associated with Aliso Canyon natural gas storage facility l
Slide 38: 2018 and 2017 Adjusted Earnings and Adjusted EPS (Unaudited)
2018 AND 2017 ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) Sempra Energy Adjusted Earnings and Adjusted Earnings Per Common Share (Adjusted EPS) exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2018 and 2017 as follows: In the year ended December 31
Slide 39: 2018 and 2017 Adjusted Earnings and Adjusted EPS (Unaudited)
2018 AND 2017 ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) Income tax Non- Income tax Non- Pretax expense controlling Pretax expense controlling 1 1 amount (benefit) interests Earnings amount (benefit) interests Earnings (Dollars in millions, except per share amounts) Year ended December 31, 2018
Slide 40: 2020 and 2019 Capital Deployed (Unaudited)
2020 AND 2019 CAPITAL DEPLOYED (UNAUDITED) (Dollars in millions) 2020 2019 Sempra Energy Expenditures for property, plant and equipment $ 4,676 $ 3,708 Expenditures for investments and acquisitions 652 1,797 Total Capital Expenditures, Investments and Acquisitions (On Balance Sheet) 5,328 5,505 Excl
Slide 41: 2020 and 2019 U.S. Utilities Capital Deployed (Unaudited)
2020 AND 2019 U.S. UTILITIES CAPITAL DEPLOYED (UNAUDITED) (Dollars in millions) 2020 2019 U.S. Utilities SDG&E capital expenditures $ 1,942 $ 1,522 SoCalGas capital expenditures 1,843 1,439 Sempra Texas Utilities investments and acquisitions 648 1,685 Total Capital Expenditures, Investments and Acqu
Slide 42: Funds From Operations (FFO) to Debt Ratio (Unaudited)
FUNDS FROM OPERATIONS (FFO) TO DEBT RATIO (UNAUDITED) Funds from Operations (FFO), and thereby the ratio of FFO to Debt, are non-GAAP financial measures. As defined and used by management, FFO, which is comprised of Net Cash Provided by Operating Activities (also referred to as operating cash flows)
Slide 43: FFO to Debt Ratio and Net Debt (Unaudited)
FUNDS FROM OPERATIONS (FFO) TO DEBT RATIO AND NET DEBT (UNAUDITED) (Dollars in millions) Sempra 2020 Net Cash Provided by Operating Activities $ 2,591 Exclude: Decreases in working capital 550 Cash flows from discontinued operations 1,051 2020 FFO $ 4,192 Short-term debt $ 885 Current portion of lon
Slide 44: Increase in 2021 + 2022 Capital Plan
INCREASE IN 2021 + 2022 CAPITAL PLAN 2020 - 2024 Capital Plan 2021 - 2025 Capital Plan Low High Low High (Dollars in millions) 2021 2021 2021 Sempra U.S. Utilities $ 5,700 to $ 6,400 $ 6,075 to $ 6,575 SDG&E 2,150 2,350 2,300 2,500 SoCalGas 1,800 2,000 1,950 2,100 1 Sempra Texas On-Balance Sheet 150