Dba Sempra · NYSE:SRE
Dba Sempra — Q4 2023 Earnings Presentation
71 slides from Dba Sempra's earnings presentation, Feb 27, 2024
Slide 1: 2023 Earnings Results + Capital Plan Update
2023 Earnings Results + Capital Plan Update February 27, 2024
Slide 2: Information Regarding Forward Looking Statements
Information Regarding Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions about the future, involve risks and uncertainties, and are not guaran
Slide 3: Table of Contents
Table of Contents • Executive Summary • Sempra California • Sempra Texas • Sempra Infrastructure • Financial Update | 3
Slide 4: Executive Summary
Executive Summary Jeff Martin Chairman and Chief Executive Officer, Sempra | 4
Slide 5: Executive Summary
Executive Summary • With a disciplined growth strategy, Sempra is building modern energy networks that connect customers to safer, more reliable, and cleaner energy ▪ Population growth and economic expansion are driving long-term energy demand ▪ Over the next two decades, energy infrastructure inves
Slide 6: Accomplishments
Accomplishments Strong Financial Performance Improving Regulatory Construct ✓ Record 2023 revenue of $16.7B ✓ California Cost of Capital Mechanism updated 2024 ROE and 5 cost of debt ✓ Record 2023 adjusted earnings of $2.9B 1 ✓ Record 2023 adjusted EPS exceeded high-end of adjusted ✓ Reached settlem
Slide 7: Robust Macro Fundamentals
1 Robust Macro Fundamentals One of the greatest opportunities of the 21st century is to address global emissions and climate change while meeting the rising demand for energy to support economic growth and prosperity Global Growth Sustainable Energy Driving Growth Robust GDP, population, and energy
Slide 8: North American Grid Modernization
1 North American Grid Modernization $11 trillion in energy sector investments are expected through 2050 with over $5 trillion expected for transmission and distribution, which is the core focus of Sempra’s corporate strategy $5.3T $4.6T $0.7T $0.7T Energy Storage / Other Other Generation Renewables
Slide 9: T+D Infrastructure Strategy Helping Enable Economic Growth
T+D Infrastructure Strategy Helping Enable Economic Growth Sempra’s growth platforms are focused on expanding and modernizing energy networks and connecting customers to safer, more reliable, and cleaner energy SEMPRA BUSINESS MODEL EXPLORATION + GENERATION TRANSMISSION DISTRIBUTION END MARKET PRODU
Slide 10: Strong Financial Execution
Strong Financial Execution $4.61 $4.61 $4.21 $4.00 $3.49 Sempra has built a high-quality growth portfolio that has consistently met or exceeded its adjusted EPS guidance range at a rate exceeding its projected long-term 6% – 8% EPS growth target $2.83 2018 2019 2020 2021 2022 20232 2024 2025 1 Initi
Slide 11: Total Shareholder Return
1 Total Shareholder Return Sempra continues to maintain a strong total return profile for investors – outperforming utility peers over the last 1, 2, 3, 4, and 5 years 1-YEAR 2-YEAR 3-YEAR 4-YEAR 5-YEAR 62% 41% 29% S&P 500 Utilities 20% Sempra 13% 12% 11% 0% -7% -6% | 11 1. Bloomberg data as of 12/3
Slide 12: Key Investment Highlights
Key Investment Highlights •1 Top-tier T+D growth platforms in some of North America’s most attractive markets “At Sempra, our goal is to give investors exposure to attractive •2 $48B for 2024 – 2028 capital plan with expected ~9% rate base CAGR1 growth in the energy infrastructure sector with the •3
Slide 13: Sempra California
Sempra California Trevor Mihalik Group President, Sempra | 13
Slide 14: Sempra California | Accomplishments
Sempra California | Accomplishments Robust Financial Performance Reliability ✓ 2023 earnings of $1.75B ✓ Awarded “Best in the West” for electric customer reliability for 5 18th consecutive year in a row ✓ 11% rate base growth from 2022 to 2023 ✓ Invested in 200 MW of utility-owned battery storage an
Slide 15: Sempra California | Macro Trends
Sempra California | Macro Trends Sempra California is a dual-utility platform serving customers in the largest economic market in the U.S. with a constructive regulatory compact supporting investments aligned with California’s energy policies Growth Sustainability Safety + Resiliency • Electric Vehi
Slide 16: Sempra California | Energy Delivery Critical to Achieve Clean Energy Goals
Sempra California | Energy Delivery Critical to Achieve Clean Energy Goals Sempra California is modernizing the T+D infrastructure necessary to integrate more renewables and clean molecules to serve the growing energy needs of consumers while facilitating California’s energy transition Integrating C
Slide 17: Sempra California | Capital Deployment Opportunities
Sempra California | Capital Deployment Opportunities 1 $24.1B Capital Plan ($B)1 Growth $5.0 $5.0 • Investing in safety + reliability, risk mitigation, and grid hardening $4.8 $4.7 $4.6 2 Sustainability • Supporting infrastructure for increased renewables, storage, and EVs 2024 2025 2026 2027 2028 •
Slide 18: Sempra Texas
Sempra Texas Allen Nye Chief Executive Officer and Director, Oncor | 18
Slide 19: Sempra Texas | Oncor Accomplishments
Sempra Texas | Oncor Accomplishments 1 Robust Financial Performance Strong Operational Performance ✓ 12% rate base growth from 2022 to 2023 2 ✓ Built, re-built, or upgraded ~3,200 miles of T+D lines ✓ Increased premise count by ~73,000 ✓ Deployed record $3.8B of capital in 2023 Reliability Construct
Slide 20: Sempra Texas | Oncor Macro Trends
Sempra Texas | Oncor Macro Trends Broad economic growth across industries and service territory driving robust regulated T+D investments to connect customers to safer, more reliable, and cleaner electricity Growth Sustainability Safety + Resiliency • Population: Oncor serves 4 of the top • Electrifi
Slide 21: Sempra Texas | Oncor Foundation for Economic Growth
Sempra Texas | Oncor Foundation for Economic Growth Oncor’s T+D investments are providing safer, more reliable, and cleaner electric service to customers and providing the backbone for Texas’ grid modernization and facilitating economic growth Grid Modernization, Reliability + Resiliency Multi-Facet
Slide 22: Sempra Texas | Oncor Capital Deployment Opportunities
Sempra Texas | Oncor Capital Deployment Opportunities 1 Growth $24.2B Capital Plan ($B)1 $5.3 • Investing to support expected ~2% annual $4.8 $4.9 $4.7 long-term premise growth and continued $4.5 increase in large C&I customers • Supporting transmission growth needed to meet interconnection requests
Slide 23: Sempra Infrastructure
Sempra Infrastructure Justin Bird Executive Vice President, Sempra Chief Executive Officer, Sempra Infrastructure | 23
Slide 24: Sempra Infrastructure | Accomplishments
Sempra Infrastructure | Accomplishments 1 Robust Financial Performance Strong Operational Performance ✓ 2023 adjusted earnings of $0.8B 2 ✓ Maintained 2022 production at Cameron LNG Phase 1 with +700 cargoes loaded since production began ✓ Continued strong cash distributions to partners Development
Slide 25: Sempra Infrastructure | Macro Trends
Sempra Infrastructure | Macro Trends High-growth, low-carbon platform delivering cleaner and more secure energy to customers around the world Growth Sustainability Energy Security • Economic Growth: Energy efficiency in • Alternative Solutions: LNG globally • Energy Source: Reliable and affordable m
Slide 26: Sempra Infrastructure | Construction Projects
Sempra Infrastructure | Construction Projects 1 Sempra Infrastructure’s energy business is playing a critical role in customers’ energy security needs by helping to provide the foundation needed for economic and societal growth Port Arthur LNG Phase 1 ECA LNG Phase 1 • Capacity: ~13 Mtpa • Capacity:
Slide 27: Sempra Infrastructure | Development Pipeline
Sempra Infrastructure | Development Pipeline 1 Active portfolio of organic growth opportunities in various stages of development Cimarrón Wind2 Port Arthur LNG Phase 2 Cameron LNG Train 4 Hackberry CS • Capacity: 300 MW • Capacity: ~6 – 13 Mtpa • Capacity: ~6 Mtpa • Capacity: ~2 – 3 Mtpa 3 • Status:
Slide 28: Sempra Infrastructure | Capital Deployment Opportunities
Sempra Infrastructure | Capital Deployment Opportunities 1 Conservative capital plan excludes all projects under $4.4B Capital Plan ($B)2 development that have not achieved positive FID 2 Projects nearing completion1 $1.4 $1.4 • ECA LNG Phase 1 – targeting summer 2025 COD $1.0 • GRO pipeline expansi
Slide 29: Financial Update
Financial Update Karen Sedgwick Executive Vice President and Chief Financial Officer, Sempra | 29
Slide 30: Q4 + FY-2023 and FY-2022 Financial Results
Q4 + FY-2023 and FY-2022 Financial Results Three months ended Years ended December 31, December 31, (Dollars and shares in millions, except EPS) 2023 2022 2023 2022 GAAP Earnings $ 737 $ 438 $ 3,030 $ 2,094 Impact associated with Aliso Canyon litigation and regulatory matters – – – 199 Equity losses
Slide 31: FY-2023 Adjusted Earnings Drivers
FY-2023 Adjusted Earnings Drivers $52M $2M ($85M) $2,915M ($69M) Equity earnings $15M $2,920M $51M $49M from higher Higher revenues, offset ($10M) Higher regulatory by higher interest investment and operating Higher NCI Higher taxes, Higher gains, offset by Higher net Higher electric interest + regu
Slide 32: 2024 – 2028 Capital Plan
2024 – 2028 Capital Plan 20% increase in prior year five-year capital plan with over 90% focused on regulated utilities1 2024 – 2028 Sempra California • Forward-looking rate cases underpinned by RAMP process • Cost of Capital Mechanism reduces interest rate exposure • Decoupled revenues • Wildfire f
Slide 33: 2024 – 2028 Financing Plan
2024 – 2028 Financing Plan Financial Plan1 Highlights 100% addressed • Financial plan anchored by strong, visible cash flows from by prior equity Equity $1.8B 2 Common operations offering + DRIP Dividends $9B • Regulated T+D utility capital plan driven by focus on safety, Net Debt reliability and cl
Slide 34: Significant Projected Rate Base Growth ($B)
Significant Projected Rate Base Growth ($B) $78 $73 $67 38 $61 37 $56 34 $50 32 30 27 40 36 29 33 23 26 2023A 2024 2025 2026 2027 2028 Sempra Texas Sempra California Projected capital investments in the modernization of our regulated T+D platforms should extend the overall scale of Sempra’s rate bas
Slide 35: 2-Year Guidance
2-Year Guidance 1 Adjusted Guidance Guidance 2023 2024 2025 (Dollars and shares in millions, except EPS amounts) Low – High Low – High Sempra California $1,747 $1,880 – $2,000 $1,980 – $2,100 Sempra Texas 738 790 – 850 870 – 940 Sempra Infrastructure 764 600 – 660 710 – 780 Parent (329) (375) – (345
Slide 36: Potential Investment Opportunities Not in Plan
1 Potential Investment Opportunities Not in Plan Distribution Distribution LNG ▪ Microgrid ▪ New residential ▪ Port Arthur LNG Phase 2 ▪ Business growth ▪ Cameron LNG Phase 2 ▪ Modernization ▪ EV fleet support ▪ Other LNG Transmission Transmission Low Carbon Solutions 2 ▪ Miguel-Sycamore Canyon Line
Slide 37: Key Investment Highlights
Key Investment Highlights Highlights 1• Top-tier T+D growth platforms in some of North America’s most attractive markets • Building modern energy networks that connect customers to safer, more reliable, and cleaner energy • $48B for 2024 – 2028 capital plan with expected 2 ~9% rate base CAGR1 • Cali
Slide 38: Appendix
Appendix Sempra @® SEMPRA | 38
Slide 39: Credit Ratings
1 Credit Ratings S&P Fitch Moody’s Issuer Rating BBB+ BBB+ Baa2 Outlook Stable Stable Stable Issuer Rating BBB+ BBB+ A3 SDGE Outlook Stable Stable Stable Issuer Rating A A A2 SoCalGas Outlook Negative Stable Stable Issuer Rating A BBB+ Baa1 Oncor Outlook Stable Stable Stable Issuer Rating BBB BBB+ B
Slide 40: Appendix: Sempra California
Appendix Sempra California | 40
Slide 41: Capital Plan and Rate Base Projections
1 Capital Plan and Rate Base Projections $24.1B Capital Plan ($B)2 Rate Base ($B) $38 $5.0 $5.0 $37 $4.8 $4.7 $4.6 $34 $32 10 $30 10 9 2.5 $27 9 2.5 2.7 2.4 2.4 8 6 8 6 6 6 5 5 4 5 4 3 3 3 2.3 2.5 2.3 2.3 17 17 2.2 14 16 12 13 2024 2025 2026 2027 2028 2023A 2024 2025 2026 2027 2028 SoCalGas SDGE Gas
Slide 42: General Rate Case
General Rate Case Sempra California SDGE SoCalGas 2024 Test Year Revenue Request $3.0B (18.7% increase vs 2023) $4.4B (25.3% increase vs 2023) Annual Attrition 2025 2026 2027 2025 2026 2027 Rates ($ / %) $346M / $332M / $303M / $292M / $261M / $381M / 11.5% 9.9% 8.2% 6.6% 5.5% 7.6% • GRC proposed de
Slide 43: Cost of Capital
Cost of Capital 1 2023 Cost of Capital 2024 Cost of Capital Phase 1 – CCM Trigger SDGE SoCalGas • October 2023 – CCM advice letters were filed Equity • 52.00% / 10.65% (CPUC) seeking 70bps higher ROE and higher cost of debt • 52.00% / 10.50% Layer / ROE • 10.60% (FERC)2 • December 2023 – Energy Divi
Slide 44: Wildfire Mitigation
Wildfire Mitigation 16 ~$6.0 100% RISK GLOBAL YEARS BILLION INFORMED LEADER Without a large utility- Invested in wildfire Risk models informing grid Scored as most mature wildfire caused wildfire mitigation since 2007 hardening investments mitigation program across 1 international utilities Mitigati
Slide 45: Decarbonization Strategy
1 Decarbonization Strategy CO2 Clean Renewable Distributed Infrastructure Transportation Natural Gas Energy + Storage Hydrogen CCUS Current/In Progress: Current/In Progress: Current/In Progress: Current/In Progress: Current/In Progress: Current/In Progress: • Supporting renewables • Implementing veh
Slide 46: Appendix: Sempra Texas
Appendix Sempra Texas @® SEMPRA | 46
Slide 47: Legislative Recap
Legislative Recap Positive legislative reforms should improve ability to reliably serve while reducing regulatory lag and supporting increased investment Bill Description SB 1015 Allows for second distribution tracker, including years when a rate case is filed, which is designed to improve (Distribu
Slide 48: Oncor Capital Plan Projections
Oncor Capital Plan Projections Sempra Texas $24.2B Capital Plan ($B)3 Oncor $5.3 $4.8 $4.9 $4.7 $4.5 Authorized ROE 9.70%1 1.8 1.5 1.5 1.5 1.6 Authorized Equity Layer 42.50% 3.2 3.0 3.1 3.1 2.6 1st DCRF expected filing Q1-20242 Regulatory 0.2 0.2 0.2 0.3 2nd DCRF expected filing Q3-20242 0.2 Timing
Slide 49: Appendix: Sempra Infrastructure
Appendix Sempra Infrastructure | 49
Slide 50: Sempra Infrastructure | Growth Pipeline
Sempra Infrastructure | Growth Pipeline 1 2 LNG Commentary Status Location Cameron LNG Phase 2 Train 1 – 3 Debottlenecking • Targeting online in stages prior to Cameron LNG Train 4 Development Hackberry, LA (~1 Mtpa) Train 4 (~6 Mtpa) • Progressing with Cameron LNG Members Development Hackberry, LA
Slide 51: Sempra Infrastructure | Growth Pipeline | Continued
Sempra Infrastructure | Growth Pipeline | Continued 1 2 Energy Networks Commentary Status Location CIP Expansion • Delivering gas to Cameron LNG Phase 2 Development Hackberry, LA Port Arthur Pipeline • To deliver gas to Port Arthur LNG Phase 2 Development Port Arthur, TX (Texas Connector) 2 Low-Carb
Slide 52: Appendix: Business Unit Earnings
Appendix Business Unit Earnings | 52
Slide 53: Sempra California
Sempra California Three months ended Years ended December 31, December 31, (Dollars in millions) 2023 2022 2023 2022 Sempra California GAAP Earnings $ 500 $ 494 $ 1,747 $ 1,514 Impact associated with Aliso Canyon litigation and regulatory matters – – – 199 Sempra California Adjusted Earnings1 $ 500
Slide 54: Sempra Texas
Sempra Texas Three months ended Years ended December 31, December 31, (Dollars in millions) 2023 2022 2023 2022 Sempra Texas Utilities GAAP Earnings $ 146 $ 132 $ 694 $ 736 Equity losses from write-off of rate base disallowances resulting from Public Utility Commission of Texas' final order in Oncor
Slide 55: Sempra Infrastructure
Sempra Infrastructure Three months ended Years ended December 31, December 31, (Dollars in millions) 2023 2022 2023 2022 Sempra Infrastructure GAAP Earnings $ 131 $ (82) $ 877 $ 310 Impact from foreign currency and inflation on monetary positions in Mexico 69 75 236 162 Net unrealized (gains) losses
Slide 56: Parent & Other
Parent & Other Three months ended Years ended December 31, December 31, (Dollars in millions) 2023 2022 2023 2022 Parent & Other GAAP Losses $ (40) $ (106) $ (288) $ (466) Impact from foreign currency and inflation on monetary positions in Mexico – – (1) 2 Deferred income tax expense associated with
Slide 57: Appendix: Non-GAAP Financial and Other Measures
Appendix Non-GAAP Financial and Other Measures | 57
Slide 58: 2023 and 2022 Adjusted Earnings and Adjusted EPS
2023 and 2022 Adjusted Earnings and Adjusted EPS Sempra Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2023 and 2022 as follows: Three months ended December 31, 2023: ▪ $(69) million impact from foreign currency an
Slide 59: 2023 and 2022 Adjusted Earnings and Adjusted EPS
2023 and 2022 Adjusted Earnings and Adjusted EPS Income tax Non- Income tax Non- Pretax expense controlling expense controlling amount (benefit)1 interests Earnings Pretax amount (benefit)1 interests Earnings (Dollars in millions, except EPS; shares in thousands) Three months ended December 31, 2023
Slide 60: 2023 and 2022 Adjusted Earnings (Losses) by Business Units
2023 and 2022 Adjusted Earnings (Losses) by Business Units Three months ended December 31, 2023 1 (Dollars in millions) Sempra Sempra Sempra California Texas Utilities Infrastructure Parent & Other Total Sempra GAAP Earnings (Losses) $ 500 $ 146 $ 131 $ (40) $ 737 Impact from foreign currency and in
Slide 61: 2023 and 2018 Adjusted Earnings and Adjusted EPS
2023 and 2018 Adjusted Earnings and Adjusted EPS Sempra Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2023 and 2018 as follows: Year ended December 31, 2023: ▪ $(44) million equity losses from investment in Oncor
Slide 62: 2023 and 2018 Adjusted Earnings and Adjusted EPS
2023 and 2018 Adjusted Earnings and Adjusted EPS Income tax Non- Income tax Non- Pretax expense controlling Pretax expense controlling amount (benefit)1 interests Earnings amount (benefit)1 interests Earnings (Dollars in millions, except EPS; shares in thousands) Year ended December 31, 2023 Year en
Slide 63: 2022 and 2021 Adjusted Earnings and Adjusted EPS
2022 and 2021 Adjusted Earnings and Adjusted EPS Sempra Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2022 and 2021 as follows: Year ended December 31, 2022: ▪ $(199) million impact associated with Aliso Canyon na
Slide 64: 2022 and 2021 Adjusted Earnings and Adjusted EPS
2022 and 2021 Adjusted Earnings and Adjusted EPS Income tax Income tax Non- (benefit) Non-controlling (benefit) controlling Pretax amount expense1 interests Earnings Pretax amount expense 1 interests Earnings (Dollars in millions, except EPS; shares in thousands) Year ended December 31, 2022 Year en
Slide 65: 2020 and 2019 Adjusted Earnings and Adjusted EPS
2020 and 2019 Adjusted Earnings and Adjusted EPS Sempra 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 year ended December 31, 2020: ▪ $(223) million impact associated with Aliso Ca
Slide 66: 2020 and 2019 Adjusted Earnings and Adjusted EPS
2020 and 2019 Adjusted Earnings and Adjusted EPS Income tax Income tax (benefit) Non-controlling expense Non-controlling Pretax amount expense1 interests Earnings Pretax amount (benefit)1 interests Earnings (Dollars in millions, except EPS; shares in thousands) Year ended December 31, 2020 Year ende
Slide 67: Sempra's 2024 - 2028 Capital Plan
Sempra’s 2024 - 2028 Capital Plan 1 Sempra Texas Sempra (Dollars in billions) Sempra California2 Utilities Infrastructure Total Sempra2 Projected capital expenditures and investments - GAAP $ 24.1 $ 3.4 $ 12.9 $ 40.4 Capital expenditures at unconsolidated entities 3 — 16.1 0.1 16.2 Capital expenditu
Slide 68: Appendix: Glossary
Appendix Glossary @® SEMPRA | 68
Slide 69: Defined Terms
Defined Terms ADIA Black Silverback ZC 2022 LP (assignee of Black River B 2017 Inc.), a wholly owned affiliate of Abu Dhabi Investment Authority ALJ administrative law judge ARCHES Alliance for Renewable Clean Hydrogen Energy Systems Bcf billion cubic feet Bcf/d billion cubic feet per day BEA U.S. B
Slide 70: Defined Terms Continued
Defined Terms Continued EPC engineering, procurement and construction EPS earnings per common share ERCOT Electric Reliability Council of Texas, Inc. ESJ Energía Sierra Juárez, S. de R.L. de C.V. ETR effective income tax rate EV electric vehicle FERC Federal Energy Regulatory Commission FID final in
Slide 71: Defined Terms Continued
Defined Terms Continued O&M operation and maintenance expense Oncor Oncor Electric Delivery Company LLC OSC Order to Show Cause PA LNG Port Arthur LNG PD proposed decision PKN ORLEN Polski Koncern Naftowy Orlen Spółka Akcyjna PPA power purchase agreement PSPS public safety power shutoff PUCT Public