Dba Sempra · NYSE:SRE
Dba Sempra — Q4 2021 Earnings Presentation
54 slides from Dba Sempra's earnings presentation, Feb 25, 2022
Slide 1: Fourth Quarter 2021 Earnings Results
Fourth Quarter 2021 Earnings Results February 25, 2022
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 • 2021 Accomplishments • Strategy Updates • Business Updates • Financial Updates • Summary 3
Slide 4: Executive Summary
EXECUTIVE SUMMARY Executing across our three growth platforms in highly attractive markets in North America Announcing record 5-year capital plan, increasing from $32B to $36B1 Reporting FY-2021 adjusted EPS of $8.43 compared to FY-2020 adjusted EPS of $8.002 Raising the annualized dividend for the
Slide 5: 2021 Accomplishments
2021 ACCOMPLISHMENTS STRATEGIC OPERATIONAL FINANCIAL ✓ Combined LNG + IEnova ✓ Invested $7.1B of capital3 ✓ Executed on 2021 to create a more simplified adjusted EPS guidance and scalable infrastructure ✓ Oncor raised its 5-year range6 platform capital plan to $15.0B4 ▪ Raised guidance ✓ Sold 20% NC
Slide 6: Highly Attractive Markets
HIGHLY ATTRACTIVE MARKETS Strategically positioned in contiguous, highly attractive markets in North America that will help play a critical role in the energy transition 6
Slide 7: Growth Platforms
GROWTH PLATFORMS SEMPRA SEMPRA SEMPRA SEMPRA 1 1 1 CALIFORNIA TEXAS INFRASTRUCTURE CONSOLIDATED • 145,000 mi T+D lines • 140,000 mi T+D lines • 5,000 mi T+D lines • Decoupled from • Pure-play T+D • Recurring cash flows 290,000 mi PLATFORM electricity + gas sales infrastructure from long-term T+D lin
Slide 8: Pathways to Net-Zero
PATHWAYS TO NET-ZERO Helping lead the decarbonization of California’s energy system 1 • SoCalGas achieved over 4% RNG deliveries, on track for 20% goal by 2030 • SDG&E received CPUC approval for three new energy storage facilities totaling 161 MW • SDG&E issued $750M green bonds • SoCalGas broke gro
Slide 9: Business Updates
BUSINESS UPDATES • SDG&E received national award for best electric reliability in U.S. and for the 16th consecutive year was named #1 for reliability in west region • CPUC decision on SDG&E’s off-cycle Cost of Capital application for 2022 is pending; SDG&E and SoCalGas will file their 2023 Cost of C
Slide 10: Sempra Infrastructure | ADIA Transaction
SEMPRA INFRASTRUCTURE | ADIA ADIA TRANSACTION1 VALUATION2 $1.785B | 10% $17.85B | $26.5B Equity Enterprise Cash Equity Value Value Proceeds Interest STRATEGIC RATIONALE Accessing attractive + stable funding to support future growth ✓ Highlight $1B greater equity value of infrastructure platform ✓ Ro
Slide 11: Q4 + FY-2021 Financial Results
Q4 + FY-2021 FINANCIAL RESULTS 1. Q4-2020 and FY-2020 Adjusted Earnings and Adjusted EPS have been updated to exclude this item to conform to current year presentation. 2. Costs associated with early redemptions of debt include ($92M) at Parent and ($30M) at Sempra Infrastructure. 3. See Appendix fo
Slide 12: FY-2021 Adjusted Earnings Drivers
FY-2021 ADJUSTED EARNINGS DRIVERS $37M $11M $2,637M $44M $52M $139M $2,342M ($78M) $216M ($126M) 1 1 FY-2020 Sale of Sempra CA Cameron Lower CPUC 2020 SDG&E Higher Other FY-2021 South Regulatory LNG + Parent Base Energy TX Utilities 1 1 America Decision Asset | Supply Losses Operating Efficiency Ear
Slide 13: 5-Year Capital Plan $36B
5-YEAR CAPITAL PLAN 2022 – 2026 SEMPRA CALIFORNIA • Focused on safety, reliability + cleaner fuels • SDG&E | WMP, energy storage + $12.1B2 EV infrastructure Sempra • SoCalGas | Pipeline safety + reliability Texas + technology $21.2B Sempra $36B 1 SEMPRA TEXAS California • Continued expected growth i
Slide 14: U.S. Utility Rate Base Growth
1 U.S. UTILITY RATE BASE GROWTH $62B $41B $14B 2017 2021 2026 Sempra California Sempra Texas 10.1% Authorized Blended ROE2 49% Authorized Blended Equity Layer2 We have continued to increase the scale of our U.S. utility platforms at a tremendous rate of growth with 2026 projected rate base of $62B 1
Slide 15: Efficient Financing
EFFICIENT FINANCING FINANCIAL PLAN HIGHLIGHTS • Financial plan anchored by strong, visible cash 2022 – 2026 flows from operations 1 ADIA $2B Capital Returned to • Robust utility capital plan supported by cash Owners $11B generated from Sempra Infrastructure Operating Cash Flow ▪ $5B of proceeds from
Slide 16: Long-Term EPS Growth | Guidance
LONG-TERM EPS GROWTH | GUIDANCE GUIDANCE • 9% rate base growth at Sempra California2 • 8% rate base growth at Sempra Texas2 $8.60 • Only includes projects under to Projecting construction at Sempra Infrastructure $8.10 $9.20 EPS CAGR of to 6% – 8%1 UPSIDES $8.70 • Sempra California | Incremental pro
Slide 17: Strong Financial Execution
STRONG FINANCIAL EXECUTION $8.43 $8.00 $6.99 Sempra has consistently met or exceeded adjusted EPS guidance range $5.66 each of the past five $5.51 years1 2017 2018 2019 2020 2021 1 Original EPS Guidance Range Final EPS Guidance Range Adjusted EPS 1. See Appendix for information regarding Adjusted EP
Slide 18: Value Proposition
VALUE PROPOSITION HIGHLIGHTS • Top-tier T+D utility platforms in 1 attractive markets • Serving one of the largest utility consumer bases in the U.S. with nearly 40M consumers1 • Robust capital investments + rate • Announcing record 2022 – 2026 capital 2 base growth plan of $36B2 • Forecasting 8.5%
Slide 19: Summary
SUMMARY Executing across our three growth platforms in highly attractive markets in North America Announcing record 5-year capital plan, increasing from $32B to $36B1 Reporting FY-2021 adjusted EPS of $8.43 compared to FY-2020 adjusted EPS of $8.002 Raising the annualized dividend for the 12th conse
Slide 20: Appendix I
APPENDIX | (®) SEMPRA
Slide 21: Strong Leadership in ESG
STRONG LEADERSHIP IN ESG E S G Environmental Social Governance • We aim to have net-zero emissions • Disclosed company’s Equal • 58% of Sempra’s Board are by 2050 and introduced action plan Employment Opportunity 1 women and/or people of color framework (3Ds)1,2 (EEO-1) data for first time • Roughly
Slide 22: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Focus on safety, reliability + 85% of 5-year capital plan focused on safety + 1 other ESG priorities reliability 8.5% 2021–2026 projected utility rate base CAGR1 2 Invest in organic utility growth 94% of 5-year capital plan focused on utilities Continue strengthening th
Slide 23: 2-Year Earnings Projections
2-YEAR EARNINGS PROJECTIONS 1. See Appendix for a reconciliation of non-GAAP financial measures. 2021 GAAP Earnings (Losses) for SoCalGas, Sempra Infrastructure, Parent & Other, and Sempra Consolidated are ($427M), $682M, ($436M), and $1,254M, respectively. 2. 2021 reflects the impact from the sale
Slide 24: Projected Rate Base Growth
PROJECTED RATE BASE GROWTH Utilities Rate Base ($B) $61.8 $57.8 $54.1 $50.4 $46.1 $27.8 $41.1 $24.4 $26.2 70% $22.6 Avg. Projected $20.9 Electric $19.2 Rate Base $9.0 $8.6 $8.1 $7.6 $6.7 $6.0 $5.7 $5.9 $5.6 $5.5 $4.0 $5.1 $3.3 $4.8 $2.6 $3.0 $2.3 $1.8 $13.0 $14.0 $15.0 $11.1 $12.1 $9.4 2021A 2022E 2
Slide 25: Utility Customer Bills
UTILITY CUSTOMER BILLS 1 U.S. Average U.S. Average Texas Average 2 3 4 Electric Bill Natural Gas Bill Wires Charges 75th 75th 75th Percentile Percentile Percentile 50th 50th 50th Percentile Percentile Percentile SDG&E 25th 25th 25th Percentile Percentile Percentile SoCalGas + SDG&E Oncor Peer Range
Slide 26: Appendix II: Growth Platforms
APPENDIX II Growth Platforms 26
Slide 27: Sempra California
SEMPRA CALIFORNIA HIGHLIGHTS 1 • 26M consumers served 1 • 145,000 mi T+D lines 2 • 73,000 ZEVs in SDG&E’s service territory • 12 hydrogen R+D and demonstration projects • Well-positioned in California, which is 3 ▪ #1 economy in the U.S. (GDP) 4 ▪ #1 manufacturing state 5 ▪ #2 in solar and wind gene
Slide 28: Sempra California 2022-2026 Capital Plan
SEMPRA CALIFORNIA 2022 – 2026 Capital Plan 2022 – 2026 Capital Plan $21.2B TOTAL FERC ELECTRIC • Further modernizing electric $2.0B transmission lines + substation SDG&E infrastructure $2.0B $3.3B SoCalGas FERC • Fire hardening to support public Electric Other safety TOTAL CPUC ELECTRIC $3.9B $6.4B
Slide 29: Sempra California | Key Metrics
SEMPRA CALIFORNIA | KEY METRICS SDG&E 2021 Achieved Return on Common Equity 10.30% Authorized Capital Structure CPUC Capital Ratio1 CPUC1 FERC2 Common Equity 52.00% 10.20% 10.60%3 Preferred Equity 2.75% 6.22% 0.00% Long-Term Debt 45.25% 4.59% 4.28%4 Period Test Year Filing Date CPUC General Rate Cas
Slide 30: Sempra Texas
SEMPRA TEXAS HIGHLIGHTS 1 • 13M consumers served 1 • 140,000 mi T+D lines 1 • 1,170 substations • Well-positioned in Texas, which is 2 ▪ #1 in electricity sales 3 ▪ #1 in solar + wind generation 4 ▪ #1 largest petroleum basin 5 ▪ #2 economy in the U.S. (GDP) 6 ▪ #2 manufacturing state Oncor’s missio
Slide 31: Sempra Texas Oncor Capital Plan
SEMPRA TEXAS Oncor 2022 – 2026 Capital Plan1 Potential Incremental Investment $15.0B TRANSMISSION EXPANSION $0.9B • Greenfield + Brownfield projects Technology $500M supporting growth primarily in Dallas, to Fort Worth, and West Texas • Potential generation interconnection $750M growth $2.4B Distrib
Slide 32: Sempra Texas | Key Metrics
SEMPRA TEXAS | KEY METRICS ONCOR Authorized Return on Common Equity 9.80% 1 2021 Achieved Return on Ending Equity 9.40% Authorized Capital Structure Capital Ratio Common Equity 42.50% Long-Term Debt 57.50% Test Year Filing Date PUCT Base Rate Case 2021 By June 1, 2022 Currently the lowest monthly re
Slide 33: Sempra Infrastructure
SEMPRA INFRASTRUCTURE Sempra Infrastructure develops, builds, operates, and invests in energy infrastructure to help enable the global energy transition HIGHLIGHTS • Infrastructure platform includes ▪ LNG + Net-Zero Solutions ▪ Energy Networks ▪ Clean Power • Long-term contracted assets with robust
Slide 34: Sempra Infrastructure Capital Plan
SEMPRA INFRASTRUCTURE Examples of Potential 2022 – 2026 Capital Plan 1 Incremental Investment $2.3B LNG + NET-ZERO SOLUTIONS • Cameron LNG Phase 2 $2.2B • Vista Pacifico LNG to • CCUS, hydrogen, and LNG $6.0B $0.7B project development Energy opportunities Networks $1.5B LNG + ENERGY NETWORKS Net-Zer
Slide 35: Glossary
GLOSSARY DEFINED TERMS ADIA Black Silverback ZC 2022 LP (assignee of Black River B 2017 Inc.), a wholly owned affiliate of Abu Dhabi Investment Authority AI artificial intelligence BEA Bureau of Economic Analysis CAGR compound annual growth rate CCUS carbon capture utilization + sequestration CMVI c
Slide 36: Glossary Continued
GLOSSARY CONTINUED DEFINED TERMS IEA International Energy Agency IOU investor-owned utility KKR KKR Pinnacle Investor L.P. (as successor-in-interest to KKR Pinnacle Aggregator L.P.), an affiliate of Kohlberg Kravis Roberts & Co. L.P. LTI lost-time injury MMBtu million British thermal unit MOU Memora
Slide 37: Appendix III: Business Unit Earnings
APPENDIX III Business Unit Earnings 37
Slide 38: California | SDG&E
CALIFORNIA | SDG&E Three months ended Years ended December 31, December 31, (Dollars in millions) 2021 2020 2021 2020 (Unaudited) SDG&E GAAP Earnings $ 216 $ 191 $ 819 $ 824 Q4-2021 earnings are higher than Q4-2020 earnings primarily due to: • $17M higher CPUC base operating margin, net of operating
Slide 39: California | SoCalGas
CALIFORNIA | SOCALGAS Three months ended Years ended December 31, December 31, (Dollars in millions) 2021 2020 2021 2020 (Unaudited) SoCalGas GAAP Earnings (Losses) $ 198 $ 79 $ (427) $ 504 Impacts Associated with Aliso Canyon Litigation and Regulatory Matters 16 139 1,148 233 SoCalGas Adjusted Earn
Slide 40: Texas | Sempra Texas Utilities
TEXAS | SEMPRA TEXAS UTILITIES Three months ended Years ended December 31, December 31, (Dollars in millions) 2021 2020 2021 2020 (Unaudited) Sempra Texas Utilities GAAP Earnings $ 137 $ 121 $ 616 $ 579 Q4-2021 earnings are higher than Q4-2020 earnings primarily due to: • Increased revenues from rat
Slide 41: Sempra Infrastructure
SEMPRA INFRASTRUCTURE Three months ended Years ended December 31, December 31, (Dollars in millions) 2021 2020 2021 2020 (Unaudited) Sempra Infrastructure GAAP Earnings $ 263 $ 71 $ 682 $ 580 Impact from Foreign Currency and Inflation and Associated Undesignated Derivatives 1 3 112 43 13 Net Unreali
Slide 42: Parent & Other
PARENT & OTHER Q4-2021 adjusted losses are lower than Q4-2020 losses primarily due to: • $36M lower preferred dividends due to the mandatory conversion of all series A and B preferred stock in January 2021 and July 2021, respectively and • $26M gain on the sale of PXiSE in December 2021, partially o
Slide 43: Appendix IV: Non-GAAP Financial Measures + Other Reconciliations
APPENDIX IV Non-GAAP Financial Measures + Other Reconciliations 43
Slide 44: Adjusted Earnings and Adjusted EPS (Unaudited)
ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) Sempra Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests (NCI)) in 2021 and 2020 as follows: In the three months ended December 31, 2021: • $(16)M from impacts associated wit
Slide 45: Adjusted Earnings and Adjusted EPS (Unaudited)
ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) (Dollars in millions, except per share amounts; shares in thousands) Pretax amount Income tax (benefit) expense 1 Non- controlling interests Three months ended December 31, 2021 Earnings Pretax amount Income tax (benefit) expense 1 Non- controlling inte
Slide 46: 2017, 2018 and 2019 Adjusted Earnings and Adjusted EPS
2017, 2018 AND 2019 ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) Sempra Adjusted Earnings and Adjusted EPS exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2019, 2018 and 2017 as follows: In the year ended December 31, 2019: • $(39)M impact from for
Slide 47: 2021 and 2017 Adjusted Earnings and Adjusted EPS
2021 AND 2017 ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) Income Income tax Non- tax Non- Pretax (benefit) controlling Pretax expense controlling amount expense1 interests Earnings amount (benefit)1 interests Earnings (Dollars in millions, except per share amounts; shares in thousands) Year ended
Slide 48: 2018 and 2019 Adjusted Earnings and Adjusted EPS
2018 AND 2019 ADJUSTED EARNINGS AND ADJUSTED EPS (UNAUDITED) 1. Except for adjustments that are solely income tax and tax related to outside basis differences, income taxes on pretax amounts were primarily calculated based on applicable statutory tax rates. 2. Amounts have been updated to reflect th
Slide 49: Adjusted Earnings (Losses) by Business Units
ADJUSTED EARNINGS (LOSSES) BY BUSINESS UNITS (UNAUDITED) 1 49
Slide 50: 2021 Adjusted EPS Guidance Range
2021 ADJUSTED EPS GUIDANCE RANGE (UNAUDITED) Sempra 2021 Adjusted EPS Guidance Range of $7.75 to $8.35 excludes items (after the effects of income taxes and, if applicable, NCI) as follows: • $(1,148)M from impacts associated with Aliso Canyon natural gas storage facility litigation at SoCalGas • $(
Slide 51: 2021 Capital Deployed (Unaudited)
2021 CAPITAL DEPLOYED (UNAUDITED) 51
Slide 52: Funds from Operations (FFO) to Debt Ratio
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 53: Sempra Infrastructure Adjusted EBITDA (Unaudited)
SEMPRA INFRASTRUCTURE ADJUSTED EBITDA (UNAUDITED) EBITDA is defined as Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) and is a non-GAAP financial measure. Adjusted EBITDA is EBITDA net of noncontrolling interests and excludes Sempra’s proportionate ownership share in interest
Slide 54: Oncor 2021 Achieved Return on Equity (Unaudited)
ONCOR 2021 ACHIEVED RETURN ON EQUITY (UNAUDITED) 54