Sempra Energy Reports Higher First-Quarter 2014 Earnings

- Company Reaffirms 2014 Earnings-per-Share Guidance of $4.25 to $4.55

- Cameron LNG Export Project Completes Federal Environmental Review

May 02, 2014, 09:00 ET from Sempra Energy

SAN DIEGO, May 2, 2014 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported first-quarter 2014 earnings of $247 million, or $0.99 per diluted share, compared with first-quarter 2013 earnings of $178 million, or $0.72 per diluted share.

Excluding a $9 million after-tax charge related to the closure of the San Onofre Nuclear Generating Station (SONGS), Sempra Energy's adjusted earnings were $256 million, or $1.03 per diluted share, in the first quarter 2014. 

"We are seeing year-over-year earnings growth consistent with our expectations," said Debra L. Reed, chairman and CEO of Sempra Energy.  "We are on track to meet our 2014 earnings guidance.  Our Cameron LNG liquefaction-export project continues to make strong progress toward the start of construction later this year and we have several large projects in Mexico and Peru coming online in the second half of 2014." 

Earlier this week, Cameron LNG received notice that it had completed the environmental review process with the Federal Energy Regulatory Commission.  Also, in March, Cameron LNG awarded a construction contract to a joint venture between CB&I and Chiyoda International Corp.  Construction on the project is expected to begin later this year, with commercial operations slated to start in 2018.

CALIFORNIA UTILITIES

Southern California Gas Co.

Earnings for Southern California Gas Co. (SoCalGas) increased to $78 million in the first quarter 2014 from $46 million in last year's first quarter, due primarily to higher California Public Utilities Commission (CPUC) base operating margin. 

The CPUC General Rate Case decision was delayed until the second quarter last year, so neither SoCalGas nor San Diego Gas & Electric (SDG&E) recorded revenue from that decision in the first quarter 2013.

San Diego Gas & Electric

First-quarter earnings for SDG&E were $99 million in 2014, compared with $91 million in 2013, due to improved CPUC base operating margin and the delay in the General Rate Case decision, offset by the $9 million SONGS charge.

On March 27, SDG&E and Southern California Edison announced that they reached a settlement agreement with key parties on the closure of SONGS.  If approved by the CPUC, the agreement resolves all outstanding cost issues related to the plant closure and allows for recovery of replacement power costs, operating and maintenance expenses, and the companies' non-steam generator replacement investment.

SEMPRA INTERNATIONAL

Sempra South American Utilities

Sempra South American Utilities had earnings of $35 million in the first quarter 2014, compared with $37 million in the first quarter 2013.       

Sempra Mexico

Sempra Mexico's earnings increased to $42 million in the first quarter 2014 from $31 million in last year's first quarter, due primarily to regulatory earnings for pipeline projects under construction and lower income-tax expense. 

On April 21, Sempra Energy's Mexican subsidiary IEnova announced that it has finalized an agreement to sell InterGen 50 percent of the 155-megawatt Energía Sierra Juarez wind-generation project.  The project, which has a 20-year power-purchase agreement with SDG&E, is expected to begin commercial operations in 2015.

SEMPRA U.S. GAS & POWER

Sempra Renewables

Sempra Renewables had first-quarter 2014 earnings of $28 million, compared with $4 million in the first quarter 2013, due primarily to the sale of a 50-percent equity interest in the Copper Mountain Solar 3 project.

Sempra Natural Gas

Earnings for Sempra Natural Gas were $9 million in the first quarter 2014, compared with $53 million in the first quarter 2013.  In last year's first quarter, Sempra Natural Gas recorded a $44 million gain related to the sale of half of the Mesquite Power natural gas-fired power plant. 

NON-GAAP FINANCIAL MEASURES

Adjusted first-quarter 2014 earnings and earnings per share are non-GAAP financial measures.  Additional information regarding these non-GAAP financial measures is in the appendix on Table A of the first-quarter financial tables.

INTERNET BROADCAST

Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with senior management of the company.  Access is available by logging onto the website at www.sempra.com.  For those unable to log onto the live webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (888) 203-1112 and entering passcode 2722529.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2013 revenues of more than $10.5 billion.  The Sempra Energy companies' 17,000 employees serve more than 31 million consumers worldwide.

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements can be identified by words like "believes," "expects," "anticipates," "plans," "estimates,"  "projects," "forecasts," "contemplates," "intends," "depends," "should," "could," "would," "will," "may," "potential," "target," "pursue," "goals," "outlook," "maintain" or similar expressions, or discussions of guidance, strategies, plans, goals, opportunities, projections, initiatives, objectives or intentions.  Forward-looking statements are not guarantees of performance.  They involve risks, uncertainties and assumptions.  Future results may differ materially from those expressed in the forward-looking statements.  Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions and the timing of actions, including issuances of permits to construct and licenses for operation, by the California Public Utilities Commission, California State Legislature, U.S. Department of Energy, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, Atomic Safety and Licensing Board, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries in which we operate; capital markets conditions, including the availability of credit and the liquidity of our investments; the timing and success of business development efforts and construction, maintenance and capital projects, including risks in obtaining permits, licenses, certificates and other authorizations on a timely basis and risks in obtaining adequate and competitive financing for such projects; inflation, interest and exchange rates; the impact of benchmark interest rates, generally Moody's A-rated utility bond yields, on our California utilities' cost of capital; energy markets, including the timing and extent of changes and volatility in commodity prices; the availability of electric power, natural gas and liquefied natural gas, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures and the decommissioning of San Onofre Nuclear Generating Station (SONGS); weather conditions, natural disasters, catastrophic accidents, and conservation efforts; risks inherent with nuclear power facilities and radioactive materials storage, including the catastrophic release of such materials, the disallowance of the recovery of the investment in, or operating costs of, the nuclear facility due to an extended outage and facility closure, and increased regulatory oversight; risks that partners or counterparties will be unable or unwilling to fulfill their contractual commitments; risks posed by decisions and actions of third parties who control the operations of investments in which we do not have a controlling interest; wars, terrorist attacks that threaten system operations and critical infrastructure, and cybersecurity threats to the energy grid and the confidentiality of proprietary information and the personal information of customers;  business, regulatory, environmental and legal decisions and requirements; expropriation of assets by foreign governments and title and other property disputes; the impact on reliability of San Diego Gas & Electric Company's electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources; the impact on competitive customer rates of the growth in distributed and local power generation and the corresponding decrease in demand for power delivered through San Diego Gas & Electric Company's electric transmission and distribution system; the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company.  These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the Securities and Exchange Commission. These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on the company's website at www.sempra.com.

Investors should not rely unduly on any forward-looking statement. These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.

Sempra International, LLC, and Sempra U.S. Gas & Power, LLC, are not the same companies as the California utilities, San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra International, LLC, and Sempra U.S. Gas & Power, LLC, are not regulated by the California Public Utilities Commission. Sempra International's underlying entities include Sempra Mexico and Sempra South American Utilities. Sempra U.S. Gas & Power's underlying entities include Sempra Renewables and Sempra Natural Gas.

 

SEMPRA ENERGY

Table A

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended March 31,

(Dollars in millions, except per share amounts)

2014

2013

REVENUES

Utilities

$  2,485

$  2,334

Energy-related businesses

310

316

    Total revenues

2,795

2,650

EXPENSES AND OTHER INCOME

Utilities:

    Cost of natural gas

(620)

(556)

    Cost of electric fuel and purchased power

(510)

(447)

Energy-related businesses:

    Cost of natural gas, electric fuel and purchased power

(138)

(111)

    Other cost of sales

(38)

(48)

Operation and maintenance

(676)

(724)

Depreciation and amortization

(286)

(295)

Franchise fees and other taxes

(105)

(106)

Gain on sale of equity interest and assets

27

74

Adjustment to loss from plant closure

13

-

Equity earnings, before income tax

17

10

Other income, net

40

37

Interest income

4

6

Interest expense

(136)

(138)

Income before income taxes and equity earnings of certain unconsolidated subsidiaries

387

352

Income tax expense

(127)

(178)

Equity earnings, net of income tax

6

4

Net income

266

178

(Earnings) losses attributable to noncontrolling interests

(19)

2

Preferred dividends of subsidiaries

-

(2)

Earnings

$     247

$     178

Basic earnings per common share

$    1.01

$    0.73

Weighted-average number of shares outstanding, basic (thousands)

245,277

243,294

Diluted earnings per common share

$    0.99

$    0.72

Weighted-average number of shares outstanding, diluted (thousands)

249,669

247,534

Dividends declared per share of common stock

$    0.66

$    0.63

 

 

SEMPRA ENERGY

Table A (Continued)

Sempra Energy Consolidated

RECONCILIATION OF SEMPRA ENERGY GAAP EARNINGS TO SEMPRA ENERGY ADJUSTED EARNINGS

EXCLUDING 2014 ADJUSTMENT TO LOSS FROM 2013 PLANT CLOSURE (Unaudited)

In the first quarter of 2014, Sempra Energy Adjusted Earnings and Adjusted Diluted Earnings Per Common Share exclude a $9 million charge ($0.04 per diluted share) to adjust the loss from plant closure (in addition to the amount recorded in the second quarter of 2013) associated with the investment in the San Onofre Nuclear Generating Station (SONGS) based upon a proposed settlement agreement filed with the California Public Utilities Commission (CPUC) in April 2014. These are non-GAAP financial measures (GAAP represents accounting principles generally accepted in the United States of America). Because of the significance and nature of the excluded charge, management believes that these non-GAAP financial measures provide a more meaningful comparison of the performance of Sempra Energy's business operations from 2014 to 2013 and to future periods, and also as a base for projection of future compounded annual growth rate. Non-GAAP financial measures are supplementary information that should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. The table below reconciles for historical periods these non-GAAP financial measures to Sempra Energy Earnings and Diluted Earnings Per Common Share, which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.

Three months ended March 31,

(Dollars in millions, except per share amounts)

2014

2013

Sempra Energy GAAP Earnings

$      247

$      178

Add: 2014 adjustment to loss from 2013 plant closure

9

-

Sempra Energy Adjusted Earnings

$      256

$      178

Diluted earnings per common share:

Sempra Energy GAAP Earnings

$     0.99

$     0.72

Sempra Energy Adjusted Earnings

$     1.03

$     0.72

Weighted-average number of shares outstanding, diluted (thousands)

249,669

247,534

San Diego Gas & Electric Company (SDG&E) 

RECONCILIATION OF SDG&E GAAP EARNINGS TO ADJUSTED EARNINGS 

EXCLUDING 2014 ADJUSTMENT TO LOSS FROM 2013 PLANT CLOSURE (Unaudited)

SDG&E Adjusted Earnings excluding a $9 million charge in the first quarter of 2014 to adjust the loss from plant closure (in addition to the amount recorded in the second quarter of 2013) associated with SDG&E's investment in SONGS based upon a proposed settlement agreement filed with the CPUC in April 2014 is a non-GAAP financial measure. Because of the significance and nature of this item, management believes that this non-GAAP financial measure provides a more meaningful comparison of the performance of SDG&E's business operations from 2014 to 2013 and to future periods. Non-GAAP financial measures are supplementary information that should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. The table below reconciles for historical periods this non-GAAP financial measure to SDG&E Earnings, which we consider to be the most directly comparable financial measure calculated in accordance with GAAP.

Three months ended March 31,

(Dollars in millions)

2014

2013

SDG&E GAAP Earnings

$        99

$        91

Add: 2014 adjustment to loss from 2013 plant closure

9

-

SDG&E Adjusted Earnings

$      108

$        91

 

 

SEMPRA ENERGY

Table B

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31,

December 31,

(Dollars in millions)

2014

2013(1)

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$       844

$           904

Restricted cash

26

24

Accounts receivable, net

1,405

1,522

Due from unconsolidated affiliates

2

4

Income taxes receivable

88

85

Deferred income taxes

375

301

Inventories

197

287

Regulatory balancing accounts – undercollected

665

556

Other regulatory assets 

35

38

Fixed-price contracts and other derivatives

114

106

Asset held for sale, power plant

293

-

Other

180

170

Total current assets

4,224

3,997

Investments and other assets:

Restricted cash

27

25

Due from unconsolidated affiliate

31

14

Regulatory assets arising from pension and other postretirement 

    benefit obligations

454

435

Other regulatory assets

2,039

2,113

Nuclear decommissioning trusts

1,055

1,034

Investments

1,634

1,575

Goodwill 

999

1,024

Other intangible assets

423

426

Sundry

1,146

1,141

Total investments and other assets

7,808

7,787

Property, plant and equipment, net

25,452

25,460

Total assets

$   37,484

$       37,244

Liabilities and Equity

Current liabilities:

Short-term debt

$    1,084

$           545

Accounts payable

1,200

1,215

Dividends and interest payable

322

271

Accrued compensation and benefits

260

376

Regulatory balancing accounts – overcollected

88

91

Current portion of long-term debt

97

1,147

Fixed-price contracts and other derivatives

54

55

Customer deposits

155

154

Other

615

515

Total current liabilities

3,875

4,369

Long-term debt

11,700

11,253

Deferred credits and other liabilities:

Customer advances for construction

158

155

Pension and other postretirement benefit obligations, net of plan assets

679

667

Deferred income taxes

2,958

2,804

Deferred investment tax credits

41

42

Regulatory liabilities arising from removal obligations

2,624

2,623

Asset retirement obligations

2,127

2,084

Fixed-price contracts and other derivatives

238

228

Deferred credits and other 

1,195

1,169

Total deferred credits and other liabilities

10,020

9,772

Equity:

Total Sempra Energy shareholders' equity

11,040

11,008

Preferred stock of subsidiary

20

20

Other noncontrolling interests

829

822

Total equity

11,889

11,850

Total liabilities and equity

$   37,484

$       37,244

(1)

Derived from audited financial statements.

 

 

SEMPRA ENERGY

Table C

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

Three months ended March 31,

(Dollars in millions)

2014

2013

(unaudited)

Cash Flows from Operating Activities

Net income

$

266

$

178

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

286

295

Deferred income taxes and investment tax credits

95

252

Gain on sale of equity interest and assets

(27)

(74)

Adjustment to loss from plant closure

(13)

      ―

Equity earnings

(23)

(14)

Fixed-price contracts and other derivatives

(3)

17

Other

(24)

6

Net change in other working capital components

234

149

Changes in other assets

94

17

Changes in other liabilities

19

9

Net cash provided by operating activities

904

835

Cash Flows from Investing Activities

Expenditures for property, plant and equipment

(801)

(531)

Expenditures for investments

(12)

(5)

Proceeds from sale of equity interest and assets, net of cash sold

66

371

Distributions from investments

3

15

Purchases of nuclear decommissioning and other trust assets

(198)

(136)

Proceeds from sales by nuclear decommissioning and other trusts

195

134

Decrease in restricted cash

23

52

Increase in restricted cash

(27)

(60)

Advances to unconsolidated affiliates

(17)

      ―

Other

(2)

(2)

Net cash used in investing activities

(770)

(162)

Cash Flows from Financing Activities

Common dividends paid

(154)

(145)

Preferred dividends paid by subsidiaries

       ―

(2)

Issuances of common stock

11

15

Repurchases of common stock

(37)

(45)

Issuances of debt (maturities greater than 90 days)

1,188

608

Payments on debt (maturities greater than 90 days)

(1,138)

(645)

Proceeds from sale of noncontrolling interests, net of $25 in offering costs

       ―

574

Decrease in short-term debt, net

(69)

(43)

Other 

6

3

Net cash (used in) provided by financing activities

(193)

320

Effect of exchange rate changes on cash and cash equivalents

(1)

3

(Decrease) increase in cash and cash equivalents

(60)

996

Cash and cash equivalents, January 1

904

475

Cash and cash equivalents, March 31

$

844

$

1,471

 

 

SEMPRA ENERGY

Table D

SEGMENT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS 

Three months ended March 31,

(Dollars in millions)

2014

2013

    (unaudited)

Earnings (Losses) 

California Utilities:

San Diego Gas & Electric

$  99

$  91

Southern California Gas

78

46

Sempra International:

Sempra South American Utilities

35

37

Sempra Mexico

42

31

Sempra U.S. Gas & Power:

Sempra Renewables

28

4

Sempra Natural Gas

9

53

Parent and other

(44)

(84)

Earnings

$247

$178

Three months ended March 31,

(Dollars in millions)

2014

2013

    (unaudited)

Capital Expenditures and Investments

California Utilities:

San Diego Gas & Electric

$294

$237

Southern California Gas

260

179

Sempra International:

Sempra South American Utilities

32

22

Sempra Mexico

75

61

Sempra U.S. Gas & Power:

Sempra Renewables

111

11

Sempra Natural Gas

40

26

Parent and other

1

-

Consolidated Capital Expenditures and Investments

$813

$536

 

 

SEMPRA ENERGY

Table E

OTHER OPERATING STATISTICS (Unaudited)

Three months ended March 31,

UTILITIES

2014

2013

California Utilities - SDG&E and SoCalGas

Gas Sales (bcf)(1)

112

140

Transportation (bcf)(1)

162

168

Total Deliveries (bcf)(1)

274

308

Total Gas Customers (Thousands)

6,714

6,685

Electric Sales (Millions of kWhs)(1)

3,897

4,024

Direct Access (Millions of kWhs)

888

835

Total Deliveries (Millions of kWhs)(1)

4,785

4,859

Total Electric Customers (Thousands)

1,410

1,403

Other Utilities

Natural Gas Sales (bcf)

Mexico

6

6

Mobile Gas(2)

11

11

Willmut Gas

1

1

Natural Gas Customers (Thousands) 

Mexico

101

94

Mobile Gas

88

89

Willmut Gas

20

20

Electric Sales (Millions of kWhs)

Peru

1,851

1,746

Chile

788

761

Electric Customers (Thousands)

Peru

1,005

968

Chile

644

628

ENERGY-RELATED BUSINESSES

Sempra International

Power Sold (Millions of kWhs)

Sempra Mexico

1,102

1,099

Sempra U.S. Gas & Power

Power Sold (Millions of kWhs)

Sempra Renewables(3)

638

698

Sempra Natural Gas(4)

1,252

1,132

(1)

Includes intercompany sales.

(2)

Includes transportation.

(3)

Includes 50% of total power sold related to wind projects in which Sempra Energy has a 50% ownership. These subsidiaries are not consolidated within Sempra Energy and the related investments are accounted for under the equity method.

(4)

Sempra Natural Gas sold one 625-megawatt (MW) block of its 1,250-MW Mesquite Power natural gas-fired power plant in February 2013.

 

 

         SEMPRA ENERGY

           Table F (Unaudited)

Statement of Operations Data by Segment

Three Months Ended March 31, 2014

(Dollars in millions)

SDG&E

SoCalGas

Sempra South American Utilities

Sempra Mexico

Sempra Renewables

Sempra Natural Gas

Consolidating Adjustments, Parent & Other

Total

Revenues

$   987

$   1,085

$            378

$  201

$            6

$        260

$            (122)

$2,795

Cost of sales and other expenses

(649)

(851)

(301)

(135)

(12)

(243)

104

(2,087)

Depreciation and amortization

(130)

(105)

(14)

(16)

(1)

(17)

(3)

(286)

Gain on sale of equity interest

-

-

-

-

27

-

-

27

Adjustment to loss from plant closure

13

(1)

-

-

-

-

-

-

13

Equity earnings, before income tax

-

-

-

-

2

15

-

17

Other income, net

13

4

1

10

-

1

11

40

Income (loss) before interest and tax (2)

234

133

64

60

22

16

(10)

519

Net interest expense (3)

(50)

(17)

(5)

(4)

-

(1)

(55)

(132)

Income tax (expense) benefit

(83)

(38)

(15)

(12)

6

(6)

21

(127)

Equity (losses) earnings, net of income tax

-

-

(2)

8

-

-

-

6

Earnings attributable to noncontrolling interests

(2)

-

(7)

(10)

-

-

-

(19)

Earnings (losses)

$    99

$        78

$              35

$    42

$          28

$            9

$              (44)

$   247

Three Months Ended March 31, 2013

(Dollars in millions)

SDG&E

SoCalGas

Sempra South American Utilities

Sempra Mexico

Sempra Renewables

Sempra Natural Gas

Consolidating Adjustments, Parent & Other

Total

Revenues

$   939

$      983

$            384

$  168

$          21

$        253

$              (98)

$2,650

Cost of sales and other expenses

(637)

(800)

(301)

(113)

(13)

(220)

92

(1,992)

Depreciation and amortization

(134)

(100)

(15)

(16)

(8)

(20)

(2)

(295)

Gain on sale of assets

-

-

-

-

-

74

-

74

Equity earnings, before income tax

-

-

-

-

1

9

-

10

Other income, net

11

4

3

9

-

2

8

37

Income before interest and tax (2)

179

87

71

48

1

98

-

484

Net interest expense (3)

(48)

(17)

(2)

(1)

(5)

(12)

(49)

(134)

Income tax (expense) benefit

(51)

(24)

(17)

(26)

8

(33)

(35)

(4)

(178)

Equity (losses) earnings, net of income tax

-

-

(7)

11

-

-

-

4

Losses (earnings) attributable to noncontrolling interests

11

-

(8)

(1)

-

-

-

2

Earnings (losses)

$    91

$        46

$              37

$    31

$            4

$          53

$              (84)

$   178

(1)

After taxes, including a $17 million charge to reduce certain tax regulatory assets attributed to SONGS, the adjustment to loss from plant closure is a $9 million charge to earnings.

(2)

Management believes Income (Loss) Before Interest and Tax is a useful measurement of our segments' performance because it can be used to evaluate the effectiveness of our operations exclusive of interest and income tax, neither of which is directly relevant to the efficiency of those operations.

(3)

Net Interest Expense includes interest income, interest expense and preferred dividends of subsidiaries.

(4)

Includes $63 million income tax expense resulting from a corporate reorganization in connection with the IEnova stock offerings.

 

 

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