Sempra(SRE) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $4.61 for 2023, exceeding the high-end of guidance, and narrowed the full year 2024 EPS guidance range to $4.60 to $4.90 [15][64] - Full year 2023 GAAP earnings were $3.030 billion or $4.79 per share, compared to $2.94 billion or $3.31 per share in 2022 [64][96] - The company announced a record capital plan of $48 billion, a 20% increase over the previous plan, with over 90% allocated to regulated utilities [20][66] Business Line Data and Key Metrics Changes - Sempra California's earnings for 2023 were $1.75 billion, benefiting from $4.6 billion of capital investments, increasing the rate base by 11% over 2022 [21][44] - Sempra Infrastructure reported adjusted earnings of $764 million for 2023, with significant progress on LNG projects [55][64] - Oncor's capital deployment was $3.8 billion in 2023, growing the rate base by 12% [77][85] Market Data and Key Metrics Changes - California's economy represents nearly 15% of the national GDP, with significant job growth and a strong alignment with state policies promoting sustainable energy [23][74] - Texas GDP continues to grow at approximately 8%, with Oncor serving some of the fastest-growing metro areas [49][81] - The company expects a 7% CAGR in rate base growth from 2023 to 2028 in California and 11% in Texas [126] Company Strategy and Development Direction - The company is focused on disciplined investments in energy networks in California and Texas, aiming for long-term EPS growth of 6% to 8% [20][106] - The capital plan emphasizes modernizing T&D infrastructure to support economic growth and energy transition [18][75] - The company is advancing a dual coast LNG export strategy and developing renewable energy projects to meet rising energy demand [54][90] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong financial performance despite economic uncertainties, including inflation and supply chain disruptions [16][68] - The company remains optimistic about the regulatory environment in California and Texas, which supports significant investments [112][126] - Management expressed confidence in navigating the regulatory landscape for LNG projects and expects normal permitting conditions to resume [61][118] Other Important Information - The company declared a dividend increase for the 14th consecutive year to $2.48 per share [34] - The company is actively engaged in developing a hydrogen hub project expected to receive $1.2 billion in DOE funding [57] Q&A Session Questions and Answers Question: How is the GRC process framed into the 2024, 2025 planning assumptions? - The company focuses on investments aligned with public policy and customer support, considering historical cases in their assumptions [108][138] Question: What are the assumptions on the cost of capital process at the CPUC? - The company believes California's regulatory environment is constructive, with reasonable returns on equity to attract necessary capital [111][112] Question: How will the company fund increased CapEx? - The company is in a strong position to support its capital program without the need for additional equity, relying on operating cash flows and net debt [115][141]