SRE — Sempra

Sempra (SRE) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• GAAP Earnings: $1.37 billion, or $1.58 per share, compared to $906 million or $1.39 per share in Q1 2025.
• Adjusted Earnings: $991 million, or $1.51 per share, up from $942 million or $1.44 per share year-over-year.
• Oncor's Rate Review Impact: Positive financial impacts from Oncor's base rate review expected to be recognized primarily in Q2 2026.

2. Strategic Updates and Business Highlights:

• Capital Investments: Sempra deployed $3 billion in capital during Q1 as part of a $13 billion investment plan in transmission and distribution (T&D) energy infrastructure.
• Oncor Developments: Approval of a new base rate with a 9.75% return on equity and a 4.94% cost of debt. Oncor also submitted its inaugural UTM filing for $4.4 billion in T&D assets.
• SDG&E Settlement: Filed an uncontested settlement with FERC to increase authorized return on equity to 10.28%.
• Sempra Infrastructure: Achieved commercial operation date (COD) at Cimarron Wind and began startup at ECA LNG Phase 1, with first LNG production expected next month.
• Capital Recycling: Progress on the SI Partners transaction and Ecogas sale aimed at reinvesting proceeds into utility businesses.

3. Forward Guidance and Outlook:

• 2026 Adjusted EPS Guidance: Affirmed range of $4.8 to $5.3, with 2027 guidance of $5.1 to $5.7.
• Long-term EPS Growth Rate: Projected at 7% to 9%, one of the highest in the utility sector.
• Capital Plan: A record $65 billion capital plan focused on Texas, with an additional $9 billion in incremental capital opportunities anticipated.

4. Bad News, Challenges, or Points of Concern:

• Interest Expenses: Higher interest expenses and depreciation impacting earnings, particularly at Sempra Parent.
• Regulatory Risks: Approval processes for settlements and rate cases remain subject to regulatory scrutiny, particularly in California.
• Labor Constraints: Emerging labor constraints could impact execution capabilities and capital plan execution, although management reports strong interest from contractors.

5. Notable Q&A Insights:

• Oncor's Load Growth: Management expressed confidence in Oncor's ability to manage and grow its capital plan despite potential regulatory changes.
• LNG Strategy Shift: Sempra is moving towards a lower-risk profile, focusing on utilities while still recognizing the long-term potential of LNG.
• Wildfire Liability Legislation: Management is optimistic about potential legislative changes in California that could improve the wildfire liability framework.
• Supply Chain and Labor: The company is actively diversifying its supply chain and has increased its contract labor significantly to address labor availability concerns.

Overall, Sempra's Q1 2026 results reflect strong financial performance and strategic progress, particularly in Texas, while also highlighting potential challenges in regulatory environments and labor availability.