Sempra (SRE) Earnings

Management highlights

- Invested $3 billion in T&D energy infrastructure in first quarter, on track for annual $13 billion target. Encore received PUCT approval for base rate review settlement with higher authorized equi layer, return on equity, and cost of debt. Submitted inaugural UTM filing to incorporate $4.4 billion of T&D assets. SDG&E filed uncontested offer of settlement in TO6 proceeding with FERC to increase authorized base return on equity. - SEMPRA Infrastructure declared COD at Cimarron Wind, ECA LNG phase one introduced feed gas and began startup, targeting first LNG next month and substantial completion this summer. Port Arthur LNG Phase I and Phase II construction progressing on time and budget. - Progress toward closing SI Partners transaction, received key approvals from FERC and antitrust regulators, expect close in second or third quarter 2026. Advancing capital recycling program, Ecogas sale on track to close in second or third quarter 2026. - Encore making strides diversifying supply chain, reducing execution risk. SoCalGas's natural gas storage facilities helped customers avoid $120 million in potential energy costs during winter storm fern. California Earthquake Authority published study on improving affordability and safety, will monitor developments.

Guidance

Affirming full year 2026 adjusted EPS guidance range of $4.80 to $5.30 and 2027 EPS guidance range of $5.10 to $5.70. Affirming projected long-term EPS growth rate of 7% to 9%. Focused on achieving key milestones like closing SI Partners transaction, completing Ecogas sale, strengthening balance sheet, executing $65 billion capital plan with more investment in Texas, and having improving visibility into approximately $9 billion of incremental capital opportunities beyond the base plan, primarily concentrated in Texas.

Segment performance

SEMPRA reported first quarter 2026 GAAP earnings of $1,037,000,000 or $1.58 per share, compared to $906 million or $1.39 per share in first quarter 2025. On an adjusted basis, first quarter earnings were $991 million, or $1.51 per share, an increase from $942 million or $1.44 per share in first quarter 2025. At Semper Texas, there was $25 million of higher equity earnings from UTM, higher invested capital and customer growth partially offset by higher interest expense depreciation and O&M. At Semper California, there was $44 million of increased earnings primarily from higher CPUC base operating margin net of operating expenses, $48 million of lower income tax benefits and higher net interest expense. At Semper Infrastructure, earnings increased by $34 million primarily from lower depreciation due to classification as held for sale, partially offset by other items. At Semper Parent, there was $6 million of higher losses from higher net interest expense and net investment losses, partially offset by other items.

Analyst Q&A

• Q: On the progress at Encore with the 127 gigawatts of qualifying load, do you view the quality as comparable to the prior 39 kind of high confidence number? And do you envision any rule changes that could move that number lower? And talk about timeline for converting that into CapEx?

  A: Jeff and Alan discussed that the 127 gigawatts submitted as part of the RTP meets all requirements of SB6, quality is solid, and they're following ERCOT Batch Zero process and Regional Transmission Plan. Alan updated on Batch Zero schedule and Encore's load queue.

• Q: On the SEMPRA infrastructure closing, what steps do you still have to achieve to close that?

  A: Justin said they've gotten FERC approval, competition approval from Korea, reached end of HSR period, received antitrust approvals in Mexico, majority of third-party consents, working with Cameron Partners and Japanese export credit agencies for their consents, and finalizing pre-transition and transition services.

• Q: On the rating agencies and completing their review after SEMPRA infrastructure potentially, is that the key milestone or are there other things?

  A: Karen said the main catalyst is improving thresholds, but Moody's also wants to see further progress on construction projects, anticipating thresholds improving post-close closer to end of year or early 2027.

• Q: On getting changes to the wildfire liability law in California this session, your confidence?

  A: Jeff and Caroline said there's momentum, the CEA report provides a solid base, and they're focused on putting wildfire victims first, coordinated statewide approach, and making progress this session.

• Q: On the Texas landscape, confidence on physical progress and limiting factors for low growth outlook?

  A: Jeff and Alan talked about Encore's base capital plan being largely indifferent to data center number, ERCOT and PUC processes needed to coordinate transmission and generation, and Encore's capital plan positioned on high-voltage transmission.

• Q: On California GRC filings, preview of priorities?

  A: Caroline said the filing will focus on continued necessary investments in safety and reliability, technology innovation, modernization of services and infrastructure to support customer needs, and efforts to support affordability while making critical investments.

• Q: On Texas execution piece, progress for securing slots for base and upside plan?

  A: Alan said they're in excellent shape for the base plan, have line of sight for outer years, and the board has given authority to secure slots outside the plan.

• Q: On LNG as a long-term component of business strategy and conversations with off-takers?

  A: Jeff and Justin said they're bullish on US LNG long term due to fundamentals, actively engaged in discussions for remaining offtake at Port Arthur LNG2, and SEMPRA's corporate strategy is moving to a pure play utility business with lower capital allocation to LNG but看好 US LNG opportunity.

• Q: On labor side specifically beyond 2028 and labor availability for upside opportunities to capital plan?

  A: Alan said there's a high class problem with growth, labor is attracted to the stable work with long backlog, and they've increased contract labor significantly.