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Sempra Energy (SRE) Q1 Earnings Beat, Revenues Improve Y/Y

Zacks Equity Research

Sempra Energy’s SRE first-quarter 2019 adjusted earnings per share (EPS) came in at $1.92, surpassing the Zacks Consensus Estimate of $1.69 by 13.6%. The bottom line also improved 34.3% from $1.43 registered in the prior-year quarter.

Barring one-time items, the company generated GAAP earnings of $1.59 per share compared with $1.33 in first-quarter 2018. This year-over-year upside was driven by solid top-line performance.

Total Revenues

In the quarter under review, total revenues of $2,898 million increased 14.3% year over year on higher contributions from both its Utilities (up 14.8%) and energy-related businesses (up 10.7%). The top line, however, missed the consensus mark of $3,120 million by 7.2%.

Sempra Energy Price, Consensus and EPS Surprise

Sempra Energy Price, Consensus and EPS Surprise | Sempra Energy Quote

Segment Update

San Diego Gas & Electric (SDG&E): Quarterly earnings amounted to $176 million compared with the year-ago quarter’s $170 million.

Southern California Gas Company (SoCalGas): At this segment, quarterly earnings totaled $264 million in the first quarter of 2019 compared with $225 million registered in the prior-year quarter.

Sempra Texas Utility: Earnings at this segment came in at $94 million in the reported quarter compared with earnings of $15 million in the year-ago quarter.

Sempra Mexico: The segment recorded net earnings of $57 million compared with $20 million in the year-ago quarter.

Sempra Renewables: The segment recorded net quarterly earnings of $13 million compared with $21million in the first quarter of 2018.

Sempra LNG: The segment reported earnings of $5 million against the year-ago quarter’s loss of $16 million.

Parent and Other: Quarterly loss at this division increased to $117 million from the year-ago quarter’s loss of $109 million.

Financial Update

As of Mar 31, 2019, Sempra Energy’s cash and cash equivalents totaled $78 million compared with $102 million as of Dec 31, 2018.

Long-term debt amounted to $19,738 million as of Mar 31, 2019, compared with $20,903 million at 2018 end.

Cash flow from operating activities was $951 million at the end of first-quarter 2019, down from $966 million at the end of first-quarter 2018.

In the reported quarter, the company’s capital expenditures, investments and acquisitions summed $877 million compared with $10,596 million in the first quarter of 2018.

Highlights of the Quarter

In March 2019, Sempra Energy increased its projected share of full run-rate earnings from the first three trains at Cameron LNG to $400-$450 million annually, up from $365-$425 million anticipated earlier. Sempra Energy expects to begin recognizing earnings from Train 1 in mid-2019.

In the quarter under review, the company also announced the sale process of its equity interests in its South American businesses, including its 83.6% stake in Luz del Sur S.A.A. in Peru and a 100% stake in Chilquinta Energía S.A. in Chile. First-round bids are expected in June.

2019 Guidance

Sempra Energy reaffirmed its earnings guidance for 2019. The company still expects to generate earnings of $5.70-$6.30. The Zacks Consensus Estimate for full-year earnings stands at $6.01 per share, slightly above the midpoint of the company projected view.

Zacks Rank

Sempra Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

FirstEnergy Corp. FE delivered first-quarter 2019 operating earnings of 67 cents per share, which outpaced the Zacks Consensus Estimate of 66 cents by 1.52%.

NextEra Energy, Inc.’s NEE first-quarter 2019 adjusted earnings came in at $2.20 per share, beating the Zacks Consensus Estimate of $2.01 by 9.4%.

DTE Energy Co. DTE reported first-quarter 2019 operating earnings per share of $2.05, which exceeded the Zacks Consensus Estimate of $1.95 by 5.1%.

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