Key Highlights

● Sempra will publish third-quarter results before the market opens on Thursday.

● A conference call is set for noon Eastern with slides posted online.

● Second-quarter adjusted Earnings were $1.16 per share, up from $0.89.

● Pending deals include a minority infrastructure stake sale and a Mexican gas Utility disposal.

Sempra (NYSE:SRE) is scheduled to publish its third-quarter results on Thursday, with the release due before eight in the morning Eastern time and a conference call at noon. The San Diego-based energy company announced the date in the middle of October and said that the release and a slide presentation would be posted to its website before the market opens.

The report arrives after a second quarter in which adjusted earnings rose well above the prior-year level, Texas contributed sharply higher Equity earnings and the company set a record Capital plan of about $65 billion over five years. It also arrives with several structural changes in progress, notably the planned sale of a minority interest in Sempra Infrastructure Partners and the disposal of a Mexican gas distribution business.

It instead reviews what the company has already disclosed, explains the moving parts that will frame the release and lists the items readers may wish to compare when the numbers appear.

When and how will Sempra report?

According to the company's announcement, issued through a newswire in mid-October, the third-quarter earnings release is due by eight in the morning Eastern time on Thursday. A conference call hosted by senior company leaders follows at noon, accompanied by a slide presentation that will be available on the company's company website.

Registration is open for anyone who wants to listen to the live webcast, including journalists, stock owners and members of the public, and a replay is typically posted afterward for those who cannot attend at midday. The company said materials would be published before the market opens, which means the figures will be available to readers before trading begins.

The date matters because Sempra's calendar differs from some peers that reported in late October. Waiting until the first days of November, as it did last year, gives the company time to close the books on a quarter in which several Business changes were in motion.

What did the second quarter show for Sempra?

For the second quarter, Sempra reported earnings under generally accepted accounting principles of about $796 million, or $1.21 per diluted share, compared with about $461 million, or $0.71, a year earlier. Adjusted earnings were about $762 million, or $1.16 per share, compared with $0.89.

For the first half, GAAP earnings were about $1.8 billion, or $2.80 per share, and adjusted earnings were about $1.75 billion, or $2.67 per share. Excluded items included currency and Inflation effects in Mexico, unrealized gains on Commodity Derivatives and a tax benefit tied to Assets slated for disposal.

Revenue for the quarter was about $3 billion, essentially flat with a year earlier. The strength therefore came from earnings quality at the segment level rather than from Revenue growth, a point that is likely to matter when the third-quarter table is compared with this one. Flat revenue alongside much higher earnings points to rate changes in Texas, lower costs and the effect of items outside the core business, all of which the segment tables separate.

How did the segments contribute?

Sempra California, which includes San Diego Gas & Electric and Southern California Gas, earned about $297 million in the second quarter, up from about $259 million. Sempra Texas Utilities earned about $346 million, up from about $208 million. Sempra Infrastructure earned about $230 million, compared with $72 million a year earlier.

Parent and other costs were roughly flat at a loss of about $77 million. The pattern, with Texas and Infrastructure showing the largest percentage gains, helps explain why the company's capital plan is so heavily weighted toward Texas.

For the third quarter, readers will likely compare the same segment lines, keeping in mind that the second quarter included a catch-up effect in Texas as new base rates took effect and that infrastructure results can swing with commodity and currency movements.

What is happening at Oncor in Texas?

Sempra owns a majority stake in Oncor, the Texas wires utility that delivers power to a large part of the state, including the Dallas and Fort Worth area. Oncor's equity earnings were about $348 million in the second quarter, up from about $210 million, and about $521 million for the half.

New base rates took effect at the start of June, and a Surcharge that began in August recovers the difference from the first of January to the start of June. This catch-up helps explain why the second quarter was unusually strong and why the surcharge may matter for later periods.

Deliveries in the quarter were about 44.5 thousand gigawatt-hours, up from about 42,000, and the electric meter count rose to just over 4.1 million. The Texas grid operator set a new all-time peak load of 91 gigawatts in July.

How large is the Texas Demand queue?

The company described a process approved by Texas regulators for handling large-load interconnection requests, known as Batch Zero. About 44 gigawatts of Oncor's large-load requests may be eligible, split between roughly 27 gigawatts of base load and 17 gigawatts of studied load, including eight gigawatts of existing load that is ramping up. Timing remains undetermined, and the company stressed that being eligible for study does not guarantee that a project will be built or that load will connect.

For scale, Oncor's current peak is about 31 gigawatts, so full realization of the eligible requests would represent growth of more than 140%. The company noted this as a range of possibilities rather than a commitment to build.

The grid operator has also endorsed high-voltage transmission projects needing more than $7 billion of spending and supporting about 16 gigawatts of new demand, with in-service dates between this year and the early part of the next decade. Oncor expects to build most of them, subject to approval.

What is the capital plan?

Sempra's five-year capital plan is about $65 billion, a record. Texas accounts for about $38 billion, or 59%. California accounts for about $23.5 billion, or 36%, and infrastructure for about $3 billion, or 5%.

Capital spending in the first half of the year exceeded $6 billion. In the second quarter alone, spending at Sempra California was about $934 million, compared with about $1.2 billion a year earlier, and at Sempra Infrastructure about $1.3 billion, up from about $1.1 billion.

Because the plan is concentrated in two regulated markets, regulatory decisions in Texas and California will determine how quickly the spending enters rates. The filing notes that the two together account for 95% of the plan.

What is the status of the minority stake sale?

Sempra agreed to divest a 45% equity interest in Sempra Infrastructure Partners to affiliates of KKR. As of the August report, the company said the transaction remained on track to close in the third quarter, subject to approvals and closing conditions.

The transaction is part of a broader effort, described in earlier coverage, to simplify the business and strengthen the balance sheet. The second-quarter Balance Sheet shows assets of about $33 billion and related liabilities of about $13 billion classified as disposal groups, which reflects the pending transactions.

Whether the closing has occurred will be one of the first items readers look for in Thursday's release, since completion would change how the infrastructure business is presented and how proceeds are described. If it has, the accounting treatment of the infrastructure business and any gain or loss would be disclosed alongside the quarter's results.

What about the Mexican gas utility sale?

Mexico's antitrust authority approved the sale of Ecogas, a gas distribution business, without conditions, and the company expected it to close in August. It estimated a pretax gain of between 160-$5 million and $205 million, or between 50-$7 million and $77 million after tax and non-controlling interests.

Gains of this kind are usually excluded from adjusted earnings, which is one reason the difference between GAAP and adjusted figures can be large. The second-quarter report already showed such gaps, including a currency and inflation item in Mexico.

If the sale closed as expected, the third-quarter release would be the first to reflect it in full. Readers comparing results can check whether the company shows the gain as an excluded item.

What is going on in California?

San Diego Gas & Electric and Southern California Gas filed applications for their next general rate cases, which focus on reducing wildfire exposure, electric reliability, pipeline safety and customer affordability. Federal regulators approved a transmission settlement for San Diego Gas & Electric with an authorized base earnings rate on equity of about 10.3%.

The California grid operator's latest transmission plan includes over $160 million of reliability projects for the San Diego utility. Southern California Gas estimated that its energy efficiency programs saved customers more than $100 million on bills last year.

Last year, market data showed that both utilities planned to trim certain programs and offices to cut administrative costs, with expected customer savings of more than $300 million over several years, subject to state approval. That context shows how the California units are pairing large spending with cost reduction. The general rate case filings are long processes, and decisions typically arrive after hearings and negotiations that can take well over a year, so the immediate third-quarter effect is more likely to appear in commentary than in the figures.

What role does Sempra Infrastructure play?

Sempra Infrastructure develops and operates energy assets in North America, including liquefied Natural Gas export facilities, pipelines, and power and storage assets in Mexico. Its second-quarter earnings were about three times higher than a year earlier, helped by the factors the company listed in its release.

The Port Arthur LNG project, located on the Texas Gulf Coast, appears in the second-quarter filing mainly through Interest Rate swaps tied to its first phase, which produced a small unrealized gain in the quarter and a small unrealized loss for the half. The company reached a final decision on the second phase last year, according to market data.

Infrastructure spending in the quarter was higher than a year earlier, which reflects construction activity. Third-quarter commentary on schedules, contracts and financing for these projects is therefore likely to receive attention alongside the regulated utilities.

What guidance is on the table?

In August, the company raised its GAAP Earnings Per Share range for the year to between $5.02 and $5.55. It affirmed adjusted earnings per share guidance of $4.80 to $5.30 for the year and $5.10 to $5.70 for next year.

It also affirmed long-term earnings growth of 7 to 9%. Chairman and chief executive Jeffrey Martin cited a consistent emphasis on execution and credited employees for innovation and continuous improvement.

Guidance changes, if any, will appear in Thursday's release, and the company usually updates its ranges and its Long-term Growth rate in the same document as the quarterly figures, so the slide presentation posted before the call is often the quickest place to find them.

Where does Sempra sit in the sector?

Sempra differs from most regulated utilities because it combines a Texas wires business, a pair of California utilities and a large natural gas export and infrastructure business. Readers following Utility Stocks will recognize the same themes of demand growth and heavy spending on the grid, but with additional exposure to liquefied natural gas projects and Mexican operations.

The stock is a member of the S&P 500 and trades on the New York Stock Exchange. Its quarterly figures can be harder to read than those of simpler peers because of the number of adjusting items, which is why the reconciliation table in each release is useful. Equity earnings from Oncor, for example, are reported as a single line even though they reflect a large operating business, while the infrastructure segment includes currency and derivative effects that the company strips out of its adjusted figures.

What should readers compare when the numbers arrive?

A practical checklist includes adjusted and GAAP earnings per share against last year's third quarter, the segment table, Oncor's equity earnings, the status of the KKR transaction, treatment of the Mexican sale, any change to guidance and updates to the capital plan.

Readers may also compare the commentary on large-load requests in Texas and the status of California rate filings, as well as any update on Port Arthur LNG, the Texas Gulf Coast export project that the company has advanced in phases.

Last year's third-quarter report, covered in market data, showed adjusted earnings of $1.11 per share and an Oncor interconnection queue of more than 600 requests, which provides a baseline for how quickly the Texas pipeline has grown.