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Press release from PR Newswire

Sempra Energy Reports First-Quarter 2012 Earnings

Thursday, May 03, 2012

Sempra Energy Reports First-Quarter 2012 Earnings09:00 EDT Thursday, May 03, 2012- Company Reaffirms 2012 Earnings-per-share Guidance Range of $4 to $4.30 - Cameron LNG Export Project Development AdvancesSAN DIEGO, May 3, 2012 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported first-quarter 2012 earnings of $236 million, or $0.97 per diluted share, compared with $254 million, or $1.05 per diluted share in the first quarter 2011.Effective Jan. 1, the company changed its accounting treatment for investment tax credits related to solar-power projects from the flow-through method to the deferral method.  Sempra Energy's 2011 results have been restated to reflect this change in accounting method.   As previously reported, the General Rate Cases for both Southern California Gas Co. (SoCalGas) and San Diego Gas & Electric (SDG&E) currently are in process at the California Public Utilities Commission (CPUC).  The revenue requirement established in these proceedings will be retroactive to Jan. 1, 2012.  Until the Commission reaches a final decision, both utilities are recording revenues based on 2011 authorized levels, as adjusted for the recovery of actual incremental wildfire insurance premiums.  When the final decision is reached, SoCalGas and SDG&E will record the cumulative change in revenues, retroactive to the beginning of the year.   "Our solid first-quarter results put us on track to meet our 2012 earnings-per-share guidance range of $4 to $4.30," said Debra L. Reed, chief executive officer of Sempra Energy.  "We also made significant progress in developing a liquefied natural gas export facility at our Cameron LNG terminal."Yesterday, Sempra Energy announced that its Cameron LNG subsidiary signed a third and final commercial development agreement with a subsidiary of GDF SUEZ Ltd. to develop a natural gas liquefaction export facility at the site of the Cameron LNG receipt terminal in Louisiana.  In April, Cameron LNG signed commercial development agreements with Mitsubishi Corporation and Mitsui & Co., Ltd.  The three agreements bind the parties to fund all development expenses, including design, permitting and engineering, as well as to negotiate 20-year tolling agreements, based on key terms outlined in the commercial development agreements.  The completed liquefaction facility is expected to be comprised of three liquefaction trains with a total export capability of 12 million tonnes per annum of liquefied natural gas, or approximately 1.7 billion cubic feet per day.  Pending regulatory approvals and achievement of other key milestones, the company plans to start construction of the facility next year and begin operations in late 2016.As announced previously, on Jan. 1, Sempra Energy consolidated Sempra Generation, Sempra Pipelines & Storage and Sempra LNG into two new operating units:  Sempra International and Sempra U.S. Gas & Power.   Beginning in the first quarter 2012, Sempra Energy began reporting financial results under the following segments:  San Diego Gas & Electric, Southern California Gas Co., Sempra South American Utilities, Sempra Mexico, Sempra Renewables and Sempra Natural Gas.CALIFORNIA UTILITIESSan Diego Gas & ElectricFirst-quarter earnings for SDG&E increased to $105 million in 2012 from $89 million in 2011, primarily due to earnings from construction work in progress.Southern California Gas Co.Earnings for SoCalGas in the first quarter 2012 were $66 million, compared with $68 million in last year's first quarter.   SEMPRA INTERNATIONALSempra South American UtilitiesSempra South American Utilities recorded earnings of $40 million in the first quarter 2012, up from $22 million in the first quarter 2011.  The increase was primarily due to the acquisition of the controlling interests in Chilquinta Energía and Luz del Sur in April 2011.   Sempra MexicoSempra Mexico recorded first-quarter earnings of $37 million in 2012, compared with $39 million last year.A 20-year contract to sell SDG&E wind power from Sempra Mexico's 156-megawatt (MW) first phase of the Energia Sierra Juarez wind project under development in Baja California was approved by the CPUC March 22.  Pending receipt of all regulatory permits, construction on the project is expected to begin this year.SEMPRA U.S. GAS & POWERSempra RenewablesSempra Renewables recorded earnings of $10 million in the first quarter 2012, up from $4 million in the first quarter 2011.  The increase was primarily due to deferred income-tax benefits as a result of placing solar and wind generating assets in service in 2012.Sempra Natural GasSempra Natural Gas, which includes results from natural gas and gas-fired power operations in the U.S., recorded first-quarter earnings of $1 million in 2012, compared with $63 million in 2011.  The decrease in earnings was primarily due to the expiration of the 10-year California Department of Water Resources power-supply contract in September 2011.INTERNET BROADCASTSempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with senior management of the company.  Access is available by logging onto the website at www.sempra.com.  For those unable to log onto the live webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (888) 203-1112 and entering passcode 4152078. Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2011 revenues of $10 billion.  The Sempra Energy companies' 17,500 employees serve more than 31 million consumers worldwide.This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements can be identified by words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "would," "could," "should," "potential," "target," "outlook", "depends," "pursue" or similar expressions, or discussions of guidance, strategies, plans, goals, initiatives, objectives or intentions.  Forward-looking statements are not guarantees of performance.  They involve risks, uncertainties and assumptions.  Future results may differ materially from those expressed in the forward-looking statements.  Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, California State Legislature, Federal Energy Regulatory Commission, U.S. Department of Energy, Nuclear Regulatory Commission, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries where the company does business; capital market conditions, including the availability of credit and the liquidity of investments; inflation, interest and exchange rates; the impact of benchmark interest rates, generally the U.S. Treasury bond and Moody's A-rated utility bond yields, on the California utilities' cost of capital; the timing and success of business development efforts and construction, maintenance and capital projects, including risks inherent in the ability to obtain, and the timing of the granting of, permits, licenses, certificates and other authorizations; energy markets, including the timing and extent of changes and volatility in commodity prices; the availability of electric power, natural gas and liquefied natural gas, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures; weather conditions, natural disasters, catastrophic accidents, and conservation efforts; risks inherent in nuclear power generation and radioactive materials storage, including catastrophic release of such materials; risks posed by decisions and actions of third parties who control the operations of investments in which the company does not have a controlling interest; wars, terrorist attacks and cyber security threats; business, regulatory, environmental and legal decisions and requirements; expropriation of assets by foreign governments and title and other property disputes; the status of deregulation of retail natural gas and electricity delivery; the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company.  These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the Securities and Exchange Commission.  These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on the company's website at www.sempra.com.These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.Sempra International, LLC, and Sempra U.S. Gas & Power, LLC, are not the same companies as San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas) and Sempra International and Sempra U.S. Gas & Power are not regulated by the California Public Utilities Commission.  Note: Formerly known entities Sempra Generation, Sempra LNG and Sempra Pipelines & Storage have now been realigned under Sempra International and Sempra U.S. Gas & Power. SEMPRA ENERGYTable ACONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSThree months endedMarch 31,(Dollars in millions, except per share amounts)20122011(1)(unaudited)REVENUESUtilities$         2,091$         1,946Energy-related businesses292488    Total revenues2,3832,434EXPENSES AND OTHER INCOMEUtilities:    Cost of natural gas(431)(642)    Cost of electric fuel and purchased power(388)(171)Energy-related businesses:    Cost of natural gas, electric fuel and purchased power(129)(230)    Other cost of sales(33)(23)Operation and maintenance(671)(639)Depreciation and amortization(257)(230)Franchise fees and other taxes(96)(95)Equity earnings, before income tax 121Other income, net7543Interest income53Interest expense(113)(108)Income before income taxes and equity earnings     of certain unconsolidated subsidiaries357343Income tax expense(117)(114)Equity earnings, net of income tax1131Net income251260Earnings attributable to noncontrolling interests(13)(4)Preferred dividends of subsidiaries(2)(2)Earnings$            236$            254Basic earnings per common share$           0.98$           1.06Weighted-average number of shares outstanding, basic (thousands)240,566240,128Diluted earnings per common share$           0.97$           1.05Weighted-average number of shares outstanding, diluted (thousands)243,761241,903Dividends declared per share of common stock$           0.60$           0.48(1) As adjusted for the retrospective effect of a change in accounting principle.SEMPRA ENERGYTable BCONDENSED CONSOLIDATED BALANCE SHEETSMarch 31,December 31,(Dollars in millions)20122011(1)(2)(unaudited)AssetsCurrent assets:Cash and cash equivalents$               404$               252Restricted cash2324Accounts receivable1,2391,345Inventories222346Regulatory balancing accounts ? undercollected7138Regulatory assets 10589Fixed-price contracts and other derivatives8385Settlement receivable related to wildfire litigation510Other146143Total current assets2,2982,332Investments and other assets:Restricted cash2422Regulatory assets arising from pension and other postretirement     benefit obligations1,0741,126Regulatory assets arising from wildfire litigation costs603594Other regulatory assets1,0701,060Nuclear decommissioning trusts865804Investments1,7221,671Goodwill 1,0711,036Other intangible assets443448Sundry799691Total investments and other assets7,6717,452Property, plant and equipment, net24,07623,465Total assets$           34,045$           33,249Liabilities and EquityCurrent liabilities:Short-term debt$               426$               449Accounts payable1,0131,107Income taxes payable535Deferred income taxes172173Dividends and interest payable297219Accrued compensation and benefits203323Regulatory balancing accounts ? overcollected240105Current portion of long-term debt713336Fixed-price contracts and other derivatives9292Customer deposits148142Reserve for wildfire litigation441586Other682615Total current liabilities4,4804,152Long-term debt10,18010,078Deferred credits and other liabilities:Customer advances for construction143142Pension and other postretirement benefit obligations, net of plan assets1,3731,423Deferred income taxes1,6011,520Deferred investment tax credits4849Regulatory liabilities arising from removal obligations2,6212,551Asset retirement obligations1,9271,905Other regulatory liabilities8087Fixed-price contracts and other derivatives281301Deferred credits and other 862784Total deferred credits and other liabilities8,9368,762Contingently redeemable preferred stock of subsidiary7979Equity:Total Sempra Energy shareholders' equity9,9529,775Preferred stock of subsidiaries 2020Other noncontrolling interests398383Total equity10,37010,178Total liabilities and equity$           34,045$           33,249(1)As adjusted for the retrospective effect of a change in accounting principle.(2)Derived from audited financial statements.SEMPRA ENERGYTable CCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three months endedMarch 31,(Dollars in millions)20122011 (1)(unaudited)Cash Flows from Operating ActivitiesNet income$     251$     260Adjustments to reconcile net income to net cash provided  by operating activities:Depreciation and amortization257230Deferred income taxes and investment tax credits3182Equity earnings(23)(32)Fixed-price contracts and other derivatives(12)(9)Other14(13)Net change in other working capital components168297Changes in other assets12(5)Changes in other liabilities1(5)Net cash provided by operating activities699805Cash Flows from Investing ActivitiesExpenditures for property, plant and equipment(811)(607)Expenditures for investments(51)(4)Distributions from investments821Purchases of nuclear decommissioning and other trust assets(134)(45)Proceeds from sales by nuclear decommissioning and other trusts13546Decrease in restricted cash39160Increase in restricted cash(40)(320)Other (5)(7)Net cash used in investing activities(859)(756)Cash Flows from Financing ActivitiesCommon dividends paid(115)(94)Preferred dividends paid by subsidiaries(2)(2)Issuances of common stock1315Repurchases of common stock(16)(18)Issuances of debt (maturities greater than 90 days)1,008803Payments on debt (maturities greater than 90 days)(347)(260)Decrease in short-term debt, net(224)(192)Other (7)6Net cash provided by financing activities310258Effect of exchange rate changes on cash and cash equivalents2-Increase in cash and cash equivalents152307Cash and cash equivalents, January 1252912Cash and cash equivalents, March 31$     404$   1,219(1) As adjusted for the retrospective effect of a change in accounting principle.SEMPRA ENERGYTable DSEGMENT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS Three months ended March 31,(Dollars in millions)20122011    (unaudited)Earnings (Losses) California Utilities:San Diego Gas & Electric$     105$       89Southern California Gas6668Sempra International:Sempra South American Utilities4022Sempra Mexico3739Sempra U.S. Gas & Power:Sempra Renewables104Sempra Natural Gas163Parent and other(23)(31)Earnings$     236$     254 Three months ended  March 31,(Dollars in millions)20122011    (unaudited)Capital Expenditures and InvestmentsCalifornia Utilities:San Diego Gas & Electric$     398$     348Southern California Gas165168Sempra International:Sempra South American Utilities20-Sempra Mexico53Sempra U.S. Gas & Power:Sempra Renewables25146Sempra Natural Gas2246Parent and other1-Consolidated Capital Expenditures and Investments$     862$611 SEMPRA ENERGYTable EOTHER OPERATING STATISTICS (Unaudited)Three months ended March 31,UTILITIES20122011California Utilities - SDG&E and SoCalGasGas Sales (bcf)(1)134138Transportation (bcf)(1)171157Total Deliveries (bcf)(1)305295Total Gas Customers (Thousands)6,6606,639Electric Sales (Millions of kWhs)(1)4,0894,148Direct Access (Millions of kWhs)752786Total Deliveries (Millions of kWhs)(1)4,8414,934Total Electric Customers (Thousands)1,3951,388Other Utilities(2)Natural Gas Sales (bcf)Argentina7370Mexico66Mobile Gas1510Natural Gas Customers (Thousands)Argentina1,8191,766Mexico9089Mobile Gas9092Electric Sales (Millions of kWhs)Peru1,6901,594Chile745661Electric Customers (Thousands)Peru934899Chile613598ENERGY-RELATED BUSINESSESSempra InternationalPower Sold (Millions of kWhs)Sempra Mexico(3)1,078916Sempra U.S. Gas & PowerPower Sold (Millions of kWhs)Sempra Renewables(4)273122Sempra Natural Gas1,9403,235(1) Includes intercompany sales(2) Represents 100% of the distribution operations of the subsidiary, although the subsidiary in Argentina is not consolidated within Sempra Energy and the related investments are accounted for under the equity method.  The subsidiaries in Peru and Chile were also accounted for under the equity method until April 6, 2011, when they became consolidated entities upon our acquisition of additional ownership interests.(3) Sales to Sempra Natural Gas(4) Includes 50% of total power sold related to wind projects in which Sempra Energy has a 50% ownership. These subsidiaries are not consolidated within Sempra Energy and the related investments are accounted for under the equity method.          SEMPRA ENERGY           Table F (Unaudited)Statement of Operations Data by SegmentThree Months Ended March 31, 2012(Dollars in millions)SDG&ESoCalGasSempra South American UtilitiesSempra MexicoSempra RenewablesSempra Natural GasConsolidating Adjustments, Parent & OtherTotalRevenues$          834$          880$          357$          135$             8$          269$            (100)$       2,383Cost of Sales and Other Expenses(544)(674)(281)(77)(9)(245)82(1,748)Depreciation & Amortization(112)(87)(13)(15)(3)(23)(4)(257)Equity Earnings Recorded Before Income Tax----111-12Other Income, Net30424--3575Income (Loss) Before Interest & Tax (1)2081236547(3)1213465Net Interest Expense (2)(37)(17)(6)(1)(4)(9)(36)(110)Income Tax (Expense) Benefit(60)(40)(13)(20)17(2)1(117)Equity Earnings Recorded Net of Income Tax---11---11Earnings Attributable to Noncontrolling Interests(6)-(6)---(1)(13)Earnings (Losses)$          105$           66$           40$           37$           10$             1$             (23)$          236Three Months Ended March 31, 2011(Dollars in millions)SDG&ESoCalGasSempra South American UtilitiesSempra MexicoSempra RenewablesSempra Natural GasConsolidating Adjustments, Parent & OtherTotalRevenues$          840$       1,056$            -$          207$             4$          449$            (122)$       2,434Cost of Sales and Other Expenses(574)(856)(2)(143)(4)(328)107(1,800)Depreciation & Amortization(103)(81)-(15)(1)(26)(4)(230)Equity Earnings (Losses) Recorded Before Income Tax----19(9)1Other Income, Net163-4--2043Income (Loss) Before Interest & Tax (1)179122(2)53-104(8)448Net Interest Expense (2)(37)(17)-(3)(3)(9)(38)(107)Income Tax Expense(49)(37)-(18)7(32)15(114)Equity Earnings Recorded Net of Income Tax--247---31Earnings Attributable to Noncontrolling Interests(4)------(4)Earnings (Losses)$           89$           68$           22$           39$             4$           63$             (31)$          254(1)Management believes "Income (Loss) before Interest & Tax" is a useful measurement of our business units' performance because it can be used to evaluate the effectiveness of our operations exclusive of interest and income tax, neither of which is directly relevant to the efficiency of those operations.(2) Net Interest Expense includes Interest Income, Interest Expense and Preferred Dividends of Subsidiaries.(Logo: http://photos.prnewswire.com/prnh/20110108/SEMPRAENERGYLOGO)  SOURCE Sempra EnergyFor further information: Media, Doug Kline, +1-877-340-8875, dkline@sempra.com; or Financial, Scott Tomayko or Victor Vilaplana, +1-877-736-7727, investor@sempra.com, all of Sempra Energy