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    SRE
    Earnings call· Dec 2025(Q4 FY25)

    SEMPRA Q4 FY25 earnings call SRE

    Feb 26, 2026 Source

    Executive summary

    Sempra Q4 FY25 — Record Capital Plan and Strong 2030 EPS Outlook

    Sempra delivered strong Q4 FY25 results, achieving record adjusted EPS and announcing a significantly expanded capital plan for 2026-2030, primarily driven by investments in Texas. The company has secured financing for this plan without new equity issuances, leveraging increased operating cash flows and strategic asset sales. Management provided a robust 2030 EPS outlook, reflecting improved financial strength and a focus on regulated utility investments.

    Highlights

    5

    • Achieved record adjusted EPS of $4.69 at the high end of 2025 guidance.

    • Introduced a new record capital plan of $65 billion for 2026-2030, a 17% increase over last year's plan.

    • Eliminated the need for new common equity issuances to fund the base capital plan, supported by a $5 billion increase in operating cash flows.

    • Successfully reached a comprehensive settlement in Oncor's base rate review, improving authorized equity layer, ROE, and cost of debt.

    • Announced the sale of a 45% stake in SI Partners for $10 billion, implying over a $22 billion equity value.

    Concerns

    3

    • Sempra California experienced $213 million lower income tax benefits and higher net interest expense in FY25.

    • Sempra Parent had $41 million higher losses from increased net interest expense in FY25.

    • The $9 billion upside capital opportunities for Oncor are outside the current base plan, primarily layering into 2028-2030.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full year adjusted EPS
    $4.80 to $5.30
    high materiality
    High
    Full year EPS
    $5.10 to $5.70
    high materiality
    High
    EPS outlook
    $6.70 to $7.50
    high materiality
    High
    Annual dividend growth
    2% to 4%
    medium materiality
    High
    FFO to debt cushion
    at least 50 to 150 basis points
    medium materiality
    Medium
    Regulated earnings composition
    approximately 95%
    high materiality
    High
    Oncor authorized ROE
    very close to its authorized ROE
    medium materiality
    High
    Port Arthur LNG Phase 1 COD
    at or near the end of 2027
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Sempra Texas
    Higher equity earnings from the UTM, higher invested capital, and customer growth, partially offset by higher interest expense, depreciation, and O&M. Rate base projected to grow at 18% CAGR over the plan period.
    Higher invested capitalCustomer growthUTM implementation
    		———$80 million higher equity earnings
    Sempra California
    $213 million impact primarily from lower income tax benefits and higher net interest expense. $148 million higher CPUC base operating margin, net of operating expenses, regulatory disallowances, and a lower cost of capital. Rate base projected to grow more modestly.
    Lower income tax benefitsHigher net interest expenseLower cost of capitalRegulatory disallowances
    		———$148 million higher CPUC base operating margin
    Sempra Infrastructure
    $123 million primarily from higher asset and supply optimization, higher transportation results, and lower depreciation on assets held for sale, partially offset by lower income tax benefits.
    Higher asset and supply optimizationHigher transportation resultsLower depreciation on assets held for saleLower income tax benefits
    		———$123 million

    Operational metrics

    18
    GAAP Earnings
    $352 millionvs. $665 million in Q4 FY24
    Q4 FY25

    Fourth quarter 2025 GAAP earnings.

    GAAP EPS
    $0.54vs. $1.04 in Q4 FY24
    Q4 FY25

    Fourth quarter 2025 GAAP EPS.

    GAAP Earnings
    $1.796 billionvs. $2.817 billion in FY24
    FY25

    Full year 2025 GAAP earnings.

    GAAP EPS
    $2.75vs. $4.42 in FY24
    FY25

    Full year 2025 GAAP EPS.

    Adjusted Earnings
    $841 millionvs. $960 million in Q4 FY24
    Q4 FY25

    Fourth quarter 2025 adjusted earnings.

    Adjusted EPS
    $1.28vs. $1.50 in Q4 FY24
    Q4 FY25

    Fourth quarter 2025 adjusted EPS.

    Adjusted Earnings
    $3.066 billionvs. $2.969 billion in FY24
    FY25

    Full year 2025 adjusted earnings.

    Adjusted EPS
    $4.69vs. $4.65 in FY24
    FY25

    Full year 2025 adjusted EPS, at the high end of guidance.

    Oncor Accretion
    $0.20
    FY25

    Oncor accretion mentioned by analyst in Q&A.

    Oncor Marketplace Share
    37%
    Current

    Oncor's share of the marketplace, as mentioned by management.

    Transmission Cost per Dollar Spent
    $0.30
    Current

    Cost per dollar spent in transmission for Oncor's customer base, as mentioned by management.

    Collateral held from customers (Oncor)
    $3.5 billionvs. $200 million in 2018
    Current

    Total collateral held by Oncor from large load and other customers.

    Interim FEAs collateral (Oncor)
    $6.5 million
    Past

    Collateral required for interim facility extension agreements.

    Regulated earnings composition
    95%
    2027 and beyond

    Expected composition after SI Partners transaction.

    Holdco to total debt ratios
    Improving
    Future

    Goal to improve holdco to total debt ratios.

    Debt-to-equity ratio
    49% or below
    Future

    Goal to drive down debt-to-equity ratio.

    SI Partners transaction proceeds (beyond 2030)
    $2.2 billion
    Beyond 2030

    Additional cash generated from the Sempra Infrastructure Partners transaction beyond the 2030 planning period.

    Residual stake in Sempra Infrastructure
    25%
    Ongoing

    Provides further flexibility.

    Industry KPIs

    8
    MetricValueDetails
    Multi year capital plan$65 billionUSD
    Regulatory rate base growth11%%
    Adjusted EPS dividend growth$4.80 to $5.30USD
    Lng capital allocation pivotSale of 45% stake in SI Partners for $10 billionUSD
    Lng export segment disclosureOn schedule
    Major regulated project construction progress70%%
    Combined electric gas framework state mandatesStrengthened
    Allowed ROE equity layer rate case calendar by jVery close to authorized ROE

    Orderbook & backlog

    2
    Oncor interconnection queue273 GWQ4 FY25

    vs. 226 GW last quarter

    255 GW related to data centers

    High-certainty load for ERCOT 2026 RTP38 GWCurrent

    Meets SB6 requirements, expected to be higher by April 1. Oncor's current peak is 31 GW.

    Deals & partnerships

    2
    SI Partnersdivestiture$10 billion

    Sale of a 45% stake in Sempra Infrastructure Partners.

    SI Partnersdivestitureapproximately USD 500 million

    SI Partners entered into an agreement to sell Ecogas.

    Capital programs

    2
    Oncor Base Capital Planannounced$47.5 billion
    Start: 2026

    Benefit: Primarily transmission, including Permian Basin Reliability Plan and 765 kV strategic transmission expansion plan. Includes $6 billion for Permian plan projects, $2 billion for new transmission projects, $2 billion for distribution upgrades, and $1 billion for Delaware Basin transmission projects.

    Increase of $11.5 billion over prior plan. Heavily derisked, primarily transmission that's gone through ERCOT or PUC process. 70% dedicated to transmission.

    Oncor Incremental Capital Opportunitiestracked opportunities$10 billion
    Start: 2026

    Benefit: Includes ERCOT non-Permian projects and 765 step plan ($3 billion), additional transmission upgrades ($2.5 billion), system resiliency plan updates '28-'30 ($2.7 billion), and additional LC&I interconnections ($1.2 billion).

    Oncor's 100% share of incremental opportunities. Sempra's proportionate ownership share is $8 billion. High likelihood these projects come into the base plan in the future, especially in '28, '29, and '30.

    Risks & headwinds

    5
    Regulatory uncertainty in Texas (past)Past (12 months ago)

    4-5 years of uncertainty

    Mitigation: Settlement in hand, expected approval in spring, providing certainty through 2030.

    Execution risk on Texas settlementSpring 2026

    Finalization of settlement

    Mitigation: Management confident in approval.

    Execution risk on SI transaction closeQ2 or Q3 2026

    Closing conditions

    Mitigation: Management confident in closing.

    California GRC executionMay 2026 (filing)

    2028 GRC filing

    Mitigation: Caroline Winn's team working on regulatory strategy.

    Data center construction/supply chain challengesOngoing

    Potential slippages

    Mitigation: Oncor working multiple avenues (Batch Zero, RPG process, SB6 criteria) to address large load needs; base plan is shielded.

    Q&A highlights

    8

    Does the $9 billion upside capital opportunity contribute to the upper end of the 2030 EPS guidance range, or is it accretive beyond that?

    Jeff Martin clarified that the $9 billion upside is outside the base plan and could move Sempra into the upper end of the 2030 guidance. He noted a track record of moving prior upside opportunities into the plan and emphasized improved quality and certainty of future earnings as reasons for the robust outlook.

    “The larger items that can impact the long-term outlook are regulatory matters. I think we've talked about this before, but our 2028 GRC in California. This is something we've been working on in terms of regulatory strategy over the last 6 months, and Caroline and her team should be in a great position to make that filing in May of this year.”

    asked by Shahriar Pourreza · answered by Jeffery Martin

    2 min read6 chapters

    Detailed Narrative

    01

    Value Creation Initiatives

    Sempra introduced five value creation initiatives in 2025, focusing on prioritizing utility investments, highlighting LNG franchise value, simplifying the business, executing cost reductions, and elevating safety. These initiatives contributed to record adjusted EPS of $4.69 and established a strong foundation for future growth. The company aims to continue these efforts in 2026, including further cost structure reductions and workforce modernization.

    02

    Oncor's Expanded Capital Plan

    Oncor's capital plan for 2026-2030 has been increased to $65 billion, representing a 17% rise from the previous year's plan. 95% of this capital program is targeted for utility investments, primarily driven by strong growth in Sempra Texas, notably the acceleration of the Permian Basin Reliability Plan and the 765 kV strategic transmission expansion. The plan includes $9 billion of upside opportunities that are being tracked.

    03

    Strategic Asset Sales and Financing

    Sempra announced the sale of a 45% stake in SI Partners for $10 billion, implying an equity value over $22 billion, and the sale of Ecogas for approximately $500 million. These transactions, combined with a $5 billion increase in operating cash flows, have eliminated the need for new common equity issuances to fund the base capital plan. The company will retain a 25% residual stake in Sempra Infrastructure, valued at $5.5 billion, providing future flexibility.

    04

    Regulatory Progress and Balance Sheet Strength

    Oncor successfully reached a comprehensive settlement in its base rate review, which is expected to improve its authorized equity layer, ROE, and cost of debt, with a final order anticipated in the first half of 2026. Sempra is committed to maintaining a strong balance sheet and investment-grade credit ratings, targeting a 50 to 150 basis points cushion above FFO to debt thresholds post-SI Partners transaction close, and aiming for a debt-to-equity ratio of 49% or below.

    05

    Texas Growth and Rate Base Shift

    Sempra Texas's rate base is projected to grow at a remarkable 18% CAGR over the plan period, contributing to an overall rate base increase from $57 billion in 2025 to $97 billion in 2030. This growth is expected to make Sempra Texas surpass Sempra California as the majority of Sempra's rate base by 2030, reflecting a strategic capital allocation towards high-growth Texas markets.

    06

    Data Center Demand in Texas

    Oncor's service territory is experiencing significant AI-related and data center growth, with 273 GW in the interconnection queue, including 255 GW from data centers. Oncor is actively working through the ERCOT Batch Zero process and other avenues to address this demand, such as the South Dallas project, which could provide 4 GW of load serving capacity. Currently, 38 GW of load meet SB6 requirements for ERCOT's 2026 RTP projection.

    AI-generated summary of the company’s earnings call. Not investment advice.