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Introduction & Market Context
Sempra Energy (NYSE:SRE) presented its second quarter 2025 earnings results on August 7, 2025, reporting flat adjusted earnings per share year-over-year while emphasizing its strategic transition toward a more utility-centric business model. The company’s stock responded positively in pre-market trading, up 1.11% to $82.05, suggesting investors are focusing on the company’s long-term strategy rather than the quarter’s flat performance.
The energy infrastructure company is maintaining its full-year guidance despite reporting Q2-2025 adjusted EPS of $0.89, unchanged from the same period last year. This follows a stronger first quarter where Sempra exceeded analyst expectations with adjusted EPS of $1.44 versus forecasts of $1.35.
Quarterly Performance Highlights
Sempra reported Q2-2025 GAAP earnings of $461 million, down significantly from $713 million in Q2-2024. However, adjusted earnings increased slightly from $567 million to $583 million year-over-year. The company’s year-to-date adjusted EPS stands at $2.34, keeping Sempra on track to meet its full-year guidance.
As shown in the following financial results summary:
The earnings drivers varied across Sempra’s business segments. Sempra California experienced a $37 million decrease in adjusted earnings due to lower income tax benefits and higher net interest expense. Meanwhile, Sempra Texas contributed a $6 million increase from higher equity earnings related to increased invested capital and customer growth. Sempra Infrastructure provided the strongest positive impact with a $26 million increase primarily due to higher revenues from contract modifications and increased power volumes.
The following waterfall chart illustrates these adjusted earnings drivers:
Strategic Initiatives
Sempra is executing several strategic initiatives aimed at creating shareholder value while transitioning to a more utility-focused business model. The company has committed to investing $13 billion in 2025, with over $5 billion already deployed in the first half of the year. These investments prioritize utility operations and improved returns, particularly in Texas where regulatory changes are expected to enhance profitability.
The company’s executive summary highlights its key value creation initiatives:
A significant component of Sempra’s strategy involves its capital recycling program. The company has extended its Right of First Offer (ROFO) process with existing limited partners and signed a non-binding letter of intent with KKR regarding Sempra Infrastructure Partners. Additionally, Sempra has initiated the sale process for 100% of Ecogas, its natural gas distribution business in Mexico, receiving interest from both strategic and financial buyers. These transactions are expected to close by Q2-Q3 2026 and will allow Sempra to redirect capital toward its U.S. utilities.
Texas Expansion and Regulatory Developments
Sempra is positioning itself to capitalize on significant growth opportunities in Texas through its subsidiary Oncor. The company highlighted the passage of the Unified Tracker Mechanism (UTM), a legislative update expected to enhance cost recovery and improve Oncor’s earned annual return on equity by 50 to 100 basis points. Additionally, Oncor filed a comprehensive base rate review in Q2-2025 to further support critical utility investments in Texas.
The company’s Texas transmission expansion plans are particularly noteworthy, with significant investments planned for the Permian Basin Reliability Plan and other transmission projects. The following map illustrates these expansion efforts:
Sempra’s projected rate base is expected to grow from $57 billion in 2025 to $80 billion by 2029, with PUCT Transmission and Distribution increasing from 45% to 52% of the total mix. This shift underscores the company’s strategic emphasis on regulated utility operations, particularly in Texas.
The following pie charts demonstrate this evolving utility mix:
Forward-Looking Statements
Despite the flat quarterly performance, Sempra affirmed its financial guidance across multiple timeframes. The company maintained its FY-2025 adjusted EPS guidance range of $4.30-$4.70 and its FY-2026 EPS guidance range of $4.80-$5.30. More importantly, Sempra reaffirmed its guidance at the high-end or above its projected EPS compound annual growth rate (CAGR) of 7-9% for 2025 through 2029.
The company’s confidence in its long-term outlook appears to be supported by several operational achievements, including the successful export of the 1,000th LNG cargo from Cameron LNG Phase 1 and steady progress on five significant construction projects: Cimarrón Wind, ECA LNG Phase 1, Port Arthur Pipeline, Louisiana Storage, and Port Arthur LNG Phase 1.
Sempra also highlighted its continued focus on safety and operational excellence, including wildfire mitigation efforts. The company reported that it has hardened 100% of San Diego Gas & Electric’s transmission system located in Tier 3 High Fire-Threat Districts, with all high fire-threat district transmission expected to be completed by 2028.
As Sempra continues its strategic shift toward a more utility-centric business model, investors will be watching closely to see if the company can deliver on its promised long-term growth while navigating the challenges of flat quarterly performance and ongoing regulatory changes in its key markets.
Full presentation:
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