) reported its third-quarter 2012 results with pro forma earnings
per share of $1.33 beating the Zacks Consensus Estimate of $1.00
per share and year-ago figure of $1.20.
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The company reported GAAP earnings per share of $1.09 versus
$1.20 in the year-ago quarter. The variance of 24 cents between
GAAP and pro forma earnings per share was due to a non-cash
charge related to a write-down on the company's investment in the
Rockies Express Pipeline.
Total revenue of Sempra Energy in the third quarter of 2012 was
$2.5 billion, down 2.7% year over year. However, reported
quarterly revenue comfortably beat the Zacks Consensus Estimate
of $2.3 billion.
In the reported quarter, Sempra Utilities' top line increased to
$2.2 billion from $2.1 billion in the year-ago quarter.
Energy-related businesses generated revenues of $337 million
compared with $511 million in the year-ago quarter.
San Diego Gas & Electric:
Quarterly earnings for San Diego Gas & Electric (SDG&E)
were $174 million compared with $113 million in the year-ago
quarter, primarily due to lower taxes, higher transmission
earnings and reduced expenses related to the 2007 wildfires.
Southern California Gas Company (SoCalGas):
The segment generated earnings of $71 million, down $81 million
year over year.
Sempra South American Utilities:
The segment recorded earnings of $40 million, down from $50
million in the third quarter of 2011. In the third quarter 2011,
Sempra South American Utilities had a foreign-currency benefit of
The segment recorded earnings of $54 million compared with $47
million last year. This was due primarily to improved operating
The segment recorded earnings of $13 million, up from $1 million
in the third quarter of 2011. The increase was primarily
due to an increase in solar and wind assets.
Sempra Natural Gas:
The segment recorded a loss of $68 million versus a profit of $41
million in third-quarter 2011. Segment results were impacted by
lower natural gas and power prices, including the expiration of
the 10-year California Department of Water Resources power-supply
contract in the third quarter 2011. Excluding a $60 million
charge related to the Rockies Express Pipeline, the segment
recorded an $8 million loss in the third quarter 2012.
As of September 30, 2012, cash and cash equivalents were $530
million versus $657 million at the end of September 30, 2011.
Long-term debt increased to approximately $11.2 billion at the
end of the reported period from $10.1 billion at fiscal-end 2011.
Sempra Energy reaffirmed its fiscal 2012 pro forma earnings
guidance range of $4.00 to $4.30 per share. However, including
the charges related to the Rockies Express Pipeline and a
second-quarter deferred tax benefit at the parent company related
to life-insurance contracts, the GAAP guidance was trimmed. The
company now expects fiscal 2012 GAAP earnings guidance in the
range of $3.21-$3.51 versus the earlier range of $3.46-$3.76.
Sempra's Earnings surpassed our expectation by 33 cents. Going
forward, the company continues to make progress with its major
infrastructure projects. In June this year, the company's Sunrise
Powerlink project came online. The project is expected to help in
meeting the power demand and improving reliability of the
regional electric grid.
Recently in October the company was awarded two bids by Comisión
Federal Electricidad ("CFE"), Mexico's state-owned electric
utility, to construct a $1 billion natural gas pipeline network
in northwestern Mexico. The new pipeline will be comprised of two
segments that will interconnect with the U.S. interstate pipeline
system and provide natural gas to existing CFE power plants. The
capacity for each segment is fully contracted by the CFE for a
25-year term. The first pipeline is expected to begin operations
in late 2014.
Moreover, the company's diversified basket of businesses
insulates its operations to a significant degree from regulatory
rate risks. However, the above positives are offset by a lack of
near-term positive triggers, along with near-term trepidation in
natural gas prices and pending regulatory cases.
The company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the
Sempra Energy is a southern California-based energy services
holding company involved in the sale, distribution, storage, and
transportation of electricity and natural gas. The company's
businesses are broadly divided into Sempra Utilities, Sempra
International and Sempra U.S. Gas & Power.
Some of the company's main competitors are
MDU Resources Group Inc.