Sempra Energy (SRE)

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Sempra Energy (SRE)

Q2 2011 Earnings Call

August 09, 2011 1:00 pm ET


Joseph Householder - Chief Accounting Officer, Senior Vice President and Controller

Donald Felsinger - Executive Chairman and Chairman of Executive Committee

Debra Reed - Chief Executive Officer and Director

Steven Davis - Vice President of Investor Relations

Neal Schmale - President, Chief Operating Officer and Director

Mark Snell - Chief Financial Officer and Executive Vice President


Michael Lapides - Goldman Sachs Group Inc.

Mark Barnett - Morningstar Inc.

Paul Patterson - Glenrock Associates

Ashar Khan - SAC Capital

Faisel Khan - Citigroup Inc



Good day, and welcome to the Sempra Energy Second Quarter 2011 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Steve Davis. Please go ahead, sir.

Steven Davis

Good morning, and thank you for joining us. I’m Steve Davis, Vice President of Investor Relations. This morning, we'll be discussing Sempra Energy's second quarter 2011 financial results. A live webcast of this teleconference and slide presentation is available on our website under the Investors section.

With us today in San Diego are several members of our management team, including Don Felsinger, Executive Chairman; Debbie Reed, Chief Executive Officer; Neal Schmale, President and Chief Operating Officer; Mark Snell, Executive Vice President and Chief Financial Officer; and Joe Householder, Senior Vice President and Controller.

You'll note that Slide 2 contains our Safe Harbor statement. Please remember that this call contains forward-looking statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. As you know, they involve risks, uncertainties and assumptions, so future results may differ materially from those expressed on our call. These risks, uncertainties and assumptions are described at the bottom of today’s press release and are further discussed in the company’s reports filed with the Securities and Exchange Commission. It's important to note that all of the earnings per share amounts in our presentation are shown on a diluted basis.

With that, I'll turn it over to Don.

Donald Felsinger

Thanks, Steve, and thank you all for joining us. I'd like to begin today's call by commenting on our recent CEO succession process. We'll then review our second quarter financial results and then provide an operational update on our businesses. In light of Neal Schmale's retirement later this year and my retirement next year, our board engaged in a thoughtful year-long process to ensure a smooth leadership succession.

That process culminated in the election of Debbie Reed as CEO and as a Sempra board member. As many of you know, Debbie has a broad understanding of the energy industry and has excelled in her 30-year career with the Sempra companies.

She has demonstrated outstanding leadership at every level of responsibility. She is also well respected by key stakeholders that we interface with, including customers, regulators, elected officials community leaders and our employees. Given this, we decided that she was the right person to lead the company going forward.

Once the decision was reached that Debbie would succeed me as CEO, we decided to make that transition effective immediately. This timing provides Debbie with the opportunity to focus on Sempra's annual strategic review of our business. Additionally, this timing allows Neal and me to provide support and guidance to Debbie and the rest of the organization during this transition until our retirements.

We have an excellent management team in place to take the company forward. The board and I are confident that Debbie, Mark, the business unit presidents and the rest of the management team will continue our excellent track record of creating shareholder value and delivering great service to our customers.

Now I'd like to hand the call over to Debbie.

Debra Reed

Thanks, Don. I'm pleased to join you all in my new role today. Before I review our second quarter results with you, I would like to address the question some of you have asked concerning my strategic vision for Sempra.

I want to start by reiterating that our strategy has been and will continue to be focused on regulated utilities and contracted energy infrastructure. It is a space within our sector where we have demonstrated success and one in which we have deep competency.

As Don mentioned, we have just begun our annual strategic review at Sempra in which we update our 5-year business plan. This year, I have 3 objectives that we will complete as part of this process.

First, we will conduct a thorough market assessment of the short- and long-term business environment in which we operate. We will be analyzing market trends to identify opportunities and risks. As an example, environmental regulations are prompting retirements of coal plant, at the same time that nuclear plant development has been substantially slowed. This trend is likely to create opportunities for natural gas-fired generation and the development of new gas infrastructure, including storage.

Secondly, we will be reviewing the current and expected performance of our asset portfolio considering market cycles and focusing on getting the greatest value from these assets. We will develop specific strategies for assets not meeting our return expectation in this market environment.

Lastly, we will put in place the organization and leadership to execute and deliver on our plan. I feel fortunate to have Don, Neal, Mark and the rest of the management team available to draw upon and support me in this process as I transition into my new role.

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