Sempra Energy’s (SRE) adjusted second quarter 2014 earnings per share came in at $1.08, missing the Zacks Consensus Estimate of $1.11 by 2.7%. Earnings, however, grew 3.8% from $1.04 per share in the year-earlier quarter mainly due to higher contributions from its utility businesses.
Total Revenue
Total revenue in the quarter was $2,678 million, up 1% year over year. The top line however missed the Zacks Consensus Estimate by almost 2.7%. The company’s utility operations generated revenues of $2,370 million (up 1.6% year over year), while its energy-related businesses generated $308 million (down 3.4%).
Segment Update
San Diego Gas & Electric (SDG&E): Quarterly adjusted earnings were $123 million compared with $115 million in the year-ago quarter. The upside primarily reflects higher California Public Utilities Commission (CPUC) base margin and an improved operating performance.
Southern California Gas Company (SoCalGas): The segment generated earnings of $80 million, down from $81 million in second quarter 2013.
Sempra South American Utilities: The segment recorded earnings of $42 million, up from $34.0 million in the prior-year period.
Sempra Mexico: The segment recorded earnings of $34 million, up from $26 million in second quarter 2013. The improvement primarily reflects regulatory earnings for pipeline projects under construction.
Sempra Renewables: The segment recorded earnings of $18 million, up considerably from $15 million in second quarter 2013.
Sempra Natural Gas: The segment earned $4 million versus $9 million in the prior-year period.
Financial Update
As of Jun 30, 2014, cash and cash equivalents were $789 million, down from $904 million as of Dec 31, 2013. Long-term debt was $12,518 million (including current portion), up from $12,400 million at 2013 end. During the first half of 2014, cash flow from operating activities was $1,034 million, down from $1,105 million in the year-ago period.
The company’s capital expenditure was $860 million during the quarter versus $599 million in the second quarter 2013.
Sempra Energy has been riding high on its Cameron LNG Liquefaction-export Project. A Sempra Energy unit, Sempra LNG, is the prime company developing this project. The project received final investment approval and secured $7.4 billion of financing.
In Jun 2014, the project received the green light from the U.S. Federal Energy Regulatory Commission for the construction and operation of three-train gas liquefaction facilities with total capacity of 12 million tons per annum.
Guidance
For 2014, the company now expects earnings per share at or above the midpoint of its previously issued guidance of $4.25 to $4.55.
Peer Comparisons
Edison International (EIX) reported solid second quarter 2014 results with its adjusted earnings of $1.08 per share well ahead of the Zacks Consensus Estimate of 83 cents by 30.1%. Earnings for the quarter also increased 36.7% from the year-ago figure of 79 cents per share.
Entergy Corp. (ETR) posted second quarter 2014 operational earnings of $1.11 per share, higher than the year-ago number of $1.01 per share by 9.9%. However, earnings failed to surpass the Zacks Consensus Estimate of $1.14. Quarterly earnings increased on the back of strong performance from its Utility and Entergy Wholesale Commodities units.
American Electric Power Company Inc. (AEP) reported second quarter 2014 operating earnings of 80 cents per share, beating the Zacks Consensus Estimate of 75 cents by 6.7%. The quarterly figure also improved 9.6% from the year-ago adjusted profit of 73 cents per share. The upbeat performance was supported by investments in infrastructure and transmission as well as system improvement.
Zacks Rank
Sempra Energy presently holds a Zacks Rank #3 (Hold).
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