Sempra Energy’s (SRE) third-quarter 2014 earnings per share came in at $1.39, far ahead of the Zacks Consensus Estimate of $1.23 by 13.0%. Earnings also increased 16.8% from $1.19 per share in the year-earlier quarter on strength of its utility businesses.
Total Revenue
Total revenue in the quarter was $2,815 million, up 10.3% year over year. The top line also surpassed the Street expectation of $2,713 million by 3.8%. The company’s utility operations generated revenues of $2,463 million (up 10.8% year over year), while its energy-related businesses generated $352 million (up 7.3%).
Segment Update
San Diego Gas & Electric (SDG&E): Quarterly earnings were $157 million compared with $129 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 $98 million, down from $102 million in third-quarter 2013.
Sempra South American Utilities: The segment recorded earnings of $32 million, down from $39 million in the prior-year period.
Sempra Mexico: The segment recorded earnings of $63 million, up from $39 million in third-quarter 2013. The improvement primarily reflects regulatory earnings for pipeline projects under construction, along with the gain on sale of its 50% share of the first phase of the Energia Sierra Juarez wind-power project.
Sempra Renewables: The segment recorded earnings of $17 million, down considerably from $37 million in third-quarter 2013.
Sempra Natural Gas: The segment earned $26 million as against a loss of $7 million in the prior-year period.
Financial Update
As of Sep 30, 2014, cash and cash equivalents were $667 million, down from $904 million as of Dec 31, 2013. Long-term debt was $12,625 million (including current portion), up from $12,400 million at 2013 end. During the nine months of 2014, cash flow from operating activities was $1,661 million, up from $1,330 million in the year-ago period.
The company’s capital expenditure was $839 million during the quarter compared with $671 million in third-quarter 2013.
The company has pinned high hopes on its Cameron Liquefaction Project. In Sep 2014, the Cameron LNG joint venture broke ground, which is expected to be operational in 2018. In the same month, the Cameron LNG project received the final federal regulatory approval to export LNG to non-free-trade-agreement (FTA) countries.
A Sempra Energy unit, Sempra LNG, is the prime company developing this project, which comprises three liquefaction trains with a nameplate capacity of approximately 12 million tons per annum of LNG or approximately 1.7 billion cubic feet per day for up to 20 years.
Guidance
For 2014, the company now expects earnings per share on the higher end of its previously issued guidance of $4.25 to $4.55.
Peer Comparisons
Edison International (EIX) reported solid third-quarter 2014 results wherein its adjusted earnings of $1.52 per share came in ahead of the Zacks Consensus Estimate of $1.35 by 12.6%. The quarterly number rose an impressive 7% from the year-ago figure of $1.42 per share.
DTE Energy Company (DTE) reported third-quarter 2014 operating earnings per share of $1.02, missing the Zacks Consensus Estimate of $1.11 by 8.1%. The bottom line also lagged the year-ago figure of $1.13 by 9.7%.
Entergy Corp. (ETR) posted third-quarter 2014 operational earnings of $1.68 per share, in line with the Zacks Consensus Estimate. However, the reported number was down from earnings of $2.41 per share in the year-ago period.
Zacks Rank
Sempra Energy presently holds a Zacks Rank #3 (Hold).
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