Sempra Beats on Q4 Earnings, Misses Revs

Zacks

Sempra Energy’s (SRE) adjusted fourth quarter 2013 earnings per share came in at $1.13, above the Zacks Consensus Estimate of 98 cents by 15.3%. The quarterly results also increased 4.6% from the year-ago adjusted profit of $1.08 per share mainly due to higher contributions from its energy-related businesses.

Full year 2013 adjusted earnings were $4.18 per share, missing the Zacks Consensus Estimate of $4.39. The reported number also dropped 3.9% from the year-earlier profit of $4.35 per share.

Total Revenue

Total revenue of Sempra Energy in the quarter was $2,705.0 million, up 1.4% year over year. The top line, however, missed the Zacks Consensus Estimate by $62.0 million. The company’s utility operations generated revenues of $2,420.0 million (up 3.3% year over year), while its energy-related businesses generated $285.0 million (down 12.6%).

In 2013, the company generated $10,557.0 million in total revenue, up 9.4% year over year and above the Zacks Consensus Estimate of $10,409.0 million.

Segment Update

San Diego Gas & Electric (SDG&E): Quarterly earnings for San Diego Gas & Electric were $119.0 million compared with $110.0 million in the year-ago quarter. The higher number primarily reflects higher CPUC base margin.

Southern California Gas Company (SoCalGas): The segment generated earnings of $98.0 million, down from $99.0 million in fourth quarter 2012.

Sempra South American Utilities: The segment recorded earnings of $43.0 million, down marginally from $46.0 million in the prior-year period.
 
Sempra Mexico: The segment recorded earnings of $26.0 million, down from $35.0 million in fourth quarter 2012.

Sempra Renewables: The segment recorded earnings of $6.0 million, down considerably from $14.0 million in fourth quarter 2012. The decrease was due primarily to deferred tax benefits in 2012 from assets placed into service.

Sempra Natural Gas: The segment earned $9.0 million versus $19.0 million in the prior-year period.

Financial Update

As of Dec 31, 2013, cash and cash equivalents were $904.0 million, up from $475 million as of Dec 31, 2012. Long-term debt was $12,400 million (including current portion), up from $12,346 million at 2012 end. During 2013, cash flow from operating activities was $1,784.0 million, down from $2,018.0 million last year.

Guidance

For 2014, Sempra reaffirmed its expectation between $4.25 and $4.55 per share. Earlier, the company had projected earnings of $5.10 to $5.60 per share for 2017. However, its earnings guidance through 2017 does not take into account any major contribution from its Cameron liquefied natural gas export project in Louisiana. The project is not expected to be fully operational until the end of 2018.

Zacks Rank

Sempra Energy presently retains a short-term Zacks Rank #3 (Hold). Stocks worth considering are Southwest Gas Corp. (SWX), Vectren Corp. (VVC) and Exelon Corp. (EXC), all with a Zacks Rank #2 (Buy).

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