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Sempra Energy (SRE) Lags Q2 Earnings, Keeps 2016 View

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Sempra Energy’s (SRE - Free Report) second-quarter 2016 adjusted earnings per share came in at 79 cents, missing the Zacks Consensus Estimate of $1.00 by 21%. Earnings also plunged 23.3% from $1.03 reported in the prior-year quarter.

GAAP earnings were 6 cents per share in the quarter, compared with $1.17 a year ago.

Sempra Energy (SRE - Free Report) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Total Revenues

In the quarter under review, total revenue was $2,156 million, down 8.9% year over year, due to lower contributions from the energy-related businesses (30.8%) and utilities (6.5%).

Quarterly Segment Update

San Diego Gas & Electric (SDG&E): Quarterly earnings were $100 million compared with the year-ago figure of $126 million, reflecting a $31 million after-tax refund to ratepayers of benefits from tax repairs deductions due to the final General Rate Case decision, partly offset by a $9 million after-tax retroactive benefit for first-quarter 2016 earnings.

Southern California Gas Company (SoCalGas): The segment registered net loss of $1 million. In the second quarter of 2015, the company had earned $70 million. SoCalGas recorded a $49 million after-tax refund to ratepayers of benefits from tax repairs deductions due to the final General Rate Case decision, offset by a $12 million after-tax retroactive benefit for first-quarter 2016 earnings. The segment also witnessed an after-tax impairment cost of $13 million in the quarter associated with the California Public Utilities Commission's (CPUC) recent refusal of the proposed North-South Pipeline.

Sempra South American Utilities: The segment recorded earnings of $43 million in the second quarter, down from $45 million in the prior-year period.

Sempra Mexico: The segment recorded earnings of $57 million, up from $50 million in the prior-year period, primarily due to favorable foreign currency effects.

Sempra Renewables: The segment recorded quarterly earnings of $12 million, down from $19 million in the prior-year period.

Sempra Natural Gas: The segment reported net loss of $149 million. In the year-ago period, it had registered earnings of $40 million.

Parent & Other: The segment reported a loss of $46 million in the second quarter, narrower than the year-ago loss of $55 million.

SEMPRA ENERGY Price, Consensus and EPS Surprise

SEMPRA ENERGY Price, Consensus and EPS Surprise | SEMPRA ENERGY Quote

Financial Update

As of Jun 30, 2016, Sempra Energy’s cash and cash equivalents were $616 million, compared with $403 million as of Dec 31, 2015.

Long-term debt was $13,178 million as of Jun 30, 2016, compared with $13,134 million at 2015 end.

Cash flow from operating activities was $882 million in the first half of 2016, down from $1,219 million in the year-ago period.

In the second quarter, the company’s capital expenditures and investments were $1,051 million, compared with $813 million in the prior-year period.

Guidance

Sempra Energy reiterated its 2016 adjusted earnings guidance in the range of $4.60 to $5.00 per share.

Peer Releases

ONEOK Inc. (OKE - Free Report) reported second-quarter 2016 operating earnings of 40 cents per share, missing the Zacks Consensus Estimate of 42 cents by 4.8%.

Vectren Corporation reported second-quarter 2016 operating earnings of 39 cents per share, missing the Zacks Consensus Estimate of 42 cents by 7.1%.

An Upcoming Peer Release

Clean Energy Fuels Corp. (CLNE - Free Report) is scheduled to report second-quarter earnings on Aug 9. The Zacks Consensus Estimate stands at a loss of 14 cents.

Zacks Rank

Sempra Energy currently has a Zacks Rank #4 (Sell).

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