DBA Sempra

Good day and welcome to the SEMPRA fourth quarter earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Nelly Molina. Please go ahead.

Good morning, everyone, and welcome to SEMPRA's fourth quarter 2021 earnings call. A live webcast of this teleconference and a slide presentation is available on our website under the investor section. We have several members of our management team with us today, including Jeff Martin, Chairman and Chief Executive Officer. Trevor Mihalik, Executive Vice President and Chief Financial Officer. Lisa LaRock Alexander, Senior Vice President, Corporate Affairs and Chief Sustainability Officer. Justin Bird, Chief Executive Officer of Sempra Infrastructure. Faisal Khan, Chief Financial Officer of Sempra Infrastructure. Alan Nye, Chief Executive Officer of Encore. Kevin Sagara, Executive Vice President and Group President, and Peter Wall, Senior Vice President, Controller, and Chief Accounting Officer. Before starting, I'd like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in any forward-looking statement we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K filed with the SEC. All of the earnings per share amounts in our presentation are shown on a diluted basis, and we'll be discussing certain non-GAAP financial measures. Please refer to the presentation slides that accompany this call for a reconciliation to GAAP measures. We also encourage you to review our annual report on Form 10-K for the year ended December 31st, 2021. I'd also like to mention that the forward-looking statements contained in this presentation speak only as of today, February 25th, 2022, and it's important to note that the company does not assume any obligation to update or revise any of these forward-looking statements in the future. With that, please turn to slide four, and let me hand the call over to Jeff.

Thank you, Nellie, and thank you all for joining us today. In 2021, we delivered another year of strong performance. We'll discuss some of the operating highlights in a moment, but on the financial side, we invested over $7 billion in critical energy infrastructure, a record amount for our company, and we delivered full-year 2021 adjusted earnings per share of $8.43, well above our increased adjusted EPS guidance range of $7.75 to $8.35 per share. The strength of that performance, together with a portfolio of investment opportunities across all three of our growth platforms, gives us a lot of confidence in the future. Today, we're announcing approval by our board of directors of an increased annualized dividend of $4.58 per share, consistent with our longstanding commitment to return value to our shareholders, record five-year capital plan of $36 billion, with nearly 94 percent dedicated to our utilities, continued confidence in our full-year 2022 EPS guidance range, and the issuance of our full-year 2023 EPS guidance range. And finally, we're announcing a projected long-term EPS growth rate for the company of 6 to 8 percent. Please turn to the next slide. Next, I'd like to highlight a few of our accomplishments. From a strategic standpoint, we've made great progress over the last four years in updating our portfolio with three goals in mind. First, prioritizing markets with strong fundamentals and constructive regulation. Second, simplifying our business model to improve execution. And third, building scale, financial strength, and a high performing culture to deliver improved financial results. 2021 was another key milestone in that journey. We've completed a series of transactions to form Semper Infrastructure, a simplified growth platform with scale and portfolio synergies, all while generating over $3 billion by selling a non-controlling interest to support growth and the return of capital to our owners. Furthermore, these transactions highlight the underlying market value of this business and demonstrate Semper's continued ability to source lower cost of capital and recycle it into organic growth at our utilities. Moving on, we continue to advance our capital plan in 2021, deploying over $7 billion with a continued focus on supporting the strong growth at our utilities. From a safety standpoint, we had record employee safety results at Sempra California and Sempra Infrastructure also had a great year, advancing construction at ECA LNG phase one on time and on budget with over 1 million hours work without a lost time injury. Taking together these accomplishments and the quality of execution we're seeing across our businesses gives us confidence in our ability to capitalize on future growth opportunities. Please turn to the next slide. SEMPRA's growth platforms are strategically positioned in highly attractive and contiguous markets in North America, where we serve one of the largest utility consumer bases in the United States. Each of these growth platforms have both scale and a leadership position in our core markets, and that is central to our strategic execution. Please turn to the next slide. Our growth platforms benefit from three main competitive advantages, size and scale in attractive markets, lower risk and strong recurring cash flows associated with T&D investments, and positive growth trends centered on the expansion of energy networks to support cleaner forms of energy, improved safety and reliability, and the continued integration of North American energy markets. Our three platforms combine for nearly 300,000 miles of transmission and distribution lines, all in key markets in North America, while serving nearly 40 million consumers. These integrated growth platforms generated approximately $2.6 billion in 2021 full-year adjusted earnings and position us to grow earnings well into the future. Trevor will walk through the details on our long-term growth drivers later in the presentation, but at a high level, Our projected growth of 6 to 8 percent is supported by strong continuing investment at SEMPRA California to support safety, reliability, and the state's ambitious energy transition goals, investment in our Texas utilities to support strong economic growth, and a significant interconnection queue loaded with renewables, and disciplined investments at SEMPRA infrastructure for fully contracted assets currently under construction, and potential upside to projected growth from projects we currently have in development. Finally, I think it's worth noting that the vast majority of our assets have some form of inflation protections built into them, either through regulatory constructs such as upcoming rate cases or pass-through mechanisms on our infrastructure projects. Additionally, given our strategic focus on T&D infrastructure, the lower risk section of the energy value chain, We believe we've reduced our exposure to many of the traditional risks in the energy space, whether it's commodity exposure, extreme weather, retail credit, or stranded generation investments. As we continue to advance our role as a leader in the energy transition, we're also creating an opportunity on this call and future calls for our Chief Sustainability Officer, Lisa Alexander, to update you on our progress. Please turn to the next slide.