DBA Sempra

Good day, and welcome to SEMPRA's second quarter earnings call. Today's conference is being recorded. At this time, I'd like to turn it over to Louise Bick. Please go ahead.

Good morning, and welcome to SEMPRA's second quarter 2025 earnings call. A live webcast of this teleconference and slide presentation are available on our website under the events and presentation section. Many of you may know me. I'm Louise Bick, Vice President of Investor Relations. Glenn has recently taken on other financial responsibilities at SEMPRA, and I'm excited to be leading our IR program now. I look forward to seeing you more on the road in the coming weeks and months. We have several members of our management team with us today, including Jeff Martin, Chairman and Chief Executive Officer, Karen Sedgwick, Executive Vice President and Chief Financial Officer, Justin Byrd, Executive Vice President of SEMPRA and Chief Executive Officer of SEMPRA Infrastructure, Caroline Wen, who I'd like to know, is a new Executive Vice President of SEMPRA. With over 35 years at our California utilities, Caroline brings extensive safety and operational expertise to her role overseeing SEMPRA California's dual utility platform, both SCG&E and SoCalGas. Alan Nye, Chief Executive Officer of Encore, Dawn Clevenger, Chief Financial Officer of Encore, Diane Wold, Vice President Controller and Chief Accounting Officer of SEMPRA, and other members of our senior management team. 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 statements we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent 10-K and 10-Q filed with the SEC. Earnings for common 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 gap measures. We also encourage you to review our 10Q for the quarter ended June 30th, 2025. I'd also like to mention that forward-looking statements contained in this presentation speak only as of today, August 7th, 2025, 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 all for joining us today. Earlier this morning, we reported second quarter 2025 adjusted EPS of 89 cents, which is in line with the prior period's results. With steady execution on our 2025 value creation initiatives, we're pleased with our first half results and remain on track to achieve our goals for the year. As a result, we're also affirming our full year of 2025 adjusted EPS guidance range of $4.30 to $4.70, and we're also affirming our 2026 EPS guidance of $4.80 to $5.30. Next, I'd like to provide an update on the progress we've made on the five value creation initiatives announced earlier this year. As a starting point, our current capital plan targets the investment of roughly $13 billion this year with over $10 billion allocated toward our growing U.S. utilities. Through the first half of the year, we've already deployed more than $5 billion of new capital while continuing our efforts to strengthen the regulatory compacts in the jurisdictions where we operate. This includes advocating for constructive regulatory and legislative frameworks to better serve all of our stakeholders. The recently passed House Bill 5247 in Texas is a great example, and Karen will touch on that development later in today's presentation. Next, I want to mention that we're making steady progress on our capital recycling initiatives. In the equity sale at Semper Infrastructure, we've executed an extension to the right of first offer process that is outlined in the limited partnership agreement. With the benefit of that extension, Semper has entered into a non-binding letter of intent with KKR. The letter of intent contemplates an equity sell within or even above the 15% to 30% range, depending upon valuation and other considerations. Given that we're in ongoing negotiations, we're limited at this time in what we can disclose, but we'll look to provide additional updates once reaching a definitive agreement. During the quarter, we also advanced the ecogas sales process. and have received substantial interest from both strategic and financial parties. I'd refer you to slide 10 for more color on both transactions. As previously mentioned, we expect these transactions to close sometime in the middle of 2026, and in combination, we expect these transactions will be accretive to the company's EPS forecast as well as credit. As is our convention, we don't provide any details on M&A transactions until definitive agreements are in place. Subject to the transactions being completed next year, we expect a notably higher contribution of earnings from our regulated utilities, which we expect to improve SEMPRA's overall credit and business risk profile. In that regard, I'd like to refer you to slide 12 of the appendix, which highlights our changing business mix. As we continue our transition toward a more utility-focused business model, this slide demonstrates two key points. Number one, our utilities are anchored in the two largest economic markets in the United States, California and Texas. And number two, our regulated investments provide investors with broad exposure to both electric and gas utility investments in different markets with constructive regulatory compacts. Taken together, regulatory and geographic diversity across both electric and natural gas investments improves the consistency of our earnings and cash flow while also reducing financial risk. Moreover, because our five-year capital plan increasingly prioritizes growth at Encore, we expect our business mix to become more weighted toward Texas through the end of the decade, a proposition that we feel strongly will enhance Semper's value over time. Moving to our Fit for 2025 campaign, we continue to make solid progress. The focus here, you'll recall, is on improving customer affordability by reducing internal costs, improving productivity, and aligning Semper's cost structure to its future business needs. To date, we've adopted new technology, found innovative ways to streamline processes, and realigned our organizational structure to better serve our customers. Finally, I'd like to discuss our continued progress in mitigating enterprise risk. SDG&E, as you know, has long been a leader in operational excellence and has made significant investments in data science, technology, and wildfire mitigation measures. Moreover, we're pleased to report that SDG&E has hardened 100% of its transmission system with steel structures in the highest fire threat areas, or what we call Tier 3 zones. SDG&E expects to achieve its medium-term goal of fully hardening Tier 2 zones by the end of 2028. I'd also like to highlight that over the last 24 months, our engineering and project management teams working alongside our vendors have been successful in reducing the cost per mile of undergrounding by 40%, demonstrating again our commitment to operational efficiency and safety while also improving the affordability of our future services. And with that, please turn to slide five, where Karen will walk through additional business and financial updates.