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 the conference over to Louise Bick. Please go ahead.

Good morning and welcome to Sempra's second quarter 2026 earnings call. A live webcast of this teleconference and slide presentation are available on our website under the events and presentation section. 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 Bird, Executive Vice President of Sempra and Chief Executive Officer of Sempra Infrastructure, Caroline Winn, Executive Vice President of Sempra, Alan Nye, Chief Executive Officer of Encore, Dyan Wold, Vice President, Controller and Chief Accounting Officer 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 statement we make today. The factors that could cause our actual results to differ materially are discussed in the company's most recent TEN-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 reconciliation to GAAP measures. We also encourage you to review our 10Q for the quarter ended June 30th, 2026. I'd also like to mention that forward-looking statements contained in this presentation speak only as of today, August 6th, 2026. 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. Finally, we've established a new corporate updates page within the Sempra Investors website to post investor updates while complying with our disclosure obligations under SEC Regulation FD. We encourage you to subscribe to the email alerts so you remain informed of any developments. With that, please turn to slide three and let me hand the call over to Jeff.

Thank you for joining us today. Our operating businesses are executing well, and our employees are aligned around our mission of building America's leading utility growth business. The strength of our execution can be seen in year-to-date financial results with double-digit gains in adjusted EPS and positive contributions from all three growth segments. Karen will cover our financial results in more detail later in the call, but on this first slide, I thought it would be helpful to cover our key priorities for the third quarter. The first is the pending sale of a 45% equity stake in SI Partners. The transaction is expected to close later in the quarter and directly supports our corporate strategy by simplifying our business model, recycling capital into our regulated utilities, displacing the need for common equity in our current base capital plan, and deconsolidating close to $9 billion of debt from Sempra's balance sheet. Second, our capital recycling program also extends to Mexico, where Sempra Infrastructure is making solid progress on the sale of ECOGAS. They recently received a critical regulatory approval, which puts the transaction on track to close later this month. Finally, in addition to the updates Sempra Infrastructure provided last week, they remain focused on the commissioning process at ECA LNG Phase 1, which remains a key priority as they continue to move that project toward full commercial operations. Sempra infrastructure is also pleased with the continued progress at Port Arthur LNG phase one and two, which remain on time and on budget. Please turn to the next slide. Texas is continuing to experience unprecedented growth in electricity demand as evidenced by ERCOT's new all-time peak load of 91 gigawatts that was reached last month. Importantly, with forecasts of significant low growth in the future, Encore is well positioned to participate in what we believe is a multi-decade investment opportunity focused on modernizing and extending the electric grid. Encore's current capital plan accounts for major investment drivers, such as new high-voltage transmission projects and other system upgrades. You'll recall that Encore is executing on a five-year base capital plan of $47.5 billion with $10 billion of incremental capital opportunities through 2030. Through the first half of the year, ENCORES made a lot of progress in firming up these incremental opportunities, specifically the $4 billion of North and Central Texas transmission upgrades that were recently endorsed by ERCOT. Encore's other incremental capital opportunities include an additional $3 billion of non-permian basin reliability plan projects endorsed by ERCOT in 2025 and $3 billion of investment that forms a part of the system resiliency plan filing that Encore is expected to make next year. As we look ahead, we also expect a new set of capital opportunities. As an example, this slide highlights that any additional investments to served load from the Batch Zero process fall outside of Encore's $10 billion incremental capital opportunity. Please turn to the next slide where we'll discuss preliminary expectations related to ERCOT's Batch Zero process. The PUCT recently approved ERCOT's Batch Zero process, which establishes a system-wide approach for selecting and sequencing large load customer interconnection requests. Although the timeline for the batch process is uncertain, 44 gigawatts of large load requests are expected to be eligible as base or studied load in OnCore's transmission system. By classification, this includes 27 gigawatts of base load defined as not requiring additional interconnection studies or allocation and 17 gigawatts of studied load which will be evaluated and assigned through a new system-wide reliability analysis. To put the magnitude of these figures in context, 44 gigawatts of additional demand would represent a 140% increase to Encore's current system peak load of 31 gigawatts. Importantly, this projected load meets all the PUCT eligibility requirements. Encore holds nearly $6 billion in collateral from large load customers, including over $2 billion for the 44 gigawatt of batch zero submissions shown here. Of the 44 gigawatts, it's important to note that approximately 8 gigawatts is already connected to the system and continuing to ramp toward full utilization. This demonstrates that demand growth in Texas is not just a projection, but is actively occurring on Encore's network. ERCOT will now study how the projects included in the Batch Zero process impact the existing transmission system and provide the initial results of that study. If ERCOT were to determine additional transmission is required to be built by Encore, the capital expenditures for those projects would be incremental to Encore's base capital plan and incremental CapEx opportunities. Looking ahead, Encore expects to update its five-year plan on our fourth quarter call because ERCOT's current timeline for identifying additional transmission projects is expected to extend beyond February of next year. We don't expect the roll-forward plan to include new capital investments associated with Batch Zero. The key takeaway here is that we have a growing confidence in Encore's execution of its base capital plan and incremental capital opportunities and believe there's increasing momentum behind Encore's long-term growth separate and apart from how data center growth materializes in the state. Now please turn to the next slide where Karen will walk through our financial results.