On the heels of the 2023 full-year earnings call, Sempra CEO Jeffrey W. Martin said the company’s record capital plan provides a roadmap to strong growth for the company.
“It’s an exciting time for our company,” said Sempra Chairman and CEO Jeffrey W. Martin on CNBC’s “Mad Money with Jim Cramer” on Feb. 29 following the 2023 full-year earnings call where Martin announced a company-record $48 billion five-year capital plan and reaffirmed the company’s projected long-term EPS growth rate of 6% to 8%1.
Martin shared with Cramer that a portfolio of strong growth opportunities prompted the 20% increase to the company’s five-year capital plan2. The capital plan largely focuses on Sempra California and Sempra Texas, two of Sempra’s three growth platforms.
“We increased our capital plan by roughly $8 billion and that will allow us to fund several strategic initiatives — grid modernization, as well as key investments in safety and reliability. Plus, we’ll be making additional grid investments to bring renewables online at a faster pace,” Martin said.
Over time, American companies that have demonstrated sustained, long-term success have also demonstrated an adept approach to continuing to invest in and optimize their corporate strategy, Martin said. Since its founding 25 years ago, this has been a hallmark of Sempra’s success.
“We have long talked about the importance of strategy,” Martin said. “We view it as an opportunity to organize our assets, employees and investments to create a competitive advantage in the marketplace.”
Over the last six years, the company has steadily focused on building leadership positions in large economic markets like California and Texas while narrowing its investment focus to the transmission and distribution (T&D) portion of the energy value chain.
“In combination, these two features of our strategy have positioned our company to grow cash flows and earnings at an attractive rate with less exposure to commodity and other related risks,” Martin said.
“We remain excited about new opportunities in the state of California,” Martin said.
With the state committed to being a clean energy leader, the company is taking active steps to “green the grid” and make investments in safety and reliability for the benefit of its customers. At Sempra California’s San Diego Gas & Electric, the company is a national leader in its support for renewables, including rooftop solar where San Diego County has an impressive 23 percent penetration rate. The company is also making investments to support electric vehicle (EV) penetration in the San Diego region, which is home to roughly 140,000 EVs.
Martin also detailed the company’s efforts in Texas, which center on the need to expand and modernize the electric grid to help support projected economic expansion and continued population growth. In addition to these regulated T&D investments, the company has also launched a $13 billion3 construction project to build a new liquefied natural gas (LNG) export project in Port Arthur, TX. Responding to the unique opportunity set in Texas, Martin said, “We certainly believe we will be among the largest capital investors in the State of Texas through the end of the decade.”
Cramer showed a lot of interest in the size and scale of Sempra’s growth story in LNG and the Department of Energy’s (DoE) recent pause in permitting new export projects.
“Today, the United States is the global leader in LNG,” Martin said. “Going forward, we expect that will continue because the long-term fundamentals of LNG are intact due to continued strong demand from Europe and Asia and the need to back out coal as a feedstock for power production.”
Martin went on to confirm that Port Arthur LNG Phase 1 and ECA LNG Phase 1 are fully permitted and well into the construction phase and that several other development projects already have the required DoE permits. He concluded by saying, “The United States is a force for good in the global energy markets.”
Martin also indicated that he expects the permitting issue at DoE to be temporary, and that America would continue to be a global leader in both the energy markets and in sustainable business practices.
“At Sempra, we believe those two things can co-exist together,” Martin said. “More importantly, if we do our job, the real winner will be the American worker and America’s allies who will use LNG to improve energy security and achieve a lower carbon footprint.”
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