Sempra Q2 2026 Earnings: Profit Rises Despite Flat Revenue

Sempra (NYSE: SRE) reported Q2 2026 revenue of $2.997 billion, essentially unchanged from $3.000 billion a year earlier, while diluted GAAP EPS rose to $1.21 from $0.71. Adjusted EPS increased to $1.16 from $0.89, supported by higher equity earnings and improved results across all three reported segments.

Core Earnings Data

Revenue was nearly flat because a $127 million increase in electric utility revenue was offset by declines of $106 million in natural gas utility revenue and $24 million in energy-related revenue. Profit moved differently: income before income taxes and equity earnings increased 70%, while equity earnings rose 39% and income tax expense declined to $112 million from $172 million.

GAAP earnings grew faster than adjusted earnings because the two periods contained different foreign-exchange, derivative, tax, and regulatory adjustments.

The difference between net income and common-share earnings primarily reflects $141 million attributed to noncontrolling interests, up from $46 million in the prior-year quarter.

Business and Segment Performance

All three reported segments increased earnings attributable to common shares. Sempra Infrastructure produced the largest dollar increase, followed by Sempra Texas Utilities.

At Oncor, quarterly electricity deliveries increased approximately 5.6% to 44.6 billion kWh, while customer meters rose approximately 1.4% to 4.14 million. Oncor’s new base rates took effect June 1, and a surcharge effective August 1 is designed to recover the difference between the new rates and those in effect from January through May.

Texas also represents a substantial potential investment pipeline. ERCOT endorsed transmission projects expected to require more than $7 billion of incremental investment, with Oncor expected to construct the majority subject to regulatory approval. Approximately 44 GW of qualifying large-load requests are in Oncor’s territory, although the Batch Zero process timeline remains undetermined and the requests may not all become completed projects.

In California, gas deliveries declined to 174 Bcf from 189 Bcf, while electric deliveries increased approximately 4.8% to 3.89 billion kWh. SDG&E and SoCalGas filed their 2028 General Rate Case applications, while SDG&E received approval for a transmission settlement providing an authorized base return on equity of approximately 10.28%.

Sempra Infrastructure’s earnings rose to $230 million from $72 million. Separately, Sempra said the sale of a 45% interest in Sempra Infrastructure Partners to KKR affiliates remained on track to close in Q3 2026, while the Ecogas sale was expected to close in August after receiving Mexican antitrust approval.

Higher Equity Earnings and Adjustments Explain the Profit Jump

The income statement shows why earnings expanded despite almost no revenue growth. Income before taxes and equity earnings increased by $209 million, and equity earnings contributed another $154 million increase. Lower income tax expense added further support, although quarterly interest expense rose by $71 million to $430 million.

The adjustment bridge also matters when comparing headline growth. Q2 2026 GAAP earnings were $34 million above adjusted earnings, reflecting items including $82 million of unrealized commodity derivative gains and a $20 million tax benefit, partly offset by a $71 million foreign-currency and inflation impact in Mexico. In Q2 2025, adjusted earnings were $122 million above GAAP earnings. This changing adjustment mix amplified GAAP growth, while the approximately 31% increase in adjusted earnings shows that profit also increased under Sempra’s non-GAAP measure.

Profitability, Cash Flow, and Balance Sheet

Cash flow figures cover the six months ended June 30 rather than Q2 alone. First-half operating cash flow improved as working capital contributed $268 million, compared with a $498 million use of cash a year earlier, and distributions from investments increased to $721 million from $516 million.

Capital requirements remained higher than internally generated operating cash, while the debt mix shifted from short-term to long-term borrowing.

Combined PP&E and investment expenditures exceeded operating cash flow by approximately $3.06 billion in the first half. Sempra issued $8.092 billion of debt and repaid $4.544 billion during the period, producing $2.194 billion of net financing cash flow. The company’s $64.9 billion capital plan for 2026 through 2030 allocates 95% to its California and Texas utilities.

Earnings Guidance

Sempra updated its 2026 GAAP EPS range to incorporate results through Q2 while reaffirming its adjusted outlook. It also maintained its 2027 EPS range and projected long-term growth rate.

The 2026 GAAP range includes an estimated Ecogas sale gain of $0.09 to $0.12 per share. Sempra’s reconciliation does not include a potential gain from the planned Sempra Infrastructure Partners transaction because the amount cannot yet be reasonably estimated.

Recent Insider Transactions

Over the last six months, insiders reported purchasing 12,188 shares across seven transactions and selling 21,439 shares across six transactions, resulting in a net sale of 9,251 shares. That represented 1.40% of the 653,690 total insider shares reported as held; the figures do not establish the reasons for individual transactions.

The latest ten reported transactions included five sales, four zero-price stock awards, and one purchase.

Risks Investors Need to Watch

• Regulatory and project realization risk: Oncor’s transmission investments require regulatory approval, and the timing of the Batch Zero interconnection process remains uncertain. The full 44 GW request pipeline may not translate into completed load additions.
• Capital funding and interest costs: First-half capital expenditures exceeded operating cash flow, long-term debt increased, and quarterly interest expense rose approximately 20%. Continued utility investment will require access to financing and successful capital recycling.
• Transaction execution: The KKR and Ecogas transactions remain subject to closing steps and customary conditions. Timing, final adjustments, taxes, and ancillary costs could affect reported results and Sempra’s financial position.
• GAAP earnings volatility: Foreign exchange, Mexican inflation accounting, commodity derivatives, interest-rate swaps, and asset-sale tax items can create material differences between GAAP and adjusted earnings.

Summary

Sempra’s Q2 2026 revenue remained nearly flat, but earnings increased as equity earnings, lower taxes, and improved segment results outweighed higher interest expense. Texas demand and regulatory investment opportunities support the company’s utility-focused capital plan, while first-half cash flow and rising long-term debt underscore the importance of disciplined financing and the planned asset sales. Execution of the Texas pipeline, transaction closings, and the durability of adjusted earnings growth are the main items to monitor.