Q4 2021 Sempra Energy and Oncor Electric Delivery Company LLC Earnings Call

February 25, 2022

Good day and welcome to the Suntrust 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 Suntrust's fourth quarter, 2021 earnings call.

Live webcast of this teleconference and slide presentation is available on our website under the investors section.

We have several members of our management team with US today, including Yes, Martin Chairman and Chief Executive Officer, Trevor Mihalik, Executive Vice President and Chief Financial Officer, Lethal Iraq, Alexander Senior Vice President Corporate Affairs, and Chief Sustainability Officer, Justin Bird Chief Executive Officer of <unk>.

Temporary infrastructure Faisal Khan, Chief Financial Officer of Sempra infrastructure, Allen Nye, Chief Executive Officer of Encore, Kevin Saga, 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 statements we make today.

Factors that could cause our actual results to differ materially are discussing the company's most recent 10-K filed with the SEC.

Although the earnings per share amounts in our presentation are shown on a diluted basis, it will 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 Natalie and thank you all for joining us today and 2021, we delivered another year of strong performance, we will 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 says.

Well above our increased adjusted EPS guidance range of $7 75 to.

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 have 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% 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.

Finally, we are announcing a projected long term EPS growth rate for the company of 6% to 8%. 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.

And 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 separate infrastructure, a simplified growth platform with scale and portfolio synergies all while generating over $3 billion by selling a noncontrolling interest to support growth and the return of capital to our owners.

Furthermore, these transactions highlight the underlying market value of this business and demonstrates <unk> 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.

<unk> focus on supporting the strong growth at our utilities.

From a safety standpoint, we had record employee safety results at separate California, and separate infrastructure also had a great year advancing construction of ECA LNG phase one on time and on budget with over 1 million hours worked without a lost time injury taken.

Taken 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.

Separate growth platforms are strategically positioned and highly attractive in 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.

And scale and 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.

<unk> safety and reliability and the continued integration of North American energy markets.

Our three platforms combined for nearly 300000 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% 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.

Significant interconnection queue loaded with renewables and disciplined investments that separate 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 construct 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 risk in the energy space, whether its 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.

Thanks, Jeff for two decades, <unk> has been on a sustained path to Decarbonize, our business operations and the markets. We serve innovation and new technologies are central to the clean energy future enabled by investments in three key capabilities de carbonization diversification and digitalization this past year.

We summarized our aspirations in each of these areas as part of Sempra energy transition action plan and I'm pleased to update you that we're making great progress.

Here are a few examples in California, <unk> completed its inaugural issuance of $750 million in green bonds and secured regulatory approval for three new energy storage projects expected to total 161 megawatts. Additionally, socal gas achieved over 4% renewable natural gas.

Gas deliveries to customers in 2021.

Moving to Texas Oncor is doing an excellent job connecting customers to cleaner renewable sources of energy by expanding and modernizing Texas gas transmission and distribution network in 2021, Oncor connected nearly 2200 megawatts of wind and solar generation, bringing the total renewables connected to encore.

System to approximately 15500 megawatts. In addition to progress on its operations <unk> also entered into a new $2 billion revolving credit facility with sustainability linked to performance metrics.

And lastly at Sempra infrastructure, the newly consolidated platform is advancing opportunities in renewable hydrogen ammonia LNG and carbon capture infrastructure. The company recently filed an amendment with FERC to incorporate electric drives that are proposed Cameron LNG phase two project, which could help reduce facility admissions by.

Up to 40%, while continuing to help Decarbonize global markets.

Earlier this year the company also announced an Mou with entergy to develop options intended to accelerate deployment of renewable energy to power primarily LNG facilities.

Across our industry companies are adjusting their business models to meet customer demands for increasingly cleaner sources of energy at Sempra. We think these trends play to the strength of our company and effectively create a tailwind for new and cleaner investments across our platforms.

Please turn to the next slide where I'll hand, the call over to Trevor to provide business and financial update.

Thanks Lisa.

To begin we've had several positive developments at our operating companies.

In the third quarter <unk> filed an application with the CPUC to assess its cost of capital for 2022 as a result of the extraordinary event of the COVID-19 pandemic in.

In December the CPUC issued a scoping memo with a final decision expected later this year.

Also the CPUC authorized a memorandum account effective January one 2022 to track any differences in revenue requirements, resulting from the interim cost of capital decision expected later this year.

Additionally, the CPUC is working through the implementation of a renewable natural gas procurement standard. We're excited about this development and view it as a significant step forward in advancing the future cleaner fuels here in California.

Lastly, socal gas recently announced a bold new vision to develop a proposed green hydrogen infrastructure system to serve the Los Angeles Basin called Angeles link.

As contemplated this project would be the nation's largest green hydrogen infrastructure system and will deliver green hydrogen to the country's largest manufacturing hub to help decarbonize electric generation industrial processes heavy duty trucking and other sectors that are challenging to fully electrified shift.

To Texas.

Encore set a company record for the number of new and active requests received for transmission interconnections in 2021, demonstrating the rapid growth in Texas and continuing opportunities for encore to grow its system.

Oncor service territory continue to grow as well with oncor connecting approximately 70000 additional premises in 2021.

At Sempra infrastructure, we signed two Mou is to advance our unique capability of delivering LNG into both the Atlantic and Pacific basins.

The first with Entergy that Lisa discussed earlier and the second an Mou with Cfe to jointly develop this to Pacific <unk> LNG as well as the new Regasification project in La Paz, Baja California sur.

Additionally, sempra infrastructure established a new credit facility in the fourth quarter and issued its inaugural investment grade bond last month, all with the intention of efficiently financing its growth along with internally generated cash flows. Please.

Please turn to the next slide where I would like to go into additional detail on an update relating to San for infrastructure.

Here are the key takeaway is that we're making progress on our announced sale of an additional 10% interest in the business to audio this.

This transaction, which is subject to customary closing conditions and third party and regulatory approvals valued sempra infrastructure and an enterprise value of approximately $26 5 billion.

Which was $1 billion higher than the KKR transaction we.

We expect to use the proceeds to fund the utility capital execute share repurchases and continue supporting improvements in the balance sheet. Please turn to the next slide where I'll review the financial results.

Earlier. This morning, we recorded fourth quarter 2021, GAAP earnings of $604 million or $1 90 per share.

This compares to fourth quarter, 2020, GAAP earnings of $414 million or $1 43 per share.

On an adjusted basis fourth quarter 2021 earnings were $688 million or $2 16 per share. This compares to our fourth quarter 2020 earnings of $668 million or $2 28 per share.

Full year 2021, GAAP earnings were $1 billion $254 million or $4 <unk> per share.

This compares to 2020 GAAP earnings of $3 billion $764 million or $12 88 per share.

On an adjusted basis full year 2021 earnings were $2.637 billion or $8 43 per share.

This compares favorably to our previous full year 2020, adjusted earnings of $2 billion $342 million or $8 per share. Please turn to the next slide.

The variance in full year 2021, adjusted earnings compared to the prior year was affected by the following key items seven.

$78 million of lower earnings due to the sales of our Peruvian and Chilean utilities in April and June of 2020, respectively.

$126 million of lower earnings from a CPUC decision in 2020 that resulted in the release of regulatory liabilities at Sempra, California related to prior years forecasting differences that are not subject to tracking and the income tax expense memorandum account.

This was offset by $216 million due to higher earnings from Cameron LNG JV, primarily due to phase one achieving full commercial operations in August of 2020, and asset and supply optimization, primarily driven by changes in natural gas prices and higher volumes.

$139 million of lower losses at parent and other primarily due to the lower preferred dividends from the mandatory conversion of preferred stock and lower net interest expense.

$52 million of higher CPUC base operating margin net of operating expenses at <unk> and Socal gas.

$44 million charge in 2020 for amounts to be refunded to customers related to the energy efficiency program at <unk>.

$37 million of higher earnings at Sempra, Texas utilities, primarily due to increased revenues from rate updates to reflect increases in invested capital and customer growth. Please.

Please turn to the next slide.

We continue to see robust opportunities to invest in our utilities and infrastructure businesses, resulting in a 36 billion five year capital plan, the largest in our history and notably a $4 billion increase over the prior plan, we announced last year.

This plan is anchored by $33 billion of utility investments, representing nearly 94% of the total capital plan.

Our <unk> and Socal gas safety and reliability continue to be at the forefront of our planned expenditures. This is important.

Our investments in California centered around the states regulatory priorities, including wildfire safety and the integrity and safety of our gas infrastructure, along with technology investments.

Additionally, at Encore the capital plan addresses the strong organic growth for example, the population of Texas increased more than any other state in 2021, continuing the need for further investments to support this growing demand.

Let's turn to the next slide.

These capital investments in top tier markets in North America are driving tremendous growth in our projected rate base.

In 2017, we had $14 billion of rate base at the California utilities and.

And through adding our interest in oncor as well as organic growth at both our California, and Texas utilities, we grew our rate base to $41 billion in 2021 and expect to grow it even further to $62 billion by 2026.

Just as importantly, we expect to support the strong projected growth without issuing common equity.

Notably.

Over the next five years, our rate base mix is not expected to change materially with approximately 70% of total rate base dedicated to electric infrastructure, which reflects how well positioned we are to continue supporting strong trends and electrification in our core utility markets.

Please turn to the next slide where I'll provide additional details on the opportunities we have to efficiently fund our growing rate base as we think about our financing strategy, we have multiple opportunities to efficiently fund the expansive growth that we're experiencing at our utilities.

Over the past few years, you've seen us rotate capital to fund utility growth, while also strengthening the balance sheet, finishing 2021 in a strong position with 47% total debt to capitalization and 18% <unk> to debt.

Looking forward our financial plan is underpinned by a portfolio of strong operating cash flows that are backed by regulated returns are long term contracts.

Our robust utility capital plan is further supported by cash generated from Sempra infrastructure, where projected cash distributions to sempra combined with the proceeds from the sales to KKR and adia are expected to provide over $7 billion from 2021 through 2026.

Turning to the dividend.

We continue to target a payout ratio of approximately 50% to 60%, which allows us to aggressively invest in utility growth while supporting the dividend. In addition to the dividend, we see opportunistic share repurchases as a way to efficiently return capital to shareholders from time to time.

We remain focused on delivering shareholder value and through the sufficient financing strategy, we expect to deliver strong EPS and dividend growth without issuing external common equity.

Please turn to the next slide where I'll discuss our near term EPS guidance ranges and projected long term EPS growth rate.

We are reaffirming our 2022 EPS guidance range of $8 10 to $8 70 per share and we are introducing our 2023 EPS guidance range of $8 60.

To $9 20 per share.

The aforementioned guidance includes plans to continue returning capital to our owners in the form of $1 billion of share repurchases. This would be in addition to the $500 million of share repurchases. We recently completed.

Now, let me talk about our longer term growth.

Our historical execution combined with the growth opportunities in front of us give us confidence in providing a long term EPS growth rate of an annual average of 6% to 8% starting at the midpoint of 2022 EPS guidance through 2026.

This 6% to 8% growth is driven by our five year capital plan and continued operational excellence across our businesses.

It is anchored by an eight 5% projected rate base growth at our utilities and only includes projects currently in construction at Sempra infrastructure.

Importantly, we see opportunities to outperform this projected growth rate through incremental investments across our three platforms.

Examples would include additional spending on energy storage wildfire mitigation electric vehicle infrastructure and related make ready work and pipeline safety and reliability in California.

Further economic growth driving transmission and distribution expansion in Texas and lastly.

Executing on incremental LNG and other development projects at Sempra infrastructure that are currently outside the plan.

Please turn to the next slide where I'll highlight our historical execution.

This slide is a good depiction of how we've historically met or exceeded our published EPS guidance ranges and done so consistently.

Reflecting our long track record of disciplined capital allocation thoughtful execution and a commitment to deliver on our financial projections. Please.

Please turn to the next slide.

Let me summarize our investment proposition.

We've invested time and energy in building a high performing infrastructure company that is well positioned in some of the fastest growing markets in North America.

Overlaid with a commitment to capital discipline, we have a track record of operational excellence disciplined financial execution and dedication to consistently returning value to our shareholders in the form of dividends and opportunistic share repurchases.

Bottom line.

We're excited about the future of Sempra and the critical role that our infrastructure will play in supporting future economic growth in the energy transition. Please.

Please turn to the last slide.

Over the last four years, we've continued to update our portfolio with a view towards prioritizing markets with strong fundamentals and constructive regulation and.

And simplifying our business model to improve execution.

And building scale financial strength, and a high performing culture to deliver improved financial results.

With the benefit of those strategic efforts it allowed us to end 2021 in a strong position and looking forward, we have three integrated platforms with improved visibility to future growth.

With that this concludes our prepared remarks, we'll now stop and take your questions.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

You are using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

The star one to ask this question and we will take our first question from sharp Rosa with Guggenheim Partners. Please go ahead.

Hey, guys good morning Shar.

Good morning.

So really comprehensive update Jeff and Trevor, but I was just starting off.

As we look at your 6% to 8% growth profile, we get a pretty good sense of the utility growth.

But as we think about maybe drilling down a bit further and bifurcate. The growth can you just elaborate a little bit more on the drivers of S. IP any color on the cadence of growth there.

<unk> phase one moves to completion in 24 do you see a more level earnings contribution from renewables energy networks.

Thank you for that question and certainly I think you're making a very interesting point you can tell that 94% of our five year capital program is dedicated to our utilities and this is not the first year that we've made that type of prioritization, you've seen us grow our U S rate base from the end of 2017, which was about <unk>.

$14 billion to roughly 41 billion today, so that remains an ongoing priority. The capital that is in the plan today for separate infrastructure is fairly conservatively projected as you know our convention really is to focus on projects, where we have already taken.

They are in construction.

We refer you to slide 34 outlines a basket of incremental opportunities that we certainly think that it could be quite positive for the company there is about.

Two to $5 7 billion of incremental opportunities I think part of that informs our view that our projections are fairly conservative.

And then just follow up on that one is tallying up today's disclosures.

When you look at the utility growth the contribution from S buybacks, what's really embedded in that 6% lower rent.

Well I think you're making the point that.

Is it possible that are.

Our projections are conservative, but I think that if you look at our track record over the last 10 to 20 years, we produced earnings per share growth of about 7% or 8%.

And we always have assumptions you have to account for future rate cases.

Got account for execution of your capital plan.

And a positive economic environment, but I think that we have a clear visibility based upon a similar attrition mechanism for the forward rate cases, the visibility we have in Texas and a fairly conservative approach that we've taken a separate infrastructure that we have a fair amount of confidence in that 6% to 8% range and to your point.

We execute quite effectively that could prove conservative.

Got it perfect and then just really quick lastly from me Jeff. This is super helpful is just as we're thinking about the incremental opportunities.

I mean, you are calling up to $9 billion right.

I just wanted to confirm as you guys are looking at incremental LNG.

And other opportunities you don't see any need to raise equity kind of over the trajectory just given sort of the opportunities to flex that balance sheet or maybe pursue more sales on the private side is that fair.

Yes, it's completely fair and I think Trevor made this point in his remark Shar, which was we finished the year with an 18%.

Net debt to total capitalization was around 47% and not only do we not expect to issue parent equity to support our record capital program. We've got a line of sight to do another $1 billion of share repurchases here through 2023.

Terrific. Thank you very much guys. Congrats on this messaging, it's a big change. Thank you. Thanks, a lot. Thanks, a lot sure.

Okay.

Yeah.

And we will take our next question from Jeremy Tonet with JP Morgan. Please go ahead.

Hi, Good morning, it's actually rich Sunderland on for Jeremy Thanks for taking my questions.

Rich.

Maybe circling back to the return of capital just wanted to parse.

This slide and dig into a little bit more of that $11 billion versus the $1 billion buyback through 'twenty three it seems like if you take the $1 billion plus the math around the dividend there is still incremental room within that $11 billion figure is that the case and is attached for either return or reinvestment and just how.

To think about the waterfall of opportunities within that.

Yes, there is obviously a variety of puts and takes in there, but I think you're onto something which is it does include dividends and includes share repurchases and one of the things you might be missing is also includes distribution to our equity partners separate infrastructure.

Got it Thats helpful. Just real quick on that front.

The timing of the repurchases through 2023.

You referenced opportunistically at one point.

The approach you're taking or are you looking for something programmatic at some point as well.

I would say that historically, when we think about returning capital to our investors, we certainly like to privilege the dividend, which today is about 323, 3% yield and we supplement that opportunistically from time to time by buying back shares in this case it will be programmatic, we have an opportunity, we're making a commitment to do $1 billion share.

Purchase before the end of 2023.

Understood. Thank you and then just circling up with LNG.

LNG Cameron expansion are you still targeting.

This year could you maybe just speak to the contracting environment more broadly across the portfolio.

Yes, let me let me do this.

It'd be a topic of interest a lot of our callers today I'll provide a little bit of some macro background and I'll pass it to just and to provide a more clear view of.

The development portfolio and some of the contract discussions let me just start with saying that we're really in uncharted territories I think in the global energy markets just.

Just yesterday, we saw a Brent crude pass the $105 a barrel hasnt passed $100 since 2014 natural gas futures in Europe , where over $40 roughly eight or more times, what youre seeing in the United States for a similar amount of natural gas and even when you look at storage levels.

Rich in Europe , the five year average today, there are about 25% below the five year average heading into the spring. So it's a really challenging environment in Europe . This is calling on a lot of different nations to step forward and make sure that we can provide more energy security, but if there's one takeaway and we're seeing this in all of our conversations that comp.

Jason around security of supply and security market is becoming more important people today and all of these developing in the OECD nations they want to make sure that they can.

Enter into contracts, where there is a rule of law and I think over the next.

Mid term and long term, you're going to see the United States really flex its muscle in the LNG space and we're seeing this a lot of our conversations suggesting perhaps we could talk about the development pipeline in some of your contract negotiations.

Great. Thank you rich and thank you, Jeff So I think as Jeff mentioned.

Given the robustness of the LNG market and what we view as our privilege platform in the Pacific Golf specific and Gulf Coast locations, I think youre seeing two things one we're seeing.

The dramatic increase in the market interest for our facilities and to I think youre seeing heightened confidence in our ability to execute on our development projects.

Speaking of Cameron, we're making great progress on the expansion.

Project at Cameron.

Given the timing of the filing of the amendment to the FERC permit we're now targeting.

In the first.

A portion of 2023 we're.

We're also making great progress on Vista.

We are actively marketing about 10 million tonnes per annum of uptake and we're seeing extremely high levels of interest.

So make no mistake, we're working with our partners and customers to get them supply as soon as possible I wish we could give them more now but as many of you know the projects take time to develop permit and build.

Also we've made great progress in the last 24 months on on Cameron, We reached full COPD in 2020 hit record production last quarter, and we're working with our customers and partners to accelerate the bottlenecking of the phase one.

We took FID on.

In November of 2020.

As Trevor mentioned projects on time on budget.

Done safely.

We expect first LNG there.

Towards the end of 2024, and you should expect us to optimize volumes out of Echo once we reach full production.

To really sum it up rich.

<unk> focus on delivering LNG to our customers under long term 20 year contracts.

LNG demand is growing.

About 5% to 10% per year, and you should expect us to grow with the market or better and lastly, we think we can deliver superior risk adjusted returns to our shareholders by making.

Disciplined investments in our LNG infrastructure.

Great. Thank you for the commentary there.

Thank you.

Yes.

We will take our next question from Doug issue.

With Evercore ISI. Please go ahead.

Hey, good morning team. Thank you for taking my question.

Jeff Big Victor.

Where do you see sort of the.

The regulated versus nonregulated earnings mix.

Evolving here from <unk>.

22 to <unk> 26 in light of like.

The majority of the increase in Capex is dedicated towards the utilities. How are you thinking about that any any updated thoughts there.

Or.

How should we think about that business over time.

Yes, one of the things I was excited about for today's call was one of the slides. It showed that at the end of 2017, our U S utility rate base was $14 billion today, it's $41 billion and by the end of the five year period that youre addressing is going to be 62 billion and we have a fair amount of confidence to be able to.

Grow that size of rate base, that's a four four times growth over that nine year period of time and I think what that really reflects is the benefit of over the last four years, our capital recycling program and our focus on these T&D marketplaces, where if you are in the right markets with good regulation you can continue to produce.

Higher recurring cash flows and grow your business faster than your peers. We certainly think that one of the arguments that comes through in our materials is the important role that separate infrastructure plays in supporting that growth. So if you go back to the December time frame of 2020, the market was valuing the <unk> business and Elena.

Business at about $9 billion, we have a slide here today that shows our ability to basically extract roughly $7 billion out of that business to support the type of growth Youre seeing in our utilities. So I think my conclusion would be we have three very strong platforms that are very capable of growing each of them have ski.

<unk> and our leadership position in the markets they serve.

Got the same teed up to deliver really good results in the years ahead.

Got it.

That's helpful. Jeff. Thank you just one.

Quick clarification on the.

And we will use.

At Cameron LNG, and the Vista Pacific, though that would be sort of.

Okay.

The additional capex there.

What's kind of the balance sheet, who do need.

Equity for that additional Capex or you think you can absorb.

That within the.

The context of upside to the Capex plan.

Alright, yes, Justin talked about this opportunity that we're working on for 10 million tonnes per annum of new capacity.

They have a self funded business model today, where they can resource third party equity at the project level. They can also call on their equity partners and one of the things that's really exciting about the separate infrastructure transaction was we set that business up with an investment grade balance sheet and a mandate that they self fund our business and where they can return capital to them.

To support our share repurchases and our dividend program and our growth at our utilities. They can do that so I think one of the things that Trevor Oftentime says is that business produces a flywheel of cash and that has been very instrumental to separate success in growing its utility platform and we will look to them to help finance the growth on the LNG side.

Got it. Thank you so much guys I appreciate the update today.

Thank you for joining us.

Our next question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Good morning, Steve.

Yeah, Hey.

Hi, good afternoon here.

Just a follow up on LNG, and specifically camera and if you do get.

Yeah.

In the first half of.

23.

Wood camera and likely be online.

Expansion.

So.

In terms of the additional train.

Roughly be.

Four years after that I think the other thing to remember about the Cameron project as a whole as I mentioned, where we're looking to accelerate the de bottlenecking, which we think can produce an incremental 1 million tonnes per annum, and we would expect that to come online prior to the full <unk>.

Second train sorry, the full additional train at phase two so the way to think about it Steve would be fully online by 2027, which is about 48 months period of time. It just is making a great point, we're looking to have access to additional volumes from debottlenecking, probably within our five year plan period.

Okay and that that would be incremental to the plan.

Debottlenecking upside.

That's correct that's something we're following very closely it's important.

Okay, that's great and then.

Jeff.

Obviously, you've got.

A new long term growth rate out there.

<unk> been doing better this year.

And and Thats, great and so but I'd be curious.

If you were to.

What would make you.

Consider changing this.

Structure of Sempra E breaking off.

We are selling more.

What are the things that could change the way it is or are you likely given the way. This is kind of all coming together.

Kind of continue the path you've laid out today.

Well I'll give you a couple of comments David I mentioned some of this earlier in the call, but I think.

Today's call really is a culmination of what we've been talking about in terms of our strategy and the value of being focused on T&D platform that really privileges U S utility growth rate. So we're very pleased with the progress we've made over the last four years and be able to grow our earnings per share over that four year period at about 11% rate and.

These record capital plans, while returning capital to shareholders. So we've got a pretty virtuous motto going for US right now one of the things I would ask you to think about us.

We have a very rigorous strategy discussion with our board. We met earlier this week strategy as discussed at every single regular meeting of the separate board through the lens of how we can push more and more value back to our shareholders. So I think you can tell from the last three or four years, we're not going to be bashful.

We see an opportunity to unlock the balance sheet and buy back more shares or adjust our dividend policy, we're going to do that but I think right now the key takeaway from this call is we have a record capital campaign. We've gone from 2017, when I was the CFO of having a $16 billion five year plan Steve.

It's 20 billion higher and over a four year period of time. So our number one opportunity is to make sure that we're funding as a first priority. What we think is a very attractive capital program and continue to look for opportunities to unlock value and I think we've demonstrated a willingness to do that.

Great.

Last question on the on the balance sheet I appreciate the <unk> to debt metric.

And and the like just have the.

Have you got any comment on the.

Rating agencies on the updated plan and how they're thinking about it.

Thank you, Steve I'll pass it to Trevor for commentary.

Thanks, Jeff, Yes, Steve we have.

Don and highlighted.

The plan with the rating agencies and gotten some of their feedback we will do it in a bigger way.

In subsequent weeks here, but they understand where we are on things and again, we feel very good about the 18% <unk> to debt. We ended the year at and continue to strengthen the balance sheet that is a priority of mine and continue to fund the Capex plan would also mentioned Steve.

We've talked about strengthening the balance sheet, probably every year for the last four years I think you're seeing that benefit. So you think about the high watermark in the second quarter of 2018, when we finished the completion of the Oncor acquisition.

To capitalization was about 57% so we've really secondary equity layer and today at the end of the year of 2021. It was 47% right. So youre seeing us fortress balance sheet with a view towards supporting more growth for our shareholders and the return of capital in the form of both dividends and share repurchases.

Great Great. Thank you for the for.

For the thorough update thank you.

Thank you Steve.

We will take our next question from Michael <unk> with Goldman Sachs. Please go ahead.

Hi, Michael.

Hey, Jeff Congrats on a good end of year call and a great start for 2020.

Exciting thank you Emanuele.

Curious.

Curious a couple of questions on the core utility.

One of which is that if I look at your rate base and your net income guidance.

Your net income growth rate that the California utility.

Kind of mid single digit range.

Many of the world.

Thank you.

Yes.

For 2002 and 'twenty three.

Rate base growth is double digit.

Both of those years from 'twenty, two and 'twenty three and then at Encore.

It's kind of the opposite.

The net income growth.

Is low double digits in 'twenty, two but the rate base growth.

<unk> been in that eight 8% to 9% can.

Can you just remind us what's driving the big spread between rate base growth and net income growth, albeit it's a little different in California.

Yes, let me just start with a little bit of context, I think one of the things we're excited about and you've seen us dedicated our focus to improve the quality and scale of our U S. Utilities, that's reflected in our rate base numbers, Michael but California rate base projections are clipping along at about a 9% CAGR.

<unk> organization Oncor is growing at roughly 8% and an average you put those two together and theyre growing at about eight 5% now I'll take your point, which you would expect earnings to roughly over long periods of time to reflect that type of rate base CAGR.

In California recall that we're going into a rate case cycle that first year, where rates are in effect you usually see a large step up and it's that portion of the right new rate base, that's coming into that cycle in Texas, you have a little bit of a lag in terms of how they are mechanisms work, but I think the larger point, you're making is you don't have visibility to year three.

Three or four or five from a growth standpoint, but that differentiation you're seeing should basically.

Come together closer to the overall rate base growth over the five year period.

Got it Okay and then this is a busy regulatory year that'll filed rate cases in California, and I think you have to file in Texas is there any scenario, where hopefully more so on the Texas side, you could get an incremental one year delay there are a bunch of other utilities like <unk>.

Access and others filing in Texas this year.

Do you feel you have the need to buy.

Ireland taxes or is there some filings that you're kind of required.

Yeah, Let me, let me make a couple of contextual comments I'll pass it to my partner here in just a second but you remember here in California, we're going to file our cases later this year, both for <unk> and Socal gas those cases will flow into 2023 with the view that those rates will be effective on January one 2024.

In Texas Alan is preparing his team for its rate case filing, but Alan I'll, let you speak to how you are preparing for that case, how you think about the timing of that case relative to some of Michaels comments.

Sure Jeff Thanks, Michael.

Yes, just initially let me say, we when we extended our rate case deadline filing last year, we got a deadline set of on or before June one of this year. So right now we're required to make the filing on or before June one.

Tell you're probably looking at call it mid may for a filing.

We're putting together what we think is a very strong case.

We have.

Obviously very aware of what other utilities have done down there recently and what the outcomes of then.

But I feel strongly and I've said it before rate cases are very company specific very fact specific.

They relate in large relate to the way you run your company over time your relationships with your constituents and the PUC.

We feel very good about all those all those connections and the history of how we performed with these rate cases, so I'm not going to front run my lawyers and my my experts by witnesses and I can't really get into what we think we're going to file obviously.

ROE cap structure are always big.

In these cases and that'll be a focus of our cases as well.

And then just the only other thing I would add and I think somebody said in the opening comments.

I think everyone is aware, we do have the lowest rates of any IOU in Texas, and if youre going in for a rate case, that's a good place to be.

So all in all right now we're looking at mid May and we don't think there's going to be another extension Theres, obviously, a lot going on at the commission right now, but we feel good about where we are and Thats our current plans.

Got it thank you Alan Thank you.

Thank you Michael.

We'll take our next question is from Ryan Levine with Citi.

Please go ahead.

Hi, everybody.

Hi, Ryan.

Hi.

What's included in the 1% to $1 $1 billion of energy network potential project and how is the contracting and developed in <unk>.

Ironman.

Today in light of the commodity and political backdrop in comparison with previous quarters.

Thank you for that question, you'll recall that we announced a recent.

Mou with CSC and one of the things that the country is trying to address is as they went through their reforms from 2013, Dave essentially overbuilt their pipeline network at a time with a view toward building a lot more natural gas fired generation to replace a lot of their oil fired plants are theyre older plants.

Some of that pipeline capacity is unused so one of the things that's important and that Mou is our partnership with CSC is designed to basically utilize some of their pipeline system to support the Vista Pacifica project, which reduces the cost that they are bearing for that capacity.

Currently there is a work around planned.

Where they have agreed to help us.

Put the Sonora pipeline back into service network.

Bob additional capital and we've got opportunities here, particularly in one of the things that Tanya always reminds of sofas, Baja California, Baja sur is literally disconnected from our gas and electrical standpoint from mainland Mexico. So this situation, where San Diego gas Electric city.

And this north Baja position that we picked up in terms of our power position in renewables as well as our pipeline position, we think there'll be continued opportunities there and in the future for pipelines to be built to support growth in Baja.

Thank you for that and then in terms of your guidance.

What are the components of the paring cost reduction between 2022 and 2023 that you are guiding towards.

So I will tell you that we are managing a number of things the biggest issue in our parent cost is how we manage our overall interest cost and the second thing.

Talked about that in the prepared remarks about some of our preferred.

Equity going away year over year, but we also have been managing down our overall SG&A for the payer and I don't know if Trevor if you want to add any additional remarks on our parent cost year over year, Yeah, No. Jeff I think you pretty much touched on at the higher.

Apparent losses were primarily due to less interest savings driven by our higher capital plan.

Okay.

Then last question for me in terms of battery outlook.

Recognizing the recent.

Regulatory filings.

You see any upside to the spending in <unk> in California and are you looking at any electric batteries for for Mexico.

Yes, we definitely have a volta project very much adjacent to Tdm in Mexico, you May remember that when Tdm was built back in the 2000 period. They had plans for a second combined cycle plant to be built adjacent to Tdm that project has now been dedicated to batteries and justice teams evaluating a five.

100 megawatt battery project that location I will turn it over to Kevin we actually are quite bullish on batteries here at San Diego gas electric and maybe Kevin you can kind of contextualize that opportunity for the utility.

Yeah. Thank you Hey, Ryan.

So we were happy to see the PUC approved.

Earlier this month, our advice letter around three new energy storage projects that totaled about 160 megawatts, that's about $300 million $380 million capital investment.

There are three different projects, they're all lithium ion.

I think we're going to see more and more of this we're seeing with the Kelly ASO study came out there's a big need for a lot of a lot more resources like this and we're I think we're going to see a tremendous amount of energy storage still to get built and we'll get our fair share of that like we did we did here.

Thank you.

Our next question from Julien Dumoulin Smith with Bank of America. Please go ahead.

Hi, Julien.

Hey, good morning team congratulations on the continued result.

Thanks.

Absolutely.

With respect to Brian's last question, maybe I'll start with the strategic one here.

As you think about the infrastructure side you all have done a lot in the gas space. We're also obviously located in California.

<unk> renewable natural gas as mentioned in your comments here, how do you think about.

Leaning into opportunities that might avail themselves, specifically as some of those opportunities become.

Perhaps more ripe if you will across the Western U S.

Well I'll give you a couple of thoughts so maybe Kevin you can follow me, but I think one of the things and I actually had the opportunity to follow Edison's call yesterday to that Youre seeing is there is no longer a conversation about whether theres going to be a clean energy transition Julian the conversation now is about how fast that can happen and what the.

Mix of technologies, and fuels will be and I think in California, one of the areas that we're fairly proud about our leadership position as we see a marketplace here, where there is a big and growing role for electrification in the form of Green kilowatts, but theres also big rule role for Green molecule. So I think this decision you saw yesterday.

<unk> very much validates the adjacencies and the existing value of Socal gas system. They just completed 4% of their core deliveries last year from a renewable natural gas and this new mandate will up that number to about 12, 5% by 2030 and that ruling came after socal gas had already committed.

To get to 20% by 2030, so I think the role of renewable natural gas. Our recent announcement around the Angela asleep for hydrogen these are going to be big opportunities I think our footprint to your point, it's going to give us a lot of opportunities both on the regulated and unregulated side and Kevin you have long been a leader and our innovation at the <unk>.

And maybe you could provide some color around how youre thinking about renewable natural gas and hydrogen.

We've spoken about this before too Julien, which is just around this idea that clean molecules have a big role to play in this energy transition and I think obviously you saw what we announced with Angeles' link this.

We got some favorable feedback from various stakeholders around the state around around that project and you see this decision by the CPUC authorizing this renewable that gas natural gas standard.

For the utilities, which is kind of it which is kind of an acknowledgment that hey, the gas companies infrastructure are going to have a big role to play in this clean energy transition within the state helping the state reach its aggressive de carbonization goals. So we view. This is all kind of like a positive step and it's demonstrating that.

There is that there is a role in this state for Clinton clean fuels, along with a lot of electrification.

Got it excellent guys I'm curious as to you when it becomes more material.

Maybe if I can just on numbers here.

As you think about this new CAGR that you've all laid out can you talk a little bit about the fungibility between.

Buybacks and use of deployment.

And share repurchase versus say going to an LNG or.

Or the Debottlenecking, obviously, there's several different scenarios that could play out here can you talk about how maybe capital going into an LNG.

It could potentially effectively delay so that earnings recognition into 'twenty seven.

Ultimately be accretive.

To your CAGR is that they understand that but maybe what's assumed in the form of buyback and then ultimately what is that incremental opportunity. If you can kind of define it relative to the CAGR.

Well, let me take a shot at it and if I don't answer it accurately please come back and we'll try to make sure I get a more fulsome answer, but I would start with the fact that you have seen our capital program grow from about 16 billion over five years in 2017 to 36 billion. So the cornerstone of our program going forward is the fact that all <unk>.

Three of our platforms have very strong growth and against that backdrop, but we understand that we're a company where we need to privilege the dividend right. So our investors expect us to return capital in a very competitive way with our dividend and what you've seen us do in the summer of 2020, Julian and now most recently in the last 90 days.

<unk> put $1 billion of share repurchases to work and again as someone mentioned earlier flexing the balance sheet, a little bit between now and the end of 2023 to put another $1 billion at work. So when we think about that return of capital. It's really a two pronged opportunity of dividend juxtaposed juxtaposed beside the share repurchases now to you.

Point as you go forward and the plan there are a variety of things that could cause or are planning to get bigger when you think about LNG I've made this comment earlier in my prepared remarks, but.

We certainly think what's unique about set for infrastructure as we've given them a mandate to be self funded right. So they are in a position where with an investment grade balance sheet that can source capital markets. They can source that they can raise money at the project level they've demonstrated a willingness to do that so think about Cameron. As example, we originally.

About 50% of that project and through our sell down at separate infrastructure to a 70% level today.

Through equity participation at camera today is roughly 35%. So we have a lot of flexibility under <unk> leadership and Justin's leadership to make sure that we're very very disciplined before we spend dollars on the LNG business, but their job is to risk adjust those cash flows in a way that make sure. These are accretive opportunities for the separate shareholder.

Got it excellent so just on the buyback commitment assumed in the plan.

Specific number per se.

So I think what we're saying is that we have identified programmatically that we're going to spend another $1 billion around share repurchases between now and 2023 and beyond that we will be opportunistic based upon what's in front of us and what we think creates the best.

Adjusted total shareholder return for our investors.

Absolutely a lot of moving pieces here. Thank you again and congrats once more thank.

Thank you guys. Thank you Julia I appreciate it.

And our next question from Craig Shere with Tuohy Brothers. Please go ahead.

Yes.

Hi, congratulations on another good quarter.

The ongoing growth.

Thank you Craig.

Jeff you mentioned the stress in uncharted global energy market.

The related opportunities on slide 34 for more simpler infrastructure projects.

Now up to $9 billion of incremental accretive.

Projects certainly.

Nothing small.

But that seems to ignore port Arthur in the eco phase two.

I realize for various reasons.

Some of these additional projects may be more towards the end of the decade.

But in a perfect storm.

Global energy and security.

There may be quite an appetite for a multiple.

Large scale projects.

While maybe not being exactly at the same time, maybe they could overlap and construction of one or two years and be quite a bit.

Hi, just in terms of their overall size.

So the first part of my question is.

A perfect storm, where the world needs help.

Would you be willing to take on that much and if we're looking at perhaps $20 billion ish of.

Growth capex through decades zone.

And I know this was asked in a different manner, but what I'm trying to get at is if it got to be that big does that necessarily auger for additional structural change.

Yes, Sir.

Really interesting set of question and I don't want to compliment you because you have long been a follower of the LNG markets and we've always appreciate our dialogue with you and your firm about this but you use twice this reference to a perfect storm and we don't take too much.

Confidence or happiness in the fact that we've been predicting this for over five or 10 years. This need for what needs to happen in the mill a decade and we certain no. One forecasted was currently taking place and I think perfect storm is the right characterization of it look there's no question that there is a commitment globally to a clean energy transition, but there is a growing recognition that.

That transition Craig has to happen in an orderly way and as you think about both developing markets in OECD nations. There is a strong and growing role a very important role for natural gas and LNG is really going to be the feedstock that allow us both Europe and Asia to make that transition with the order in a way which is affordable.

It is the natural partner to renewables. So I think we're in a in a very fortuitous position I think youre really describing for us a high class problem. So we do have a unique set of assets both on the west coast and the Gulf that can be responsive now we can't suggest his point and be responsive in the short term.

But over the long term, we have a very bullish view of what can happen in our portfolio, maybe feisal, who is the CFO that business. Maybe you can take about to Craig's question Feisal, how you think about that opportunity and how it can be flexed and how big it can be for our company, yes, Greg I think I think that would be awesome. If we could do all these projects all at the same time, but I'll.

Honestly, we have to be disciplined about how we do it. So if we think about over the long run how we are going to source that capital. So at Sempra infrastructure, obviously, when he cafes phase one comes online we're going to have a step up in cash flows. There. So we have very strong internally generated cash flows to fund growth projects in the future. The second part of it too is we have we have our partners now.

KKR and it can also be a source of capital for big projects like that and thirdly, we can pull that can pull capital at the project level. So similar that we have done a camera and we can do that other projects too. So I'd say, if you think about the future of funding. These projects, we feel very good about how we can source of capital.

To that growth.

I would just maybe Craig as a final comment say.

In the perfect storm Youre, describing I think there'll be a lot of alignment.

Around government agencies and support across our industry to pull projects forward as necessary. If we can to be helpful to improve the energy security of our allies.

One one would hope that our societies would be so integrated.

We are in agreement.

Thank you.

Thank you very much.

And we'll take our next question comes from Neil.

At Seaport Global Securities. Please go ahead.

Yes, hi, good morning folks and good morning, Thanks for all the clarity.

Actually I had a couple of follow ups on the LNG discussion.

So it seems like the European utilities over the last few years have been.

Kind of sticking on long term commitments with the 20 year contracts and so considering that the changes we are seeing.

Okay.

Currently has kind of discussions are opened up again I was just curious on that.

Yes, sure a couple of things have taken place one is.

European utilities are doing several things they are taken on longer term contracts number one.

And other companies.

Make more investments in pipeline, what they call a future ready pipelines for hydrogen which is probably further along that we are in the United States, but Justin talked about really the improvement and how he is envisioning the long term contracting environment and maybe just if you could just recap that in terms of the nature of the conversation youre, having with Counterparties currently.

Yes. Thank you, Jeff, Yes, so Neal I think.

You had been seeing some reluctance on the European utilities to really.

Go out on long dated contracts I think I think a lot of that was driven by uncertainty around the taxonomy as well as.

Carbon tax related questions. So.

Think some of that overhang is still there, but I will say, we're seeing a significant uptick in interest.

Particularly given some of the things that we've described as Jeff described in the global markets.

The forwards.

Clearly currently affected by what's happening in the Ukraine, but we are still seeing significant interest in the 10 million tons that I'm talking about marketing.

In Europe , and Asia, all of it on a 20 year basis.

Thank you Justin.

Yes, thanks for that and then one clarification on the one MTT as Ed mentioned the camera on Debottlenecking.

Is that the capacity all spoken for.

Partners in that project.

So yes.

Capacity.

Go to the current off takers.

And so basically represent.

In a sense captive customers for the for the marginal.

Earnings that would come out of those additional volumes.

Got it and then last question on that but I think you mentioned improvement in return profile on these projects.

You give us a sense of that externally.

What kind of improvements that you're seeing and I presume that the.

Contract construct with regard to the nature of the contract.

Pretty much the similar to what it did for Cameroon.

Yes.

Ill pass this to five but I think one of the things that we're referring to here is the nature of scarcity that you see in the marketplace and a growing recognition that youre seeing about the growing role of natural gas is causing two things to happen number one increased openness by customers to enter into long dated contracts and number two.

Greater competition for the capacity that we're looking to market both in the golf and the West Coast and Pfizer you want add anything to that in terms of what we're seeing.

There is also laid this out in his capital allocation sort of framework, but it's targeting those sort of mid to high teens equity.

Equity Levered IRR is just kind of what we look at.

Got it thanks for that.

Thanks Sunil.

And we'll take our next question from Nicholas Campanella with credit.

Please go ahead.

Hi, Nicholas 18, Hey, long time no talk.

I guess just on the.

On the California utilities in it in terms of what's assumed in the broader six to eight CAGR here I know, we talked about the <unk> cycle coming up you also have cost of capital coming.

Are you just kind of assuming status quo.

<unk> through 'twenty, five 'twenty, six or how should we think about that.

Yeah, a couple of things for you in terms of.

The five year plan two of those years or under the old rate case, and then three of the forward five years will be covered by the rate the rate case that goes into effect on January one 2024 in terms of cost of capital. We're obviously following the proceeding very closely.

Thank you.

In our current range for 2022.

As contemplated whether the trigger mechanism applause doesn't apply is contemplated in the range, we view it as having between five and 10 cent impact either way and then in terms of the JRC assumption.

We think about forecasting in future periods, you recall of Nicholas our convention has been to use.

Substantially similar Tricia mechanisms from the past. So if you look at the attrition mechanisms that <unk> and Edison recently got and our average attrition mechanism across both utilities over the last five years, that's a good proxy for our expectation and the plan going forward.

Great. Thanks, a lot and just.

One more cleanup question here on LNG or sorry.

EBITDA.

You gave 22.

We have earnings guidance for 'twenty, two and 'twenty three is there any reason why 23 wouldn't track similar to how you framed the change in earnings.

From a from an EBIT perspective, I'm, just trying to think about EBITDA at S&P for 'twenty three.

Yes.

So the earnings for the earnings you see in our guidance range for 'twenty, two and 'twenty three assumes a proportional amount of earnings. So the NCI is in there. So for example in 'twenty two youre seeing roughly 25%.

Interest to our non controlling shareholders and then in 'twenty three youre seeing 30% Noncontrolling interest. That's why you see a little bit of a change there, but on a gross basis. The EBITDA is basically fairly fairly fairly.

Fairly straightforward.

But let me just say this the reason we just put 22 in there there was nothing with regards to why we Didnt put 23, it's largely the same.

Yes, just wanted to confirm that thanks for your time really appreciate it.

Thank you.

And that concludes today's question and answer session. At this time I will turn the conference back to Jeff Martin for any additional or closing remarks.

Sure in closing I wanted to make sure. We took the time to summarize some of the highlights from today's call. We've nearly tripled our U S rate base in four years to 41 billion.

It includes current authorized blended ROE is today, there is slightly higher than 10% we.

We posted record adjusted EPS result, printing a number today of about $8 43. This was the 12th consecutive year that we've been able to raise our dividend and today, we announced our long term EPS growth rate of 6% to 8% and by the way over the last 10 years, we delivered a 7% to 8% annual CAGR in terms of EPS.

Growth I would also note that we are really benefiting from a simplified business model with three T&D platforms with scale and the biggest economic markets in North America and all of these results are being backed by shareholder friendly repurchases $1 billion in the summer of 2020, and another approximate $1 billion.

<unk> three.

Through 2023, we appreciate everyone joining the call Trevor and Justin and our IR team will be attending the credit Suisse Conference next week in Vail and also the Morgan Stanley Conference next week in New York can we hope we have the chance to see many of you there in person at both of those events. This concludes our call.

Thank you for your participation you may now disconnect.

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Good day and welcome to the Suntrust 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 <unk> fourth quarter 2021 earnings call.

Webcast of this teleconference and slide presentation is available on our website under the investors section.

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, Lethal Iraq, Alexander Senior Vice President Corporate Affairs, and Chief Sustainability Officer, Justin Bird Chief Executive Officer, Tim.

Infrastructure Faisal Khan, Chief Financial Officer of Sempra infrastructure.

My Chief Executive Officer of Encore, Kevin <unk> Executive Vice President and group, President and Peter <unk>, Senior Vice President Controller, and Chief Accounting Officer.

Before starting I would like to remind everyone that we will be discussing forward looking statements within the meaning of the private Securities Litigation Reform Act of 995.

Actual results may differ materially from those projected in any forward looking statements we make today.

Factors that could cause our actual results to differ materially are discussing the company's most recent 10-K filed with the SEC.

Although the earnings per share amounts in our presentation are shown on a diluted basis and will be discussing certain non-GAAP financial measures.

Please refer to the presentation slides that accompany this call for every calculation to GAAP measures.

We also encourage you to review our annual report on Form 10-K for the year ended December 31st 2021.

I did mention that the forward looking statements contained in this presentation speak only as of today February 25, 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.

Earnings per share of $8 43.

Well above our increased adjusted EPS guidance range of $7 75 to.

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 are 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% 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 are announcing a projected long term EPS growth rate for the company of 6% to 8%.

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 and 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.

More of these transactions highlight the underlying market value of this business and demonstrates <unk> 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 Central California, and separate infrastructure also had a great year.

Dancing construction at ECA LNG phase one on time and on budget with over 1 million hours worked without a lost time injury.

<unk> growth platforms are strategically positioned and highly attractive in 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 and 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 combined for nearly 300000 miles of transmission and distribution lines all in key markets in North America, while serving nearly 40 million consumers.

Is supported by strong continued 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 that simpler infrastructure for fully contracted assets currently under construction and potential upside to projected growth from projects. We currently have in development.

The energy value chain, we believe we have reduced our exposure to many of the traditional risk in the energy space, whether its commodity exposure extreme weather retail credit or stranded generation investments.

Thanks, Jeff for two decades, <unk> has been on a sustained path to Decarbonize, our business operations and the markets. We serve innovation and new technologies are central to a clean energy future enabled by investments in three key capabilities de carbonization diversification and digitalization.

This past year, we summarized our aspirations in each of these areas as part of Sempra energy transition action plan and I'm pleased to update you that we're making great progress here.

Here are a few examples in California, <unk> completed its inaugural issuance of $750 million in green bonds.

And secured regulatory approval for three new energy storage projects expected to total 161 megawatts. Additionally, socal gas achieved over 4% renewable natural gas deliveries to our customers in 2021.

<unk> to approximately 15500 megawatts. In addition to progress on its operations Encore has also entered into a new $2 billion revolving credit facility with sustainability linked to performance metrics and.

And lastly at Sempra infrastructure, the newly consolidated platform is advancing opportunities in renewables hydrogen ammonia LNG and carbon capture infrastructure. The company recently filed an amendment with FERC to incorporate electric drives that are proposed Cameron LNG phase two project, which could help reduce facility admissions by.

Up to 40%, while continuing to help Decarbonize global market.

Earlier this year the company also announced an Mou with entergy to develop options intended to accelerate deployment of renewable energy to power primarily LNG facilities.

Please turn to the next slide where I'll hand, the call over to Trevor to provide business and financial update.

Thanks Lisa.

To begin we've had several positive developments at our operating companies.

In the third quarter <unk> filed an application with the CPUC to assess its cost of capital for 2022 as a result of the extraordinary event of the COVID-19 pandemic.

In December the CPUC issued a scoping memo with a final decision expected later this year.

Additionally, the CPUC is working through the implementation of a renewable natural gas procurement standard.

We're excited about this development and view it as a significant step forward in advancing the future cleaner fuels here in California.

Lastly, socal gas recently announced a bold new vision to develop a proposed green hydrogen infrastructure system to serve the Los Angeles Basin called Angeles link.

Duty trucking and other sectors that are challenging to fully electrify.

Shifting to Texas Oncor set a company record for the number of new and active requests received for transmission interconnections in 2021, demonstrating the rapid growth in Texas and continuing opportunities for encore to grow its system.

Oncor service territory continue to grow as well with oncor connecting approximately 70000 additional premises in 2021.

At Sempra infrastructure, we signed two Mou used to advance our unique capability of delivering LNG into both the Atlantic and Pacific basins.

The first with Entergy that Lisa discussed earlier and the second an Mou with Cfe to jointly develop this to Pacific <unk> LNG as well as the new Regasification project in the Pas Baja California sur.

Please turn to the next slide where I would like to go into additional detail on an update relating to San for infrastructure.

The key takeaway is that we're making progress on our announced sale of an additional 10% interest in the business to audio this.

This transaction, which is subject to customary closing conditions and third party and regulatory approvals valued sempra infrastructure and an enterprise value of approximately $26 5 billion.

Which was $1 billion higher than the KKR transaction.

Earlier. This morning, we recorded fourth quarter 2021, GAAP earnings of $604 million or $1 90 per share.

This compares to fourth quarter, 2020, GAAP earnings of $414 million or $1 43 per share.

On an adjusted basis fourth quarter 2021 earnings were $688 million or $2 16 per share. This compares to our fourth quarter 2020 earnings of $668 million or $2 28 per share.

Full year 2021, GAAP earnings were $1.254 billion or $4 <unk> per share.

This compares to 2020 GAAP earnings of $3 billion $764 million or $12 88 per share.

On an adjusted basis full year 2021 earnings were $2 billion $637 million or $8 43 per share.

This compares favorably to our previous full year 2020, adjusted earnings of $2 billion $342 million or $8 per share. Please turn to the next slide.

The variance in full year 2021, adjusted earnings compared to the prior year was affected by the following key items seven.

$78 million of lower earnings due to the sales of our Peruvian and Chilean utilities in April and June of 2020, respectively.

$139 million of lower losses at parent and other primarily due to the lower preferred dividends from the mandatory conversion of preferred stock and lower net interest expense.

$52 million of higher CPUC base operating margin net of operating expenses at <unk> and Socal gas.

$44 million charge in 2020 for amounts to be refunded to customers related to the energy efficiency program at <unk>.

$37 million of higher earnings at Sempra, Texas utilities, primarily due to increased revenues from rate updates to reflect increases in invested capital and customer growth. Please.

Please turn to the next slide.

This plan is anchored by $33 billion of utility investments, representing nearly 94% of the total capital plan.

Our <unk> and Socal gas safety and reliability continues to be at the forefront of our planned expenditures. This is important.

Our investments in California centered around the states regulatory priorities, including wildfire safety and the integrity and safety of our gas infrastructure, along with technology investments.

Let's turn to the next slide.

These capital investments in top tier markets in North America are driving tremendous growth in our projected rate base.

In 2017, we had $14 billion of rate base at the California utilities and.

Just as importantly, we expect to support the strong projected growth without issuing common equity.

Notably.

Looking forward our financial plan is underpinned by a portfolio of strong operating cash flows that are backed by regulated returns are long term contracts.

Our robust utility capital plan is further supported by cash generated from Sanford infrastructure, where projected cash distributions to sempra combined with the proceeds from the sales to KKR and adia are expected to provide over $7 billion from 2021 through 2026.

Turning to the dividend.

We remain focused on delivering shareholder value and through this efficient financing strategy, we expect to deliver strong EPS and dividend growth without issuing external common equity.