SEMPRA - SHAREHOLDERS' EQUITY AND EARNINGS PER COMMON SHARE

12 Months Ended

Dec. 31, 2022

SEMPRA - SHAREHOLDERS' EQUITY AND EARNINGS PER COMMON SHARE

SEMPRA – SHAREHOLDERS’ EQUITY AND EARNINGS PER COMMON SHARE

SEMPRA COMMON STOCK REPURCHASES

On September 11, 2007, our board of directors authorized the repurchase of shares of our common stock, provided that the amounts spent for such purpose do not exceed the greater of $2 billion or amounts spent to purchase no more than 40 million shares. On July 1, 2020, we entered into an ASR program under which we prepaid $500 million to repurchase shares of our common stock in a share forward transaction. The total number of shares purchased was determined by dividing the $500 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of July 2, 2020 through August 4, 2020, minus a fixed discount. The ASR program was completed on August 4,

2020 with an aggregate of 4,089,375 shares of Sempra common stock repurchased at an average price of $122.27 per share. Following the completion of the ASR program, the aggregate dollar amount authorized by the September 11, 2007 share repurchase authorization was exhausted.

On July 6, 2020, our board of directors authorized the repurchase of shares of our common stock at any time and from time to time in an aggregate amount not to exceed the lesser of $2 billion or amounts spent to purchase no more than 25 million shares. No shares were repurchased under this authorization in 2020.

Beginning on November 17, 2021, we executed a series of open market repurchases for which we paid $300 million to repurchase shares of our common stock in the open market. The repurchases were completed on December 7, 2021 with an aggregate of 2,422,758 shares of Sempra common stock repurchased at a weighted-average purchase price of $123.83 per share, excluding commissions.

On January 11, 2022, we entered into an ASR program under which we prepaid $200 million to repurchase shares of our common stock in a share forward transaction. A total of 1,472,756 shares were purchased under this program at an average price of $135.80 per share. The total number of shares purchased was determined by dividing the $200 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of January 12, 2022 through February 11, 2022, minus a fixed discount. The ASR program was completed on February 11, 2022.

On April 6, 2022, we entered into an ASR program under which we prepaid $250 million to repurchase shares of our common stock in a share forward transaction. A total of 1,471,957 shares were purchased under this program at an average price of $169.84 per share. The total number of shares purchased was determined by dividing the $250 million purchase price by the arithmetic average of the volume-weighted average trading prices of shares of our common stock during the valuation period of April 7, 2022 through April 25, 2022, minus a fixed discount. The ASR program was completed on April 25, 2022. As of February 28, 2023, a maximum of $1.25 billion and no more than 19,632,529 shares may yet be purchased under the July 6, 2020 repurchase authorization.

EARNINGS PER COMMON SHARE

Basic EPS is calculated by dividing earnings attributable to common shares (from both continuing and discontinued operations) by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution of common stock equivalent shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.


EARNINGS PER COMMON SHARE COMPUTATIONS
(Dollars in millions, except per share amounts; shares in thousands)
	Years ended December 31,
	2022		2021		2020
Sempra:
Numerator for continuing operations:
Income from continuing operations, net of income tax	$	2,285	$	1,463	$	2,255
Earnings attributable to noncontrolling interests	(146)		(145)		(162)
Preferred dividends	(44)		(63)		(168)
Preferred dividends of subsidiary	(1)		(1)		(1)
Earnings from continuing operations attributable to common shares	$	2,094	$	1,254	$	1,924

Numerator for discontinued operations:
Income from discontinued operations, net of income tax	$	—	$	—	$	1,850
Earnings attributable to noncontrolling interests	—		—		(10)
Earnings from discontinued operations attributable to common shares	$	—	$	—	$	1,840

Numerator for earnings:
Earnings attributable to common shares	$	2,094	$	1,254	$	3,764

Denominator:
Weighted-average common shares outstanding for basic EPS(1)	315,159		311,755		291,077
Dilutive effect of stock options and RSUs(2)	1,219		752		1,175
Dilutive effect of mandatory convertible preferred stock	—		529		—
Weighted-average common shares outstanding for diluted EPS	316,378		313,036		292,252

Basic EPS:
Earnings from continuing operations	$	6.65	$	4.03	$	6.61
Earnings from discontinued operations	$	—	$	—	$	6.32
Earnings	$	6.65	$	4.03	$	12.93

Diluted EPS:
Earnings from continuing operations	$	6.62	$	4.01	$	6.58
Earnings from discontinued operations	$	—	$	—	$	6.30
Earnings	$	6.62	$	4.01	$	12.88

(1) Includes fully vested RSUs held in our Deferred Compensation Plan of 403 in 2022, 453 in 2021 and 537 in 2020. These fully vested RSUs are included in weighted-average common shares outstanding for basic EPS because there are no conditions under which the corresponding shares will not be issued.

(2) Due to market fluctuations of both Sempra common stock and the comparative indices used to determine the vesting percentage of our total shareholder return performance-based RSUs, which we discuss in Note 10, dilutive RSUs may vary widely from period-to-period.

The potentially dilutive impact from stock options and RSUs is calculated under the treasury stock method. Under this method, proceeds based on the exercise price and unearned compensation are assumed to be used to repurchase shares on the open market at the average market price for the period, reducing the number of potential new shares to be issued and sometimes causing an antidilutive effect. The computation of diluted EPS for 2022, 2021 and 2020 excludes potentially dilutive shares related to stock options and RSUs of 86,532, 211,155 and 187,028, respectively, because to include them would be antidilutive for the period. However, these shares could potentially dilute basic EPS in the future.

In 2021, the potentially dilutive impact from mandatory convertible preferred stock was calculated under the if-converted method until the mandatory conversion date. After the mandatory conversion date, the converted shares are included in weighted-average common shares outstanding for basic EPS. As we discuss in Note 13, we converted our series A preferred stock into common

stock on January 15, 2021 and our series B preferred stock into common stock on July 15, 2021. The computation of diluted EPS for the years ended December 31, 2021 and 2020 excludes potentially dilutive shares related to our mandatory convertible preferred stock of 2,272,117 and 17,889,365, respectively, because to include them would be antidilutive for those periods.

We are authorized to issue 750 million shares of no par value common stock. The following table provides common stock activity for the last three years.


COMMON STOCK ACTIVITY

	2022	2021	2020
Sempra:
Common shares outstanding, January 1	316,919,782	288,470,244	291,712,925
Conversion of mandatory convertible preferred stock	—	18,037,745	—
Shares issued in IEnova exchange offer	—	12,306,777	—
RSUs vesting(1)	457,222	686,916	896,839
Stock options exercised	40,630	50,671	4,400
Savings plan issuance	—	—	201,431
Common stock investment plan(2)	—	—	42,955
Issuance of RSUs held in our Deferred Compensation Plan	65,013	102,238	103,552
Shares repurchased(3)	(3,147,969)	(2,734,809)	(4,491,858)
Common shares outstanding, December 31	314,334,678	316,919,782	288,470,244

(1) Includes dividend equivalents.

(2) Participants in the Direct Stock Purchase Plan may reinvest dividends to purchase newly issued shares.

(3) Includes shares repurchased under the repurchase programs that we discuss above. Generally, we purchase shares of our common stock or units from LTIP participants who elect to sell to us a sufficient number of vested RSUs to meet minimum statutory tax withholding requirements.