SRE 10-K & 10-Q changes, risk factors and insider trading

When evaluating our company and its consolidated entitiesbusinesses and any investment in our or their securities, you should carefully consider the following risk factors and all other information contained in this report and the other documents we file with the SEC (including those filed subsequent to this report). We also may be materially harmed by risks and uncertainties not currently known to us or that we currently consider immaterial. If any of these risks occurs,occur, our results of operations, financial condition, cash flows and/or prospects could be materially adversely affected, our actual results could differ materially from those expressed or implied in our forward-looking statements, and the trading prices of our securities and those of our consolidated entitiesbusinesses could decline. These risk factors are not prioritized in order of importance or materiality, and they should be read together with the other information in this report, including in the Consolidated Financial Statements and in “Part II – Item 7. MD&A.”

We are a holding company and substantially all the assets that produce our earnings are owned by our subsidiaries or equity method investees, which are entities we do not control,control. includingSI Partners, which primarily constitutes our Sempra Infrastructure reportable segment, will be accounted for as an equity method investments.investment subject to closing the planned sale of 45% of our equity interest, which we expect to occur in the second or third quarter of 2026. Our ability to pay dividends and meet our debt and other obligations largely depends on distributions from our subsidiaries and equity method investments,investees, which in turn depend on their ability to execute their business strategies and generate cash flows in excess of their own expenditures, dividend payments to third-party owners (if any) and debt and other obligations. In addition, our subsidiaries and entities accounted for as equity method investments, which we do not control, and our subsidiariesinvestments are all separate and distinct legal entities that are not obligated to pay dividends or make loans or distributions to us and could be precluded from doing so by legislation, regulation or contractual restrictions, in times of financial distress or in other circumstances. TheAny inability to access capital from our subsidiaries and equity method investmentsinvestees could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.

Sempra’s rights to the assets of its subsidiaries and equity method investmentsinvestees are structurally subordinated to the claims of each entity’s trade and other creditors. When Sempra is a creditor of any such entity, its rights as a creditor are effectively subordinated to any security interest in the entity’s assets and any indebtedness of the entity senior to that held by Sempra. In addition, Sempra may elect to make additional capital contributions to its subsidiaries,subsidiaries or equity method investments, which are not required to be repaid and are structurally subordinated to claims by creditors of the applicable subsidiary.

We have investments in businesses we do not control or manage or in which we share control.control, including Oncor and SI Partners (subject to closing our planned sale of a portion of our equity interest in SI Partners). We discuss these investments in Note 5 of the Notes to Consolidated Financial Statements. In some cases, we engage in arrangements with or for these businesses that could expose us to risks in addition to our investment, including guarantees, indemnities and loans. For businesses we do not control, we are subject to the decisions of others, which may be adverse to our interests. When we share control of a business with other owners, any disagreements among the owners about strategy, financial, operational, transactional or other important matters could hinder the business from moving forward with key initiatives or taking other actions and could negatively affect the relationships among the owners and the efficient functioning of the business. In addition, irrespective of whether we control these businesses, we couldwould be responsible for certain liabilities or losses related to these businessesbusinesses, may be subject to disproportional funding obligations for certain matters or priority distributions in favor of other partners or members, and may be required or elect to make additional capital contributions to these businesses. Any such circumstance could materially adversely affect our results of operations, financial condition, cash flows and/or prospects. We discuss these investments in Note 5 of the Notes to Consolidated Financial Statements.

We have been and may in the future be subject to activist shareholder attention.attention, Activist shareholders may engage inincluding proxy solicitations, advance shareholder proposals or otherwiseother attemptattempts to effect changes in or assert influence on our board of directors and management. In takingconnection with these steps,efforts, activist shareholders could seek to acquire our capital stock, in spite ofdespite the provisions of our articlesgoverning of incorporation and bylawsdocuments that couldmay havedelay, the effect of delaying, deterringdeter or preventingprevent a change of control or other takeover of our company,company even whenif our shareholders might considerprefer such a change of control to be in their best interests.control. At certain ownership levels, these acquisitions of our common stock acquisitions could threaten our ability to use some or all of our NOL or tax credit carryforwards if our corporation experiences an “ownership change” under applicable tax rules. Responding to activist shareholders can be costly and time-consuming and requires time and attention from our board of directors and management, diverting their attention from our business strategies.

Successfully completingexecuting our five-year capital expenditures plan is subject to certain risks.

The execution of our five-year capital expenditures plan may not be completed in accordance with current expectations or produce the desired results. Factors that have historically impacted and could continue to impact the amount, timing and types of capital expenditures we make include the cost and availability of financing; economic and market conditions; regulatory approvalsdecisions; changes in tax law; business opportunities providing desirable rates of return; forecasts related to safety, reliability and load growth, gas system planning,planning and transportation electrification; safety and environmental requirements and climate-related policies; and cooperation of third-parties,third parties, including customers, partners, suppliers, lenders and others. We discuss these and other relevant factors underwith “Risks Relatedrespect to Alleach Sempraof Businesses”our businesses below. We aim to finance our five-year capital expenditures plan in a manner that will maintain our investment-grade credit ratings and capital structure, but there can be no guarantee that we willmay not be able to do so. Any failure to successfully execute our capital expenditures plan could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.

Settlement provisions contained in the forward sale agreements we may enter into in connection with our ATM program subject us to certain risks.

In November 2024, Sempra established an ATM program, which we discuss in Note 1213 of the Notes to Consolidated Financial Statements. We are permitted to sell shares of our common stock in the ATM program pursuant to forward sale agreements, whichincluding 4,996,591 shares under existing forward sale agreements that remain subject to future settlement as of February 26, 2026. These forward sale agreements grant each counterparty (each a forward purchaser) the right to accelerate its forward sale agreement (or, in certain cases, the portion thereof that the forward purchaser determines is affected by the relevant event) and require us to physically settle the forward sale agreement on a date specified byupon the forwardoccurrence purchaserof if,certain subjectevents, tosome aof priorwhich noticeare requirement:not within our control.

A forward purchaser’s decision to exercise this right and require us to physically settle the relevant shares will be made irrespective of our interests, including our capital and other needs. In such cases, we could be required to issue and deliver shares of our common stock under the terms of the physical settlement, which would result in dilution to our EPS and may adversely affect the market price of our common stock, Series C preferred stock and any other series of preferred stock we may issue in the future.

We will generally have the right, in lieu of physical settlement of any forward sale agreement, to elect cash or net share settlement in respect of any or all of the shares of our common stock subject to sucheach forward sale agreement. If we elect to cash or net share settle all or any part of any forward sale agreement, we would expect to issue a substantially lower number of shares than if we settled by physical delivery, but would not receive the cash for the shares that would have otherwise been issued if we settled the entire forward sale agreement by physical delivery and, as a result, would not derive the same liquidity or credit metrics benefits.

If the price of our common stock at which these purchases are made by sucha forward purchaser (or its affiliate) exceeds the applicable forward price, we will pay suchthe forward purchaser an amount in cash equal to such difference (if we elect to cash settle) or we will deliver to suchthe forward purchaser a number of shares of our common stock having a market value equal to such difference (if we elect to net share settle). Any such difference could be significant and could require us to pay a significant amount of cash or deliver a significant number of shares of our common stock to sucha forward purchaser.

The purchase of shares of our common stock by a forward purchaser (or its affiliate) to unwind the forward purchaser’s hedge position could cause the price of our common stock to increase above the price that would have prevailed in the absence of those purchases (or prevent a decrease in such price), thereby increasing the amount of cash (in the case of cash settlement) or the number of shares (in the case of net share settlement) that we would owe suchthe forward purchaser upon settlement of the applicable forward sale agreement or decreasing the amount of cash (in the case of cash settlement) or the number of shares (in the case of net share settlement) that suchthe forward purchaser would owe us upon settlement of the applicable forward sale agreement.

The economic interest, voting rights and market value of our outstanding common and preferred stock may be adversely affected by any additional equity securities we may issue.

At February 19, 2025,2026, we had 651,457,249653,284,140 shares of our common stock and 900,000 shares of our non-convertible series C preferred stock outstanding. Our businesses have substantial capital needs, and we may seek to raise capital by issuing additional equity, including in our ATM program, or convertible debt securities in potentially significant amounts depending in part on the prevailing market price of our common stock, which at times experiences substantial volatility. Any future issuance of equity or convertible debt securities may materially dilute the voting rights and economic interests of holders of our outstanding common and preferred stock and materially adversely affect the trading price of our common and preferred stock.

2024 Form 10-K | 40 exacerbated by supply chain and gas transportation capacity constraints, tight labor markets, and cost increases due to inflationary pressures, tariffs or otherwise, that may not be recoverable in a timely manner or at all; operational restrictions resulting from environmental requirements or governmental interventions or permitting delays; inability to enter into, maintain, extend or replace long-term supply or transportation contracts; and performance below expected levels. Our businesses undertake capital investment projects to construct, replace, operate, maintain and upgrade facilities and systems, but such projects may not be completed or effective at managing these risks and involve significant costs that may not be recoverable.recoverable in a timely manner or at all. We often rely on third parties, including contractors, to perform work related to these projects and other maintenance activities, which may subject us to liability for safety issues andor thelower qualitystandards of work performed.quality. Because some of our facilities are interconnected with those of third parties, including customer-side-of-meter facilities, natural gas pipelines and power generation facilities that produce most of the power we distribute,facilities, the operation of our facilities could also be materially adversely affected by these or similar risks to such third-party systems, which may be unanticipated or uncontrollable by us.

Additional risks associated with our ability to safely and reliably construct, replace, operate, maintain and upgrade facilities and systems, which may be beyond our control, include:

▪worksite accidents and other incidents impacting the health, safety,safety or security of employees, contractors, the public or our infrastructure

▪severe weather, which we discuss further in the following risk factor The occurrence of any of these events could affect supply and demand for electricity, natural gas or other forms of energy, cause unplanned outages, damage our assets and/or operations or those of third parties on which our businesses rely, damage property owned by customers or others, and cause personal injury or death.death, such as recent contractor fatalities on certain Sempra Infrastructure projects under construction. In addition, if we are unable to defend and retain title to the properties we own or obtain or retain rights to construct and operate on the properties we do not own in a timely manner, on reasonable terms or at all, we could lose our rights to occupy and use these properties and related facilities, which could prevent, limit or delay existing or proposed operations or projects, increase our costs, and result in breaches of permits or contracts and related legal costs, impairments, fines or penalties. Any such outcome could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.

Our employees and contractors may be harmed and our facilities and infrastructure may be damaged as a result of physical risks, such as extreme temperatures, storms, droughts and other severe weather; natural disasters, including wildfires (such as the LA Fires),wildfires, land movement, earthquakes, and solar flares; climate-related conditions, including sea level rise and coastal erosion; accidents, including explosions andexplosions, excavation damage to pipelines and automobile accidents; or acts of terrorism, war,war or criminality.criminality, including physical attacks and unauthorized drone incursions. Because we are in the business of using, storing, transporting and disposing of highly flammable, explosive and radioactive materials and operating highly energized equipment, the risks such incidents pose to our facilities and infrastructure, as well as to the surrounding communities for which we could be liable, are substantially greater than the potential risks to a typical business. Efforts to mitigate these risks could decrease revenues and earnings and/or increase costs, which for our regulated utilities may not be recoverable in rates on a timely basis or at all, including expenditures on infrastructure maintenance and resiliency, physical and employee safety and security, emergency preparedness, wildfire mitigation and grid modernization.

Such incidentsincidents, which have occurred from time to time, could result in operational disruptions, electric or gas outages, property damage, personal injury or death and could cause secondary incidents that also may have these or other negative effects, such as fires; leaks or spills of gases, natural gas odorant or radioactive material; damage to natural resources; or other impacts to affected communities. Any of these occurrences could decrease revenues and earnings and/or increase costs, including maintenance costs or restoration expenses, amounts associated with claims against us, and regulatory fines, penalties and disallowances. In some cases, we may be liable for damages even though we are not at fault, such as when the doctrine of inverse condemnation applies, which we discuss below under “Risks Related to Sempra California – Operational Risks.” For our regulated utilities, these costs may not be recoverable in rates or recovery may be insufficient or delayed. Insurance coverage for these costs may continue to increase or become prohibitively expensive, be disputed by insurers, or become unavailable for certain of these risks or at adequate levels or in certain geographic locations, and any insurance proceeds may be insufficient to cover our losses or liabilities due to limitations, exclusions, high deductibles, failure to comply with procedural requirements or other factors. We discuss the risks related to insurance for wildfire liabilities below under “Risks Related to Sempra California —– Operational Risks.” Such incidents that do not directly affect our facilities may impact our business partners, supply chains and transportation and communication channels, which could negatively affect our ability to operate. Moreover, weather-related incidents have become more prevalent, unpredictable and severe due to climate change or other factors. As a result, these incidents could have a greater impact on our businesses than currently anticipated and, for our regulated utilities, rates may not be adequately or timely adjusted to reflect any such increased impact. Any such outcome could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects.

We face evolving cybersecurity andcybersecurity, technology resiliency risksand associateddata security and governance risks, including with therespect energyto grid,increasing pipelines, storage and other infrastructure as well as the collectionuse of personal,artificial sensitive and confidential information.intelligence.

Our significant use of and reliance on complex technologies and information systems in our operations, including our increasing deployment of new technologies, such as advanced forms of automation and artificial intelligence,intelligence and virtualization of many business activities, and our collection and retention of personal, sensitive and confidential information, represent large-scale opportunities for attacks on, vulnerabilities inon or other failures of our information systems, information andthe energy grid and our other infrastructure. Our digitalization and grid modernization efforts, including the networking of operational technology assets such as substations, continue to increase the potential vulnerabilities and points of failure in our information systems. We are also at risk of attacks on, vulnerabilities in or other failures of technologies and systems used by certain third-party vendors’vendors, regulators and/or regulators’ISOs, technologiesincluding andthird-party systems,systems dependingthat onare the level of access these vendors and agencies haveintegral to our informationelectric andutilities’ systems.operations in their respective ISO markets. Viruses, ransomware, malware and other forms of cyber-attacks targeting utility systems and other energy infrastructure arecontinue continuouslyto increasingincrease in sophistication, magnitude and frequency, may not be recognized until launched against a target and may further escalate during periods of heightened geopolitical tensions. Adversaries increasingly use artificial intelligence to develop new hacking tools, exploit vulnerabilities, obscure malicious activities and increase the difficulty of detecting threats. Accordingly, we may be unable to anticipate these techniques or to implement adequate preventative measures, making it impossible for us to eliminate thisthese risk.risks.

Although we make significant investments in risk management, technology resiliency and information securitycybersecurity measures for the protection of our systems and data, these measures could be insufficient or otherwise fail, particularly against unknown software flaws, insider threats, attacks involving sophisticated adversaries, including nation-state actors, or outages involving key technology vendors.vendors and systems. The costs and operational consequences of implementing, maintaining and enhancing these measures are significant and expected to increase to address evolving cyber risks. We oftenincreasingly rely on third-party vendors to deploy new technologies and host, maintain and update our systems (including providing security updates), and these third parties may not have adequate risk management, technology resiliency and information securitycybersecurity measures with respect to their systems or may fail to timely provide and install software updates. Although we have not experienced a material breachCertain of our informationkey externally hosted systems ordepend data,on weglobal andcloud service providers as well as their respective vendors, some of our vendorswhich have beenexperienced significant system failures and willoutages likely continue to be subject to breaches of and attempts to gain unauthorized access to our systems or data or efforts to otherwise disrupt our operations. Any actual or perceived noncompliance with applicable data privacy and security laws or any incidents impacting our or our vendors’ information systems;in the integrity of the energy grid, our pipelines or our distribution, storage and other infrastructure; or our personal, sensitive and confidential information could result in disruptions to our business operations, regulatory compliance failures, inability to produce accurate and timely financial statements, energy delivery failures, financial and reputational loss, litigation, violations of applicable laws and fines or penalties, any of which could have a material adverse effect on our results of operations, financial condition, cash flows and/or prospects. Although Sempra currently maintains cyber liability insurance, this insurance is limited in scope and subject to exceptions, conditions and coverage limitations and may not cover the costs associated with a cybersecurity incident, and there is no guarantee that the insurance we currently maintain will continue to be available at rates we believe are reasonable.past.

▪Sempra is a California-based holding company withwhose energyprincipal infrastructurebusinesses investmentsare regulated utilities in NorthCalifornia America.and Texas. Our businesses invest in, developin and operate energy infrastructure, and provide electric and gas utilities and other energy infrastructure that provide energy services to customers.

SDG&E and SoCalGas each hashave one reportable segment.

▪The CPUC approvedissued an FD to modify the CCM and updatefor SDG&E’s and SoCalGas’ cost of capital effectivefor January2026 1,through 20252028

In 20242025 compared to 2023,2024, the increasedecrease in earnings of $99$418 million (6%23%) to $1.8 billion was primarily due to:

▪$89$432 million charge in 20242025 forfrom amountsregulatory relatingdisallowances related to the2019 FERCthrough order2024 findingassociated thatwith the TO52024 adderGRC refundTrack provision2 has been triggered, requiring SDG&E to refund customers the California ISO adder retroactively from June 1, 2019,FD, which we discuss in Note 4 of the Notes to Consolidated Financial Statements

▪$15 million impairment in 2024 from disallowed capital costs in the 2024 GRC FD In 20242025 compared to 2023,2024, the increase in earnings of $87$80 million (13%10%) to $781 million was primarily due to higher equity earnings from Oncor Holdings driven by:

▪higher interest expense and depreciation expense attributableassociated towith increases in invested capital

In 20242025 compared to 2023,2024, thelosses increasewere in$160 million compared to earnings of $34 million (4%) to $911 million was primarily due to:

▪$499$445 million favorableunfavorable impact from foreign currency and inflation effects on our monetary positions in Mexico, comprised of a $263$181 million unfavorable impact in 2025 compared to a $264 million favorable impact in 2024 compared to a $236 million unfavorable impact in 2023

▪$21$43 million favorable impact from $20 millionlower income tax benefit in 2024 compared to $1 million income tax expense in 2023 primarily from outside basis differences and the remeasurement of certain deferred income taxes

▪$463$21 million from asset and supply optimizationTdM driven by lower volumes and lower power prices and unrealized losses in 20242025 compared to unrealized gains in 20232024 on commodity derivatives due to changes in natural gaspower prices and lower LNG diversion fees

We discuss herein Sempra’s results of operations and significant changes in earnings, revenues and costs by segment, as well as Parent and other, in the three months (Q2) and six months (YTD) ended MarchJune 31,30, 2026 compared to the same period in 2025. We also discuss herein the impact of foreign currency and inflation rates on Sempra’s results of operations.

In the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, the decreaseincrease in earnings of $4$38 million (1%15%) was primarily due to:

▪$34$29 million lowerhigher income tax benefits primarily from flow-through items

▪$14$21 million higher CPUC base operating margin, net interestof expenseoperating expenses

In the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, the increase in earnings of $25$138 million (17%) was primarily due to higher equity earnings from Oncor Holdings driven by:

▪higher interestdepreciation expense and depreciationinterest expense associated with increases in invested capital

In the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025, the increase in earnings of $116$163 million (46%) was primarily due to higher equity earnings from Oncor Holdings driven by:

▪$35$46 million netfrom $20 million income tax benefit in 2026 compared to $26 million income tax expense in 2025 as a result of classifying SI Partners and Ecogas as held for sale, comprised of the following:

◦$33$21 million net income tax benefit in 2026 to adjust deferred income tax liabilities primarily related to outside basis differences in our investment in SI Partners ◦$2$25 million from $1 million income tax benefitexpense in 2026 compared to adjust$26 million income tax expense in 2025 related to a Mexican deferred income tax liability on our outside basis difference in Ecogas

▪$12$27 million favorable impact from foreign currency and inflation effects on our monetary positions in Mexico and associated undesignated derivatives, comprised of a $19$71 million favorableunfavorable impact in 2026 compared to a $7$98 million favorableunfavorable impact in 2025

▪$11$10 million higherlower O&M from changes in provisions for expected credit losses

▪$9$11 million fromlower revenues in 2025 driven by a contract modification in December 2024 on an LNG storage and regasification agreement that ended in December 2025 In the six months ended June 30, 2026 compared to the same period in 2025, the increase in earnings of $274 million was primarily due to:

In the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, the increasedecrease in losses of $6$1 million (5%1%) was primarily due to:

▪$11 million preferred dividends in 2025 prior to the redemption of series C preferred stock in October 2025

In the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, Sempra’s natural gas revenues decreased by $337$106 million (14%7%) driven by Sempra California, which included: