FOR IMMEDIATE RELEASE
January 29, 2004
Telephone: 609-561-9000
Investor Relations Contact: Stephen Clark x4260
Public Relations Contact: Joanne Brigandi x4240
SJI Posts 18% Increase in Income from Continuing Operations
Reports Record Earnings for a Fifth Consecutive Year
[Folsom, NJ] - Today, South Jersey Industries (NYSE: SJI) announced record
earnings from continuing operations for 2003 of $34.6 million, or $2.73 per
share, an increase of $29.4 million, or $2.43 per share from 2002 results. This
performance reflects an 18% increase in net income from continuing operations
and a 12% increase in earnings per share from continuing operations. Both
utility and non-utility business lines contributed to SJI's record performance.
"Exceptional earnings performance in 2003 marks our fifth consecutive year of
record earnings and our fifth year in a row of increasing SJI's dividend," said
SJI Chairman of the Board and CEO Charles Biscieglia. "Our performance clearly
indicates that our focused strategy of growing SJI in energy related markets has
been successful in achieving our goal of sustained, consistent earnings and
dividend growth. Our $0.08 annual dividend increase and the dividend policy of
3% to 6% annual growth announced in November of 2003, demonstrate our confidence
to SJI shareholders in our ability to continue the trend of record earnings
growth in the future."
Highlights For 2003 Include:
SJI Provides Strong Total Returns to Shareholders: Stock price appreciation,
combined with dividends paid in 2003, provided SJI shareholders with a total
return of 28% on their investment. For the 5-year period ending December 31,
2003, SJI's investors enjoyed a 14.5% annualized total return, which compares
very favorably to negative 2.5% and negative 0.6% returns from the S&P Utility
Index and S&P 500 Index, respectively.
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Utility Business Produces Record Performance: South Jersey Gas' net income of
$26.6 million in 2003 was 15% higher than last year when it produced $23.2
million. Key contributing factors were:
o SJG added 8,188 customers to its customer base during 2003.
Customer growth of 2.8% continues to be well above the
national average of 1.8%. The growth rate is also the highest
of any gas utility in New Jersey. Dynamic economic development
in our service area, aided by an anticipated stream of
conversions from electricity and oil, the latter of which is
heavily driven by environmental issues, should help SJG
duplicate 2003's growth rate this year. These new customers
will add approximately $1.8 million to net income in 2004.
o Weather was 12.5% colder in 2003 than 2002. Significantly
colder weather in 2003 compared to the prior year, added $2.9
million to net income while the temperature adjustment clause
reduced gas costs to our customers by the same amount.
o Off-system sales activities added 9% to net income over last
year. Income from this business line grew by $550,000 in 2003
to $6.7 million. Higher profit margins per unit sold and
increased capacity release activity were the primary
contributors. To maximize the value of its pipeline and
storage assets, SJG actively markets these assets to third
parties when they are not needed by utility customers. Through
a sharing formula under which SJG splits proceeds of its
off-system sales with customers, SJG returned $11.0 million to
customers in 2003.
o Interest expense decreased by 8% in 2003. SJG realized lower
interest rates on both short-term and new long-term debt,
producing nearly $1 million in savings. We financed
redemptions of $75 million of higher rate debt with a
combination of equity and debt. The debt carries an average
rate of 4.98% and an average maturity of 17 years. Included in
the total redeemed was $35 million of SJG's 8.35% Preferred
Securities called in November 2003. These actions will provide
significantly greater future interest savings when in place
for a full year.
Non-Utility Income Contribution Jumps 28% Percent: Non-Utility operations
accounted for 23% of SJI's 2003 earnings, increasing to $7.9 million from $6.2
million in 2002. Reasons for the substantial performance hike include:
o Marina Energy delivered $1.1 million to SJI's bottom line.
This represented an $800,000 increase compared with 2002. The
major contributor to that improvement was the thermal energy
plant in Atlantic City, N.J. becoming fully operational in
July 2003. Plant operations have exceeded our expectations to
date.
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We expect Marina's contribution in 2004 to double with a full
year of operation from the thermal plant and other projects
coming on-line.
o SJE's customer base increased by 23 percent. In 2003 South
Jersey Energy reaped the benefits of strong customer growth in
its retail gas marketing activities. SJE's customer count
increased to just over 93,400 customers from 76,200 at the end
of 2002. Commencement of electric marketing activities also
contributed positively to earnings. SJE was awarded a contract
to supply all electricity to many central and northern New
Jersey school districts through May 2005. SJE's net income
increased by almost $700,000 in 2003 to $3.2 million.
o Wholesale gas marketing profits grow by 19 percent. Higher
volumes of gas marketed, additional pipeline capacity and
storage assets, and favorable market conditions helped South
Jersey Resources Group grow net income from continuing
operations by almost $500,000, to $3 million, compared with
2002.
SJI Strengthens Balance Sheet: To maintain the financial flexibility necessary
to take advantage of the many growth opportunities present at SJI's utility and
non-utility operations, we strengthened our balance sheet during 2003. SJI
raised $36 million of equity through its dividend reinvestment program,
replacing $35 million of preferred securities. The result was a reduction of
SJI's debt-to-capitalization ratio from 65.3% at the end of 2002 to 58.8% at
year-end 2003. SJI's leverage typically peaks due to seasonal working capital
needs in the fourth quarter. SJI projects a debt-to-capitalization ratio of
approximately 50% during the first half of 2004.
Webcast and Conference Call Details
South Jersey Industries' President and COO, Edward J. Graham, will be hosting an
open conference call and webcast to discuss the company's 2003 fiscal year
earnings on Thursday, January 29, 2004 at 11:00 a.m. EST. To participate in the
conference call, dial 1-800-901-5231, approximately 10 minutes ahead of the
scheduled time and provide the pass code of 36930282.
To listen to a live webcast, simply visit the South Jersey Industries
website at HTTP://WWW.SJINDUSTRIES.COM, click on Investors and then click on the
webcast icon. A recorded version of the webcast will be available at SJI's
website following the call. A rebroadcast of the conference call will also be
available by calling 1-888-286-8010 and entering the code: 88164878. SJI
encourages shareholders, media and members of the financial community to attend
the conference call and/or listen to the webcast. South Jersey Industries (NYSE:
SJI) is an energy services holding company for South Jersey Gas, South Jersey
Energy, South Jersey Resources Group, and Marina Energy. Visit
HTTP://WWW.SJINDUSTRIES.COM for more information about SJI and its subsidiaries.
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SOURCE: DAVID A. KINDLICK 609-561-9000
STEPHEN H. CLARK
COMPANY NAME: SOUTH JERSEY INDUSTRIES, INC.
MARKET: N
STOCK SYMBOL: SJI
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
COMPARATIVE EARNINGS STATEMENTS
(In Thousands Except for Per Share Data)
UNAUDITED
Three Months Ended
December 31,
2003 2002
Operating Revenues:
Utility $ 150,107 $ 132,223
Nonutility 70,537 42,606
Total Operating Revenues 220,644 174,829
Operating Expenses:
Cost of Gas Sold - Utility 100,520 85,439
Cost of Sales - Nonutility 63,761 38,347
Operation and Maintenance 29,355 22,628
Energy and Other Taxes 3,296 3,398
Operating Income 23,712 25,017
Other Income and Expense:
Equity in Affiliated Companies 237 288
Other 181 (22)
Total Other Income and Expense 418 266
Interest Charges * 5,501 5,004
Income Taxes 7,251 8,084
Income from Continuing Operations 11,378 12,195
Discontinued Operations - Net (46) (256)
Cumulative Effect of a Change in
Accounting Principle - Net 0 0
Net Income Applicable to Common Stock $ 11,332 $ 11,939
Basic Earnings Per Common Share (Based on
Average Basic Common Shares Outstanding):
Continuing Operations $ 0.87 $ 1.00
Discontinued Operations - Net 0.00 (0.02)
Cumulative Effect of a Change in
Accounting Principle - Net 0.00 0.00
Basic Earnings Per Common Share $ 0.87 $ 0.98
Average Common Shares Outstanding - Basic 13,000 12,165
Diluted Earnings Per Common Share (Based on
Average Diluted Common Shares Outstanding):
Continuing Operations $ $0.87 $ $0.99
Discontinued Operations - Net (0.01) (0.02)
Cumulative Effect of a Change in
Accounting Principle - Net 0.00 0.00
Diluted Earnings Per Common Share $ 0.86 $ 0.97
Average Common Shares Outstanding - Diluted 13,109 12,261
Twelve Months Ended
December 31,
2003 2002
Operating Revenues:
Utility $ 487,678 $ 386,120
Nonutility 209,142 119,006
Total Operating Revenues 696,820 505,126
Operating Expenses:
Cost of Gas Sold - Utility 332,463 243,341
Cost of Sales - Nonutility 184,992 105,242
Operation and Maintenance 89,492 76,662
Energy and Other Taxes 12,030 10,806
Operating Income 77,843 69,075
Other Income and Expense:
Equity in Affiliated Companies 786 941
Other 136 534
Total Other Income and Expense 922 1,475
Interest Charges * 20,616 20,734
Income Taxes 23,596 20,404
Income from Continuing Operations 34,553 29,412
Discontinued Operations - Net (774) (424)
Cumulative Effect of a Change in
Accounting Principle - Net (426) 0
Net Income Applicable to Common Stock $ 33,353 $ 28,988
Basic Earnings Per Common Share (Based on
Average Basic Common Shares Outstanding):
Continuing Operations $ 2.75 $ 2.44
Discontinued Operations - Net (0.06) (0.03)
Cumulative Effect of a Change in
Accounting Principle - Net (0.03) 0.00
Basic Earnings Per Common Share $ 2.66 $ 2.41
Average Common Shares Outstanding - Basic 12,559 12,038
Diluted Earnings Per Common Share (Based on
Average Diluted Common Shares Outstanding):
Continuing Operations $ $2.73 $ $2.43
Discontinued Operations - Net (0.06) (0.04)
Cumulative Effect of a Change in
Accounting Principle - Net (0.03) 0.00
Diluted Earnings Per Common Share $ 2.64 $ 2.39
Average Common Shares Outstanding - Diluted 12,658 12,116
* Net of rate recovery of carrying costs on certain
unrecovered fuel and environmental remediation expenses.