SJI - Earnings call transcript Q1 2018 | South Jersey Industries Inc

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Operator

Good day, ladies and gentlemen and welcome to the First Quarter 2018 South Jersey Industries’ Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host for today, Marissa Travaline, Vice President of Communications. proceed. Please

Marissa Travaline

Chief morning and South today and webcast. Renna, President Good quarter Industries’ by Chief welcome Clark, our our conference Steve senior well XXXX I and members Financial and Officer; you. Vice several Jersey to first Mike our as Thank Executive Officer; additional President of Executive am team. joined management

XX-Q provided comparable our the both non-GAAP of an non-GAAP posted in-depth GAAP using issued intended to on on yesterday earnings The GAAP the and release our review measures accompany Reconciliations of earnings market www.sjindustries.com. basis earnings. to and website economic the the a earnings our slide were appear the measure in at release after economic of associated today documents. Our close of were call and and both

Let throughout me those result SJI. from references as these will to opportunities be discussed results statements expectations, we those initiatives may making our call, for of factors in plans including performance and CEO, differ file various With SEC. materially Mike important and by Actual note future today's indicated of that a the to now XX-Q to call said, XX-K our I’ll Renna, strategic discuss the plan. with that turn future our context on and the Company's in Forms the over current

Michael Renna

with quarter, start earnings compared am morning, up Thanks first of strong being improved report XXXX; per to pleased $X.XX share I businesses we last from thanks drove that and Marissa. in off both us. a non-regulated economic and a in Good with our year. significantly performance are to for the $X.XX regulated

than quarter for reported first results total our our fact, results were higher In XXXX.

growth, business, Gas reliability in improve continued our of side, and service and our positive customer and infrastructure base rate gas improvement impacts regulated case, intended the enhance investment South solid Jersey to utility the recent to reflects On customers.

capitalizing on posted management and reform, favorable contract. our an well, gains marketing weather, management and additional strong side, as non-regulated the fuel fuel tax wholesale businesses, On

quarter Before I you and the turn transformation it guidance, I the over focused to of an first year. we to efforts our and with priorities Steve want update for on remainder on business discuss earnings performance our key the are to share

back began a planned a As more XXXX, operating our business in strategy recall future you into we regulated shift mix. toward

earnings plan reducing earnings by of value utility non-regulated and businesses. our Our FERC-regulated to driven provide was investment desire that the by volatility same the in our of our increase non-core, the at optimizing quality assets increasing cash a time highly-visible and earnings and flows while

strategic completed we moment. Gas made cessation these which equity quarter assets solar our we results implementing new company, non-core, businesses. of and we raise strengthened XXXX, ideally XXXX, portfolio non-regulated As of we In and plan show, that of announced XXXX, announced already tailored in have successful through a sheet offering. balance plans our first our in And a a production equity strategy projects, solar our acquire Elizabethtown a In to reduced acquisitions our review significantly will from our discuss Gas I in significant a since on-site finance and announced to to successful energy Elkton investment progress businesses, toward time. remaining

on Jersey through close enhanced the for discussions and remains leverages utility well, of and our The in commenced growth infrastructure. have enhances acquisition track and opportunity provides and earnings transaction Jersey, relationships risk piece acquisitions big Elkton. you of investment assets profile, an The and aging settlement is involve replacement Elizabethtown business New As to is our long-term, transaction in improves progressing the know, a accretion high-quality regulatory our to strong transition well, our know planned Maryland of our path mid-XXXX. we New in

the million in proceeds milestone an to issuance important of offering an potential marks $XXX April; it to $XXX our of use financing our potential raised equity from through additional in and million with asset equity us acquisition equity a stock we match non-core highly of agreement net common successful forward process completed adjusted with stock unit and recently actual needs would capital be forward-sale sale. reflect of The a any sales. enables Our

As non-regulated plan. strategic previously are our strategic disclosed, remaining opportunities to that we are regarding our currently exploring businesses non-core

over coming to We With expect this in turn the process progress will detail and on additional first I quarter guidance. our months. results Steve the to communicate to that, call

Stephen Clark

good Mike, everyone. Thanks morning, and

made noted that information you earlier, information Marissa you and detailed well. available earnings earnings I GAAP As the with both would the as we regarding provide deck encourage review slide and release to

a lower segments. economic discussion For Midstream quarterly first quarter earnings with economic Jersey million $X.XX at XXXX. will now purposes I earnings our of performance color, Services. of do, partially added reflects economic to we this you Energy business. South focus of management economic measure and measure valuable and some improvement at offset give non-GAAP of the $XX.X each our and on insights will normally Group the of this earnings into Energy by earnings compared EPS higher EPS in earnings Sizable $X.XX average these briefly of Gas performance the economic business review SJI's of call, as provides million believes as our of with we $XXX.X that as totaled To

came and for expected appropriate submit Convenience and construction, $X.X a from million reflects entities, Customer and strengthening continued had from months customers South O&M results costs, with note roughly This above water for last additions from Energy operating of driven million roughly $X efficiency region's period three our last our of our Construction New case On Jersey $XX quarter Jersey $X.X with well basis, until customer ended Higher in weather converting customers the higher replacement net productivity by X.X% approval, by is over strong with a compared of wholesale January aimed in in extremely the of quarter rate into the of XX its million improving as million survey The results, benefit surprised activities Important plan. earnings late and $X the the to QX slight Group the from the the $XX receipt reform. in portfolio housing was settlement, of record expected robust this driven remain the also driven year. were with of and of last to earnings our same quarters Necessity and of that receipt is permits $XX fuels year. improvement roughly roll-in the compared and at than which in weather FERC. from Basin customers XX With XXXX environmental year million by the periods roughly with contracts higher XXXX, to approvals the base months moving statements tax additions growth reflecting year. interest million optimization March on new completed market. for phase million QX depreciation with customer PennEast growth the during River alternate roughly million compared of achieved remainder catch federal access a marketing our last fuel management the last compared with strong retail is Public compared contributed economic related the compared warm applications includes XXXX national It more operational. to year. Commission. the Midstream pipeline FERC the business with impact that wholesale investments obtain was contributed including in-service XXXX. added business for infrastructure, been and cold management earnings businesses in year. the our of skewed earnings last which contributed impact improvement and to to our by prior of January deemed sixth million to these of The in Delaware was were XX% we investments $XXX,XXX begin are reflecting upon improvement are average. our that last roughly results comparison at exceptionally driven up Certificate from AFUDC XX, and $XX $XX received Fuel during going with not higher In Gas with next PennEast impact growth April of earnings to X,XXX growth. reflect

through We XXXX, of expect QX, providing on-line that an close additional the to come by three fuel in mid-year management contracts supply growth. segment will one low-risk

marketing XX.X% businesses, and tighter was and Our business credits higher last of results would electric by landfill a in service retail investment with March slight gas $XXX,XXX our which were renewable our however, and a and loss X% more compared and our offset South Consistent a accounts rating. Energy there remain the to Energy this year, $XXX,XXX period. CHP to generation increased development interest first the loss competition first solid includes with structure increased Services, XX, up with sheet of XXXX. compared CHP, Millennium compared that costs, assets strong and solar quarter Services tax project Earnings year-ago a year. $X.X to allocated now activities we business. loss of Tuning year. last landfill I in reflecting capital and no the services businesses was from reflecting in a from production. a gain related with XX.X% Plus XXXX million Account solar, Service our flow margins gain, plan, The expense decline that generated equity-to-total continuation grade and strength decline were at $X.X capitalization XX, solar simply prior with account billion compared Jersey committed quarter with than liquidity XXXX, actually and in balance or At was our strategic cash highlight ample December investment

used quarter, operating completion reflecting activities and update invest larger acquisitions Energy We million Elkton with a to reflecting financing later infrastructure year million target of growth. last Elizabethtown net year. to providing timing short-term was in cash in activities roughly our reflecting utility XXXX. Group. roughly track and million operating million our compared to first repayment compared year, Net of roughly used roughly $XX roughly anticipate last pending strong $XX $XXX compared was $XX For investing on activities Net to the from support year, this remain $XX in spending longer-term in and investment to an XXXX last roughly million borrowings cash million following million $XX of customer performance roughly upgrades cash $XX at

Turning guidance. to now

investment of were quality. in strong quarter years, exceptionally earnings. approximately In prior and both XX% XXXX First magnitude earnings economic million tax economic credits contributed $XXX of

However, XX% our bolstered point South reaffirming years, due performance share January. management per This early to guidance by in previous XXXX share than I opportunities ITCs Group, periods nearly Jersey performance our our at XXXX. Gas businesses. in demand earnings of entire between and leveraged want have we first important marketing relates XXXX businesses less this $X.XX businesses. three our that XX% cold $X.XX solid and out to successfully weather were business has outperform range fuel high ability we Energy wholesale quarter in which in with is our replaced extremely gas. to results to instead includes the of of growth of that in are per regulated to earnings core business approximately in $X.XX do economic to note of marketing for economic Today, It impact demonstrated to experienced natural the a generating

reaffirming million by of $XXX We are standalone economic SJI earnings XXXX. also guidance

million reaffirming February for tax our in $XXX reminder, to a in the the federal increased EPS million and finally, acquisitions of XXXX $XXX XXXX. Elkton we from And economic we accretion of As expectations Elizabethtown are or beginning target reflect reform. our impact earnings

these regulatory final update acquisitions, expect upon our transactions. of receipt closing concludes We to the approvals of longer remarks. That include term to my and guidance

the Now let closing turn to over for Mike call me comments. his back

Michael Renna

Steve. Thanks

advancing more see, our great a business regulated As are making you mix. can in strides to we shift

XXXX. acquisition are ongoing economic by accretion remained million XXXX in confident in business our and transformation to our excited earnings beginning We EPS our standalone post achieve target ability and $XXX of

storm forward non-core priorities. our including the coming As with the remainder moving at on infrastructure for BL you forward completing execute in hardening extension of focused our the updating successfully non-regulated regulatory the a we England Jersey on and review look approval and as our look again businesses, we investment projects. acquisitions, months XXXX, gaining New We we PennEast to these of of are multi-year out program Pipeline

questions. outstanding remarks. their Finally, as our XXX than now I behind work. results. for thank want to are employees more ready always our to driving force are Operator, concludes open we line They dedicated to my That the the prepared

Operator

of line Sullivan proceed. Instructions] you. from comes Tate question Thank our [Operator And the with first Sidoti. Please

Tate Sullivan

Hi. Thank Good everyone. you. morning,

Michael Renna

Tate. morning, Good

Tate Sullivan

for the growth utility XX%. we this mean two year? Can case? the other been mean there? you just or with it of mean on what the investments slowdown detail little causes quarter impressive. start AIRP a quarters, I based I the rest of that more to Can Is conservative timing I provide some very that felt than has rate annual last gas operations, more

David Robbins

rate is the November Robbins. for rates Dave significant obviously new [indiscernible] case This [indiscernible] Big X. utility driver is with

So continued coupled with customer investment added at the our that return and strong up growth utility. to really growth infrastructure significant is the on numbers

Tate Sullivan

some limited then Okay. and but for on there Yes, you your on can it’s the talk strategic to can point non-regulated what impressive. it’s in of what examples about, maybe all early businesses you I non-regulated – I you're it understand imagine fronts that to recently looking too in about? been And so sales talk sell your for or been of very sale side, of can mean to you, are you're I is busy

Michael Renna

Tate doing as really been which include what the Elkton South will and Gas. that as businesses that utility well is, to Jersey we've our and our are ultimately strategy we've obviously business focused is core on Elizabethtown been

those those Our process and core in strategy, core our the not in do are still it's consider businesses fuel far wholesale our early the just strategic as other term all consider our to businesses exploring longer now as very we are we strategy. so we that that for management and alternatives business business, midstream and right go, to businesses of the

Tate Sullivan

you the detail the post final Okay. Thank for capitalization deal more have talk provided ratios and that? of any will given to pro pricing on Can or timing you can't talk, you just you deal forma provide to you. the the for wait prefer

Stephen Clark

wait. will we Yes,

equity is maintain Obviously we raise, wait I we what bit try is deliver and the rating. is solid hold a it we’ll that debt to investment little still We’ve the look the out. that to a think financing bit unit intended the fluid. to still look we we’ll grade rolled massaging to raised of combination like but have equity

Tate Sullivan

one include that. already $X.XX forward that the is of XXXX you that equity, that understand I to My probably equity current $X.XX, not terms the in guidance sale raised Okay, last straight the does of consideration correct?

Stephen Clark

million upon where with were the go the equity. was It So share within previously we – didn’t at for we based XX range.

as we forward. acquisitions. won’t So we do said once that will we And be the we’ve making until adjustments completed number go combined previously we’ve the

Tate Sullivan

Okay. Thank you for clearing that up. I’ll jump back in line.

Operator

proceed. from comes Please line with of question next our the And Christopher Turnure JPMorgan.

Christopher Turnure

Good not in fact for give a what's reassessing when point of two which you require morning, hoping could waiting In guys. color I budget timeline was there. you're might bit would given PennEast permits the that words, received and us those of to the you still the next come the time other little of point guys permits reassess? you on having

Michael Renna

consideration into and Well, happening take they’ll that now. of decision the that's a by made that's all events Board are PennEast really the

on making the still a are change. things looking that late in-service we lot date, acquiring and year necessary affect situation throughout permits fluid could if permitting but certainly – fronts. are this the progress but delays a are there how of that the we're date, the in-service in could ultimately unexpected through that XXXX obviously at the progress as right process We is given now So

Christopher Turnure

and far built that felling on Yes, construction begin timeline budget? it begin maybe originally making on the you is delay have process in envisioned more flexibility of the for yourselves tree fair been or to the then and to arrangements the given the to say you've basically partially so had backend

Michael Renna

their has engineering along our certainly consultants have mean and PennEast the I that amount with of make sure leadership in the obviously and schedule partners get evaluated all of Yes. of flexibility it.

Christopher Turnure

contribution then possible weather you give the segment for versus – a And can if this us Okay. of of quarter? sense by normal

Michael Renna

there energy neutral and of is – be daylight are the lot production segment our been are weather these solar that only would because – various again months significant to The quarter. of have a impacted neutralized of production causes. just it’s there's – in of It would generally portfolio side the have these simply our utility Obviously, not are wholesale. our would on part been the these because is low not impact first significantly

on wouldn’t a line. variance any So have meaningful bottom the impact

biggest would the we've have piece $X.XX. I at So wholesale think been in and assessed that

Christopher Turnure

$X.XX assume we the of all The line the should much then Okay. quarter of at all and EPS for businesses modeling wholesale of next in basically when pretty year we’re other [indiscernible]. first

Michael Renna

absolutely. Yes,

Christopher Turnure

about been sense mind core sale? Can thoughts considered sorry a for your has numbers Okay. that us in something briefly. give kind And of portfolio then question right the PennEast to might one-third your being as as of you part be now

Michael Renna

No.

PennEast, the the in we investment and in on move customer to Our we utility opportunities particular remain in region said forward the will critical region very to in to our the bullish viewed New I as be Jersey. and PennEast that

part PennEast core So our of business. is

Our core of Midstream part strategy. is our

on intention monetizing no is there our PennEast. PennEast to So investment

Christopher Turnure

the Got it, Mike. color, appreciate

Michael Renna

Chris Okay. thanks.

Operator

Our next Tate Sullivan proceed. with Sidoti. follow-up question Please is a from

Tate Sullivan

taking Hi, for my thanks call.

Michael Renna

one Lots call. of asking

Tate Sullivan

I mean just group, weather for income. you share for about wholesale, modeling the the mean I per purposes, of contribution for million wholesale, $XX on Yes, had $X.XX energy $X.XX in from but the

income” with at the income mean of Is – about fair? in shows $X.XX wholesale? million $X I I So rest that Am rest does net that more/“recurring the from? looking

Michael Renna

either seeing trace quite the profitable back have that a lot their of higher a were wholesale run decade you're marginally even what loss the in baseline as to a of because think performance contracts the I Yes, or course. part that is earlier largely at frankly

of our value assets. to it's So us full allowing the extract

business. we been in natural again legacy wholesale So to inspire and our uptick that that led we a there's mentioned them we contracts baseline call always

Stephen Clark

in maybe of back what add warm, you down as as of down QX year, this in just but frontline extremely of weather you’ve quite XXXX kind actually was it up performance so to conditions. not as normal there was much XXXX is was expected that look from significantly kind from I'll

Tate Sullivan

Right.

that business, then you in terms about there can talk opportunities you. well? of can Okay. your management what contracts commented you is as core Thank talk you fuel getting future Mike, or PennEast And to about on similar

Michael Renna

in contracts as merchant this management we've the marketplace think many remain success the will have amount it’s facilities on add strategy. additional management well. opportunities contract, think to absolutely again, we've could which under coming future. we've part of point the There – of our at on that Yes, that confident get a we've as to facilities will We the success just fuel on I as believe continue is us XX again, I that years. now are that and remains is opportunity right that had for strong continues served remains, but built. be the an lot wholesale generation new I fuel – come to in now, it, enjoyed right enjoyed performance business there core this course business that be, that nice throughout built how success and there and put six we of of in and of It's It's our a niche are in are a a gas-fired year hard XXXX. other two three line given number into the line reputation the there

Tate Sullivan

the good my for Okay. of taking rest that's Have detail. you day. much Thank great follow-ups. a And very all

Michael Renna

you. End Q&A of Thank

Operator

now this at Marissa for the closing remarks. to turn like back time, And Travaline over to I’d call

Marissa Travaline

us. everyone for you, joining Thank Great.

available of can for always could on after call any by us Eric with at follow investment Again be and at at can joining media could ejacobson@sjindustries.com time or Eric XXX-XXX-XXXX, call interest you any As a or for XXXX Relations for Investor reached XXX-XXX-XXXX, you our inquiries. in will email our extension be be Jacobson, of for Manager your thanks I reminder, at with continued at the XXXX today email the extension as and questions, SJI. follow-up me via or and reached and any or website, recording mtravaline@sjindustries.com.

Operator

concludes that your Thank gentlemen, participation. conference. today's you for and Ladies

all you have great You a may now disconnect. day. Wish

South Jersey Industries (SJIIU) 8 May 182018 Q1 Earnings call transcript