SJI - Earnings call transcript Q1 2019 | South Jersey Industries Inc

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 South Jersey Industries Earnings Conference Call. [Operator Instructions].

As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Dan Fidell. Please go ahead.

Daniel Fidell

Chris. Thanks, and First everyone, Call Earnings to Webcast. and welcome morning, Quarter SJI's Conference Good today Renna, members by Chief here joined I'm Mike as management as senior Executive our well several our additional of team. Officer; and President

earnings measure at the were basis accompany and of www.sjindustries.com. of market earnings of The earnings. on issued a slides available also associated using close call and review the release our and are earnings presentation in-depth after non-GAAP non-GAAP both on documents. economic Our release the GAAP that the an yesterday our the provide of XX-Q comparable measures economic in GAAP Reconciliations both the and to appear website

of opportunities our that introduce call, will remarks. will will current SJI's of individual offer may our through which me results discussed are our on Renna, your references indicated for differ discuss With and XX-K that who'll guidance materially that, financial performance, After and Mike then Let with some earnings questions. Financial company's to I'm the performance from and SEC. factors, review XX-Q, to these important be in we'll Officer, result SJI. we a segments note take the statements as forms the Cielo Chief pleased then those balance Actual CEO, Hernandez, happy to sheet. today's those Mike making including by said, various final plans our future then outlook. be file expectations, and

to introduction, turn over Mike. me now that with let So it

Michael Renna

deck. opportunity to today. us for and an And review our had thank release Dan. Thanks, all you've joining you our earnings slide Hopefully,

on you transformation details, to give our first I Before we an into quarter business dig initiative. want update

strategy last a profile opportunity in our still you two dynamic, bringing history. composition heavily-regulated them entity. natural gas cementing transformational time with have our acquiring as greater and SJI utilities We've well-run any in than shifted company's and two years know, been our for the As yet

and effort, utilities have focused across conjunction achieving As volatility, in overall retail growth to to to practices into wholesale are our cunning shift without our tighter improve question and transformation nonregulated best shared we exceptionally earnings spreads path. remain in SJI quality and efforts earnings we for more broader opportunities business overcome support organization. These we reduce the improvement noncore, assets. our these utility-driven in limited and a markets. on solar exciting the Simultaneously, continuous integrated SJI absorb gas are designed our combined with had a optimization time and has It an been Further, story.

results we those While our transition of year our set met with transformation, first associated overall timing investment our quarter results for pressures the expectations the reflects some community. and

$X.XX economic today per to of reaffirmed have our $X.XX guidance We earnings XXXX share.

of our plans beyond. solid foundation are able we're $X.XX we importantly, of and increasing technology, performance and share, our of to building guidance our the More initiating businesses. hard earnings a today, employees a dedicated QX And sorry, efficient from regulated and from efforts improvement our nonutility we to to across productivity half into and the the initiatives attributable cost-effectively business Elkton, and growth simultaneously absorb operations, seamless Leveraging with our have earnings Elizabethtown in while planned work to to stemming our XXXX. utilities regard of expect with ETG XXXX full owing on linchpin integration midpoint. to people, and process. of efficiency midstream efficiencies and be to driving per XXXX Thanks - increase from our of performance. remains Elkton, down we growth With customer be Overall, XX% gains integration economic I'm to roughly our XXXX our improving and our been the our are process on and investment, growth costs completed regulatory XXXX from all initiatives. $X.XX track transformation These in largely XXXX balance

not significant filed very underway similar Elizabethtown. have from $XXX for with an expect roughly initiatives In at program On in plan in of recover October, currently BPU proposal, XXXX. requesting SJG. rates. we million base in that decision we petition begun in replacement to NJBPU revenue also the settlement regulatory a infrastructure system to have the final we million approximately we We've a increase discussions In filed April, $XX front, improvements the and a two place are the reflected

this cases. later to order, precedent begin final in a settlement line expect with We year followed by prior discussions from

financial asset sales the of noncore credit continue further on strengthen balance from our metrics. on front, repayment and to debt we our the Finally, focused improving remain sheet,

Looking for the XXXX priorities forward, unchanged. balance of our remain

initiatives Southern, business We our completing are Elizabethtown our of our achieving winding savings cost effectively integrate and anticipated our all proceedings, acquisitions, our of Cielo the and the I'll per growth remaining to performance. continuing focused operational With to nonregulated provide to earnings with transformation on the annually. down for pending foundation of our now from effectively review our significant which share that, it turn noncore, review executing X% businesses, to regulatory including TSA X% Elkton over

Cielo Hernandez

everyone. morning, Good Mike. you, Thank

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

$X.XX we with compared of this performance. as SJI's For in measure non-GAAP earnings were measure this XXXX our $X.XX economic insight million the dilution. results costs discussions earnings per economic Gas, addition of QX that million. economic quarter's business XXXX our $XXX.X Energy XXXX into as Services of expectations, and results results and line at reflects as first pressure economic share well our Jersey share integration and management financing acquisition $XX.X In of Energy by will call, on share believe as The per Group. our earnings, compared valuable as provides variance reflect with XXXX. focus quarterly earnings and Midstream with were South improved offset also ETG lower Elkton at the totaled

will the first of review each segments. I business of performance Now drivers quarter our

per of infrastructure per primarily compared XXXX roll share XXXX. share addition earnings ETG as $X.XX with improvement Our replacement gas and as in of July of investments The in customer and $X.XX for well contributed acquired reflects the the utilities operations Elkton in growth.

conversion, to BPU. from Our partnership of These net Gas above quarters XX and regulated growth as With was South the with X.X% over growth additions close that a national rate initiatives to rate coming investments customer our months, across reached remains our average. growth contributions our commitment well Jersey the utilities growth three last as reflect from X.X%. the each the

AFUDC South maintain customers to support Project, strong Midstream both across to ETG Gas per expect generally partnerships Jersey and $X.XX Jersey. was We which in consistent Pipeline share XXXX. reflecting New these were PennEast with of related earnings our

share to Turning to Lower earnings several $X.XX operating declining The that last $X.XX activities and new of to rules tighter favorable our opportunities. margins items. compared weather optimization spreads. limited contributed Group year. result daily nonregulated per of economic tied Less pipeline operations. Energy reflects trading energy asset

several seems off contracts, also First which impacted quarter XXXX. XXXX results by headwinds legacy in to roll associated were with

in that will results existed various services by quarters, of the assets evaluated Sachs also million $X.XX XXXX conditions Asset wholesale received quarter share of market over solar results sale Energy gas strong of last First XXXX. an million announced XXXX. the $XXX agreement. by period entity in first year, per the June to improved Goldman in solar our versus Management during the managed the Through end $XXX light the same reflecting we've be of

spending. capital to now Turning

In totaled $XXX.X spend million in our XXXX. First quarter remain balance in and million for strengthened intact approximately we sheet. XXXX, $XXX further capital spending will

XX, of XX, This and our As of with $XXX equity XXXX, the issuance in repayment asset total sales. proceeds equity up capitalization compared was from forward March in significantly at XX.X% million reflects debt to noncore December using XXXX. XX.X%, January

mandatory our our at March XX.X% XXXX. due previously total growth $XXX.X XX, adjusted capitalization at conversion, non-GAAP units XX.X% a of million As XXXX, measure, Including in communicated, was December to XX, convertible equity and plan XXXX. equity our ratio, embeds

from anticipated will the that I repayment. turn further now back remarks. sales nonregulated any of Mike to proceeds concluding operational you. be his sheet. remaining a for sheet. of remain review As our concludes balance strengthening and assets Thank to debt reminder, additional for it And committed my we potential deployed balance That we performance will noncore,

Michael Renna

Thank you, Cielo.

I for employees As dedicated conclude outstanding their X,XXX my approximately remarks, to want thank our work. I

As behind Operator, remain driving always our strong to for our they remarks. outlined the execute prepared force the results we've our growth that concludes ability and you. path

the to open questions. ready We line for are now

Operator

of our first question with Coleman the [Operator Bank America. Instructions]. comes Dennis line of And from

Dennis Coleman

pick we Slide X. of Maybe on you priorities on listed the some if that could just up

a that quite is, heard one divesting some it? You You've ones has of growth the consider talked done remaining business? assets one already, we've about and the the of reviewing would you but that's wholesale noncore questions to still lot

Michael Renna

Thanks, Dennis.

our certainly And challenges we exception it's an Historically, it's as it I fair nonutility market, it us. business. despite in that think some of relates our well considering currently wholesale have business - to performed it utilities, businesses. core, for a the is capital-intensive the has to area we that say be not our identified would as although to anything it open with is a

low-risk We from it have designed platform. a very to operate

monetize we'd was the So future. there if opportunity part complementary a a have kind be say But I consider that do we'd there to our as of we being critical we not business with right to out to that. a capture premium now, think wouldn't of able I that's mean, view that consider, like and it and that any commanding market

Dennis Coleman

with I there. England an in there's offline, you might going to able talked efforts. alternatives to be you're Okay. release, I issuance wonder support to equity switch options redundancy I was different BL to about you've the if the more those any you project the add guess indicated just details and pursuing

Michael Renna

believe look Yes. supportive when addressing England all having exposure step what that project would our that of little there terms would of Maybe redundancy single ensure project redundancy off a replacement customers customers is yet and continuity and We we some bit are would we the now, of a that system to of have believe we exposure a I'll of don't distribution We a service, kind kind would XXX,XXX roughly should kind maintain that have view served we who specifics two as one take a components be that redundancy aided are regulators be by redundancy we afforded a some like. of have us of back. in have potential line. interruption. our it, of that be Right of to just that BL be

and England we do to looking are bills, customer in that time making We redundancy with been that BL making That we mind. sure place project, permitted are two addressing addressed expediency, we in minimizes do exploring would shortest have affordability, the on and we are it with the in really and The get redundancy. things that sure whatever so that the alternatives impact can possible.

And type of in project protect an other would us redundancy is heavy supply usage redundancy. that design interstate months. be to The supply particularly, interruption, against a

project. capital-intensive we that's mentioned would really as more of the time and two of and that LNG. or which we've - So of we It's a and, permitting particularly, perhaps front third either think. large-scale another there's take construction would off different on before that feed options pipeline, a think be would lot type involve a interstate One

finalizing design both our of kind of are those and our projects. around We decision

projects would project. the size of to the the of, also a be raise that, We targeted project, depending, to particularly, second with again, and the point that supply on said equity support redundancy the we have and would that equity to scope million redundancy support have $XXX we

may depending more reflects be Our a that project. of little size guidance less that on bit range or may equity the be

again would designed, we $XXX investment equity project. So I can't utility million that - any would equity we say and to from project that right have that be would by is that additional or now come supported revenues specifically related that that out we any the there project. a really would raise that and

Dennis Coleman

for thanks A mentioned a just little couple XXXX you great. guidance. detail That's the that guidance Okay. more the and of given

people but to the just understand should guidance stated, will that settle assume of place XXXX, and some help rate about or is, the sort the think Elizabethtown at should it I sort Is think in you've it that this guidance? of how think I XXXX at along of cases. being lines that we but transition case confirm, guided rate represented in least past that you is

Michael Renna

I'm President Utilities, going Robbins, speak that. the to ask Dave to to our of

David Robbins

filed the It's it. really invested case. driving Yes. in into XXXX mean, filing absolutely of the is which prudent million about I their system, we've that guidance, of We've capital $XXX

this standard covering XXXX begin frame expect and settled expect a numbers reflect We in to kind time soon, to it that. the be a we so of

Dennis Coleman

me. for specifics And on little statements an deeper, you or just one right, on to were more Could about conversations rules I'm some for last as then have but limiting the a okay. that? quarter. Right, optimization share little dig impact sorry there a pipeline

Steven Cocchi

wholesale business, inhibit really that our pipelines. storage the rules Cocchi. that the of to take and our saw of a extremely demand the to the able don't of the coming pipelines lot the XXXX. the being in Sure. look the pipelines early of and to we things Yes, able And quarter did have uptick this value year what Steve secondary ability before, operating of move the something volatility XXXX, some because in Yes, when winter their Dennis. talked the to in Hi, to that that of optimize It's the we've first of saw kind nature of beginning transportation numbers were we maximize an us coming allow of related that on something advantage it's they that that's that of and - the cold at out to changed ability it's we XXXX capacity certain the of that of take we in back at were that again, demand extremely cold about the we had really is own. advantage

Operator

Group. next Tate with our question of [Operator Sullivan from Instructions]. Maxim line the And comes

Tate Sullivan

of issues more about redundancy couple redundancy Elizabethtown you learn way is questions to the any your talked Or And there most to redundancy there? are territory. a potential, of legacy related service territory. Michael, about

Michael Renna

- territory. a the more a two their is speak Jersey and because their as little do know he's Dave is that What relates Gas - that interstate to it specifics I South got served pipelines. bit the familiarity our understanding let about I'll of Company greater off of

you into if particularly needs not in customers, that were would would so interruption There So winter. outstrip on the the demand just meet be we obviously, they and pipeline. the to is it a of interstate exist. of city number may come three our our them, territories, redundancy but an able to the one are the serve Elizabethtown of have of capacity different The pipelines issue gains,

they that more speak right now, I but ask I'll to think it's something evaluating are Dave on that.

David Robbins

pronounced as as because That's Mike the not because South on the but make a somewhere LNG to only served it's two that going sense sense, haven't pressing we're yet. down a further their around road time spend not Gas we're just is identified to as need that would there mean I as Yes, probably large-scale bit we mentioned, by put it probably as makes a system more Jersey little interstates. a project that opportunity need, but

Tate Sullivan

your I'm you Okay, answered some question looking rate was and and other Elizabethtown at case, my to that the XX. on Slide detail gave that related you

'XX, With the service talk early pipe projects, Or other potential bit is Elizabethtown the can the about the Elizabethtown there effort? there are a in CapEx projects? guidance You replacement territory? beyond for

David Robbins

No.

requests reflects I opportunity. the baseband growth we receive of then it CapEx our and new think infrastructure at assumes compliance program. just certainly ETG approval and It that

So they're main three of ETG the capital numbers. the really components

Tate Sullivan

what South the - customer growth Okay. customer are expected? please? And the the two you territories, customer in dynamics in rate the is, growth Elizabethtown then what Jersey Elizabethtown on see last the Is versus service different I the in has And Gases. Elizabethtown

David Robbins

see as opportunity. the I number ETG

our focus wasn't Jersey Southern as customer done look at we under that's that efficiency, of which South ownership, believe we focused if that They X.X%, operating a growth well. they've you believe Gas really a growth. have on at And at on I very number were much there portable. So model

marketing transferring So and efforts. ETG, construction there's to we and both believe that up ample conversion there. ramping customers opportunity are model We new for up the sales

number. ETG So we to invest expect investments customer the significantly to make the growth

Michael Renna

too. very jump I'll as topographies well. Mike. it's bit Tate, a There little in different are

a look particularly sand, and part Jersey, Elizabethtown the main new it's of running northern and Elizabethtown, than of or does you it's at the of if populated. densely central New economics flat, part it largely very different distribution sort Southern the so at set it's as

like Jersey. rocky. a than be a there little can things New costly the bit one openings part in western and But of street of River, on So up lot more territory, the very mountainous it construction southern that hugs that and is the it's Delaware the

by growth really just themselves. actuals, the it's of driven the again, differences So inherent is - in some service the the territory

David Robbins

already we X.X% significantly signs. I the that's think upon do seeing and some but opportunity to the have we're true, believe that encouraging improve I certainly

for go forward. move we as look north So number that to

Operator

does that with in just conclude today that have do the came - from line - have actually Stanley. Byrd And we a Morgan Stephen of question

David Arcaro

cover Dave, is I'll clarification. bit of for a This a Stephen. on Had

into up at XXXX, in Looking little the capital other CapEx SJG proportions and and talk the what one driving a the looking about bit if was you between plan, could down? Wondering noticed ETG. shifting some of

Michael Renna

jump I'll have provide detail. and in Dave more

think seeing are just like shifts larger Jersey things with scale, more that to I redundancy. projects intensive you're fundamentally in discussed again, capital Gas, in what in we related XXXX really identified South

little a optimize again And and our we in our to, capital a as has as try of structure so there sheet balance obviously, bit well. been spending shift

David Robbins

Yes.

drivers the year. I XXXX, SHARP think we one of X our program of had last approved

'XX compressor to at second as is going the large-scale numbers have station significant that we be program SJG, there's well. our spend and in accelerated So in a

their well. dollars side, staining are in ETG as On be there dollars some up for systems, there there quite few a on so spending the ETG we're going IT to

David Arcaro

things. was side I color. curious helpful of the Okay. on Got it. It's Midstream

were wondering of there extra being any are Day, expectations I at if bit dollars? the there Day? if side, was about that in talk increase XXXX, there Analyst of and color your is Kind expecting on at the are on outlook you or into what but looking Looking would drivers higher was a CapEx helpful. could back an we ROE the the versus be than it Midstream on Analyst baked implied Any

Steven Cocchi

really This changed or it's moment, from project since fingertips as is the that have once the the to Steve. the would timing We've I anything date. at my Day service CapEx. would just have think not Investor then expectations in but changed I don't our expect numbers of at We the in-service ROE. that is

David Arcaro

it. once ROE the is remind service once And into - and full you project period? the that's Got AFUDC me could expected - what Okay. the goes

Steven Cocchi

That's not negotiated something that with that is something we've disclosed publicly. It's FERC.

it's... So

Michael Renna

Yes, a contracts of negotiated yes, - those volumes is and we have with the shippers. are confidential fully project base our under subscribed XX%

we what exact get we So is. as we would real is negotiated. FERC but have ROE returns, what said to given to that detail not like the It's any expect all have

Operator

with And from line question group. we Maxim have do Sullivan of follow-up a Tate the

Tate Sullivan

wind with Mike, it basis that? I of make consistent within agreement the on mentioned work? you - to the year? Or do a on describe repeat a the you payments how Is that you cash Southern. think a down based earlier on is it service bulk Can related more the transition of that little you Elizabethtown income over

Michael Renna

reflect, agreement rate it's we assets or settlement amount on the of XX past actual we migration would The that the agreement. so, part Southern, a from of months off TSA, the the the purchase TSA the we of mechanics the based be a again, that are expected was that or over to - services over basically The receiving our of would which TSA. under expecting that be

we that's component the were expect it Atlanta around support really year, of number this and that's I a of things, two Chicago services customer the services or were dispatch think operations. would important the are service function, out to either middle essential the of somewhere Tate, off kind function of other of be provided that utility the really the to that

have functions to migrate of those off up those allowing to and in progress us continuing service We - we overstating terms are of them. or

build little With a had systems. big - the is systems to the all utility. basically necessary of run the is longer a bit are a to of which other We runway piece, the

from systems, remaining billing work with Southern to system, So management to financial those customer all a of property, they're they're Southern. system,

those we're exit - So before we and the from And up quarter - we running. to now, quarter think is right probably TSA, targeting a have the systems. can then I exit have first fully early systems XXXX that off first

Tate Sullivan

from quarter in was Okay. in And in quickly Was that there $XXX abnormal drops operations the usually cash something real flow second million the quarter. the quarter?

Cielo Hernandez

nothing abnormal is in no. No, quarter. the There

Operator

line Stanley. do we a Byrd the Stephen have from And Morgan with follow-up of

David Arcaro

Dave Arcaro again here.

to or to into question XX% Elizabethtown. was were might wondering the you you an potentially Just layer how requested, layer? plans your fit financing equity just such of equity? Or more that able get you'd I financing might as had quick wondering that current one if go around about be if equity require just if

Ann Anthony

This Ann Anthony. is Sure.

actually think additional equity So envision I layer that down achieve don't equity needs in we would to Elizabethtown. order at

We to able plan. current accommodate will within be the that financing

Operator

conclude remarks. session. now Fidell that does further to We'd today's question-and-answer call back any like turn And for to Dan the

Daniel Fidell

Great. us and many you Thank forward for the Financial all travels, with course. AGA you Forum, wish look at of We to upcoming this you all morning. we of safe joining meeting

reminder, a is recording be will available website. As our of call our - on today a

or Jacobson or investor questions Eric free inquiries. always, either analyst Dan media Fidell, to myself, Marissa and As for contact feel please for Travaline

earnings may Have your Again, a Our release and found SJI. good call. thank you us This be presentation and in for interest on earnings concludes continued our information materials. for joining today contact day. our investment and

Operator

and today's in This Ladies does your for today's thank gentlemen, participating conclude you conference. program.

have And a please disconnect. great day. You all may

South Jersey Industries (SJIIU) 11 May 192019 Q1 Earnings call transcript