SJI - Earnings call transcript Q2 2020 | South Jersey Industries Inc

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the SJI's Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Dan Fidell, Vice President of Investor Relations. Sir, you may begin.

Dan Fidell

you. Thank and webcast. second everyone, conference XXXX to and call welcome morning, quarter SJI's earnings Good today Mike members joined as management I'm by well Executive and team. as Officer, Chief several additional of senior Renna, our our President

both the comparable XX-Q health earnings of at of the were the GAAP differ accompany non-GAAP length and www.sjindustries.com. those a among pandemic of projected market future call, The issued to expectations, about slides today's GAAP available plans earnings statements also associated the close call or others, and other in the and release statements earnings as release our COVID-XX. are earnings. recent materially basis Throughout and from forward-looking such provide SJI. measures and could after to on in non-GAAP Our documents. review using presentation of opportunities include, the and measure be that on Reconciliations results references an the outbreak in-depth both yesterday economic we'll our of and the of website the making for our crisis, severity appear Actual economic

that remarks. it me of cause to priorities please we'll With let review Strategy then turn year the over will happy and our the actual Cocchi, to our pandemic After SJI's our that review a remainder and differ, then quarter response. our key filings. closing factors questions. Interim now to pleased take and your be offer Mike financial Chief Steve second that for that, some Officer our Mike. With Renna, to results and SEC to review I'm outlook. introduction, who Officer, performance outlook will For on refer financial said, will of Chief introduce discussion Mike could CEO, business Financial operations

Mike Renna

us today. Thanks, for Dan, and joining thanks

and the families you by of our begin pandemic Let this all saying, with your that at safe remain us hope all soon. and you continue hope passes me and are continues. this to thoughts as staying SJI, we summer, behalf crisis We on of well

workforce I the depend time remains As a the to that and pandemic largely extensive of to effectively XXX,XXX employees this last thanks the customers more delivery and level. financial our during pleased safety posture us minimal with our that critical a a than to Through said, work-remote continue priority business assuring safely and and each operate gas day. at time. dedication very at our this use businesses continue large and impact, who exceptional our discussed to of the am on I thankful part planning the We employees. operate in operations during innovative With technology, in report remain challenging to quarter, of high our very

utility across margins gas Our natural and both reflecting for rates. segments, demand and our strong weather remained steady and decoupling riders have in customer high normalization growth our continued the

in services, these incremental incremental the cost have July, this we recovery. authorizing crisis. the allowing deferral our to operating incurred future state for as enabling a cleaning expected, note, well unanimously technology emergency asset, regulatory debt order supplies, As Of bad of costs expenses an during establish approved regulators as for utilities incremental

we the projections. March achieve spending capital to June, upgrading Construction and in modernization critical with and ceased to accordance that in Our remain in state, programs, replacing track resumed on continue move from forward. activity infrastructure directives our

for remain this Gas, At critical BPU redundancy South rate to resolution Jersey Regarding proposal regular our meetings as year. our our later as hold a and agenda regulatory track via on initiatives, route the well case teleconference. filing project continues base engineering commission for

needs debt XXXX to maturities from have and XXXX. these a equity our the completed eliminate in our resolves On completed confident the near-term funding multiple impacts planned program, June, $XXX taken ensure we manage ability hear At-The-Market moment, a of our in the proactive you'll in Steve Having million COVID-XX. in ongoing steps, Most financial through side, steps our which capital we for liquidity, to of as program. recently, strengthen we feel

Lastly, this obviously have as crisis, that is adjust assured very monitoring our and fluid flowing continually situation. to pandemic Be employees throughout and and to as gas our are safe. this the necessary, we business operations community keep a we are prepared done

second to results over guidance. our and Let Steve to me now quarter turn it review

Steve Cocchi

Thanks, Mike. morning, Good everyone.

As in our impact our that, service has Mike second the in no the performed pandemic. this and and had and a we've significant COVID-XX from quarter material noted, experienced well the business country Despite financial territories. around world, year-to-date, in impact

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

For economic earnings, this our we'll valuable the performance believes provides insight our measure of the business. purposes measure discussion non-GAAP of call, management as normally of we focus on as this do, into our

a of quarter diluted improved XXXX of compared were from our both businesses. profitability share XXXX, a per and earnings Second reflecting economic loss the with nonutility of in utility share diluted $X.XX per $X.XX loss second quarter

reflect of rate results These quarter November, the customer became that Our utilities contributed share ETG $X.XX per and of improved positive case per modernization programs. roll-ins base compared second XXXX. to $X.XX SJG's share the loss growth last rate earnings effective of a in infrastructure

over increased improved XXXX. loss nonutility refund and Our results to opportunities XX Transco a per a contracts driven a contributed operations, case. in management $X.XX optimization compared by last $X.XX reflecting to Improved were related became rate additional share fuel from wholesale operations wholesale of months, share profitability per operational the that

with economic last loss of $X.XX in Our interest debt. consistent year, contributed other share, per earnings segment a reflecting on

diluted same reflecting a diluted the from factors compared earnings again comparable share the by For ago, XXXX, second economic our per nonutility quarter. year-to-date, profitability for were and $X.XX and the businesses driven as per largely period utility with year improved $X.XX both share

for maintenance and system upgrades, Our capital utility customer reflecting expenditures infrastructure million, growth. year-to-date primarily were approximately investments $XXX

capital and non-utility investments utilities clean the to with continue safety We and $XXX for other than expect million more our for and XXXX, energy at remainder XX% in of spending approximately investments. reliability solar

last debt tranches, Chesapeake Mike The our will we've which completed in term of to proceeds million our $XXX Gas closed in years, mentioned, Utilities cash. two for and $XX need X on ongoing In maturities we've $XXX throughout XX-month late sale XXXX, we million And recently, we resolves steps of respectively. Most ensure of to July, and a loan in Elkton approximately the XX completed June, equity capital of At-The-Market program, XXXX for week, reduction. fuel funding funding further with strengthen million As a planned liquidity program. our which XXXX. refinanced

available $X.XX As of capacity we and July have confident to on XX, in our feel our $XXX and revolvers manage through of ability million credit of in facilities the COVID-XX. billion impacts

units equity at in our XX, for capitalization continues XX% expectations. debt, total approximately a of Equity XXXX, approximately using at sheet approximately strengthen and financing with Including from XXXX, debt measure, with sales. ratio, due of XXXX. total and June equity adjusted in to to December at XX% balance conversion equity rating reflecting asset compared mandatory agencies proceeds XXXX was non-GAAP to and capitalization line our June XX% XX, long XXXX, duration credit XX, equity at compared convertible was XXXX, XX% debt December repayment XX, with Our approximately from

now to guidance. Turning

interest first XXXX excluding continue our in earnings and ongoing from to expectations, with of with Our to costs. earnings economic diluted share $X.XX XXXX earnings were of operations, of expect utility for line the economic our half $X.XX XX% per we approximately

While our it we've thus far any impact witnessed financial facets remarks, from future and of operations will communicate turn concludes a my we're to our impacts Mike. projections. pandemic, to the back now all I'll minimal financial monitoring and continually That

Mike Renna

Steve. Thanks,

our I our the to families committed all safety the remainder of strategic the Before else, want our we conclude, review and our communities. we for to year. Above remain priorities of employees,

effectively largely highest continue very platform, remote make at leaders a levels. the functioning our from are We health by and decisions from informed professionals directives and we'll to

the economic company, adequate back region's Safety, $XXX $XXX support energy modernize ensuring the to energy and at sustainability infrastructure clean to lower of content New remain state's that and pandemic, execute goals. shovel-ready of of the our supply goals. proud and stand emissions, reduce of work. targeted and investments system jobs a million get new reliability making roughly state in fugitive and natural our renewable the system our on and consumption carbon As Despite we efforts critical ready clean plan, to gas Prioritizing mission. and investments we redundancy, investments including deliver to Jersey methane of million states our this in support core the energy recovery are support to track capital

three drive solar second toward goal. we in make soon solar corporate install to announcements facilities year. Jersey this We on to our us in three quarter, We of expect additional closed on New at and investments that expect very our the projects

We also focused initiatives to increasing the consumption safety and the remain the the file further track two important for emissions, year, reliability customers. on BPU on and with and of end before reducing our regulatory

XXXX, Gas' efficiency. June, programs and July South at most The for established September BPU through file XXXX, the demand recover the with including efficiency Jersey recovery expanded the order date a The cost first response energy us order In term. XX, filing relates of a surcharge year program X, company's base recent to an our inviting structure investments by rate and program capital Gas state's authorizes in energy Elizabethtown to to issued a three effective of utilities cases. capital

This has critical which Jersey safety an of to to Jersey more relates of our and is decade. program, South reliability infrastructure New a reducing than provided filing replacement in ensuring of extension driver second emissions XXXX. is remains It expire system. Gas' program hundreds an paying the methane in good set for fugitive important to The jobs and in accelerated

employees Let again to customers. to other my commitment me for and once by our our your X,XXX conclude thanking each remarks

deepest safe, this tireless to why deliver now questions. is My to our prepared continue Operator you all. we ethic mission: that crisis to concludes line Your the our reliable, and continued throughout work remarks, for and open economic admiration clean energy. ready are thanks we on

Operator

comes Our Moreen from Gabe Mizuho. Instructions] first from [Operator question

Gabe Moreen

If by stuff also was the COVID of recently just, seen had curious asking Just into expenses, how is then in you'd incremental the it And that all or last can paid? next talk how was heating I much out down. uncollectibles? in not that winter that stuff season? breaks out start about winter maybe coming you going just about of that of anticipation Or can been

Steve Cocchi

The Sure. it's related the COVID bad Cocchi. debt. Steve Gabe, significant is deferred expense to incremental that we've of portion

seen continue. that on based since really March. over the historical minor Our incremental we've and to O&M impact to historical The has would and calculated been averages dollars we date, incremental is expect being and averages relatively way that above are that the

receivables months, So some be but into really from back that March bad calculated it's that experiencing June prior averages. as deferral of could far some that of prior do that thus through in versus we're the debt comparison go year a

Gabe Moreen

Maybe levels SJG and of the filing. that time then if the Is energy switch efficiency I could that could how there large any at sense be frame? to ETG over X-year

Steve Cocchi

even a year SJG's more those have perhaps robust driven than We in would in and to expect putting focused market programs, the of want so $XX are, now. got of ETG's about on at and program of SJG something of we We're have would up offerings, We've that be believe, the expenditures. program EE It's which our a million would size all of we what seek I team to is we the the right smaller, we a for to significantly the like now. historically. propose be we demand investment together get that likelihood offerings proposed by much existing increase level program. design all make proposal terms programs that type to going that, to ETG higher will

able we'll around a in So little and to filing more approach color that give detail September. we the as be

Gabe Moreen

run might a, talk of going on how spend. RNG be And last more other looking opportunities. things then rate question to terms sort other than language solar Certainly, the you on at a of the know future. about million $XXX of lot Can $XXX forward? is for say have And that and that around this I probably much me just you, solar? of million in And in

something. to free feel point So on

Mike Renna

Mike. it's Gabe,

what is So state supporting really, that are broader goals. to the both have clean now, and the and we committed region said their we energy

a in are variety opportunities that there a goals investment do And energy so of those cleaner economy. different support

I invest priority think always our or has utility in to utilities been our first.

are solutions make believe renewable and again, like and those, of like that much projects, particularly that natural impact meters that more outside the investments type the perhaps hydrogen-based like that biggest probably things being term. So things by we utility on smart renewable near Investments fit other utility. like is be, power-to-gas power-to-gas, natural renewable several would And years meters, with we focused But many energy gas, of them. decarbonizing are one but smart of can our gas will our of ultimately, solar there strategy. things region's goals and align away, are

going commit This were several ago, the us very pretty where to were have do So investments were nothing building selective, just early out to aggressively clear with point that really to we're prepared strategy be very for type that. renewable to strategy. anything to are same at projects. a alternative to of to be want other These to internally we solar. of solutions specific aligned decarbonization dollars. that be this were emphasize going investment that had of also not time But targeted or we to going a highly portfolio targeted, high we're where And in were we that we beyond I a announce like all projects couple open on things and was bar going about years

So none of that has really changed.

X -- In million $XXX we've either. a nothing's -- we're run to about period, said that's changed over always to $XXX terms a million of between X-year sort and rate, there of

Gabe Moreen

Thanks. color. Appreciate the

Operator

Bank question [Operator Richard next Instructions] from of our you. America. Ciciarelli Thank And comes from

open. is line Your

Unidentified Analyst

This for guys Richie. Harry on Hey, actually is

are like a CapEx had minimal you on subject, million. but committed with half first Slide guys looks solar associated in solar the XX, to it still the $XXX the On

are three facilities And up to portion outlined large confident how half? million? given this the of So $XXX going you back in do million, essentially that those be you $XXX it's those all a earlier, in make

Steve Cocchi

Steve. is this Richie,

we're more CapEx with to wanted strategically, to with facilities some including talked of solar X is associated are opportunities those former gas our of at opportunities to and start referenced upfront, sites, as some corporate not looking significant. really facilities part the about our the all and electric we've our So that buildings, strategy we before. really are more specifically that the relevant and around It's our deploy landfill own

of looking very about reach the developments maintain for for terms that we've going In at right the that a of the now. year. We point, being queue of remainder pursued. the year, talked that we guidance in opportunities confidence this outlook that are we're At robust the to a we're have our number actively of and target opportunities

Unidentified Analyst

Okay. you're so the the offset into timing looking to of usage pandemic. how offset? you And any all -- about to COVID it of how are of goes Anything initiatives any -- taking Got I'm to if kind of extended the it. heating That's LDCshave The helpful. taking the kind on just initiatives impact of kind and XQ? been COVID? versus far gas out peak given are you of insulated XQ thinking kind season,

David Robbins

this Robbins. take one. It's Dave I'll

our decrease The large X% bit, ahead small and is Actually, but a our of are actually large commercial a margin. of So margins we down significant total really only forecast. haven't volumes. volume little in volume Rich, about consists seen the our residential

As shut being offs proactive, far we're voluntary right you as a now. as on moratorium under know,

New that in extend Jersey We Labor to collaboration Day. the have, utilities, agreed other to with

our time. our more that other into at that a with efforts. back we'll be with use collection But lockstep state, as as So decision utilities, long and regulators, of evaluate I aggressive in offs we'll we're the in shut with little the ease think the

the and that at that available are both being directing We customers proactive presently programs are, way. assistance very to utilities, however,

I continue. seeing the trends into will going heating we're the season, So think that even

Unidentified Analyst

I And one. could X in quick more if sneak

supposed in there On an that we redundancy updates date I month the the should specific project, think or next watching? be LNG we're to get outcome Any on or X.

David Robbins

Yes. on now. a tank We've right preliminary ton discovery LNG not had movement the of filing,

staff a for have do filing. to scheduled the with discuss meeting we However, September

our I to has. of case furloughs the rate project kind the with, having has particularly some the risen BPU think to that deal in that top like way with not state,

a ton on but momentum that to expect I few of progress that the of more right So report filing next weeks, a now. not in little as on

Operator

from comes Morgan. question Richard from next Our Sunderland JP

Richard Sunderland

Just energy the XXXX well, consistent investments projects solar the wanted clean before to alluded on alternatives kind bent. from as and the the I'm of expectations would to just you've off expected those or that XXXX if investments start side? types of with solar of the contemplated with similar curious be earnings contributions

Mike Renna

just Yes. to. this applied It's said, we've Yes, Mike. bar that as I they high not it's are, solar

is internally, certain obviously underlying So the the it which to hurdles of much of meet investments. has economics

So we our earn the in the make a return, kind utilities, a of, renewable that realize because would different certainly in is expect ultimately, risk that risk above investment energy would any we the earn in and we the there's in to what to utility. profile non-utilities

assured we rest any that earnings. make to be investment accretive So is going to that

Richard Sunderland

there. of PennEast, FERC just you then referenced some action And the

curious milestones Phase for next what to Just look X? for

Mike Renna

all need EA receiving permits we of milestone final the point the getting and certainly, FERC, we're Well, which significant at to milestone. time, believe, in I the that from next approvals in all months. have coming begin And will construction. necessary I was have the we'll The of, be think, that would expecting to we cert would a happen

very as of that case that be think there for merits a will there are positive and believe we're I have so as now. General parallel front The our we And waiting other in on, again, outcome well. the well. thing strong, of But right we appoint, asked Supreme petition to they've do, path the going the we Solicitor that's is on a Court a

So...

Melissa Orsen

with period is XX-day we that I And started. more environmental the one received, to has a assessment just add comment want already that it's thing that Melissa. there

track been time on the out.. we're line So for laid that's

Richard Sunderland

Got And just marketing one, X wholesale then performance. I if The it. final may.

color curious the improving of frame you the maybe exit and there for a it plan against provide could results Just if contracts? that's that little bit little legacy more while and a place bit in some about now around been

Mike Renna

you're There's been production quite direct since about the a a few years, area, compression talked market we've certainly in seeing had there's our meaningful between Well, not then in in as create and impact couple that type X spreads a Yes. we've for the taken now and XXXX. have volatility. and XXXX and we XXXX, for on really either additional of the initiatives now area a had is, the difference the any could value wholesale of that that has in earnings XXXX and which last book, the winner between of been winters,

we've repositioned is what what productive, So really are shed we've of lot to valuable less done to book less consider a assets. be our we

your not is result, and to again, demand A incurring we're a cost so lot the, a charges some of anymore. renew point, which those take done of any time as frame, take didn't XXXX volume, the what lot those. have contracts, And runoff, XXXX, date expired of too, back certainly we and the of those those got and We've to we've base. lower a legacy just

wholesale runoff I base we our and think a combination taken really assets out the then of of So lot where the portfolio the business. have contracts legacy cost repositioning of has the point the volatility our the of we've to our in lowered

market are assets there's that that But take we've still is less significantly there less there's So is we, because those. in our spikes volatility But again, book you weather-driven, downside. upside. and also the opportunity there's when of now our some book, for us there's, an advantage the in see limited less in there when really, expectations are what to

certainly thing, of of wholesale what much level earnings XXXX. other to out percentage you'll in is our see a And forward as be is think continues bigger contribution of contracts performance more our business. as an predictable recently from I than management wholesale going the too, So it that one was fuel increasingly overall

Richard Sunderland

color. Appreciate the it. Got

Operator

lines. like any Thank I'd you. Fidell to questions And over turn back further remarks. our for I'm the closing conference showing phone no to Dan from

Dan Fidell

morning. I questions. for thank Great joining to want you all great. us Well, this

a recording reminder, call today is going be to our website. a of on our As available

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

found release certainly and interest today and contact earnings and Thanks. earnings you may Again, all and you look with the hope That materials. on again call well, today. be and for investment presentation Our speaking soon. us continued concludes safe thanks for our I information forward stay joining in your the to for SJI.

Operator

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

You Everyone, may disconnect. day. have wonderful all a

Dan Fidell	Vice President-Investor Relations
Mike Renna	President and Chief Executive Officer
Cielo Hernandez	Chief Financial Officer
Steve Cocchi	SVP and Chief Strategy and Development Officer
Gabe Moreen	Mizuho
Richard Ciciarelli	Bank of America

South Jersey Industries (SJIIU) 8 Aug 202020 Q2 Earnings call transcript