SJI - Earnings call transcript Q3 2020 | South Jersey Industries Inc

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Operator

Good day ladies and gentlemen and thank you for standing by. Welcome to the South Jersey Industries Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Fidell. Dan begin. may you Sir,

Dan Fidell

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

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

our cause For introduce to our refer could discussion operations filings. a of differ, pandemic said, factors who and I'm pleased CEO, review actual please And will to results business that response. to Renna with our SEC Mike

closing to we'll to the questions. year that, Mike now Our the of priorities then offer let key CFO, over your financial Mike. some review for it third quarter performance and Steve will will take remarks. financial be outlook. our turn Cocchi With then that, review remainder me happy After and our

Mike Renna

we've and to made today. in an progress you business our operations well. update on like I Thanks priorities you our Dan your joining this safe, are and thanks XXXX of and I'd the my hope healthy, pandemic. remarks begin families to despite us in for significant executing terrible all and with

our assuring of customers. Overall, thanks our dedication of our pandemic, safety during part the our remains employees. to employees priority large the gas delivery to exceptional in very the critical top and to effectively businesses operate continue Our XXX,XXX

pandemic, approved of in As for know since experienced incremental been and the March unanimously a and New businesses incurred have this high throughout service. also uncollectibles voluntary Thankfully, future our keep we levels expenses costs Jersey have as you with running to state's to support. of offs shut higher regulatory suspended our maintain these We've an incremental in recovery. authorizing deferral the full allowing July, utilities establish order regulators asset, our

of to COVID-XX Having funding also in navigate balance our our ability completed capital successfully multiple ongoing and majority years, of XXXX the liquidity, our and impacts debt steps, five continue feel taken steps ensure to eliminated through have the maturities We proactive these for strengthen a next forward. the to in sheet program. going we of our confident

that infrastructure of above burning heating Turning a new quarter Elizabethtown and cost The weather adding Elizabethtown strong off. goals, our earnings. our decoupling are from New significantly riders, outcomes, the modernization growth, solid South our few natural management. Margins financial from years represent case Gas trackers, with our average and demand to business priorities our Gas rate have XXXX, Gas fuels, respect service of of remains conversions, roughly Jersey bulk Gas programs alone. effective base and Jersey New our such customers majority South with more our successful XX across shows consecutive in and in as and gas utilities Jersey. increased cleaner last efforts fourth With the positive With territories reflecting two-thirds normalization results, past and alternative customer continue critical across natural converting improvement and come execution than results, with business in through the transformation over our Consistent to of months and combined paying lower gas. O&M customers our growth, to propane oil XX,XXX customer

regulatory Our both and in utilities. in amicable constructive remain relationships desired record with results strong, time settlements of resulting our

utility Our the of to reliable to critical modernization customers infrastructure and reducing programs assuring have emissions. our significantly benefit service methane safe added

bare the steel And we've recovering these October adjusted than rates $XXX our our replace system. important iron cast million invested months, more XX on main Xst, regulatory to Over investments. last we to aging begin across with approval and

have as and right-sizing also business as a operations priorities. of year result non-utility improvement experienced well, a refocusing a largely this significant Our of

Our wholesale to our improvement, roll-off fuel performance and legacy driven year-over-year asset business opportunities. related has contracts, the contracts, reshape by strong optimization management portfolio, delivered of solid

Steve cent pleased fulfill share to our third we this and execution offering that to At other venture clean Steve? over with Energy Finally, Overall, it business with has our commitment the review projects, facilities announced our to closing same some the projects, corporate two results. XXXX. Captona goals investment energy select fuel City. region. which acquisition New to projects very our look and with joint at the our along in and time, new solar quarter In are of invest XXXX after I'll and guidance, goals partner time and landfills targeted in a to forward Services provided energy to delivered of on renewable August, align ITC we clean a now $X.XX announced and investments advance our projects, cell quarter remarks. third for the York turn in per our I our plan results business of These solid state benefit

Steve Cocchi

everyone. Mike. Thanks morning Good

in experienced impact third noted, continuing our performed and and the pandemic. pandemic, financial despite the Mike business well As material we've from the quarter year-to-date no

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

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

with loss per quarter $X.XX diluted utility both XXXX, diluted per from a our a XXXX and of third compared $X.XX profitability share of quarter economic businesses. non-utility reflecting in share improved of earnings Third loss were

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

group compared compared higher of earnings share volumes of XXXX, third became by share improved $X.XX related contributed both investment months, services. per and last per at over $X.XX XX in services compared latest share the primarily quarter share share asset a cell increased $X.XX contributed to and loss third $X.XX share operation Our period. were achieved were non-utility of driven of in opportunities during or portfolio. our fuel that to solar contracts operational per Improved energy operations contributed resulting to results quarter optimization $X.XX earnings additional per fuel management recognition credits reflecting share XXXX, profitability tax Energy and per efforts from to to in $X.XX announced energy the reshape the acquisitions Energy XXXX. per in reflecting per $X.XX group

in $X.XX a by and of reflecting loss in and per an economic increase repayments, share partially contributed debt refinancing other outstanding, XXXX, to Our segment earnings share $X.XX per loss offset of activity. compared a

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

completed to and XX-month sheet the for tranches respectively. term XXst, program. seven $XXX we've we with on mentioned, strengthen loan liquidity reduction. and we sale of the balance steps to that July, SGI closed $XX refinanced proceeds Mike XXXX capital in approximately throughout further million XXXX, cash, Chesapeake in ongoing and with And funding Elkton XX our our ensure two a As million July our maturities fueling Utilities In of debt of Gas on years

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

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

infrastructure XX energy maintenance, upgrades, year-to-date expenditures and were Turning reflecting down the growth, guidance, investments utility approximately million, investments. and primarily our for customer clean XXX capital system

other investments excluding to million solid ITC capital the We spending XXXX are share period. to $XXX related our for in third and $X.XX quarter with and clean $XXX recognition continue approximately to reliability non-utility, utilities, million the remainder and investments. that energy results, We're for energy clean and expect and in the approximately of year-to-date latest report pleased cents per of investments safety

versus sizable the a both ago, our results results improvement a improved and non-utility per again $X.XX driven still by quarter segments. share comparable third Our utility period gain showed of year

approximately of $XX at into the XX diluted economic fourth dollar head the range earnings quarter, from costs. with we per expect operations, utility of XX% earnings our excluding we a now share As XXXX end ongoing upper our interest

future That the thus now of for reminder, financial potential my no projections. material far from Mike. all concludes impacts back we continually remarks. pandemic, to a As impact while our And it to financial our I'll witnessed facets turn operations monitoring have we're

Mike Renna

Steve. Thanks

the words remain employees, strategic to communities. safety our I Before and else, conclude, want committed to continuing our we families, few priorities. our Above all about of our a we say

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

we our BPU efficiency our proposals expanded medium to programs program to regulatory investment. a pending significant designed consumption to and the important In file lower $XXX be existing state's several clean with benefit recoverable a cost the September, July energy job bills utilities our through and programs, a term. issued expand response our with XXXX, order representing of programs, BPU. reduce efficiency short effective to added an before demand new On expect million These In in would being the have programs we filed the front, to energy Xst June, energy utilities efficiency the energy surcharge. Consistent focused customer creator. have of initiatives directing date regulatory

We are further consumption. also at encourage in Elizabethtown to Jersey Gas proposing reductions a decoupling place the in South similar one currently mechanism that for will

second requests a next quarter of of expect these We in resolution the year.

assuring to Jersey file South reliability in program critical This infrastructure New We request of good system important expires the extend is provided program of for and Gas replacement an more a to It's in safety also XXXX also and jobs emissions. expect Jersey methane paying our than in reducing decade. end. your company's before to driver hundreds a which remains fugitive

and of We our of with we our opportunities new with On gas, meters, you state power like future smart to large in align plans. the Clean goals to few and our energy these clean you being accelerate evaluate anticipate we a last front, the Energy energy is the solidify performance renewable investment. potential discuss projects today region. Investments recent topic as I'd have the for gas, potential The natural stock. with continue to able other investments discuss to to

to we value uncertainty. challenge has a gas by historically narrative And the Jersey even among be opportunity reading core, At on as several said, a energy some we again, exaggerated. opinions working clean sector plan. the the is have rate view plan. are of believe own energy of achieving the energy LDCs, to despite that ourselves state, the and LBTs utility sector? rates toward underperformed market of contrary, mistaken with master the master these driven sentiment Quite from initiatives And The and partners through accelerating even SJI our us concerns interest Over aspects of more past like billion the we've strategic for renewables shift largely master based and of our as hand-in-hand why utility SJI economic concerns, while death the presupposes obituary, the great why chief fuels, reports plan and these months, underperformed The greatly to grow low decarbonisation heard broad Mark upon his Twain are the and goals a away pronounced terminal blueprint energy famously acknowledging the a holds we a company. fossil in best as toward given for investments. X New immediacy infrastructure variety of a the

valuable safely, serving pay for in and and a customers for Our asset decades. reliably affordably are pipes the ground

approximately added natural Safety, core and homes continues to New our gas affordability heat with fact, businesses In Jersey, every at customers of the of year. mission. and XX% are new of thousands in reliability

critical We are by infrastructure lower methane greatly supply emissions, investments carbon equally by system, offered encouraged technologies gas. we that redundancy. sustainability the system natural fugitive and the And that investments, to reduce of and will potential content prioritizing are consumption modernize ensure our are and and critical committed

regulators fact, support these continue mandating approving to demonstrate priorities. by their Our with in us regulatory that solidarity initiatives and

system come. New As to burning hydrogen, gas, remain the of agnostic for pipes we remain I've times, our delivery for natural Whether many or our molecules it's vital gas clean terms decades said pipes. Jersey through in will energy flowing a natural renewable

of are recovery more with utilities the state never jobs our to support state, for across Jersey with as are New company, we partnered it and economic to our We important back shovel is the get your proud work. a to been ready efforts

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

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

Operator

line comes Yes, JPMorgan. sir. Our [Operator from question Instructions] Richard from or Sunderland first comment the of

Your line is open.

Richard Sunderland

morning. questions. for good my Thanks Hi, taking

Mike Renna

Good morning Rich.

Richard Sunderland

redundancy the off process of an kind hurdles? you stands or project. of any that Just on regulatory provide update for where want to of and LNG kind timeline upcoming project start the Could

Dave Robbins

Yeah, This hi, Dave Rich. is Robbins.

that been staffs. few There which December. aspects technical In communication filing, asked some up know, we a So, last filed questions. last has were as some to have move at discovery we the to slow were you the It's we been received minor BPU. of with month, admittedly do. the were There

that been So, reintroduced has back to staff.

discovery, we a BPU round we ultimate of you know, for Again, definitive So, relatively soon. getting another expect timeline don't have approval.

liked. So, slower have it's been certainly a little moving would but we than

Richard Sunderland

switching this kind in to financing be was financing LNG understood. point? be outline tied timing the here equity equity Got this specific, And specifically the it kind gears longer other equity term spending part of what then this maybe just programmatic redundancy for year to that at little a overall for originally -- whether of done you bit, and think project thinking about future or needs, Can might can discussed. the need this project,

Steve Cocchi

Sure, hey, Rich, this is Steve Cocchi.

to as think equity. I a the through our said, debt always and of So, we've we intend business mix continue finance to growth and

I think got continue of have regulators to our from and us opportunities amount support New front systems regulatory tremendous demonstrated in good to our outcomes Jersey. in we've and a growth in of invest

more have point. done likely So, we've in point we'll what guidance some specific we'll is at year we'll the we'll have at that and past, do to speak next that plans detail as equity some around

Richard Sunderland

been you gas hearing offset Could economy. current your on your lags this? on in maybe, one associated just and I could Okay, CapEx? programmatic would system higher to about what If of of times to the more kind that great. And a then? put a might and that incremental if speak additionally, you're fit to local kind thoughts kind quick at way be jobs into would stimulus then attract or plan money any additive how the if of talk be local And investment one, there's

Mike Renna

our continue to Rich, kind Hey, of think driven state respect, has it, economy, formal there in stimulus. which New been utility from a on regulators as of is around Those utility strong kind that front. take jobs well as I'll get with jump-start support to office happen, this I There Mike, it's guess not as conversations that with Jersey's investment I means the to announcement with front one. certainly the the specifically any particularly

the back our again. get ready jobs, will specific of and that in out there programs we to as do shovel-ready come and the work our that going stand our I So, utilities of all state with utilities. think economy do be very state the stimulus-based to

is reason of lot a management the of for -- think the it's I COVID. delay just overall

you begin into hit getting probably just not us of and summer We're hard. As longer, Jersey the our now very It the New the fall. to economy. got heading know well if process reopening took through kind month, of a

And so still things approach. here. are not We're fully very reopened taking measured a

now and the I've And utilities so to the and understand their critical kind getting control, people directly that. the certainly health at back are appreciate I state are fully who that how crisis the BPU the with And believe to BPU of as economy leadership had work. folks we've the under gotten hopefully attention conversations this turning very and to at and

Richard Sunderland

appreciate Thank Great, you. color. the

Mike Renna

Rich. Thanks

Operator

Thank you.

next line Mizuho. The comment Our question or of the line Moreen from is Gabe open. from comes

Gabe Moreen

Can Hey, expense? the context the maybe moratorium in we're for bit good debt that just shut mechanisms little remind bad into of asset you're ask the can debt, kind morning, a guess heating what I And you the extended, of viewing also going of everyone. comes? on that season? when time on bad how of being winter offs be the And the recovery I ultimately will us

Dave Robbins

for this sure asset. have paying recovery -- lot and mentioned, our debt mechanism we Dave of bad of as Mike a Robbins. our do customers put Yeah, Gabe, are regulatory in We in a regulatory place

the really XXth. for -- doing Obviously, offs some we've voluntary we're to residential agreed in through soft been on March So, shut collections. moratorium has

delinquents, continuing with our we customers. volume really large We seen issues have our noticeably commercial to are pursue really not

and have approval from but So, when as that to today. still filed as waiting defer for, some are doing certainly for will recovery staff costs those far we we're we guidance be

Gabe Moreen

in how Talking tax Catamaran I you of maybe anything it sharing the JV, if of comes out happen much thinking guess, I bigger forward? about number opportunity. that picture, terms of Great. Is guess how I your into should million-ish, credits and the there thinking going Thank the JV about know or intended are just of about XXX XXXX, capital going will switch that sort can just XXXX? then also contribution the that in future that investment how to renewables within JV? you. And we

Mike Renna

investments, was, an initiatives to there, in it was the or making that investments , emphasis Clearly, we've It energy. ITC future time, that of between targeted would support in Hey the specifically Mike. that. from but Jersey, strategically, detriment ask to far very deals at come in any me be targeted, all was not to kind going and we of and very on all that the investment, said, kind might Gabe, might Energy as demonstrate in the our of to talk back to look I only about that CapEx and But I associated and remiss along, how energy started of master it -- me let sharing not it's more can go reentry he be into Catamaran utility type insurance jump help region. intervals. as energy potential kind was Steve there discussing didn't I'm designed broader the here kind our the in and us felt and to our any of of renewables is clean thinking we for Clean state if first the clean when New as to to measured, be about plan

on to with and doing that support would our that we've all focus going our to of also customers. utility be and committed in we the our priorities. of utility, our along benefit goal energy state's the that renewable clean So, investments type we're that these investments said and But

potential power RNG, been our term of on a has certainly So, longer to smart gas. the meters, focus

thought of around fuel the where for We think overall use energy to a -- longer $XXX in million So, spend, us tax would clean clean, and as I would beyond great consumption a thought our cell, somewhere be I over Those all I of plan that's gas. this that, pretty that to for The we've an think we we make priorities investments. fit. be would I and was said that period. unique range not safe for natural of our guess, would And that's investment be looking strategic we kind along, assumption. was opportunity million mean, non-utility But term in a sort to $XXX rest. the think a or three-year really

somewhere we're right think this year. million around I So, $XXX for

another very we've with somewhere I this very, will got we So, to make, we be to would $XXX say want very our any I range. between We're investments doing not aligned internal and ITC, got a clear, they've chase at $XX think investments to end these -- million of and $XXX high the And hurdles. simply plan. that strategic be rigorous this after our million

Gabe Moreen

No, that's just I Thanks sort more helpful. RNG. one can of Maybe with Mike. follow-up if

$XX Just of much do utility costs million of to the of million be RNG? it within the if doing you recovering how to the terms do you're in know guess and utility gas RNG might $XXX how and I you that just outside questioning from your ability

Mike Renna

Again, a term question. little of state, the that's, for you and play kind longer hydrogen. to all power play, know, long a with certainly not I plan is that's Great RNG something as something an as I gas. a a But wind like power think opportunity. that's, of gas we're well-positioned term a as to think longer term certainly like offshore that's bit

we're I think having conversations New within encouraged there is by a we're RNG, opportunity the more in immediate Jersey.

to New quickly imagine farms a because company, our treatment gas intensity, impact through finding positive this really it do and ways the carbon on we're methane to waste a can vision would of well very farms decarbonize in meaningful in flowing But of an facilities, of as the are food the goal have -- of dairy how actively and of be New the clean there you looking from -- As is this not nature ability something us, for pipes. for of wastewater Jersey. opportunities abundance the around most manure as generated that and them Jersey energy our potential landfills, at, back becomes gets to being we really is it dairy

company to we do are we and opportunity all that looking committed at that. as a and are every So, to

Gabe Moreen

you. Mike. Got Thanks

Operator

next comment the from open. Richard Thank line is you. or of your Our question comes [Operator from of Ciciarelli Instructions] Bank line America,

Richard Ciciarelli

for here. Thanks my morning. taking question good Hey,

curious the on the provided. that on guidance updated Just you

You obviously the the turnaround tailwind non-utility had you some recognition nice in the the and there marketing with also side mentioned. quarter wholesale and ITC on that

a on Just little curious into speak next that the can driving if year. we what's bit more sustainability provide and range color of the the upper end maybe of to

Steve Cocchi

Sure, hey, Richard, it's Steve.

the not being controls. the regulatory across cost intentional strong portfolio it's business non-utility, efforts The kind look And as based reshape of variety the on over last then a a focus to reasons, that to really years, performance incredible shed utilities business has this So, have driven up our the and performance the by maintaining as couple of achieving we've that outcomes, things including outperformed our of you've about strong talked on a wholesale seen, at are this to strong well year. year performing efficiencies of that and for expectations. had lot assets

us expect of the we've regulatory the end see the to what's thus year that's and to the and carry the in we the upper the the end of on driving to and remainder outcomes based the of to some really seen of So positives that we expect business performance the range. of through additional that year far

into and as far going the year future. next As

a some would expect to with time. normally we point that come year to, we earlier, said ranges give we'll do. would expectations I for next guidance as little And to As more be able we concrete out around at our at

Richard Ciciarelli

just the just PennEast the or still helpful. have some either peers Appreciate assets. we elect know project. separately slides we've of midstream seen to any expected And divest on updates several in you're committed mentioned you right, spin And Obviously, of your curious their approach. we these I All the project, to two-phase color on rule when the very then should that's on there. when Burke the

thinking Just curious overall? how you're project about that

Mike Renna

this take it's I'll Rich, one Mike.

We kind receive that can FERC As the proceed. the the you anticipating Solicitor is indication I'm I with to expect we for project. do as But case kind to respect I might have FERC notice know very am as approval perspective. a the And phasing of imagine will get positively parallel very I again tends of and make there's far you is direct as things reviewing in a to a of might On not be the the Supreme any is a around of any continue that view when we're path, from the general the we have General us updates that that feel or to with be. of I things. hand, and of tight-lipped to -- to getting would lot EA FERC sort that issues when to final Court. recommendation sure a not kind heard

customers, and to where project, other as impact a some our the its as these entirety, from it far think projects has As absolute is differs I -- this very commitment right. our pipeline in -- of on

X, Phase So Phase X.

Jersey, New Jersey Elizabethtown, and for customers your Gas New in able being to gas arguably access to Jersey South the about Gas, you're the cheapest country. the natural I So, talking utilities Natural afford in think the

is And is service. affordable is doing that constantly so, safe, more customers, our reliable, for than our what anything, rooted commitment into and best

Richard Ciciarelli

overall? Or filing thinking to about that of renewals from a for utility your begin guys all just filing? how any you as for And up the more the kind sense. your with are if that makes their side, going helpful. learned one ton just lessons rider Yes, there, you to I just may -- gear then pier That's inside of

Dave Robbins

one. So Rich, it's Dave Robbins, so I'll that take

that being about So, programs in costs safety Certainly, filing we infrastructure. removed all of us Gas file front know make you investments riders, of South in steel next as opportunity case, these the know benefits some expect reliability, great New but to the our program, to make and of [Indiscernible]. peers, if talking were And we in Jersey Jersey think we're under inventory continue saw I name to weeks. do the you -- our certainly natural the next into we to opportunity we have our to a couple certain within and were accelerated were the pre-cut investments an of of and that referring from significant there probably

still of the finalizing filing. the number we're So,

really generate Given programs, programs, But both do jobs. safety we jobs to look the There's next these ETG, a we've filing, investments creation times we regulators said as for like expect at these some preliminary lots for SJG of look, reliability weeks. I they but quite the the support opportunity of to in by these have discussions. these couple of SJI particularly had take a within SJG bit and make and an of good or

Richard Ciciarelli

That's very That's helpful. perfect. I all right, All had.

Operator

showing additional over this close time, Fidell questions you. conference up. At in Thank back Mr. I'm to this like the to queue. turn I'd the no to Dan

Dan Fidell

Well, much thank joining all you very this us morning. for

recording Travaline free Dan investor of call inquiries. our questions, And As Fidell is for a analysts me and always, our today for be please as reminder, media to or feel website. contact a Marissa going to available on

this for concludes So, and in again, thanks for Operator, your interest our joining SJI. call. us today continued and investment

Operator

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

Everyone, disconnect. a You day. have wonderful may

South Jersey Industries (SJIIU) 8 Nov 202020 Q3 Earnings call transcript