South Jersey Industries (SJIIU) 27 Feb 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 South Jersey Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator

like Dan conference go Fidell. now speaker to ahead, hand Mr. today, Thank to would over the your sir. I you. Please

fourth and Good earnings you. morning and to Thank everyone conference webcast. SJI's call welcome quarter

I'm senior Executive several as Chief President Officer; team. by joined of well our Mike today members our and Renna, additional management as

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

be and and Forms expectations, will factors, various may SEC. to Throughout including these indicated results Actual of discussed today's opportunities Company's file SJI. materially as in making plans, XX-K from differ those important XX-Q the those statements on by we future with references result for a call the

the individual that pleased financial offer Officer, will your initiatives, performance Mike to who CEO, to Renna, operations, Mike current final then our some our our After will review take outlook. questions. I’m with will review Hernandez be remarks. SJI's of happy Chief and said, Cielo segments introduce Financial we'll and our And then financial outlook. significant that,

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

for today. joining thanks Thanks, us and Dan,

We in delivered strategic of a while higher -- to that all our sorry report these primary of our to pleased economic who XXXX. range, our objectives transformation to came business advancing X,XXX at am XXXX testament employees results our efforts. integration end I accomplished earnings in our guidance our the XXX

Gas, and conversions. modernization improvements Jersey we foremost, our customers. executed customer safety above national primarily behalf $XXX than and by growth First fueled million averages At solidly on of spent South on annual existing remained plan, with our reliability system more successfully

to extremely our year-over-year culture customers led across fuel efforts across I'm a improvement with integrate Gas, nearly by highlighting in added sales nearly sustained new and the encouraged results, to While demographics. and Elizabethtown geographies growth. in natural gas XX% these customer XXXX team in X,XXX

is efficient with It very of full and well. with integration services also process of with in doing the systems, wind a our largely Southern Elizabethtown line of remains integration expectations. The our TSA tracking down including

for infrastructure to settlement Elizabethtown, front, the Last each Elizabethtown very new On are true-ups rates This for Gas. miles busy effective and modernization authorizing XXXX several steel case Jersey XXXX. similar October. BPU a and includes program approved the cast we in BPU an ETG replacement and planning summer, in the executing important November rates of of aging increase South the on for the authorizing program pipe. important long-term replacement South program $XX and million $XXX rate million annual Also XXX Gas' AIRP approved XX, is regulatory fall, five-year last base bare initiatives rate Jersey to iron and

the BPU with customers to months. have done we will interruption, is a redundancy continuity and This solution pipeline to filed coming In project. in related resolution service non-pipeline study Gas December, ensure an Jersey critical engineering an of we South a route Interstate and supply expected help

as used will of repay assets repay of steadily these of And be sheet. The non-core improving the proceeds debt. well is the our balance our assets used sale more than our the front, activities -- over lastly, which to were year, which debt refinancing financial $XXX to as on generated past million sale

of The by subordinated equity rating notes from million is $XXX in due we fall duration long an agencies perspective. last offering favorably In a which junior XXXX. successfully viewed completed with

to want Cielo, let's to guidance, about reshape I an important to how speak New it I Before think and that over energy. Jersey our and SJI about turn will event review financials

Plan, updated to on XXXX Energy plan Governor from a updated homes state's businesses varies key natural outlined Governor aggressive by unveiled abundant, strategy expansion The the and EMP XXXX. centered January reach master Murphy dramatically of state. to gas which the On clean Christie's affordable, across XX, Master as carbon administration's neutrality and supporting goal

investing SJI conservation more reliability improving emissions, in supported We've decade and the initiatives Energy Master spent efficiency fugitive a our clean energy through goals reducing encouraging infrastructure, Plan. of the in regulatory than modernizing and renewable.

nearly honored of let just in let mission are also core our strategy me safe, And remains energy me release best how SJI to gas. board the reiterate our environmental have continuing Plan, assure Master XXX,XXX the evaluating and hard economic the to the at together outset, the Energy we to unwavering we serve. strategically At customers that benefits affordable to provide reliable, you work promote our clear working natural while Master the with and Plan, of align with

next across the a over that years, capital initiate both be utility non-utility utility to to prior As businesses our we will and investments result, carbon our five plans. incremental investments reduction intend

reduce maximizing modernize we and to efficiency, renewable deployment technology innovations. via energy, energy of focus on emissions, areas and educate accelerate consumption Specifically, energy plan that customers on

landfill our a point further development in XXXX projects. facilities, on focus installations, invest $XXX and solar properties, with million $XXX to and As renewable targeted approximately other community starting we million to deployment, reduction on capital emission address solar, corporate plan SJI a of budget

benefits that gases our energy. efforts particularly acceleration lowering policy In not a gas production aggressively and transform reinforce advance energy in are reduce XXX,XXX will the effects will we bringing developing investments Collectively, the only we content parallel region's to utilities expansion SJI greenhouse develop gas smart our utility customers. But and investments our to remain how of a these of energy the our gas to use meter to infrastructure our goals, emissions. in utilities, committed renewable our sound on we while uniquely make fugitive Because they modernization to and prepared supporting methane be also path at of positioned lower carbon utility the critical aimed and technology of policy, energy. greenhouse and to power and opportunities, an

to that, turn will Cielo review with and over operating it performance I And our you. Thank guidance. to

Thanks Mike.

Dan release slide encourage mentioned, GAAP the earnings information. the that information detailed regarding and to I you earnings. deck As provide review

discussion non-GAAP insight focus call, For economic this business measure will this performance. valuable in earnings. our of our provides into our we We believe measure

earnings, format We have two view the assets utilities. response We following representation our of non-core non- a just timeline believe in into a utilities more structured provides XXXX. of of categories, state and this

might be found details presentation. of earnings our segment Additional the in Appendix

fell of was the decline offset reflects performance Overall, our recorded full are and we in utility other that by per $X.XX gas above operating SJI operating pleased XXXX, in with non-utilities guidance. compared economic of a results, share The $X.XX balance earnings the mid-point For increased performance. with which XXXX.

to earnings growth, On of $X.XX related freight ownership increases become share organization ETG, the in full SJG considering utilities that products. compared per to effective of reflect increase And ECG customer $X.XX infrastructure Results a XXXX. the November. in rate

the pipeline by from wholesale per retail operation The gas with marketing by of new and $X.XX wholesale partially in decline share non-utilities offset weather, increased variance driven negative spreads, XXXX. contributed primarily compared Our in share tight and contracts. sale per rules, marketing mild $X.XX lower The management headwinds marketing activities operating was operations late fuel reflects results, XXXX.

of of Reflecting economic financing with non-core a financial in contributed of segment debt employers by per loss repayments share, sales, from partially impact $X.XX the $X.XX compared earnings asset per loss last other Our share year. offset acquisition-related activities. a

The and in per business. Turning XXXX. performance were of compared Non-utilities in earnings to performance. results for $X.XX SJI operations fourth share with other quarter, the by driven line the balance utility XXXX $X.XX its with strong reported economic was including

Our primary $X.XX driver in consumer increase Positive XXXX. earnings. for $X.XX were a per for utilities share the the for year-over-year contributed rate growth to compared in contribution expansion

Our contributed XXXX which $X.XX flat was non-utility per operations to results. share,

with economic segments per contributed of last loss $X.XX other earnings share per compared in year. a a of Our $X.XX loss share

Reflecting invested our financing the utility XX% of safety approximately repayment financing in non-core improvement. In impact spending reliability critical on activities. invested XXXX, XX% $XXX other and million, debt capital operations by that was through were partially in offset sales application-related our asset and which and stockings

our Turning to metrics. remain to balance strength and finances. We improving of the sheet our credit committed

compared XX, of equity asset XXXX. content, our debt The total repayments and issuance reflects XX.X% subs junior million As than more from at forward, sales. XXXX, the XX.X% equity December equity improvement to XX, of capitalization in was December with $XXX

XX.X% As you XXXX. equity in know, mandatory convertible XX, as our conversion, December Including to was growth total plan XXXX. our equity million $XXX.X a includes XX, December XXXX, XX.X% at of measure, unit non-GAAP due adjusted capitalization ratio, our and of

calls, repayment for ESA prior saves in anticipated of and in will the we sales Marina Facility used discussed recent our from debt the further cost sheet pending balance sale strengthening. of Thermal be As

to $X.XX of earnings economic the to with XXXX expects SJI per guidance. our mid-point to the share, now of Turning diluted range. $X.XX guidance

our per diluted narrowed our on $X.XX guidance and wider share. previous prior to range We about -- $X.XX have of

our As range including prior of potential lower embedded end given at the the scenarios, the previously communicated, PennEast expectation with our project. to delays various guidance Pipeline be

legal incorporates reducing Our EMP renewable have delayed guidance reflecting Updated goal footprint. the and its SJI's recent updated and new support investments carbon regulatory sustainability actions that consistent, guidance of and remains also PennEast. energy in of

for of of growth customer operations, modernization, be ongoing business our of XX% by and XX% coming new transformation. with is earnings acquisition-related Utility lower earnings to coming utility the initiatives, financing expected regulatory We infrastructure, non-utility costs our remaining costs. the from expect execution from excluding driven operation growth,

Non-utility negative contracts, new installation driven portfolio, new of and fuel by wholesale growth steadily is and results to EMP a improvement solid investments a retail from of support expected be in contracts. the management

dollar than Our million, growth, of XXXX well EMP. for $XXX non-utility with more in $XXX our with for customary approximately investment been has support and compared utility guidance for million reliability, as as million capital the $XXX million safety guidance upgraded of previous $XXX

plan financing $XXX of SJG or $XXX $XXX sales, more redundancy $XXX asset and XXXX mix million more projects. the debt or million million in for support capital the includes million of in of with issuance, equity approximately from in Our approximately

Thank That concludes my will now you. Mike. remarks. it turn back to I

Thank you, Cielo.

the priorities of on focused safety and operations on projects. delivering XXXX, the begin As earnings critical and capital our remain plan we our focused reliability utility for majority strategy and heavy

continuing transformation Our and savings advancing initiatives, including the achieving I South significant and Elizabethtown business the rate integrate cost On project, redundancy Jersey regulatory earlier. for effectively our to Gas filing mentioned initiatives. from supply base critical case

support using refinancing commitment from of investments proceeds goals sales targeted Plan the balance a sheet I'm of and and our clean with sustainability additional in Energy non-core to and further moving asset on the activities. Master energy the forward strengthening

customers years our dedication. high The As remarks, I of continued as work. X,XXX our enormous of for the our efforts for this in entire employees my senior outstanding the and throughout praise. required improve path families. been of several last their This transformation company dedication behalf on has thanks has their the On conclude my to XXXX thanks worthy of the to team, is deepest lives always

Operator that open We're questions. concludes to line our ready the now prepared remarks. for

[Operator Instructions].

comes Tate And your of Group. question Maxim from with Sullivan line first the

Good morning.

Slide first or million XX solar the what of Focusing can specifically on credits more the that? installations current you on context. non-utility mean provide I I Can your else for tax earnings non-utility $XX me please will million, to related $XX framework you and the investment all to that guidance, economic recognized remind mean just on is primarily, and be

I missed it? if Sorry

that midstream Well, putting would That midstream non-utility. the that yes would we're -- include because wholesale. would actually in include

related to our sold companies include related in will be it that. to would and ITC, AFUDC also it So PennEast

Right.

ITCs, back, the any management is you contract the Just on But include on give management, compared fuel to changes there, then, small I've put to or not of contracts was in would can And a an noticed in those you update that I'm to I trying there please? think their okay. one break-down those contract fuel contracts figure. list it

I'm Yes, just that get hold that to to -- on. page. trying

you. Thank

one gone you Do this? know on has which

Calpine.

a XXXX working we're several for was up guidance in addition and contracts of the previously for contributor. XXXX. was was rolled-off. in It our that renewal it for And contract there very of their that on we run decree XXXX, have the will of numbers a the energy coming project. Yes, also on one small And Calpine, that the be then Tier expiration

place Okay, or have it to from forgot go task thank back investing to in new of -- to sorry you I had do solar years you. or is mean a Mike are efforts couple -- ago back to you do what there a still in is solar, the from I solar? operations

buyers. have of couple other being but the deal successfully our that a assets held-for-sale and we part were with So discussions not are actively that still of that Goldman have we're original able for that we close potential were looking to on,

be this Now -- re-entry would would clean phase. this be a

have, we profitable. underperforming targeting started with finding been as about operations while of is which our as solar how the our those about we at ways it this you reposition really believe a looking our means also sustainability, Something one facilities that but we thinking landfills the years We've solar for which green and to now they options. at several thinking specifically the with do that contracts, to we replace are we which to and still counties obviously and year around own viable last was to and a landfill in right the solution have a way that's providing know, is time, energy buildings also that been could engines those

was so about our really thoughts re-entry. that kind of And first a

very that it's Master the the going and state to had state when the specifically we Plan, goals how in became clear align with position the our it -- of state. then SJI But released itself was when rethink to Energy

require it -- a really, state that which option landfills, C&I market. think a and some actually community development our looking a into So well, is gas landfill risk profile landfills, our great strategic to and we activities, for other opportunities terms we're solar have ourselves be at with is this and way landfills the our solar, own of our our great community business our site would align in operations to the mean where be going reentry it priority think said, fit re-entry we would require would target, I as -- buildings, I begun we and the

[Operator Instructions].

from with ExodusPoint. comes FinTech line question next of Your the Scott [ph]

thanks. Good morning,

in this one be all some you're another or into solar Will year? for that Just some in or quick assets going spending that some follow-up and on this they the year year that entering of year. on to service point be this next at

meeting it'll obviously intended use for be be risk status both. that it'll -- probably around getting There's or Yes, ready be always to criteria.

we would that for ready we're comfortable be looking I right be few a something certainly think will intended by at projects I feel use of now pretty year. are I XXXX. own constructed being our facilities think that other end this would, about the There that that in

other the stretch could into of Some potentially XXXX. ones

into another some And your Okay. ones are sites? is that I'm your that you then you the contracting are of Or party sorry, -- there on the contract to yourself? for facilities

Our sites, yes, we will contract ourselves.

Okay.

obviously forward? is the Will the ITC that going then in foot distribution do that? you of recovery gas then, think to that utilities that your coming some so, in, about And purchases future? loss that get the or we does a How of and rates for should

be -- parent would the it at it company. doing We through

the the utility. put on maybe assets parent to our the So And to investment facilities. energy savings solar the would would make the company on solar on pass we or gas different facilities a facilities,

[Operator Instructions].

Granite [indiscernible]. Your next question Stephen line [indiscernible] comes of with from the

Just quick had guess. a ones, two or I one quick

like an I bridge this do is for just First how be that? a think this to this question, year ongoing or $XXX expect million or you spend should as solar, guys the about restarting of

question, It's Steve. great

before, I an that to decision think, look align this as I is in mass attempt we with SJI player. better mentioned have energy the a made

well. the at five-years it this we energy was solar New it a Jersey So the very exit market looking way made decision but we're very market, is as was different solar different to ago,

of renewable particular And what calling called and gas in five-years. plan rapid forward expansion now fast a the Now, for natural solar wind. was that the rapid energy expansion once for is of

Plan how strategy. more shapes we're it Jersey regulated. and honest maybe And shapes be to And it informs -- our in well, Energy we New utility, the completely we're informs Master think and importantly, and that frank

be And business, We that agile. a think and have think outlier. We an partner. to as so can't have seen responsive can't be be seen we be as includes I we I solar. to And

the of to expect in would that really region. to where direct very investments can I targeted and modest, sight think So line very us to make solar have we it the state

that's are broader more to much XX% we regional this is of targeted. just you New and solar I from It'll much modest this returning tell around -- not something of can Jersey; isn’t day this earnings. where our renewables. the isolated a represents is be And What thing more

Okay.

for say some will spend. I'd assumption, there like but sound be ongoing So baseline targets does But it --

some. There'll probably be

Okay.

question had so previously. guess I other funding obviously, plus was the about And standpoint, talked I have $XXX guys from just million equity a you of

go-forward going Now get up I to you're taken do is that. of guess, if needs the I I projecting what by But going a basis? little asset you you forward, it's to do equity $XXX you've you year bit be levels, a are $XXX these so understand having look? million proceeds. Obviously, terms guys on in this spending sale million, helped what What spending,

expectations trying So set to forward? going just for level

protect with and to plan. believe in sheet, relates be thought this the is utility what and investments, put we've great plan trying we original power also, Another investments, what our RNG, were balance smart A it it's in our our I've flexible. equity will fell the plan it outside what balance to things past, We our And Investments re-entry is solar, non-traditional more this contemplated certainly what bank way things The together financing talked at like plan original we're utility question. going call looking modest we into we're we're to these, this original remain investments. about things I'll to called gas. lot particularly investments when to original our -- like protect of meters, which consistent of like thought done be utility were sheet. needs. and we we -- particularly were particularly that these that would were what that These we with

I that -- the timing of suffice year cost time our think sheet around process we cost a certainly but by that strategy to really specificity don't at these in quantify but with it and to we to five-year from I more have we're initiatives of speak are mean specificity I forward. going and investments. More -- around have all come, protect are balance that a because in think say point will all to will developing, again, concerns, these fundamental be equity this lot and these our timeline, can't We make to this able lot we

line next question ExodusPoint. Your from with Covello of the comes Phil

it guess I answered mean, I color there. was more to the wanted just for you around equity. kind of Just looking I

tell anything potential else the block that or that you whether could and you sounds timing about forward unless there? something offer can have whether there's it's us ATM but or we If conduit it tuned a like for to stay or makes not, sale

is this Phil Cielo.

condition. We of specific we are it. import, of additional issue employee conjunction the looking plan elegant in to ratio programs, market attached that projects a board we clarity XX retain we with equity terminable at assure with the and and with including string to is any that and we owners, But as contemplated as we you equity, many projects on tighter

I will this Yes, least be that for driven be by our XXXX the at a be project. timing to lot somewhere the for LNG expecting will -- mid-year. of decision think around BPU We're around

million, a be of consideration in? or it's is need the And clear balance sheet just function $XXX then just sizing, so or $XXX there Okay. whether CapEx to on the is a also that million

earlier. LNG the to discussed related that CapEx we It's project

[Operator Instructions].

Davis comes Matthew the of question from next Your Capital. Carlson with line

are targeted Just quickly to in terms debt-to-cap? whether you're or metrics of at credit remind FFO just what looking the can us debt you first-off,

rating contemplated we as upcoming you, to XX% FFO continue to plan. And to in in to XX% XXXX, to BBB+ this a the expect Thank reward debt be forward and would is see five-year Cielo the around strengthening our agencies like and years. it's our we again.

a you give they to targeted Did debt? FFO

that. around XX% it's Yes,

Okay. Master medium you as New do you business the think New all if And see over about then LDC that Plan Energy Jersey, at the the and in core secondly, how Jersey, long-term? impacting in

language of calls a towards certainly push carbon. think kind Master for phase, -- a some big to a in the to Energy by there's determined I language. versus I'm a still of the We're carbon use be in complete there's question. renewable -- neutrality of that encouraged Plan elimination a Great

I Energy for think Plan infrastructure the the important objectives. to State's is of think advancing thing is us Master all to critical our about how

this relates The just critical only infrastructure customers gas, can things we how renewable towards do also to an move in At terms clean but where company do, investments not and of the renewable the that -- as that end we value years, future. And to our next towards to gas make particularly to and focus energy serving -- it the day can it's going we're energy. they can power and is much forward -- this today, that's and the the for our bring is. really support invaluable, XX it infrastructure this of

think in going Jersey. a State near-term, bit safety to as administration, not from we're kind expect very any well of from fully investments to utility I support and as the terms of So of little in regulators New look, of reliability. I and impact in critical the terms do the that. from see specific more the legislature I have XXX%

I targets, see able we're that but that anytime our don't in I customer a be risk, immediate to from add could future us horizon. this I certainly growth see going that the longer-term. something in to mean, anything five-year I don't going that that's to still And prevent could think customers. be certainly it achieving be

investments biggest understand that we And five-year believe solutions. and for utility have only that's case, not necessity and type the then, the business investments, state non-pipe the it, they and base to I investments. is, believe investments. they the and will is they incredible basis redundancy that the of the the plan Gas, in Jersey understand our safety that's modernization And these these understands it's And the our focus, reliability the every supply of think support I redundancy really Elizabethtown immediacy make, investments, redundancy, at I but to understand of Gas that make supply gas state thing South has has that the

Master a years every Plan. then have and Look we Energy new five

place an that So be most market in the in a totally could is agile. the we different -- we be perspective, years, but I can from could and five SJI we next think responsive be important thing

And guess -- from given you do solar directed in build out, back more, for And investment going the you see thank that. it’s targeted profile that then How earnings just just to forward? business do able anticipate XXXX the and contribution level going you variable Meaning given ITCs? investment timing be same of being as maintain will the or XXXX in then it the I of value year. more earnings to of

investing up of level to as as will But had as Yes, be the level, renewable they we've will replaced coming investments. said of market like don't we're I we that mentioned Mike for natural get heavily next and solar, into evaluating investments Energy I future because type other this contributions the In that Master goals other continuously utility ultimately a can I of we think remain level earlier, the -- be expect for been will CapEx think will in think the the by this things we of year. years, intend is things. the renewable Mike make we I in just million get historically and ultimately not at the really that those Plan. to that think the be gas, targeted involved target earnings to those some years, year of when $XXX

as move no, of earnings. support XX% the our to some come of to our does be to Steve's from utilities -- percentage parallel our think think going for a more you of kind that's earnings. XX% of of utility -- plan from utility grow investment the point, and again, a I continue really And I can our perspective the a contribution then our But within expect renewable-based lot traditional relative think to utility now to again, a I investment.

it the next And a follow-up Tate from is of with Maxim Your question line Sullivan comes question. Group.

to that on the and understand helpful the another And mention address solar mean, it's you. years is is planned did you every installation too. way of the five that please? detail EMP, smart give natural gas I that I you can spending approved And meters. What And is Can context that the that be side to on more quickly? can meters? a get for utility Thank

Robbins. this Dave Tate, is

I It's encourage think perfectly is benefits. has the way help conservation, with to which meters we're is going smart looking many aligned EMP. smart meters at

As we crews to to be of it's as to benefits a from it'll program. going do all the far lot have out done as eliminate meters, automatically lot take of greenhouse emissions, not so truck that roll send

And as really this said to going Mike talked the earlier, exploring of our We've we're have work. couple in who a is utilities to gas program. how

getting years we way in program take of because we're utilities, And the kind our five see of investment information. lot a as both good a estimate, So believe will maybe of this tracker, to our put work would probably we base. across it it the in our customer

great a opportunity we it’s utilities. think So for

call I to this no any over are Are like turn There sir? remarks you closing further questions time, to now at Mr. at to make the Fidell. this time. gentlemen, would and like there Ladies would

us this all morning. you joining thank Yes, for

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

in Our release our contact information found material. the may earnings be earnings presentation on

joining today SJI. call. So our in again, for us interest day. thank you continued good concludes and Have This a for and your investment

for Thank today's you that participating. Ladies call. and gentlemen, conference concludes

may disconnect. now You