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8-K - 8-K - SOUTH JERSEY INDUSTRIES INC | form8k-q22017resultsslided.htm |
EX-99 - EXHIBIT 99 - SOUTH JERSEY INDUSTRIES INC | q22017quarterlyresults.pdf |
South Jersey Industries
Q2 2017 Business Update
August 4, 2017
Certain statements contained in this presentation may qualify as “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. All statements other than statements of historical fact should be considered forward-looking
statements made in good faith and are intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. Words such as “anticipate”, “believe”, “expect”,
“estimate”, “forecast”, “goal”, “intend”, “objective”, “plan”, “project”, “seek”, “strategy”, “target”, “will”
and similar expressions are intended to identify forward-looking statements. Such forward-looking
statements are subject to risks and uncertainties that could cause actual results to differ materially from
those expressed or implied in the statements. These risks and uncertainties include, but are not limited
to, the following: general economic conditions on an international, national, state and local level;
weather conditions in our marketing areas; changes in commodity costs; changes in the availability of
natural gas; “non-routine” or “extraordinary” disruptions in our distribution system; regulatory,
legislative and court decisions; competition; the availability and cost of capital; costs and effects of legal
proceedings and environmental liabilities; the failure of customers or suppliers to fulfill their contractual
obligations; and changes in business strategies. These cautionary statements should not be construed
by you to be exhaustive. While SJI believes these forward-looking statements to be reasonable, there
can be no assurance that they will approximate actual experience. Further, SJI undertakes no obligation
to update or revise any of its forward-looking statements, whether as a result of new information,
future events or otherwise.
Forward Looking Statements
2
3
Grow
Economic
Earnings
Improve
Quality of
Earnings
Maintain
Balance Sheet
Strength
Maintain Low
to Moderate
Risk Profile
2017 YTD Performance Highlights
Maintain Economic EPS Guidance of $1.14 to $1.20 for 2017
• Sixth fuel supply management contract commenced service in May 2017.
• $60.7 million invested YTD through AIRP II and SHARP.
• Utility rate case settlement discussions currently underway.
• 4,020 (gross) customers added YTD.
• 121,000 SRECs produced YTD.
The Path to $150 Million
SJI Capital Investment
$1.7B of planned Cap Ex 2016-2020¹
Focused on regulated utility and FERC regulated growth
$291M
$331M
$483M
$374M
$257M
2016A 2017P 2018P 2019P 2020P
Regulated Utility FERC regulated Non-Utility
2016A-2020P
73%
20%
7%
% Utility
and FERC
regulated:
93%
4¹Capital expenditures shown are inclusive of affiliate investments
Utility Capital Investment
2016-2020 Utility Cap-Ex Breakdown
Base
capital
58% AIRP
23%
SHARP
10%
BL
England
9%
Base Capital
Rate case settlement discussions underway
≈ $735M planned capital investment 2016-2020
Utility headquarters under construction
AIRP (Accelerated Infrastructure Replacement Program)
Earn ROI with annual roll-in to base rates in October
Currently in year one of 5-year, $302.5M program
SHARP (Storm Hardening and Reliability Program)
Earn ROI with annual roll-in to base rates in October
First phase ended June 30, with $107.5M invested
Program extension filing expected within 6 months
BL England
Proposed ≈ $115M pipeline to supply natural gas to the
former BL England generating facility
Final Pinelands Commission approval received February 24
Legal appeal process continues, with a favorable resolution
expected before year end
5
GAAP Earnings – 2017 v 2016
For the three and six months ended June 30
Q2 2017 Q2 2016 Variance YTD 2017 YTD 2016 Variance
In millions except per share data
Gas Utility $2.3 $5.0 ($2.7) $48.7 $49.5 ($0.8)
Midstream $0.4 $0.0 $0.4 $2.4 ($0.1) $2.5
SJ Energy Group ($11.5) ($13.7) $2.2 ($19.6) $10.0 ($29.6)
SJ Energy Services $1.1 $3.9 ($2.8) ($3.2) $4.1 ($7.3)
SJI ($7.6) ($4.8) ($2.8) $30.1 $63.4 ($33.3)
SJI EPS ($0.10) ($0.06) ($0.04) $0.38 $0.86 ($0.48)
6
Economic Earnings – 2017 v 2016
For the three and six months ended June 30
Q2 2017 Q2 2016 Variance YTD 2017 YTD 2016 Variance
In millions except per share data
Gas Utility $2.3 $5.0 ($2.7) $48.7 $49.5 ($0.8)
Midstream $0.4 $0.0 $0.4 $2.4 ($0.1) $2.5
SJ Energy Group $0.6 ($0.3) $0.9 $10.4 $11.8 ($1.4)
SJ Energy Services $1.1 $4.1 ($3.0) ($1.3) $4.5 ($5.8)
SJI $4.5 $8.7 ($4.2) $62.0 $65.7 ($3.7)
SJI EPS $0.06 $0.12 ($0.06) $0.78 $0.89 ($0.11)
7*SJI uses the non-GAAP measure of Economic Earnings when discussing results. A full explanation and reconciliation of this non-GAAP measure is provided
under “Explanation and Reconciliation of Non-GAAP Financial Measures” in the Earnings Release.
South Jersey Gas
In millions¹ Q2 YTD Performance Notes
2016 Net Income $5.0 $49.5
Customer Growth $0.4 $1.4 1.5% YOY customer growth
Accelerated Infrastructure
Investments
$0.2 $3.5 AIRP I and SHARP investments roll-in to base
rates
Off System Sales $0.0 $0.1
O&M Expenses² ($1.3) ($2.7) Resource investments supporting future growth;
increased reserve for uncollectible accounts
Depreciation³ ($0.5) ($1.1) Additional assets placed in service
Interest Charges – Net of Capitalized³ ($0.3) ($0.5)
R&D Tax Credit ($1.0) ($1.0) Non-recurring credit benefited 2016
Other ($0.2) ($0.5)
2017 Net Income $2.3 $48.7
¹ Slide depicts changes to period over period net income, it is not intended to be a substitute for financial statements.
² Excludes expenses where there is a corresponding credit in operating revenues (i.e., no impact on our financial results).
³ Expenses associated with accelerated infrastructure investments are reflected within that line item.
8
Utility Customer Growth
12 Months Ending
June 30, 2017
Margin Growth from Customer Additions $2.2M
Conversions 5,082
New Construction 2,604
Total Gross Customer Additions 7,686
Net Customer Additions 5,788
Year Over Year Net Growth Rate 1.5%
9
10
Q2 2017 Q2 2016 Variance YTD 2017
YTD
2016 Variance
Economic Earnings, in millions
SJ ENERGY GROUP $0.6 ($0.3) $0.9 $10.4 $11.8 ($1.4)
Retail Commodity $0.4 $0.5 ($0.1) $1.0 $0.9 $0.1
Fuel Management $1.3 $0.9 $0.4 $2.7 $1.7 $1.0
Wholesale Mktg / Asset
Optimization ($1.1) ($1.7) $0.6 $6.6 $9.2 ($2.6)
SJ Exploration $0.0 $0.0 $0.0 $0.1 $0.0 $0.1
South Jersey Energy Group
Volumes delivered on fuel supply management contracts more than double prior year
Record warm temperatures limited ability to optimize capacity in wholesale marketing
For the three and six months ended June 30
11
Q2 2017 Q2 2016 Variance YTD 2017 YTD 2016 Variance
Economic Earnings, in millions
SJ ENERGY SERVICES $1.1 $4.1 ($3.0) ($1.3) $4.5 ($5.8)
CHP ($0.3) $1.8 ($2.1) $0.0 $2.1 ($2.1)
Solar $2.2 $1.7 $0.5 $0.1 $0.3 ($0.2)
Landfills ($0.9) ($0.7) ($0.2) ($1.6) ($1.1) ($0.5)
ITC $0.0 $1.1 ($1.1) $0.0 $2.8 ($2.8)
Other $0.1 $0.2 ($0.1) $0.2 $0.4 ($0.2)
South Jersey Energy Services
CHP comparison impacted by non-recurring $1.3M settlement that benefited 2016, and
by increased interest expense associated with refinancing certain debt
Strong solar production continues, with YTD results reflecting impacts of softer MD
SREC market
No ITC in 2017 earnings
For the three and six months ended June 30
Appendix
PennEast Pipeline Project
• $200M investment with FERC
level returns projected
• 20% equity owner in $1.0B+, 1
BCF, 118-mile interstate pipeline
from Marcellus region of PA into NJ
• Fully subscribed; 80% of capacity
under 15-year agreements
Application
submitted
9/24/15
FERC draft EIS
issued
7/22/16
Final EIS
issued
4/7/17
Targeted
construction
2018
13
14
Non-Utility GAAP Earnings – 2017 v 2016
For the three and six months ended June 30
Q2 2017 Q2 2016 Variance YTD 2017 YTD 2016 Variance
GAAP Earnings, in millions
SJ ENERGY GROUP ($11.5) ($13.7) $2.2 ($19.6) $10.0 ($29.6)
Retail Commodity ($0.2) $5.1 ($5.3) $0.0 $5.2 ($5.2)
Fuel Management $1.3 $0.9 $0.4 $2.7 $1.7 $1.0
Wholesale Mktg / Asset
Optimization ($12.6) ($19.7) $7.1 ($22.4) $3.1 ($25.5)
SJ Exploration $0.0 $0.0 $0.0 $0.1 $0.0 $0.1
15
Non-Utility GAAP Earnings – 2017 v 2016
For the three and six months ended June 30
Q1 2017 Q1 2016 Variance YTD 2017 YTD 2016 Variance
GAAP Earnings, in millions
SJ ENERGY SERVICES $1.1 $3.9 ($2.8) ($3.2) $4.1 ($7.3)
CHP ($0.3) $1.6 ($1.9) ($1.6) $1.7 ($3.3)
Solar $2.2 $1.7 $0.5 ($0.2) $0.3 ($0.5)
Landfills ($0.9) ($0.7) ($0.2) ($1.6) ($1.1) ($0.5)
ITC $0.0 $1.1 ($1.1) $0.0 $2.8 ($2.8)
Other $0.1 $0.2 ($0.1) $0.2 $0.4 ($0.2)
Fuel Supply Management
16
Counterparty Location
Capacity
(MW)
Volume
(Dth/day) Start Date Term
Starwood Marcus Hook, PA 750 80,000 In service 2016 - evergreen
LS Power West Deptford, NJ 738 36,000 In service 15 Years
LS Power II West Deptford, NJ 400 31,000 In service 15 Years
Moxie - Liberty Bradford Co, PA 825 137,655
In service
June 2016 5 Years
Moxie - Patriot Lycoming Co, PA 825 137,655
In service
June 2016 4 Years
Panda - Stonewall Leesburg, VA 750 110,000 2017 4 Years
Moxie - Freedom Luzerne, PA 1,029 157,000 2018 10 Years
Lordstown Trumbell, OH 1,029 160,000 2018 5 Years
Invenergy - Lackawanna Jessup, PA 1,045 210,000 2018 10 Years
To Be Announced TBA 990 121,000 TBA 4 Years
To Be Announced Executed August 2017 1,000 162,000 2020 5 years
Solar SREC Generation
MW DC Number of SRECs
* Actual annual production reflected from 2012 through 2016. Estimated 2017 production reflects six months actual and
six months forecasted, assuming normal weather conditions.
17
26,193
55,766
111,908
136,379
224,737 227,897
-
50,000
100,000
150,000
200,000
250,000
0
50
100
150
200
250
2012 2013 2014 2015 2016 2017
SRECs generated MWs Installed