South Jersey Industries, Inc.
Q1 2017 Earnings Call Transcript

Published: 9 May 2017

[Operator:]

Good day, ladies and gentlemen. And welcome to the Quarter One 2017 South Jersey Industries Earnings Conference Call. My name is Mark and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded. I would like to turn the call over to Marissa Travaline, Director of Investor Relations. Please proceed, ma'am.

[Marissa Travaline:]

Thank you. Good morning and thanks for joining us as we review SJI' first quarter results for fiscal year 2017. Joining me to present on our call today are Mike Renna, President and CEO; and Steve Clark, our CFO. We also have several members of our senior management team available to help address questions following our prepared comments. Our earnings release and the slides intended to accompany the call were issued earlier today and are also available on our website at www.sjindustries.com. The release and its associated 10-Q provide an in-depth review of earnings on both a GAAP and non-GAAP basis, using our non-GAAP measure of economic earnings. Reconciliations of economic earnings for the comparable GAAP measures appear in both documents. Let me note that throughout today's call we will be making references to future expectations, plans, and opportunities for SJI. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the company's Forms 10-K and 10-Q on file with the SEC. With that said, I'd like to turn the call over to our CEO, Mike Renna, to discuss current performance and future initiatives in the context of our strategic plan.

[Mike Renna:]

Thanks Marissa. Good morning, everyone. To effectively weigh our performance for the first quarter of 2017 it's important to evaluate it against the priorities of the strategic plan we've shared with you over the last two years. While our overarching goal is to achieve economic earnings of $150 million by 2020, it's vital to our long-term success and we deliver this earnings growth from high quality sources while maintaining our balance sheet and preserving the quality of our risk profile. With these measures in mind, I'm proud of the progress we've made. Moving to the first quarter of 2017, we produced economic earnings growth with zero contribution from investment tax credits and in the face of an extremely warm winter one in which New Jersey experienced its warmest February on record. During the first quarter, we also continued advancing key initiatives, securing approval for the B.L. England project and obtaining the Final Environmental Impact Statement for the PennEast pipeline. I think it's important again to emphasize that this quarter's results for the first time in seven years are absent any contribution from ITCs. 2017’s earnings composition represents another critical milestone as we continue to execute on our long-term strategy. In 2017, 75% to 80% of economic earnings are projected to come from regulated sources representing the highest quality, lowest risk earnings available. With another 5% to 7% coming from our long-term contracted assets, including the Marina Thermal facility serving Borgata and our fuel supply management activities. Fuel supply management represents one of the fastest growing areas of our business where we currently supply five facilities in the region, with the sixth set to begin taking gas in the second quarter. Four more facilities are under contract, expected to come online over the next 18 months. And we have an attractive pipeline of potential deals, several of which are in advanced stages of negotiation. Further, fuel management contracts require minimal capital outlay, helping maintain the strength of our balance sheet while delivering meaningful results. Cash flow is further improved from the decision of forgo additional solar development, sharply reducing capital requirements on our non-utility businesses and positioning SJI to use of the cash from our not-utility operations in support of our significant regulated investments. Over the last 18 months, we've taken actions to strengthen our business, reduce risk, and volatility in our results, maximize operating performance and improve cash flow from operations, all designed to reinforce the foundation of the core businesses that make up SJI. With that in mind we announced guidance with our results that targets economic earnings per share for the full year of $1.14 to $1.20. In addition to the impacts of the extremely warm winter, guidance reflects the elimination of ITCs from earnings and the issuance of more than 8 million additional shares last May as part of our equity offering. And at the core of our business is more than $1.7 billion of capital investment projected to occur between 2016 and 2020. 93% of that investment is focused on utility and FERC regulated initiatives, investments in the safety and reliability of our transmission and distribution systems, investments that will ensure our region has an affordable supply of natural gas to fuel their energy needs, and investments to support the region's economic viability. I'm very pleased with the progress we've made towards the commitments in our five-year plan and I'm every bit as confident that we will fulfill all of them. With that, I'll turn the call over to Steve to detail results for the quarter.

[Steve Clark:]

Thanks, Mike. As Marissa alluded earlier, both the earnings release on the slide deck we made available will provide you with detailed information regarding GAAP earnings, and I would encourage you to review that information as well. For the purposes of this call, as we normally do, we’ll focus the majority of our discussion on our non-GAAP measure economic earnings as management believes this measure provides valuable insights in the performance of our business. However, it is worth noting, the GAAP results were significantly impacted by the outcome of a jury verdict issued just on Monday in a legal proceeding relating to a pricing dispute with a gas supplier. An after-tax charge of $26.4 million was recognized for the first quarter in our GAAP results. We strongly disagree with the jury's decision. Our motion for a judgment in favor of SJI is still pending with the court. Should that be denied, we intend to appeal. Now, taking a look at economic earnings. SJI's Q1 2017 economic earnings totaled $57.6 million as compared with $57 million in 2016. Economic EPS for the quarter totaled $0.72 as compared with $0.80 for the same period in the prior year. It's worth noting that the variance in the current year's EPS reflects for more than 8 million additional shares that were issued doing our highly successful equity offering in May 2016, and that dilution impact was worth about $0.08. As Mike noted, our first quarter results reflect the absence of investment tax credits as well as the unseasonably warm weather experienced across the U.S. this winter, which particularly impacted the Northeast. Now, we'll take a closer look at the key items that helped drive our performance within our business lines. South Jersey Gas contributed earnings of $46.5 million for the first quarter, exceeding prior year results of $44.4 million in the same period of 2016. Earnings growth is largely attributable to the benefits from infrastructure improvements through our AIRP and SHARP, as well as from customer growth. As we move forward with our accelerated infrastructure investment program, we are seeing a change in the way we earn AFUDC as investments made to this program will now roll into base rates in October each year. The change in methodology was part of the extension and expansion of the AIRP approved last fall. This change makes the treatment of the AIRP consistent with our system hardening and reliability program or SHARP separating these investments from those recovered through a base rate proceeding. For the quarter, our AIRP and our SHARP in the aggregate produced incremental net income of $3.4 million. While this is a sizeable contribution, it stems from the fact that several years of prior AIRP investment rolled entirely into rates at the end of 2016. With that in mind, the full-year contribution reflects a change in recovery described previously and is expected to be approximately $3.8 million in total since most of the earnings associated with these investments won't begin till the October roll into rates. After 2017, we'd expect the incremental income benefit from the AIRP investments alone to be close to $6 million per year. Customer addition started the year strong. For the 12-months ended March 31, 2017, our customer base grew by 1.4% on a net basis bringing our total number of customers served to almost 381,000. Conversion activity continues to be the main driver of customer additions throughout our service inventory and conversion numbers are up on a year-over-year basis for the quarter. Customer additions from new construction have also improved relative to the prior year. Natural gas continues to be a better value as compared to other fuels, and homeowners recognize that. Looking at our midstream business, it provided a significant contribution to earnings in the first quarter. The earnings contribution reflects the fact that the partnership has begun recording AFUDC, and this reflects SJI’s share. Turning to our non-utility businesses, they contributed total economic earnings of some $7.4 million for the first quarter of 2017 as compared with $12.6 million in 2016. I'll address the significant drivers the impacted these results as I discuss our two primary non-utility businesses. First our wholesale and retail commodity businesses housed within South Jersey Energy Group contributed $9.8 million for the first quarter of 2017 as compared with $12.2 million for the same period in the prior year. The difference here was that the record warm winter noted previously, which significantly reduced spreads available to be achieved from our transportation assets. Despite this challenge, this area of the business delivered meaningful economic results supported in part by the volumes delivered for five fuel management contracts currently on line and serving merchant electric generation facilities. For the first quarter of 2017, our energy projects business South Jersey Energy Services, produced an economic earnings loss of $2.4 million as compared with economic earnings of $0.5 million in the first quarter of 2016. Once again, this is in the area of our business where you see the impact investment tax credits for solar develop had in 2016. First quarter 2016 results included $1.7 million of ITCs while well first quarter 2017 had none. Also a factor was the significant softening in Maryland SREC prices due to the over development of renewable energy projects in the state. This situation has similarities to what happened in the New Jersey market in 2012, and market participants are seeking a legislative solution. I do want to note we are continuing to see strong production across our solar fleet and projects completed at the end of 2016 will add production this year. We are also actively hedging SREC production into strong SREC markets in New Jersey and Massachusetts. Finally, although some unplanned outages occurred among our landfill gas-to-electric facilities have negatively impacted results. We continue working to optimize the productivity of these assets and expect over time to mitigate the loss seen in this area. Now I'll turn the call back over to Mike.

[Mike Renna:]

Thanks, Steve. At this time, we'd be happy to answer any questions you may have.

[Operator:]

Thank you. [Operator Instructions] Your first question comes from Spencer Joyce, Hilliard Lyons. Please proceed.

[Spencer Joyce:]

Hey, Mike, Steve, Marissa, good morning. Thanks for taking my call. So several for me here, perhaps bear with me. So Steve you mentioned increased interest expense in energy Services kind of weighing on a full year. I'm wondering if you could walk us through kind of the pro forma amount of debt we're talking about. My guess, as the $60 million of left over Marina debt and then $100 million perhaps a variable at the parent SJI, is that kind of full $160 million applied to energy services or what's sort of the whole debt bucket we're looking at that kind of repricing on us?

[Steve Clark:]

Well, we've taken a number steps Spencer to start addressing. Yes, it’s fixing some things. That [indiscernible] deck you noted, actually it just didn't impact the first quarter, we just paid it off at the beginning of May, and in paying it off, we took out some swaps, actually extended some swaps related to that. I think that total in swaps at that point was about $15.3 million, and now we're up that $50 million of swaps, so we took some of that out of play. We’ll be looking to take another $50 million potentially, even $100 million of payable fixed rate debt in the near term future. I think that will probably leave us with maybe, I want to say $150 million, maybe $200 million of floating rate debt at that point in time. And so, basically what we're looking at is, we're factoring in as we think about our numbers through the expectation of the rate hike [indiscernible].

[Spencer Joyce:]

Okay. And it's safe to assume there's really no incremental debt just from an absolute value standpoint that it's being borrowed kind of for energy services? That's right I mean what we have here is…

[Steve Clark:]

…is what you've got.

[Spencer Joyce:]

Okay.

[Steve Clark:]

Or as we've said before, basically what we have on our books now is all that's being incurred for those projects. Now as those projects produce cash and even in the solar business - even if we recognize a fair amount of the income upfront when we took the ITCs, there's a significant amount of cash that comes out of those as a result on just depreciation aspect that’s associated with that, so that cash is effectively being utilized to enable us to reinvest in the other parts of the business. That will be actually a cash positive for SJI as a whole.

[Spencer Joyce:]

Okay. Yes, understood there, kind of sticking with energy services, I guess a little surprised at the - that you all had to mention again kind of the landfill gas-to-electric stuff. Aside from the more basic kind of standard solar assets, remind us what is left within that segment. And then kind of part two there, you know how special were the landfill issues? I mean was it an act of God, once every kind of 20 year kind of thing or is this routine maintenance; I mean how special was kind of the negative surprise there?

[Mike Renna:]

Spencer, this is Mike. As far as the portfolio goes in addition to the assets that serve Borgata, which is a combined heat and power facility, supported with a cogeneration unit. We have four landfills that we own; all of the production from those landfills or the majority of the production of those landfills is sold to Borgata under a long-term, above market PPA. And then again as you mentioned, we have our Arcelor portfolios. So that I believe is the strength of our energy production asset. As far as the challenges that we face in the landfills, they are relatively unique to each site, so each site has different challenges. I mean frankly the two landfills are the same, so the delay that we've had have been a part of a very comprehensive improvement plan, and I think some of them were just delays in equipment arrivals and bringing new engines online. It doesn't change the long term prospects of the landfills. In fact, I think in both cases we were now, Steve or Greg, you could probably help me here I think. We do have the fixes in place, is that correct?

[Greg Nuzzo:]

Yes. One of the facilities now just have that start, produce what we expect.

[Mike Renna:]

Right. So it really was just delays I think in equipment, getting new and upgraded equipment online.

[Spencer Joyce:]

Okay. And I guess sometimes it’s a little hard to parse out the landfill piece versus the solar contribution, but on a net basis for the full year, can the landfills be kind of EPS neutral or net income neutral? I assume they contributed at least some losses in the first quarter.

[Mike Renna:]

They did. And as I mentioned you know we put together in 2015 when we did the transaction with our partner in Energetic, we at that point in time put together a full operational improvement plan together for the landfills, and our expectation is they will be accretive once that plan is fully in place.

[Steve Clark:]

Yes. Spencer, for the first quarter that hit us for about $700,000, it was about $30,000 last year, a little over $300,000 last year. As these things come in, we anticipate I think for the year, last year, we lost $2.6 million on those. We expect to make up the overage that we had in the first – I mean, the larger loss that we had in the first quarter and reduced that loss that we experienced for the full year. Going forward, we would expect to be heck a lot closer to [indiscernible].

[Spencer Joyce:]

Okay.

[Steve Clark:]

Once we're through 2017.

[Spencer Joyce:]

Okay, perfect. On the SREC side, I know you mentioned the production numbers. Is it safe to assume that the sales of SRECs were up kind of about that 25% year-over-year? You know I guess Steve, with your hedging strategy, do your sales more or less match kind of the bell curve of production just on a very broad kind of general basis?

[Mike Renna:]

Yes, I mean in general, yes. I mean obviously there's seasonality to it but we're constantly looking out based upon the productive facilities we have and look the hedge-out into future markets as it relates to those that's absolutely the case.

[Spencer Joyce:]

Okay. And just kind of to parse the language a little bit, you mentioned an aggressive hedging strategy in the press release. I assume that, or I interpreted that to mean you're hedging out sort of as far as possible, you know not aggressive and kind of a risk conversation as in trying to game the markets per se. Is that right?

[Mike Renna:]

No. That a correct, Spencer. By aggressive we mean that we will go out as far as we can whether it's liquidity in the market. We're not aggressive in a sense of speculation.

[Spencer Joyce:]

Okay. Great. Great, thanks for clarifying that for me. Steve, you touched on a little bit on the call with the AIRP now being consistent with the SHARP treatment. As far as rolling those into rates and such and you know we can perhaps talk at AGA you know in a little bit more detail about what changes there, but my question is if that particular change will be a headwind for you in the second and third quarter. I'm just trying to parse you know where we all kind of on the street here might be wrong, kind of in our full year outlook, kind of coming into to this release this morning.

[Steve Clark:]

Yes. That's a point we've been trying to make for a while now. Sometimes I guess the nuances that we picked up there. With regard to the AIRP because it is now in the same format as the SHARP and because the way that the - we recognize earnings will actually go into our rates on an annual basis and the recognition that AFUDC under these programs is a little bit different than the way we recognized it that under the old ones. Basically the way to think about it is, is that last year we got our program approved that was an expansion of a previous program. The previous program said that we were basically investing approximately $35 million a year in the AIRP type investments. What happened was we got an approval to go to $60 million of spend, however in seeing that increase in investment that we could do for that program, we knew that there was going to be basically a catch-up period in 2017 as that program got going. So when I think about the program over - if I did an apples-to-apples comparison of the two programs over a similar five year period the new programs probably is worth to us around $16 million of net income, the old program would have been worth about $11 million during that period. So there is a lag that occurs during '17 but then it picks up once you're into '18 and actually you end up - if you ever got to the end of the program there would be a tail that would then last into the following year where you continue to recognize incremental earning benefit.

[Spencer Joyce:]

Okay. Yes. That that is helpful. I guess Mike, switching gears a little bit maybe jumping back to you. Did I hear that you did have a few fuel management contracts kind of in the pipeline past the 10 that we have talked about as being agreed to? And then as kind of a follow up to there. It looks like kind of the three furthest out that we're kind of able to build into the model hit middle of '18. Is it safe to assume that anything in the pipeline would have incremental impact kind of past the middle of next year?

[Mike Renna:]

Yes. A couple of the ones that we’re in advanced negotiations with are scheduled for 2019-2020 type of start date. So some of that will be will be test gas we would expect that if we're successful in any of those contracts they would contribute toward our 2020 target.

[Spencer Joyce:]

Okay. Very helpful. And just a last follow up and thanks for bearing with me here for a whole bunch of them. So you know we have quite a bit more activity on the fuel management contract side than was initially baked into the 2020 plan. Kind of at least by my counting, correct me if I'm wrong there. But I guess Mike, kind of at least a year, maybe 18 months kind of into working towards 2020, are there any other sort of broad pillars where you've seen either a material improvement in potential impact or maybe alternatively any drivers where you're kind of re-evaluating there?

[Mike Renna:]

Well, I mean I think any time you put a plan together with a five year kind of horizon, there is going to be some movement particularly in terms of expected dates for certain things, but as far as the fundamental assumptions of the plan, really the only two things I think we're overachieving or we're exceeding our original expectations in fuel management, that's been - as I mentioned that's been a great niche for us, and I think really the only place that we've seen something that would what I would consider to be a unexpected softening is really in the Maryland Solar Market right now. And as Steve mentioned the market’s saturated and it's probably going to need or require a legislative solution to prop those SREC prices back up. But I think other than that everything else is really kind of tracking - other than maybe some timing things it’s tracking towards our plan.

[Spencer Joyce:]

Okay. Yes. That's very helpful. Steve, can you remind us just as far as a kind of capital in the ground in Maryland Solar, that's still well below New Jersey but you have kind of an approximate net asset dollar amount there? Is it 100 million or so?

[Steve Clark:]

$50 million.

[Spencer Joyce:]

Okay. Perfect, perfect. Again, thanks for taking the questions and we'll see [indiscernible] in a week or so.

[Steve Clark:]

Take are.

[Operator:]

Thank you. Your next question comes from the line of Chris Turnure from JP Morgan. Please proceed.

[Chris Turnure:]

Good morning Mike and Steve. I wanted to clarify on the B. L. England project that that pipeline build out is in fact dependent on the power plant being built and being online essentially in conjunction with the pipe coming online. And then following on to that where does the power plant stand right now in its development process and is that contingent upon clearing the PJM auction this year?

[Steve Clark:]

It is not contingent on clearing the PJM auction this year. I do know that. As far as where the plant is - I believe the intent is for them to try to bid into the PJM auction next year. So the only thing holding us from moving forward is waiting for the final go ahead from the owners of B. L. England and that would at the end of the current appeals process which we expect will be somewhere at the end of this year to early 2018, that would be resolved.

[Chris Turnure:]

Okay. So you're confident that they would give you the go ahead on the pipe even not knowing the outcome of the 2018 auction?

[Steve Clark:]

Well, I believe that they will know the outcome of the 2018 auction in the spring of '18. And that should be pretty coincident with the results of the appeals so at that point they would be able to tell us if it's okay to move forward.

[Chris Turnure:]

Got you. Okay, that makes sense. And then my understanding of the final approval of the EIS for PennEast that came last month. Was that kind of put you on a at least theoretical calendar to get an approval kind of early summer the final FERC approval for but without the quorum that looks like it's in jeopardy now. Is there a way that we can think about the latest possible date that you would get that final FERC approval before the pipe commercial [upstate] [ph] would have to be pushed back again?

[Greg Nuzzo:]

This is Greg. Yeah, I mean we're still - what we've modelled in is that we should be able to get our FERC certificate probably mid-summer and of course [indiscernible] how many [indiscernible] and so that's good news for us but we still have some pushing to still hit that 2018 start. So you don't need to get that FERC certificate at summer. We still have an ability to miss that a little bit and still hit our target of mid-18.

[Mike Renna:]

But I guess nominations are obviously into that and it's [indiscernible].

[Chris Turnure:]

And then remind me on the booking of AFUDC that started kind of in earnest this quarter if there's a timing shift at all in the pipe how would that be treated in terms of booking AFUDC both on a prospective basis and on a historical kind of backward basis?

[Mike Renna:]

I don't think we’d have any impact backwards and going forward it would just be whatever is spent up to that point [indiscernible].

[Steve Clark:]

So it would just continue to be a cumulative number that runs till the project is complete.

[Chris Turnure:]

Okay. That makes sense. Great, thanks, guys.

[Operator:]

Thank you. Your next question comes from the line of Chris Ellinghaus from WCG. Please proceed.

[Chris Ellinghaus:]

Hey guys. Good morning.

[Steve Clark:]

Good morning Chris.

[Chris Ellinghaus:]

The decline in solar, given that it was warm, I assume you know generally sort of cloud cover would have been better without sort of the ugly weather. Is that delta of 700,000 pretty much entirely the SREC issue? I would sort of expect maybe slightly better production with better weather.

[Steve Clark:]

Actually our production is pretty much flat to budget which is based on normal so. If I remember correctly January was actually a poor month for production because of a lot of cloud cover and rain and then I think we made up a lot of ground in the subsequent months. So we're kind of right on track right now with what our expectations would be. Might be slightly over but certainly not anywhere near we were last year where we had a lot of sun.

[Mike Renna:]

Yes. Chris, I’d say two factors that came into play into that number you're referencing is, one is obviously we have a higher interest expense number that’s associated there as rates have started to move up but also we had about a $300,000 write off – sorry, not write off, write down of our inventory values because of the change in the SREC values.

[Chris Ellinghaus:]

Okay. That makes sense.

[Mike Renna:]

In Maryland.

[Chris Ellinghaus:]

Okay. As far as South Jersey Energy or SJEG, how much of that decline in the wholesale is sort of optimization of the fuel supply manager in contracts due to the poor weather. Can you give us any kind of sense of that?

[Steve Clark:]

I think from a fuel supply and all that, I’ll let Greg jump in here too, but I think from a fuel supply management perspective we're right on where we would expect to be. You know we don't we don't factor in a lot of the optimization that exists into our long term outlook. Certainly we will take advantage of it when it is there but I think you're correct, it was not a lot of optimization opportunities that were afforded us in the first quarter because of the very mild temperatures. So I think the real impact was on kind of our more core marketing business. But Greg you might be able to add a little color to the marketing piece.

[Greg Nuzzo:]

Yes. Just in terms of when we say the asset optimization the bulk of that is a lot of just our transportation which effectively is hedged but we do have some assumptions of just some volatility and optimization which didn’t exist. I would say that's worth, Q1 I think about 2 million, that [ain’t] [ph] common terms of what the marriage was from previous year to this year. But again the fuel management transactions have actually over-performed than we expected.

[Chris Ellinghaus:]

Okay. What exactly is in South Jersey exploration, the delta for the year?

[Greg Nuzzo:]

This is Greg. We have some - again, we some acreage, mineral rights that we hold under that business line where we get some royalty interest as producers drill. One thing we're starting to see is that some uptake activity in drilling because of prices rebounding and we just get a royalty stream, we're non-passive investor in where we hold some acreage, so as producers drill, we'll get some money in from royalty [indiscernible].

[Chris Ellinghaus:]

Okay, as pure royalty was there any assets sales or anything?

[Mike Renna:]

That was last year.

[Chris Ellinghaus:]

Okay. And can you just give us a little update on PennEast litigation?

[Mike Renna:]

Not that I'm aware off. [Indiscernible], Chris?

[Chris Ellinghaus:]

Yes, yes, I’m sorry.

[Mike Renna:]

We expected that the opponents were going to file for an appeal. I believe they are appealing on strictly procedural basis. The basis - Steve might be able to help me here but the basis of their claims is that they weren't all allowed to speak at the public setting.

[Steve Clark:]

Yes, they've alleged procedural issues as well as their - they make environmental claims that we've refuted very strongly all along. At this point the appeals process is with the judges in the appellate in [indiscernible] New Jersey and we have requested and been granted a request to expedite those appeals, but by [indiscernible] we are hopeful they will be resolved [indiscernible].

[Chris Ellinghaus:]

All the appeals were consolidated, right?

[Mike Renna:]

Right.

[Chris Ellinghaus:]

Okay. All right, thanks for the details guys.

[Operator:]

Thank you. [Operator Instructions] Your next question comes from the line of Joe Joel, Avis [ph] Capital Advisors. Please proceed.

[Unidentified Analyst:]

Actually, it's [Andrew Levy] [ph]. Just you guys have been in there or maybe about a month ago where there was some headlines, new story about M&A. Could you just address that please?

[Mike Renna:]

Yes, we don't comment on rumors.

[Unidentified Analyst:]

I understand that, just on big picture?

[Mike Renna:]

On the big picture?

[Unidentified Analyst:]

What are your thoughts on M&A as far as SJI and how you guys fit or not fit into what's been going on within the sector, specifically the LDC sector over the last two years?

[Mike Renna:]

Given the fact that nothing has happened I think clearly that - as far as how we fit, we're focused on achieving the goals that are out there in our 2020 plan. And then that has been the focus of this team and our Board. Beyond that - yes, there has been a whole lot of activity in the marketplace but again, our - what we do every day is focus on accomplishing what we set out for 2020.

[Unidentified Analyst:]

Do you think that activity has made sense for the companies that have done it or does it not make sense?

[Mike Renna:]

I'm not going to comment on other companies’ decision making. I can comment on ours.

[Unidentified Analyst:]

Does consolidation make sense for SJI at all or are you better off as an independent company?

[Mike Renna:]

Again, I'm focused on the plan, we're focused on the plan and I think we've got great opportunity in front of us.

[Unidentified Analyst:]

Okay, thank you very much. We'll see you Thursday. I think you're coming to CS. Thank you very much.

[Operator:]

Thank you. We have no further questions at this time. I'd like to now turn the call over to Mike Renna for closing remarks.

[Mike Renna:]

All right, before we wrap up, as always please free to contact Marissa Travaline, our Director of Investor Relations or Ann Anthony, our Treasurer if any follow-up questions arise. Marissa can be reached at 609-561-9000, extension 4227 or by email at [e-mail]. Anne can be reached at extension 4143 or by email at [e-mail]. Again, thank you for joining us today and for your continued interest and investment in SJI.

[Operator:]

Ladies and gentlemen, this concludes today's conference. This concludes the presentation. You may now disconnect. Thank you for joining in. Have a good day.