South Jersey Industries, Inc.
Q1 2015 Earnings Call Transcript

Published: 9 May 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Q1 2015 South Jersey Industries Earnings Conference Call. My name is Whitley, and I’ll be your operator for today. At this time all participants are in listen-only mode. And later we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to your host for today, Ms. Ann Anthony, Treasurer. Please proceed.

[Ann Anthony:]

Thank you, and good morning. Welcome to the conference call for SJI’s first quarter fiscal 2015 results. I’m Ann Anthony, Treasurer of South Jersey Industries. And I’m joined today by members of our senior management team, including Mike Renna, President and COO of SJI; Steve Clark, our CFO; Jeff DuBois, President of South Jersey Gas; and Marissa Travaline, General Manager of Investor Relations. As you may know, we issued a news release this morning announcing the results we will be discussing on the call today. That release includes an in-depth review of earnings on both a non-GAAP and GAAP basis using our non-GAAP measure of Economic Earnings. This measure eliminates all unrealized gains and losses on commodity and on the ineffective portion of interest rate derivative transactions. It also adjusts for realized gains and losses attributed to hedges on inventory transactions and for the impact of transactions or contractual arrangements where the true economic impact will be realized in a future period. The news release is currently available on our website at www.sjindustries.com, in the Newsroom section. Throughout today’s call, we will be making references to future expectations, plans and opportunities for South Jersey Industries. These remarks constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the company’s Form 10-K on file with the SEC. We assume no duty to update today’s statements should actual events differ from expectations. With that said, I’d like to turn the call over to our CFO, Steve Clark to present our first quarter 2015 results.

[Steve Clark:]

Thank you, Ann, good morning to everyone on the call and thanks for joining us. As we usually do, today, we will discuss results in the context of two main segments of our business

[Mike Renna:]

Thanks Steve, and good morning. I’d like to begin by discussing the guidance we provided today in conjunction with our first quarter results, which targets full-year growth and economic earnings per share of 2% to 8% in 2015. While I recognize that this is a broad range, it is largely the results of the current uncertainty around the future of ACR and any potential agreement to serve rental. And the responsibility we have to provide guidance that reflects this uncertainty. With that said, we are committed to moving forward with a model emphasizing our regulated business and those areas of our non-regulated businesses, where we have a demonstrated ability to compete and succeed. Our focus for 2015 remains utility customer growth through infrastructure investment and growing our non-utility commodity marketing and energy production businesses. With natural gas still presenting a competitive cost advantage even in the phase of declining oil prices, we expect to improve upon the record conversion activity we saw in 2014. Total utility infrastructure investment in 2015 is projected to top $230 million with our normal capital spend complimented by our SHARP and AIRP initiatives. In addition to strong margins in our commodity business, 2015 will also bring the commencement of two additional fuel management contracts at the Panda Liberty and Panda Patriot plants in Pennsylvania. These new facilities will add to the benefits from our longstanding agreement with the next Yura facility and the more recent edition of LS Power. Beyond these things, I’m extremely confident in the long term potential for SJI as we establish the operation -- as we establish the operation of a natural gas liquefier at our McKee City facility to help minimize price volatility for our customers and advance our progress on the development of a natural gas pipeline to enhance system reliability and serve the B.L. England facility, and work with our partners to bring the vital PennEast Pipeline to market. When coupled with the benefits of customer growth, utility infrastructure investments and contributions from seven fuel supply management contracts, we’ve already executed, plus those we expect to add over the next two to three years, I’m confident in the prospects for future success that these initiatives will help drive. One key part of our longer term growth is our 20% ownership interest in the 1 bcf PennEast Pipeline. This fully subscribed pipeline is being driven by climates [ph] of more than 800,000 decatherms from recent utilities and utility affiliates, and has the potential to provide at least 10% of the SJI economic earnings in 2018 when it is expected to be fully in service. This opportunity layers nicely increasing values on our successfully operating CHP assets and the ability to expand and optimize our wholesale and retail commodity businesses. Wholesale in particular is an area poised for accelerated growth as legacy contracts expire, and the capacity we’ve acquired over the past few years increases in value. We remain committed to maintaining the agility in our business that allows us to not only maximize our core utility investments but also drives shareholder value from opportunities in energy production, fuel supply management, midstream investments and retail commodity services. As I said before, the foundation that we’ve built over the last 10 years from our business will help ensure that our long-term growth and profitability are not compromised by short-term challenges. Thanks. And now I’ll turn the call back to the operator for Q&A.

[Mike Renna:]

If there are no other questions at this time, no questions, I would remind you as always, please feel free to contact Marissa Travaline, our General Manager of Investor Relations or Ann Anthony, Treasurer for any follow-up on the items we’ve discussed today. Marissa can be reached at 609-561-9000 extension 4227 or by e-mail at [e-mail]. Ann can be reached at extension 4143 or by e-mail at [e-mail]. Again, thank you joining us today.

[Operator:]

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.