Current Report Filing (8-k)
February 23 2018 - 8:18AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 23, 2018
SOUTH JERSEY INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Charter)
|
| | | | |
New Jersey | | 1-6364 | | 22-1901645 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
1 South Jersey Plaza, Folsom, NJ 08037
(Address of Principal Executive Offices) (Zip Code)
(609) 561-9000
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
| |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
| |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
| |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
| |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure
On Friday, February 23, 2018, South Jersey Industries, Inc. (“SJI”) will deliver a presentation to the financial community via live webcast, in conjunction with the presentation of its Q4 2017 financial results and future prospects during the company's Q4 2017 Earnings Call. The slide presentation is attached hereto as Exhibit 99. SJI does not intend for this Item 7.01 or Exhibit 99, to be treated as “filed” under the Securities Exchange Act of 1934, as amended, or incorporated by reference into its filings under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
Exhibit 99. South Jersey Industries, Inc. slide presentation which will be made available to the financial community in conjunction with the company's Q4 2017 Earnings Call on February 23, 2018.
Exhibit Index
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
| | | |
| SOUTH JERSEY INDUSTRIES, INC. | |
| | | |
Date: February 23, 2018 | By: | /s/ Stephen H. Clark | |
| | Stephen H. Clark | |
| | Executive Vice President & Chief Financial Officer | |
South Jersey Industries
Q4/FY 2017 Business Update
February 23, 2018
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
Grow
Economic
Earnings
Improve
Quality of
Earnings
Maintain
Balance Sheet
Strength
Maintain Low
to Moderate
Risk Profile
2017 Highlights
Economic EPS of $1.23, Ahead of $1.14-1.20 Guidance
• Base Rate Case settlement added $6.0M to Economic Earnings
• AIRP II and SHARP investments totaling $94.5 million
• SJG added ~8,600 customers (gross)
• FERC issued certificate of public convenience and necessity for the PennEast
Pipeline project
• Agreed to acquire Elizabethtown Gas and Elkton Gas
The Path to Growth
3
2018 Guidance
Business Line
Percent of
Total SJI Economic Earnings
2017A 2018 Target
South Jersey Gas 75% 63% - 67%
SJI Midstream 5% 2% - 5%
Non-Utility 20% 27% - 36%
2018 Economic EPS Guidance of $1.57 to $1.651
1 Excluding impact from pending acquisitions; inclusive of tax reform and January cold weather impacts.
4
Tax Reform
1 Excluding impact from pending acquisitions. Adjustment reflects impact of tax reform on projected earnings.
Increased 2020 EE target to $160M from $150M1
2017 2018-2020
Income Statement
South Jersey Gas No impact.
Annual benefit due to higher rate base. Amount
dependent upon regulatory action and timing of base
rate cases.
Non-Utility and Corporate
$13.5M one-time benefit from
revaluation of net deferred tax liabilities,
excluded from Economic Earnings.
Annual benefit due to lower tax rate projected to be
approximately $10M by 2020.
Cash Flow
SJI No impact.
Annual cash flow decrease of $20-40M expected due to
return of excess deferred taxes to customers and an
increase in cash taxes to be paid sooner than expected
resulting from the elimination of bonus depreciation.
Actual amount is dependent upon regulatory action.
5
SJG Base Rate Case and
Infrastructure Investment
Base Rate Case Outcome
Rate of Return 6.8%
Return on Equity 9.6%
Equity-to-capital ratio 52.5%
Annual Net Income
Impact
$20.8M
2017 Incremental Net
Income Impact
$6.0M
2018 Incremental Net
Income Impact
$14.8M
AIRP II (Accelerated Infrastructure Replacement Program)
Earn ROI with annual roll-in to base rates each October
$4.7M increase in annual revenues effective Oct. 1,
based on $46.1M investment
Currently in year two of 5-year, $302.5M program
SHARP (Storm Hardening and Reliability Program)
Earn ROI with annual roll-in to base rates each October
$3.4M increase in annual revenues effective Oct. 1, based
on $33.3M investment
Phase II petition filed November 1
Proposed investment of $110M from 2018-2021
BL England
Proposed ≈ $115M pipeline to supply natural gas to the
former BL England generating facility
Legal appeal process continues, with a favorable
resolution anticipated
6
Capex Drives Economic Earnings
$1.9B of planned Cap Ex 2017-20201
Focused on regulated utility and FERC regulated growth
2017A-2020E
% Utility and FERC
regulated:
97%
1 Capital expenditures shown are inclusive of affiliate investments and reflect any projections for pending acquisition
2017A 2018E 2019E 2020E
Regulated Utility FERC regulated Non-Utility
$402M
$651M
$530M
$303M
7
$1,484M
$352M
$49M
Utility Customer Growth
12 Months Ending
December 31, 2017
Margin Growth from Customer Additions $2.4M
Conversions 6,108
New Construction 2,528
Total Gross Customer Additions 8,636
Net Customer Additions 6,008
Year Over Year Net Growth Rate 1.6%
8
PennEast Pipeline Project
• $200M investment, 20% equity
owner in $1.0B+, 1 BCF, 118-mile
interstate pipeline from Marcellus
region of PA into NJ
• Contributed $4.6M to 2017 earnings
from AFUDC
• FERC approved on January 19, 2018
• Additional state permits required
• Construction expected to begin in
2018
9
Targeted Acquisition of
Elizabethtown Gas & Elkton Gas
¹ Adjusted to reflect ~$200M tax basis step-up resulting from tax reform impacts 980388_1.wor - NY008P5T
NJJ
PA
DE
MD
NY
VA
South Jersey Gas
Elizabethtown Gas
Elkton Gas
• October, 2017 acquisition announcement of Elizabethtown Gas
(NJ) and Elkton Gas (MD) in a $1.7B transaction, with an
effective purchase price of $1.5B(1)
• Transformative transaction that reinforces regulated business
mix and builds scale, increasing rate base by 45%
• Accretive to 2020 economic earnings per share, building off of
Elizabethtown and Elkton 2016 standalone net income of $35
million
• Provides visibility into growth well beyond current SJI 5-year
plan
10
GAAP Earnings – 2017 v 2016
For the twelve months ended December 31
Q4 2017 Q4 2016 Variance FY 2017 FY 2016 Variance
In millions except per share data
Gas Utility $29.6 $22.9 $6.7 $72.6 $69.0 $3.6
Midstream $0.9 ($0.1) $1.0 $4.6 ($0.2) $4.8
SJ Energy Group $5.1 $19.5 ($14.4) ($21.8) $33.6 ($55.4)
SJ Energy Services1,2 ($30.9) $3.9 ($34.8) ($59.8) $16.8 ($76.6)
Acquisition Expenses ($12.0) $0.0 ($12.0) ($12.0) $0.0 ($12.0)
SJI Other ($0.1) ($0.2) $0.1 $1.6 ($0.1) $1.7
Tax Adjustments3 $11.4 $0.0 $11.4 $11.4 $0.0 $11.4
SJI $4.0 $46.0 ($42.0) $(3.4) $119.1 ($122.5)
SJI EPS $0.05 $0.58 ($0.53) $(0.04) $1.56 ($1.60)
1 Includes after-tax charges related to legal proceedings
2 Reflects after-tax charges related to solar impairments and write-down of landfill assets
3 Represents one-time tax adjustments made throughout the year, most notably for Tax Reform, which was signed into law in December 2017
11
Economic Earnings – 2017 v 2016
For the twelve months ended December 31
Q4 2017 Q4 2016 Variance FY 2017 FY 2016 Variance
In millions except per share data
Gas Utility $29.6 $22.9 $6.7 $72.6 $69.0 $3.6
Midstream $0.9 ($0.1) $1.0 $4.6 ($0.2) $4.8
SJ Energy Group $11.7 $7.3 $4.4 $21.3 $17.7 $3.6
SJ Energy Services ($2.8) $3.3 ($6.1) ($2.8) $16.5 ($19.3)
SJI Other $0.6 ($0.2) $0.8 $2.4 ($0.2) $2.6
SJI $40.0 $33.2 $6.8 $98.1 $102.8 ($4.7)
SJI EPS
$0.50 $0.42 $0.08 $1.23 $1.34 ($0.11)
*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.
12
South Jersey Gas
In millions¹ Q4 FY Performance Notes
2016 Net Income $22.9 $69.0
Customer Growth $0.8 $2.4 1.6% YOY customer growth
Accelerated Infrastructure
Investments
$1.4 $4.2
AIRP and SHARP investments
Rate Case Investments $6.0 $6.0 Rate Case investments roll-in to base rates
November 1
Off System Sales $0.1 $0.2
O&M Expenses² ($0.9) ($4.8) Resource investments supporting future growth;
increased reserve for uncollectible accounts
Depreciation³ ($0.7) ($2.4) Additional assets placed in service
Interest Charges – Net of Capitalized³ ($0.6) ($1.8)
Other $0.6 $0.2
2017 Net Income $29.6 $72.6
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 13
South Jersey Energy Group
For the twelve months ended December 31
Q4 2017 Q4 2016 Variance FY 2017 FY 2016 Variance
Economic Earnings, in millions
SJ ENERGY GROUP $11.7 $7.3 $4.4 $21.3 $17.7 $3.6
Retail Commodity ($0.7) $0.0 ($0.7) ($0.5) $1.3 ($1.8)
Fuel Management1 $1.7 $1.2 $0.5 $5.8 $4.2 $1.6
Wholesale Mktg / Asset
Optimization2
$10.7 $6.1 $4.6 $15.8 $12.2 $3.6
SJ Exploration $0.0 $0.0 $0.0 $0.2 $0.0 $0.2
1 Fuel Management benefited from the additional contract that came on-line earlier in the year
2 YTD improvement driven by optimization of storage and capacity. Results partly offset by record low spreads from warmer weather in Q1.
14
South Jersey Energy Services
For the twelve months ended December 31
Q4 2017 Q4 2016 Variance FY 2017 FY 2016 Variance
Economic Earnings, in millions
SJ ENERGY SERVICES ($2.8) $3.3 ($6.1) ($2.8) $16.5 ($19.3)
CHP1 $0.0 $0.5 ($0.5) $0.5 $6.2 ($5.7)
Solar2 ($2.1) ($0.8) ($1.3) $0.4 $3.0 ($2.6)
Landfills ($0.8) ($1.1) $0.3 ($3.7) ($2.6) ($1.1)
ITC3 $0.0 $4.5 ($4.5) $0.0 $9.1 ($9.1)
Other $0.1 $0.2 ($0.1) $0.0 $0.8 ($0.8)
1 CHP comparison YTD impacted by non-recurring $4.3M settlement that benefited 2016
2 Solar comparison YTD impacted by reduced revenue from MD projects and increased interest expense
3 No ITC in 2017 earnings
15
Appendix
Non-Utility GAAP Earnings – 2017 v 2016
For the twelve months ended December 31
Q4 2017 Q4 2016 Variance FY 2017 FY 2016 Variance
GAAP Earnings, in millions
SJ ENERGY GROUP $5.1 $19.5 ($14.4) ($21.8) $33.6 ($55.4)
Retail Commodity $1.9 $3.0 ($1.1) $1.4 $7.4 ($6.0)
Fuel Management $1.7 $1.2 $0.5 $5.8 $4.2 $1.6
Wholesale Mktg / Asset
Optimization1
$1.5 $15.3 ($13.8) ($29.2) $21.9 ($51.1)
SJ Exploration $0.0 $0.0 $0.0 $0.2 $0.1 $0.1
17
1 YOY wholesale results impacted by previously noted legal disputes with suppliers
Non-Utility GAAP Earnings – 2017 v 2016
For the twelve months ended December 31
Q4 2017 Q4 2016 Variance FY 2017 FY 2016 Variance
GAAP Earnings, in millions
SJ ENERGY SERVICES1 $(30.9) $3.9 ($28.8) ($59.9) $16.8 ($70.6)
CHP ($17.4) $1.1 ($18.5) ($18.4) $6.5 ($24.9)
Solar $3.2 ($0.8) $4.0 ($21.7) $3.0 ($24.7)
Landfills ($11.5) ($1.1) ($10.4) ($14.4) ($2.6) ($11.8)
ITC $0.0 $4.5 ($4.5) $0.0 $9.1 ($9.1)
Other $0.8 $0.2 $0.6 $0.7 $0.8 ($0.1)
18
1 Reflects after-tax charges related to solar impairments and write-down of landfill assets
Fuel Supply Management
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 5 Years
Moxie - Patriot Lycoming Co, PA 825 137,655 In service 4 Years
Panda - Stonewall Leesburg, VA 750 110,000 In service 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
Hickory Run Lawrence County, PA 1,000 162,000 2020 5 years
To Be Announced TBA 990 121,000 TBA 4 Years 19
Solar SREC Generation
MW DC Number of SRECs
26,193
55,766
111,908
136,379
224,737
240,333
-
50,000
100,000
150,000
200,000
250,000
300,000
0
50
100
150
200
250
2012 2013 2014 2015 2016 2017
SRECs generated MWs Installed
20
21
2017 GAAP to Economic Earnings Reconciliation
-$3,404
$98,065
$56,048
$34,308
$12,032
$10,303 $199
$11,420
-$5,000
$15,000
$35,000
$55,000
$75,000
$95,000
$115,000
$135,000
USD $Thousands
This regulatory filing also includes additional resources:
q42017quarterlyresultsfinal.pdf
South Jersey Industries (NYSE:SJI)
Historical Stock Chart
From Apr 2024 to May 2024
South Jersey Industries (NYSE:SJI)
Historical Stock Chart
From May 2023 to May 2024