SJI
$31.53
South Jersey Industries
$.52
1.68%
Earnings Details
1st Quarter March 2018
Monday, May 7, 2018 6:39:00 PM
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Summary

South Jersey Industries Reaffirms

South Jersey Industries (SJI) reported 1st Quarter March 2018 earnings of $1.26 per share on revenue of $521.9 million. The consensus earnings estimate was $0.96 per share on revenue of $460.4 million. Revenue grew 22.6% on a year-over-year basis.

The company said it continues to expect 2018 earnings of $1.57 to $1.65 per share. The current consensus earnings estimate is $1.58 per share for the year ending December 31, 2018.

South Jersey Industries Inc is an energy services holding company. The Company through its subsidiaries provides regulated, natural gas service to residential, commercial, and industrial customers in United States.

Results
Reported Earnings
$1.26
Earnings Whisper
-
Consensus Estimate
$0.96
Reported Revenue
$521.9 Mil
Revenue Estimate
$460.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

South Jersey Industries Reports First Quarter Results

                                                                                                                                                                             
Investor Contact:
Eric Jacobson
609-561-9000 x4363
ejacobson@sjindustries.com 
                                                                                                                                                                           
Media Contact:
Marissa Travaline
609-561-9000 x4227  
mtravaline@sjindustries.com

FOR IMMEDIATE RELEASE

South Jersey Industries Reports First Quarter Results

FOLSOM, NJ (May 7, 2018) - South Jersey Industries (NYSE: SJI) today reported operating results for its fiscal 2018 first quarter ended March 31, 2018.  Highlights include:

  • GAAP earnings were $1.40 per diluted share compared to $0.47 per diluted share last year
  • Economic Earnings* were $1.26 per diluted share compared to $0.72 per diluted share last year
  • Strong quarterly gain reflects solid improvement in both our regulated and non-regulated operations
  • Shift to more regulated business mix on track, with regulatory approvals and financing of Elizabethtown Gas (ETG) and Elkton Gas (Elkton) acquisitions proceeding well and ongoing review of our non-core, non-regulated businesses
  • Reaffirming 2018 Economic Earnings guidance of $1.57 to $1.65 per diluted share

"We are off to a strong start in 2018," said Michael Renna, president and chief executive officer of SJI.  "Our regulated business benefited from our recent base rate case, customer growth and continued infrastructure investment intended to enhance and improve service and reliability to our customers.  Our non-regulated operations, specifically our wholesale marketing and fuel management businesses, posted strong gains as well, capitalizing on favorable weather and tax reform." 

"We also made great strides in advancing our shift to a more regulated business mix, including the completion of a successful equity offering to help fund our acquisition of Elizabethtown and Elkton." added Renna.  "We are excited by our ongoing business transformation and remain confident in our ability to achieve our 2020 standalone economic earnings target of $160 million and post-acquisition EPS accretion beginning in 2020."

FIRST QUARTER RESULTS        
           
  Three months ended March 31, 2018 Three months ended March 31, 2017

  GAAPGAAPEconomic Economic GAAPGAAPEconomic Economic
  EarningsEPSEarningsEPS EarningsEPSEarningsEPS
South Jersey Gas $66.7 $0.84 $66.7 $0.84  $46.5 $0.58 $46.5 $0.58
Midstream $0.3 $0.00 $0.3 $0.00  $2.0 $0.03 $2.0 $0.03
Energy Group $52.5 $0.66 $35.9 $0.45  ($8.1)($0.10)$9.8 $0.12
Energy Services ($2.7)($0.03)($2.7)($0.03) ($4.3)($0.05)($2.4)($0.03)
Other ($5.5)($0.07)$0.2 $0.00  $1.6 $0.01 $1.7 $0.02
Total $111.3 $1.40 $100.4 $1.26  $37.7 $0.47 $57.6 $0.72
           
* Non-GAAP, see "Explanation and Reconciliation of Non-GAAP Financial Measures."    

                          

First Quarter 2018 Results

Consolidated GAAP income from continuing operations for the three months ended March 31, 2018 was $111.3 million ($1.40 per diluted share) compared to $37.7 million ($0.47 per share) in the prior year period. 

SJI uses the non-GAAP measure of Economic Earnings when discussing results.  We believe this presentation provides clarity into the true continuing income of our business.  A full explanation and reconciliation of economic earnings is provided under "Explanation and Reconciliation of Non-GAAP Financial Measures." 

Economic earnings for first quarter 2018 were $100.4 million ($1.26 per share), up from $57.6 million ($0.72 per share) last year, reflecting higher earnings at South Jersey Gas and Energy Group partially offset by lower earnings at Midstream and Energy Services.  We review the performance of each segment below:

South Jersey Gas (SJG)

Our gas utility segment includes the regulated gas distribution operations of South Jersey Gas (SJG).

Operating Performance

GAAP income from continuing operations and economic earnings are the same for SJG.  First quarter 2018 economic earnings were $66.7 million ($0.84 per share), up from $46.5 million ($0.58 per share) in the prior year.  The improvement largely reflects an increase in utility margin partially offset by higher operating costs.

We define utility margin, a non-GAAP measure, as natural gas revenues less natural gas costs, regulatory rider expenses and related volumetric and revenue-based energy taxes.  Utility margin increased to $134.0 million compared with $118.5 million in the prior year period.  The $15.5 million increase was driven by our base rate case settlement ($22.8 million), the roll-in of investments for infrastructure replacement and improvement ($4.5 million) and customer growth ($1.0 million) partially offset by a deferral of excess taxes billed ($12.8 million) that will be returned to customers.

Utility operating costs were $50.6 million compared with $41.4 million a year ago.  The $9.2 million increase largely reflects higher operating & maintenance expense ($7.5 million) tied to increases in personnel, governance, compliance and system maintenance.  These investments are primarily aimed at improving efficiency and productivity for the benefit of our customers.  Higher depreciation expense ($1.7 million) reflects capital investment in infrastructure and customer growth.

Customer Growth

South Jersey Gas added more than 8,800 new customers over the last 12 months and now serves more than 385,000 customers. Our 1.6% growth rate compares favorably to our peers and has largely been driven by gas conversions (~70% of new customer additions) from alternate fuels.  We continue to estimate an additional 50,000 customers currently served by higher-priced alternate fuels are located very near our system, implying solid potential for conversion activity in the future.

Our proposed $115 million pipeline project to supply natural gas to the former BL England (BLE) generating facility remains in the legal appeal process.  The pipeline is intended to boost reliability for gas customers in Cape May and Atlantic counties and provide gas for the power plant's conversion from coal and oil-fired electric generation.  The project received Pinelands Commission approval in February 2017, but the approval process has been contested by environmental groups.  We anticipate receiving a favorable resolution on BLE in 2018.       

Regulatory Update

We remain committed to modernizing our distribution system for the benefit of customers.  In November 2017, we filed for an extension of our Storm Hardening and Reliability Program (SHARP) with the New Jersey Board of Public Utilities (NJBPU).  Our petition requests approval to invest $110 million from 2018-2021 on four specific projects to enhance the safety, redundancy and resiliency of our distribution system for coastal communities.  A final order is expected in 2018.

Midstream

The Midstream segment includes our 20% equity investment in the PennEast Pipeline project (PennEast).  PennEast is a planned $1B+, 1 Bcf, 120-mile interstate pipeline running from the Marcellus region of Pennsylvania into New Jersey. 

GAAP income from continuing operations and economic earnings are the same for Midstream.  First quarter 2018 economic earnings were $0.3 million ($0.00 per share), down from $2.0 million ($0.03 per share) in the prior year.  Strong results in first quarter 2017 reflect a catch-up of Allowance for Funds Used During Construction (AFUDC) related to prior periods that had not been deemed appropriate to record until original receipt of Federal Energy Regulatory Commission (FERC) approval.

In January, PennEast received its Certificate of Public Convenience and Necessity from FERC.  With this approval, we are moving to the next phase to obtain survey access and submit completed applications for water permits in New Jersey and with the Delaware River Basin Commission (DRBC).  Construction is expected to begin upon receipt of approvals from these entities, with in-service expected in late 2019.

Energy Group

The Energy Group segment includes our non-regulated operations engaged in fuel supply management services and wholesale and retail gas and electric commodity marketing. 

First quarter 2018 GAAP earnings were $52.5 million ($0.66 per share), up from a loss of $8.1 million ($0.10 per share) in the prior year.  First quarter 2018 economic earnings were $35.9 million ($0.45 per share), up from $9.8 million ($0.12 per share) in the prior year. 

First quarter 2018 economic earnings primarily reflect strong results from our wholesale business of $33.3 million ($0.42 per share) compared to $7.6 million ($0.09 per share) the prior year.  This improvement primarily reflects portfolio optimization during cold weather in January compared with extremely warm weather in Q1'17, and the impact of federal tax reform. 

Fuel management activities contributed economic earnings of $2.8 million ($0.03 per share) compared with $1.4 million ($0.02 per share) the prior year driven by a larger portfolio of contracts (six) compared with last year (five).  We expect that an additional three fuel supply management contracts will come on-line in 2018 and two more by the end of 2020, providing low-risk segment growth. 

Our retail gas and electric commodity marketing business generated a loss in economic earnings of $0.1 million ($0.00 per share), down compared with $0.6 million ($0.01 per share) last year, reflecting a continuation of increased competition and tighter margins in this business.

Energy Services

The Energy Services segment consists of our energy production portfolio including solar, combined heat and power (CHP) and landfill gas-to-electric assets.  First quarter 2018 GAAP results were a loss of $2.7 million ($0.03 per share) compared with a loss of $4.3 million ($0.05 per share) in the prior year.  First quarter 2018 economic earnings were a loss of $2.7 million ($0.03 per share) compared with a loss of $2.4 million ($0.03 per share) the prior year. 

Economic earnings from our account services businesses, South Jersey Energy Service Plus and Millennium Account Services, were up $0.4 million compared with the prior year.  The gain, however, was more than offset by a $0.7 million decline from combined heat and power (CHP), solar and landfill activities reflecting increased costs, higher interest expense and a one percent decline in solar production.  Consistent with our strategic plan, there were no investment tax credits related to renewable project development in first quarter 2018 results or the year ago period.

Business Transformation

In 2015, we began a planned shift in our future operating strategy toward a more regulated business mix.  Our plan was driven by a desire to increase the quality of our earnings by increasing investment in utility and FERC-regulated assets that provide highly-visible cash flows and earnings while at the same time reducing our earnings volatility and optimizing the value of our non-core, non-regulated businesses.

We have made significant progress toward implementing our plan since that time.  In 2016, we announced a cessation of new investment in solar projects, reduced our portfolio of on-site energy production businesses, and significantly strengthened our balance sheet through a successful equity offering.  In 2017, we announced plans to acquire ETG and Elkton, assets ideally tailored to our strategy (discussed below).  In 2018, we completed a successful equity raise to finance the acquisitions (net proceeds totaling $447 million received to date, with $200 million to be received at SJI's option in the future) and announced a strategic review of our remaining non-core, non-regulated businesses.

Acquisition Update

In October 2017, we announced plans to acquire neighboring gas utility ETG as well as Elkton from Southern Company (SO).  The acquisition process is progressing and remains on track to close in mid-2018. 

The transaction involves assets we know well, improves our business risk profile, leverages our strong regulatory relationships in New Jersey, enhances our path to long-term, high-quality growth and earnings accretion and provides an opportunity for enhanced utility investment via replacement of aging infrastructure. 

The transactions received approval from the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) under the Hart-Scott-Rodino Act.  FERC approval is pending.  We filed for regulatory approval in New Jersey in December and Maryland in January, and settlement discussions have commenced.  

In April, we completed an offering of equity units and common stock as part of our permanent financing plan for the acquisitions.  We issued 5.75 million equity units, including overallotments, at $50 per unit, generating $279 million in net proceeds.  In addition, we issued 12.7 million shares of common stock, including overallotments, at $29.50 per share.  Of the offered shares, 5.9 million were offered at closing generating $168 million in net proceeds, and 6.8 million were issued under a forward sale agreement to our underwriters.

The use of a forward-sale agreement enables us to match our capital needs with actual stock issuance.  SJI has the option to physically settle the forward-sale agreement by delivering all or a portion of the shares to our underwriters for cash proceeds of approximately $200 million over the next 12 months.  If SJI decides we do not need any or all of the proceeds, we have the option to cash settle or net stock settle the forward sale.  SJI will not receive any proceeds until such settlement. 

As previously disclosed, we are currently exploring strategic opportunities regarding our remaining non-regulated businesses that are not core to our strategic plan.  We expect to communicate additional progress on this process in the coming months.                  

Balance Sheet and Cash Flow

As evidenced by our recent financing activity, we remain committed to a strong capital structure with ample liquidity and a solid investment grade rating.  At March 31, 2018, equity-to-total capitalization was 46.3 percent compared with 43.7 percent at December 31, 2017.

For the three months ended March 31, 2018, net cash from operating activities was $95.2 million compared to $79.5 million in the prior year period, reflecting strong operating performance at Energy Group.  Net cash used in investing activities was $61.5 million compared with $72.8 million in the prior year period, reflecting timing of utility infrastructure upgrades and investment to support customer growth.  Net cash used in financing activities was $50.3 million compared to $20.7 million in the prior year period, reflecting a larger repayment of short-term borrowings in 2018.

Our capital expenditures forecast for 2018 is $373 million, with approximately 75% of total spending on planned infrastructure investment at South Jersey Gas.  We anticipate providing an update to our longer-term spending targets following completion of our pending acquisitions of ETG and Elkton later this year.

Dividends

The SJI board of directors declared a quarterly common stock dividend of $0.28 per share, payable April 3, 2018, to shareholders of record on March 19, 2018. We have continuously paid a cash dividend since 1950, with 2017 marking the 19th consecutive year of increasing dividends on an annualized basis.  Our targeted payout ratio remains 55 to 70 percent of economic earnings.

Guidance

First quarter 2018 economic earnings of $100 million were exceptionally strong in both magnitude and quality.  In prior years, investment tax credits (ITCs) contributed approximately 30 percent of economic earnings.  However, first quarter 2018 results were instead bolstered by solid performance at South Jersey Gas and Energy Group, which successfully leveraged opportunities in our marketing and fuel management businesses.  In less than three years we have replaced nearly the entire impact of ITCs through growth in our core businesses.

We are reaffirming our previous 2018 economic earnings guidance of $1.57 to $1.65 and standalone economic earnings guidance of $160 million by 2020, subject to the risks and uncertainties identified below under "Forward-Looking Statements."  As a reminder, we increased our 2020 economic earnings target to $160 million from $150 million in February to reflect the positive impact of federal tax reform.  We expect to update guidance to include ETG and Elkton upon receipt of final regulatory approvals and closing of the acquisitions.

We continue to expect our regulated businesses to generate between 65 to 72 percent of economic earnings in 2018.  Please refer to the Guidance table below for additional detail.  Assuming successful completion of our pending acquisitions of ETG and Elkton, we expect our regulated businesses will generate more than 80 percent of economic earnings annually over time. 

Conference Call and Webcast

SJI will host a conference call and webcast on Tuesday, May 8 to discuss its first quarter 2018 financial results. To access the call, please dial the applicable number approximately 5-10 minutes prior to the start time.

Date/Time:       Tuesday, May 8, 10:00 a.m. ET

Dial-In:            U.S. and Canada:  800-219-3192; International: +1-617-597-5412

Passcode:         58488114

The call will also be webcast in a listen-only format for the media and general public.  The webcast can be accessed at www.sjindustries.com under Events & Presentations.  A replay of the webcast will be available on our website at www.sjindustries.com under Events & Presentations.

About South Jersey Industries

South Jersey Industries (NYSE: SJI), an energy services holding company based in Folsom, NJ, delivers energy solutions to its customers through three primary subsidiaries. South Jersey Gas delivers safe, reliable, affordable natural gas and promotes energy efficiency to approximately 385,000 customers in southern New Jersey. SJI's non-utility businesses within South Jersey Energy Solutions promote efficiency, clean technology and renewable energy by providing customized wholesale commodity marketing and fuel management services; acquiring and marketing natural gas and electricity for retail customers; and developing, owning and operating on-site energy production facilities. SJI Midstream houses the company's interest in the PennEast Pipeline Project. Visit http://www.sjindustries.com for more information about SJI and its subsidiaries.

Forward Looking Statements and Risk Factors

This news release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future results of operations or financial position, expected sources of incremental margin, strategy, financing needs, future capital expenditures and the outcome or effect of ongoing litigation, are forward-looking.  We use words such as "anticipate," "believe," "expect," "estimate," "forecast," "goal," "intend," "objective," "plan," "project," "seek," "strategy," "target", "will" and similar expressions to identify forward-looking statements.  These forward-looking statements are based on the beliefs and assumptions of management at the time that these statements were made and are inherently uncertain.  Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to, general economic conditions on an international, national, state and local level; weather conditions in SJI's marketing areas; changes in commodity costs; changes in the availability of natural gas; "non-routine" or "extraordinary" disruptions in SJI's 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, suppliers or business partners to fulfill their contractual obligations; and changes in business strategies and the uncertainties that the anticipated acquisitions will be completed or that they will provide the benefits we anticipate.  A discussion of these and other risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements are described in greater detail in the Form 10-Q for the period ended March 31, 2018 and in other filings made by us with the Securities and Exchange Commission (SEC). These cautionary statements should not be construed by you to be exhaustive and they speak only as of the date they are made. No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date they are made. SJI undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Explanation and Reconciliation of Non-GAAP Financial Measures

Management uses the non-generally accepted accounting principles (non-GAAP) financial measures of Economic Earnings and Economic Earnings per share when evaluating its results of operations. These non-GAAP financial measures should not be considered as an alternative to GAAP measures, such as net income, operating income, earnings per share from continuing operations or any other GAAP measure of liquidity or financial performance.

We define Economic Earnings as: Income from continuing operations, (i) less the change in unrealized gains and plus the change in unrealized losses on all derivative transactions; (ii) less realized gains and plus realized losses on all commodity derivative transactions attributed to expected purchases of gas in storage to match the recognition of these gains and losses with the recognition of the related cost of the gas in storage in the period of withdrawal; (iii) less the impact of transactions or contractual arrangements where the true economic impact will be realized in a future period; (iv) as adjusted by the impact of a May 2017 jury verdict stemming from a pricing dispute with a gas supplier over costs, including interest charges and legal fees incurred, along with the realized difference in the market value of the commodity (including financial hedges); and (v) as adjusted for various costs related to the agreement to acquire the assets of Elizabethtown Gas and Elkton Gas. With respect to part (iii) of the definition of Economic Earnings:

  • For the three months ended March 31, 2017, Economic Earnings excludes an approximately $2.4 million pre-tax loss related to a new interest rate derivative and amendments made to an existing interest rate derivative linked to unrealized losses previously recorded in Accumulated Other Comprehensive Loss (AOCL). SJI reclassified this amount from AOCL to Interest Charges on the condensed consolidated statements of income as a result of the prior hedged transactions being deemed probable of not occurring. Since the economic impact will not be realized until future periods, this amount is excluded from Economic Earnings.  See Note 12 to the condensed consolidated financial statements.
  • For the three months ended March 31, 2017, Economic Earnings excludes an approximately $0.3 million pre-tax charge incurred related to an impairment charge due to a reduction in the expected cash flows to be received from a solar generating facility, for which the economic impact will not be realized until a future period. See Note 1 to the condensed consolidated financial statements. An impairment charge was also recorded in 2012 within Income from Continuing Operations on a separate solar generating facility which reduced its depreciable basis and recurring depreciation expense, and this was also excluded from Economic Earnings.
  • For the three months ended March 31, 2018, there were no items that fit part (iii) of the definition of Economic Earnings.

Economic Earnings is a significant performance metric used by our management to indicate the amount and timing of income from continuing operations that we expect to earn after taking into account the impact of derivative instruments on the related transactions, those transactions or contractual arrangements where the true economic impact will be realized primarily in a future period or was realized in a previous period, and other events that management believes make period to period comparisons of SJI's operations difficult or potentially confusing. Specifically, regarding derivatives, we believe that this financial measure indicates to investors the profitability of the entire derivative-related transaction and not just the portion that is subject to mark-to-market valuation under GAAP. We believe that considering only the change in market value on the derivative side of the transaction can produce a false sense as to the ultimate profitability of the total transaction as no change in value is reflected for the non-derivative portion of the transaction.

The following tables present a reconciliation of SJI's income from continuing operations and earnings per share from continuing operations to Economic Earnings and Economic Earnings per share for the three months ended March 31 (in thousands, except per share data):

  Three Months Ended
March 31,
  2018   2017
Income from Continuing Operations $ 111,306     $ 37,747  
Minus/Plus:      
Unrealized Mark-to-Market Gains on Derivatives (25,190 )   (13,908 )
Realized Losses on Inventory Injection Hedges -     332  
Unrealized Loss on Property, Plant and Equipment (A) -     256  
Net Losses from a Legal Proceeding in a Pricing Dispute (B) 1,345     43,987  
Acquisition Costs (C) 9,277     -  
Other (D) -     2,351  
Income Taxes (E) 3,680     (13,207 )
Economic Earnings $ 100,418     $ 57,558  
       
Earnings per Share from Continuing Operations $ 1.40     $ 0.47  
Minus/Plus:      
Unrealized Mark-to-Market Gains on Derivatives (0.32 )   (0.18 )
Net Losses from a Legal Proceeding in a Pricing Dispute (B) 0.02     0.56  
Acquisition Costs (C) 0.11     -  
Other (D) -     0.03  
Income Taxes (E) 0.05     (0.16 )
Economic Earnings per Share $ 1.26     $ 0.72  

(A) Represents impairment charges taken on solar generating facilities, which was primarily driven by declining market conditions, specifically market prices of solar renewable energy credits (SRECs), and for which the economic impact will not be realized until a future period. 

(B)  Represents net losses, including interest, legal fees, and the realized difference in the market value of the commodity (including financial hedges), resulting from a ruling in a legal proceeding related to a pricing dispute between SJI and a gas supplier that began in October 2014. Since the net losses relate to purchase transactions that primarily occurred in prior periods, these amounts are excluded from Economic Earnings.

(C) Represents costs incurred in connection with the expected acquisition of the assets of Elizabethtown Gas and Elkton Gas.

(D) Included in this amount are amendments made to an existing interest rate derivative linked to unrealized losses previously recorded in accumulated other comprehensive income (AOCL). SJI reclassified this amount from AOCL to Interest Charges on the condensed consolidated statements of income as a result of the prior hedged transactions being deemed probable of not occurring. Since the economic impact will not be realized until future periods, this amount is excluded from Economic Earnings.  Also included is additional depreciation expense within Economic Earnings on a solar generating facility where an impairment charge was recorded in the past, which reduced the depreciable basis and recurring depreciation expense,  and the related reduction in depreciation expense was added back in the prior year.

(E)  Determined using a combined average statutory tax rate of approximately 25% and 40% for the three months ended March 31, 2018 and 2017, respectively.

The following table summarizes Utility Margin for the three months ended March 31 (in thousands):

 

 
Three Months Ended
March 31,
  2018   2017
Utility Margin:      
Residential $ 96,063     $ 73,446  
Commercial and Industrial 35,643     26,832  
Cogeneration and Electric Generation 995     1,128  
Interruptible 129     4  
Off-System Sales & Capacity Release 1,935     1,956  
Other Revenues 226     234  
Margin Before Weather Normalization & Decoupling 134,991     103,600  
CIP Mechanism (1,760 )   13,975  
EET Mechanism 780     943  
Utility Margin** $ 134,011     $ 118,518  

**Utility Margin is a non-GAAP financial measure and is further defined under the South Jersey Gas section

SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands Except for Per Share Data)

  Three Months Ended
March 31,
  2018   2017
Operating Revenues:      
Utility $ 231,768     $ 195,769  
Nonutility 290,177     230,060  
Total Operating Revenues 521,945     425,829  
Operating Expenses:      
Cost of Sales - (Excluding depreciation)      
 - Utility 87,117     71,379  
 - Nonutility 195,951     215,763  
Operations 47,044     38,448  
Maintenance 6,862     4,981  
Depreciation 24,662     24,323  
Energy and Other Taxes 2,439     2,071  
Total Operating Expenses 364,075     356,965  
Operating Income 157,870     68,864  
       
Other Income and Expense 2,761     4,487  
Interest Charges (13,972 )   (16,745 )
Income Before Income Taxes 146,659     56,606  
Income Taxes (36,415 )   (21,870 )
Equity in Earnings of Affiliated Companies 1,062     3,011  
Income from Continuing Operations 111,306     37,747  
Loss from Discontinued Operations - (Net of tax benefit) (66 )   (30 )
Net Income $ 111,240     $ 37,717  
       
Basic Earnings Per Common Share:      
Continuing Operations $ 1.40     $ 0.47  
Discontinued Operations -     -  
Basic Earnings Per Common Share $ 1.40     $ 0.47  
       
Average Shares of Common Stock Outstanding - Basic 79,595     79,519  
       
Diluted Earnings Per Common Share:      
Continuing Operations $ 1.40     $ 0.47  
Discontinued Operations -     -  
Diluted Earnings Per Common Share $ 1.40     $ 0.47  
       
Average Shares of Common Stock Outstanding - Diluted 79,724     79,641  
       
Dividends Declared Per Common Share $ 0.28     $ 0.27  



SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)

  Three Months Ended
March 31,
  2018   2017
Net Cash Provided by Operating Activities $ 95,201     $ 79,528  
       
Cash Flows from Investing Activities:      
Capital Expenditures (58,816 )   (67,278 )
Proceeds from Sale of Property, Plant & Equipment -     3,058  
Investment in Long-Term Receivables (1,916 )   (2,362 )
Proceeds from Long-Term Receivables 2,390     2,554  
Notes Receivable -     3,000  
Purchase of Company-Owned Life Insurance (279 )   (8,074 )
Investment in Affiliate (3,975 )   (5,902 )
Net Repayment of Notes Receivable - Affiliate 1,065     2,251  
       
Net Cash Used in Investing Activities (61,531 )   (72,753 )
       
Cash Flows from Financing Activities:      
Net Repayments of Short-Term Credit Facilities (98,300 )   (91,000 )
Proceeds from Issuance of Long-Term Debt 50,000     273,000  
Principal Repayments of Long-Term Debt -     (200,000 )
Payments for Issuance of Long-Term Debt (1,264 )   (2,021 )
Net Settlement of Restricted Stock (776 )   (751 )
       
Net Cash Used in Financing Activities (50,340 )   (20,772 )
       
Net Decrease in Cash, Cash Equivalents and Restricted Cash (16,670 )   (13,997 )
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 39,695     31,910  
       
Cash, Cash Equivalents and Restricted Cash at End of Period $ 23,025     $ 17,913  



SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Thousands)

  March 31,
 2018
  December 31,
 2017
Assets      
Property, Plant and Equipment:      
Utility Plant, at original cost $ 2,696,087     $ 2,652,244  
Accumulated Depreciation (504,936 )   (498,161 )
Nonutility Property and Equipment, at cost 745,826     741,027  
Accumulated Depreciation (205,230 )   (194,913 )
       
Property, Plant and Equipment - Net 2,731,747     2,700,197  
       
Investments:      
Available-for-Sale Securities 36     36  
Restricted 16,713     31,876  
Investment in Affiliates 66,970     62,292  
       
Total Investments 83,719     94,204  
       
Current Assets:      
Cash and Cash Equivalents 6,312     7,819  
Accounts Receivable 243,395     202,379  
Unbilled Revenues 62,601     73,377  
Provision for Uncollectibles (14,684 )   (13,988 )
Notes Receivable - Affiliate 3,848     4,913  
Natural Gas in Storage, average cost 33,422     48,513  
Materials and Supplies, average cost 4,233     4,239  
Prepaid Taxes 20,391     41,355  
Derivatives - Energy Related Assets 24,386     42,139  
Other Prepayments and Current Assets 29,602     28,247  
       
Total Current Assets 413,506     438,993  
       
Regulatory and Other Noncurrent Assets:      
Regulatory Assets 491,629     469,224  
Derivatives - Energy Related Assets 12,268     5,988  
Notes Receivable - Affiliate 13,275     13,275  
Contract Receivables 27,638     28,721  
Goodwill 3,578     3,578  
Identifiable Intangible Assets 12,240     12,480  
Other 100,480     98,426  
       
Total Regulatory and Other Noncurrent Assets 661,108     631,692  
       
Total Assets $ 3,890,080     $ 3,865,086  

SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Thousands)

  March 31,
 2018
  December 31,
 2017
Capitalization and Liabilities      
Equity:      
Common Stock $ 99,516     $ 99,436  
Premium on Common Stock 709,756     709,658  
Treasury Stock (at par) (274 )   (271 )
Accumulated Other Comprehensive Loss (36,756 )   (36,765 )
Retained Earnings 509,255     420,351  
       
Total Equity 1,281,497     1,192,409  
       
Long-Term Debt 974,749     1,122,999  
       
Total Capitalization 2,256,246     2,315,408  
       
Current Liabilities:      
Notes Payable 248,100     346,400  
Current Portion of Long-Term Debt 263,809     63,809  
Accounts Payable 259,684     284,899  
Customer Deposits and Credit Balances 29,356     43,398  
Environmental Remediation Costs 60,846     66,372  
Taxes Accrued 6,814     2,932  
Derivatives - Energy Related Liabilities 12,486     46,938  
  Deferred Contract Revenues 262     259  
Derivatives - Other Current 526     748  
Dividends Payable 22,334     -  
Interest Accrued 7,790     9,079  
Pension Benefits 2,388     2,388  
Other Current Liabilities 9,785     15,860  
       
Total Current Liabilities 924,180     883,082  
       
Deferred Credits and Other Noncurrent Liabilities:      
Deferred Income Taxes - Net 123,239     86,884  
Pension and Other Postretirement Benefits 104,262     101,544  
Environmental Remediation Costs 101,551     106,483  
Asset Retirement Obligations 59,807     59,497  
Derivatives - Energy Related Liabilities 4,153     6,025  
Derivatives - Other Noncurrent 7,194     9,622  
Regulatory Liabilities 300,358     287,105  
Other 9,090     9,436  
       
Total Deferred Credits and Other Noncurrent Liabilities 709,654     666,596  
       
Commitments and Contingencies       
       
Total Capitalization and Liabilities $ 3,890,080     $ 3,865,086  




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Source: South Jersey Industries via Globenewswire