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SJI Reports Second Quarter 2022 Results

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·26 min read
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Acquisition Proceeding on Track

FOLSOM, NJ , Aug. 03, 2022 (GLOBE NEWSWIRE) --

















Investor Contact:

Daniel Fidell

609-561-9000 x7027

dfidell@sjindustries.com

 

Media Contact:

Dominick DiRocco

609-561-9000 x4262

ddirocco@sjindustries.com

SJI Reports Second Quarter 2022 Results
Acquisition Proceeding on Track

FOLSOM, NJ (August 3, 2022) - SJI (NYSE: SJI) today reported operating results for the second quarter ended June 30, 2022. Highlights include:

  • Q2 2022 GAAP earnings $(0.15) per diluted share compared to $(0.87) per diluted share in 2021 Economic Earnings* $0.05 per diluted share compared to $0.02 per diluted share in 2021

  • YTD 2022 GAAP earnings $0.90 per diluted share compared to $0.30 per diluted share in 2021 Economic Earnings $1.27 per diluted share compared to $1.22 per diluted share in 2021

  • YTD Economic EPS improvement reflects increased profitability from both Utility and Non-Utility operations and the impact of financing activities

  • Acquisition by Infrastructure Investment Fund (IIF) on track; Closing expected in Q4 2022

  • Regulatory initiatives advancing — SJG new Infrastructure Investment Program (IIP) authorized; Base rate cases for ETG/SJG proceeding on schedule

  • RNG production at ten dairy farms under development; Expected in-service in 2022/2023

"Our businesses have performed very well year-to-date, and we remain on track to achieve our financial goals in 2022," said Mike Renna, SJI President and Chief Executive Officer. "Our regulatory initiatives and clean energy investments targeting enhanced infrastructure safety, reliability and decarbonization continue to advance. And our acquisition by IIF continues to secure requisite approvals, with closing of the transaction expected later this year,” added Renna.

 

 

Three Months Ended June 30, 2022

 

Three Months Ended June 30, 2021

 

 

GAAP

GAAP

Economic

Economic

 

GAAP

GAAP

Economic

Economic

 

 

Earnings

EPS

Earnings

EPS

 

Earnings

EPS

Earnings

EPS

Utility

 

$

1.5

 

$

0.01

 

$

2.8

 

$

0.02

 

 

$

3.3

 

$

0.03

 

$

3.3

 

$

0.03

 

Non-Utility

 

$

(11.3

)

$

(0.09

)

$

12.7

 

$

0.10

 

 

$

(90.7

)

$

(0.82

)

$

8.1

 

$

0.07

 

Other

 

$

(8.8

)

$

(0.07

)

$

(9.2

)

$

(0.07

)

 

$

(9.3

)

$

(0.08

)

$

(9.3

)

$

(0.08

)

Total - Continuing Ops

 

$

(18.7

)

$

(0.15

)

$

6.3

 

$

0.05

 

 

$

(96.7

)

$

(0.87

)

$

2.0

 

$

0.02

 

Average Diluted Shares

 

 

125.9

 

 

 

125.9

 

 

 

 

110.9

 

 

 

110.9

 

*Non-GAAP, see "Explanation and Reconciliation of Non-GAAP Financial Measures."

 

 

 

 

 

Note: Earnings and average shares outstanding are in millions. Amounts and/or EPS may not add due to rounding.

 

 

Second Quarter 2022 Results

For the three-month period ended June 30, 2022, SJI reported consolidated GAAP earnings of $(18.7) million compared with $(96.7) million 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 continuing earnings of our business. A full explanation and reconciliation of economic earnings is provided under “Explanation and Reconciliation of Non-GAAP Financial Measures” later in this report and in our 10-K for the year ending December 31, 2021.

For the three-month period ended June 30, 2022, economic earnings were $6.3 million compared with $2.0 million in the prior year period.

UTILITY

Utility entities include the regulated operations of South Jersey Gas (SJG) and Elizabethtown Gas (ETG). Second quarter 2022 GAAP earnings were $1.5 million compared with $3.3 million in 2021. Economic earnings were $2.8 million compared with $3.3 million in 2021.

South Jersey Gas

Performance. Second quarter 2022 GAAP earnings were $4.8 million compared with $6.3 million in 2021. Economic earnings were $6.2 million compared with $6.3 million in 2021. Utility margin increased $4.5 million, reflecting customer growth and the roll-in of investments from infrastructure replacement programs. We define utility margin, a non-GAAP measure, as natural gas revenues plus depreciation and amortization expenses, less natural gas costs, regulatory rider expenses and related volumetric and revenue-based energy taxes. Total expenses increased $4.6 million, primarily reflecting higher depreciation and interest expenses.

Customer Growth. SJG added approximately 6,600 new customers over the last 12 months and now serves approximately 413,000 customers. SJG’s 1.2% customer growth rate compares favorably to the peer average and remains driven by gas conversions from alternate fuels such as oil and propane, and new construction.

Infrastructure Modernization. Through infrastructure replacement programs, SJG enhances the safety and reliability of our system while earning our authorized utility return on approved investments in a timely manner. In June, the New Jersey Board of Public Utilities (NJBPU) authorized a new Infrastructure Investment Program (IIP) that accelerates planned capital expenditures to enhance the delivery of safe, reliable, affordable natural gas, create jobs, and support the State’s environmental goals. SJG's new program authorizes investment of $200 million from 2022-2027 for important infrastructure upgrades including the replacement of up to 250 miles of pre-code coated steel and vintage plastic main. Our annualized investment of approximately $40 million from July 2022 to June 2023 is anticipated to be rolled into rates on October 1, 2023.

Base Rate Case. In April, SJG filed a petition with the NJBPU requesting an increase of $73.1 million to its base rates, which was updated in July to an increase of $73.3 million. The request is based on a proposed pre-tax return on invested capital of 7.77%, with a capital structure that includes a common equity component of 57.0% and a return on common equity of 10.75%. The request is predominantly driven by the significant capital investments that SJG has made since its last base rate proceeding that was resolved in 2020. These capital investments have been and will continue to be made to ensure the safety, reliability and resiliency of SJG's distribution system, allow SJG to continue to provide safe, reliable and best in class customer service, and facilitate the environmental goals of NJ and SJI's commitment to ensuring that it is part of New Jersey’s clean energy future. A resolution of the case is expected later this year.

Energy Efficiency. Through energy efficiency programs, SJG advances New Jersey’s clean energy goals in a manner that benefits customers, the environment and the State’s green economy while recovering our investments in a timely manner. SJG's energy efficiency program, as approved by the BPU in April 2021, authorizes investment of $133.2 million from July 1, 2021 to June 30, 2024. The revenue requirement associated with our net investment of approximately $25 million from July 2021 to June 2022 commenced recovery in July 2021 under the terms of the program.

Elizabethtown Gas
Performance. Second quarter 2022 GAAP/economic earnings were $(3.4) million compared with $(3.0) million in 2021. Utility margin, as previously defined, increased $2.0 million, reflecting customer growth and the roll-in of investments from infrastructure replacement programs. Total expenses increased $2.4 million, primarily reflecting higher O&M and interest expenses.

Customer Growth. ETG added approximately 5,000 new customers over the last 12 months and now serves approximately 307,000 customers. ETG’s 1.5% customer growth rate has increased from its historic 0.9% rate, driven by increases in gas conversions from alternate fuels such as oil and propane, and new construction.

Infrastructure Modernization. ETG's Infrastructure Investment Plan (IIP) authorizes investment of $300 million from 2019-2024 for important infrastructure upgrades including the replacement of up to 250 miles of cast iron and bare steel mains. Our investment of approximately $58 million from July 2021 to June 2022 is anticipated to be rolled into rates on October 1, 2022.

Base Rate Case. In December 2021, ETG filed a petition with the NJBPU requesting an increase of $76.6 million, which was updated in February 2022 to a requested increase of $72.9 million and in May 2022 to a requested increase of $77.3 million. The request is predominantly driven by the significant capital investments that ETG has made since its last base rate proceeding that was resolved in 2019. These capital investments have been and will continue to be made to ensure the safety, reliability and resiliency of ETG's distribution system, allow ETG to continue to provide safe, reliable and best in class customer service, and facilitate the environmental goals of NJ and SJI's commitment to ensuring that it is part of New Jersey’s clean energy future. A resolution of the case is expected in Q3 2022.

Energy Efficiency. ETG's energy efficiency program, as approved by the BPU in April 2021, authorizes investment of $74.0 million from July 1, 2021 to June 30, 2024. The revenue requirement associated with our net investment of approximately $12.7 million from July 2021 to June 2022 commenced recovery in July 2021 under the terms of the program.

NON-UTILITY

SJI's non-utility entities include Energy Management, Energy Production and Midstream. Second quarter 2022 GAAP earnings were $(11.3) million compared with $(90.7) million in 2021. Economic earnings were $12.7 million compared with $8.1 million in 2021.

Energy Management

Performance. Energy Management includes Wholesale Services (Fuel Management/Marketing) and Retail Services (Account Services/Energy Consulting). Second quarter 2022 GAAP earnings were $(22.2) million compared with $(4.1) million in 2021. Economic earnings were $2.4 million compared with $7.0 million in 2021, reflecting lower margins from daily energy trading activities and less robust asset optimization opportunities as compared with the year ago period, and contributions from consulting activities, meter reading and appliance service contract fees.

Energy Production

Performance. Energy Production primarily includes renewable (fuel cell/solar) and decarbonization (REV/RNG development) investments. Second quarter 2022 GAAP earnings were $10.2 million compared with $(0.4) million in 2021. Economic earnings were $10.2 million compared with $(0.2) million in 2021, primarily reflecting investment tax credits (ITC's) and income associated with fuel cell and solar investments, and contributions from SJI's 35% equity interest in REV. RNG development activities at ten dairy farms is proceeding on track, with in-service anticipated in 2022/2023.

Midstream

Performance. Second quarter GAAP/economic earnings were $0.8 million compared with $(86.1) million in 2021. Economic earnings were $0.0 million compared with $1.2 million in 2021, reflecting the absence of allowance for funds used during construction following cessation of the PennEast Pipeline project in 2021.

OTHER

Performance. Other entity includes interest on debt, including debt associated with past acquisitions. Second quarter 2022 GAAP earnings were $(8.8) million compared with $(9.3) million in 2021. Economic earnings were $(9.2) million compared with $(9.3) million in 2021, reflecting lower outstanding indebtedness partially offset by higher interest and bank fees.

Six Months 2022 Results

 

 

Six Months Ended June 30, 2022

 

Six Months Ended June 30, 2021

 

 

GAAP

GAAP

Economic

Economic

 

GAAP

GAAP

Economic

Economic

 

 

Earnings

EPS

Earnings

EPS

 

Earnings

EPS

Earnings

EPS

Utility

 

$

128.7

 

$

1.05

 

$

130.0

 

$

1.06

 

 

$

124.9

 

$

1.16

 

$

124.9

 

$

1.16

 

Non-Utility

 

$

3.3

 

$

0.03

 

$

43.6

 

$

0.35

 

 

$

(74.4

)

$

(0.69

)

$

24.1

 

$

0.22

 

Other

 

$

(21.2

)

$

(0.17

)

$

(17.9

)

$

(0.15

)

 

$

(18.4

)

$

(0.17

)

$

(18.2

)

$

(0.17

)

Total - Continuing Ops

 

$

110.7

 

$

0.90

 

$

155.8

 

$

1.27

 

 

$

32.1

 

$

0.30

 

$

130.9

 

$

1.22

 

Average Diluted Shares

 

 

122.9

 

 

 

122.9

 

 

 

 

107.4

 

 

 

107.4

 

*Non-GAAP, see "Explanation and Reconciliation of Non-GAAP Financial Measures."

 

 

 

 

 

Note: Earnings and average shares outstanding are in millions. Amounts and/or EPS may not add due to rounding.

 

 

Six months YTD GAAP earnings were $110.7 million compared with $32.1 million in 2021. Economic earnings were $155.8 million compared with $130.9 million in the year-ago period.

UTILITY

Utility entities contributed six months YTD GAAP earnings of $128.7 million compared with $124.9 million in 2021. Economic earnings were $130.0 million compared with $124.9 million in the year-ago period.

  • SJG. YTD GAAP earnings were $93.5 million compared with $89.9 million in 2021. Economic earnings were $94.9 million compared with $89.9 million in 2021. Utility margin increased $13.4 million, reflecting customer growth and the roll-in of investments from infrastructure replacement programs. Total expenses increased $8.4 million, primarily reflecting higher depreciation and interest expenses.

  • ETG. YTD GAAP/economic earnings were $35.2 million compared with $35.0 million in 2021. Utility margin increased $5.7 million, reflecting customer growth and the roll-in of investments from infrastructure replacement programs. Total expenses increased $5.5 million, primarily reflecting higher depreciation and interest expenses.

NON-UTILITY

Six months YTD GAAP earnings were $3.3 million compared with $(74.4) million in 2021. Economic earnings were $43.6 million compared with $24.1 million in 2021.

  • Energy Management. YTD GAAP earnings were $(7.1) million compared with $9.6 million in 2021. Economic earnings were $32.9 million compared with $20.9 million in 2021, reflecting improved asset optimization opportunities, colder weather and improved contributions from consulting activities.

  • Energy Production. YTD GAAP earnings were $9.8 million compared with $1.2 million in 2021. Economic earnings were $10.7 million compared with $1.0 million in 2021, reflecting ITC's and income associated with fuel cell and solar investments and contributions from SJI's equity interest in REV.

  • Midstream. YTD GAAP earnings were $0.6 million compared with $(85.1) million in 2021. Economic earnings were $0.0 million compared with $2.2 million in 2021, reflecting the absence of AFUDC related to the project.

OTHER

Six months YTD GAAP earnings were $(21.2) million compared with $(18.4) million in 2021. Economic earnings were $(17.9) million compared with $(18.2) million in 2021, reflecting lower outstanding indebtedness partially offset by higher interest and bank fees.

Capital Expenditures and Cash Flow

For the three months ended June 30, 2022:

  • Net cash provided by operating activities was $323.6 million compared with $241.7 million in the prior year period, primarily reflecting improved wholesale marketing results and customer growth.

  • Net cash used in investing activities was $(312.9) million compared with $(269.3) million in the prior year period, primarily reflecting utility capital expenditures and REV, fuel cell and solar investments.

  • Net cash provided by financing activities was $15.6 million compared with $73.8 million in the prior year period, primarily reflecting equity issuance partially offset by debt repayment.

Balance Sheet

  • Equity-to-total capitalization was 37.6% at June 30, 2022 compared with 35.8% at December 31, 2021, largely reflecting equity financing and repayment of debt.

  • Assuming conversion of mandatory convertible equity units and equity credit from rating agencies for long-duration debt, SJI's adjusted equity-to-total capitalization, a non-GAAP measure, was 45.3% at June 30, 2022 compared with 43.6% at December 31, 2021.

  • At June 30, 2022, SJI had total credit facilities of $1.0 billion, with $647.8 million of available liquidity.

Dividends

On August 3, SJI’s Board of Directors declared its regular dividend of $0.3100 per share for the third quarter of 2022. The dividend is payable October 4, 2022 to shareholders of record at the close of business on September 9, 2022. This is SJI's 71st consecutive year of paying dividends.

Acquisition

On February 24, 2022, SJI announced that it had entered into a definitive agreement to be acquired by IIF. The per share purchase price of $36.00 represented a 46.3% premium to SJI’s 30-day volume weighted average price (VWAP) as of February 23, 2022, the last trading day prior to the announcement of the agreement. The transaction was unanimously approved by SJI’s Board of Directors and is expected to close in the fourth quarter of 2022, subject to the approval of SJI’s shareholders, the receipt of regulatory approvals, including by the New Jersey Board of Public Utilities, and other customary closing conditions. Dividends payable to SJI shareholders are expected to continue in the ordinary course until the closing, subject to approval by SJI’s Board of Directors. Upon completion of the transaction, SJI’s shares will no longer trade on the New York Stock Exchange, and SJI will become a private company.

About SJI

SJI (NYSE: SJI), an energy infrastructure holding company based in Folsom, NJ, delivers energy services to customers through two primary subsidiaries: SJI Utilities (SJIU) and SJI Energy Enterprises (SJIEE). SJIU houses the company’s regulated natural gas utility operations, delivering safe, reliable and affordable natural gas to more than 700,000 residential, commercial and industrial customers across New Jersey via its South Jersey Gas and Elizabethtown Gas subsidiaries. SJIEE houses the company’s non-utility operations primarily focused on clean energy development and decarbonization via renewable energy production and energy management activities. Visit sjindustries.com for more information about SJI and its subsidiaries.

Forward-Looking Statements and Risk Factors

This news release, including information incorporated by reference, 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 guidance, industry prospects or 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. This Quarterly Report uses 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. These forward-looking statements are based on the beliefs and assumptions of management at the time that these statements were prepared 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; cybersecurity incidents and related disruptions; 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; changes in business strategies; failure to satisfy the conditions to closing of the Merger; the diversion of management time on Merger-related issues; and public health crises and epidemics or pandemics, such as the COVID-19 pandemic. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements, are described in greater detail in Part II, Item 1A in this Quarterly Report, and Part I, Item 1A in SJI’s and SJG's Annual Report on Form 10-K for the year ended December 31, 2021, as they may be supplemented from time to time by other SEC filings made by SJI or SJG. earnings release. Also refer to the additional risk factor described below:

Explanation of Non-GAAP Financial Measures

Management uses the 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 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 non-utility derivative transactions; (ii) less income and plus losses attributable to noncontrolling interests; and (iii) less the impact of transactions, contractual arrangements or other events where management believes period to period comparisons of SJI's operations could be difficult or potentially confusing. With respect to part (iii) of the definition of Economic Earnings, items excluded from Economic Earnings for the three and six months ended June 30, 2022 and 2021, are described in (A)-(E) in the table below. Economic Earnings is a significant financial measure 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 the items described above. Management uses Economic Earnings to manage its business and to determine such items as incentive/compensation arrangements and allocation of resources. 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.

Reconciliation of Non-GAAP Financial Measures

The following table presents a reconciliation of our income from continuing operations and earnings per share from continuing operations to Economic Earnings and Economic Earnings per share (in thousands, except per share data):

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

(Loss) Income from Continuing Operations

$

(18,678

)

 

$

(96,660

)

 

$

110,736

 

 

$

32,138

 

Minus/Plus:

 

 

 

 

 

 

 

Unrealized Mark-to-Market Losses on Derivatives

 

33,922

 

 

 

15,230

 

 

 

55,191

 

 

 

15,274

 

Income Attributable to Noncontrolling Interests

 

(104

)

 

 

(120

)

 

 

(291

)

 

 

(299

)

Impairment of Equity Method Investment (A)

 

 

 

 

87,370

 

 

 

 

 

 

87,370

 

Impairment of Property, Plant & Equipment (B)

 

1,897

 

 

 

 

 

 

1,897

 

 

 

 

Acquisition/Sale Net Costs (C)

 

(1,342

)

 

 

406

 

 

 

5,149

 

 

 

674

 

Income Taxes (D)

 

(9,391

)

 

 

(18,414

)

 

 

(16,922

)

 

 

(18,451

)

Additional Tax Adjustments (E)

 

 

 

 

14,176

 

 

 

 

 

 

14,176

 

Economic Earnings

$

6,304

 

 

$

1,988

 

 

$

155,760

 

 

$

130,882

 

 

 

 

 

 

 

 

 

Earnings per Share from Continuing Operations

$

(0.15

)

 

$

(0.87

)

 

$

0.90

 

 

$

0.30

 

Minus/Plus:

 

 

 

 

 

 

 

Unrealized Mark-to-Market Losses on Derivatives

 

0.27

 

 

 

0.14

 

 

 

0.45

 

 

 

0.14

 

Income Attributable to Noncontrolling Interests

 

 

 

 

 

 

 

 

 

 

 

Impairment of Equity Method Investment (A)

 

 

 

 

0.79

 

 

 

 

 

 

0.81

 

Impairment of Property, Plant & Equipment (B)

 

0.02

 

 

 

 

 

 

0.02

 

 

 

 

Acquisition/Sale Net Costs (C)

 

(0.01

)

 

 

 

 

 

0.04

 

 

 

0.01

 

Income Taxes (D)

 

(0.08

)

 

 

(0.17

)

 

 

(0.14

)

 

 

(0.17

)

Additional Tax Adjustments (E)

 

 

 

 

0.13

 

 

 

 

 

 

0.13

 

Economic Earnings per Share

$

0.05

 

 

$

0.02

 

 

$

1.27

 

 

$

1.22

 

(A) Represents an other-than-temporary impairment charge taken in 2021 on the Company’s equity method investment in PennEast.

(B) Represents an other-than-temporary impairment charge on property, plant & equipment at SJG that was deemed unusable.

(C) In 2022, represents costs incurred related to the Merger Agreement and to finalize the transactions related to acquiring Bronx Midco and solar projects, partially offset with gains recorded on the sale of assets. In 2021, represents the final working capital payment on the sale of Elkton.

(D) The income taxes were determined using a combined average statutory tax rate.

(E) Represents a federal deferred tax asset valuation allowance taken in 2021 at SJI related to the impairment charge described in (A).

Summary of Utility Margin

The following tables summarize Utility Margin for SJG and ETG (in thousands):

South Jersey Gas

 

Three Months Ended
June 30,

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

2022

 

 

 

2021

 

Utility Margin:

 

 

 

 

 

 

Residential

$

40,345

 

 

$

37,728

$

163,823

 

 

$

157,701

 

Commercial and Industrial

 

21,499

 

 

 

20,101

 

66,086

 

 

 

61,123

 

Cogeneration and Electric Generation

 

953

 

 

 

1,172

 

2,204

 

 

 

2,421

 

Interruptible

 

19

 

 

 

14

 

45

 

 

 

79

 

Off-System Sales & Capacity Release

 

920

 

 

 

195

 

3,183

 

 

 

932

 

Other Revenues

 

661

 

 

 

736

 

901

 

 

 

979

 

Margin Before Weather Normalization & Decoupling

 

64,397

 

 

 

59,946

 

236,242

 

 

 

223,235

 

CIP Mechanism

 

(669

)

 

 

636

 

(1,395

)

 

 

(126

)

EET Mechanism

 

1,920

 

 

 

1,555

 

3,724

 

 

 

3,009

 

Utility Margin**

$

65,648

 

 

$

62,137

$

238,571

 

 

$

226,118

 

Elizabethtown Gas

 

Three Months Ended
June 30,

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

2022

 

 

 

2021

 

Utility Margin:

 

 

 

 

 

 

Residential

$

21,427

 

 

$

21,552

 

$

89,033

 

 

$

87,533

 

Commercial & Industrial

 

16,629

 

 

 

16,716

 

 

47,775

 

 

 

49,773

 

Regulatory Rider Mechanisms (B)

 

(1,917

)

 

 

(4,130

)

 

(7,967

)

 

 

(14,178

)

Utility Margin (C)

$

36,139

 

 

$

34,138

 

$

128,841

 

 

$

123,128

 

*B-Represents pass-through expenses for which there is a corresponding credit in operating revenues.  Therefore, such recoveries have no impact on financial results.

**Utility Margin is a non-GAAP financial measure and is further defined on page 2 under SJG performance. The definition of Utility Margin is the same for SJG and ETG gas utility operations.

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

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Operating Revenues:

 

 

 

 

 

 

 

Utility

$

181,111

 

 

$

144,270

 

 

$

671,330

 

 

$

546,886

 

Nonutility

 

330,320

 

 

 

167,558

 

 

 

664,679

 

 

 

439,242

 

Total Operating Revenues

 

511,431

 

 

 

311,828

 

 

 

1,336,009

 

 

 

986,128

 

Operating Expenses:

 

 

 

 

 

 

 

Cost of Sales - (Excluding depreciation and amortization)

 

 

 

 

 

 

 

- Utility

 

67,133

 

 

 

33,286

 

 

 

267,637

 

 

 

159,799

 

- Nonutility

 

354,237

 

 

 

168,209

 

 

 

662,001

 

 

 

413,270

 

Operations and Maintenance

 

62,791

 

 

 

62,881

 

 

 

141,769

 

 

 

132,984

 

Depreciation

 

34,181

 

 

 

33,031

 

 

 

68,138

 

 

 

64,843

 

Impairment Charges

 

1,897

 

 

 

 

 

 

1,897

 

 

 

 

Energy and Other Taxes

 

3,338

 

 

 

2,812

 

 

 

8,113

 

 

 

6,795

 

Total Operating Expenses

 

523,577

 

 

 

300,219

 

 

 

1,149,555

 

 

 

777,691

 

Operating (Loss) Income

 

(12,146

)

 

 

11,609

 

 

 

186,454

 

 

 

208,437

 

 

 

 

 

 

 

 

 

Other Income and Expense

 

2,891

 

 

 

3,592

 

 

 

5,494

 

 

 

5,660

 

Interest Charges

 

(31,561

)

 

 

(31,185

)

 

 

(63,140

)

 

 

(62,644

)

(Loss) Income Before Income Taxes

 

(40,816

)

 

 

(15,984

)

 

 

128,808

 

 

 

151,453

 

Income Taxes

 

22,067

 

 

 

4,702

 

 

 

(18,599

)

 

 

(37,067

)

Equity in Earnings (Loss) of Affiliated Companies

 

71

 

 

 

(85,378

)

 

 

527

 

 

 

(82,248

)

(Loss) Income from Continuing Operations

 

(18,678

)

 

 

(96,660

)

 

 

110,736

 

 

 

32,138

 

Loss from Discontinued Operations - (Net of tax benefit)

 

(152

)

 

 

(80

)

 

 

(222

)

 

 

(151

)

Net (Loss) Income

 

(18,830

)

 

 

(96,740

)

 

 

110,514

 

 

 

31,987

 

Less: Income Attributable to Noncontrolling Interests

 

76

 

 

 

88

 

 

 

211

 

 

 

217

 

Net (Loss) Income Attributable to South Jersey Industries, Inc.

$

(18,906

)

 

$

(96,828

)

 

$

110,303

 

 

$

31,770

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share:

 

 

 

 

 

 

 

Continuing Operations

$

(0.15

)

 

$

(0.87

)

 

$

0.92

 

 

$

0.30

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

(0.15

)

 

 

(0.87

)

 

 

0.92

 

 

 

0.30

 

Less: Income Attributable to Noncontrolling Interests

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income Attributable to South Jersey Industries, Inc.

$

(0.15

)

 

$

(0.87

)

 

$

0.92

 

 

$

0.30

 

 

 

 

 

 

 

 

 

Average Shares of Common Stock Outstanding - Basic

 

122,442

 

 

 

110,902

 

 

 

120,316

 

 

 

105,902

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Common Share:

 

 

 

 

 

 

 

Continuing Operations

$

(0.15

)

 

$

(0.87

)

 

$

0.90

 

 

$

0.30

 

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

(0.15

)

 

 

(0.87

)

 

 

0.90

 

 

 

0.30

 

Less: Income Attributable to Noncontrolling Interests

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income Attributable to South Jersey Industries, Inc.

$

(0.15

)

 

$

(0.87

)

 

$

0.90

 

 

$

0.30

 

 

 

 

 

 

 

 

 

Average Shares of Common Stock Outstanding - Diluted

 

122,442

 

 

 

110,902

 

 

 

122,887

 

 

 

107,389

 

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

 

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

Net Cash Provided by Operating Activities

$

323,580

 

 

$

241,651

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

Capital Expenditures

 

(260,757

)

 

 

(232,138

)

Investment in Contract Receivables

 

(11,324

)

 

 

(18,335

)

Proceeds from Contract Receivables

 

6,612

 

 

 

12,928

 

Investment in Affiliates

 

(40,158

)

 

 

(9,802

)

Return of Investment in Affiliates

 

10,466

 

 

 

 

Advances to Affiliates

 

(12,105

)

 

 

(7,924

)

Net Repayment of Notes Receivable - Affiliates

 

 

 

 

890

 

Divestiture Working Capital Settlement

 

 

 

 

(267

)

Investment in Subsidiary, Net of Cash Acquired

 

(5,660

)

 

 

(14,672

)

 

 

 

 

Net Cash Used in Investing Activities

 

(312,926

)

 

 

(269,320

)

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

Net Repayments of Short-Term Credit Facilities

 

(100

)

 

 

(571,700

)

Proceeds from Issuance of Long-Term Debt

 

 

 

 

460,000

 

Principal Repayments of Long-Term Debt

 

(48,176

)

 

 

(100,000

)

Payments for Issuance of Long-Term Debt

 

 

 

 

(12,761

)

Dividends on Common Stock

 

(36,398

)

 

 

(30,453

)

Proceeds from Sale of Common Stock

 

100,380

 

 

 

329,772

 

Payments for the Issuance of Common Stock

 

 

 

 

(2,300

)

Capital Distributions to Noncontrolling Interests in Subsidiaries

 

(130

)

 

 

 

Capital Contributions of Noncontrolling Interests in Subsidiaries

 

43

 

 

 

1,213

 

 

 

 

 

Net Cash Provided by Financing Activities

 

15,619

 

 

 

73,771

 

 

 

 

 

Net Increase in Cash, Cash Equivalents and Restricted Cash

 

26,273

 

 

 

46,102

 

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

 

29,440

 

 

 

41,831

 

 

 

 

 

Cash, Cash Equivalents and Restricted Cash at End of Period

$

55,713

 

 

$

87,933

 

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

 

June 30,
2022

 

December 31,
2021

Assets

 

 

 

Property, Plant and Equipment:

 

 

 

Utility Plant, at original cost

$

5,870,464

 

 

$

5,682,805

 

Accumulated Depreciation

 

(1,005,538

)

 

 

(975,619

)

Nonutility Property and Equipment, at cost

 

287,314

 

 

 

240,503

 

Accumulated Depreciation

 

(38,630

)

 

 

(35,367

)

 

 

 

 

Property, Plant and Equipment - Net

 

5,113,610

 

 

 

4,912,322

 

 

 

 

 

Investments:

 

 

 

Available-for-Sale Securities

 

37

 

 

 

37

 

Restricted

 

2,241

 

 

 

686

 

Investment in Affiliates

 

70,264

 

 

 

38,509

 

 

 

 

 

Total Investments

 

72,542

 

 

 

39,232

 

 

 

 

 

Current Assets:

 

 

 

Cash and Cash Equivalents

 

53,472

 

 

 

28,754

 

Accounts Receivable

 

378,095

 

 

 

343,835

 

Unbilled Revenues

 

23,012

 

 

 

87,357

 

Provision for Uncollectibles

 

(50,876

)

 

 

(41,763

)

Notes Receivable - Affiliates

 

5,258

 

 

 

5,695

 

Natural Gas in Storage, average cost

 

69,615

 

 

 

59,744

 

Materials and Supplies, average cost

 

1,633

 

 

 

1,053

 

Prepaid Taxes

 

43,699

 

 

 

33,977

 

Derivatives - Energy Related Assets

 

157,217

 

 

 

95,041

 

Other Prepayments and Current Assets

 

27,490

 

 

 

25,269

 

 

 

 

 

Total Current Assets

 

708,615

 

 

 

638,962

 

 

 

 

 

Regulatory and Other Noncurrent Assets:

 

 

 

Regulatory Assets

 

643,014

 

 

 

672,416

 

Derivatives - Energy Related Assets

 

61,923

 

 

 

22,488

 

Notes Receivable - Affiliates

 

94,969

 

 

 

64,254

 

Contract Receivables

 

49,381

 

 

 

45,339

 

Goodwill

 

706,960

 

 

 

706,960

 

Other

 

209,587

 

 

 

206,699

 

 

 

 

 

Total Regulatory and Other Noncurrent Assets

 

1,765,834

 

 

 

1,718,156

 

 

 

 

 

Total Assets

$

7,660,601

 

 

$

7,308,672

 


 

June 30,
2022

 

December 31,
2021

Capitalization and Liabilities

 

 

 

Equity:

 

 

 

Common Stock

$

153,081

 

 

$

146,675

 

Premium on Common Stock

 

1,654,503

 

 

 

1,559,060

 

Treasury Stock (at par)

 

(316

)

 

 

(287

)

Accumulated Other Comprehensive Loss

 

(26,712

)

 

 

(26,729

)

Retained Earnings

 

346,374

 

 

 

310,433

 

Total South Jersey Industries, Inc. Equity

 

2,126,930

 

 

 

1,989,152

 

Noncontrolling Interests

 

10,413

 

 

 

10,289

 

Total Equity

 

2,137,343

 

 

 

1,999,441

 

 

 

 

 

Long-Term Debt

 

3,177,991

 

 

 

3,189,009

 

 

 

 

 

Total Capitalization

 

5,315,334

 

 

 

5,188,450

 

 

 

 

 

Current Liabilities:

 

 

 

Notes Payable

 

333,900

 

 

 

334,000

 

Current Portion of Long-Term Debt

 

31,076

 

 

 

66,076

 

Accounts Payable

 

429,986

 

 

 

330,164

 

Customer Deposits and Credit Balances

 

32,136

 

 

 

40,355

 

Environmental Remediation Costs

 

39,654

 

 

 

40,905

 

Taxes Accrued

 

4,559

 

 

 

4,937

 

Derivatives - Energy Related Liabilities

 

146,919

 

 

 

60,002

 

Deferred Contract Revenues

 

356

 

 

 

753

 

Derivatives - Other Current

 

320

 

 

 

568

 

Dividends Payable

 

37,964

 

 

 

 

Interest Accrued

 

22,051

 

 

 

23,611

 

Other Current Liabilities

 

40,478

 

 

 

54,311

 

 

 

 

 

Total Current Liabilities

 

1,119,399

 

 

 

955,682

 

 

 

 

 

Deferred Credits and Other Noncurrent Liabilities:

 

 

 

Deferred Income Taxes - Net

 

224,421

 

 

 

198,901

 

Environmental Remediation Costs

 

124,984

 

 

 

125,176

 

Asset Retirement Obligations

 

233,061

 

 

 

229,030

 

Derivatives - Energy Related Liabilities

 

50,446

 

 

 

16,079

 

Derivatives - Other Noncurrent

 

4,031

 

 

 

7,432

 

Regulatory Liabilities

 

408,942

 

 

 

398,951

 

Other

 

179,983

 

 

 

188,971

 

 

 

 

 

Total Deferred Credits and Other Noncurrent Liabilities

 

1,225,868

 

 

 

1,164,540

 

 

 

 

 

Commitments and Contingencies  (Note 11)

 

 

 

 

 

 

 

Total Capitalization and Liabilities

$

7,660,601

 

 

$

7,308,672