South Jersey Industries, Inc. (SJI)

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South Jersey Industries Inc. (SJI)

Q4 2018 Earnings Conference Call

February 28, 2019, 11:00 AM ET

Company Participants

Dan Fidell - VP of IR

Michael Renna - President and CFO

Cielo Hernandez - SVP and CFO

Ann Anthony - Treasurer

Steven Cocchi - SVP and Chief Strategy and Development Officer

Conference Call Participants

Chris Ellinghaus - Williams Capital

Dennis Coleman - Bank of America

Scott Walker - MFS Investment Management



Good day, ladies and gentlemen, and welcome to the Q4, 2018 South Jersey Industries' Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions how to participate will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Dan Fidell, Vice President of Investor Relations. Sir, you may begin.

Dan Fidell

Thank you. Good morning, everyone and welcome to SJI's fourth quarter and 2018 and full earnings conference call and webcast. I am joined here today by Mike Renna, our President and Chief Executive Officer; as well as several additional members of our senior management team.

Our earnings release and the presentation slides that accompany the call were issued yesterday after the close of the market and are also available on our website at www.sjindustries.com. The release and the associated 10-K provide an in-depth review of earnings on both the GAAP and non-GAAP basis using our non-GAAP measure of economic earnings. Reconciliations of economic earnings to the comparable GAAP measures appear in both documents.

Let me note that throughout today's call we'll be making references to future expectations, plans, and opportunities for SJI. Actual results may differ materially from those indicated by these statements as a result of various important factors including those discussed in the company's Forms 10-K and 10-Q on file with the SEC.

With that said, I'm pleased to introduce our CEO, Mike Renna, who will discuss our current earnings performance and outlook. SJI's Principal Financial Officer, Cielo Hernandez, will then review the performance of our individual segments and balance sheet. And Mike will then review our financial guidance. After that, we'll then be happy to take your questions.

So with that introduction, let me now turn it over to Mike.

Michael Renna

Thanks, Dan. Good morning, everyone. Before we start, I want to take a moment at the outset to address two senior level management changes at SJI. Our Executive Vice President, Steve Clarke is retiring from the company effective today, Steve has distinguished himself in countless ways over a very long and successful career and shown effective leadership at every level across the company.

As you know, Steve was our CFO for over five years and then more recently brought that same leadership and steady hand to our non-regulated operations. Like many of you in the investment community, we will miss Steve's intellect wise counsel, and good humor very much. On behalf of the SJI family, Steve, we wish you and Liz all the best as you begin this exciting chapter and we thank you for a job well done.

I'd also like to welcome and introduce you all to our new Senior Vice President and CFO, Cielo Hernandez. We are thrilled to have a proven leader like Cielo join our team. She brings not only strong technical expertise but also an impressive track record of partnering with business units to drive operational excellence and profitability, exactly the leadership and principled approach that is integral to our business transformation efforts.

Many of you will have an opportunity to meet Ceilo as we make the route at several meetings and conferences in coming months. And you'll hear some remarks from Cielo shortly about our operational performance. But first, I want to give you an update on our business transformation activities.

In addition to record earnings, 2018 certainly witnessed some of the most significant change in our company's history. I'm very pleased with our progress and excited by our future. With regard to our Elizabethtown and Elkton acquisitions, the process was seamless with financing regulatory approval and closing in less than 9 months. Full integration is on track to be completed in Q1, 2020.

On the regulatory front, we achieved multi-year extensions of our SHARP infrastructure and energy efficiency programs at SJG and filed an infrastructure replacement proposal for ETG with the BPU in October. With respect to our core non-regulated operations, we achieved record wholesale marketing results, driven by cold weather and three additional fuel management contracts that became operational.

Regarding business transformation, we successfully executed the sale of our non-core solar and retail gas marketing assets using cash proceeds to pay down debt and strengthen our balance sheet. We also launched a series of initiatives designed to better align internal resource with our strategy and opportunities, leveraging people, process and technology we were able to cost effectively absorb, ETG and Elkton, while simultaneously driving down costs all across our businesses.

These business transformation efforts, which included a very successful early retirement incentive program will help support our growth plans into 2020 and beyond. Again, we did all this while achieving record economic earnings of $116.2 million in 2018. I could not be proud of our employees and their commitment to excellence. In the first few months of the year, we have further strengthen our balance sheet using the proceeds from our non-core assets, sales and the issuance of our equity forward in January for repayment of debt.

Read the rest of this transcript on seekingalpha.com