South Jersey Industries — Q3 2021 Earnings Presentation
31 slides from South Jersey Industries's earnings presentation, Nov 3, 2021
Slide 1: Third Quarter 2021 Earnings Presentation
Third Quarter 2021 Earnings Presentation November 4, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation, 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
Slide 3: Third Quarter 2021 Financial Review
Third Quarter 2021 Financial Review
Slide 4: Third Quarter 2021 Financial Review Highlights
4 Third Quarter 2021 Financial Review Highlights PERFORMANCE ▪ GAAP earnings $(0.23) per diluted share compared to $(0.10) per diluted share in 2020 ▪ Economic Earnings $(0.17) per diluted share compared to $(0.06) per diluted share in 2020 ▪ Capital expenditures $3.5B through 2025 on track; ~80% al
Slide 5: Third Quarter 2021 Consolidated Earnings
Third Quarter 2021 Consolidated Earnings 5 Note: Earnings and average shares outstanding are in millions. Amounts and/or EPS may not add due to rounding. GAAP GAAP Economic Economic GAAP GAAP Economic Economic Earnings EPS Earnings EPS Earnings EPS Earnings EPS UTILITY South Jersey Gas ($7.7) ($0.07
Slide 6: Third Quarter 2021 Consolidated Earnings Bridge
Third Quarter 2021 Economic Earnings Consolidated Earnings Bridge – Q3 2020 to Q3 2021 6 • UTILITY: SJG $1.8M; ETG $(0.9M); ELK $0.3M • NON-UTILITY: Energy Production $(9.9)M; Energy Management $(2.2)M; Midstream $(1.4)M • OTHER: Interest on Debt $(0.4)M
Slide 7: Third Quarter 2021 Utility Earnings Bridge
Third Quarter 2021 Economic Earnings Utility Earnings Bridge – Q3 2020 to Q3 2021 7 • MARGIN: SJG rate relief, customer growth and infrastructure modernization investment • OPERATION EXPENSES: O&M, bad debt, regulatory riders, and energy and other taxes • DEPRECIATION: Utility investment in property
Slide 8: Third Quarter 2021 Non-Utility Earnings Bridge
Third Quarter 2021 Economic Earnings Non-Utility Earnings Bridge – Q3 2020 to Q3 2021 8 • RETAIL SERVICES: Meter reading/appliance services contracts and energy consulting fees • DECARBONIZATION: Equity investment/expense in REV LNG, LLC • RENEWABLES: Fuel Cell and Solar earnings, and ITCs from proj
Slide 9: SJI Utilities Key Regulatory Initiatives Advancing
SJI Utilities (SJIU) Key Regulatory Initiatives Advancing 9 Proposed $742.5M over five years to replace 825 miles of aging steel main and install excess flow valves ▪ Considerable investments past decade to modernize system focused on cast iron/bare steel main replacement ▪ New program will take pla
Slide 10: SJI Energy Enterprises RNG Dairy Farm Development Status
SJI Energy Enterprises (SJIEE) RNG Dairy Farm Development Status 10 MCE = Milking Cow Equivalents SJI RNG DevCo ▪ Initial investment in dairy farm development rights in 2020 ▪ Right of first refusal (ROFR) to purchase additional development rights for a total portfolio of up to 25 dairy farms ▪ Addi
Slide 11: Nine Months 2021 Financial Review
Nine Months 2021 Financial Review
Slide 12: Nine Months 2021 Consolidated Earnings
Nine Months 2021 Consolidated Earnings 12 Note: Earnings and average shares outstanding are in millions. Amounts and/or EPS may not add due to rounding. GAAP GAAP Economic Economic GAAP GAAP Economic Economic Earnings EPS Earnings EPS Earnings EPS Earnings EPS UTILITY South Jersey Gas $82.2 $0.75 $8
Slide 13: Nine Months 2021 Consolidated Earnings Bridge
Nine Months 2021 Economic Earnings Consolidated Earnings Bridge – 2020 YTD to 2021 YTD 13 • UTILITY: SJG $16.4M; ETG $(1.9M); ELK $(0.3M) • NON-UTILITY: Energy Management $6.6M; Energy Production $(6.0)M; Midstream $(1.3)M • OTHER: Interest on Debt $(1.4M)
Slide 14: Nine Months 2021 Utility Earnings Bridge
Nine Months 2021 Economic Earnings Utility Earnings Bridge – 2020 YTD to 2021 YTD 14 • MARGIN: SJG rate relief, customer growth and infrastructure modernization investment • OPERATION EXPENSES: O&M, bad debt, regulatory riders, and energy and other taxes • DEPRECIATION: Utility investment in propert
Slide 15: Nine Months 2021 Non-Utility Earnings Bridge
Nine Months 2021 Economic Earnings Non-Utility Earnings Bridge – 2020 YTD to 2021 YTD 15 • WHOLESALE SERVICES: Fuel supply management contracts and asset optimization opportunities • RETAIL SERVICES: Meter reading/appliance services contracts and energy consulting fees • DECARBONIZATION: Equity inve
Slide 16: Financial Metrics
9SJI Financial Metrics
Slide 17: Capital Expenditures 2021-2025 on Track
Financial Metrics ~$3.5 Billion Capital Expenditures 2021-2025 on Track ~80% for Utilities (SJG/ETG) ~60% for Safety & Reliability ~60% for Sustainability 17 ~ $2,100 60% ~ $1,400 40% Sustainability Traditional ~ $2,000 57% ~ $500 14% ~ $1,000 29% Safety & Reliability New Business Clean Energy ~$2,7
Slide 18: Capital Sources and Uses
Financial Metrics Capital Sources and Uses (Nine Month Period Ended September 30, 2021) Capital Sources ~1.0B Capital Uses ~1.0B 18 CASH FLOW FROM INVESTING $427CASH FLOW FROM OPERATIONS $267 DEBT ISSUANCE $444 DEBT REPAYMENT/OTHER $548 DIVIDENDS, $64 EQUITY ISSUANCE $329 B ill io n s
Slide 19: Equity Capitalization / Credit Ratings
Financial Metrics Equity Capitalization / Credit Ratings Equity-to-Total Cap Credit Ratings 19 Note: Non-GAAP includes mandatory convertible equity units and equity credit from rating agencies for long-duration debt. Results are rounded. S&P SJI SJG ETG BBB BBB BBB Stable Stable Stable Moody's SJI S
Slide 20: Liquidity (September 30, 2021)
Financial Metrics Liquidity (September 30, 2021) 20 M ill io n s $500 $250 $250 $220 $25 LIQUIDITY SOURCES SJI CREDIT FACILITY SJG CREDIT FACILITY ETG CREDIT FACILITY EQUITY FORWARD CASH $61 $83 $11 $1,090 LIQUIDITY USES SJI CREDIT FACILITY SJG CREDIT FACILITY ETG CREDIT FACILITY AVAILABILE LIQUIDIT
Slide 21: Guidance and Outlook
9SJI Guidance and Outlook
Slide 22: 2021 Economic Earnings Guidance Reaffirmed
2021 Economic Earnings Guidance Reaffirmed Midpoint Guidance By Segment – 2020 to 2021 22 • NON-RECURRING ITEMS: 2020 results included ~$13M in nonrecurring gains — adjustments for certain tax benefits (~$7M), adjustments to SJG's rate design (~$3M) and pipeline supplier refunds (~$3M) • UTILITY: SJ
Slide 23: Strong Growth Through 2025 and Beyond
Strong Growth Through 2025 and Beyond Driving Significant Shareholder Value 23 SECTOR FUNDAMENTALS STRATEGIC PLAN FINANCIAL TARGETS $3B+ existing infrastructure are valuable assets, performing essential role supplying reliable energy to homes and businesses and supporting economic growth Utilities w
Slide 24: Appendix
9SJI Appendix
Slide 25: Our Mission: 21st Century Clean Energy Infrastructure Company
2 5 Our Mission 21st Century Clean Energy Infrastructure Company ▪ $3B+ infrastructure company supplying safe, reliable and affordable energy and supporting economic growth ▪ U.S. and New Jersey accelerating transition to low carbon and renewable energy future ▪ Launched utility-centered $3.5B, 5-ye
Slide 26: Decarbonization Goals
Decarbonization Goals Our Pathway To A Clean Energy Future ▪ 70% Reduction in Carbon Emissions and Consumption by 2030 ▪ 100% Reduction in Carbon Emissions and Consumption by 2040 ▪ At least 25% of Annual Capex on Sustainability Investments 26
Slide 27: Regulated Earnings
Regulated Earnings Utilities Remain Our Core Growth Engine in 2021-2025 and Beyond 27 70-80% 20-30% REGULATED NON-REGULATED
Slide 28: Economic EPS Guidance
Economic EPS Guidance Attractive 2021-2025 and Long-Term Economic EPS CAGR 5-8% 5-8% LONG-TERM ANNUAL GROWTH 28 $1.55 - $1.65 $2.00 - $2.10 2021E 2022E 2023E 2024E 2025E
Slide 29: Capital Allocation
Capital Allocation Disciplined Approach Balances Financial Strength With Strong Growth 29 Capital Allocation Priority 2021-2025 Plan Allocate capital first at utility operating companies to ensure system safety and reliability ~60% of 5-year capital plan dedicated to safety and reliability investmen
Slide 30: Future Growth Opportunities
Future Growth Opportunities Focused on Both Utility and Non-Utility Investments 30 HISTORIC TRACK RECORD PRESENT FUTURE OPPORTUNITIES REDUCING ENERGY CONSUMPTION/EMISSIONS Conservation Incentive Program (SJG) Replacement of Aging Infrastructure (SJG) Conservation Incentive Programs (SJG and ETG) Rep
Slide 31: Q&A
9SJI Q&A
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