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PHONE: 609-561-9000
MEDIA CONTACT: JOANNE BRIGANDI x4240
INVESTOR CONTACT: STEPHEN CLARK x4260
January 29, 2004
SJI Posts 18% Increase in Income from Continuing Operations
Reports Record Earnings for a Fifth Consecutive Year
FOLSOM, N.J. -- Today, South Jersey Industries (NYSE: SJI) announced record earnings from continuing operations for 2003 of $34.6 million, or $2.73 per share, an increase of $29.4 million, or $2.43 per share from 2002 results. This performance reflects an 18% increase in net income from continuing operations and a 12% increase in earnings per share from continuing operations. Both utility and non-utility business lines contributed to SJI's record performance.
"Exceptional earnings performance in 2003 marks our fifth consecutive year of record earnings and our fifth year in a row of increasing SJI's dividend," said SJI Chairman of the Board and CEO Charles Biscieglia. "Our performance clearly indicates that our focused strategy of growing SJI in energy related markets has been successful in achieving our goal of sustained, consistent earnings and dividend growth. Our $0.08 annual dividend increase and the dividend policy of 3% to 6% annual growth announced in November of 2003, demonstrate our confidence to SJI shareholders in our ability to continue the trend of record earnings growth in the future."
Highlights For 2003 Include:
SJI Provides Strong Total Returns to Shareholders: Stock price appreciation,
combined with dividends paid in 2003, provided SJI shareholders with a total
return of 28% on their investment. For the 5-year period ending December 31,
2003, SJI's investors enjoyed a 14.5% annualized total return, which compares
very favorably to negative 2.5% and negative 0.6% returns from the S&P Utility
Index and S&P 500 Index, respectively.
Utility Business Produces Record Performance: South Jersey Gas' net income of $26.6 million in 2003 was 15% higher than last year when it produced $23.2 million. Key contributing factors were:
SJG added 8,188 customers to its customer base during 2003. Customer growth of 2.8% continues to be well above the national average of 1.8%. The growth rate is also the highest of any gas utility in New Jersey. Dynamic economic development in our service area, aided by an anticipated stream of conversions from electricity and oil, the latter of which is heavily driven by environmental issues, should help SJG duplicate 2003's growth rate this year. These new customers will add approximately $1.8 million to net income in 2004.
Weather was 12.5% colder in 2003 than 2002. Significantly colder weather in 2003 compared to the prior year, added $2.9 million to net income while the temperature adjustment clause reduced gas costs to our customers by the same amount.
Off-system sales activities added 9% to net income over last year. Income from this business line grew by $550,000 in 2003 to $6.7 million. Higher profit margins per unit sold and increased capacity release activity were the primary contributors. To maximize the value of its pipeline and storage assets, SJG actively markets these assets to third parties when they are not needed by utility customers. Through a sharing formula under which SJG splits proceeds of its off-system sales with customers, SJG returned $11.0 million to customers in 2003.
Interest expense decreased by 8% in 2003. SJG realized lower interest rates on both short-term and new long-term debt, producing nearly $1 million in savings. We financed redemptions of $75 million of higher rate debt with a combination of equity and debt. The debt carries an average rate of 4.98% and an average maturity of 17 years. Included in the total redeemed was $35 million of SJG's 8.35% Preferred Securities called in November 2003. These actions will provide significantly greater future interest savings when in place for a full year.
Non-Utility Income Contribution Jumps 28% Percent: Non-Utility operations accounted for 23% of SJI's 2003 earnings, increasing to $7.9 million from $6.2 million in 2002. Reasons for the substantial performance hike include:
Marina Energy delivered $1.1 million to SJI's bottom line. This represented
an $800,000 increase compared with 2002. The major contributor to that improvement
was the thermal energy plant in Atlantic City, N.J. becoming fully operational
in July 2003. Plant operations have exceeded our expectations to date.
We expect Marina's contribution in 2004 to double with a full year of operation
from the thermal plant and other projects coming on-line.
SJE's customer base increased by 23 percent. In 2003 South Jersey Energy reaped the benefits of strong customer growth in its retail gas marketing activities. SJE's customer count increased to just over 93,400 customers from 76,200 at the end of 2002. Commencement of electric marketing activities also contributed positively to earnings. SJE was awarded a contract to supply all electricity to many central and northern New Jersey school districts through May 2005. SJE's net income increased by almost $700,000 in 2003 to $3.2 million.
Wholesale gas marketing profits grow by 19 percent. Higher volumes of gas marketed, additional pipeline capacity and storage assets, and favorable market conditions helped South Jersey Resources Group grow net income from continuing operations by almost $500,000, to $3 million, compared with 2002.
SJI Strengthens Balance Sheet: To maintain the financial flexibility necessary to take advantage of the many growth opportunities present at SJI's utility and non-utility operations, we strengthened our balance sheet during 2003. SJI raised $36 million of equity through its dividend reinvestment program, replacing $35 million of preferred securities. The result was a reduction of SJI's debt-to-capitalization ratio from 65.3% at the end of 2002 to 58.8% at year-end 2003. SJI's leverage typically peaks due to seasonal working capital needs in the fourth quarter. SJI projects a debt-to-capitalization ratio of approximately 50% during the first half of 2004.
Webcast and Conference Call Details
South Jersey Industries' President and COO, Edward J. Graham, will be hosting
an open conference call and webcast to discuss the company's 2003 fiscal year
earnings on Thursday, January 29, 2004 at 11:00 a.m. EST. To participate in
the conference call, dial 1-800-901-5231, approximately 10 minutes ahead of
the scheduled time and provide the pass code of 36930282.
To listen to a live webcast, simply visit the South Jersey Industries website
at http://www.sjindustries.com, click on Investors and then click on the webcast
icon. A recorded version of the webcast will be available at SJI's website following
the call. A rebroadcast of the conference call will also be available by calling
1-888-286-8010 and entering the code: 88164878. SJI encourages shareholders,
media and members of the financial community to attend the conference call and/or
listen to the webcast.
South Jersey Industries (NYSE: SJI) is an energy services holding company for South Jersey Gas, South Jersey Energy, South Jersey Resources Group and Marina Energy.
This release contains forward-looking statements about SJI's financial performance. The statements are made in good faith and deemed reasonable at the date of this release. SJI assumes no responsibility to update this information. Actual results may vary and SJI encourages you to conduct your own research before making any investment decisions including a review of SJI's second quarter 2003 SEC Form 10Q for a discussion of risks and/or uncertainties that may cause actual results to vary.
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