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Telephone: (609) 561-9000
Investor Relations Contact: Steve Clark x4260
Media Contact: Joanne Brigandi x4240
July 29, 2004
SJI Doubles Earnings for Second Quarter
Delivers Six Month Record Earnings
FOLSOM, N.J. - - South Jersey Industries (NYSE:SJI) today reported earnings from continuing operations of $3.9 million, or $0.28 per share for the second quarter of 2004 compared with $2.0 million, or $0.16 per share, for the same period last year.
"SJI's ability to continue to generate strong earnings growth reflects the effectiveness of our strategic plan, particularly with regard to our non-utility businesses," said SJI CEO Edward Graham. "These focused strategies have produced consistent profit and dividend growth at the same time we have been substantially strengthening the balance sheet. We are very pleased to deliver that performance to our shareholders." SJI's earnings from continuing operations for the first six months of 2004 were a record $28.4 million or $2.08 per share compared with $24.8 million or $2.00 per share for the same period in 2003.
Second Quarter 2004 Business and Financial Highlights:
Non-Utility Operations - Earnings Accounted for 79% of SJI's Bottom
Line
Growth of SJI's non-utility businesses has dramatically enhanced second quarter
profitability. Non-utility activities contributed $3.1 million of net income
for the quarter, compared with $1.3 million for the second quarter of 2003.
Key contributing factors were:
o Marina Energy – Continues To Outperform Expectations
For the quarter, Marina contributed $700,000 to SJI's net income, up $540,000
over the same period last year. The July 2003 start-up of the Atlantic City
thermal energy plant, along with the January commencement of operations at its
Salem County cogeneration facility were the major contributors to Marina's performance
improvement over the prior year quarter. Also, in April Marina announced its
newest project, a joint venture with DCO Energy to develop and install a 1,400-kilowatt
methane-to-electric power generation system at a county-owned landfill in Egg
Harbor Township, NJ. The project is estimated to generate 12,000,000 kilowatt-hours
per year, enough energy to power 1,000 homes for a year. In addition to providing
another revenue stream for Marina, this project will also contribute to improving
air quality. When methane gas is recovered as an energy source, it helps to
reduce air pollution. Commercial operation of the plant is targeted for December
2004.
o South Jersey Resources Group – Earnings Jump 65%
SJRG posted earnings of $1.4 million for the second quarter compared with $840,000
for the same period last year. The improvement was driven by higher profits
realized by SJRG on wholesale gas contracts during the quarter and the start
of the fuel management contract with FPL Energy Power Marketing that was announced
last year. South Jersey Energy is SJRG's largest customer, purchasing gas from
SJRG to serve its retail customer base. SJRG fully hedges its gas transactions
to avoid commodity price risk.
o South Jersey Energy – Delivers $840,000 to SJI's Net Income
SJE's second quarter results improved substantially over the same period in
2003. Residential, commercial and industrial retail gas customers increased
to 93,000 at the end of the second quarter of 2004 compared with 88,000 at the
end of the same period in 2003. Comparing the second quarter of 2004 to the
same quarter in 2003, SJE benefited from additional customers and lower customer
acquisition costs incurred during the current period. Retail electric contributed
$240,000 to the increase in net income for the quarter as compared with its
start-up at this time last year.
Utility Operations – Profits up 22%
For the quarter, South Jersey Gas contributed $820,000 to SJI's bottom line,
up 22% from the second quarter of 2003. The performance improvement was driven
primarily by customer growth and a reduction in interest expense. Highlights
include:
o Consistent Customer Growth Continues at SJG
SJG's growth rate of 2.7% continues to be well above the national average of
1.8 %. SJG added 8,076 customers since June 2003, bringing total customers to
306,953 as of June 30, 2004.
o SJG Rate Restructuring and Base Rate Case Approved By BPU
On July 7, 2004 the New Jersey Board of Public Utilities approved a restructuring
of SJG's rates benefiting both gas customers and shareholders. The rate change
has two major components. First, the BPU approved an increase in SJG's base
rates of $20.0 million, which is projected to increase SJG's bottom line by
an annualized $8.5 million. Second, the BPU approved a $38.9 million rate reduction
eliminating several rate clauses, which were used primarily to recover historic
gas costs that are now recovered. These clause reductions do not impact the
company's earnings. The rate restructuring became effective July 8 and will
reduce the typical residential heating customer's gas bill during a winter month
by approximately 5%.
o BPU Approves Move of Appliance Service Business out of SJG
On July 23, 2004 the BPU approved the transfer of SJG's appliance service business
from the utility to South Jersey Energy Service Plus, a non-utility subsidiary
of SJI. This repositioning will significantly improve our ability to address
customer needs and adapt to changing market conditions. The appliance service
business will be merged with our HVAC installation business during the third
quarter of 2004.
Balance Sheet Improvement Continues
The combination of strong earnings and additional equity raised during the past
year has significantly enhanced SJI's balance sheet. Balance sheet strength,
as measured by the ratio of total equity to total capitalization, improved to
49.5 % at June 30, 2004 from 39.4% at the same point in 2003. A strong balance
sheet will enable SJI to take advantage of future growth opportunities while
remaining the safe, strong, dependable investment that our shareholders expect.
Webcast and Conference Call Details
South Jersey Industries President and CEO, Edward Graham, will host an open conference call and webcast to discuss the company's second quarter 2004 earnings on Thursday, July 29, 2004 at 11:00 a.m. EDT. To participate in the conference call, dial 1-800-299-8538, approximately 10 minutes ahead of the scheduled time, provide the passcode of 86777356.
To listen to a live webcast, simply visit the South Jersey Industries website at http://sjindustries.com, click Investors and then click 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: 80796589. SJI encourages shareholders, media and members of the financial community to attend the conference call and/or listen to the webcast.
Forward-Looking Statements
This news release contains forward-looking statements. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described in SJI's most recent reports on SEC Form 10-K and 10Q. SJI assumes no duty to update these statements should actual events differ from expectations.
South Jersey Industries (NYSE:SJI) is an energy services holding company for South Jersey Gas, South Jersey Energy, South Jersey Resources Group, South Jersey Energy Service Plus and Marina Energy. Visit http://www.sjindustries.com for more information about SJI and its subsidiaries.
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