SOUTH JERSEY INDUSTRIES INC [SJI] Filings

10-Q 1 sji-20220930.htm 10-Q sji-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ______________________


Commission File Number	Exact name of registrant as specified in its charter	State of Incorporation	I.R.S. Employer Identification No.
1-6364	South Jersey Industries, Inc.	New Jersey	22-1901645
000-22211	South Jersey Gas Co	New Jersey	21-0398330

Address of principal executive offices

City

State

Zip Code

Registrant's telephone number, including area code

South Jersey Industries, Inc.

1 South Jersey Plaza

Folsom

New Jersey

08037

(609)

561-9000

South Jersey Gas Co

1 South Jersey Plaza

Folsom

New Jersey

08037

(609)

561-9000

Securities registered pursuant to Section 12(b) of the Act:

South Jersey Industries, Inc.


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock - $1.25 par value per share	SJI	New York Stock Exchange
5.625% Junior Subordinated Notes due 2079	SJIJ	New York Stock Exchange

Corporate Units	SJIV	New York Stock Exchange

South Jersey Gas Co


Title of each class	Trading Symbol(s)	Name of exchange on which registered
None	N/A	N/A

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that such registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that such registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

South Jersey Industries, Inc.:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

South Jersey Gas Co:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if either registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether either registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

South Jersey Industries, Inc. (SJI) common stock ($1.25 par value) outstanding as of November 1, 2022 was 122,464,793 shares. South Jersey Gas Company common stock ($2.50 par value) outstanding as of November 1, 2022 was 2,339,139 shares. All of South Jersey Gas Company's outstanding shares of common stock are held by SJI Utilities, Inc., which is a wholly-owned subsidiary of SJI.

South Jersey Gas Company is an indirect wholly-owned subsidiary of SJI and meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q. As such, South Jersey Gas Company files its Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION	Page No.
Glossary of Terms and Abbreviations		4
Item 1.	South Jersey Industries, Inc.
	Condensed Consolidated Statements of (Loss)/Income	8
	Condensed Consolidated Statements of Comprehensive (Loss)/Income	9
	Condensed Consolidated Statements of Cash Flows	10
	Condensed Consolidated Balance Sheets	11
	Condensed Consolidated Statements of Changes in Equity	13

	South Jersey Gas Company
	Condensed Statements of (Loss)/Income	15
	Condensed Statements of Comprehensive (Loss)/Income	16
	Condensed Statements of Cash Flows	17
	Condensed Balance Sheets	18
	Condensed Statements of Changes in Equity	20

	Notes to Unaudited Condensed Consolidated Financial Statements	21
	South Jersey Industries, Inc. and South Jersey Gas Company - Combined
	Note 1. Summary of Significant Accounting Policies	21
	Note 2. Stock-Based Compensation Plan	26
	Note 3. Affiliations, Discontinued Operations and Related-Party Transactions	28
	Note 4. Common Stock	30
	Note 5. Financial Instruments	32
	Note 6. Segments of Business	34
	Note 7. Rates and Regulatory Actions	37
	Note 8. Regulatory Assets & Regulatory Liabilities	39
	Note 9. Pension and Other Postretirement Benefits	42
	Note 10. Lines of Credit & Short-Term Borrowings	43
	Note 11. Commitments and Contingencies	44
	Note 12. Derivative Instruments	46
	Note 13. Fair Value of Financial Assets and Financial Liabilities	49
	Note 14. Long-Term Debt	53
	Note 15. Revenue	55
	Note 16. Acquisitions & Business Combinations	58
	Note 17. Goodwill and Identifiable Intangible Assets	58
	Note 18. Subsequent Events	59
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
	South Jersey Industries, Inc.	63
	South Jersey Gas Company	78
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	80
Item 4.	Controls and Procedures	83
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	85
Item 1A.	Risk Factors	85
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	89
Item 3.	Defaults Upon Senior Securities	89
Item 4.	Mine Safety Disclosures	89
Item 5.	Other Information	89
Item 6.	Exhibits	86
Signatures

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS



ACB			ACB Energy Partners, LLC
ACLE			AC Landfill Energy, LLC
ADIT			Accumulated Deferred Income Taxes
AEP			Applied Energy Partners, LLC
AFUDC			Allowance for Funds During Construction
AIRP			Accelerated Infrastructure Replacement Program
AMA			Asset Management Agreement
Annadale			Annadale Community Clean Energy Projects LLC
AOCL			Accumulated Other Comprehensive Loss

ARO			Asset Retirement Obligation
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
ATM			At-The-Market

BCLE			BC Landfill Energy, LLC
BGSS			Basic Gas Supply Service

BPU			New Jersey Board of Public Utilities

Bronx Midco			Bronx Midco, LLC
CARES Act			Coronavirus Aid, Relief and Economic Security Act of 2020
Catamaran			Catamaran Renewables, LLC
CBA			Collective Bargaining Agreement
CEGR			Compounded Earnings Annual Growth Rate
CEP			Clean Energy Program (ETG)
CHP			Combined Heat and Power
CIP			Conservation Incentive Program
CLEP			Clean Energy Program (SJG)
CODM			Chief Operating Decision Maker
COVID-19			A highly contagious respiratory disease caused by the SARS-CoV-2 virus





DRP			Dividend Reinvestment Plan
dt			Decatherm
dts/d			Decatherms per day
EDIT			Excess Deferred Income Taxes
EEP			Energy Efficiency Program
EET			Energy Efficiency Tracker
EGR			Earnings Growth Rate
ELK			Elkton Gas Company
EMI			Energy & Minerals, Inc.
EMP			Energy Master Plan
EnerConnex			EnerConnex, LLC
Energenic			Energenic US, LLC
EnergyMark			EnergyMark, LLC
EPS			Earnings Per Share
ERISA			Employee Retirement Income Security Act of 1974
ETG			Elizabethtown Gas Company
ETG Acquisition			The Company's acquisition of the assets of Elizabethtown Gas Company, effective July 1, 2018, from Pivotal Utility Holdings, Inc., a subsidiary of Southern Company Gas

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FASB			Financial Accounting Standards Board
FERC			Federal Energy Regulatory Commission

GAAP			Generally Accepted Accounting Principles for financial reporting in the United States

IAM			International Association of Machinists and Aerospace Workers
IBEW			International Brotherhood of Electrical Workers
IIF			Infrastructure Investment Fund
IIP			Infrastructure Investment Programs
IRA			Inflation Reduction Act
ITC			Investment Tax Credit
LIBOR			London Interbank Offer Rate
LL			Lifeline Credit and Tenants Assistance Program
LMP			Locational Marginal Price

Marina			Marina Energy, LLC




Merger; Merger Agreement			Agreement and plan of merger signed by SJI with NJ Boardwalk Holdings LLC and Boardwalk Merger Sub, Inc.
Midstream			SJI Midstream, LLC
Millennium			Millennium Account Services, LLC
MPSC			Maryland Public Service Commission
MMdts			One million decatherms
MMmWh			One million megawatt hours
Morie			The Morie Company, Inc.
MTF			Marina Thermal Facility

MTN			Medium Term Notes

MW			Megawatt
MWh			Megawatt-hours



NCI			Noncontrolling Interests
NOL			Net Operating Loss
Non-GAAP			The financial measures that are not prepared in accordance with U.S. GAAP
NPA			Note Purchase Agreement


NJEDA			New Jersey Economic Development Authority

NYMEX			New York Mercantile Exchange

OSMC			On-System Margin Sharing Credit
OSS			Off-System Sales
PennEast			PennEast Pipeline, LLC
Potato Creek			Potato Creek, LLC
RAC			Remediation Adjustment Clause
Red River			Red River RNG, LLC
REV			REV LNG, LLC
RNG			Renewable Natural Gas
ROE			Return on Equity
ROU			Right of Use
SBC			Societal Benefits Clause

SCLE			SC Landfill Energy, LLC
SEC			Securities and Exchange Commission
SERP			Supplemental Executive Retirement Plan
SHARP			Storm Hardening and Reliability Program
SJE			South Jersey Energy Company

Table of Contents


SJEI			SJI Energy Investments, LLC
SJES			South Jersey Energy Solutions, LLC
SJESP			South Jersey Energy Service Plus, LLC
SJEX			South Jersey Exploration, LLC
SJF			South Jersey Fuel, Inc.
SJG			South Jersey Gas Co or South Jersey Gas Company
SJI			South Jersey Industries, Inc., or the Company
SJIU			SJI Utilities, Inc.
SJRG			South Jersey Resources Group, LLC
SRECs			Solar Renewable Energy Credits
SXLE			SX Landfill Energy, LLC
Tax Reform			Tax Cuts and Jobs Act which was enacted into law on December 22, 2017


TIC			Transportation Initiation Clause

TSA			Transition Services Agreement
TSR			Total Shareholder Return

Utilities			Represents SJI's two utility businesses: SJG, and ETG
USF			Statewide Universal Service Fund
UTUA			Uniform Transitional Utility Assessment
UWUA			United Workers Union of America
VSIP			Voluntary Separation Incentive Program

WNC			Weather Normalization Clause

Table of Contents

INTRODUCTION

FILING FORMAT

This Quarterly Report on Form 10-Q is a combined report being filed separately by two registrants: South Jersey Industries, Inc. (SJI) and South Jersey Gas Company (SJG). Information relating to SJI or any of its subsidiaries, other than SJG, is filed by SJI on its own behalf. SJG is only responsible for information about itself.

Except where the content clearly indicates otherwise, any reference in the report to "SJI," "the Company," "we," "us" or "our" is to the holding company or SJI and all of its subsidiaries, including SJG, which is a wholly-owned subsidiary of SJI Utilities, Inc. (which is wholly-owned by SJI).

Part 1 - Financial information in this Quarterly Report on Form 10-Q includes separate financial statements (i.e., balance sheets, statements of income, statements of comprehensive income, statements of equity and statements of cash flows) for each of SJI and SJG. The Notes to Unaudited Condensed Consolidated Financial Statements are presented on a combined basis for both SJI and SJG. Management's Discussion and Analysis of Financial Condition and Results of Operations (Management's Discussion) included under Item 2 is divided into two major sections: SJI and SJG.

Table of Contents

Item 1. Condensed Consolidated Financial Statements

SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS)/INCOME (UNAUDITED)

(In Thousands, Except for Per Share Data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating Revenues:
Utility	$	147,261	$	106,123	$	818,591	$	653,009
Nonutility	461,257		259,508		1,125,936		698,750
Total Operating Revenues	608,518		365,631		1,944,527		1,351,759
Operating Expenses:
Cost of Sales - (Excluding depreciation and amortization)
- Utility	62,598		24,128		330,235		183,927
- Nonutility	430,214		264,237		1,092,215		677,507
Operations and Maintenance	63,968		61,198		205,737		194,182
Depreciation	36,927		33,081		105,065		97,924
Impairment Charges	7,217		—		9,114		—
Energy and Other Taxes	3,411		(8,040)		11,524		(1,245)
Total Operating Expenses	604,335		374,604		1,753,890		1,152,295
Operating Income (Loss)	4,183		(8,973)		190,637		199,464

Other Income and Expense	7,801		2,225		13,295		7,885
Interest Charges	(38,478)		(31,468)		(101,618)		(94,112)
(Loss) Income Before Income Taxes	(26,494)		(38,216)		102,314		113,237
Income Taxes	(9,989)		11,727		(28,588)		(25,340)
Equity in (Loss) Earnings of Affiliated Companies	(1,288)		659		(761)		(81,589)
(Loss) Income from Continuing Operations	(37,771)		(25,830)		72,965		6,308
Loss from Discontinued Operations - (Net of tax benefit)	(93)		(127)		(315)		(278)
Net (Loss) Income	(37,864)		(25,957)		72,650		6,030
Less: Income Attributable to Noncontrolling Interests	143		173		354		390
Net (Loss) Income Attributable to South Jersey Industries, Inc.	$	(38,007)	$	(26,130)	$	72,296	$	5,640
Basic Earnings Per Common Share:
Continuing Operations	$	(0.31)	$	(0.23)	$	0.60	$	0.06
Discontinued Operations	—		—		—		—
Net (Loss) Income	(0.31)		(0.23)		0.60		0.06
Less: Income Attributable to Noncontrolling Interests	—		—		—		—
Net (Loss) Income Attributable to South Jersey Industries, Inc.	$	(0.31)	$	(0.23)	$	0.60	$	0.06
Average Shares of Common Stock Outstanding - Basic	122,465		112,448		121,040		108,108
Diluted Earnings Per Common Share:
Continuing Operations	$	(0.31)	$	(0.23)	$	0.59	$	0.06
Discontinued Operations	—		—		—		—
Net (Loss) Income	(0.31)		(0.23)		0.59		0.06
Less: Income Attributable to Noncontrolling Interests	—		—		—		—
Net (Loss) Income Attributable to South Jersey Industries, Inc.	$	(0.31)	$	(0.23)	$	0.59	$	0.06
Average Shares of Common Stock Outstanding - Diluted	122,465		112,448		123,888		109,589

The accompanying notes are an integral part of the condensed consolidated financial statements.

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SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (UNAUDITED)

(In Thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (Loss) Income	$	(37,864)	$	(25,957)	$	72,650	$	6,030

Other Comprehensive Income, Net of Tax:

Reclassification of Unrealized Gain on Derivatives - Other to Net Income, net of tax of $(3), $(3), $(10) and $(10) respectively	8		9		25		25

Other Comprehensive Income - Net of Tax	8		9		25		25

Comprehensive (Loss) Income	(37,856)		(25,948)		72,675		6,055
Less: Comprehensive Income Attributable to Noncontrolling Interests	143		173		354		390
Comprehensive (Loss) Income Attributable to South Jersey Industries, Inc.	$	(37,999)	$	(26,121)	$	72,321	$	5,665

The accompanying notes are an integral part of the condensed consolidated financial statements.

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SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In Thousands)


	Nine Months Ended September 30,
	2022		2021






























Net Cash Provided by Operating Activities	$	374,907	$	273,927

Cash Flows from Investing Activities:
Capital Expenditures	(462,969)		(373,516)
Investment in Contract Receivables	(17,828)		(16,429)
Proceeds from Contract Receivables	10,115		10,494
Investment in Affiliates	(76,495)		(13,155)
Return of Investment in Affiliates	12,138		—
Advances to Affiliates	(30,449)		(26,615)

Divestiture Working Capital Settlement	—		(267)
Investment in Subsidiary, Net of Cash Acquired	(21,034)		(14,683)


Net Cash Used in Investing Activities	(586,522)		(434,171)

Cash Flows from Financing Activities:
Net Repayments of Short-Term Credit Facilities	(130,800)		(453,900)
Proceeds from Issuance of Long-Term Debt	400,000		460,000
Principal Repayments of Long-Term Debt	(58,175)		(110,000)
Payments for Issuance of Long-Term Debt	(2,306)		(16,304)
Dividends on Common Stock	(74,362)		(64,460)
Proceeds from Sale of Common Stock	100,380		329,772
Payments for the Issuance of Common Stock	—		(2,318)
Capital Distributions to Noncontrolling Interests in Subsidiaries	(392)		—
Capital Contributions of Noncontrolling Interests in Subsidiaries	1,368		1,072

Net Cash Provided by Financing Activities	235,713		143,862

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

SOUTH JERSEY INDUSTRIES INC [SJI] Filings
SOUTH JERSEY INDUSTRIES INC [SJIJ] Filings
SOUTH JERSEY INDUSTRIES INC [SJIV] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-24]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-06]
10-K	[2020-02-27]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-08]
10-K	[2019-02-28]
10-Q	[2018-11-07]
10-Q	[2018-08-08]
10-Q	[2018-05-07]
10-K	[2018-02-26]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-09]
10-K	[2017-02-27]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-02-29]
10-Q	[2015-11-05]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-02-27]
10-Q	[2014-11-07]
10-Q	[2014-08-06]
10-Q	[2014-05-09]
10-K	[2014-02-28]
10-Q	[2013-11-12]
10-Q	[2013-08-08]
10-Q	[2013-05-03]
10-K	[2013-02-28]
10-Q	[2012-11-08]
10-Q	[2012-08-07]
10-Q	[2012-05-07]
10-K	[2012-02-28]

SOUTH JERSEY INDUSTRIES INC [SJI] Filings

SOUTH JERSEY INDUSTRIES INC [SJIJ] Filings

SOUTH JERSEY INDUSTRIES INC [SJIV] Filings