South Jersey Industries, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter 2020 South Jersey Industries Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require additional assistance, you may press star then 0 to reach an operator. I would like to hand the conference over to Dan Fiedel, Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to SJI's fourth quarter 2020 earnings conference call and webcast. I'm joined today by Mike Renna, our President and Chief Executive Officer. Steve Kochi, our Chief Financial Officer, as well as 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 a GAAP and non-GAAP basis using our non-GAAP measure of economic earnings. Reconciliations of economic earnings to the comparable gap measures appear in both documents. Throughout today's call, we'll be making references to future expectations, plans, and opportunities for SJI. Actual results could differ materially from those projected in any forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. With that said, I'm pleased to introduce our CEO, Mike Renna, who will review our 2020 operational performance and strategic priorities as we begin 2021. Our CFO, Steve Kochi, will then review our 2020 financial performance. Mike will then offer some closing remarks. After that, we'll be happy to take your questions. With that introduction, let me now turn it over to Mike.

Thanks, Dan, and good morning, everyone. Thank you for joining us today, and as always, I hope you and your families are staying safe and well. I am pleased to report a $60 million increase in economic earnings and a 50% year-over-year improvement in economic earnings per share. 2020 saw us meet or exceed all key strategic and operational metrics despite unprecedented challenges, and we delivered on our mission, providing safe, reliable, and affordable natural gas to more than 700,000 customers across New Jersey. We were there at a time when our customers and communities needed us the most. 2020 also saw us deliver on key strategic priorities driving our long-term growth. We reached a favorable resolution of South Jersey Gas Company's base rate case, a reflection of our prudent investment and strong regulatory relationships, achieved our targeted clean energy investment goals, demonstrating alignment and commitment to state and regional decarbonization efforts, proactively strengthened our balance sheet, ensuring we had sufficient liquidity to address the unknowns of COVID, and funding of our capital plans, and proposed important regulatory initiatives in support of safety and reliability, energy efficiency, decarbonization, and job creation. Consistent with our goals, our utilities, South Jersey Gas and Elizabethtown Gas, represent the majority of earnings in 2020. Margins increased significantly, reflecting above average customer growth, positive base rate case outcomes, critical infrastructure modernization programs and trackers, and effective O&M management. Natural gas remains in strong demand across our territories and across New Jersey, with more than 12,000 new customers adding service in the last 12 months alone. While we are seeing increased new construction across the state, the bulk of our customer growth continues to come from conversions, with roughly two-thirds converting from alternative fuels, such as heating oil and propane, to cleaner burning and lower-cost natural gas. Regulatory relationships remain constructive and strong, resulting in amicable settlements in record time with desired results at both our utilities. Infrastructure modernization programs, critical to assuring safe and reliable service to our customers, have the added benefit of significantly reducing methane emissions. Over the last 12 months, we've invested more than $135 million to replace aging cast iron and bare steel main across our system. And on October 1st, 2020, we adjusted rates at both our utilities to begin recovering these important investments. Our non-utility operations also experienced significant improvement in 2020 due primarily to new clean energy investments and a right-sizing and repositioning of our legacy businesses. Specifically, our wholesale businesses delivered solid year-over-year improvement driven by strong performance in our fuel management activities, the roll-off of legacy contracts, a reshaped portfolio, and asset optimization opportunities. Our energy services business delivered on our commitment to align and advance the clean energy goals of our state and region. Our fuel cell investments are expected to produce 7.5 megawatts of low-carbon electric generation in Staten Island. and along with four small-scale solar investments, delivered 21 cents per share of investment tax credits in 2020. As we begin 2021, our priorities are focused on executing on our commitment to clean energy and decarbonization and achieving resolution in our pending regulatory initiatives. With regard to decarbonization, as you saw from our earnings release, we are excited to announce our equity investment in REV-LNG. a company specializing in the development, production, and transportation of renewable natural gas, liquefied natural gas, and compressed natural gas, along with the development rights to a portfolio of anaerobic digester projects to produce RNG. Over the last few years, REV has become one of the country's leading developers of dairy RNG projects through capturing, cleaning, and converting biomethane to RNG. RNG recovered from dairy farms has a negative carbon intensity rating, meaning it takes more carbon out of the environment than it produces and is less carbon intensive than conventional natural gas. These investments, along with our planned investments in RNG that will directly serve our utilities, will accelerate SDI's path toward decarbonization. This strategic investment is adjacent to our core utility business. It supports our commitment to decarbonization and to delivering the clean energy of the future. It positions SJI at the front of an emerging energy market with significant growth and upside, and with unlevered returns in the teens, strong growth in the core transportation vertical, and the potential afforded through dairy farm development, this investment will be accretive to earnings and credit metric positive. As you know, we currently have several important proposals pending before the BPU, with resolution expected before the end of the second quarter. We have requested $267 million in energy efficiency investments at our utilities over the next three years, as well as a decoupling mechanism for Elizabethtown Gas, similar to the one we have in place at South Jersey Gas. We have also requested $742 million in Phase III infrastructure modernization investment at South Jersey Gas, targeting coated steel and vintage Adelaide plastic pipes. Both programs support the Murphy administration's goals surrounding safety and reliability, energy efficiency, decarbonization, and job creation. At this time, I'll now turn it over to Steve to review our 2020 financial performance, after which I look forward to offering some closing remarks.