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South Jersey Industries, Inc. (NYSE: SJI ) Q1 2016 Earnings Conference Call May 06, 2016 11:00 AM ET Executives Ann Anthony – Treasurer Marissa Travaline – IR Mike Renna – CEO Steve Clark – CFO Greg Nuzzo – SVP South Jersey Energy Solutions Analysts Michael Gaugler – Janney Montgomery Scott Dan Fidell – U.S. Capital Advisors Andrew Gay – Motion Group Chris Ellinghaus – Williams Capital Group Operator Good day, ladies and gentlemen, and welcome to the First Quarter 2016 South Jersey Industries Earnings Conference Call. My name is Sheila, and I will be your operator for today. At this time, all participants are in a listen only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded. I would like to turn the conference over to Ann Anthony, Treasurer. Please proceed. Ann Anthony Thank you, Sheila. Good morning and thank you for joining us as we present South Jersey Industries’ first quarter results for fiscal year ‘16, as well as an update on our business. Joining me on the call today are Mike Renna, President and CEO of SJI, along with Steve Clark, our CFO, and Marissa Travaline, our Director of Investor Relations. We also have several additional members of our senior management team available to help address questions following our prepared comments. Our earnings release was issued to the media this morning and is also available on our Web site at www.SJindustries.com. The release and the associated 10-Q 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 GAAP measures appear in both documents. Let me note that throughout today’s call we will be making references to future expectations, plans and opportunities for SJI. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Company’s Form 10-K and 10-Q on file with the SEC. Also, as a reminder, our 2015 per share numbers have been adjusted to reflect the impacts of the stock split that occurred in May of 2015. With that said, I will now turn the call over to our CFO, Steve Clark, to present SJI’s first quarter 2016 results. Steve Clark Thank you, Ann, and good morning everyone. Thank you for joining us. To begin, our first quarter 2016, economic earnings totaled $57 million as compared with $58.9 million in 2015. Economic earnings per share for Q1 2016 were $0.80 as compared with $0.86 for the prior-year period. Strong utility growth, combined with a more than 50% jump in the contribution from our commodity businesses within South Jersey Energy Group, drove economic earnings for the quarter. And with the Revel and Energenic restructuring transactions behind us, the operational contributions from our energy services business has improved considerably. What is noteworthy about the recent quarter’s performance is the fact that it was achieved with nearly $8.5 million less in investment tax credits for ITCs than in the first quarter of 2015. This reduction is consistent with our strategy of substantially reducing investment in solar development, which we discussed on our year-end call in February. With that said, now I’ll review the performance of each of our business lines. South Jersey Gas’ net income of $44.4 million for the first quarter exceeded prior-year results of $42.6 million as a result of strong customer growth and the benefits from infrastructure investments made to reinforce system safety and reliability. There is no difference between SJG’s GAAP net income and economic earnings. In the first quarter, the efforts of our business development team added almost 1,800 new customers in our utility. This helped to bring our current customer count to 375,585 as of the end of the first quarter. For the 12 months ending 3/31/2016, our customer base grew by 1.8%. Conversions have driven the majority of that growth by a margin of roughly 2:1, but new construction has also picked up over the last year. We are encouraged by the signs of life in that market. We anticipate that relative energy prices, combined with our aggressive marketing efforts, will help fuel long-term customer growth. Regulated infrastructure investments made by SJG through two key programs, the accelerated infrastructure replacement and storm hardening and reliability programs, provided incremental net income of $1.9 million for the quarter. First quarter 2016 investments under these two programs totaled $21.3 million. The AIRP, which replaces aging bare steel and cast iron gas mains throughout our system, and the SHARP, which replaces low-pressure gas mains along the Barrier Islands with high-pressure mains, helped to reinforce and better protect our system. We anticipate infrastructure investments totaling $66 million for the full year in 2016. And we expect those investments to add $4.8 million in incremental net income for the year. Turning to another major infrastructure initiative, I don’t have much new to report on the proposed pipeline that provides natural gas to the former BL England electric generating station. As you may recall, we received final approval from the New Jersey Board of Public Utilities in December, allowing the project to proceed. Briefings are due on the appeals in June and oral arguments are scheduled for September. We remain optimistic that we will be able to move forward on this project late this year. In March, South Jersey Gas participated in the official ribbon cutting for a compressed natural gas station in Paulsboro, New Jersey represents a joint project with Wawa, a leading gas station and convenience store chain operating in six states spanning from Florida to Pennsylvania. With seven CNG stations currently open to the public in our service territory and five more planned by SJG in the next year, we look forward to helping mainstream this technology, allowing greater numbers of drivers to realize the cost and emission benefits this fuel alternative can provide. Turning to SJI midstream’s PennEast pipeline project, the Federal Energy Regulatory Commission released a notice of schedule for environmental review in March, which helped identify another milestone for the Partnership. This document establishes December 16, 2016 for the completion of the Commission’s environmental review of the project. Design, engineering and environmental assessments continue moving forward on the approximately 118-mile FERC-regulated pipeline, which is targeted to be placed in service during the second half of 2018. Now we will move to the non-utility side of our business, which is comprised of two business segments, South Jersey Energy Group and South Jersey Energy Services. For the first quarter our non-utility businesses generated a combined $12.6 million of economic earnings, as compared with $16.3 million in the first quarter of 2015. Once again, what is compelling here is the first-quarter 2016 results were only $3.7 million lower than first-quarter 2015, despite the fact that investment tax credits were $8.5 million lower than they were in the first quarter of 2015. Additionally, we achieved this performance during a quarter where the weather was considerably warmer than in the same period in the prior-year period. Looking at these businesses individually, our commodity, marketing and fuel management activities at South Jersey Energy Group contributed $12.2 million of economic earnings for the first quarter of 2016, as compared with $7.8 million in the first quarter of 2015. Optimization of storage and transportation assets produced significant year-over-year improvements, complement by the performance of three active fuel management contracts. The positives more than offset a $1 million decline in economic earnings from our retail commodity marketing activities due to the very mild winter we just experienced. We anticipate that the remainder of 2016 will benefit from two additional fuel management contracts coming online in the second quarter and from the contributions of several large new retail commodity contracts. Our other non-utility business, South Jersey Energy Services, contributed $500,000 to economic earnings in the first quarter of 2016, as compared with $8.6 million for the same period in 2015. Although the variance is very significant, 2005’s sic 2015 results reflect the benefit of $10.2 million of ITC, while the first-quarter 2016 results were achieved with $1.7 million of ITC. Improved year-over-year operating performance at our solar and landfill gas-to-electricity projects came despite lower locational margin pricing, was partially offset by the impact of a very warm winter on our CHP holdings. Disregarding the effect of investment tax credits, operations from this area of the business improved by over $400,000 for the quarter. And with that I’ll turn the call over to Mike. Mike Renna Thanks, Steve. Good morning, everyone. A year ago we introduced a set of four clear strategic objectives, the first of which, to grow economic earnings to at least 150 million by 2020, is the foundation of our plan. I want to emphasize that the 150 million represents earnings from our core business lines in other words, earnings without the benefit of investment tax credits. Effectively, we aim to double operating performance in five years, with 72% to 82% of our economic earnings coming from regulated opportunities, we anticipate, both within our utility and from FERC-regulated projects within our midstream business. We expect that strong customer growth will continue adding to this segment of our business, along with the benefits of infrastructure investment. The contributions Steve highlighted within South Jersey Energy Group from our commodity and fuel supply management business lines are expected to continue growing and replacing the earnings on the scale back of ITC, ultimately contributing close to 20% of economic earnings by 2020. Finally, improved operating performance within our recently reorganized energy production portfolio will provide a contribution of 2% to 4% as we approach 2020. The second tenet of our strategy is to improve the quality of our earnings. As we approach the end of the decade, as I mentioned, 72% of 82% of economic earnings will come from our regulated business lines, and the balance will be derived mainly from contracted assets that reflect a low-risk, fee-based multi-year approach to growth in our wholesale, retail and energy production businesses. This emphasis on regulated and contracted assets is intended to help drive a third key component of our strategy, which is reducing the risk across our portfolio to ensure that we provide not only high quality but also consistent and reliable earnings. And, finally, as we grow, we intend to do so with a stronger, less levered balance sheet. As our investment profile changes and aligns with increased opportunities, around both the utility and regulated projects, we expect to invest more than $600 million over the next two years in our regulated businesses. We plan to fund that growth through a mix of operating cash flow, debt, and equity that will help us maintain a flexible capital structure. We believe this flexibility will allow us to be agile in response to the many growth opportunities in front of us. I am very pleased with the progress we’ve made to date. In addition to strong growth in our utility, we again benefited from improved performance in our wholesale commodity business, improvements driven by the optimization of our storage and transportation assets, and our three active fuel management contracts. We expect to continue this momentum as we begin serving two additional merchant generation facilities in the second quarter and four additional projects, like our recently announced Lordstown Energy Center, lay the groundwork for future growth. The restructuring of our energy project portfolio within South Jersey Energy Services has led to improved operating performance, as we shed our ownership interest in non-core landfill gas to energy assets, while retaining four New Jersey facilities that serve Borgata hotel and casino property in Atlantic City with green electricity under a long term power purchase agreement. And, of course, the write down of our interest in the energy facility at the former Revel Casino last year has put the impacts of that project behind us and allowed us to focus on improving CHP assets, like the facility that has served the Borgata for more than a decade. Looking at the full year, we anticipate strong customer growth, contributions from our AIRP and SHARP programs, as well as our investment in a natural gas liquefier in McKee City, which, when combined with strong performance from our commodity marketing businesses and improved operating performance across our portfolio of energy production assets, will result in double digit growth in our core businesses, meaningful growth in the range of 15% to 18%, which nearly offsets the significant reduction in renewable project investment we’ve already highlighted. It’s important to note that nothing has changed with respect to our 2020 targets. And our plan, as we stated all along, focuses on core operations, in other words, our 2020 target of $150 million never contemplated any contribution from ITC. With the regulated investment opportunities in front of us, and the impact of the recent bonus depreciation extension, we are simply accelerating our plans to scale back investment in renewable projects to focus on executing on our strategy of growth through our core businesses. As we continue to execute on our strategy, and factoring in our intended plans for capital investment and reduced ITC, we are anticipating 2016 economic earnings per share between $1.29 and $1.35. Beyond 2016, as I said earlier, I’m very encouraged by the progress we’ve made to date, and I’m highly confident that we are well positioned to deliver on all four of our 2020 targets. At this time I will turn the call back to the operator for the Q&A portion of our call. Question-and-Answer Session Operator [Operator Instructions] And your first question comes from the line of Michael Gaugler of Janney Montgomery Scott. Please proceed Michael. Michael Gaugler I was wondering if you could provide an update on the potential move to Atlantic City for the headquarters. I know that’s a big chunk of tax credits that you’ve indicated could be available in the past. The reason I’m asking is, simply, in light of the challenges the city if facing right now, perhaps there’s even a better deal to be had. Mike Renna The better deal to be had is a Camden. And we’ve identified Atlantic City as the optimal place for us to expand our business. Quite frankly, not to drag this out, but our current corporate headquarters in Folsom is space constrained. And we happen to sit in an area where we’re both tyne land and deed restricted, so we do not have the ability to expand our footprint here, which is really the catalyst for why we were looking at potentially relocating a significant part of our business. Simply put, for me, I like the idea that, while everybody else is looking to flee the city, we are heading in. I think that with Stockton and South Jersey Gas as the anchors of the Gateway project, it sends a strong signal that Atlantic City’s future is bright. And its future is also, it’s necessary for a diversification of their economy. So, we’re very proud to be a part of it and, yes, there are very significant tax credits and we’ll be realizing them over 10 years. And, quite frankly, I don’t know that Atlantic City, or the state, for that matter, has the money to sweeten the deal at all. Michael Gaugler Okay. Is there a timeline on the move at this moment? Or just exploratory? Mike Renna I’m hoping to get it done before I retire. Things move a little bit slowly in Atlantic City, but we’re hoping to break ground this year, correct, Gina? And we would assume probably 18 to 24 months of construction. So somewhere late 2018. Michael Gaugler Okay. And then just one other I had. You had referenced Mike, midstream opportunities and investments there. And certainly you’ve got a nice one coming up in PennEast. How are you feeling near term about potentially putting a couple more in the portfolio? Are there projects on the drawing boards that look viable? And are you concerned at all about, what we’ve seen in the Northeast in terms of pushback against new midstream assets? Mike Renna A couple of questions. First, yes, we do have a business development group that reports up through Greg Nuzzo, so we’re evaluating different opportunities in the space. I think that there are opportunities for expansion of PennEast potentially down the road, as well. So I’m very bullish on the opportunities that we have in front of us. But again, we are in preliminary stages of development, so it’s a little bit premature to put anything out there other than the fact that yes we are actively looking at opportunities. As far as the Northeast, I think it’s something that’s relatively unique in the United States to this area of the country. Obviously the West Coast has very similar activism but– I’m very encouraged, or very confident, in the project simply because this is a unique project. It is really being driven by demand. Where a lot of the pipelines are being driven by the producers, this is being driven by the market. And the fact that it’s fully subscribe at the BCF, it’s fully subscribed, demonstrates that there is a real need for this product and for this project to go through. So, despite the fact that it’s in the Northeast, and despite the fact that there is a very small but vocal opposition to it, I am highly confident that it will be successful. Operator Your next question comes from the line of Dan Fidell of U.S. Capital Advisors. Please proceed. Daniel Fidell Just a couple of questions from me. First, more of just a clarification question, with the acceleration in the solar wind down, it looks like solar is 13 million or so for the year, targeting, versus 38 last year, how should we be thinking about contributions going forward? You had mentioned 2% to 4% coming from that bucket going forward, but should we assume zero in the next year? Mike Renna In 2017, yes, I would assume zero. I would not expect us, unless something changes dramatically in the market in terms of economics, that we would be making any further investment in renewable energy products. Could there be an opportunity for us to be involved in a CHP project if the conditions were right? Yes. And there’s an investment tax credit attached to CHP projects. But I think as you know, that’s a smaller percentage and that would really probably be the only place we would realize anything from ITC. Daniel Fidell Okay. Great. And just in terms of financing, you had mentioned as part of the 2016 guidance, I think, in the release talking about the finance, you talked about the need for equity and debt as part of the growth funding for the plan. Can you give us maybe a little bit more color of what you’re including in terms of expectations for equity financing into the 2016 guidance number? Mike Renna Dan, I think you’ll appreciate that we’ve got a lot of opportunity in front of us. And the opportunities are in our regulated business lines which is we have discussed before, that is really the foundation of our plan going forward, As I mentioned, we are going to get to 72% to 82% — not that I want to be precise — in terms of contribution from regulated assets. Right now we are just evaluating different financing strategies to support our growth opportunities and we intend on being opportunistic in the timing and the nature with which we meet those needs. Steve Clark And, Dan, this is Steve. When you step back and look at how we’ve laid out our expectations — and we’ve talked in the past about the things that we see in front of us is opportunities to invest in — what a lot of it entails is a lot of our front investment. We are going to put a lot of money in the ground before cash starts flowing from it, so we’ve got to be very cognizant of that as we implement those. Daniel Fidell Okay, great. And then the last question is more about growth opportunities you see in front of you in two tranches. First is, you talk about 600 million or so in investment opportunity,’16 and ’17, and then longer term the 150 million economic earnings per share number by 2020. I don’t know if you can address a sort of each of them maybe in some way sort of on the near term, the 600 million or so, without going into necessarily specifics, or as much as you can, can you kind of bucket that a little bit in terms of big chunks of where that’s — the $600 million will likely flow from? Steve Clark Dan, just to respond to that, as we look at our utility, as an example, I think we’ve got in our forecast about $220 million of CapEx just at South Jersey Gas Company. And I believe next year we’re at that same range or a little bit higher than that next year. So you’ve got $450 million targeted right there. We certainly are looking at, basically the rest of it would be opportunities with regard to our FERC-regulated midstream opportunities. As we look at the kinds of things that we’re doing at the utility, and you take them even out beyond 2017, obviously our focus is on continuing to improve the quality of our system. We’ve had a regulatory environment that has supported folks in New Jersey from making those good decisions to improve and enhance their systems. And that’s exactly what we’re looking to do. When we’re talking about these numbers, it’s really focused on the regulated businesses, and the vast majority of it falls on the utility. Mike Renna Just a follow up on Steve’s, there is no significant planned capital expenditures in our traditional non-utility businesses. And that, I think, echoed in the fact that we’re considerably — or whatever word you want to put on it — reducing our investment appetite in renewable projects this year, and not anticipating any next year. And, again, we don’t have any big development projects in front of us on the CHP side. So, all, if is not all the vast majority, of this spend is in regulated businesses. Daniel Fidell Last question for me and I’ll hop back in queue, just wondering if you’ve got — you mentioned the CapEx spend for ’16 or ’17 but do you have a spend through the 2020 period, a general level of total CapEx that we can peg to? Should we assume sort of a normalized rate that you are guiding here for, 300 million roughly or so annually through the period up to 2020? Steve Clark We’re probably a little heavier now through the middle of the phase, but we’re probably looking at as much as $1.5 billion through that 2020 period. Operator Your next question comes from the line of Andrew Gay of Motion Group. Please proceed Andrew. Andrew Gay In terms of what changed with the guidance from last quarter in terms of the percentages from each segment, did your expectation of overall earnings change, or was it just shifting between the segments? Just trying to understand what drove some of the shift, like the utilities a little less now as a percentage. Steve Clark Primarily just refining things. As we’ve moved forward, it’s just looking at how the winter played out. Obviously, it was a very warm winter so you move a couple things around there. But I don’t think there was anything really significant in the adjustment. Andrew Gay So, then, at the utility, did I hear you right that net income there is up year on year? Steve Clark Yes, that is correct. Andrew Gay And then in terms of the uncollectibles at the utility, you had highlighted them on the fourth quarter call that they were a drag in last year. Do you have any guidance on what that is looking like for this year, just like a year-on-year benefit? Steve Clark We did expect it to be conservatively better this year. We thought we had addressed a lot of the issues last year. We are expecting, and will obviously have to continue along a little bit further into the year, but we are expecting that we will also see benefit out of the fact that we had an extremely warm winter. And while that prevented some of our non-utility businesses from taking advantage of what are typically market opportunities in cold winter periods with a lot of cold weather volatility, within the utility the real benefit is it’s a lower bill for our customers to pay, and it makes it easier for them to pay. We think that’s a net positive to us so we’re expecting a significantly better situation from a receivable collection standpoint this year than we were last year. Andrew Gay Okay. And the 15% to 18% core business growth that you had mentioned, I apologize, I missed what you exactly said there, is that 15% to 18% expectation for this year? Steve Clark Yes. Andrew Gay Okay, for this year. And then, just lastly, I know that you want to be you want to be somewhat sensitive to discuss the amount of equity and timing, but just in terms of the 2020 goal, 150 million goal for net income, any sense of the share count that we should be assuming out there once you get the cash flows and the upfront CapEx and everything is all taken into account? Steve Clark I think probably the biggest issue there is going to be timing of cash flows. But our view on this is that there is going to be, from a significant investment there’s going to be a significant amount of cash that comes rolling in. Ultimately the issue is that you would have expected, as you look out at a 2020 program that we are talking about, and with a lot of the investment that we are talking about, any of the real capital needs and that would also fall in the category of equity capital you expect that to be much heavier at the beginning of the period than it would at the end. And clearly at the end we wouldn’t expect any real equity requirements at the end of that period. Andrew Gay Okay. And just lastly from me, has anything changed in terms of why you’re talking about equity upfront? Given the contracted regulated nature of a lot of the cash flows that will come online, there could have been a thought to let the credit metrics slip a little in the front years because you will get the benefit of those cash flows in the back years. Are you getting pressure from rating agencies? Or this was the plan all along and there hasn’t been a change? Just if you could give a little color on that thought process. Mike Renna It’s been the plan all along. A key component of our plan was to strengthen our balance sheet. We believe it’s the prudent thing to do. But, again, we’ve got tremendous amount of investment opportunity in front of us. As we look at all of these different opportunities, we’re making decisions — discrete decisions — on how best to finance these opportunities. And doing so mindful of — again, we talked about strengthening the balance sheet and minimal dilution, so those are all part of how we are factoring in our decisions. Operator The next question comes from the line of [Steven Ambrosi] (ph) of Castleton Investment Management. Please proceed Steve. Unidentified Analyst Most of my questions have been asked. Just quickly, do you guys have plans in the five-year look-forward to do another general rate case in New Jersey? And can you talk about timing on that and when that would be? Mike Renna We do have plans. When you experience the kind of CapEx that we’re planning on in the utility, it is certainly something that you make plans for. As far as timing goes, no, we have not refined the timing in New Jersey. There are a lot of factors that go into it, particularly off your gubernatorial cycle or election in New Jersey. So, we tend to look at everything from — obviously, business needs are paramount but at the same time we try to factor in some of the social type of impacts. Unidentified Analyst Okay. There was a lot going on before — the BL England comment, what was the comment you made on that in the script? Can you just talk about where that is, where the process is there? Steve Clark Sure. We got approved back in December. It went through a long process to go through the Pinelands. And the Pinelands had taken action to move forward on it, and it required a final approval, in essence, by the Board of Public Utilities. That happened back in December. There were a number of, in essence, appeals that were filed by different groups who were opposing the pipeline for a variety of different reasons. Those are being addressed right now. The expectation, I think I indicated that briefs were due in June, and that the expectation is that the arguments would be heard in September. So, the thought always was, once that got approved that we would have to go through the appeal process. We don’t think the appeals have any merit and we are expecting this thing to continue moving on. Hopefully we’ll be moving forward with it again by the end of the year. Unidentified Analyst What are they appealing on the basis of? Steve Clark There’s a variety of approaches they’re taking. [Audio gap] Some of it had to do with the fact that the BPU was approving it. It had to do with the way that thing was approved. There are certainly people who — well, let’s get right down to brass tacks — one of the processes here as we are dealing with all of the argument again fracking and against fossil fuels and the like, part of the plan is delay. If you can’t kill it, if you delay really, what the process here is, is that they’re going to throw a lot of stuff against the wall and if it creates a delay that’s great. Steven Ambrosi Okay. That’s all I had. Thanks very much, guys. Operator Your next question comes from the line of Chris Ellinghaus of Williams Capital Group. Please proceed. Chris Ellinghaus A couple of questions. One, can you give us some color on where variance in ITC recognition this year might come from? Stephen Clark Chris, when you say the variance, are you talking about the first-quarter variance? Chris Ellinghaus No, in terms of you said up to $13 million. What could make it be less? Mike Renna It’s a couple things. If we don’t have investment opportunities that meet our internal rates, certainly that would be one driver. We’re not going to invest in a sub optimal decision simply because we’ve got an ITC number out there. Second, if we have stronger than anticipated or expected performance in any one of our other business lines that would, again, be a more attractive use of our capital and generate a higher return on our capital. That would be, really, the other thing. Off the top of my head I can’t really think of anything else besides just better investment opportunities. Chris Ellinghaus Okay. Steve, can you give us any elaboration on what you did for equity in the first quarter? Stephen Clark We brought in $9 million, I believe it was, in equity in the first quarter. I’m sorry, I take that back. I’m sorry. It was $5.5 million, but through our DRIP, I think as of April 1, we got another $4 million. So, it was $9 million total as of April 1. What will show up in the quarter numbers is $5.5 million. Chris Ellinghaus Okay. And, Mike, as far as that 15% to 18% number that you quoted us for this year, how are you defining, just so I’m clear, what are you calling core? Is that simply ex ITCs or is that really a different definition? Mike Renna It is ex ITCs and ex any one-time events. So, it really is just the operating profits from Gas Company, Energy Group, and Energy Solutions Chris Ellinghaus Okay. Great. That’s clear. Steve, or anybody, can you just walk us through the supply management contracts and when you expect the un-operating ones to begin? Stephen Clark Sure. Let me introduce you to Greg Nuzzo. This is his maiden voyage on an earnings call. But he is best equipped to give you an update on our fuel supply business. Greg Nuzzo We have three operating contracts now currently contributing, and we have two more coming online this year. There will be five in total that will contribute to 2016. Chris Ellinghaus Both of those are Panda’s? Greg Nuzzo The two additional our Panda’s, Moxie and Liberty, yes. Chris Ellinghaus And the Ohio contract, when does that begin? Greg Nuzzo That’s the Lordstown deal that will begin in 2018. Chris Ellinghaus Is that the most detailed as far as timing goes that you have? Greg Nuzzo In terms of timing for that particular deal? I think in total we have nine that we have under contract. We have two more coming online in 2017, and two additional ones coming on in 2018. Chris Ellinghaus Okay. Great. Thanks for the color, guys. Operator [Operator Instructions] I would now like to turn the call over to Mike for closing remarks. Mike Renna Thanks. Before we wrap up, as always feel free to contact Marissa Travaline, our Director of Investor Relations, our Ann Anthony, our Treasurer, if any follow up questions arise. Marissa can be reached at 609-561-9000, extension 4227, or by email at mtravaline@sjindustries.com. Ann can be reached at extension 4143, or by email at aanthony@sjindustries.com. Again, thank you for joining us today and for your continued interest and investment in SJI. Operator Ladies and gentlemen, thank you for your participation in today’s conference. 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