New Jersey Resources (NJR) 7 Feb 202020 Q1 Earnings call transcript

Good day, and welcome to the New Jersey Resources Fiscal 2020 First Quarter Earnings Conference call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Dennis Puma, Director of Investor Relations. ahead. go Please

and And as Resources Sharon. webcast. everybody. to management Financial our Welcome joined Vice our Thank and team. members President quarter good of fiscal Jersey Chief President Westhoven, Steve first today as and Pat XXXX New Migliaccio, here Senior well you, Officer; by morning, CEO; other Conference I’m senior Call our

as laws. and basis assumptions and or beliefs We the our to with know, statements materially not, include forming to or current beyond of results to cause in X. other the many estimates found are release, statement, factors any control forward-looking in SEC. forward-looking certain in our differ could do and filed light Form future also our today’s as this events. contain statement meaning ability be the on statements for that XX-K statements from can statements review any you our Form expectations, of particular This As precisely. found items of obligation earnings section revise the estimate X-K and forward-looking listeners call herein by assume of recent securities in our wish caution that first on forward-looking this to including the These referenced most within today’s Slide Q We call expectations,

earnings net more also non-GAAP NFE. be complete as performance. our measures financial believe or of financial will that We referring certain provides understanding to We such NFE a financial

for to not is substitute intended NFE However, GAAP. a be

XX-K. Item in more Form financial our measures non-GAAP Our discussed of fully are X

slides from quarter, the furnished financial then begin who by were morning. on found today’s followed The to is this accompanying on open Steve will agenda Slide today’s presentation review X-K call available with filed and our up we’ll are questions. our will website highlights on the your Our Form our call results, Pat, X.

our to Steve Steve? call like turn Westhoven. I’d to said, President that and the over With CEO,

Thanks, good Dennis, morning. and

briefly get Jersey’s Governor our Master quarter which first talk Plan, about New fiscal like to week. by we Before Energy released to XXXX Murphy last results, I’d was

that is The management clean goal plan goal, XXX% the of of outlines to energy the plan XX% submission The energy policy XXXX. emissions state’s creates a for of energy and a reduction ours. New levels in development recognize achieve and the Jersey. XXXX company support We to is and document like and opportunities it by the diversified use, reduce

Annual last the emissions of a Jersey I voluntary our at aligns reduction a fact, Meeting with of including state’s XXXX month, our target, XXXX. levels shareowners by to outlined In agenda operational XXXX XX% that sustainability New in

delivering recognizes meeting needs. the heating our hydrogen. through gas in our XX% value It infrastructure customers the of state’s decarbonized long-term this the role Importantly, infrastructure also natural to of supply home like technologies plays green renewable the and recognizes E&P in gas

outlined With rate capital policies Plan, in our X% the unchanged. of our the to remain Energy NFE growth expenditures planned X% long-term and Master

meet capitalize the team has climate and business helping state’s these opportunities our assets, Resources Jersey New grow and to goals. while the expertise on

a distribution fuel deliver be that have heat We to to can and world-class system leveraged gas businesses. clean homes decarbonized

energy and long-term most market, New state’s We solar in efficiency one of a we manage the investor are Jersey successful significant programs.

and together growing focused state they the agenda, shareowners. for company strengths, remain and its long-term results on allow in sustainability reach These our helping to with our critical be the us will own generating will goals, emission

let’s turn to the Now quarter.

primarily SREC year. from lower The from timing difference quarter. highlights share X, can services. results see and to Turning first [ph] of per with reported the $X.XX financial you the net due We per of share to earnings energy is $X.XX the Slide compared sales last

quarter. adding nearly at continued Jersey growth the Gas, first Natural new in Customer New X,XXX customers

track on reach fiscal of are year. X,XXX goal to customers new adding our this We

Adelphia Gateway end regulatory receipt our the the the in expected to history, permits. FERC. from of begin first received natural to operator approvals now our we’re upon for Necessity from Certificate oil is Public time of and pipeline. and company’s Southern Conversion And gas Convenience of of its necessary a FERC-regulated final

energy Center, During we megawatts into placed quarter, the homes. Clean Leaf River approximately completed megawatts, nearly portfolio acquisition of service, the to the XXX solar line is expectations. Energy solar it XX,XXX Ventures that’s projects our with performed in and and Energy X.X and our enough power commercial

X, XXXX guidance contributions of certain Slide the are share, $X.XX adjusted segments. $X.XX while On NFE our from we’ve we to affirming per

our NFE. of midpoint in utility range a X% reduction due expect a and O&M expense. to guidance to increase we about to primarily That’s our prior the about XX% contribute First, from is

Second, prices between XX%. we X% adjustment volatility mild Northeast. weather to prior contribute down from of to in energy January to natural gas through services estimate This X% X%, lack our the the expect in reflects due to of

between to of XX%, up estimate is opportunities contribute CEV from to This the prior third, additional XX%. due XX% to year. primarily expect to And XX% investment we this

track for On steady Gas. growth thanks to X.X% territory, achieve growth, service the we demographics New summarized customer and drivers Slide our In growth we can the annual in expect Natural X, our see upper Jersey customer we rate. are key to have left, the you on favorable

expect in completed update date, over we’ve the Link. project of on be top to is XXXX. the and an the Southern in To it In right XX% Reliability service

year. is in the On to is review currently this left, and regulatory program fiscal our expected conclude process, bottom the investment infrastructure

And XX% lag. capital the provide finally, will on this minimal invested regulatory of about right, with quarter the we bottom returns

on is An update on Gateway Slide X. Adelphia

subsequently the the generation significant we the in under Martins Northern of are a our natural for quarter, the battle XX company. The on already These is gas supplying service received lower end milestones acquisition. certificate, in supply million midstream Creek to and the FERC $XXX facilities business During mount pipeline year and closed the and project its agreement.

Once to final our the driver regulatory will permits laterals and the new cleaner the to the already compression, be natural Greater for in gas will cash serve portion, earnings in Philadelphia the which receive ground which and Southern begin to markets largest project. adding approvals, Southern constrained flow We interconnects convert portion, we region. we’ll of and is the

investment capital expected $XXX be to of improve Our million Gateway range to the to million. in $XXX is Adelphia

now through the filing developments this On take you On for a Slide Xth the January of year. this PennEast. petition was Court extension I’ll deadline submit petition latest XX-day with to X, XX, States. of the United for PennEast review granted for is March The Supreme

filed XX, amend requesting its as which the PennEast a pursues approach, approval phase-in pursue the a the On application FERC PennEast as eminent issued project significant demand. PennEast’s order U.S. an supporting to position to January supported by certificate, shipper rights. project Court review. FERC also support declaratory FERC is domain through Supreme

construction consist in Pennsylvania, begin construction is expected approved within FERC after Pennsylvania, the with the will to phase state. and PennEast the does interconnections Because majority of First of soon in amendment. needed permits approvals

remainder after The includes secure PennEast the second approvals. Jersey the to phase New original and all the will necessary of begin and Pennsylvania

said the future. we its project before, to we’re role energy As and committed important in our

Moving QX quarter. context moment. will through to a Pat take results operational our financial this for highlights CEV the Slide in around provide more you X, I’ll

incremental solar total project portfolio of At note placing bring megawatts projects on placed one megawatts. XX service of about our This eight capacity. this capacity. adding fiscal about service, will into We X you’ll megawatts to the into top, we plan commercial XXX year, about adding that

revenue At capital shows recognized totaled the the XXXX, can $XX.X bottom through expected tax bottom approximately expenditures first which million, in see our we you in million anticipated left, right be that investment our SREC and to is quarter million. The $X.X $XX credits.

provide like Jersey. on solar I’d Turning in market to to the an XX. Slide update New

part capacity SREC in of when BPU required to retail the of installed sales. solar Clean Act, Energy As is state XXXX reaches the the the electric close existing market the X.X%

the market In December, between will was be market transitional successor the what will TREC. SREC credit current the called bridge program. a approved The gap and transitional become to

me take through let of So some the details. you

price all and Projects as First, market for to solar will does investments XX the year fixed to continue receive it subsidy. date the function will SRECs, made generate TRECs today. a eligible we will

transitional its the program targets, of the come. types will to BPU incent shown more plan with table, successor the refining will is as in projects. of market investment the And transitional details and allow meet the to We believe certain development NJR

on the turn Pat results. over now call to details financial the for I’ll

NFE Thanks, quarterly NFE Steve. $X.XX per behind million And morning, or $XX.X in good or million drivers changes. everyone. Slide our Reported shows $X.XX share the XXXX. XX to compared main $XX.X per of share

due On in first primarily to gross margin the the case our resulting quarter, settlement. higher rates rate from NJNG’s regulated side, utility increased

the shares. decreased did investment this through first NFE the in of in quarter recur of addition, recognition during NJR that first and we a midstream the because year sold In not gain XXXX, on equity slightly the Dominion quarter

approximately This by in from with revenue decrease operating $X was performed partially River, line our offset expectations. with Leaf million, contributions which of

NFE At decreased CEV, for reasons. three

sales. of a SREC sales In XXXX, occurred first First, quarter. the larger the fiscal timing of portion our SREC in annual

quarter first XXXX was portfolio of the in divested subsequently contributions wind included Second, that from XXXX. February

Third, the to last year. in compared first ITC quarter we recognized fewer credits

to pricing spreads mentioned, As services as declined by the weather narrow milder Steve NFE energy and due caused in Northeast.

next outlines years. few the highlight. There capital quarter like XX of a the are our points first X spending I’d Slide for to

up in spend the the and NJ to year-over-year, SAFE primarily investment in was increases II utility XX% and combined For SRL quarter, due RISE.

XX%. to port capital total based a over NJNG, For of spend fiscal rate at XX% CAGR of approximately XXXX, be helping will

a $XXX spend now PennEast the to in pursuing construct capital and approach estimates Pennsylvania. expect expenditure $XXX We phase-in to million our million between to With XXXX reducing we’re I Phase project, XXXX. for to

due spend capital projected Venture’s investment to opportunity. Energy the additional year million about increased an $XX for

seasonality which Moving in $XX quarter and an to see our Cash financing operations the Slide the of million, on business. flow XX, cash negative projections. reflects was you first our can flows update from

As new you the NJNG. for rates year can to at higher improvement expect a full due significant see, we

XX. these went November effect As on a reminder, rates into

issued the Energy bridge financed a million, in fiscal bridge million which the was of Leaf the acquired XXXX, the permanent and we Center part through We’ve $XXX.X loan. needed partially initially for acquisition’s repaid facility. $XXX as Early funding equity River

stock, and issue shares DRIP. equity issuance satisfies proceeds The in result of equity the planned million X.X of year Our part common XXXX the tend in raise. equity with $XXX needs division raise excluding shares as sale the our our of X.X fiscal net to the of portion We XXXX, for later forward million. million of common

are on program hedging SREC highlighted our of Slide XX. results The

auction prices As we February, years in saw SREC an for we in XXXX and energy XXXX. BGS the increase approach

have to our XX%, those respectively, X% last earnings call. increased For since years, prices

we’ve XX% SREC an from when been XXXX, XX% With the and we prices, in for have now data. revenues actively last reported hedged increase increase hedging of our

continue hedge energy market to add hedged, we’re position. XXXX, to our monitor the we’ll XX% now For and year to

SREC in we prices. and SREC hedged. be these nearly are XXXX unaffected XXXX, future years will XXX% At our revenues energy changes largely For by ratios,

call the to turn Steve? I’ll back Steve.

Thanks, Pat.

the open taking to I want hard join questions, Before I appreciate us today. time employees that and thank for our performance, our their and drives all work to you call to dedication I the

call now for I’ll questions. the open

We will go the now Instructions] session. begin first Travis question comes Miller question-and-answer from ahead. with Morningstar. Please Our [Operator

you. Good morning. Thank

morning, Travis. Good

just that that saw share Ventures want I your segment up drove Clean technical Anything a question that’s the little projection Energy for year. here. earnings this went that I increase? your a from there notable bit

Travis, that XX% It’s this range portion increase the spend the $XX of expected of really million Pat solar in of projects, increase XX%. commercial the we’d on Migliaccio. approximately drive our to to is good

going economic Is before, in the that might opportunities now seeing there? or from are those - else as have that not Okay. market something you’re been on that

No.

Just change pipeline. the a further in

then potential And with And had side higher-level opposition come a and out talk some in natural question. Obviously, the think of about Okay. use. residential there’s I AGA lot gas statements. been a

your back use. its gas lines discussions? either of seeing any of you’re the went cutting And terms in environmental policy if policy, anything I we in along towns, that through neighborhood, debates, wonder anything in local Usually, those residential

this Steve. date. any haven’t And of no, that is seen we to Travis,

In fact, pace. our continues growth, said, just customer we’ve on as

to next that continue. all We our the base. given expect natural and service to X heat new of of And to certainly add our to other expect, territory home, we gas ways over years, your demographics to customers price customer the the compared XX,XXX, XX,XXX

great. had. Okay, I Thanks. all That’s

Thanks, Travis.

[Operator Richard Instructions] go questions. further this At like there America. from - I Please have would Bank pardon time, of me, see ahead. we no [indiscernible] are I

Hi, Can guys hear morning. me? you

Yes.

Richard. Hey,

miss you it. your was guidance pretty just It just with Hi. big seems expectations. reaffirmed a I range, like relative to wondering,

do see that you how yourself within trending range? Just

reaffirm to we this $X.XX the is Richard, this point, At mean, Pat I would of Migliaccio. to [ph]. refined range give premature more guidance it be for guidance any that. than $X.XX us

Okay.

higher or not reaffirming necessarily trending just lower? guidance, So the but

Yes, that’s statement. I fair a think

Thanks Okay. lot. a

turn to closing like would I conference Puma session. question-and-answer the Dennis any back our for concludes This over to remarks.

for I this us everybody morning. right, want All Sarah. thank joining to

of our this a website. reminder, available on for replay a call is recording As

your As New in interest always, Good-bye. appreciate we Jersey investing in Resources.

now Thank for conference The concluded. has today’s presentation. you attending

disconnect. now may You