New Jersey Resources (NJR) 8 May 202020 Q2 Earnings call transcript

Good day, and welcome to the New Jersey Resources Fiscal 2020 Second Quarter Earnings 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, Head of Investor Relations. ahead. go Please

CEO; Good other second Cole. I’m Welcome New team. Officer; President to here President Senior Thank Chief of and fiscal morning, our XXXX Resources Financial and our Westhoven, quarter by well webcast. Migliaccio, conference Jersey our today Vice as you, as Steve everyone. Pat members call joined management and senior

We forming other found forward-looking control wish in that or basis beliefs forward-looking slide certain caution on from results include expectations, to you are statements This today’s precisely. many the call securities differ estimates current of could cause one. know, this the laws. factors within statements for of and our to estimate to the listeners the ability as beyond expectations, call our materially statements meaning our As contain that and assumptions

most first Q assume We earnings These by statement, X-K any and be light of particular items can including revise forward-looking review in do also obligation events. our any today’s Form of in our referenced section the statement or on this SEC. Form filed statements with herein recent forward-looking future XX-K release, not, found to in as and

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

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

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

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

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

morning, communities. felt good for joining and you in our the everyone. COVID-XX our been globe, around today. has The state impact and devastating Thank of Dennis, across us Thanks,

affected. and with been deliver our anything service while every customers. And interruption, team occasion maintained Without those safe ever experienced, work. are our thoughts who've day reliable professionalism we've unlike hard this our to and to the Our gas natural all with ability we've is to rises

one As half our of thing top early is and of March, priority. team safety clear. unprecedented health and times, remains The our these we remains our employees and we plan business our our nearly now navigate customers working remotely. In continuity implemented

technicians, and while essential their Our such responders, continue as at all employees distribution service assist businesses, our protocols. safety robust homes customers first mechanics, to following

natural for customers, home limiting a by We distance and service strictly assistance potential we're employees experience to equipment to the protective of and and energy suspended gas customers guidelines, business. grants customers disconnections state or following form ensure providing are appropriate have we late exposure for hardships, their we've who them the and and help entering CDC with protect when fees continued social To bills. wearing personal waived maintaining in energy

delivering the meals why of impact the in vulnerable. $XXX,XXX to are food banks we've is that on community donated recognize to most especially need. also communities, our We That's that having COVID-XX thousands residents

funds Way, businesses. local our responders, victims violence, United to well donated as domestic the through Additionally, of we support as first

operations. we we have experienced Given change the not our to provide, services fundamental the critical core

Energy New scale Midstream. NJR to over projects infrastructure our and Clean continue customers We in Gas, utility Ventures moving Jersey large provide NJR Natural service and to at construction are XXX,XXX forward

$XXX into a have our April, new we on execute strategic million sure capital. successfully has to making To priorities, further to enhance facility liquidity. entered credit focused our access NJR In we

the and our customers, our the expectations and nation, committed economic communities business of Jersey While employees, in COVID-XX has strong of remain the to created New some are shareholders. across uncertainty we meeting fundamentals and

$X.XX XXXX the per fiscal our Services. reaffirming are performance NJR we $X.XX of four, to slide share, guidance despite of to Moving NFE Energy range

utility of total to and of previous to NFE, will increase an NJR to XX% from now estimate our XX% XX% XX% to XX% XX%. contribute Our business Midstream for account will continue

here Ventures total previous Clean estimate XX% NFE, expected side, to now unregulated from results will the adjusted to our of to contribution Energy to committed we a zero increase Energy business. XX% Services Energy an contribute of We XX%. continued challenging the for X% for remain the range On the the with And of XX% due to conditions. we were negative while to market disappointed Services, current

limited hedge that of we caused that situation were combination winters assets of typically results on key ability in of by record warmest our physical unique to do. our the issues one one These our pipelines operational way and the

disruption potential winter and we in and gas not consequently, this all in could warm physical drove long the position the reducing Energy this Services did Services The capacity. deliver risks capacity capacity Energy Ultimately, volume values unhedged value hedge resulting assets. of on lower, weather losing

Energy Services. Under comment normal for expectations don't we circumstances, on

some time, important our the our charges, to We're to opportunities optimize taking and to share portfolio. continue this profile of to also in reduced at risk Services we've thought steps details. taken contractual O&M seek storage agreements the Energy reduce it we was We've and for I transportation to the However, reduce within demand value certain future. actions expenses,

have how last Energy Moving three weather performance straight slide the impacted Services to years. five, we'll over patterns

winter heating On degree of northeast show days the weather. winter reflecting we the during in the XXXX with months, cold page, the top consistent

result On areas a marge between price proxy show production the our a the main for of we TETCO proxy bottom main for differentials our TETCO MX, MX, and chart, in the areas.

to Services pricing significant cold During differentials XXXX, Energy sustained able weather that capitalize on. was generated

especially weather or market our limiting to due capture to XXXX, portfolio depressed XXXX, opportunities unusually timing In the contrast, value spreads warm location geographic within in the in differences. and

Services demand glut heading Energy to for of hasn't Looking XXXX. drop for is seen to existed This a constructive some summer/winter fiscal a widening gas into the a spreads the with fiscal next year, off in supply, and COVID-XX creating time. environment we've due that

per range we share. per $X.XX to $X.XX NFE of share. Moving be The achieve lower still $X.XX Energy can of slide our prior impact to performance six, compared to up expect Services guidance our to to guidance

$X.XX Gas of New savings in tax are uplift, And range that Natural CEV allow fiscal changes of add OPEB. is expected related guidance XXXX. our to credits. safe expected efficiencies These tax and harboring to expected Jersey from us for O&M investment $X.XX NFE mostly mostly maintain to to

new Moving new to starting customers our to on growth seven, so We highlights customer us targets added over this cover to reach of years. keeping the next over gas. X.X% slide some the track XX,XXX between I'll customers futures year, XX,XXX far natural annual adding and X,XXX three

quarter we in XX% we're placed be complete XXXX. Adelphia the completed progress project and Midstream, file to to service to to actively of and order we FERV construction final proceed. the expect over Pennsylvania with the for the continues Link Reliability Gateway Southern permits obtain to The into in working of GEP NJR with needed acquisition this At

This is required add to new the to laterals compression southern portion. in

We on Jersey petition southern the and expect a project. in be to PenEast remain portion to partnership. service And of submitted the Court the wait to Gateway ruling in respond The committed XXXX. we New directed PenEast to by Supreme Adelphia U.S.

provide updates they available. become will We when

the solar projects to years, continue will TREC to $XXX forward its will for goals. eliminating development I'd to nature look price, market promote CEV update to developments and energy new transition We Jersey market. for in market. opportunities Jersey qualify as The X, legacy market. a TREC closed you volatility. the more like achieve provide help to SREC New the of solar Jersey fixed will now price slide On in market recent the New TREC The April clean continue for solar price XX, XX fixed On on stable market New TREC state investment

of XX productive Turning quarter, capacity. to had slide incremental CEV X, another adding megawatts

commercial fiscal The place Sunlight eight track service our solar on customers Advantage, into solar year. new program are XXXX. in added projects We residential XXX this

detailed call over financials. now at Pat the I'd to look more like the to for some turn

Thanks, Steve, everyone. and morning, good

to Turning debt, and taken River In million the long-term we to an XX, additional to and our provide two other financing slide Adelphia $XXX profile. of to Leaf projects. priced mainly acquisitions significant Gateway April, liquidity infrastructure improve steps we've for

We conditions. at receive at and year $XXX to XXXX during subject NJR to expect million customer fiscal closing and $XXX million NJNG assigning

new becomes facility. we financing, and for we million, Once liquidity account the facility entered Also a even long-term stronger. credit $XXX position April, in XXX our day new into

On slide XX, show we our debt schedule. maturity

and our As chart right, on you priced assuming closing can and of maturities. near-term notes, the of our recently signing most from see the effectively remove we

NFE Slide XX, drivers shows behind our the main quarterly changes.

$XXX in XXXX. share, of second quarter $X.XX per of $X.XX per $XXX.X million share compared report XXXX, million NFE NJR the or During for and fiscal to

and base to Natural NJNG Home Jersey $XX.X New and quarter-on-quarter. improvements to higher lower expenses. rates Home O&M Other O&M. Others due Services mainly increased also and million saw due lower NFE Services increased during $X.X million and the quarter, Gas to

the million, mostly of year. fiscal challenging experienced sales, unusually $X.X through winter second warm due timing the of in year. continuing phase SREC will services occur the half Energy market we the down CEV which conditions was this

of our acquisitions. segment River generated offset to with and related Finally, acquisitions from the was Adelphia expense Midstream the increased operating essentially by Leaf income by flat interest those

had three our capital our COVID-XX XX, not months far decreased. solar the spend capital a six of has residential of material on fiscal Slide which in the XXXX program, thus impact outlines projected for our with slightly years. next spending the exception first

progress as Our largely to continues NJNG capital program planned.

on flows can and Moving our projections. to see slide update you financing an XX, cash

taken to we've our prove before, As I liquidity. steps mentioned

also this XXXX We we fiscal have first equity in for quarter fiscal offering completed the and XXXX of equity the needs no through year

SREC for hedging from XXXX SREC on our we last and actively highlighted when We've of been and are program results our data. hedged the XX% reported slide revenues hedging increased now have The XX% of XX.

XX% to to XXXX, add market years that now energy to the hedge continue For hedged. position. monitor We’ll are we

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

XX down drivers some NJNG slide for CEV and providing quarter. financial by additional On we're broken

illustrating of earned the NJNG, the heavily a year utility winner of business. the the to during margin gross seasonality beginning weighted months is year, our of was fiscal hitting which percentage the For

of the year. two fell gross margin utility in Approximately of first this XX% quarters

and revenues percentage quarter ITCs For CEV, in fiscal for of we're and providing occur XXXX. the each to expect SREC

For XX% when ITCs the the service. the are typically of year, projects SRECs also back in weighted credits with most occur. the tax towards revenues then fourth is solo SRECs our when occurring weighted Investment in were sales placed quarter heavily half to our of of fourth the quarter, which particular

turn over to now back the Steve. I’ll call

for difficult a circumstances, our the of Thanks, under all Pat. But of It's strong. fundamentals business remain us. even been challenging time

financial We credit business sufficient have liquidity lines. our across

team drive company. will we that of inspirational, emerge the these through carry Witnessing our our and has mission of instills than times dedicated stronger uncertain value employees confidence their continues been bravely Our out still professionals to it ever.

now joining And you Thank the call we'll to us for up today. open questions.

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

you. Thank morning. Good

Hey, Travis.

Good morning, Travis.

Hi.

So, couple terms decoupling the had did you of you or How weather impact quick give normalization of the causes. in weather that questions the here, during quarter? that back much

Travis, weather, months ended the and normal this from and correctly March XX Migliaccio. million you to than said, the Pat XX. few utility, added tune think the this I It was, more as I so of that to believe the particular for a we insulated are mechanism, dollars, than quarter six decoupled close warmer is CFP the

residential? supply the could what getting side, the supply? it? on need what you're supply Okay, chain Are smaller Is the if chain about like? you wondering you a about solar difference on does could if on I bit the you wonder the seeing larger there when look supply? good. and And was solar talk What Just and you talk supplies you're seeing between little projects

is Hey, Travis. This Steve.

believe know, purchased in solar our construction, you we we to for So have regards panels all year. solar need that the this market the

has So our chain been supply uninterrupted.

know, the building So the go into for we quite you facilities for remaining through our, that construction has you while. we're And, the fiscal know, year been obviously all summer have, that planned continues. we a as entering construction still

business from as usual. perspective, our really uninterrupted So and

decline the I the potential conceptually, think might what's if prices and prices. does if decline in down in gas Texas, affect other How guys? more associated that gas, gas going affect see, Marcellus the spreads the that gas we oil south, oil associated basins area you get how you market, in increase see I and you a potential when may, the one Okay, in if in rise that on especially

to as market Well, causing being the either think in the community there, halted is the where, reduced. disruption leading, alluded in markets. oil down It's what's we being happening I volatility drilling certainly, production and, those programs or are just producer

exactly to know, you balance you've from the storage value other, creating one going And this to driving how gas this volatility point out. this unpredictable from is a time. trying predict this able of all fold essentially out. wider, to gas production to But think I plays this and in essentially one the difficult very future or all of think to to spreads I certainly of So for that, shifting story got certainly, area all moving, ahead area be going in out at more to there's is bottom how be moving marketplace, line the volatility another,

Great. it. a Have Okay. Appreciate day. good

Thank you, Travis.

Travis. you, health. Stay Thank

[Operator Instructions] of comes America. ahead. from go And question Bank our Richard with next Please Ciciarelli

Hey, questions. Thanks for morning. good my taking

Rich. Hey,

Rich. Hi,

Hey.

to terms XH of ability demand and solar on half I into know the social of given Just the and execute COVID the that year. seeing of recognition anything in a distancing? back the quick the just one customers But projects most from IPC in back or is execution specific to you're impacts

our Richard, is moving construction guidelines CDC the maintaining we a before, utmost constructions and construction, the to as is the all our as the customers And employees that, importance. goes, basically reconfirm far are as state BPU, social certainly central of said, solar construction of and our and certainly then service, adhering Well, distancing, crews for forward. the safety that

– by So time some we've year. the the the complete be projects are quite that planned those end And had we're moving essentially, fiscal we're forward. all for hopeful able we'll that of to

It's we custom that really I'd And with of associate our customers to reflection did you Richard, not my of our imagine? able thing Advantage. being more for construction, do only as expectations reflection into a some as in Sunlight is, the I not to channel might partners, slightly get the decrease add script, marketing mentioned home –

for [Operator to will Dennis Instructions] our back And words. session. any turn I'd the Puma closing this conclude conference like Mr. question-and-answer

you this very much, everyone Paul. morning. us joining Okay, Thank for

always, a investment call replay available appreciate Good-bye. Jersey we a interest safe reminder, Stay this as As your of on and our New everyone. is Resources. website. And in

The attending confidence is included. you for Thank not presentation. today's

lines this disconnect at time. You may your now