New Jersey Resources (NJR) 8 Aug 202020 Q3 Earnings call transcript

Good morning, and welcome to the New Jersey Resources Third Quarter Fiscal 2020 Earnings Teleconference. 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. ahead. go Please

our Good members Jersey Brandon. and - Welcome as Steve everybody. I our Pat Thank Financial our Chief third morning, senior quarter New Officer; Westhoven, by today Resources joined as call and fiscal to CEO; am Migliaccio, other you, well here everyone President of XXXX webcast. team. conference management

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

certain measures, a that as of such provide to financial financial understanding net or non-GAAP gross referring financial net NFE, believe our be loss NFE. complete earnings, also We will and We more performance. margin financial utility

be for not are However, intended GAAP. to substitute they a

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

call call who Steve over accompanying like by to have were today’s your President our to from morning. to this on the slides with give we said, open to financial Steve? begin Steve Form questions. Turning With Westhoven. will I’d that results, Pat our the available and the then on website call quarter, will X, agenda for up and highlights furnished CEO, we presentation our today. X-K turn today’s are The our filed followed will Slide our

and Thanks, Dennis, us morning, for and joining good today. thank you everyone

Before I to In Jersey a resumed for that impacts New resume results, Natural COVID-XX services quarter provide last in-home efficiency started the scaled at we back peak the want on SAVEGREEN, pandemic. update NJR. other June, inspection status program Gas on of energy review month, our and the over have been third we the work to

non-emergency work customers’ performing now are utility at service-related requests. We

has quarter. over and restrictions, team activities of new certain continues nearly delay far during of year and XXXX XXXX so today. Our installations customers. pending we to We’ve have construction done despite pandemic-related terrific a added as a navigating customers home fiscal COVID-related the job The this utility add

adding XXXX, goal remain of reaching confident XX,XXX our of target end customers of likely we XXXX. and the near-term this XX,XXX We a as original but in customers XX,XXX our new year by lag fiscal in are view to new delay and three

suspend customer well-being through take and their assist through voluntarily in fees warrant and in to gift those and and we our disconnects Charity communities the and our customers safety NJR designed of we the and continue programs assistance bills. serve always, paying As to federal late priority, provide state of and to various employees, need customers

our will Midstream NFE XXXX We X% The notice the range XX% and NFE, on to on for challenging X% from contribute complete, XX% to Gateway We Pennsylvania segment we due per date. in lowered loss contribution proceed towards decreased to falling a the Gas permits under XX% is the expectation remains Services, previous to to of compared to share XX% review Adelphia service once to to are Slide now Natural for our DEP negative review guidance now at Jersey project. And Adelphia XX% reaffirming file $X.XX of final of the to XX% New expenses. agency’s range lower our to total to NFE. O&M the FERC the and despite of earnings we our end due Energy despite ASEVC a we XX% of with by environment, XXXX X, the of to longer-than Moving are expect $X.XX end review expect period, anticipated for total the range our lower fiscal of permit track negative X% range. NFE to Adelphia

pandemic, reaching X, and XX,XXX Moving as the to customers three we customers despite confident to new Slide target before, add mentioned the XXXX. year to by in end related our remain continue to delays of unavoidable some XX,XXX

Utilities not materially XXXX. for Jersey future year establishing released minimal been CAGR we has New of energy the by and Gas’ see Natural XX.X% disclosed Public capital Jersey during quarter, rules and pandemic for order our Also the downside previously three affected period XXXX Board efficiency an risk program as to filings. between the the New

progress Natural with And for to construction programs over with change go. goals. we Gas XX% as energy utility, the customers. the a state track miles The with such, to continues leaving strong to aligned state’s record efficiency as Link Jersey of constructively New design positive X.X complete, Southern approximately of Reliability regulators working and has this our our view make

inadvertent drilling However, operation, third Gas routine New Natural in site. structure damage the drilling an experienced Jersey in caused which return a during the quarter, the to

with suspension matter notified. on takes waiting protection stopped portions the environmental sections responded the do to actions, Natural the accordingly. the and seriously of But release. of to required permits on permit we submitted Construction July And DEP, certain took of the suspended DEP of a review. the mitigation safety the several expected activities the No continue Jersey progress in to not permitting impacts to timeline We consultations New of completion DEP as result a is the Gas we and this mitigation the expect SRL. are remaining Xth, resolve plan and immediate issue following be risk permanent productive of Jersey, SRL activated return lift we our affected. inadvertent Gas’ and Natural after New for are drilling, environmental Jersey was was strategy New part now DEP’s project

another Turning track are fiscal goals growth The to important of segment to megawatts An solar meet and Slide we solar quarter year. this first facility, of our had an Solar early our totaling the quarter, on our In of nine capacity example our help acquisition to XX incremental Energy to Clean asset. X,CEV clean energy we part commercial Oak Jersey portfolio sustainability achieve another third commercial outlined adding commitment this operating projects year. added New including is three an productive the projects the future. of our agenda we the of

expertise upgrades be project and Oak efficiencies. record realized team’s our is minor that of successful management, to believe asset to there solar we an opportunity can Given in track New Jersey the related O&M

And investment has pandemic-related majority during we pace see program and and successful quarter, XX As serves lease team signs the markets. The another now on small through the XXXX and solar total. their targets year. over at to customers Sunlight ease, CEV the very for are restrictions third is of satisfied the Advantage in the quarter, And in beginning commercial of improvement residential added customers

ITCs approximately million the in We expect quarter. SREC revenue recognize to fourth of and million $XX approximately from $XX

southern from River flowing of At gas portion Midstream, project project I’ll Midstream Moving NJR is positive manage, and our northern Energy Leaf a and of our portion of the X, storage Center with and remains for be our continues expectations. The working Gateway cover are Adelphia highlights line Services. our NJR in in permitting date addition through XXXX performing the in-service final to construction we portfolio some unchanged. and the and transmission Energy to assets of Slide to well

the may issued Supreme impact. PennEast, project recall, no environmental FERC August assessment XXth, Xof for on the a as Phase Court the For U.S. Xrd, on And June of environmental the finding significant requested positive U.S. view the you

in I in summary, reduced on And this our O&M the allowed guidance, maintain provide the for available. predictability they its the flows. steps financials. and and programs And will and We’ve continues case despite our us the General to by objectives when months of business Solicitor like updates nine one expenses environment, to the strength progress services year. we to made that, would Supreme Services provide of of the project. the Jersey the reduce General hear Energy PennEast the of to of whether of over with will of turn and and the to to increase call cash the to portion the become Pat and details regarding await stability opinion businesses on capital risk difficult first some We our has profile Solicitor Court that decision to the New over customers. pursue reaffirm uninterrupted continue diversified the the our

and net financial good shows everyone. and the Slide loss main morning, NFE drivers changes. X our Steve, Thanks, quarterly of

third the to quarter During or a loss per $X.XX share or of share, net net reported financial XXXX, $XX.X XXXX. fiscal compared in NJR $X.X a of million, million per $X.XX loss financial of

our mainly spending fiscal mostly million, income our New in due of the quarter NFE increased to due decreased Services Jersey Natural during Midstream from two Services which will first interest project. of IT River million, $X Gas $X.X Slide income for $XX.X and to the financial higher same occur as and investment expenses and when the replacement rates mostly SREC base this the million the Ventures of outlines improvement months operating due quarter-on-quarter expenses. timing quarter. lower an and compared and Adelphia, Energy mentioned higher margin quarter expense. to nine next sales taxes Energy years. improved $X.X the recognition saw of XXXX. related and with the Home credit to to due modest fourth offset improvement by down system XXXX saw some in primarily million to was timing Leaf other Steve period XX tax O&M capital

permitting now $XXX in range As $XXX to to to $XXX XXXX the expect to capital Adelphia previous earlier, of resulted million. in Gateway’s to mentioned and pushed fiscal estimate Gateway in We $XXX expenditures getting XXXX. compared for our spend our a fiscal for million million million Steve of process capital portion of XXXX delay be the XXXX, Adelphia

NJR terms in see liquidity. positioned well can As on Slide XX, remains of you

As had of to $XXX almost June available million us. XXth, liquidity of we

$XXX our balances. the River million total Leaf notes reduce NJR We NJR to bridge pay In and short-term unsecured for received July, of debt of mortgage loan issuance use funds addition, to those NJNG bonds. a outstanding in off

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

per needs due discuss the stability the communicated, no of want to fiscal this $.XXXX the previously or and to of SREC not expect light dividend of I On July have we of moment rate growth of currently dividend highlighted we’ve dividend December. equity share we our to our XX, our declared completed XX, offering year program. long-term to for also we last X%. regular quarterly fiscal X% the a changes As our in XXXX do take pandemic. Slide On in hedging details

unaffected prices. increased Energy position continue SREC XXXX, data. revenues XX% We hedge future year ensure and last have this for XX% XX% XX% XXXX, to year SREC in volumes have hedged we while are when by for we actively hedged, we reported to of our from to are hedge changes our energy largely XXXX, we

an our over energy For at now and energy year volumes We’ve now SECP. $XXX, to of year of a back year call at fundamentals current have XX% the our are with energy the trading of is turn hedged XXXX XXXX market $XXX. hedging I’ll SREC Steve. begun XX% average XXXX strong

Thanks, Pat.

working all challenge of embraced performance the wishes customers’ dealing how open largely their needs I in serving and of we’ve considering the especially our March, has and this that to our and want this I quickly Weathering excelled and working environment period we hard work to we Back remotely, thank circumstances for for place. their all employees at unaffected. with. been pivot for that are associates dedication, service questions, the Before to new should respecting call our the had through field our take

recognized I’ll are to according straight and in Cogent the taking a on utility focus niche for for the to year time I appreciate the you questions. customer seventh today by most trusted call service Escalent. June is we open now Our Syndicated join why as us

ahead. [Operator Instructions] Please question Mizuho. comes Our Moreen Gab with first go from

what questions. Wanted start actually on and about, with you looking Can energy to talk programs and done the your what you the solicitation over there Good morning maybe BPU. Couple above, just of the magnitude are efficiency in the SAVEGREEN and the programs everybody. past? to you’ve do

Head of question those this Steve. Kahrer, who is to some pass Regulatory to Hey, Gab. on This you our is am details to going I the Mark programs. give

Yes.

background, call SAVEGREEN you vast a know to a our quick over program program. improvement million So, prior as was it our $X.X a just give you

and one a We still over on the million $XXX get three in And are have we about is we to that in XXth. investing we $XX programs million look do at year approval upcoming a prior year September when through the a that working period. the due last take filing,

what program know it date is that gets better approved the will now and look when XXXX. We like right May will of target

right We expect similarly aspect final discuss uncertain be. Those and are customers be we in BPU. programs the previously the natural are many is ins program details it that will – But were residential The there that some commercial will and the be really now, by to utilities and there Energy for and size, Clean coming the somewhat around be what outs can’t programs. over to gas. it the specific will run of is programs positive are

that implementation July look required creating – by with BPU hopeful forward XXXX. the of May by they get we Xst those once we are will So, collaborative to the be working and approved and there X, programs, on

there what of lot about So, that programs look those uncertainty still know of three is We like program. the right now, a a will year size. be

could these bigger. similar or even SAVEGREEN are it to a bit expect little So, projects what be

calling has an COVID Appreciate sound some you. the cost, impacts? anticipate that. turn much you BPU can that. COVID the if then, or potential for impact know I doesn’t directly. at there of Thank allowed I all, potential out has And been maybe Do COVID to of like it costs

anticipate noted forward? they your so One that you think going yesterday reported. doing I peers, of were they that’s when Is something

Migliaccio. Gab, this To-date, immaterial. for we are been order. largely aware us Certainly cost of the Pat have is the COVID-XX

We’ve great bad a some increase not And all that. to typical net well a write-offs as we’ll mentioned see around debt material in a To high largely to back to year million those to COVID-XX as just us of costs $X got going XXXX, expense. a of some monitor million $X as so, But, that specific recession magnitude. in we that are you continue bad I related immaterial. put ranges give earlier, seen as both million, the and way sense today XXXX, to the $X debt

this Mark is And again.

the Public having aspect productive whole the been We Board with have conversations of Utilities about uncollectibles. of

next aware acutely work to work able are that through be that and through they that. these periods some so, the as bills. in they we And pay need We’ll assistance over of of getting to their customers the

last the Mark. Thanks, just can you huge talk looking SRL, SRL capital specific final changed at Pat. Thanks, cost point plans through the on there then, whether the total about SRL. just slide maybe my for project this The has at And versus [Indiscernible] question machines is like

higher? you even costs looking are job confidence which just the will the rate So, be for clarification case also the to and able if recover during on

is Migliaccio. this Pat Gab,

largely the our not issues SRL last see reported with any cost quarter from project. do the we with and what So, estimates for recovering of unchanged associated cost

Okay. Thanks, Pat.

Thanks.

question with Janney Our ahead. from Please Scott. comes Michael next Montgomery Gaugler go

everyone. morning, Good

Good morning, Mike.

Mike. morning, Good

you. got Steve, one for

the are cancellation of of just in you opportunities what future? Given any your it the thinking midstream in Coast, create Does assets for wondering and Atlantic you energy existing marketing. terms

got electric that been that a top electric a there even generators come making build, in helping have we to been has that, the important gas-fired recently with as provide and very on of of Natural thoughts few here think procurements forward. service becoming place more not service. I the valuable Mike. been running energy infrastructure seen has we’ve through lot is is hard infrastructure source and to One, lot gas, which certainly, and A that’s move

not summer So, in important winter, important only in its but and critical infrastructure.

Gateway, So, so that markets. many ground. minimal at we Adelphia left and Pennsylvania. in some We the on we constrained look projects impact permitting have when board, minimal construction, the still environmental the already got in But

helped And Gulf Mississippi volatile forward storage once facility Certainly, and so, Leaf the approval. Energy River LNG performing liquefaction in that get the shows down been as prices We���ve constraints but about Center, got tough, that we has moving excited there it’s project well well. gas Louisiana, the Coast, we really down important in as down helping the in project. spreads been area and in PennEast, still in well. Northeast. capacity that’s needs such an are balancing

think I the So, as EA. we forward, received we push

at projects that which We But completed we are and the get are think are project. them that the opportunities marching to I working running, we now, on get forward with is hard in pretty slate our needed. Certainly, very right have what right that we have now. developed

you grow target there the what’s to X? Phase begin then, And am Okay. wondering just on I PennEast, construction

So, a fall other Receive the and EA. in approvals. completion FERC Phase some receive X, are the we and I think We through – we’ll need right to XXXX going process. have the this now, then certificate

I working process So, are an the and think, as you know, been process. unpredictable we that’s through

that XXXX, believe schedule currently. of XXXX having current end in I right, service, the So,

Thank you, sir.

Ciciarelli Bank ahead. Our next from question with comes Please America. Richard go of

Good Thanks questions. my taking Hey. morning. for

Rich. morning, Good

Hey, Rich.

Hey.

curious can the provide the Just of you little a expectations for bit on driving remainder guys more if your color year. what’s

revenues a realize recognition is it at that done considerations what some from with segment. color would you timing seems But can more just and provide I year-over-year bit little if there looking Just it at imply XXX% year-to-date, curious XQ your and growth the you’ve a CEV SREC ITC there.

end, side little cut of the you bit out on initial question. the Rich, your on Hey,

on what specifically? So, additional color

Sorry. Yes.

seems the as year. growth driving is you’ve your ITC of XXX% but the I recognition. expectations But your low-end the for XQ remainder year-to-date, of for timing a you’ve realize imply else the to given with For the would it range, it the your the guidance like what and expectations point year just that given kept for the of done remainder what year-over-year

fiscal operating investment the expenses No, and we’ve It is year Rich, and that will of to which spot you there interest. timing as the is really tax you we bottom-line, deliver remarks, can alluded dollars credits because income with effect this Steve SREC million of them additional his drop got those fourth roughly in tax are is associated no sales on. quarter incremental the rather plus XX balance effectively taxes, to in

is strictly than So, that. much more timing it issue, really not a

also for energy it. approval? Got when then I know Okay. What on timing and very treatment there rider are the touched expectations program. is but That’s the your And curious, helpful. the just program, IT efficiency you on for

Hi. This is Affairs. again, Regulator Kahrer, Mark President Vice

filed back We we was So, and year. discovery all submitted required benefit earlier We’ve analysis in of process answered now. on that. this February begun the settlement XXXX that the of cost

So the some we that early and FY some underway. are quarter get during quarter the close this resolution into we’ll issue hopeful investments XXXX, or of of and quarter or have first course fourth out the

reminder that, what billing million the and next, a what to $XXX as $XXX we’ve customer working done asset system, over underway which million ERP. is traditional ERP approximately of Richie, related I replacement described project And is $XXX our, our to just of million is our related as was That infrastructure. work program, pipe for management.

and the into went X. - July actually So on service

the program. spend FYI, types just So, under different an those as of two are that

one very That’s helpful. here. then, Okay. just me Got for it. And last

shifted the You spending CEV. also What’s alluded was of spending – there. minor the that? and you Adelphia challenges out at to noticed some I driving shifted at permitting some the

It the to the that. little in the to – numbers a So, Pennsylvania that. we’ve to them project the in slowing is that But been getting see a - down slowing extremely with things Adelphia well. DEP, impact reason And XXXX in just and just we’ve bit. spending Gateway, be the could commercial But the that’s permits reflect working COVID-related the think, with you out to operation expect shifted still have down. commercial for we I

to lowered then the Richie, $XX last And million. on our side, quarter sunlight Energy for $XX million the we Ventures advantage from expectation

and channel And COVID-related still to permits principally second bit then at homes get also our that’s again, to achieve. targeted market with slower level partners, there. little call, the to our at have last been local municipality customers being reference We’re on a able to not first

a Thanks had. I guys. all the for Alright color. lot That’s

Thanks, Rich.

Have a good day.

Instructions] go Travis Miller comes [Operator Morningstar. Please Our ahead. next with from question

guys. Good morning,

morning, Good Travis.

Travis. Hey,

process wondering anything there looking On was kind issues SRL, of the like the of was if with I or involved happened into BPU dealing whether in terms rather BPU what DEP. investigation what was in and happened through the than any of

wondering Just there. there if was involvement any

that’s the with them So, we It’s said, Travis, permitting now the we it. BPU are risk really and review. waiting decision And we’ve them local the that been right we but notified place, working been have we like and are involved. about plan been and it and with DEP submitted our mitigation took

start has can would So remember still project another add our Super we system. start. that’s construction necessary point is, to only up I the and Storm born project The of a to approved is sections, that to thing continuing. get the This this supply out was other that resiliency really BPU Sandy

guess, extremely was BPU’s involvement far. so situation So to I going the important the this us for in forward. project complete That

kind Has any given interveners interveners from been there possible about happened? pushback recovery what Okay. rate or of

we so into this next go rate No, case. our haven’t, would

operations put So, we’ve to it to had point get this commercial we At place the first. haven’t in a in case. rate got opportunity

from any reaction been So, there an intervener. hasn’t

then, Got level, it. that and deal Thanks. the at thoughts high price you came right any similar along that on wondering your divestiture And chance if a might the midstream look Sure, on side? Dominion the

are will say, are up excited in. we those on and Adelphia I There a get of comment a assets situations, is big in running market. but constrained It’s some definitely types into to get market. need don’t these natural Gateway that markets of these deliveries gas, for we We and

provide very time. will for that our value for long think company I So

I the guys. Thank you elaborate much And very non-answer. appreciate Okay.

Travis. Thanks,

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

everybody Brandon. to thank for Alright, this want you thank joining We us morning.

interest for is available New Resources. and Jersey we replay. of As Good-bye. on call our a you always, a your investment for reminder, thank And recording as this in website

you is conference today's now for Thank concluded. presentation. attending The

may now You disconnect.