New Jersey Resources (NJR) 3 Feb 222022 Q1 Earnings call transcript

Thank you. Good morning, everyone. Welcome to New Jersey Resources first quarter fiscal ‘22 conference call and webcast. I’m joined here today by Steve Westhoven, our President and CEO; Roberto Bel, our Senior Vice President and Chief Financial Officer as well as other members of our senior management team.

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

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

these a measures be However, substitute for not to are non-GAAP intended GAAP.

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

accompanying will this found turn review Our slides call our Westhoven. agenda will open With is Then, quarter’s X-K today financial who with the for X. were results. on your we Form begin furnished said, followed today’s Roberto filed and website questions. to Steve? this will available to presentation on our The on I’ll our over the and Steve call today’s that highlights by President call morning. Steve slide are CEO,

Thanks, Dennis, and good morning, everyone.

XXth areas. like progress, back sustainability our XXXX report to get fiscal week, goals, other on accomplishments, with report, issued on Last I’d going we to details sustainability ESG quarterly in sustainability decarbonization begin we results, corporate report The efforts goals X. related and Before our our slide into the XXXX. our update and consecutive our

of the Let me highlights. about a talk few

zero emissions greenhouse as First, net XXXX we our New goal know, a by Jersey gas for last quarter, of announced operations. you

XX% we already year’s from significant these emissions have detailed already NJR over has progress by we reduced goal, this report, as in made XXXX this levels. As towards

recommendations Task Second, adopting commitment for the Financial of Climate-Related stronger transparency year on to our TCFD. made even this Force by or we’ve the disclosure based Disclosure

through report the for the sustainability transition decarbonization in by in and available energy furthering efforts, Company’s RNG our and Importantly, on strategy, additional emissions most reliable goals our in opportunity decarbonization reinforces beliefs for you our our this It deliver achieving have robust and articulated and existing an affordable like website. broader This and our climate ongoing does reduction I it. solar. hydrogen, to review are report, fuels portfolio clearly describe clean and year’s way which infrastructure around which paid customers. and already advancing all energy hope clean energy efficiency in and already leveraging approach our to our focuses is fundamental energy investments leadership on

Turning to X. slide

to is ago. share, first year same We XXXX start and good on our per we XX% executed the performance $X.XX fiscal delivered off delivered quarter. period strategy financial Our earnings and strong net from a a in increase a the business

base rate with its New At service businesses more our of and we a to are financial predictable business, complementary XXXX, which I’ll to in into additional December we moment. and management of of results, project, placed of agreements our At case. further of constructing a the Gateway to delivering the our million Storage payment fiscal actively first expect project Adelphia consistent commitment end our construction results operational $XX our in Energy In Gas and projects the Jersey of by are improved at unit. on revenue our be earnings. provide Energy net that derisk These that strength primarily business saw received to we generate announced progress Transportation stable discuss our on from by year. million strategy continues more of reflect Clean overall $XXX fee-based driven the Natural settlement Ventures portfolio and asset Services, results

of Turning to our $X.XX $X.XX slide to X. NFEPS range fiscal guidance per morning we share. This reaffirmed XXXX

most our we’ve utility our long-term importantly, from Services of revenue net includes X% are We segment range our Also, growth financial And its the from X%. earnings Energy of in expected our will that to said guidance XXXX contributions NFEPS expect margin come as streams. fiscal we only past, business. maintaining fee-based

quarter. of we Natural Gas of mentioned invested some I on you remarks, As Natural during the the the X,XXX I’ll in achieving first on over pandemic, real-time top New customer my highlights. focused of in Gas million opening growth strong left, $XX are And X, Jersey slide quarter rate the had we pre-pandemic ongoing Despite in Jersey quarter returns. our with through the New over near customers a X.X%. and take new XX% first that providing At CapEx added

efforts decarbonization energy Going emphasis expect you on Jersey forward, fuels. Gas decarbonized and with to Natural should efficiency further an its New

energy SAVEGREEN helping the On program by carbon usage, money reduce our lower energy commitment and sustainability our to footprint. front, ever furthers save their efficiency their largest customers

we In hydrogen and RNG future carbon our to additional use that and currently terms expanding fuels of opportunities our are zero expected add system. low of are decarbonized fuels, to assessing

Energy expected our Slide into in left as Ventures. total projects. capital visibility our fiscal Clean our update with top get other type, will plan by revenue QX revenue core the for business, provides broken we XXXX. along X shows The highlights potential We revenue operational more down

with is the substantially spent million program. a SREC SREC $XX at and for all program. capital projects $XX on are hedging secured our reminder, our As million residential through this $X Total invested our revenues through commercial million of year CEV quarter

have indicated of chart $XXX under million currently on construction. to projects right, the As the we

into with of $XX almost million addition, In commence million to shortly. anticipated currently have moved contract $XXX construction under late-stage development

chain of approval not of have under or to continues dependence tax to CEV under NFE and regulatory our a negative remember advance supply constraints we evaluation currently to timing expect these project move a our fiscal fiscal means projects to guidance. potential credits XXXX dates in-service investment our impacts that the this on reduced of guidance. as if its process. beyond risks While important year to the pipeline, achieve contract result impact do even earnings dramatically This that materialize, It’s we the

announce we two slide pleased X. in another service. strategy have achieved placed to our I’m into that to projects Adelphia milestone Turning ongoing derisking as

of delivery operation full of by Construction the revenues One XX% new serving in about fee-based on Adelphia’s the customers expansion first project. these year. this additional of end organic zone project represents facilities, for we commercial pipeline, the our generating points expect northern existing is and complete the the

of of the Jersey on promotions a include Chief Senior conference senior turn Gas; series CFO. his being quarterly him Xth, leadership Senior Roberto I’ll Natural announcement New and named And President of Vice now, executives since promoted Roberto? promotion Financial and Chief first for our call financial marks and Operating I’d this Finally, to December which over Bel and being Migliaccio on call President Vice Officer Officer to to at a Roberto to congratulate like the NJR. review. Pat

regulatory we to offset revenue million effect primarily SREC Storage that saw or revenues We $XX.X large our to quarter our Steve, due of improvement December revenue. we Slide on Services SREC due Energy you, quarter the recognition higher by was went in of partially by $XX.X from of the deferral affiliates. this lower XXXX. income from details million a of sale hedging $X.XX sale highlighted new NFE of XXXX. NFE CEV’s expected fiscal morning, as remains quarter the higher flow primarily $XX.X The down fiscal On production depreciation during Transportation a by during shows have costs mildly share equities. of impact of X primarily XX, and fiscal NJNG improved asset SRECs to hedging lower entered base de-risked earnings of SREC. and compared $X.X pandemic-related XXXX. item, $XX.X last Thank million for NFE of expense, from good with portion reported per and of We of due our primarily first everyone. into taxes the million, to CEV’s the management cash improved higher or electricity increased due energy of an rates the prices per the into share NFE $X.XX million, and program. year. the by million of of XX main agreements a equity and $X.X first that the Slide drivers [Ph]

expected And SREC prices As Compliance see, generation XXXX. of you have our at can we’re and XXXX the hedged almost now energy for Alternative XX% energy hedged through above XXXX, or of Solar XX% Payment SACP. we XX% or at and year fully years

At capital service base spending to NJNG. XX. through [ph] you may continue With projected potential in rate the changed behind moderate quarter. has our capital years to NJNG assess next us, from to case our some and in and not the slide we plan take is two over and Turning RNG. estimated on I’ll last highlights, as with CEV, new at starting spend somewhat investments our change this hydrogen

year a spend delays. be Steve noted, CapEx this target regulatory We of solar and constraints supply could for future timing as have by this in-service the large affected chain or

represents Gateway to move Moving forward segment. construction capital continues expenditure of Transportation. to the Adelphia The this and for and Storage largest

our slide cash on flows to Turning XX.

continue that for cash XXXX and You operations very can we fiscal year see flow from project strong to XXXX.

expect existing I’ll program. resumed we offset roughly said, the back Therefore, reminder, reinvestment all to issuances by under Steve closing for Finally, year, our as it some for generated repurchases last our turn full that year, With we plan. a dividend to share remarks. our equity anti-dilution

Roberto. Thanks,

thoughts. questions, open few I I’d with call close to the like Before a to

outlined meet tremendous to fiscal I’d NFEPS executing our and NJR successfully provided XX has call diversified portfolio the New illustration We clear At of ago. from note our to like The filing are new rates strategy due And guidance this broadly, and that. strength more are on businesses. Natural effect. just made our on are case contributions to rate track the Jersey settled we complementary of base today’s months progress updates in for was we’ve a year the Gas,

focused Hydrogen strategic decarbonization state investments on CEV Jersey. outside to facility. well growth within for its achieving Howell path goals our our like are as the we forward, New continuing grow base customer as continues asset Green Moving current home towards our and with

new factors growing investments. tracking have we number we of closely potential service and impacting into year this going a pipeline significant solar, While projects are a macroeconomic of

strategy Our results. continues Services deliver to Energy at

With the we’ve Gateway, upside. Adelphia revenues, And we progress to long increased moving noted are service. project in potential our closer AMA bringing into while option have that strategy our we offer continues fully the place, fee-based on significantly to

the growth to want thank these strong to our cash dividend that NFE pandemic. finally, their X% especially our drive support with now our flows efforts through quarter, I of will latest expect all questions. and brought that, for by I’ll last And will X% We for employees call the And of over hard year. on the the guidance challenges produce open per work

Please Sunderland [Operator Instructions] Our Morgan. comes first Richard from question go ahead. from JP

Hi. your both, questions. XXXX I Good New recent on curious chain potential side. you And if taking Curious maybe you my it’s development And Jersey regulatory how activity tracking here non-New just thanks the this constraints could and is delays. morning. activity? solar for speak the mentioned and supply Also, across Jersey to if and expectations. know starting consistent

Hi, Richard. Steve. This is

$XXX projects solar and the numbers. got I you contract. we’ve at believe, million million, under got Our $XXX saw under the construction, group, We’ve

think forward, certainly, certainly, I pretty all going the to -- our tranche and these that happen place. we’ve those needs And some takeaway are a where ability pipeline projects development is clear. permitting is to come regulatory forward moving robust second to our see -- key those is of projects. for make But, to So, got some

bit. sure focused making a but that’s bring we able income are execute. and timely little to we’re execute we’ve critically that important, It basis we’re on may to much accounting slip we how and So, these a revenue possible. these say projects optimistic changed not as assets, to But book be our not for that from the should we able service on less as because into as it,

you recent the the pivoting AMAs then can Any a in overall upside about to with the magnitude way Services, speak guidance? is in earnings the you the And that and of the capture little segment just weather place? positioning to to think benefit Energy noted to bit

we this So, morning. reaffirmed guidance

book that So take in of like AMA to still have at change tranche significant And capacity we’re They a that the out time. XX,XXX certainly not this of about dekatherms. did book, going existence. a

volatility, So bringing good certainly, some across certainly, storm all that guys and know, for volatile. We’ve you that’s now has business. January And Mid-Continent as volatility the U.S. South. especially in got been that’s is this moving

as see business winter. events the for deeper get these well. recent our we good But guidance out play into that’s I we’ll how we’re to So, reaffirm, to as weather want and sticking wait to the

just brief And a there. follow-up

around Some of to this assumptions contributions quarterly XQ margin the move quarter. from the

are just changes? backdrop Speaking anything the that with again to Energy Services, there, what drivers against

we certainly, of recognized going this? I’m see talk So, But AMA. the should you the be look on Roberto tranche that and on first cash to that at that to the the large how specifics would to of phase essentially margin ask way

Yes. good Roberto. Hey Rich, is This morning.

to the in So, AMA, next revenue recognized of which we the to recognized and presentation the end that is difference and have for over going going terms be quarters. expect recognize of the pro in three the year you million -- have recognize to $XX in should about already for revenues going you rata is million, that towards we’re $XX that

think So, this you that’s should it year. how for about roughly

Gabe [Operator question Please go Instructions] next from Our comes ahead. Moreen Mizuho. from

your you’re you’re it additional like potentially getting mostly based kind of you’re -- system. stuck RNG at, RNG to regulated sticking looking on on the comments of rate size the Can of headed things bit you’re Steve, you into seems your investments little et cetera? rate where of out and RNG about and at base, kind more whether a base, the with looking talk

of do think get pursuing I are energy forward. we’re we’re of that the proof-of-concept that natural the putting is a that’s essentially at to we priority footprint gas, on works there way minimal that well, operation a to the to certainly customers. really and plant But, I and announce our technology we’re with customers that anything fuel in to our systems very been capital system our can And essentially important -- sources few fuel in have our We’ve decarbonized and our looking into at So, is deliver Certainly, decarbonized and how impact hydrogen don’t able in it, to some yet. our now a low works. within Renewable looking as carbon us, we there’s top profile we’re plan. that expect future. that way as certainly a it up moving months, it’s way to got that clean for

Certainly, So, it’s bring we’re into we an as forward. going stakeholders these to connect important system. path sources all our involved

the Our administration. regulators, customers, we’re to sensitive going to price, be

is the that RNG very part to at going But certainly delivery the that and to can so thoughtful to future decarbonized really value do a increase generally of our so So our customers fuel way. looking assets. of energy in we prove way we’re long-term and hydrogen out be the clean

the fair So, the and steps the deliberations and is it half discussions, and of in to of sounds these additional like steps terms say year, concrete announcements. back it more that

we’re announce, Yes, have said, to but like I don’t you that on. a know we really deal working

just if for not there second again an or extraordinary Roberto was bit and you still then, COVID. the you to recovery what give And is for for the deferred can costs think extent I recognizing of question wondering are a through costs COIVD walk little and I potentially? process update me talked to that on

Roberto. Hey. is This

calendar expenses year, So, the to as million this so refer We we excess are any until to the to -- this end BPU and that’s COVID morning, $XX.X ability announced going utilities related of all the the and question major expenses deferred have we more order. is, per defer if we COVID more?

said know But pandemic what that. not in. We’re don’t kicks planning this having on that, we

question Matt Coann Davis Please ahead. Capital. Instructions] comes [Operator Our next from go from

of the change just you I walk talked AMA timing. if curious through clarification quarter, the little year I what for year, get of I fourth the an was know that a over more in, come the just you expectation about revenue for think there on I quarter the this since rest is wanted that of the was but the to can the versus to the given in first of year? balance

right. is. Yes. It And Hey you’re again. is Matt, Robert this

in, QX. first And in all clear, the million, you cash prior $XX for remember our be quarter So got the that’s this all came just became and that. cash how year we It -- quarter, recognition came came in about the the to in early effective the remarks, AMA in if all right?

you’re and That’s of of that the what whenever two value. the higher Whenever QX. we We have remainder million a in pieces. the recognized in of usually why releases, less, the right, temporary little have we going broken bit revenue recognizes $XX bit about release have permanent year. And to value in QX. recognition, recognition we’re into you terms revenue the that In that’s of is in little it’s had a a that of capacity

why for million. $XX about So, that’s going we’ll recognize forward, quarter every

So, your assumption initial was correct.

no Puma, I turn at back this further to the are time. questions There you. call Mr. over Dennis

us Thank like morning. joining for everyone. everybody thank to Okay. I’d you, this

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

As Jersey always, New investment in we appreciate your interest Resources. and Goodbye.

today’s concludes This conference call.

disconnect. now may You