NJR - Earnings call transcript Q4 2017 | New Jersey Resources Corporation

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Operator

Good day, and welcome to the New Jersey Resources' Fourth Quarter Fiscal 2017 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

Dennis Puma

our and our Resources' Nicole, management members and everybody. to Financial and well Larry Welcome I our as Steve Thank Vice Officer, Vice Executive quarter good our President fiscal of team. Jersey President Downes, by today fourth joined Pat call other and XXXX New senior CEO; am Westhoven, Migliaccio, you, COO; here morning, Chairman Senior year-end as webcast. Chief conference and

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

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

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

Chairman website there With and the like out our we’re Downes. discussed of over also on morning. are the X also Larry? XX-K. to Form slides on which today’s our to that furnished measures financial presentation, that accompanying said, like our our this turn available Item are call to non-GAAP X-K fully and CEO, I’d more Larry in point are Our I’d

Laurence Downes

good Dennis, morning, Thanks, and everyone.

his recent Chief of wanted begin this I I and Executive As New to morning, Officer promotion Steve on Jersey Resources. Vice Westhoven President to congratulate Operating

many team. to of I for he's the that development continue made – you almost significant He of been I know wholesale three Company, our now, stakeholders. and results our for has our valuable of confident all a but particularly on will member am energy contributions think shareowners midstream decades successful the our and and he to deliver the strategies customers, of Steve,

another fiscal you the our focus, strong As from know this to and hard their year. performance dedication. of Thanks news our and we reported employees, their morning, release, their work,

strong or X.X%. As very we reported of we rate financial a earnings XXXX last look share that year compared of Slide and X, for represented with per $X.XX NFE net fiscal share per at $X.XX of and growth

the fiscal we were grow in of a lead addition once have the remain record and financial growth ranges share. Our point expectations year. rate to to beginning rates in market. line also a to and plans, year. each $X.XX business earnings the results very results, strategically and from New Natural at this stated out over provided drove $X.XX of per that for in utility base with Jersey financial the again community well-positioned I you Gas Demand had New our customer continues Jersey solar, the strong XX.X% results our higher year prior and with that within to of we guidance were our our Consistent range would

into our we almost commercial service now Energy megawatts. has Clean Energy XXX in solar also five solar Jersey. business of New largest providers includes the one projects Clean Our and residential become year, NJR Ventures solar This placed portfolio

customers industrial transportation, physical natural fiscal storage Services acquisition provide strategy, with Energy from Talen to million. will is customers During support gas $XX.X NJR gas to services wholesale natural acquired our which supply were energy year, Energy services the large across and This America. agreements North

dividend us strong profile a X.X% rate return by shareowners Our increase annual performance our of with and our financial to provide and total allowed nearly to XX%.

plan for which infrastructure As strengthen and for customers. future we made ensuring we system, our our growth, Southern our on reliable Reliability service progress our including projects, resilient Link, key will safe,

years. this Moving our in to represented increased dividend the increase X.X%, last Slide we XXth X, the which year, XX dividend by in earlier our

return Our reinvesting support ratio current rate XX% dividend X% X% and the provide growth. between NFE strategy shareowners a future approach annual to should of with a in We while earnings that this growth targets payout to to XX%. competitive an believe Company

Turning to an NFE XXXX, fiscal to guidance per we this to announced X, share. $X.XX Slide of morning as range we $X.XX look

Our Jersey. remains New in longer-term X, in the to November range. the NFE X% gubernatorial share X% goal won Murphy Phil race here per

energy forward Governor look we administration During job campaign leader with vision. production his solar intentions make and elect, New his to realize national creation Murphy in to Jersey to his help and a that stated working

benefit Just This strategy shareowners. after an an Generation it year, involves, is signed and is existing the project acquire with an Talen agreement converting Philadelphia region. and The customers pipeline investment pipeline consistent to in with oil fiscal both expected Greater serve end gas of in we to the natural to to the our customers Southeastern Pennsylvania.

at each can the Slide of give we businesses X, fiscal see our breakdown look of As XXXX. a contributions you NFE in expected you from

funds of investments and Gas will provide our earnings We continue principal currently existing of earnings, of between Midstream Gas performance XXXX. and total, In the Natural from recording regulated NFE by NFE, customer New be during majority will the businesses are XX% for XX% Natural fiscal infrastructure Jersey to assets drivers. of construction anticipate which PennEast. Jersey that NJR our growth will used NJR in of to driven remain X% allowance or the XX% and New Midstream contribute and contribute our to AFUDC expected

XXXX. NJRES contribute expect this to our strong within performance All-in-all, and another Westhoven. and guidance the portfolio will in XX% XX% year. that, finally, is year, Steve between Energy XX% over to Steve? of Ventures we perform and fiscal this NFE expectations range turn X% NJR meeting of And Clean and call contribute fiscal we I'll We of expect with the our NFE performance that between expect our and

Stephen Westhoven

already Hook, for for announced morning, good would XX-mile will of to and At time, everyone. way. gas and to Marcus to Natural which an and the we and costs our a the system as environment Gateway and operations. because pipe jurisdiction is the in XX-inch NJR The are of the brownfeild Gateway. year, fueling construction natural Pennsylvania is Philadelphia, name the new begin affordable manufacturers locations the million Philadelphia runs Slide range. access million. same the Pennsylvania Midstream Larry, like the Adelphia an fiscal the Adelphia intends on project XX-mile involves to signed Capital Gas for X. under acquisitions the the FERC to to recent Thanks, agreement regarding The creation to Gateway acquire to we pipeline, I and end Creek, announcement pipeline their job the process minimal on expected by ground. section conversion business Shortly Adelphia have constrained from energy Martins be existing after with of in limited market this need, Today, pipeline. just discussing pipeline minimal we expand open Adelphia rights serve to $XXX season utilizes under Southern the convert South bring of line businesses conversion $XX impact will the economic the million North pipeline growth only $XXX an and will Midstream sources.

We to earnings in project be contribute expect service in XXXX to the in and to XXXX.

natural pipeline certificate will extend currently West pipeline system regulated in PennEast New from expected move is midstream estimated operational and be construct forward. PennEast other XXX-mile completed Northern Pennsylvania project, that awaiting XXXX. FERC the the FERC is Jersey project Our to is to and to gas interstate to

Turning to the and year their majority to this New higher once base investments. X, provided earnings Natural customer Jersey of rates, infrastructure due growth Slide Gas again

last margin. of nearly These add customers XX% over million over utility representing During year X,XXX customers new XXXX, about we new an to fiscal added year. gross annually increase $X.X will

million expect other to new and X.X%, to about two from conversions XX,XXX next new approximately XX% to of come We rate will will of that the construction growth growth XX% we $XXX equates a that from and up continue add spend from This come customers. gas years and will natural fuels. over growth to

system Our providing while to RISE to our nearly make XX.X%. safety have has to BPU $XXX in from customers our our returns and SAVEGREEN energy approved current on efficiency we equity and New II infrastructure reliability program authorized earn XXXX, programs including their invested these The million and of capital. businesses. ensure investments Since that ranges helped Jersey homes SAFE X.XX% invested the in SAVEGREEN return and upgrades are

of the contributing our earnings. incentive programs Jersey BGSS Our life annually Gas’ of average the over customers programs $XXX saved while New to per nearly to share $X.XX Natural an million

to XX. Turning Slide

revenue As you years. Results inventory Slide of future on hedging in shown we for are know, our this lock added to energy SREC of strategy strategy XX.

clean hedged operational on sales under that are the see for all as becomes of And chart energy XXXX, can along we requirements. $XXX facility energy XXXX more average SREC. set price hedge and SREC market rise Energy aside hedging is to XXXX construction percentages active per Difficulty] year fiscal an XXXX. You and years mandated at to [Technical through continue will continue prices currently should nearly with our the of

over some details numbers. the Pat turn to call I’ll for the Now on

Patrick Migliaccio

everyone. share $X.X compared quarter share $X.XX reported year. you, $X.XX same morning, or Steve, and of per loss Thank fourth in loss a This million with $XX.X period last we per million good or a morning, the NFE of

compared you and For of improvement or per results. share Slide the or quarterly see last the of the $XXX.X in million can our to $X.XX reported decline year. $XXX.X On annual million XX, NFE share per $X.XX the we year, drivers

quarter, lower from in fourth the contribution quarterly higher Gas. New resulted Natural O&M a Jersey expenses For

for the Natural We a executed continue for of fourth of recorded of basis both to improvement AFUDC led equity $X.X higher fiscal lower Midstream PennEast, as and from Gas. which began $XX.X million rates a annual arrangements results quarterly XXXX. the approximately year, However, and result and a recognizing XXXX million quarter customer year. NJRCEV owner. and is were our fiscal AFUDC of benefit XX% second quarterly on financing NJR Both Jersey base quarter the in the New in to sale-leaseback the Results growth in for

year, NJRES expectations. as prior compared for were the is which higher our in lower quarter to of with results Finally, the but margin line is for full-year the

and operation XX, retained still we asset. because effective have recent of Solar and for this type SRECs Turning like would maintenance streams arrangement, Under to financing the solar ownership all I of also review including responsibility projects transactions. the the Sale-Leaseback Slide to the we our of revenue

We managing value impact over time value creates the structure, there are NJR earnings together ITC and we us the is to the however, from bonus brings depreciation. to the Slide transaction capital cash not the surrounding investment additional upfront the rights rather for taxpayer for our captured next Since tax years, lease. and economic are associated several assisted for tax plan several XX, credit no structure with is our our credit of tax carryforward. Under for a the benefits the terms this years.

and billion see, Also can over billion Adelphia investment few $X.X planned the from we Natural next projects. Jersey years $X approximately Gas over PennEast Midstream you our XXXX. invest fiscal Gateway through in XXXX to in on approximates As our New

highlight to like would solar I other our is spending. The

are We XXXX, $XX our resulting customer XX% solar in X% of rate fiscal and million in will approximately investment. between growth capital be residential estimating

the we structure. estimate solar which four of have sale-leaseback some be new commercial also to will finance currently We and installations

you debt. and targets, see growth equity the help well Moving issuance from cash capital XX, that of $XXX over the investment by fiscal two long-term as our as can capital our reinvestment to anchored finance company program balance is also Slide operations next of dividend approximately strong and plan of our flows million to dividend years

our support now current this, ratings credit flows mindful our financial our do and we believe plans cash we will financing continue maintaining and strong and future. to profile the into As remain

the I would any Larry, turn to changes to I back I call tax the corporate rates effect Before cover XX. on of thought Slide

a of Senate from Reform industry House of downside Gas would rate thereby Natural utilities lower in the for reform. and tax on potential versions excludes For tax our and limits customers. risk interest depreciation current Jersey result corporate most growth The deductibility, mitigating Tax bonus the New Bills from lower the

rate. That benefit re-measure an non-regulated corporate we The ongoing see our large For lower one-time from time would our liabilities in result the are as in and investments tax associated is likely credits, material planned a investments. not businesses, a clean us corporate benefit process. we energy net to lower it use we tax a with deferred but tax would for our slightly change a result rate longer in to tax early said,

status now turn package we final clear, reform a Larry tax update I'll the future back some any continue you thoughts. As to actions. our for position on becomes of to and call

Laurence Downes

Thanks, Pat.

elements we shareholder up I value. questions, create the to key summarize plan open of the Before long-term call want for to our

XX, Slide fiscal in at as to have as Looking we our accomplishments future growth. path illustrated well our XXXX

both markets We bath returns demand services and continue portfolio spent to energy to knowledge offer for assets We energy will long-term large customers of the their current shareowners. and energy future and help believe decade infrastructure and solid last used we've of growth that building manage energy help needs. this our support our to our provide small targets a meet

natural is growing provide programs primary of money. will less we energy, energy energy the areas fastest efficiency our to Our and strategy help our invest supply two and save continue gas customers nation's clean use energy that and in to

As Energy future Clean in mix. play and clean will roles grow, supply domestic Natural affordable energy for the continues Gas demand to our leading

with are needs. as meet production in record opportunity. and natural gas demand we aligned as advances Our accessible efficient to customer gas levels, technology and reach infrastructure in gas natural to infrastructure continues Also this investments investing are natural make more

currently our costs another We grow Our We Clean advance projected in of increased is to standards, an state cost energy the benefits codes policies, energy a to is our customers energy environment. this energy reducing customer grow. and appliance with efficiency and energy and and and all to that by federal focus believe and efficiency saving energy XXXX. part growing XX% demand, continues future, believe solar for by in with to of efficiency investments transition Energy technologies, nation's that of including bills, new improving will declining cleaner mix the our interest alternative supported it’s stakeholders energy important of along on lowering emissions least money investors, building the energy future,

a in with to efficiency interested We has who are innovators risk NFE on achieving capital growth leaders for increasingly energy advance the saving and customers, targets, allocation our in achieve as New relationships capital. key to we space ability will in are efficiency maintain regulators of strategy Jersey. our cost continue To focused in long-term been energy appropriate our element energy be a collaborative adjusted discipline an

financial as We will capital will also maintain provide external a strong and to that profile needed. efficient access

our excellence that Company has do serving customers every the we driving men So before today to more I work the outstanding our our women all of to want for who and X,XXX as is questions, and say commitment employees, the do reporting of thank you the behind we than results are are we foundation dedicated day. to been go force always and achieved to their their passion and

you So now your and us for Have welcome today. Thanksgiving everyone we I want joining would to a say wonderful questions. thank

Operator

you. Thank

now first begin the Hilliard Instructions] question question-and-answer from We Spencer ahead. of Lyons. [Operator Please Joyce Our will comes go session.

Spencer Joyce

Hey, the Thanks good call. guys. taking morning, for

Laurence Downes

morning, Good Spencer.

Patrick Migliaccio

Good morning, Spencer.

Spencer Joyce

a hopefully of XX/XX the operations? quickly is Hi, first or agreement leasebacks see the the will me, for kind ITC-eligible we you, I a too split standard ones kind perhaps Pat to of make of quickly how solar to sale for that sale stuff quick couple mean leaseback between perhaps shift? new and be that can

Patrick Migliaccio

actually sale days both we The commercial long-term today. expect leaseback have structure, expected. service some in of provide sale we it operation after and plan, to XXXX into leaseback finance if the the us Spencer, XX goes we are what before the flexibility estimate So capital an so of up ramp in included our to of and businesses to that, execute than that course the performing ours of during asset XXXX year, other better

Spencer Joyce

I'm item, me leasebacks, correct we fourth saw sale helpful. Okay, specifically ITC for very negative the from is quarters on earlier math sticking the with but we in there? sale just as off contribution adjust here, perhaps Also my leaseback was in the quarter wrong there when or the that's kind QX a of

Patrick Migliaccio

rate Unfortunately, that's I future consideration estimate into No, take have tax investment to and think accurate. tax we a credit. future

the not important the look credits is So comps. number II at investment did the the in you the will. we solar fourth ITC year-on-year think quarter, and that, tax sorry record in Pemberton fact if think I the projects negative a I But on Princeton resulted Spencer, to – adjustment

Spencer Joyce

Okay. wanted Great. mind make my I holidays the at home. just around sure here I to losing wasn’t

less comp comparable So versus slightly the number, that, XXXX, XXXX NFE what's the XX.X than right? ITC for

Patrick Migliaccio

that I $XX this is year, me million was and roughly CapEx the decline in modest so year-on-year. Yes, last of front year million right have for $XX

Spencer Joyce

first Okay, perfect. all, you perhaps the Final congrats promotion. to on second – Steve for a question of

Stephen Westhoven

you. Thank

Spencer Joyce

call. there Welcome the Governor are [ph] comment or way new as a SREC And the the to simply curves that look kind we dynamics those of about from that in the a structured clean for more perhaps about use the was assertion qualitative XXXX way those end the that on support years, energy customers short over comment you SREC? was XXXX, a buy the of made perhaps [Wyoming] structural

Stephen Westhoven

guess Governor the I somewhat both. can energy would that has yes lofty a answer clean our for two that probably imagine I new you expressed joined. are goals. as some Certainly,

in that XXXX to order in Jersey. to as within BGSS have this guidelines servicing load complement of buy generation certain XXXX, interest, auction think their load, in increase buying has remember prices. somehow we've the to been and for some the there's In not also marketplace, auction, for SREC service translated but New some seen only in SRECs that and an load February, for in seen that's certainly I So adhere a uptick and to will you providers

pressure So And that certainly together. the coming adds think I these all upward to of markets. are

make strong So this at on certainly trying not some the point. it support to market, but has predictions forward

Spencer Joyce

That's very Happy nice a year. helpful. real Okay. Thanksgiving congrats and on

Stephen Westhoven

you. Thank

Laurence Downes

Thanks Spencer.

Operator

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

Michael Gaugler

everyone. morning, Good

Laurence Downes

morning, Good Mike.

Stephen Westhoven

Mike. morning, Good

Michael Gaugler

the questions got Adelphia two I line. on

the plan that do First, then before into the you opportunity, the upsize internally was And brought I'm wondering in size you service? of putting how discovered it you or second, line, of terms to sourced to externally?

Stephen Westhoven

Steve. Hey Mike, it’s

in and gone to constraints supply. the processes through market that asset, basically been Philadelphia very and the to that on value quite the of that that about able were to that we that the achieve short gas assets actually essentially So had time area, way would on and market identify felt we bidding for constraints some win South the multiple and line significant zone have had specifically was came we due industrialized area market, in Philadelphia finally

So they in down need new area. that supply

what the pursue marketplace. us that's asset really this So in drove to

As already it's as upsize down be plans the we at upsizing should that the far that asset, laterals some in tested. is be to able area. in with that in goals, assets market put point have short very just place the need We and this ground, construction this convert minimal pipeline to no to and been Marcus pipeline Hook the

point as XX-inch such. operated and So at an stay this pipeline it will

Michael Gaugler

interest? Okay. I Are that the in final pipes any area that to other your one. there like guess one speaks

Stephen Westhoven

certainly We don't assets discuss, have but this repurposing is an to easier some gas way certain infrastructure. develop to any at point

Michael Gaugler

gentlemen. you, I all Thank That's had. Okay.

Stephen Westhoven

Thanks Mike.

Laurence Downes

Mike. Thanks

Operator

of question go Please from Wells Akers Fargo. Sarah next Our ahead. comes

Sarah Akers

morning. Good

Laurence Downes

Sarah. morning, Good

Sarah Akers

update out today? wind the drove update QX capital plan the What and of between

Laurence Downes

million wind about investments fiscal for of have we XXXX and $XXX XXXX. slated Sarah,

some Adelphia asset cash I a attractive we fair capital that with flows. redirecting it's announcement, say the are into with higher think return to Gateway

also profile more wind to will time. – shift will so a opportunistic We over

Sarah Akers

recovering for expect then SRL, it. on a relative and start return Okay. do that earning to fiscal And the and date to QX when investment? you Got service

Patrick Migliaccio

equity given date SRL earning balance on permits in-service we've in the is the of a opening delays [Indiscernible] but off the want to Mark SRL got AFUDC say had before, bit the not might that from as it where complete shifted road room, was the spend, currently he the we and well. for would follow-up moving project, that [Indiscernible] materially the in on achieving I

Laurence Downes

seven joined ago our group. leads months Mark Kahrer regulatory and PS six us just from probably or now about

So Mark you why that? on comment don’t

Mark Kahrer

Yes.

working we’ll operations to plan get his process for the right he So through Lynch thinks begin construction starting now then we're When in of with likely and Craig the schedule. out on we’ll of to think up rate that case; kind not plan slides, so it pretty there's we asset. lag on any to but will can and closely regulatory the on go it’s one going as when that we're in-service, this try

Sarah Akers

Okay. in-service and will it I fiscal you case? also the thought in will correct of QX rate that that's [indiscernible] file go XXXX when

Mark Kahrer

we to in. able rates before that have a get We shot the that may before at get sets clear winter file done if and being in

Sarah Akers

an you Got between it. just date to the plan And rates? special in accounting in-service the any get seek there to any can or lag is and ultimately order mitigate that treatment when

Laurence Downes

really I the classes purposed think to have that. but like kind for that. of to, to infrastructure that board conversation do in would we'd a order the aren’t have would that with We do

Sarah Akers

or Okay. more then throughout AFUDC XXXX we XXXX? that contribution earnings you should Adelphia be book to project, the on in will expect And

Patrick Migliaccio

Sarah, we're present expecting so on a AFUDC portion to we the that on it it. time that project. it’s this If Yes. will at challenge conclusion to changes, do the And some any and of already that getting that update has AFUDC. in-service fact certainly equity with not

Sarah Akers

questions last ITCs. to then question on Spencer's just And Okay. the follow-up a

an of for you basis is on solar XXX EPS So have contribution XXXX EPS? not guidance the on midpoint, earnings from just what if it Or the an at the credits? tax

Patrick Migliaccio

have capital planning got I Yes. in the side.

second – my are one top of we right mind on now. you not for So Sarah, sorry

time. close and at is of $XX And of balance got investment roughly then ITC all million of $XX million XXXX in of $XX.X recognized solar tax solar investment to credits ITC the to XX% for across of – so $XX we investment, are will million tax sale-leaseback So times over investment investment credit the million that we've looking be XXXX.

Sarah Akers

there's XXXX down? Okay. close just booking because down $XX into that's XXXX that said you're to this. And ITC primarily sale-leaseback so driving delta of the in it million, Is decent the was you a it

Patrick Migliaccio

our So up in XXXX, this roughly next million XXXX, solar and in compares a year. year see increase step so ITC-eligible with be you Sale-leaseback, $XX $XX.X was see million solar will a to also and CapEx a it $XX.X ITC-eligible slight in slight million million $XX a that CapEx. you

Sarah Akers

End of Thank Q&A you. Okay.

Operator

we Instructions] closing questions, further for as turn like Dennis no over Puma And conference I would have [Operator back to remarks. any the to

Dennis Puma

Okay. Thank morning. Nicole. us for you, everybody Thanks this joining

As for Jersey Bye-bye. a website. a reminder, recording of is a interest reply appreciate Have on your call always our We the Thanksgiving. available New in investment Resources. in great

Operator

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

You now disconnect. may

New Jersey Resources (NJR) 21 Nov 172017 Q4 Earnings call transcript