NJR - Earnings call transcript Q2 2018 | New Jersey Resources Corporation

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Operator

Good morning everyone and welcome to the New Jersey Resources' Second Quarter Fiscal 2018 Earnings Conference Call. All participants will be in a 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. to Investor conference Relations. like Puma, to now of Director would turn over the Dennis I Please ahead go sir.

Dennis Puma

conference forming today’s to XX-K Q statement particular with earnings on SEC. in I X-K Thank Form Pat Officer; CFO, you, herein, as future including Larry our Resources' meaning management XXXX the that by Executive do forward-looking Jersey review for Welcome Downes, Migliaccio, to and well also Laura, on estimate to as obligation in factors and forward-looking as CEO; in call of other members and senior beliefs and our and statements laws. good section our statements are control statements be or the of We the second morning, and our other team. include We wish Chairman Vice referenced listeners which not expectations revise our quarter forward-looking assume Certain filed the statements Senior Steve that to assumptions beyond today President materially recent could most President joined and any call release current today's securities this here within on am and everybody. estimates and of contain the caution events. New many or our call our items by furnished Vice webcast. Westhoven, can fiscal to statements this expectations, Operating results Forms X. These cause of and the from precisely, Chief ability basis found forward-looking differ any slide of our found light

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

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

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

Larry Downes

everyone. Thanks and strong with know Things being morning our good we a quarter. this Thanks news us for Dennis you here release, second from had morning.

last and Services reported So NFE the earnings we $X.XX for It for look is million slide Energy quarter financial a with the with share extremely year. of the Strong primary $XXX.X of experienced three, cold net drove an of share, NJRE if or December excellent we having contribution this you that at the compared January per the year. $XX.X demand or $X.XX volatility financial those year. compared results. quarter second making per earnings during is from $XX.X same net quarter million driver late weather and million in market which early the last quarter and significant was

$X.XX and per fiscal our New other guidance range to XXXX a $X.XX reaffirmed performed gas of line earnings we share. expectations, and with our Jersey natural our share in subsidiaries

for Moving see to financial net can slide anticipated four, earnings fiscal you of sources our XXXX.

will net red businesses. the the chart, on of in the from is which regulated Aside shown largest the earnings the deferred related to taxes financial contribution pie from revaluation come our

in NJR and in currently XX% between We services will will anticipate XX% fiscal annual we New financial energy midstream contribute and of net that Gas Natural and between expect XX% XXXX. earnings, Jersey financial net that XX% and earnings contribute

performance XX% our share a and believe a return dividend strong continue to we will payout current provide that and We goal balance five, between our keep ratio growth rate the target slide this to to strong and X% Moving between competitive X% of annual with owners. of XX%. sheet

in growth turn new our We investments, will expected call And Operating the reinvest that, reduce and Chief needs. future over natural support clean Steve equity with energy and Officer, I’ll external infrastructure gas Steve? earnings to our to our Westhoven.

Steve Westhoven

Thanks, today details you updating everyone. Jersey progress Slide on Larry New Gas. six in customer provides like at and by utility. Natural I’d on to the good growth begin morning strong our

growth from For the March new Ocean was XX% we this XX, recorded over additions our customer $XX Based customer that customers, XX% this million. period annual gross six a margin we County. fiscal running new months new and rates, approximately to particularly add over of growth through XXXX of an of customer of expect year. to The Between a from planning XXXX, representing growth current new to in X.X%. will now cumulative increase the on XXXX. now last additions We three-year ended XX,XXX from in XX,XXX majority rate come average expect construction estimate add we construction, utility

mechanisms, us in slide investment our are Turning our to reliability of safety to the about of These seven, in have II BPU-Approved that including miles main Rise. annual XX New Jersey and XXXX. growing we fiscal which on system two help steel returns Safe fiscal replaced XX through II our also we ensure unprotected and recovery invested Safe current XXXX programs miles in capital. programs, provide date, and and began infrastructure to

by XX% the over unprotected of our year. We expect steel end fiscal replaced to the have of main

Brick we station the regulator Rise, a distribution main Moving and Beach Long secondary between gas on Mantoloking, reinforced Island. on and to completed natural NJ

secondary XXXX. on completed island the expected barrier We also be is continue to to to of Seaside natural June which work distribution in gas main a

In the more addition, we territory than excess flow XX,XXX in of inception. storm areas installed valves since prone service have program’s our

summary rate XXXX in the our And dates annual rise Recently, the two on of to like this update way June on completion in detailed infrastructure XX. base more XX, in the phase in these which with link. a we programs, $X.X for give capital permitting for last BPU costs of regulations requesting change petition a of of March the found XXXX. future filed standardized appendix the fiscal projects expected pave slide forward. can brief through recovery approved BPU new with amount going Our are million on process be changes southern reliability the I’d year. A will regulatory for our the

to progress and in currently continue through sometime XXXX. be service process We easement in permanent anticipate and to SRL we the

Moving wind beginning interest on Two the update Northwestern $XX.X assets. In to eight, announced you to in our slide March, wind our for we farm the energy. selling I’d we of million to like that are Dot

Overtime and wind will information to we that have as sell available. to it and and now waiting are wind record found we fit of $X becomes return we expect you difficult We about to criteria increasingly more million. find approval committed update projects onshore gain risk pretax our assets our remaining FERC

about Our CEV results XXXX. and target Larry Strategy. is policy committed to illustrates SREC Murphy’s with state our We this energy clean aligned process is complete the of to Hedging and speak clean agenda. nine in later energy will Governor fiscal Slide how remain

at SREC. we year $XXX of SREC of all approaching SREC average And that made hedged facilities currently see XXXX our in XXXX construction are can significant nearly under are price and over energy XXXX an we OF hedged NJR You increases XX% XXX% per energy at now our XX% an we more from in have $XXX XXXX hedged. for operation for in NJR per and importantly, hedging sales years for XXXX. price are for activities average And

supports New the clean awaiting legislation governor’s new which energy solar development in Jersey. signature, New, is

SREC turn New remained for to on I’d result, the financials. pricing over has a some Jersey details call now As Pat strong. like more to the

Pat Migliaccio

drivers as The XX, XXst Steve. key the on was begin morning in net three everyone. the March for follows. slide I’d And NFE with months Thanks, good waterfalls. like financial earnings to ended

Jersey BGSS modestly quarterly New NFE quarter to AFUDC. incentives. were increased Midstream is well Natural by relative XXXX primarily net the gross offset which second lower flat. The margin taxes high was as of due as of to expenses O&M lower Gas’s utility

quarter of in Energy year, compared recognized fewer decrease our in AFUDC commercial With FERC’s The time the which catch of expected second which entry as assets the for primarily XX:XX. all to our sale-leaseback the capital of see had the a last reflecting you XXXX. also included year this due we to PennEast recorded structure is Clean of for quarter at tax up credits during result aim modification and to was quarter, the first to solar reporting financings the Ventures update last

For Energy colder was in and by natural for Energy demand volatility weather increased the in natural resulted NFE Services from driven significant gas additional allowing Services price which margin in increase spreads. capture early higher January to gas

in gross ended New mainly the Natural margin net March an For six higher resulting by partially was weather. expenses, which Both in the our increase that increase ended the offset was colder taxes the associated Midstream from over only and prior months Gas time O&M saw Energy CEV Jersey XX, year six and result colder the with evaluation tax for the improved deferred weather. tax March as of of reform, the segments the result services the XX, also over months a

I’ll Turning and the walk in on through NFE beyond. an XXXX of impact to slideXX, that factors will some you have

items Link Reliability our projects. of first our Southern in the capital The and forecasted expenditures PennEast shifts for

and which XXXX, PennEast maybe access, of permit continues of an delay all delayed the means project effect in-service While the surveys the construction has XXXX. applications, in certificate land to the of target delaying the commencement that in state receiving had to ripple

in easement we the commencing progress plans Also, we expect XXXX. process, in XXXX. service such, to be as project continues our capital Steve As adjusted to in construction SRL reflect the to have mentioned of permitting

For fiscal decline the both fiscal in expects XXXX. a and these of amount in projects, NJR XXXX AFUDC

in rates quarter, a beyond. discussed on NFE net continue XXXX low to fiscal positive tax last have we XXXX, fiscal effect corporate have and will As and

benefit and result we will enhance of the actions XXXX fiscal we’ve To to to our the this significant [Indiscernible] returns. to and advantage company certain from take a of NJR’s rate. the overall as evaluation, tax deferred XXXX year, taken we performance lower can, Additionally, shift benefit extent the fiscal tax from also

the projects sale-leaseback all also utilizing commercial financing into XXXX. are expenses fiscal in accelerating and for XXXX certain We solar

these we to As taken a I and long-term items X% continue guidance of rate reaffirm support growth fiscal to together XXXX X%. NFE mentioned, for

updated slide PennEast this assumptions to substantive the latest slide plan. have and changes. timing an SRL impact reflect Moving plan XX, no on both changes to other capital projects, for the our on with The capital

raised to of slide XX, new equity about to in of equity XXXX. Moving the plan we the or XX feature waiver forecasted $XX reinvestment first quarter, million We you financing update of I our on million to DRIP. discount originally assumptions. dividend our In about fiscal want

the be about the We reduced to outperformance energy equity plan through we from raising of financing expect the for will and services need tax our year which reform. million, due Through on the DRIP. balance the needs that benefits is of $XX fiscal for

debt placement and equity sales. potential and maturities our Proceeds March, turn While the the With the of be needs are will price year. capital remarks. for results XXXX the to to these by combine will fund XXXX, reflecting our completed private offset remainder use NJR during offerings financing the wind fiscal upcoming closing impacted We'll in XXXX early be external now of and offering. that we asset likely In we've expenditures. from for offerings combined both back some call to Larry debt NJNG of

Larry Downes

Thanks Pat.

on is legislation Governor Jersey renewable the energy, bills on and minutes energy goals where will that important currently from energy of on strategy we come our renewables. The And You early to affordable has the to supported that energy already of Those efficiency by last to energy that customer Jersey New one our XXXX, by solar with energy that on are just to April I state may spend our demand. greenhouse efficiency believe agenda the is investments. public energy think path by reliable, nation I – New on the goals. quarter's energy services. the advanced XXXX, come the to and a bills talked agenda driven policy with New how clean remained with Jersey its our those path state. wanted focused expand and aligns sets few markets passed strategy of by gas, in is it's about In clean We our execute achieve awaiting up note you legislature call our important which strategy. largest in signature. solar states' Jersey Murphy gases the from customers clean for natural energy will also and and sources. XX% XX% And recall energy clean Today, updating is provide To states' reduce New I energy importantly

storage, investing made that advancing modernizing of has developing the robust build The in Murphy Governor will economy wind, a Now the new efficiency, energy energy energy strategy solar fuel job furthering to clear energy drive and growth more investment adoption offshore his create vehicles. grid strategy clean and alternative opportunities. includes and

are for than can directly a that of the been number pursuing decade. priorities see governors we've with aligned As strategy a the you more

energy the points So three energy And about I strategy. to importance first want make clean efficiency. of the states' today our one is

long have new the legislative that current is the can significant energy from goals savings states' And positive Jersey come our with than energy New recognized of triple pace benefits efficiency. a from more and we efficiency. their have customers, usage Since XXXX foundation our they've than build by we reduce on. XX% also more And energy save than million. $XXX strong to more helped

looking business of investments small our to customers also well of best six in petition they Our SAVEGREEN to and filing critical since Utilities seniors, to and low our goals. Board results. moderate its energy place customers $XXX Public this March, to bringing benefits these invest income proposal the the Through more project efficiency entities, public efficiency over policy we're next a energy interest been energy been the strategy to by In advanced businesses, million which years. in has assist and achieving has as generating forward efficiency Jersey and homeowners, owners we state energy XXXX New the as shareholders with in

currently market The investments the today that I'd in focus potential decade a in Jersey. to produced invest years. XXXX the in I market enough to second you and and more we XXX New solar the solar earnest power on solar four million Jersey. $XXX in invested XXX,XXX nearly began ago New nearly the equivalent in want million point to to over expect solar of relates have more another Since than Jersey energy New next remind we've homes for

that we significant industry represents As solar opportunity one our for of believe a largest providers New Jersey's the state. economic

Jersey. the market Energy billion investment point customer role of transition solar want National that according play energy fact Jersey Today choice third could being that for clean share over water, heat gas the resources gas the natural in had New half the addition In state's the critical In electricity decade And and generated reach wind saved billion, support for states' accelerate to incentives than energy focus meet the And customers and allowed in coming the Jersey of future including the efficiency gas lower Jersey's $XX in to more add gas have gas Natural states than generation solar new the New largest already Laboratory billion. and prices that New to cost ago. and is strategy renewables I and more grid at intermittent must gas fuel that which like customers state to nearly facts represents the levels double to have natural mix. New Natural as needs natural of natural low affordable generation will residents at hot about solar our time of energy has and more accelerate a nature we to Renewable a decades. gas to with our transition added about generation share to to of on have the Since natural solar powers we same mix same which what the the adjusting from growth Jersey a the $X.X some provides economy. investment $X I'd New quickly benefit future. has energy cleaner more in wind the save prices technologies. billion. time reliability $X to is XXXX, renewables gas you us also more and natural affordably means clean the than to as done

shift is natural natural which states should of expected will these part affordable. low an economy. forward important when energy be all to our But cleaner and keep think energy consider clear a the to remain I facts prices very we it to transition are gas Going continue of gas

their of am dedicated the XXXX to So more behind they're you do. company these and always results. thank than want our of as go women they work, and proud are everything And as employees foundation to before I we questions, for to our men I driving that force always say our outstanding

In at work economic serve past I just honoring customers XX the of with highlights employees day us stewardship, also to can't have fact environmental every do have our report our they your about years say employees to our our Lamplighters Annual website enough social growth that to our corporate that tonight pleasure the and of businesses. and and grow and I event. sustainability XX you worked will I'll our to that responsibility. for the invite commitment visit want our read XXXX

us welcome joining Thank would again you. thank and questions you all for comments. today we here So and your

not question Merrill from will begin the will And answer Coleman come [Operator Dennis of question session. Instructions] America We and our Lynch. of Bank first

Unidentified Analyst

Sammy] This ;[actually on Good for is morning, Dennis. everyone.

strong First, strong this wondering fiscal for factors of your Or any about? in should there the congratulations year a actually We on offsetting what year that the were unchanged. look results. should really quarters we be it's such in we XXXX thinking quarter, expectation? terms the two for Are is next but

Pat Migliaccio

Sammy, the is the can perform Pat post expect how Migliaccio. New second this year, typically We of at quarterly gas lost. of very in we natural but Jersey don't Yes. that provide you modest looking fiscal the half guidance,

towards the XX be transportation to months. have and In earnings NJR front contracts the last year. to the extremely tend addition over tend Services they Energy that half be rated weighted Whereas storage the of

planning is that And the of first $X.XX call in good about that activities back half Energy reference and on attribute of again offsets. So Services. then $X.XX year tax of lost finally quarter I this the in the portion the a of to NJR that opportunistic certain contribute to

of together taken the to midpoint back So the guidance get those things range.

Unidentified Analyst

in-service to XXXX. fiscal specifically extended about is looks like for the from delays? then also then you speak it is the the and And helpful. quarter XXXX XXXX have additional what of more might to SRL CapEx date first year That's Okay. Could pushed the most caused

Steve Westhoven

this is Sammy, Steven.

we're expect starting of that's pipe to achieve in joint and So, that current necessary right through working the the have XXXX, those fiscal of entry the then to the the forward. ground in year put obtaining in we permits the service and we'll base so looking and construction plan this process with

Unidentified Analyst

Thank Okay. All you. right.

Operator

question will Pourreza The Partners. next from of come Shahriar Guggenheim

Shahriar Pourreza

guys. morning, Good

Larry Downes

morning, Shahriar. Good

Shahriar Pourreza

clean somewhat energy focus New big New So, the states. direction trailing other been just let Jersey a it’s me just standards. Obviously change Jersey, for on in

first – governor legislation? taking foremost the me to and the Let long what's so sign

Larry Downes

Shahriar, Larry. this is

have ask I on are in states think think done that has solar We a we view New characteristics clear question, there was was would his growth thought are in we there think evaluate we they job to a facilitate we I first actually what or only have take processes cleaner only come as when at a to over but I has energy market. the I the New really the at on period the time. in just path been look not you to that think of a staff in the and of leader in the there's energy to of we these on the the a relate an efficiency. lot to of -- given The bill. responsive and Jersey him focus the element legislation overall team the imagine and – that but through areas, a the I statistics good that going are only not continued energy from to least is that commitment do as gave growth to solar. changes delivery in focus and And leader important do of that – a it's area Jersey's market they also but been feel extended areas mover long-term and clean to really market, those solar you states not to been

Pat Migliaccio

Steve we aggressively in XXXX Pat only add XXXX is is remarks, hedging thing The years. in levels. legislation that even as Migliaccio. his resulting outer have year would these energy SREC production And prices I And out signed, our strength hasn't pointed both been Shahriar though this price expected year been in they've energy and seen the at

Larry Downes

this Larry. Shahriar, is

path and to is of to and believe may this have you I'm there that from require one the the positioned improvement it's drive where you government view, start really Just state at those point in point already technologies, that also is seem and term It a look here longer-term think strategy us talking when goals. good they to we aspirational aggressive, is and to look at the longer achieve going other clearly goals but done, it's it's when how trying although but I off realistic is we're the been to. things a

Shahriar Pourreza

any in of either mandate touched because could sense it. to you And administrative is result of a or changes that I market look as you whether SREC that change a Got see just the since construct think SRECs, on the see from should in there they any markets? part standpoint has the at standard a is whether DPU the

Steve Westhoven

is this Steve Westhoven. Shahriar,

energy is DPU on have it So going as the make to are action does legislation is to and that the change require period in into built to essentially prior going market. legislation projects the that a closing the drafted

will to see now probably establishing the have to similar going the grandfather market your solar builds the then and in forward existing a new be that projects future. we and So one

SREC So being reflected going going forward market of supportive I Pat a like change in change the referenced, there and curve is somewhat has to legislation that your is be is think this that forward. supportive

Shahriar Pourreza

or penalties it. like legislation you a this Got result of of on that's whether like what a it. any And you touched offshore mandates or on incentives palatable? could do the storage it's you what as wind, do look sense little guys then the bit have see Got sort

Steve Westhoven

to tell too it's how to early will and that transpire. how I evolve going that's think

need have to do that wind. made investments some particularly big You be at offshore

have to develop we time. watch think So something I and it's over

Shahriar Pourreza

some these on standpoint, whether any sort a product BPU could part something because seen of the deregulated sense as it. a retail storage as think do And I as power that mandates be there in the from there structure? just again, locality be on of retail sort be you whether guys has have storage kick flexibility a of Got should could seen rate product or

Steve Westhoven

very order the way to evolved off have that's situation create you in which think future. becomes I to I in the is in And technology similarly the as just asked meaningful. think question

I something have to and opportunity and we're that that creates think see for So that's to us. going watch wait and developed how

Shahriar Pourreza

That's it. Got guys. all had. I Thanks. Thanks

Pat Migliaccio

Shahriar. Thanks

Operator

have Advisors. next And a we question from Joe Capital Zhou of Avon

Joe Zhou

morning, the Good good quarter. and morning Pat Larry, and good congratulations Steve, on

Larry Downes

Hey, Joe.

Pat Migliaccio

Thanks, morning. Good Joe.

Joe Zhou

morning. Good

I So question a side. got quick wind on

the squeezed of because or from or landscape why the margin it side? planning because you. you're you portfolio to that it like a your of developers increasingly Would now wind your onshore to wind the difficult good competition and sell to on wind So wind existing margin this of you develop. share Is project shrinking to conclusion? staging other is thought this on some project, Thank make find

Larry Downes

Joe.

basis become come well. can towards into farm is becomes risks when these developing combination of important a important risks as it’s think item and you're moving through And some those in an I point number scale big assets developed, and your that you which play, hedge of between market. market players that where wind operating other seen the wind Certainly as events. is we've

to us you when to these this explore for continue these project all able So weren’t other find opportunities business that really we us. the push to together, factor and develop

Pat Migliaccio

the recently add lot some if the side to infrastructure more more of these investment Joe both atleast have regulated lower and utility that capital come funds a on only the than you’ve with seen I’d pension in with And strategies. also cost is rate investments facing the wind thing

on pressure so, putting And that’s some well. as also it

Joe Zhou

And very portfolio, and are when looking what you of you metrics you at? evaluation your wind you would thoughts share at Thank also much. looking timing on this are monetizing Understood. some

Larry Downes

we becomes going now will available expecting share, XXXX. Yes, the it’s but are process to to in close as Joe, and are we we information said appropriate we to and

Joe Zhou

are portfolio or asset, to you asset? going single sell sell a Are by going you as asset to

Larry Downes

As we I to determined. so working that said, yet the is through are process, be

Joe Zhou

you very Thank great. Okay, much.

Larry Downes

Thanks, Joe.

Operator

this Larry Instructions] the conclude and Downes to for to and like closing I answer would [Operator any our back turn question will remarks. over session. conference

Larry Downes

And I’ll over to turn it Dennis.

Dennis Puma

Laura. everyone us you, joining this you Thank Thank morning. for

a on a we Have this New Jersey be investment great day. reminder, appreciate Enjoy your interest call in recording your We of As our available Resources. will as website. a always in weekend.

Operator

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

may now disconnect. You

New Jersey Resources (NJR) 4 May 182018 Q2 Earnings call transcript