NJR - Earnings call transcript Q2 2022 | New Jersey Resources Corporation

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Operator

Good morning. Thank you for attending today's New Jersey Resources Second Quarter Fiscal 2022 Conference Call. My name is Amber, and I will be your moderator for today's call. [Operator Instructions] I now have the pleasure of handing the conference over to our host, Dennis Puma, Director of Investor Relations with New Jersey Resources. Dennis, please proceed.

Dennis Puma

Amber. you, Thank Jersey and New Quarter XXXX Fiscal Welcome Resources Call Webcast. Conference to Second here Westhoven, Chief I'm CEO; by of today joined Steve team. management our well other Vice our as senior Roberto our Senior President Officer; and Financial as members Bel, and President

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

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

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

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

are followed review will your on on the financial our filed and begin will Form furnished Steve a results. Then with X-K presentation slides found to website morning. available is today by on of agenda Our this X. Slide call The today's give will this who highlights, were accompanying Roberto, questions. we open quarter's for

X. on With will Steve? the turn that of President an call following the we'll our said, over Westhoven. Slide with along, overview For Steve those begin to I'll be who quarter CEO, and

Stephen Westhoven

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

results guidance driven Energy Our financial share our us earnings quarter $X.XX. financial fiscal per enabled by Services fiscal net XXXX to XXXX our contributions second for by increase expectations, segment from exceeded that primarily

performance also Gas, opportunities Jersey presentation. benefited I'll metro Philadelphia project solar Connecticut South across full X the pipeline gas We Jersey, Island. Ventures, from place first grew base by CEV and New short-term long-term NFE some natural Rhode this Storage concluded includes project in with area. on now is its Gateway Clean our by rates growing At operational Natural delivering solid to is New new XX%. to Adelphia at of and which be and our quarter challenges portfolio later in Energy at states: discuss fully now track the Zone, of year. serving & its our our and And end Transportation, finally, Adelphia projects the

our for original stronger-than-expected share. a to performance $X.XX to us $X.XX from share, per per range $X.XX X. increase guidance $X.XX of XXXX guidance Services' Energy NFEPS our to Moving Slide to up fiscal of to enabled

Services Energy diversified assets of during volatility this of NFEPS Our team leveraged at generate past to their and higher-than-expected strategically located periods portfolio winter.

next the slide. to Moving

that Natural real-time we've On so invested fiscal Gas, capital returns. can Jersey at left, year near this you New approximately that providing with the see $XXX million of far XX%

replace the XXX% to first was cast fully or protected nearly is all pipe, steel. utility Gas Natural and our either plastic Jersey system New of iron

fiscal XXX,XXX added customers. first conservation, and new to support investments XXXX, for half customers. the benefit nearly make and we the enhance the system energy to of continue reduce of our We our reliability safety emissions distribution of Through X,XXX

On despite basis. I long-term utility short-term incremental to Natural strong in fundamentals $X.X these an success with expects is gross market to Jersey contribute approximately of annualized discuss million how want a some X, Gas margin Slide itself positioning challenges. to CEV additions New on

network developed market We level in As development and greater expertise strategy strong to for growing a that commercial in diversify projects largest the the goals. by New our NJR runway driven shovel-ready XXX CEV to development solar Jersey contract you're investment that a us our CEV site. portfolio us capabilities thus history, our our in adjusted we of our and and network This and identified established Analyst strong to ESG time, leader the growth aware, corporate our XXXX. pursue was Jersey over strategy earlier of as construction, leveraged projects products through partners support acquire beyond allowed of megawatts resulted investment target an years. a We fiscal policy shift solar exclusivity megawatts over in in coming in with to aggressive the business to public the XXXX, enhanced a Day state, or mover for investment our pipeline a XXX has operational strategic sustained as market of At projects. providing early New This as under market. core

farmlands. community of generation to final They of the of transition delayed. structure permanent A of megawatts the fundamentals strong projects the growth X in nature, support broaden more to number will of our for are of opportunities program and and approval TREC run, market a our that ability remain long include CEV's investment development strategy, to deploy are capital in the long-term for favorable slowing in pilot qualified are short for which solar, the regulatory the replacement dual-use be and solar solar several While factors solar incentive term. currently transitions in TRECs, allow

delays backlog projects resulting multiple at of awaiting interconnection PJM, addition, In across well been in states. there's publicized

normal the be of conservative development disrupting and temporarily view believe As solar ultimately viability time efforts and deployment a that regulatory processes, which to fiscal will the in-service market. for of cycles, result, estimates strengthen XXXX. a XXXX fiscal our year lines will our taking we're interconnection streamline are capital impacted, We long-term

X. it our we project you thought go to walk beyond challenges, Slide on which our these capital important was forecast usual is expenditure and Given pipeline, through

pipeline can have that we robust solar the significant investment in a see, years. drive As you coming will

In construction, XXXX. contractual XX pipeline XXX queue PJM addition CEV's is clean of to portfolio the fiscal many rights projects the capable megawatts portfolio. exclusivity tripling megawatts a size through have under have regionally totaling energy current diversified and existing we of of This which to of now of projects, positions, almost

secured and areas. exclusive CEV Over than the XXX policy-supported alone, last project development high-priority, quarter megawatts more of options

issues Any as delays able procured panels have racking projects which chain We we supply from we've and been mitigate. were forecasted through equipment, fiscal components XXXX. such to experienced for inverters most electrical

to investment Overall, closely sourcing Department nice are our long-term project pipeline, a of we the and grow has navigating done solid has impacted environment investigation team date. Additionally, the materials, quality Commerce following of this while to ensuring recent regarding not opportunities. certain job our suppliers continuing the which

of construction. Moving thanks CapEx update I'll in-service top impact at short-term to CEV total to to on for Despite no the portfolio highlighting capital businesses. bottom chart CEV time in X estimates, long-term close Due our anticipate we complementary investment Slide projections our by for X. growth reasons shows NFE the NJR's XXXX. lower shows delays my currently the strength The while under by of any line, year quarter the year. projects fiscal second CEV's we chart discussed, the down revenue expect the type, broken we to

is installation New completed, largest project. first solar be The United and Once solar array Jersey. floating it floating X.X-megawatt an the the solar Milburn, second States floating will in in CEV's

fiscal Sayreville project, of will our location size is twice XXXX. and slide the which service the in be Milburn into Our on pictured is placed

second Storage will quick is facility generate array States. homes. The capped X,XXX in enough Slide over located XX.X-megawatt be that Mt. & Transportation in a the landfill I'll will of largest electricity solar to It discussion business. On with X, upon Olive, New close a Jersey a completion United the our power on

Pennsylvania. track customers call to the in area be the And which in metering is reduce includes by progress year. coal-fired by Mainline, the fully of number flowing the Adelphia construction to Kimberly-Clark, cutting on Lateral operational gas to XXXX. in PECO over and Adelphia the TETCO We recently review which end of is and Kimberly-Clark's the a Tilghman conversion of The This goal natural XX% South make plant to Gateway metro to continue this Philadelphia in results. its oil pipeline. service turn utilize will Adelphia by emissions a that, Interconnect Roberto? and gas for Zone, a of the placed at I'll converted mill's greenhouse allows gas. stations. support Chester, its half facilities, South including mill We into Quakertown carbon of the replaced industrial our financial now footprint Roberto with

Roberto Bel

Thank good you, and everyone. morning, Steve,

net $XXX.X drivers or financial year. and operational NFE. shows the of second earnings financial share few a Slide main $XXX.X for per highlight $X.XX million per our quarter. the to XX I'll reported We usual, last As NFE compared million of or metrics share the or $X.XX of

the due extreme natural XXXX. U.S. to As the Services to volatility of cold at second price increased included reminder, unusually in financial quarter last earnings Energy high of net a during related year gas weather February

due lock reported second due including to entered fiscal of an And from sale to still cash management we by by SRECs. $XX.X million, NFE on Moving hedging asset large fiscal sale prices quarter revenue reported before, Slide million million, activity revenue, due CEV's the program. the December Storage expected into our production these that of rates the of have improved XXXX. compared unit. year. in SRECs the impact remains The hedging revenues improvement for largely of NJNG by CEV's of in XXXX Energy X. Transportation of the as weather million quarter, SRECs electricity unusual On to the XX, $X.X and declined the SREC that NFE in saw went to NFE during was of from of portion mentioned second into increased business Services we XXXX. a base strong details CEV's primarily of agreements higher new highlighted primarily $XX.X NFE prior NFE $XX.X but to the our and flows effect quarter flat & of in the

we As Alternative XX% for XXXX our to and of expected capital see, I year hedged and the generation on of Compliance XX% XX% almost we're prices XX. Solar of SREC fully SACP. or through And the plan have turn at will now our you now year energy hedged payment Slide can XXXX, over XXXX. of

we that and past us. Storage now the call, & expect during case rate NJNG capital moderate to at service behind discussed spending these is At in base are somewhat As the construction capital with pipeline growing segment. strong completion and largest CEV, of Adelphia the Transportation, at fundamentals. expenditure robust is long-term the for And and a this we represents Gateway approaching have

range the to for our mentioned of XXXX adjusting as a However, fiscal mostly programs the PJM in XXXX Jersey CapEx as due fiscal as regulatory number approval in earlier, important in Steve for we're New estimates and well process. delays

fiscal the progress as We Jersey and and XXXX the tighten for million, in see million CEV's new fiscal $XXX regulatory more get more for clarity the $XXX programs. range process of to expect our around be CapEx XXXX projections we to PJM will New we around

higher-priced higher as end projected extent, estimates Natural on working lesser needs, Turning the cash prices our currently Services impact We're Gas. Energy that winter XXXX. particularly from of a to storage flow will our flows in XX. incorporating is reflected the gas cash Jersey our will natural of fiscal sustained Slide to as of through gas be and, have natural New The operations in elevated ahead capital

As a a loss prices. risk energy removing as changes gas is the reminder, services in result hedged, of of a the XXX% natural and

that, of turn under the In impact higher injections storage injection much is hedged program, natural Steve. hedging an addition, to our in season, back call, the the and mitigating has advance me of well customers. into prices With it for prior in risk of as which price of the gas NJNG extensive discussed actual let

Stephen Westhoven

NFE Thanks, Roberto. the that half Energy reported first Natural a year NFEPS New from for It financial year. of with solid Gas. from growth allowed our was Services We guidance strong Jersey us performance the increase to

portfolio growth NFE dividend our flowing end of XXXX. of the some the despite complementary short-term is complete of gas lastly, of pipeline without and Gateway year. opportunities deployment us Our CEV's challenges construction been businesses by we short-term expect to navigate Adelphia to to affecting long-term And CEV's the Zone, has solar challenges, and allows never XX% And remain growth projected our per capital strength project South unchanged. stronger.

thoughts the open close like I to our few Before call I'd on questions, sustainability a to efforts. with

to We are deliver our customers decarbonized the achieving focused infrastructure emissions reliable goals, on and most fuels. climate way reduction by energy affordable existing leveraging for

state, from goals of meet shift more optimistic climate infrastructure in and manner. recognize the about pipeline faster, more a are We value reliable increasingly federal the international ongoing affordable and policymakers to who existing

put world-class clean but to call And position strong us that, infrastructure significant in participate the role only New Jersey's open assets play Our to a in not I'll for transition. questions. a with energy

Operator

Instructions] first comes from Our Richard question [Operator with JPMorgan. Sunderland

Richard Sunderland

the changes there these you in solar Appreciate around as would a for about range talked XXXX you guess do more. headwinds something What helpful. there little to over and bit ease? I maybe on the that be clarity the line thoughts dig time Is narrowing clarity as of the to Any year like the even see course expect would CapEx this this you into of emerges. XXXX? or

Stephen Westhoven

regulatory at New looking expect Jersey at PJM, the would a marketplace. And more they're Steve. imagine process developing -- that log out. number are the I the make leave associated that by being next over streamline macro Richard, analyzing eliminating least themselves it the their easier the of the successor issues trying that development in these regulatory and and to should easier solved the with to well, agencies are because moving it's interconnection in Thanks -- In program, message and figure as accelerate make or we is we'd forecast really process and you forward they're to year so ultimately, the headwinds this jams these question. guys development, at for certainly like with to looking

it the and where solved. push these keep eye over can next make we are to certainly to sure So an that and short on going we're answer, issues year,

Richard Sunderland

Understood.

you just those the issues, guess that high around the Is the the and I kind the thinking what easing high about meaning that of end emerging, XXXX around timing clarity risk, So CapEx. timing this Is of low drive it or the low fair next then a year of how largely right end? summary least say, now? see year would versus at for of

Stephen Westhoven

summary. add commitment contracted And -- have Yes. we've large It's sort we've fair commitment. that, just a got a to -- that to I pipeline projects some think for of

pretty log So just the It's good business of matter just we jams. moving feel eliminating a about forward. these

of in should kind a ultimately, point removed, when are they development there as process So be catch-up this at well. some

Richard Sunderland

eventually earnings how you the versus catch-up That of Great. maybe now the a earnings there? in when outlook the pace of see how a just last issue? slower becomes see it Is you right there. helps. you squeeze given the need Just you of issues is factors to before it To to these about do an one one catch-up, of sort have kind shape And of the profile emerge? the that years development your SREC point runway and do couple timing

Stephen Westhoven

a companies. few So we've One, of a things. portfolio got

grow From capital company. and the here So we've ability levers the that to of grow view, got to an give order number to company. make a earnings to us a deploy in need continue essentially we XX,XXX-foot

So that's certainly an important portion of it.

a we changed the for just CEV on accounting. Focusing moment,

a certainly But basis, important to the it it it remember, in, so got capital. needs case. deploy we've ultimately, yearly comes the it on what to makes year in. come but That's And

portfolio a of got we've companies. So

You've that We've large the got Energy certainly able and all has our in AMA. growth to capability Storage been & has a contribute. CEV, utility, organic businesses, and growth got Services Transportation,

to as of portfolio got themselves companies. And time work able numbers companies. goes. as our on it of should forecasted and So these because that forecast think some we've the things to for ultimately, we And guidance relying we forward, achieve the we far will about good those moving feel we've be out

Operator

with Miller comes question next Morningstar. from Our Travis

Travis Miller

talking from about here. there on the tariffs. just One the in Department are about more PJM, cost solar availability? what issues higher and and Jersey supply Commerce the pure in talked of the on the you either seeing market with the Apart is industry what whole and tariffs side, that the Obviously, on New you policy-wise or

Stephen Westhoven

a year next done of we most panels out team next the this immediate the CEV of portion that a -- the and our year. team for CapEx future, have in job year, So of hedging has for nice solar for

the market. jam and we So have the now don't insight into log that of right same experience

going by but for going investigation. good hedges to our work roll itself of roll to normal thinking and Department that right? out So such time we're there, off, the that's that certainly a something what be accustomed Commerce that we'll able to. little a market more hopeful And we're acknowledge on news into than us, an is we there that's doing is we're

So how plan we're to in capital ability at that to our that's and now looking deploy it relative space. our business

Travis Miller

Okay.

the of the at. you're effectively to So contracted that Until get to say? you panels terms able Is you're hedging, able fair XXXX, in to at price actual similar roughly. --

Stephen Westhoven

XXXX to Close so... Yes.

Travis Miller

Yes.

And cetera, question midstream with your it's Okay. is globally gas appetite more second security Leaf for markets, then et like toward type whether energy What's and your of LNG. move facility? everything and or investments, River pipelines

Stephen Westhoven

our Travis, you portion. have that yes, we've rest the which plan gas this or getting Gateway on service Day in flowing We're we We that put had rolled to down executing Adelphia same still construction the saw and complete into November there. is and in that Southern Investor we're some of out and -- today some in expansion story. the and running, up

look assets just Energy at constructive it's now. security, that Nothing the So proved some the real a value at to these we in of around these right? is way. had. going gas, long-term certainly, we natural point, we're that. certainly, recognize But the this right digesting organic assets And for we'll announce out And forward. being assets market, growth

Operator

Our of with from next comes question Instructions] Dumoulin-Smith [Operator Bank America. Julien

Kody Clark

Kody Clark on for is this Roberto, Steve and Julien.

high single-digit mentioned So first, mid- returns. you to

pipeline? kind distributed terms commercial demand solar guess, for PPA pipeline. thanks -- and years? seen backdrop, sort have your you that the power of over the been growth you growth in that curious what X Can of the going I forward? can trends seeing describe given for talk if you're you've of and around I'm in about the And pricing growth see you you or year for seeing also disclosure So incremental What past related what do

Stephen Westhoven

against, parts, been electric that providers. and PPAs driven have I'll -- pressures, higher So the guess, gas which certainly up The the curve, take up electric and your cost has into I that driven you're for prices inflationary competing right? traditional supportive prices longer-term the have

So that's this to market. market. in going think I constructive been constructive in this that's be continue to And

the morning As forward, the have to far as we we need of to clear need see portion far as going our developing. you hand growth have we into can as of we We shared sight that order execute And that what achieve this what how in CapEx to plan. the compares in line future. projects that to on a

sight So cleared for we've we've develop be and ultimately, development. think itself. got we projects should on I that spoken able we these that, issues the regulatory are that and the that at still We good good and rates returns a of that once some think jam to And line feel of pretty issues speaks log about.

Kody Clark

that Okay. customer Got viewing your of a utility utility just budget the detail bills just CapEx to 'XX the of discuss in to the as it. backdrop on more relates kind and bit also you the driver And And can from it to inflationary you're 'XX? side. how then curious in related second, also, shift little

Stephen Westhoven

to at a related RNG utility develop few specifically. had We bit little the that have to a projects longer Yes. taken

into projects we I So and update too with guidance get CEV, made much there. we them move ultimately, our well. we feel forward, the as read full completed we'll those since that. will like are wouldn't I CapEx and updating figured

a impacts. a to haven't any got it your of pluses second we impact. on inflation, going number will Or really be minor had of think minuses. question a bunch I -- We've and

the get to certain the earlier this margins be that. and gas where and electric and could asked panels energy electric escalation the prices exposures at we or minor about company. we'll prices You a offset, electric output portfolio. someone or in -- expect volatility question services in some pluses plan. about hopefully, spoke all negatives that, period. for we a currently, like plus those, Higher certainly incentive solar that inflationary things and We've a asked question like got the to acknowledging in after things from impacts we'll according Higher longer-term even to of mitigate in largely be us able very other our outrun our But

Roberto Bel

and CapEx same. And complete combined the question here, at then a you XXXX I'm are a the -- this to Robert and on take CEV is When pretty XXXX, totals look CapEx. that the much see you for excluding combined our

we understand have we the movement is what projects. better that of So from some that small come our

Operator

next with question comes Our Securities. Mizuho Instructions] Mosca from Robert [Operator

Robert Mosca

understand in portfolio. So least CEV medium trajectory a outlook in -- CEV of kind of changed the bit, remarks, the may understand so the that your the reiterated at have term. opening X-year overall trajectory for little for you And

Just dig Leaf some could get to what there. little specific specifics, more the at rates to if detail offset what Services a Energy into is you are? seeing CEV, the wondering bit Is a Hoping better you're it of uplift? levers River, little bit more those

Stephen Westhoven

questions. Yes, some of answered you the

You mentioned right there it well. pretty

certainly, companies, did from inflationary about You flows And group as portfolio of a pressures, a the that. Services earlier. Energy AMA, do publicized talked remember we've we which large -- pretty the cash some of

Energy You've are and could from the pressures electric incentives like the anywhere certainly contribute the to before, number Services prices, talked at PPAs utility got a And volatility also. got going additional even as line of it's beyond development and that support items solar the on have the about you've AMA that going well. income certainly additional upside we to in higher

It's there's forward. really, of every portfolio to you allow to fill think, being going and as forecast able having So bit utilize little one your I and companies of to gaps. a pressure a each power build the the upside, us of the

Robert Mosca

up think with can New Gas. Got year, then might I focus the broadly, you solutions component there be gas it. commodity expected more And in talk also Jersey And just you're And managing to within the on impacts about That's the last was a prices. Natural deemphasized helpful. coming stream of rising lot decarbonize gas bills? the customer how just from bill given customer increase that wondering whether of

Stephen Westhoven

customers. So that to some narrative impact move to the we're are and now. And think gas, decarbonization that. the long walk guess far acknowledge a that. it's And and walk bringing the doing I And -- to eventually X forward. natural efficiency pricing storage going we to One that think going future, to got effort, short-term issues and that renewable energy I continue people capture you've a is are and going X be But carbon decarbonization ways pipelines answers I going into things hydrogen, for to the to to occurring is utilize we're time. certainly, our

think guys at impact we've to of of about how you got a NYMEX I the well-established got price at last at gas below talking customers, now. I one in of program pricing going which, Bcf market our pretty term, looking about system the gas short know, is company. $X.XX, And gas current is as is a we've hedging storage night, all just where numbers or the was pricing XX far

customers So insulated. will largely, our be

As we're in into that year, from the insulated 'XX. winter, they're 'XX winter slightly going will of as talking, now right than And for that's now. gas and that last price what and next much realities going to be is storage higher right be market our -- that's

customers bit the to out time to prices of a to those to don't and quite be issues and have got some feel of come work normalize down, prices impacts. market So so able we've our

seeing currently, price where last in largely So insulated pretty I market is, the higher you're we're good of year moves but a from place, than some far below little think the a that currently. bit

Robert Mosca

just And one. last one Great. color. That's awesome maybe

hoping could discuss Adelphia. maybe Just next milestones for you the

be the You any wondering but to milestones that should you the year, end then. by it out if mentioned fully would now service there's in from call specific of

Stephen Westhoven

to that here. She's for and the Chief ask Amy And take So nonutility been Operating project I'd I've question, time. some over Amy? Officer her that got has companies our of Cradic

Amy Cradic

have and Yes, before of service a more We mitigated regulatory next get end few have chain year. just facilities facilities really support, construction to we and really just to again, done bring just issues, perspective. couple a But over it more months, into supply have several the the good any the left. from a we

So through the very well it's process. been moving

Robert Mosca

Great.

forward up to Looking catching at AGA.

Operator

to Q&A Dennis session. closing I Puma remarks. for That pass the over today's now any will back concludes conference

Dennis Puma

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

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

look also -- at of this in or next We call. seeing to you forward many quarter's person year's next year's AGA

want we Resources. Jersey interest for New investment always, and your in to thank As you Goodbye.

Operator

New Quarter Jersey you That concludes Second participation. today's Conference Resources XXXX Fiscal Call. Thank your for

You disconnect may your now lines.

New Jersey Resources (NJR) 7 May 222022 Q2 Earnings call transcript