- Earnings call transcript Q4 2022

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Operator

Hello, everyone, and welcome to the New Jersey Resources Fiscal 2022 Fourth Quarter and Year-End Conference Call. My name is Emily, and I will be your conference call operator today. [Operator Instructions]. I will now turn the call over to our host, Adam Prior at New Jersey Resources. Please go ahead, Adam.

Adam Prior

you. Thank Jersey Webcast. Fourth New Conference and Fiscal and Call Resources to Quarter XXXX Year-end Welcome here by President joined of Roberto Officer; I'm today well our Bel, CEO; President as our and senior and management Senior other Vice as and team. Financial Steve Chief members Westhoven, our forward-looking laws. statements Certain other today's meaning the contain call within in of and estimates statements the securities many and our of to call that estimate include assumptions caution forward-looking expectations, for basis listeners or this that our beliefs wish beyond the We current forming control are ability factors statements the to precisely. materially This could cause from as results to found X. in differ Slide expectations, our items These and filed with on be furnished Form forward-looking the X-K the and SEC. XX-K statements as most in XX-Q section can in today's forms release also of earnings our found recent not, by herein statements forward-looking to statement, any assume future this referenced revise or including events. any review We obligation particular in of light do non-GAAP net net referring as financial to such also We'll fee. certain be measures or earnings financial that NFE margin provide We financial gross financial of complete understanding funds more performance. and net our adjusted utility believe operations a from financial loss, margin,

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

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

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

Steve Westhoven

everyone. good and Adam, morning, Thanks,

leverage per strength NJR of ways with speaks benefit model. also while our to investors. and Our our energy at to NFEPS energy businesses compared investing diversified reported in $X.XX. This to core, At solid represents clean ability customers we infrastructure is complementary of earnings this a our This business the performance share or morning, At Gas, that driven is net new portfolio financial adapt year Natural results base utility to an increase by of challenges experience Jersey rates. top a we range. company of year guidance that XX% our past for positioned New future. our our reported to last fiscal XXXX and the a

rising at Clean Our largest and hedging incentive commitment natural prices policy Energy mitigate cost. programs pipeline. customers. reflects helped to to a now of reasonable the Ventures has have energy reliable BGSS safe, to This project our our impact gas delivering ever

with our At natural the management this agreements to During price York to additional the fee-based geographic providing December into Energy our fourth revenues XXXX or volatility uptick we in strategy. significant year became quarter, value predictable, service, services project effective in team allowed summer through Services, consistent the this remaining CEV's New signed placed gas asset generate The assets. business. first physical AMA the from diversification energy

Gateway Adelphia team to thank that entire further energy customers year. the a major able by runs gas helping fiscal achieve Martins of place end Creek, our is to prior south economic we replacing an completion the to reliable reductions of Pennsylvania and Philadelphia. oil. to emissions want This Adelphia is I capacity-constrained downstream now growth a just S&T from and pipeline into fully is delivering company. were coal Finally, to the accomplishment fueling for oil from region, XX-mile service converted as to Adelphia

Moving to X. Slide

for our expect the utility financial We are from business. earnings XXXX guidance that come $X.XX net introducing will per most a and fiscal of year $X.XX our to NFEPS share of share.

X% maintaining growth X% We our long-term NFEPS rate. also to are

our expected will which this Services, Energy fixed come associated year the from the primarily will the NFE In payments AMAs. at contribution addition, be in with second

slide. next the to Moving

NJR our For now years. year share, raised a every $X.XX rate year only have for of business our companies annualized And reflects last this fiscal on dividend an With X.X% per turn have Slide XXXX, increase the this the of raised one throughout XX building long-term dividend period. their XXXX. to to we XX we With have raised context, dividend is publicly-traded provide that, increase, This fiscal I'll compared begin X. of to which units, to other our to value. our commitment that discussion shareholder

New usually the capital over over through investments. we help a footprint, deployment with variety reduce during Jersey near the help more across new a Natural of investment And in of ever some combination million capital capital returns. were largest SAVEGREEN save energy fiscal added successful major customers new plan with year over file construction XXXX, Gas, base in their through real-time expected our notably, customers and Natural to and to to million our $XX XXXX X,XXX that lower program. our in-service rate dates is with of able providing XX% of programs fiscal our in their carbon We program. of Gas' conversions. invested we We spent money consistent than next technology annual which customers We $XXX case usage XXXX of

from to increase business a in performance. XX% to discussion XXXX for on financial prices our overall electricity X. NJR's a benefiting Slide fiscal solar strong that CEV elevated Moving reported revenues of contributed

approximately advanced portfolio solar of the capital of Airport project of CEV grow New megawatts quarter, Road exclusivity CEV includes strategy has a you Slide another State XXX County, its diversification of to now service. XXX Including assets project, CEV regional On pipeline, X, megawatts fourth has can New continue with X.X its megawatts project, ongoing construction. Jersey. to rights in approximately CEV deployment under expansion the addition which on XX in projects see contractual megawatts more options, outside York. of this in installation a the of During now

portfolio. clean projects pipeline present triple of nearly the current Our regionally-diverse of would size energy CEV's

the segment service milestone important announce X. proud project. to Slide for company, collaboration we the is municipalities, to Adelphia an regulatory meeting Gateway energy the in Gateway local Transportation residents. will NJR agencies Storage our completion and needs play an future. on Adelphia Moving the appreciate the region's our well was of and important fully and Adelphia in Place role our with into into

December finally, of replaced both XX% From Financial One results. to revenues earnings. by in Leaf financial progress Chester our emissions of segment, I of customers, success had the in Chief been over to made expected Energy fact, these the S&T year in of at Energy Notwithstanding supports years objective generate The 'XX turn the to review is pipeline a the our at physical Roberto carbon and come cutting exceeding of operators. fiscal that over and market greenhouse geographic had assets creates XX. XXXX. in segment goal briefly larger to we AMA the Kimberly-Clark's Gateway. has Pennsylvania's the we've periods on coal-fired before an driven of XXXX its the expected Officer, margins Slide And tremendous I during in our Bel, Adelphia towards a by Kimberly-Clark, performance gas location diversity for Services Services, year fee-based and gas, excellent key more perspective, through gas fee-based of of a Energy and option We footprint that call half majority with storage strategy plant at long natural effective fiscal Energy facility Services financial financial our increased significant strategic to provide assets with from to that, XXXX revenues, our secured predictable review, that which the to fixed turn higher call our our Services for in owns our costs. became ability the volatility. highlight a which With stability XXXX. far River projected is and goal I'll discuss physical by of and financial Roberto reduce And want portfolio returns

Roberto Bel

and good everyone. Thank morning, you, Steve,

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

year, of new impact Gas, $XX.X of from improvement an Natural positive more effect million went rates of prior increase than the that Jersey an the base into New due X. to primarily December XX%, on

at higher Clean year. sales contracted and and Turning Energy driven twice River to businesses. a La partially increased revenues. service to more expenses. at $X.X from Leaf increased by into of facility million, capacity by depreciation is Adelphia our an nonutility during the Transportation Storage last revenues electricity went improvement million, offset higher higher $XX.X reported NFE and by year's than highest Ventures due NFE

the of prior Energy $XX.X million Finally, compared to NFE year. in Services $XX.X reported million

the As by NFE a from partially due was higher Uri. year's extreme contribution volatility was reminder, last the of weather in offset pad national the NFE decrease generated winter The MAS. by to storm gas

Turning to XX. Slide

the a the Given take natural discuss increase utility to gas how prices, moment I of to natural want cost our recent in manages gas.

dramatic winter the the must pass-through year be currently of November residential XX% have our and cost policy, know, price commercial a gas robust than to XX% of changes, winter Jersey of our ago. customers you estimated storage hedging customers. has more in a for around least We that a prices To heat already sudden program our New at in were estimated our of By Gas send-out As risk Natural at and small to hedged mitigate X. prior place. natural is supply hedged

we're natural SREC prices. lock fluctuated incentive Jersey portion program. details our supply SREC the price by our XX, highlighted able average of mitigate gas of remains As leveraging throughout large of our the to securing significantly prices a and rising Gas On CB's expected of the on cost-effective a that while revenue, cost in sale we is able gas an spot CEV's these and we current SREC. hedging year, of The below customers. of Slide have a New flows result, program, Natural behalf production to cash natural hedging BGSS secure been By has hedge

on expected you significantly year hedged now CEV see, capital risky almost will projections As energy is SREC to our XX. Slide revenues. turn XXXX, generation can fully our through I

at our expect our X Jersey we in million $X.X of between X% and the and invest our At the target growth to to across $XXX supporting growth nonutility company, consistent billion we at Gas, X%. utility long-term X businesses, and National years, spending with next million anticipate between NFEPS years. $X.X For $XXX next New billion the

calls. between same New as new Jersey's While to regulatory in period. and prior million CEV's CEV, million the reform, interconnection of expect range lines and consequence spend program is wide $XXX of have $XXX uncertainty we a over time at the outlined implementation we in PJM's

our as fiscal XXXX tighten become more clear. for will XXXX projections time We and lines those

Adelphia Finally, note fully Gateway service. in is that

We moderate expect capital spending to at S&T.

However, incremental visible. we'll growth more they and you opportunities arise update may organic when become

projecting those to better-than-expected cash Turning slightly period, summer. This businesses to cash a operating due including across our is during Slide and X-year communicated last for stronger flows XXXX XX. mainly the than earnings now year our call last XXXX. fiscal operating generation We're

the of cash you generation. and end In we flows fiscal overall This working fiscal took years between a the fiscal XXXX considerations. addition timing was operating improvement, operating in QX notice even injections shift at during expect particular, stronger XXXX. energy for XXXX. services capital not to most XXXX, will of And storage due and In fiscal to place cash XXXX

FFO strong into supports growth to teens our X%. translate credit investment-grade metrics equivalent to flows X% cash net credit and an rating ratio healthy high that rate in with dividend long-term of operating a the Our

on plans equity operating few block strong no the impact issue addressing and current strength flows future. our the have to our in any credit XX. of to rate I'd with interest environment a metrics, like cash the Given the of close near comments we Slide

XXXX that, long-term fiscal to NFEPS expect market don't most in interest interest back NFEPS to we and projections of Steve. fixed guidance limited we significant consistent of growth for long-term have Furthermore, impact range. and rate even With guidance expectations. turn within current our maturities with in our NFEPS is the call since and I'll Our corporate guidance the year, our be higher particular any potential rates debt

Steve Westhoven

Thanks, Roberto. Sustainability is to not NJR. new

years, plastic protected system several of in nearly distribution state the making used it the we've tightest network, last XXX% the with Over our or our invested steel. in

CEV, the value of to most miles are delivering that way to already built paid delivery start to low possible. perform We renewable homes, calls in X,XXX carbon has our infrastructure in to network grow and been through zero reach of businesses continues energy At affordable helping energy, of portfolio the and and of high-quality to as its grid. and the energy affordably The energy we safely energy XXX% transport well, continue only resilient permitted, climate increasing infrastructure for. state percentage clean delivering our will

policy project for pipeline CEV working of is the a We delays. sustainable and be with growth proactive support to goals ESG are to navigate policy, the near-term investment strongest federal to interconnection corporate state come. we've mechanism positioned regional well years and a had, drive ever for But and

XX. to turn Let's Slide

decarbonize. to into accelerate One of to renewable of is environmental extension our tax fuels Reduction inflation that clean climate as change. security, strategy an And of RNG, legislation incentives the of This help and in XXXX and key potential our public energy represents such infrastructure investment law. that in priorities and hydrogen the was aligns existing The policy. our and ensuring energy U.S. efforts signed with Act green unprecedented August, solar credits addressing has

the growth on these understand additional demands. needs incorporating multiple in we and To be the that we're our that take assets These to time develop. feel the take decades, X IRA. to included incremental we for plans, XX% policy in ITC can conclude more expectations, have of successfully market which extension would out than meet some XX, incentives in opportunities our will acquired energy there Slide we While but years growth of built, we are to and operated to advantage

our X%. raised fiscal ability shareholders. with long-term our us results that, strong us the reputation today. our to the twice combined on and and our financial and Our the of targets questions. team NJR based for strength investors and appreciate our deliver currently call for passing rate guidance with initial our growth X% offers during NFEPS our suppliers These reported to acting join value our responsibly dividend through attractive work yield that And customers, for We current allows open of businesses. expected execute, total regulated proven performance reflect the along with of year. you We to an XX% time return XX% the took to to I'll great

Operator

first today with Our Moreen the Instructions] of from question comes Mizuho. Gabe line [Operator

Gabe Moreen

SMT. for question on X-part Quick me

Or take guess, Adelphia in the run there is with back rate quarter -- something Just that? I forward first point? of quarterly all, fourth that's this potentially be organic referenced arise we the else some rate there? at? now run online, secondly, should going then I'm segment. for And if River to Leaf you you -- other Robert, alluding the potential in looking the growth CapEx or if opportunities wondering to there's at might guys

Roberto Bel

customers first So you mean, we just bringing I no, still regarding your and new at know, there I up Adelphia ramping are would say we're are in. question, because as

rate the say going run future. is rate we right we're in have to that So that have run a the I now wouldn't

actually And are what arise. opportunities from I discuss but over mean potentially ready those Adelphia both or there So that potential we're potential would coming question, so. the we year your Leaf. to not expect are, that revenue to improve second so there yes, opportunities actually may next, are say, regarding I and

Gabe Moreen

the Great. can and sort there? And in the timing you're regs of the for about CV the CapEx. I more kind just looking next range of of bottlenecks, kind milestones potentially then maybe you're interconnection either you Can if Jersey of expecting some ask getting maybe sort on the or visibility New in what of talk on

Steve Westhoven

some be certainly Yes. we going to continue there they'll Steve. that's finally resolving on to for Also, PJM commitments And new bring soon, relatively certainty but it's months, guess, New take I the Jersey the Gabe, when program expecting coming certainly, don't bear. should know I program. over that to place. work their to we're mean are

CEV a investments. So that's there. little a states wide want the certainly, leave that you bit is with why the it's range many well Jersey New to we're making of in which that I and surrounding supported, got But of in thought is

our that project about pretty forward. going and prospects feel growth we the So good business pipeline in

Gabe Moreen

better kind this your squeeze into on factored more I might peers just your higher in this guess, that go, some. a but some could particularly what costs where no how many as for debt that's guidance next expense, bills moratoriums, for in than gas with moratoriums, If of, Appreciating position be you're far what that bad might of as year, one upcoming I winter? be stands,

Roberto Bel

Roberto Yes. This is again, Gabe. Yes.

So have the been moratoriums to COVID lifted. related

in lot down. well. Of are the trending the course, COVID we're It's cannot period general, during customers. we it's winter, coming of bad that in debt a actually had we terms off of deferrals actually shut But during

So now. it's trending right good a direction actually in

Operator

Richard from with comes Sunderland question JPMorgan. next Our

Richard Sunderland

you impacts the reduction your upside adders speak inflation CEV's pipeline from how can the much Curious this to little assumptions. and a if the impacts return of also potential more outlined, advantage could take Exo Circling these. bit you IRA of

Steve Westhoven

subsidies positive a how be that's the time hydrogen upside out. got implemented. during there's in city, Also, how to with we've got implementation impact, on for at well, for call some We've IRA going fuel for it's the quite we've play there's the utilities ITC, or right, certainly but subsidies which embedded it's but those our going Certainly, plant, for delivery we've again, We but a costs Yes. our for for the to positive wait development to down wait XX% way is to that there said the battery bringing hydrogen about carbonized exactly to talked business. storage. described, productive. as it's There's

put or and but to with a we've through positively wait details trending to come to strategy, them. are these into numbers put aligns to specifically all business for some those got presentation So really those for our very our things how it

Roberto Bel

right the go XX%. that others, have of new our of all on get just projects is now top maybe incremental. ITC from we perspective, to the financial in be In we may assumptions numbers a will our But that will

Richard Sunderland

you CapEx I CEV initially a When the high Understood. Analyst sticking XXXX know rate? about Day you to post-XXXX if about you're I development you timing still PJM clear. and here, and Jersey of return relative guess, kind some And to That's at But those start there. plan, that you spoke at CEV's the plans a need level, of thinking ago do your run very do converging, guess? minute X contemplated your when with New I just to look growth, spread. certainly need

Steve Westhoven

So is this to reaffirmed morning. rate we the growth way that answer our I'd X% X% question that

a to So of and with that got do businesses, that a We're lot we've we'll portfolio IRA and got feel strong so. a confident investments things we're good to taking we've able make of and are other be associated we in able tailwinds position, place.

into numbers which XXXX, able out our to not CapEx in So don't hit feel far. in planning, numbers. get certainly specific we that generally But that we'll project confident speaking, be our to we

Richard Sunderland

then And one I slip could in enough. here. if Fair more

On about the little NJNG bit efforts the a in side, R&D the you've spoken past.

going the Just and right might curious what's in how forward. change plan now this

Steve Westhoven

He's coming So Pat from call. to here. blast a past Migliaccio investor got back the I've the

as going Pat turn of over the it So to COO I'm to utility. Pat?

Pat Migliaccio

So both we've and capital on 'XX. the our some supply plan pursuing side, 'XX for and modest RNG assumptions opportunities reflected the and both investment in

Richard Sunderland

over, the there? if next Any an there XX sense might any And acceleration on say, on months? potential be that

Pat Migliaccio

Whether we that we'll time no and have you information, ago. if at update

Operator

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

Sam Schwartz

walk for for to broadly latest the you I is for 'XX could This just is on solar panels capital And have you're Sam need 'XX supply if Julien. projects. on of 'XX? us projects? be of seeing speaking, much you wondering the just chain at was kind availability the through on and that your site procured Do Schwartz how you

Steve Westhoven

businesses, to our the call, she's So and CEO going of I've on Amy Cradic that the take and got Amy? question. she's nonutility

Amy Cradic

a good from near monitor any we're capital we the in any but position moving spot. solar We're We're have concerns have in we'll in risks to seeing situation, we the continue not good term. supply the a chain don't a panel for projects that forward or perspective. --

Sam Schwartz

embedded what's 'XX your and could what some kind Excellent. provide of color your on in of on offsets just then plan? And expecting beyond? in interest And rates, you kind

Roberto Bel

Yes. This is Roberto again.

interest Our current incorporates already environment. guidance the rate

these in right plan. the now are So facing embedded market rates higher interest interest the we're our on projections and from current

that's don't with already any So risk in. right now. that We see

Operator

Gaugler Michael next Our Janney comes Montgomery. question with from

Michael Gaugler

in Steve, Services if how could I'd the that possible? actually that's supply with Jones we've on the Eversource the for more play England, White your writing England like New had to Act Energy into out gas and the House Joe relief of thoughts terms to New get for get segment, asking gas Nolan situation a

Steve Westhoven

on the own, much sort there. general Energy comment valuable market trading transportation to has are that period. associated we couldn't that our is that contractual points Services in the extremely a think Yes. written, is there letter as I'd utility in the our but well. not hold certainly, and I how from only But was market not up constrained a from don't Mike, participate that, of up constraints we're all and guess direction the New perspective. think it, perspective pricing in assets of the winter I the assets of but it's only we assets certainly, ahead the England. the and evidence these I utility in We that that some way not address gas a I overall, book industry

able sets provides advantage nicely and last for of that, saw it to being well. year outsized our businesses for up take and you that So infrastructure as returns

it. forward the we risks understand We the infrastructure it winter. with have. for looking the we're we So associated that We're and prepared to like

Michael Gaugler

given what a about Okay. year wondering how follow-up opportunities this And it versus as thinking year that. we're year to what you Are versus year? last seeing? this I'm there last maybe are better -- just

Steve Westhoven

how and the stay difficult. would We certain take forward. and profile I fairway projections and that risk earnings our really certainly in and those to how are. quantify at try to on to be projection the a that and look baseline as extremely at how to We and opportunities our risks a investors. and those embedded think acceptable businesses in put of earnings going big try they're look to We our the opportunities performance That's a speculate our

So a a give nice we we've them And base and upside. can year and year earnings proven of provide that potential again.

upside a base and got sometimes we've that's project it we of very comes, the doesn't, earnings, forward. Sometimes strong what but going

Michael Gaugler

actually with was Maybe rephrase going it. I can I the where wasn't question. That Okay.

As you more That's at it last look have the year? the should does question. the this market, constrained appear year way I probably versus asked

Steve Westhoven

That's detailed markets to these side hard to without put in getting grow, a say being and certainly, supply market. all and infrastructure But of like the you've demand of to a continue very gas slowdown as the and some got place. natural markets

that could to say lot variability. is exports You Weather that. There's big variance variability big variability market. a of around this a or comes

Operator

Instructions] back for remarks. call this have any the management At time, to further no [Operator I'll questions. closing we pass

Adam Prior

Thank of you morning. you, all joining Emily. thank us I'd for like this to

reminder, and in is website. your appreciate a our everyone. a And As recording you, interest Thank always, of available investment as this NJR. replay call we on for

Operator

our Thank everyone, us concludes call. today. you, for This joining

now lines. disconnect You may your

New Jersey Resources (NJR) 17 Nov 222022 Q4 Earnings call transcript