Presentation

Operator

Thank you for standing by. My name is [Frila], and I will be your conference operator today. At this time, I would like to welcome everyone to the New Jersey Resources Fiscal 2025 first-quarter conference call. (Operator Instructions) Please note this event is being recorded. Thank you.
I would now like to introduce your speaker for today, Adam Prior, Director of Investor Relations. You may begin.

Thank you. Welcome to New Jersey Resources fiscal 2025 first-quarter conference call and webcast. I'm joined here today by Steve Westhoven, our President and CEO; Roberto Bel, our Senior Vice President and Chief Financial Officer; as well as other members of our senior management team.
Certain statements in today's call contain estimates and other forward-looking statements within the meaning of the securities laws. We wish to caution listeners of this call that the current expectations, assumptions and beliefs forming the basis of our forward-looking statements include many factors that are beyond our ability to control or estimate precisely.
This could cause results to materially differ from our expectations as found on slide 2. these items can also be found in the forward-looking statement section of yesterday's earnings release burnished on Form 8-K and in our most recent Forms 10-K and 10-Q as filed with the SEC.
We do not by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events. We'll also be referencing certain non-GAAP financial measures such as net financial earnings or NFE. We believe that NFE, net financial loss, utility growth margin, financial margin, adjusted funds from operations and adjusted debt provide a more complete understanding of our financial performance. However, these non-GAAP measures are not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in item 7 of our 10-K.
The slides accompanying today's presentation are available on our website and were furnished on our Form 8-K filed yesterday. They will begin with this quarter's highlights beginning on slide 4, followed by Roberto who will review our financial results, then we will open the call for your questions.
With that said, I'll turn the call over to our President and CEO, Steve Westhoven.

Please go ahead, Steve, thanks and good morning everyone. Fiscal 2025 is off to a strong start during the first quarter. We continued to execute on our strategic initiatives, driving growth across our business segments at New Jersey natural Gas. We achieved a significant milestone with the implementation of new rates. Following the approval of our base rate case, this was support our ability to recover the $850 million of investments made since our last rate case and results in a rate base of $3.2 billion.
We launched the next iteration of Safe Green. Our $386 million energy efficiency program which is the largest in New Jersey natural gas history and runs through June of 2027.
Investments in saving are incremental to our rate base and earn a near real time return to a rider that is updated annually.
Clean energy Ventures continues to advance its commercial solar strategy with a project pipeline of over one gigawatt. We remain well positioned to drive growth at storage and transportation. We continue to move forward on our capacity recovery project at Leaf River and Adelphia gateway section four rate case is progressing with an expected resolution later this year.
And finally at energy services, we continue to derive significant value from our portfolio of strategically located storage and transportation assets as well as continued contribution from the asset management agreements announced in 2020.
These achievements reinforce our commitment to delivering shareholder value through disciplined capital allocation.
As we review our strong first quarter performance. It's clear that NJR is not only delivering on its commitments but it's strategically positioned to capitalize on emerging growth opportunities.
Now, let's turn to our guidance for fiscal 2025. On slide 5, this reflects the strength of our diversified portfolio and our ability to navigate current opportunities and long term objectives.
Our fiscal 2025 PS guidance is $3.05 a share to $3.20 per share, which exceeds our long term growth rate of 79% and incorporates the one time gain from our sale of our residential solar portfolio.
We are encouraged by the recent operating performance across all of our businesses and we will carefully monitor and assess our financial outlook as we move forward through the winter season.
On slide 6, we break out our fiscal year 2025 NFPS by segment, we slightly narrowed the contribution ranges of our business units in the first quarter and will continue to do so as the year progresses, the majority of our NFPS is expected to come from our utility operations.
Now, let's discuss our complementary business units starting with New Jersey Natural Gas. On slide 7.
During the quarter, we invested $127 million in New Jersey natural Gas with 43% of that CapEx providing near real time returns.
We are leveraging investments to enhance reliability and drive consistent customer growth through our new construction and conversions as well as expansion into new locations.
Moving to Slide 8 at Clean Energy Ventures, we successfully placed approximately 11 megawatts of commercial solar projects into service during the period with an additional 63 megawatts currently under construction.
Looking ahead we are well positioned to continue growing our capacity by leveraging a robust and steadily expanding project pipeline of over one gigawatt.
Furthermore, the sale of our residential solar portfolio enhances our balance sheet and recycles capital to support the future growth opportunities.
Moving to slide 9, our storage and transportation business continues to deliver stable returns through fee based revenues.
Our infrastructure investments including pipelines and storage facilities are strategically positioned to serve constrained energy markets.
The Delphia gateway continues to work through its first rate case which reflects the investments made to enhance and modernize our pipeline system. We anticipate the conclusion of the process later in 2025 we are also actively advancing our capacity recovery project at Leaf River focusing on restoring and enhancing storage capabilities to meet growing energy demand overall, we have made excellent progress throughout the quarter on several fronts with that, I'll turn the call over to Roberta to review the financial results. Roberta.

Thank you, Steve and good morning. Everyone. As noted earlier, fiscal 2025 is off to a good start in the first quarter. We reported an EPS of a dollar and $0.29 per share compared with any CPS of $0.74 per share. Last year.
NG and G reported higher fee as a result of new rates being in place on November 21st following the successful conclusion of our rate case and clean energy ventures reported higher in the fee as a result of the sale of our residential solar portfolio, our storage and transportation and energy services businesses also deliver higher fee compared to the prior year period.
Now let's move to slide 12 where we will discuss in your capital plan for fiscal 2025 and fiscal 2026. We are planning capital expenditures ranging from 1.3 to $1.6 billion which aligns with our long term and AP S growth target of 7 to 9%.
We did not make any changes for capital plan compared to our prior disclosure and continue to expect spending between 610 and $790 million in capital investments during fiscal 2025.
Over the next several years, we expect to employ capital to enhance our unique infrastructure, expand our clean energy portfolio and optimize our storage and transportation assets.
As highlighted on slide 13, our strong balance sheet and liquidity position enable us to execute on our strategic priorities of maintaining financial flexibility.
Our adjusted funds from operations adjusted debt ratio is projected to range between 18% and 20% for fiscal 2025 which reflect our ability to generate solid operating cash flows and manage that effectively.
These levels are consistent with maintaining our investment grade credit rating at NGNG and a strong balance sheet at NG we expect our cash flow corporations to be between 465 $100 million in fiscal 2025 providing a solid foundation for our capital plan dividends and other corporate needs.
In summary, our first quarter performance reflects the strength of our diversified portfolio and disciplined financial strategy.
We remain on track to deliver on our long term growth objectives supported by a solid balance sheet and steady cash flows.
With that, I'll turn the call back to Steve for a discussion our organization initiatives on slide 14.

Thanks Roberto. Last month we issued NJR'S fiscal 2024 corporate sustainability report. This reflects our commitment to transparency with our stakeholders in the evolving energy landscape.
In the report, we detailed our leadership and accomplishments in emissions reduction and renewable energy. As well as our long term vision for the role of existing pipeline infrastructure.
Our sustainability initiatives remain business driven as highlighted by notable achievements such as record investments in energy efficiency and the advancement of new innovations such as carbon capture.
During the year, New Jersey natural gas became the first natural gas utility in New Jersey to install and operate distributed carbon capture technology at our headquarters and we are also fueling a portion of our fleet operations with renewable diesel.
This work underscores our leadership in driving a more sustainable energy future and our commitment to pursuing innovative reliable clean energy solutions.
To conclude NJR is well positioned for sustained long term growth across our diversified businesses. As we highlight on the next slide, njr's diversified business model supports an industry leading long term NF EPS growth rate of 79%.
Key drivers include continued customer growth at New Jersey natural gas, solar investments, TED and enhanced asset utilization at Leaf River and Adelphia gateway.
As we progress through the winter season, we are pleased with the strong operating performance across all of our businesses. Our results highlight the resilience of our physical infrastructure and equally important, the talent and dedication of our team.
I'd like to recognize and thank our employees for all their hard work. And with that, let's open up the call for questions.

Question and Answer Session

Operator

All right. Thank you. And we will now begin the question and answer session if you have dialed in and would like to ask a question, simply press the star, followed by the number one on your telephone keypad to raise your hand and join the queue. If you would like to read your questions, simply press the star one again one moment, please for your first question.
And our first question comes from the line of Shar Perez with Guggenheim Securities. Please go ahead.
Hey, guys. Good morning.

Hey.
Good morning.
I just want to get a sense on how you feel about the guide for 25 to 283. That's out there. You know, if we strip out that gain from the residential sale, add back a couple of pennies from lost earnings, we get to about $0.92 for Q1 and on a more recurring basis which, slightly below expectations, I guess. How are you trending within the EPS range? You have out there for 25. I know winter matters a lot and you highlighted you're going to be monitoring it, but just curious how you're trending for 25. Thanks.

Share this Roberto. So we have our guidance out there three or 5 to 320. We're not changing that this point in time.

Understood. But any sense on how you're trending within that range.

It were we, well, we know range. That's all I can tell you right now.

Okay, that's perfect. And then just on ce V, I mean, obviously good growth, you're seeing slightly larger opportunities outside your footprint versus a year ago, I guess what's driving that should we assume more of that mix will continue to shift outside of New Jersey in any sense on whether any of the uncertainties around? Maybe Ira are impacting the discussions, especially as we think about the pull forward of demand.

Yeah, sharp, we've purposely diversified that portfolio and that strategy has been in place for many years and you really focused on jurisdictions that are friendly towards solar and support of, in the solar landscape.
So, that has is basically, when you look at the Forli, we've got 11 megawatts are in service. You got 63 megawatts are in construction, you got about a gigawatt in our project pipeline, so, robust and certainly quite a bit of investment, more than we need for what we projected as CapEx over the next few years. You know, as far as, kind of the IRA, currently, based on our past safe Harvard provisions, we don't see any impacts in the near term, project as we move forward. So it's really as business as usual and all the metrics that you referenced, supporting the business. So, we're in a good place.

Fantastic. Thanks, guys. Appreciate it, and see you soon. Appreciate it. Thanks.

Operator

Richard Sunderland, J.P. Morgan.

Hi, good morning. Thank you for.
The time today. Hey, Rich.
Maybe starting on winter and energy services, any color on the market opportunities for energy services upside during last month's cold snaps. I don't know if there's any way to frame this on an order of magnitude basis versus what you're able to realize last year. Just any thoughts there. Thank you.

Yeah, the weather was constructive across all of our businesses, not only energy services but just all of our infrastructure. Business really shows the value of existing infrastructure in these peak periods of need, as the market grows. You know, we just see our infrastructure becoming more valuable and certainly the ability to organically expand that as a key driver for our business. You know, as far as how to think about that in reference to the event that happened, we've got, quite a bit of winter left and, you know, as we look forward to, the next quarter, we'll, we'll update, the market, as appropriate. And that's, that's about all that I will say at this point in time.

Understood. Well, thank you for the color there and then turning to the Adelphia rate case process, I realize it's early. But are there any key dates in the procedural schedule we should watch for? I guess. I'm curious what the typical settlement.

Window is.

Yeah, it's a, it's a typical.
Rate case, it's really just, verifying, quite a bit of the money that we spent during the initial construction, which is several years ago. So a regular section four rate case and, we said we expect this to proceed forward and be settled sometime in 2025. So we haven't changed for many of that. So that's about all the color that we can give right now since we're in the.
Regulatory proceeding.

Great. Thank you. I'll leave it there.

All right. Thanks rich.

Operator

Gabe Moreen, Mizuho.

Good morning everyone. If I could just ask a question CV TX relative to what you spent year-to-date and the target range was this kind of what you intended, I guess to spend. And we should expect maybe a potential acceleration to kind of get you to the midpoint of the range or is there still just, I guess uncertainty around the timing and spend as to whether you're going to get to that midpoint of, of the CapEx range for CE V this year.

Yeah, so this, this Roberto gave so for this year, you see what our guidance range for traffic for CV is out there, it is higher than what we did last year. And so from that perspective, yeah, you can consider that an acceleration but we expect to be well within our, our guidance range for the year as it is in our presentation.

Thanks Roberto. And I know I think we asked about this last quarter about a potential follow on to the I and the additional thoughts as far as renewing the I IP. Now that you're the cases in the review.

Hey, it's Pat Migliaccio. Thanks for the question. You know, just as a reminder, we do have the current I IP that has spending forecasted through fiscal year '25 that will close out with rates effective in 2026. We had a really constructive energy efficiency filing a record level of approved investment of $386 million that ramps up over time as far as a success or a follow on IP. We'll evaluate that and update you when we have something to report.

Thanks, Pat. Appreciate.

Thanks, Deb.

Operator

(Operator Instructions)
Travis Miller, Morningstar.

Good.
Morning. Thank.
You.
Hey Travis.
I think Richard asked my question the January operations of your midstream business. So look forward to hearing about that next quarter. But save green, wondering if you could remind us the regulatory treatment was any of that included in the rape case? And then if not, what's the recovery of the capital.
Side of that program?

Hey Travis, this is Pat Miac.
So Sabri spend is not included in our base rate case filings. It is a separate, a separate filing that operates a little like our infrastructure writers. So we recover annual investment each year as we make that investment. So, when we consider our complexion of our capital investment, that's as near real time recovery as we can possibly get.

Okay, perfect. And then a broader question, someone asked you have tariffs, is that going to have any impact either on getting the equipment that you need to execute the capital investment program or even more directly possibly on the solar build.
Out.

Hey Travis, this.
Is Steve, we talked about, just general, impacts from before, at this point in time, due to the construct of our business and you know, safe harbor provisions and things like that, you know, we don't expect any impacts, from what's going on out in the, out in the, I guess the regulatory.

World.
Okay. And, and.

No impact on just your regular need for equipment or, supplies and stuff like that for your, for your utility operations aside from the.
Solar stuff.

No, I don't think.
There's anything that, is significant at this point in time. You know, when you look at our overall makeup, especially if you look at the utility, most of it's labor. So you materials is a smaller portion of it and, I would expect that, any issues we have would be kind of quickly, worked through. So not seeing it as a, as a big issue, going to be fluid, we'll, we'll monitor this as it moves forward, but, we have no expectation of any impact at this point.

Okay, great. Thanks so much. Alright, thanks.

Travis.

Operator

Thank you, and I'm showing no further questions at this time. I would like to turn it back to Adam Prior for closing remarks.

Thanks so much and thanks to all of you for joining us. As always, we appreciate your investment and interest in NJR and have a good rest of your day. Thanks again.

Operator

Thank you, and this concludes today's conference call. You may now disconnect.