NEW JERSEY RESOURCES CORP Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Affordability & Reliability: Foundation of value proposition. Focus on disciplined capital deployment, operational excellence, and strategic innovation across segments.
• Segment Highlights: NJR Energy Services (wholesale gas marketing) had strong winter performance, leading to raising fiscal 2025 NFEPS guidance to $3.15-$3.30 per share. New Jersey Natural Gas saw customer growth, SAVEGREEN investments. Clean Energy Ventures placed solar capacity, diversified pipeline. Storage and Transportation ongoing projects.
• Financial Results: Q2 2025 NFEPS was $1.78 vs $1.41 last year. Fiscal 2025 capital plan $1.3B-$1.6B for 2025-2026. Adjusted funds from operations to debt ratio projected 19%-21% for 2025. Cash flow from operations expected $460M-$500M in 2025.
• Tariff Commentary: NJR insulated from imported goods impact; Clean Energy Ventures has cost containment provisions in contracts.

Segment Performance

• New Jersey Natural Gas: Delivers consistent customer growth driven by new construction, system expansions, and city conversions. Invested $254 million this year, with 46% of CapEx providing near real-time returns. Began investments under the SAVEGREEN program. Has saved customers nearly $800 million over 10 years via BGSS incentive programs.
• Clean Energy Ventures: Placed 31 megawatts of solar capacity into service in fiscal 2025, with 60 megawatts under construction. Project pipeline stands at over one gigawatt, diversified outside New Jersey. Robust pipeline and SREC hedging strategy support stable cash flows.
• Storage and Transportation: Delivers steady fee-based revenues. Continuing capacity recovery project at Leaf River, exploring fourth cavern, and advancing Adelphia Gateway rate case settlement.

Guidance

• Raised fiscal 2025 NFEPS guidance to $3.15 to $3.30 per share, an increase of $0.10 from prior range.
• Fiscal 2025-2026 capital expenditures planned between $1.3 billion to $1.6 billion, with expected spending $610 million to $790 million in 2025.
• Cash flow from operations expected $460 million to $500 million in 2025.

Risks

• Fluid macroeconomic environment, particularly tariffs, with uncertainty around supply chain and tariffs affecting projects like Leaf River expansion and Clean Energy Ventures projects.
• Regulatory changes and policy complexities in the renewable energy industry posing challenges to project deployment.

Question and Answer

Q: Richard Sunderland asked about the timing of Leaf River expansion, capital required, and targeted returns.

A: Steve Westhoven said they completed an open season, estimated total capital costs between $175 million to $200 million, and returns in line with midstream investments.

Q: Jamieson Ward inquired about Leaf River economics vs existing caverns and storage market dynamics.

A: Steve Westhoven stated they'd only proceed if returns are appropriate, noting it's different from initial investments.

Q: Jamieson Ward asked about utility regulatory environment and next rate case.

A: Steve Westhoven mentioned good regulatory calendar, focus on customer affordability.

Q: Travis Miller asked about Leaf River equipment ordering and supply chain risk.

A: Steve Westhoven discussed brownfield site advantages but noted it's too early to tell on supply chain impacts.

Q: Travis Miller asked about utility customer growth.

A: Pat Migliaccio talked about residential service territory dominance and SAVEGREEN program's role in customer growth.

Q: Robert Mosca asked about energy master plan and affordability legislation.

A: Steve Westhoven mentioned gubernatorial election, expecting new administration to draft new energy master plan