New Jersey Resources Corporation Q3 FY2025 earnings call

• Fiscal 2025 is an excellent year for NJR with disciplined execution. Raised lower end of full year NFEPS guidance to $3.20 to $3.30 per share. - New Jersey Natural Gas has consistent customer growth, SAVEGREEN program with accelerated cost recovery and aligned with decarbonization goals. - CEV has a diversified development model with ~131 MW solar projects scheduled, flexible capital approach. - Storage and Transportation segment has Adelphia Gateway settlement in principle and Leaf River evaluating expansions. - Financial results show NFEPS of $0.06 per share in Q3, year-to-date NFE $313.4 million. Capital plan for 2025 expected $650M-$770M, adjusted FFO to debt ratio 19%-21%.

New Jersey Natural Gas: Serves approximately 588,000 customers with over 90% residential, located in core counties. SAVEGREEN capital projections for 2025 raised to $90 to $95 million, with over 47% of ~$383 million in capital projects earning near real-time returns. Clean Energy Ventures (CEV): Year-to-date placed ~63 MW into service, with ~131 MW of solar projects scheduled to come into service in next 2 years, representing ~$350 million investment. Storage and Transportation: Reached settlement in principle at Adelphia Gateway rate case, evaluating expansion opportunities at Leaf River. Energy Services: Provided stability through fee-based performance.

• Raised lower end of fiscal 2025 NFEPS guidance to $3.20 to $3.30 per share. - Fiscal 2025 capital spending expected $650M-$770M, with update to 2026 plan in Nov. - Projected cash flow from operations for 2025 $460M-$500M, adjusted FFO to debt ratio 19%-21%.

• Factors beyond control affecting forward-looking statements. - Permitting challenges for gas infrastructure. - Market dynamics impacting CEV projects' returns and timing.

Q: For the Adelphia rate case, what would be the year-over-year impact of the settlement in 2026?

A: Negotiations are constructive but details not public yet, will share when settlement reached.

Q: Understood. Fair enough. And then turning to CEV, the 131-megawatt target over the next 2 years, how have you sized that relative to initial expectations last fall when you rolled out your '25 and '26 capital plan? And then I guess, similarly, has OBBB changed your expectations at all around CEV?

A: 131 megawatts is what's under construction or nearing construction, high confidence in projections, majority of CapEx in gas-related businesses.

Q: The expansion of Leaf River, do you have any sense after the open season when a decision time line might look or what a decision time line might look like?

A: Expecting to make a filing at FERC in coming months, narrowing in on expansion details.

Q: And is there any incremental color you can add on S&T's relative strength this quarter?

A: Strong natural gas market, weather contributing, need for infrastructure to supply energy demand.

Q: Going back to the Adelphia case, it's certainly a really big catalyst for 2026. When you make your filing, do you anticipate you'll do a release for that?

A: Yes, there'll be a public disclosure when settlement in rate case is complete, will update tariffs etc.

Q: And lastly, I think you sort of intimated this, Steve, vis-a-vis the tax bill and what the outlook for CEV might be going forward. But the pricing in PJM is pretty -- was very strong. So are you kind of thinking part of your thought processes you have fungibility of CapEx across the board. But are you also thinking that sort of the pricing for solar is going to equalize to a certain extent, where power prices are headed and solar project economics will also adjust over time.

A: There's going to be a re-rationalization in the market on costs, prices in electric side moving up, infrastructure becoming more valuable.

Q: And just following up on the Leaf River conversation and the expansion. Are there a series of discrete steps that have to be done for the expansion versus -- it sounds like you're also doing an open season for some of the existing capacity. What are the steps in terms of the expansion that you're looking at that would be next, the FERC filing and then is it up to you to decide an FID?

A: Get customers lined up, run feed studies, FERC filing, then construction and commercial operations.

Q: At what point in that process would you know around the CapEx number that you either be willing to share or be putting explicitly into your CapEx forecast. At what point in this process for the expansion would you expect to have some kind of number?

A: In coming months, expected to be done by Nov when updating CapEx schedule.

Q: The dividend. Traditionally, the Board has considered a dividend increase here in the next couple of months. Given the EPS that you've had over the last few years, how do you think the Board is going to look at not necessarily the payout ratio, but just generally capital allocated to the dividend given again, your payout ratio will be pretty low on this year's earnings, but then you also talked about the base earnings number. How is the Board thinking about that base versus actual?

A: Typically view related to historical growth rate, dividend will follow historical performance of growing the company, expect to continue increasing dividend.

Q: Just wondering if you could -- just wondering if you guys could speak to the higher CapEx in SAVEGREEN. Just wondering what's driving the stronger demand for that program. And early days here, but could this portend anything around the size of future durations of this program as far as what gets approved?

A: Start of new triennium, strong demand for efficient HVAC systems residential and commercial, team's strong execution led to guidance, will update CapEx guidance in 2026.

Q: For my follow-up, it seems like the permitting environment for gas infrastructure in the Northeast might be easing a little bit. Is there anything NJR will be interested in, be it growth projects or trying to secure system or supply redundancy to support some of the customer growth you guys are experiencing and maybe improve reliability?

A: Expect more of the same in permitting and infrastructure investment, have been able to achieve investment despite past difficulties.