New Jersey Resources Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Highlights: Fiscal 2025 was an excellent year with strong earnings growth, a solid balance sheet, and continued investment. Delivered 5 consecutive years of exceeding initial earnings guidance. Guiding to NFEPS of $3.03 to $3.18 per share for fiscal 2026, consistent with 7%-9% long-term growth.
• Capital Deployment: Expect to invest roughly $5 billion over the next 5 years across the company, with ~60% allocated to New Jersey Natural Gas. This represents a 40% increase compared to the CapEx spend over the last 5 years.
• Financial Results: Fiscal 2025 ended at the top end of guidance range, with ~2/3 of total EPS from the utility. Deployed $850 million across businesses in fiscal 2025. 5-year CapEx outlook is $4.8 billion to $5.2 billion, with over 60% dedicated to the utility.

Segment Performance

• New Jersey Natural Gas: Represented approximately 64% of total CapEx in fiscal 2025. Positioned for high single-digit rate base growth through 2030, focusing on strengthening core infrastructure, enhancing system safety and reliability, and supporting customer growth with energy efficiency programs like SAVEGREEN, which helps residential customers reduce energy usage and costs.
• Storage & Transportation (S&T): NFE is expected to more than double over the next 2 years, driven by strong recontracting in Adelphia and Leaf River. The average contract rate at Leaf River has increased from ~$0.09 to almost $0.20 per dekatherm per month. Filed a FERC application to increase Leaf River's working gas capacity by over 70%, with phases including expanding existing caverns and developing additional caverns.
• Clean Energy Ventures (CEV): Expected to grow service capacity by more than 50% over the next 2 years. Has a robust project pipeline secured through strategic safe harboring, positioned to deliver high single-digit unlevered returns.

Guidance

• Fiscal 2026 NFEPS: Guided to a range of $3.03 to $3.18 per share, consistent with the long-term 7%-9% growth rate.
• Capital Investment: $5 billion planned over 5 years, with 60% allocated to New Jersey Natural Gas.
• Clean Energy Ventures: Expect to grow service capacity by more than 50% over the next 2 years, supported by a strong project pipeline secured via safe harboring.

Risks

• Forward-looking statements are subject to factors beyond the company's control or ability to estimate precisely, which could cause results to materially differ from expectations. Non-GAAP financial measures are not a substitute for GAAP, but they provide a more complete understanding of financial performance.

Q: Gabe Moreen asked about contract renegotiations at S&T/Leaf River and FID timing of expansions.

A: Contracts at Leaf River have various terms with a bias towards longer-term contracts, and average rates have increased. Open seasons showed high commercial interest, and FID timing is tied to securing long-term fee-based contracts.

Q: Jamieson Ward inquired about CEV deployment timeline and earnings cadence.

A: The capital plan is the most accurate picture of deployment, with safe harbor projects providing flexibility for potential acceleration.

Q: Elias Jossen asked about EPS growth outlook and tailwinds/headwinds.

A: All investments are positive, and the company is confident in executing the plan to increase earnings going forward.

Q: Travis Miller asked about S&T recontracting assumptions and M&A.

A: Contracts in hand drive earnings, and the company is always looking for bolt-on acquisitions that fit organically with its businesses