New Jersey Resources Corporation Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Fiscal 2025 Recap: Exceeded initial earnings guidance for the fifth consecutive year. New Jersey Natural Gas had a constructive rate case outcome and record investments in Save Green. CEV added record new solar capacity. S&T advanced expansion initiatives. Achieved 30 consecutive years of dividend increases.
• Fiscal 2026 Q1 Highlights: Navigated extreme cold weather with strong performance. New Jersey Natural Gas had highest sendouts in history and was over 87% hedged for winter gas needs. Energy services outperformed, leading to NFEPS guidance raise. CEV added 10 MW of capacity in the quarter. S&T secured a long-term contract for Leaf River expansion.
• Capital Deployment: Five-year CapEx outlook is $4.8 to $5.2 billion, with over 60% of total projected CapEx dedicated to the utility. Strong cash generation supports an adjusted funds from operations (FFO) to adjusted debt ratio projected to remain around 20% for the next five years.

Segment Performance

• New Jersey Natural Gas: Planned investments to drive high single-digit rate base growth through 2030. Operates in a constructive utility framework, prioritizing safety, reliability, and affordability. Energy efficiency programs like Save Green help customers reduce usage and costs. For example, residential customers in Save Green Whole Home offerings see up to 30% reduction in energy usage and savings of hundreds of dollars annually.
• Storage and Transportation (S&T): Expected to more than double net financial earnings (NFE) over the next two years due to strong recontracting in Adelphia and Leaf River. Filed a FERC application to increase Leaf River's working gas capacity by over 70%, including expanding existing caverns to 43 Bcf by 2028 and developing a fourth cavern to reach 55 Bcf. A long-term contract has been secured for initial capacity expansion at existing caverns.
• Clean Energy Ventures (CEV): Expect to grow in-service capacity by more than 50% over the next two years. Proactive safe harboring initiatives preserve federal tax incentives, and the company is advancing wholesale PJM solar assets and exploring organic growth opportunities with new technologies to optimize interconnections.

Guidance

• Fiscal 2026 NFEPS guidance raised to $3.28 to $3.43 per share from the prior range of $3.03 to $3.18, driven by energy services outperformance.
• S&T is expected to more than double NFE over the next two years due to strong recontracting in Adelphia and Leaf River.
• CEV aims to grow in-service capacity by over 50% in the next two years through proactive safe harboring and project pipeline expansion.

Risks

• Factors beyond the company's control, such as market volatility, regulatory changes, and weather-related impacts on energy demand, could materially differ from expectations. These are outlined in forward-looking statements and in the company's Forms 10-Ks and 10-Qs filed with the SEC.

Question and Answer

• Q: Talk about energy services revision and potential upside from weather events A: Guidance is based on performance in January, with the fiscal year remaining and future weather events not predictable at the time.
• Q: S&T capacity expansion contracts and future growth A: Compression and existing cavern expansion at Leaf River have contracts; the fourth cavern expansion is in progress with strong commercial interest, and timing for construction is being worked out.
• Q: Regulatory backdrop and CEV plan A: Affordability efforts continue with the utility working proactively with the administration. CEV benefits from permit reform and accelerating interconnects to advance projects.
• Q: Solar pipeline and geographic diversity A: Approximately 50% of forward-looking projects are outside New Jersey, with PJM capacity needs driving interest in adjacent states for solar and energy projects.
• Q: Hedging strategy and regulator appreciation A: Regulators are aware of the hedging strategy, which mitigates customer costs by avoiding spot prices for natural gas, and the company files on these programs.
• Q: CapEx flow-through and Leaf River timing A: CapEx guidance includes compression and expansion at Leaf River, with timing in 2026-2027 as part of the scheduled capital investments.
• Q: Rate base solar/generation interest A: The company is open to working with the administration on cost-lowering energy infrastructure solutions if aligned with risk and capital deployment, though not currently part of rate-based generation discussions.