NewJersey Resources Corporation

Good morning. My name is Matt, and I will be your conference operator today. At this time, I would like to welcome everyone to the NJR first quarter fiscal 2021 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by two. Thank you. I'll turn the conference over to Dennis Puma, Director of Investor Relations. You may begin your conference.

Okay. Thank you, Matt. Good morning, everyone. Welcome to New Jersey Resources' first quarter fiscal 21 conference call and webcast. I'm joined here today by Steve Westhoven, our President and CEO, Pat Migliaccio, our Chief Financial Officer, as well as other members of our senior management team. As you know, 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 for 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 what expectation is found on slide one. These items can also be found in the forward-looking statement section of today's earnings release, furnished on Form 8K and in our most recent Forms 10K and 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 will also be referring to certain non-GAAP financial measures, such as net financial earnings or NFV. We believe that NFV provides a more complete understanding of our financial performance. However, it is not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in item seven of our 10-K. Our agenda for today is found on slide two. Steve will begin today's call with highlights from the quarter, followed by Pat, who will review our financial results. Then we'll open the call up to your questions. The slides accompanying today's presentation are available on our website and were also furnished on our forum 8-K file this morning. With that said, I'd like to turn the call over to our president and CEO, Steve Westover. Steve?

Thanks, Dennis, and good morning, everyone. Thank you for joining us today. New Jersey Resources delivered strong performance in the first quarter, and on slide three, I'll take you through the highlights. We reported an NFE of 46 cents per share, driven by the performance of our core business, New Jersey Natural Gas. We are also reaffirming our NFE guidance for fiscal 2021 of $1.55 to $1.65 per share and increasing our fiscal 2022 NFE guidance to $2.20 to $2.30 per share, an increase of $0.15 per share for prior guidance. At New Jersey Natural Gas, we completed almost 90% of the Southern Reliability Link and expect to place the project into service this year. We received approval to move forward with our infrastructure investment program, a five-year, $150 million accelerated recovery program that will improve the resiliency and reliability of our natural gas infrastructure. And we filed for Save Green 2020, a new energy efficiency program that is designed to help our customers reduce their energy consumption and save money. At Clean Energy Ventures, we acquired the 2.9-megawatt Mount Laurel solar facility, which is part of our plan to invest $165 million this year. In our storage and transportation business, we've begun to construct to convert the southern portion of the Delphi Gateway to natural gas and expect it to be in service later this calendar year. And just yesterday, the U.S. Supreme Court granted Penny's petition to hear its appeal. But despite this positive news, we are still excluding pennies for our long-term projections until there's more clarity on the project. And at NJR Energy Services, we've entered into an asset management agreement, which will result in contracted cash proceeds of $501 million over a 10-year period. I'll take you through the transaction in more detail on the next slide. Turning to slide four, Energy Services entered into a series of AMAs with an investment-grade public utility. These transactions illustrate the value of our portfolio of natural gas storage and transportation contracts and are a testament to the hard work of our talented team. The transactions assist our counterparty in securing the needed supply, while Energy Services monetizes the value of a portion of the assets it controls. Let me walk you through some of the specifics. Beginning in November of 2021, which is our fiscal year 2022, NJRS will begin to release portions of our pipeline capacity, Under the terms of the agreements, NJRS will receive payments of $261 million over the first three years of the AMAs. After fiscal year 2024, NJRS will receive additional payments of approximately $34 million per year through 2031. The benefits for NJRS include extracting value from our assets without the need for weather-related price volatility and reducing operational risks associated with the direct management of these transportation assets. The result will be more predictable earnings and cash flows in a lower risk energy services business. These transactions also allow us to increase our fiscal 2022 guidance by 15 cents per share, as we'll see on the next slide. And later in the call, Pat will take you through other financial impacts of these transactions. Turning to our NFV guidance for fiscal 2022 on slide five, we are increasing our overall guidance to a range of $220 to $230 per share. This reflects the impact of the AMAs and the expected cash settlement of our equity forward. However, our long-term annual growth rate of 6% to 10% remains based off our originally communicated guidance of $205 to $215 per share, which excludes the impact of the AMAs and any other contribution from energy services. As Pat will discuss later, the NFE benefits of EMAs will not be the same every year. As I mentioned in my opening remarks, New Jersey Natural Gas had a strong quarter, and on slide six, I'll take you through some of the operational highlights. Looking at the top left, we invested $89 million in New Jersey Natural Gas during the first quarter, with about a third of the capex providing near real prime returns. Despite the ongoing COVID-19 pandemic, we added over 1,900 new customers, only slightly below the customer additions from the same period a year ago, which was pre-pandemic. This is due to the favorable growth demographics in our service territory. Construction on the southern reliability link continues to progress, and we now have almost 90% of the project complete, with an in-service date expected this year. We plan to file a rate case to recover the costs associated with the project in fiscal 2021. And as I mentioned earlier, we received approval for our IIP program and filed for save green in 2020. On slide seven, I'll take you through the operational highlights of our other core business, Clean Energy Ventures. We added 2.9 megawatts of capacity this quarter, and as you can see on the top right, we now have 360 megawatts of installed capacity. We have a strong project pipeline with about $260 million worth of investments, either under contract or exclusivity, that are targeted for commercial operation in fiscal 2021 and 2022. Total invested capital at CEV this quarter was $23 million, with $17 million of commercial projects and $6 million at Sunlight Advantage. The bottom right shows our expected CEV revenue for fiscal 2021, a significant portion of which is secured through our SREC hedging program. And finally, before I turn the call over to Pat, I'd like to take a moment to talk about some of the important progress that we've made on NJR's sustainability goals, which you can see on slide eight. The sustainability agenda we've outlined for our company focuses on innovation, emissions reductions, energy efficiency, and transparency. And I'm pleased to report NJR has made significant progress. Last quarter, we announced that NJR achieved our goal of reducing our New Jersey operational emissions by 50% of 2006 levels, well ahead of schedule. And we set a new higher target of 60% reduction by 2030, This is a significant accomplishment that reflects the decades of investment in safety and environmental responsibility. It reflects our strong commitment to sustainability and the hard work of our team. Our new target ensures our company's goals are aligned with the state's 2050 statutory goals for emissions reduction. Last month, we issued our 12th Annual Corporate Sustainability Report, which is available on our website. For the first time, this year's report includes ESG reporting and disclosures established by SASB, which is another step to increase transparency and strengthen our communications with our investors in the financial communities on these issues. Now I'll turn the call over to Pat to go through the financials.