NewJersey Resources Corporation

Good morning, thank you for attending today's New Jersey Resources second quarter fiscal 2022 conference call. My name is Amber and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad at any time. I now have the pleasure of handing the conference over to our host, Dennis Puma, Director of Investor Relations with New Jersey Resources. Dennis. Please proceed.

Thank you, Amber. Welcome to New Jersey Resources' second quarter fiscal 22 conference call and webcast. I'm joined here today by Steve Wesson, our president and CEO, Roberto Bell, our senior vice president and 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 our expectations, as found on slide one. These items can also be found in the forward-looking statement section of today's earnings release, furnished on Form 8-K, and in our most recent Forms 10-K and 2 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, utility gross margin, and financial margin provide a more complete understanding of our financial performance. However, these non-GAAP financial measures are not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in item 7 of our 10th K. Our agenda for today is found on slide 2. Steve will begin with this quarter's highlights, followed by Roberto, who will give our review of financial results. Then we will open the call to your questions. The slides accompanying today's presentation are available on our website and were furnished on Form 8-K filed this morning. For those of you following along, we'll begin with an overview of the quarter on slide 3. With that said, I'll turn the call over to our President and CEO, Steve Westover.

Steve? Thank you, Dennis, and good morning, everyone. Thank you for joining us today. Our fiscal 2022 second quarter financial results exceeded our expectations, primarily driven by contributions from energy services that enabled us to increase our net financial earnings per share price for fiscal 2022 by 10 cents. We also benefited from solid performance base rates in place and grew NFV by 28%. At Clean Energy Ventures, our portfolio now includes projects across three states, New Jersey, Connecticut, and Rhode Island. I'll discuss our growing solar project pipeline, our long-term opportunities, and some short-term challenges at CEV later in the presentation. And finally, at Storage and Transportation, our Delta Gateway project is now delivering natural gas to its south zone, serving the Philadelphia metro area. Philadelphia is on track to be fully operational by the end of this year. Moving to slide four, energy services' strong and unexpected performance enabled us to increase our NFAPS guidance for fiscal 2022 to a range of $230 to $240 per share, up from our original guidance of $220 to $230 per share. Our team at Energy Services leveraged their portfolio strategically located assets to generate a higher than expected NFVPS during periods of volatility this past winter. Moving to the next slide. On the left, you can see that we've invested $144 million so far this fiscal year at New Jersey Natural Gas, with approximately 40% of that capital providing near real-time returns. New Jersey Natural Gas was the first utility in New Jersey to fully replace all cast iron pipes and nearly 100% of our system is either plastic or protected steel. We continue to make investments to support energy conservation, reduce emissions, and enhance the safety and reliability of our distribution system for the benefit of our 568,000 customers. Through the first half of fiscal 2022, we added nearly 3,600 new customers New Jersey National Gas expects these additions to contribute approximately $2.9 million of incremental utility gross margin on an annualized basis. On slide six, I want to discuss how CEV is positioning itself as a success in a market with strong long-term fundamentals, despite some short-term challenges. As you're aware, CEV was an early mover in the New Jersey solar market. We developed operational expertise and a strong network of partners that allowed us to acquire shovel-ready projects. This strategy established us as a market leader in the state, growing our portfolio to over 350 megawatts as of our annual estate in 2020. At that time, we identified CEV as a core growth business for NJR and adjusted our commercial solar strategy to support the greater level of investment driven by aggressive public policy and corporate ESG goals. We leveraged our strong network to diversify our target investment market beyond New Jersey and enhance their development capabilities to pursue projects earlier in the development cycle. This strategic shift has resulted in the largest pipeline project in our history, with 680 megawatts of projects under construction, contract, or exclusivity through fiscal 2027, thus providing a runway for sustained investment over the coming years. While solar market fundamentals remain strong in support of our long-term growth strategy, several factors are slowing CEB's ability to deploy capital in the short term. A number of regulatory transitions and features, which will broaden our solar investment opportunities and be favorable in the long run, are currently delayed. They include approval of final projects that are qualified for T-REX, a transition to a permanent incentive program for community solar, replacement of the T-Rex structure for projects of 5 megawatts or more, and the development of a dual-use pilot to allow for solar generation on farmlands. In addition, there's been well-publicized backlog of projects awaiting interconnection at PJM, resulting in delays across multiple states. As a result, our fiscal year 2022 in-service timelines will be impacted, and we're taking a conservative view of our capital deployment estimates for fiscal 2023. We believe that efforts to streamline regulatory and interconnection processes, which are temporarily disrupting normal development cycles, will ultimately strengthen the long-term viability of the solar market. Given these challenges, we thought it was important to go beyond our usual capital expenditure forecast and walk you through our project pipeline, which is on slide 7. As you can see, we have a robust pipeline that will drive significant solar investment in the coming years. In addition to the 75 megawatts under construction, we now have exclusivity and contractual rights to a portfolio of projects totaling 600 megawatts through fiscal 2027. This pipeline of regionally diversified projects, many of which have existing PJMQ positions, is capable of almost tripling the current size of CED's clean energy portfolio. Over the last quarter alone, CED secured more than 420 megawatts of exclusive project options in high-priority, policy-supported development areas. We have procured panels for most projects forecasted through fiscal 2023. Many supply chain issues we have experienced were delays from electrical components, such as inverters and racking equipment, which we have been able to mitigate. Additionally, we are closely following the recent Department which has not impacted our suppliers to date. Overall, our team has done a nice job navigating this environment while continuing to grow the project pipeline, ensuring quality and long-term investment opportunities. Moving to slide eight, the chart on the top shows CEB's second quarter revenue broken down by type, while the chart at the bottom shows capital investment projections for fiscal year 2022. Due to the reasons we discussed, it affects a lower total CEB CapEx for the year. Despite any short-term delays in our in-service timeline, we anticipate no impact to NJR's long-term NFV growth estimates, thanks to the strength of our complementary portfolio of businesses. I'll close my CEB update by highlighting two projects currently under construction. The first is an 8.9-megawatt floating solar installation in Milburn, New Jersey. Once complete, it will be the largest floating solar array in the United States, and CEB's second floating solar project. Our Milburn location will be twice the size of our Sayreville project, which is pictured on the slide and was placed in service in fiscal 2020. The second is a 25.6 megawatt facility located in Mount Olive, New Jersey. That, upon completion, will be the largest solar array on a cap landfill in the United States. It will generate enough electricity to power over 4,000 homes. On slide nine, We continue to make progress in the construction of the Adelphia Gateway, a converted oil pipeline. We recently placed into service a number of facilities, including the South Mainline, Chiltern Lateral, and Tetco Quaker Town Interconnect, and Pico metering stations. Adelphia is now flowing gas to the South Zone, which allows industrial customers in the Philadelphia metro area to utilize natural gas. This includes Kimberly Clark, which replaced a coal-fired plant Pennsylvania. The conversion will reduce the mill's greenhouse gas emissions by 50% and support Kimberly Clark's goal of cutting its carbon footprint in half by 2030. The Delta E is on track to be fully operational by the end of this year. And with that, I'll turn the call over to Roberto for a review of our financial results. Roberto?