NewJersey Resources Corporation

Hello, everyone, and welcome to the New Jersey Resources Fiscal 2022 Fourth Quarter and Year-End Conference Call. My name is Emily, and I'll be your conference call operator today. At the end of the presentation, you will have the opportunity to ask a question by pressing Start, followed by the number 1 on your telephone keypads. I will now turn the call over to our host, Adam Pryor at New Jersey Resources. Please go ahead, Adam.

Thank you. Welcome to New Jersey Resources Fiscal 2022 Fourth Quarter and Year-End Conference Call and Webcast. I'm joined here today by Steve Westhoven, our president and CEO, Roberto Bell, our senior vice president and chief financial officer, as well as other members of our senior management team. 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 in 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 10Q and 10K as filed with the SEC. We do not, by including this statement, assume any obligation to review or revise any particular forward-looking statements referenced herein in light of future events. We'll also be referring to certain non-GAAP financial measures. such as net financial earnings or NFE. We believe that NFE, net financial loss, utility gross margin, adjusted funds from operations, and financial margin provide a more complete understanding of our financial performance. However, these non-GAAP measures are not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in Item 7 of our 10-K. Our agenda today is found on Slide 2. Steve will begin with this quarter's highlights, followed by Roberta, who will review our financial results. then we'll open the call for your questions. The slides accompanying today's presentation are available on our website and were furnished on our form 8K filed this morning. We'll begin with an overview on slide three. With that said, I'll turn the call over to our president and CEO, Steve Westhoven. Please go ahead, Steve.

Thanks, Adam, and good morning, everyone. Our performance this past year speaks to the strength of our diversified business model and our ability to adapt to challenges in ways that benefit our customers and investors. At our core, NJR is an energy infrastructure company with a portfolio of complementary businesses positioned to leverage our utility experience while also investing for a clean energy future. This morning, we reported fiscal 2022 net financial earnings per share, or NFVPS, of $2.50. This represents a 16% increase compared to last year and is at the top of our guidance range. At New Jersey Natural Gas, we reported solid results driven by new base rates, Our hedging policy and BGSS incentive programs have helped to mitigate the impact of rising natural gas prices to customers. This reflects our commitment to delivering safe, reliable energy at a reasonable cost. Clean Energy Ventures now has our largest ever project pipeline. During the fourth quarter, we placed our first New York project in the service, consistent with CEV's geographic diversification strategy. At Energy Services, The asset management agreements, or AMAs, signed in December 2020 became effective this year, providing predictable fee-based revenues to this business. The significant uptick in natural gas price volatility through the summer allowed the energy services team to generate additional value from our remaining physical assets. Finally, I want to thank the entire S&T team as we were able to place Adelphia Gateway fully into service prior to the end of the fiscal year. Adelphi is an 84-mile pipeline converted from oil to gas that runs from Martins Creek, Pennsylvania to just south of Philadelphia. Its completion is a major accomplishment for our company. Adelphi is now delivering reliable energy to a capacity constraint region, fueling further economic growth and helping downstream customers achieve emissions reductions by replacing coal and oil. Moving to slide four, we are introducing fiscal 2023 NFEPS guidance of $2.42 a share to $2.52 per share, and expect that most of our net financial earnings for the year will come from our utility business. We are also maintaining our 7% to 9% long-term NFEPS growth rate. In addition, at Energy Services, this will be the second year in which our expected NFE contribution will come primarily from the fixed payments associated with the AMAs. Moving to the next slide, For fiscal year 2023, we have raised our dividend to an annualized rate of $1.56 per share, a 7.6% increase compared to fiscal 2022. With this increase, we have now raised our dividend every year for the last 27 years. And to provide context, NJR is one of only 57 other publicly traded companies that have raised their dividend throughout this period. This reflects our long-term commitment to building shareholder value. With that, I'll turn to the discussion of our business units, which begin on slide six. At New Jersey Natural Gas, during fiscal year 2022, we invested more than $335 million of capital across a variety of programs, with over 42% of that capital providing near real-time returns. We added over 7,800 new customers in 2022 through a combination of new construction and conversions. And notably, we were able to help customers lower their energy usage with successful capital program we spent over 53 million dollars to help our customers save money and reduce their carbon footprint which is New Jersey natural gas's largest ever annual investment in the program we plan to file our next base rate case in fiscal 2024 consistent with the expected in-service dates of some of our major technology investments moving to a discussion of our solar business on slide seven CEV reported a 35% increase in revenues for fiscal 2022, benefiting from elevated electricity prices that contributed to NJR's overall strong financial performance. During the fourth quarter, CEV advanced its regional diversification strategy with the Airport Road Project, a 4.9 megawatt solar installation in Orange County, New York. Including this project, CEV now has a portfolio of approximately 387 megawatts of assets in service. On slide eight, you can see CEV continue to grow its project pipeline, which includes ongoing expansion outside the state of New Jersey. CEV now has exclusivity or contractual rights on approximately 700 megawatts of capital deployment options, in addition to another 63 megawatts of projects under construction. Our current pipeline of regionally diverse projects would nearly triple the present size of CEV's clean energy portfolio. Moving to our storage and transportation segment on slide nine, NJR is proud to announce the completion of our Adelphia Gateway project. Placing Adelphia fully into service was an important milestone for our company, and we appreciate the collaboration with the municipalities, regulatory agencies, and local residents. Adelphia Gateway will play an important role in meeting the region's energy needs well into the future. One of our larger customers, Kimberly Clark, replaced a coal-fired plant in Chester, Pennsylvania with natural gas. which is expected to reduce greenhouse gas emissions at the facility by 50% and supports Kimberly Clark's goal of cutting its carbon footprint in half by 2030. From a financial perspective, our S&T segment had an excellent year, driven by higher revenues at both Leaf River and Adelphi Gateway. And finally, before I turn the call over to Roberto for our financial review, I want to briefly discuss the performance and stability of our energy services segment, which we highlight on slide 10. Energy Services owns a portfolio of physical gas assets with pipeline and storage operators. The geographic diversity and strategic location of these physical assets creates the ability to generate significant returns during periods of increased market volatility. Notwithstanding the tremendous success that we've had with our long option strategy at Energy Services, a key objective has been to provide more predictable fee-based earnings. We made progress towards that goal through the AMA secured in December of 2020 that became effective in fiscal year 2022. And in fact, the majority of energy services projected financial margins in fiscal years 2023 and 2024 is expected to come from these fee-based revenues, far exceeding our fixed costs. With that, I'll turn the call over to our Chief Financial Officer, Roberto Bell, for a review of our financial results. Thank you, Steve, and good morning, everyone.