NewJersey Resources Corporation

Good morning ladies and gentlemen. Welcome to the New Jersey Resources fiscal 2023 second quarter conference call and webcast. At this time all participants are in a listen-only mode and please be advised that this call is being recorded. After the speaker's prepared remarks there will be a question and answer session. If you would like to ask a question during this time simply press star 1 on your telephone keypad and if you would like to withdraw your question you can press star 1 again. And now at this time, I would like to turn things over to Mr. Adam Pryor, Director of Investor Relations. Mr. Pryor, please go ahead, sir. Thank you. Welcome to New Jersey Resources Fiscal 2023 Second Quarter 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 conference 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 10K and 10Q 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, net financial loss, utility gross margin, 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 seven of our 10-K. The slides accompanying today's presentation are available on our website and were furnished on our form 8-K filed this morning. Our agenda for today is found on slide three. Steve will begin with this quarter's highlight, followed by Roberta, who will review our financial results. Then, we will open it up for your questions. With that said, I will turn the call over to our President and CEO, Steve Westhoven. Please go ahead, Steve.

Thanks, Adam, and good morning, everyone. We have another solid quarter executing our strategy and delivering results in line with our expectations. In addition, we are reiterating our fiscal 2023 NFVPS guidance range of 262 to 272 per share. Overall, we reported net financial earnings of $1.16 per share in the second quarter of this year. During the first calendar quarter, much of the eastern half of the country experienced the warmest weather in recorded history. But remember, our utility, New Jersey Natural Gas, is decoupled, meaning the utility gross margin is insulated from changes due to weather and customer usage. We continue to see a trend in strong customer growth at New Jersey Natural Gas and achieved higher utility gross margin for the period. In addition, we were able to provide cost savings to our customers by issuing a bill credit and lowering rates following the recent decrease in natural gas prices. We will continue to monitor market conditions and use our expertise to manage costs and provide savings to our customers whenever possible. At C&V, we placed an additional six commercial solar projects into service, growing our installed capacity by over 13% since the end of our fiscal year. This increases our total solar in-service to 440 megawatts. In our storage and transportation business, we benefited from solid operating performance from the Delphia Gateway and Leap River and continue to explore potential organic growth opportunities to maximize those assets. And finally, although the winter was unusually warm, which resulted in lower energy usage, energy services generated another profitable quarter. Starting to slide 5, as I noted earlier, we are reiterating our fiscal 2023 NFVPS guidance range of $2.62 to $2.72 per share. We initially raised this guidance by 20 cents following our first quarter results due to higher contribution from New Jersey natural gas and outperformance at energy services during the winter storm Elliott in December of last year. Our expected long-term anti-DPS growth range remains at 79% from our original 2022 guidance, and we expect to be at the higher end of that range for fiscal 24. New Jersey Natural Gas had a strong quarter, as highlighted on slide 6. We invested $195 million in New Jersey Natural Gas during the first six months of fiscal 2023, with over 37% of that capex providing near real-time returns. We reported strong customer growth, adding over 4,000 new customers in the first six months of the year, compared to approximately 3,600 customers during the same period last year. As indicated on prior calls, we expect to file our next rate case in fiscal 2024 consistent with the timeline of our major technology investments. Moving to slide seven, we continue to see positive momentum at Clean Energy Ventures. Since the end of fiscal 2022, we have placed 53 megawatts of new solar projects into service. We continue to maintain a robust and diverse pipeline of solar investments in various stages of development, including greenfield and late stage projects, both within and outside of New Jersey. And we continue to innovate, producing clean, renewable energy through the repurposing of landfills and deployment of milestone floating solar arrays. Over the past few months, we have seen progress in New Jersey's solar policy. In December, New Jersey Board of Public Utilities approved the state's competitive solar incentive, CSI program, for projects over five megawatts. Through this program, New Jersey seeks to award 300 megawatts of solar projects per year. Although specific timing and results are still to be determined, we see that the CSI program is another sign of New Jersey's continued commitment to its renewable energy targets. With that, I will turn the call to Roberto for review of the financial results. Roberto? Thank you, Steve, and good morning, everyone.

Slide 9 shows the main drivers of our NFE for the second quarter and first half of fiscal 2023. For the first half of fiscal 2023, we reported strong year-over-year improvement in our consolidated results. Year-to-date, NFE was $222.6 million or $2.30 per share, compared with $196 million, or $2.04 per share last year. This represents a 13% improvement in our net financial earnings per share for the period. For the second quarter of fiscal 2023, we reported a benefit of $112.3 million, or $1.16 per share, compared with $130.2 million, or $1.36 per share last year. Through the quarter, higher utility gross margin at New Jersey National Gas and higher revenues at our S&P and CEV businesses were more than offset by higher depreciation and interest expenses, which now include the impact of the LCA Gateway being fully placed into service, lower financial margin at energy services, higher expenses related to variety investments, and a $5 million difference in the timing of incentive compensation accruals related to our NAPL performance earlier this year. Turning to our capital plan on slide 10, as we have said before, for fiscal year 2023 and 2024, we expect to invest between $1.1 and $1.4 billion across the company. And our capital plan remains on track to achieve these investment levels. We expect to tighten our CAPEX ranges in future quarters, specifically at CV, as PJMs, interconnection timelines, and regulatory outcomes on certain New Jersey projects become more clear. We're comfortable with the lower end of our CV CAPEX range for fiscal 2023, and have a number of opportunities that could move us toward a higher end. Our capital projections for fiscal 2023 and 2024 are anchored by strong cash flow from operations and consistent with our long-term NDCPS growth target of 79%. And while we have no plans to issue block equity, our existing dividend reinvestment program includes a waiver discount feature that allows us to raise equity on an opportunistic basis. With that, I will turn the call back to Steve.