New Jersey Resources(NJR) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the second quarter of fiscal 2025, the company reported an NFEPS of $1.78 per share, an increase from $1.41 per share in the previous year, reflecting improved performance across various segments [22][10][12] - The fiscal 2025 NFEPS guidance has been raised by $0.10 to a revised range of $3.15 to $3.30 per share, exceeding the long-term growth target of 7% to 9% [10][12][30] Business Line Data and Key Metrics Changes - New Jersey Natural Gas showed higher utility gross margin due to a recent base rate case settlement, contributing significantly to the overall NFE [22][11] - Clean Energy Ventures reported higher NFE driven by the sale of its residential solar portfolio, which is expected to generate a net benefit of approximately $0.30 per share for fiscal 2025 [22][23] - The storage and transportation segment improved performance, particularly at Leaf River, contributing to higher revenues [22][10] Market Data and Key Metrics Changes - The company continues to see consistent customer growth in New Jersey Natural Gas, driven by new construction and system expansions, with a customer base predominantly residential [14][60] - The company has invested $254 million in New Jersey Natural Gas this year, with 46% of that CapEx providing near real-time returns [16][15] Company Strategy and Development Direction - The company emphasizes disciplined capital deployment, operational excellence, and strategic innovation across all business segments to ensure long-term sustainable growth [9][10] - The Clean Energy Ventures segment is diversifying its project pipeline, with a focus on avoiding overreliance on any single market or policy regime [19][20] - The company is proactive in managing energy affordability through various programs, including BGSS incentive programs, which have saved customers nearly $800 million over the last ten years [15][16] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the current macroeconomic environment, particularly regarding tariffs, is being monitored closely, with minimal expected impact on operations due to domestic sourcing of materials [26][27][29] - The company remains well-positioned for sustained long-term growth, supported by a strong balance sheet and liquidity [29][30] Other Important Information - The company plans capital expenditures ranging from $1.3 billion to $1.6 billion for fiscal 2025 and 2026, aligning with its long-term growth targets [23][24] - The adjusted funds from operations to adjusted debt ratio is projected to range between 19% to 21% for fiscal 2025, maintaining financial flexibility [24] Q&A Session Summary Question: Timing and capital requirements for Leaf River expansion - Management indicated that the total capital costs for the Leaf River expansion are estimated between $175 million to $200 million, with no finite timeline set for advancing the project [34] Question: Cost exposure to tariffs for Clean Energy Ventures - Management acknowledged the fluid situation regarding tariffs but emphasized that existing contractual protections should mitigate potential impacts on project costs [37][38] Question: Expected economics of Leaf River compared to existing caverns - Management stated that the decision to build will depend on securing appropriate returns and contracts, with a focus on ensuring a clear understanding of construction costs [47] Question: Regulatory environment and affordability initiatives - Management expressed confidence in the regulatory environment following the completion of recent rate cases and highlighted ongoing efforts to maintain affordability for customers [50][52] Question: Customer growth fundamentals - Management noted that customer growth is driven by a strong service territory with high per capita income and ongoing energy efficiency programs [60][61] Question: Focus on the Energy Master Plan - Management mentioned that comments have been submitted regarding the Energy Master Plan, with expectations of a new plan following the gubernatorial election [66]