Good day and welcome to the New Jersey Resources Corporation Second Quarter Fiscal 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Dennis Puma, Investor Relations. Please go ahead.

Thank you, Watson. Good morning, everyone. And welcome to this quarter's conference call and webcast. I'm joined here today by Larry Downes, our Chairman 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, which could cause results to materially differ from our expectations. A list of these items can be found, but is not limited to items in the forward-looking statements section of today's news release first on Form 8-K and in our most recent 10-K filed with the SEC. Both of these items can be found at sec.gov. We do not, by including the statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events. I would also like to point out that there are slides accompanying today's discussion, which are available on our Web site and were furnished on our Form 8-K filed this morning. With that said, I would like to turn the call over to our Chairman and CEO, Larry Downes. Larry?

Thanks Dennis. Good morning, everyone and thank you for joining us today. For those of you who have seen this morning's earnings release, you know that we reported solid second quarter earnings that exceeded financial community consensus estimates. Our year-to-date earnings were also strong and we remain on target to achieve our earnings guidance range for fiscal 2016. As I begin this morning, I want to remind everyone that during my presentation, I will be discussing our future, and I will be making forward-looking statements. Our actual results maybe affected by many risk factors including those that are listed on Slide 2. I would also remind you that the complete list is in our 10-K and as always I would encourage you to review them very carefully. Also as noted on Slide 3, I will be referring to certain non-GAAP measures such as net financial earnings or NFE. Now, we believe that NFE provides more complete understanding of our financial performance, however, I want to stress that NFE is not intended to be a substitute for GAAP. Our non-GAAP measures are discussed more fully in item 7 of our 10-K and I would ask you to please review that disclosure as well. Moving to Slide 4, I want to review some of our financial highlights from the second quarter. Net financial earnings in the quarter were $0.91 per share compared with a $1.16 in the second quarter of 2015. The difference is primarily due to low results in NJR Energy Services. We did, however, exceed the financial community consensus estimate of $0.89 per share. New Jersey Natural Gas had a solid quarter and its fundamentals remain strong. We added more than 1600 customers during the second fiscal quarter of 2016 and nearly 3700 for the first six months of the…

Thanks Larry. This morning we announced net financial earnings of $77.9 million or $0.91 per share for the second quarter of 2016. That compares with $99.1 million or $1.16 per share last year. We also reaffirmed NFE guidance for fiscal 2016 in the range of $1.55 to $1.65 per share. Moving to Slide 10, NJNG's current operating assets produced net financial earnings of $49 million compared with $48.6 million in the prior quarter. The improved financial performance was driven by an increase in utility gross margin from customer growth, our BGSS incentive programs and SAVEGREEN, our energy efficiency program. Although the quarter was about 12% warmer than normal, our conservation incentive program, which we referred to as CIP mitigated the impact earnings. And as Larry discussed, our future growth at NJNG will be based on continued customer growth, new rates and regulatory program such as our BGSS incentives. The chart on Slide 11 shows the changes in utility gross margin in the past 12 months and as you can see customer growth is the largest contributor to this increase. Other significant contributors were BGSS incentive programs and regulatory initiatives such as SAVEGREEN. Since its inception, the BGSS incentive programs have saved customers approximately $842 million and also provided share owners an average of $0.05 of NFE per share annually. Turning to Slide 12, we added 3655 new customers in the first six months of fiscal 2016. Approximately half of those customers were running from other fuels primarily fuel oil, combined this new and conversion customers are expected to contribute approximately $3 million annually to utility gross margin. Although additions were down for the first half due to timing differences, we're on track for the fiscal year to add 8150 customers to our system in fiscal 2016. This will be about…

Thanks Pat. I want to conclude our call today by summarizing our total return performance, but first I'd like to say that I believe the results we're reporting today show that we are on track with the execution of our strategic plan and have the framework in place to support future growth. So as you can see on Slide 20, we continue to reward our share owners with strong total returns over both the short and long-term and that really reflects the outstanding work over more than 1000 employees because as I've said to you many times and as I comment on every call without their efforts we could have achieved the excellent results that we're reporting this morning. Our employee is the foundation of our company and as always I am very grateful for what they do every single day. So, we thank you for your time today, we thank you for being part of the call and now we would be ready for your questions and comments.

[Operator Instructions] And our first question comes from Mark Levin with BB&T. Please go ahead.

Hey, gentlemen, congratulations on a good quarter. Couple of quick questions particularly around PennEast and then ITC PTC changes on your capital program. Obviously you guys aren't ready to change the capital program yet or your expectations but may be some guidance as to how you're thinking about not necessarily 2016 but 2017, 2018 and beyond from a capital perspective given the ITC PTC change, and then, also the timeline for PennEast?

Okay. Let's start with PennEast. And I'll ask Steve Westhoven to talk about that. Steve?

So, we received our FERC environmental schedule and we're moving forward, it appears that its going to be -- we should receive our final FERC certificate sometime second quarter of 2017 that's going to move us forward into the permitting phase in the State of New Jersey and moving forward through that. So, right now, we're on schedule to meet the 2018 in service state or fiscal 2019 and capital expenses will obviously push forward a little bit because they'll line up with construction as it pushes a little bit further out in the project timeline.

Mark, do you want to follow-up on that before we talk about the ITC and the PTC? That sounds like no.

No, no, no. That's fine. Yes. I'm sorry. Go ahead.

So, just a comment I think its when we talk about the ITC and the PTC, I think its important to really remind everyone that we undertook a strategy going back three or so years ago when we recognized that there was the possibility that there would be a cliff that the ITC was not extended and that led to a really a portfolio diversification strategy, which we successfully have executed that and you hear that this morning when you hear the wind, we now have in our portfolio. Of course, the ITC and the PTC were extended and from our perspective what that has done is to give us additional options in the capital budget because we had again we were prepared to continue to grow that business to grow CEV with more of an emphasis on wind. So what we're doing right now is looking carefully at the potential solar opportunities to balance the portfolio and maybe additional commercial opportunities that we will have. But, certainly on the residential side where we have been very successful working with our partners here in New Jersey there could also be the possibility of increasing that as well. So I think the basic portfolio diversification strategy has worked for us. We will continue to be focused on that. But, we now have another option to consider. And as I said and Mark as you pointed out, there is no plan right now to change the fiscal 2016 capital budget. But, as we move forward with our internal process that will culminate with presentation of the capital budget from fiscal 2017 to our Board, we would certainly reflect any changes and let everyone know that. So I don't know Pat, if you want to add anything to that.

No. The only thing I will add Mark, of course, is that the plan, the capital expenditures that we had already communicated for residential $40 million in fiscal year 2017 and also 2018. Of course with that much more profitable and a 30% ITC environment than in the 10% ITC environment.

Fair enough. And then, just more near-term when you think about the fiscal 2016 guidance $1.55 to $1.65 as you kind of sit here through the first six months of the year. Do you feel maybe more comfortable toward the lower end of the range, the higher end of the range or kind of in the middle, how was the year progressing? And then, maybe thoughts about what would leave you closer to the lower or the higher end of the range?

Nobody is volunteering for that. Mark, I will just say we are comfortable with that -- comfortable with that range. I think it would be early to pinpoint higher or lower obviously, we have six months left to go in the utility as well as NJRES. But, for the moment I would prefer to stay just with the guidance range of $1.55 to $1.65.

Great. Thanks guys. I appreciate now.

Somehow I suspect that will be your first question on the third quarter call.

Absolutely 100% guaranteed. Thanks guys

Thank you.

Our next question comes from Michael Gaugler with Janney Montgomery Scott. Please go ahead.

Good morning, everyone.

Hey, Mike.

Good morning, Mike.

One of my question was already answered and that was on PennEast, but just as an inside here on the -- in the energy services business as we certainly had some interruptions in the gas flows into the northeast with the Texas Eastern incident about a week or so ago. I was wondering if that created any opportunities for the energy services business.

Mike, I'm going to ask Steve Westhoven to comment on that. I just wanted to make a comment that our team at New Jersey Natural Gas did a great job responding to that incident and making sure that our supplied picture was not affected because I think that might be on people's minds. But, as far as the impact itself I will ask Steve to comment on that.

Hey, Mike. It certainly impacted gas flows to the northeast and we've got quite a bit of capacity on Texas Eastern pipeline. So it impacted our deliveries and certainly the business that we have. As far as commenting on how it's impacting our businesses; our business certainly there was some lost revenue and some of the capacity not being able to flow. But, we did have some offsets from storage and some other things. So, all in all, I think it's relatively neutral and certainly not going to change any of our forward guidance numbers from this incident.

Okay. That's exactly what I was fishing for. So thanks.

Thanks Mike.

[Operator Instructions] At this time, I'm showing no further questions. So I would like to turn the conference back over to Dennis Puma for any closing remarks.

All right. Thanks Austin. Thanks everyone for joining us this morning. As a reminder, a recording of the call is available for replay on our Web site. Again, we appreciate your interest and investment in New Jersey Resources. Have a great day. Thanks. Bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.