Good morning everyone and welcome to the New Jersey Resources' First Quarter Fiscal 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Dennis Puma, Director of Investor Relations. Please go ahead.

Thank you, Stephen, and good morning, everybody. Welcome to New Jersey Resources' first quarter fiscal 2018 conference call and web cast. I am joined here today by Larry Downes, our Chairman and CEO; Steve Westhoven, our Chief Operating Officer; and 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 the 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 as found on slide 1. These items can also be found in the forward-looking statements section of today news release furnished on Form 8-K and in our most recent Forms 10-K and Qs 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. Turning to slide 2, we will be referring to certain non-GAAP measures such as NFE or net financial earnings. We believe that NFE provides a more complete understanding of our financial performance. However, it is not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in the Item 7 of our 10-K. We'd also like to point out that there are slides accompanying today's discussion, which are available on our web site and were also furnished on our 8-K filed this morning. With that said, I'd like to turn the call over to Larry Downes, our Chairman and CEO. Larry?

Thanks Dennis and good morning everyone. I think as you know from our news release, we have good news to share with you this morning. So I will start with slide 3, we reported net financial earnings or NFE for the quarter of $1.56 per share, and that compared with $0.47 per share during the first quarter last year. As you can also see, tax reform is very positive for both our business and for our customers. Energy Services is having an excellent year and made a significant NFE contribution this quarter of $20.3 million. Our team at NJRES worked very hard with customers day and night, to meet the increased demand for natural gas, that was caused by extremely cold weather. As you know, we have a diverse portfolio of assets, and many of the states where energy services operates recorded the lowest temperatures that they have seen in the past two decades. I want to turn to tax reform, which as you saw from the release, has produced a meaningful incremental boost to NFE in the first quarter. We also expect that it will positively impact our results throughout fiscal 2018 and beyond. Our plan is to reinvest those earnings in our business to reduce our external equity needs, as we advance our infrastructure growth strategy. Tax reform will also help New Jersey Natural Gas customers, who will benefit from lower energy bills. Our regulatory team will be working through that process with the New Jersey Board of Public Utilities. As a result of all this activity, we have raised our fiscal 2018 earnings guidance to a range of $2.55 per share to $2.65 per share, and that compared with our previously announced range of $1.75 per share to $1.85 per share. We also adjusted our annual growth…

Thanks Larry. Good morning everyone. During the quarter, New Jersey Natural Gas continued to experience excellent customer growth, and we have made progress on our infrastructure programs. The big story was the extreme cold weather, which led to some of the highest throughput days in New Jersey Natural Gas' history. In fact, four of the 10 highest throughput days over the past 11 years were in fiscal 2018. Our system met the challenge, and these extreme weather events further emphasize the need for infrastructure investments, as we continue to strengthen and maintain our natural gas delivery system. We will invest approximately $300 million over the next few years accomplish this task. These projects include the Southern Reliability Link, SAFE II, and NJ RISE. Our Energy Service business is a provider of physical natural gas assets to produce various [ph] utilities, power generators, and industrial customers across North America. Energy Services portfolio today, includes nearly 50 BCF of storage capacity and 1.5 BCF of daily pipeline capacity. These assets are strategically located throughout the United States and Canada. Slide 8 illustrates the temperature departure from normal, during the Arctic Blast that began in December. It also shows the areas throughout the country, where energy services has contracts for storage and pipeline capacity. It is in these areas, where we saw strong price volatility during the Arctic Blast. Our portfolio has effectively supported our performance, and we expect nearly double plant results from Energy Services for this fiscal year. This equates to an expected $0.30 to $0.40 per share contribution in fiscal 2018. Moving to slide 9; the PennEast pipeline project was approved by the Federal Energy Regulatory Commission on January 19. It is now moving to complete land surveys and permit applications. PennEast is estimated to begin operation in 2019. As…

Thanks Steve. I'd like to begin with slide 12 to discuss the effects of tax reform. You have seen this slide in the past, however with the final legislation, we were able to quantify the impacts. The lower corporate tax rate will provide between $0.05 and $0.10 of ongoing NFEPS benefit to our non-regulated businesses, including the BGSS incentives. For New Jersey Natural Gas, a lower corporate tax rate will result in lower bills for our customers. We currently estimate about $228 million to be returned to customers, associated with the revaluation of deferred tax liabilities. In addition, the lower corporate tax rate also results in reduction in customer bills going forward. We are working with the NJBPU to determine the timing and methodology of the decreases in customer bills. The reevaluation of net deferred tax liabilities for our non-regulated subsidiaries, results in a significant benefit that we currently estimate to be between $0.60 and $0.65. As Larry indicated in his opening remarks, we have increased our NFEPS guidance for fiscal 2018. The major components of the increase are the reevaluation of deferred tax liabilities, NJR Energy Services performance, and the impact of a lower corporate tax rate on our fiscal 2018 results. In addition, tax reforms provide us with the opportunity to create additional economic value for New Jersey Resources. We use sale-leaseback financing for all of our planned commercial solar investments, an increase of $52 million of our plan and a reduction of ITCs for fiscal 2018, equating to approximately $0.15 of NFEPS. In fiscal year 2018, our statutory tax rate is 24.5%, a blend of the old and new. Fiscal year 2019 is when we get the full benefit of the lower rate. To the extent we can, we will move SREC sales from fiscal 2018 to…

Thanks Pat. So before we open up the call for questions, I wanted to summarize our outlook for fiscal 2018. So I think you can see clearly, that we are off to an excellent start, and we expect fiscal 2018 to be a strong year and due to tax reform, higher NFE contributions from Energy Services and steady performance from our core businesses. Our regulated business segments, including New Jersey Natural Gas, are expected to contribute to between 40% and 55% in annual NFE. Our long term strategy remains to build a safer, cleaner, and more affordable energy future for our customers, and our infrastructure investment strategy is focused around natural gas, clean energy, and energy efficiency. The fundamentals for New Jersey Natural Gas remains strong; steady customer growth, strong regulatory relationships, and infrastructure investment opportunities will continue to drive consistent NFE growth at New Jersey Natural Gas. We have collaborative regulatory relationships, which help us with not only our regulators, but also public policy leaders that are important, as we work together to support New Jersey's energy goals. We are looking forward to working with Governor Murphy and his administration to advance his energy agenda, while supporting economic development growth activities in New Jersey. In fact, we have invested nearly $600 million in solar, and we currently plan to invest nearly $500 million in solar through 2021. We have also invested more than $150 million in SAVEGREEN, our energy efficiency program, which has generated over $370 million in local economic activity, and through our conserve to preserve program, we have saved our customers almost $380 million since 2006, by helping them reduce their energy usage. Our team works every day to meet the needs of our growing customer base, to improve the environment and to create more affordable clean…

[Operator Instructions]. And our first question comes from Travis Miller with Morningstar. Please go ahead.

Good morning. Thank you.

Good morning Travis. How are you?

Good. I was wondering, you compared the cold weather over the last couple of months to the 2014-2015 period. Obviously a lot of regulatory discussions since then, obviously you guys have made a lot of investments since then. I was wondering if you could characterize the system integrity, for a lack of better term, between then and what you saw this winter, and how those investments and regulatory changes might have impacted that?

Travis, this is Steve Westhoven. Yeah, I mean, certainly the investments that we have made in the utility have strengthened the system. The cold weather that we experienced, end of December, beginning of January, was actually colder than what we experienced in 2014 during the Arctic Blast, and our system performed very well. But you know, it does reinforce that as growing gas needs happen, we continue to need to reinforce the reliability of our systems. So everything performed well, and everything worked well, through that extreme period.

Travis, Larry. One point that you should be interested in, since 2008, we have invested over $1 billion into our infrastructure. You hear us talk about the accelerated infrastructure plans that we have with -- here in the state, with the Board of Public Utilities. And I think as Steve correctly points out, the performance of the system, clearly has shown the benefits of those programs.

Did you see any part where regulatory changes might improve anything, having gone through these two periods? Was there anything that came out, or -- aside from just more investment and system integrity that regulators could change anything or promote anything during --

No, I think -- this is Larry again. I think our regulators have done an outstanding job, giving us the tools that we need to invest properly. Not only in the capital resources, but the human resources as well. And clearly, the weather that we experienced recently, was testable [ph] of that. But when I used the world collaboration in describing our relationship with the regulators, it is truly that, and the steps that we are able to take and the programs we are able to pursue, put us in the best possible position to be able to serve our customers under most extreme conditions.

Okay, great. And then another completely different topic, the solar business, you have been in it obviously for a long time. What do you think about the tariffs coming into play?

So the tariffs that we are just instituted, which raised the cost of panels. Currently, we don't expect that to have a material impact on our business, and in fact, for the projects that we had scheduled for this year, a lot of those panels have already been purchased. As we moved forward, we expect that those costs will be absorbed by everybody in the value chain, and we should continue to move forward and make those investments.

Travis, this is Pat Migliaccio. The only other thing I would add is that, it doesn't meaningfully impact the project economics, because at least for most of our projects, the panels are the smallest portion. And let's not forget, that we do get 30% of that increasing cost back by virtue of the investment tax credit.

Okay, great. I appreciate the thoughts.

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

Good morning everyone.

Good morning Mike.

Let's start with the Adelphia Gateway; you had mentioned you received interest twice the capacity during open season. So wondering if there are any thoughts on upsizing with more compression, or if their line will be maxed out, when its put in service?

So Mike, this is Steve. At this point, we are going to keep the initial phase at 250,000 dekatherms. We are working through the contracts with those counterparties, and hope to have them contracted relatively soon. And we don't plan on expanding that line beyond its current pipeline that's underground. So we do have a second expansion that we are capable of, but that will happen a year down the road.

Okay. Will that be similar size in just kind of thinking about that or?

No, that would just be compression that we would add.

Okay. And then, Energy Services, great quarter obviously. Wondering if you could kind of highlight the differences between what you saw on the polar vortex in this current cold weather, and how that impacted the segment's performance?

I think the key differences between the polar vortex and what we just experienced, was the polar vortex was much longer in duration. But it didn't have temperatures, which were as extreme. So if you recall back, last time in 2014, I think high prices were around $100, somewhere around there. I think the highest price that we saw during this period was $175 as a high print. So I think it was really characterized as a much shorter duration, but a more extreme duration. So you have your volatility somewhat compressed during that period. But we had the right assets in the right place, and the team performed very well, and we are able to capitalize on some of the volatility in the market.

That's all I had. Thank you.

Thanks Mike.

[Operator Instructions]. And I am showing no further questions at this time. So I'd like to turn the conference back over to Dennis Puma for any closing remarks.

All right Stephen. Thank you all for joining us this morning. As a reminder, a recording of this call is available for replay on our web site. As always, we appreciate your interest and investment in New Jersey Resources. Have a great day. Good bye.

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