Thank you for standing by. My name is Jessica, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Jersey Resources, Fiscal 2024 First Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I would now like to turn the call over to Adam Prior, Director of Investor Relations. Please go ahead.

Thank you. Welcome to New Jersey Resources Fiscal 2024 First Quarter Conference Call and Webcast. I am joined here today by Stephen Westhoven, our President and CEO; Roberto Bel, 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 of 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 on slide one. These items can also be found in the forward-looking statement section of today's earnings release, furnished on Form 8-K, and in our most recent forms 10-K and 10-Q 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 will 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, financial margin, adjusted funds from operations, and adjusted debt 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 Form 8-K filed this morning. Our agenda for today is found on slide four. Steve will begin with this quarter's highlights, followed by Roberta, who will review our financial results. Then we will open the call for your questions. With that, I will turn the call over to our President and CEO, Steve Westhoven. Please go ahead, Steve.

Thanks, Adam. Good morning, everyone. Fiscal 2024 is off to a good start, and we delivered strong performance in the first quarter. Positive momentum continued in the start of the second quarter as energy services outperformed in January, capitalizing on weather volatility. As a result, we are announcing a $0.15 increase in our NFEPS guidance to $2.85 to $3.00 per share. Before we discuss our quarterly results and forecast more fully, I’ll begin with an update on our sustainability and decarburization efforts on slide five. Last month, we issued NJR's fiscal 2023 Corporate Sustainability Report, our 15th consecutive report dating back to 2008. This report is an important part of our commitment to transparency with all of our stakeholders in the evolving energy landscape. It details our leadership and accomplishments in emissions reduction and renewable energy, as well as our long-term vision for the role of existing pipeline infrastructure in a lower carbon future. Just as important, this year's report also shows how the strong culture of innovation in our organization is having a positive impact on how we execute strategies, engage in dynamic partnerships, and deploy cutting-edge technology in new ways. I'd like to cover just a few of the report's highlights. Last year, we invested approximately $60 million in SAVEGREEN, New Jersey Natural Gas energy efficiency program. Clean energy ventures continue to innovate, commissioning the largest cap landfill and floating solar arrays in North America. We advanced cutting-edge, lower carbon energy solutions, including the installation of localized carbon capture technology at our Wall, New Jersey headquarters, and high-efficiency gas heat pumps at other facilities in the state. And as I mentioned, we engaged in new partnerships with a number of well-known academic and research entities to support our innovation efforts. Finally, NJR was recognized by Newsweek as one…

Thank you, Steve, and good morning everyone. Slide 13 shows the main drivers of our NFE for the first quarter of fiscal 2024. We reported an NFE of $72.4 million or $0.74 per share, compared with an NFE of $110.3 million or $1.14 per share last year. New Jersey Natural Gas reported NFE in line with expectations, as higher utility growth margin was offset by higher depreciation and operating expenses. Clean Energy Ventures increased NFE by approximately $14.1 million, largely due to the timing of SREC revenues for the period. Storage and transportation NFE declined versus Q1 of last year as a result of higher operating revenues related to Winter Storm Elliot in the first quarter of fiscal 2023. Finally, Energy Services reported NFE of $7.8 million compared to $52.5 million in Q1 of the prior year. As a reminder, the first quarter of last year benefited from increased natural gas price volatility related to winter storm Elliot during December of 2022. In addition, AMA revenue recognized in the first quarter of fiscal 2024 was less than that recognized in Q1 of last year. As Steve mentioned earlier, our guidance raise for fiscal 2024 is due to Energy Services self-performance in January 2024, which is our current fiscal second quarter. As we look to the remainder of fiscal 2024, it's important to note that we expect to recognize a significant portion of AMA's total revenues later in the year, with the majority being recorded during our fiscal fourth quarter. Turning to our capital plan in slide 14, over the next two years, we expect to invest between $1.2 billion and $1.5 billion across the company. We did not make any changes to our capital plan compared to our prior goal. Our capital projections are anchored by strong cash flow from operations. On slide 15, you can see that we expect cash flow from operations to range between $450 million and $490 million in both fiscal 2024 and fiscal 2025. Slide 16 shows our credit metrics. We continue to project 10 years adjusted FFO to adjusted debt to be between 17% and 18% for the year. And while we have no plans to issue block equity, our existing AMA reinvestment program includes a waiver discount feature that allows us to raise equity on an opportunistic basis. Finally, on slide 17, we provide a breakout of our long-term debt. As you can see, most of our debt is fixed rate in nature, and we do not have significant maturities in any particular year. Our NFEPF guidance for fiscal 2024 and our long-term NFEPF growth guidance assume high interest rates for the foreseeable future. We have substantial liquidity at both NJR and NJNG. Overall, we are in an outstanding position to fund our growth objectives. With that, I will turn the call back to Steve.

Thanks, Roberto. In conclusion, NJR is off to a good start, and we expect fiscal 2024 to be a strong year due to higher NFE contributions from energy services and steady performance from our core businesses. In addition, we have been able to take advantage of the opportunities in energy markets that have resulted in considerable upside to our growth targets in recent years. And as always, I want to thank all of our employees for their hard work. And with that, I will now open the call for your questions.

[Operator Instructions]. Our first question comes from the line of Richard Sunderland with J.P. Morgan. Please go ahead.

Hi. Good morning. Can you hear me?

We can hear you. Good morning, Rich.

Great. Thank you. The $0.15 guidance range -- sorry, guidance raise, does that fully reflect the January weather benefit, and not just at energy services, but anything at S&T or even on the BGSS incentive side to the extent realized?

Yeah. The financial team did a nice job of really going through everything in our budgets and impacts from the weather and tried to put that all into our numbers going forward. So we believe it does fully reflect the January weather event across all the businesses.

Understood. That's helpful color, thanks. The big SREC sale number at CEV, I guess largely a timing factor. Could you unpack that a little bit more? I was surprised to see that.

Yeah. You know what? As it goes, those SRECs are commodities. It depends when the sales take place, and we recognize that revenue impact at the time of the sale. So it's really just dependent on when those transactions really occur. So don't read anything into it. It's just our normal business.

Understood. And then I know you put a spotlight on the AMA benefits this year, now the weather benefits from January versus that long-term growth rate. I guess turning to the base growth though in ‘25, could you provide any color around the shape to that, meaning, do you expect it on a base business basis to be linear or should there be a bigger step up in ‘25 given the rate case will be coming in that year?

I mean, this is really the power of the portfolio of companies. We're going through a rate case cycle now that should be settled by the time we get to ’25, and you've got the slight changes in percentage contribution. We've given – we've shared with the financial community our growth rate in the company over the period as well as our segment contributions and we expect those to be intact. And as we said before, we expect them to normalize as we go into the future. So I hope that answers your question.

So very helpful color as always, and thank you for the time today.

Alright. Thanks Rich.

Your next question comes from the line of Shahriar Pourreza with Guggenheim Partners. Please go ahead.

Hey, guys. Good morning.

Hey Shah.

Good morning.

Morning, morning. So just real quick on the ‘24 financing plans. Obviously you guys now expect to issue slightly less debt, but then also raised your equity issuance guidance despite sort of that unexpected inflow from energy services. I guess just run us, what's driving the higher equity in plan.

Hey, Shah. This is Roberto. The increase in, and it's a very small increase in equity by the way. It's related to our DRIFT program. As you know, as part of our equity buyback program – I'm sorry, as part of our DRIFT program, we have the option to issue a little bit of equity and from time-to-time we exercise that option. So that's really what you're seeing there.

Okay. Okay, got it. And then just, I know obviously highlighted a little bit peak earnings from the Asset Management Agreement you struck in 2020. Just I guess, remind us what the remaining years kind of look like in terms of earnings and cash contribution and sort of the cadence, especially as we're thinking about ‘25 and beyond. Just maybe just elaborate a little bit on that prepared remarks. Thanks.

Yeah. This is Roberto again, Shah. So as you know, this is going to be the peak year for AMA in terms of our revenue contributions. From here on, between ‘25 and ‘31, we have a little bit of a step down in terms of the earnings per year. And every year they become, in terms of revenues, around $15 million to $20 million.

Okay, got it. And let me just, I know this was asked in the prior question, but I just want to maybe hit it a little bit more accurately. Are you – with sort of the step downs that you're seeing with AMA and maybe the energy services business going to a little bit more of a recurring figure versus what you're seeing now, are you just confident that you can hit sort of the midpoint of that guidance range at least to show linear or should we just assume some gyrations? I know that was sort of the impetus of the prior question, but I didn't get a sense on whether you still assume there's going to be linearity that spikes some of the step down in earnings we should be expecting in the near term.

Yeah, we'll confirm our long-term growth range. It's kind of the best I can do. We'll normalize it to history. You do have a spike and we expect some other business units to contribute more going forward as you'd expect. That is the percentage that's normalized. But yeah, we're confirming our long-term growth rate.

Just to clarify Shah, as we were saying in our earnings presentation, you should take our initial 2022 guidance and then basically grow that between 7% and 9% every year to find what our normalized expected earnings are going to be every year.

All right. Let me take the rest off one. I appreciate it, guys. Thank you.

Alright. Thanks Shah.

Your next question comes from the line of Chris Ellinghaus with Seibert Williams Shank. Please go ahead.

Hey, good morning everybody. Have you guys got any color at this point in terms of the solar CapEx range where you think you might be landing this year?

Yes. It is what we're showing in the presentation, so we're not deviating from that. So for this year, what we expect for solar is to be between $140 million and $200 million roughly.

Have you got a number or some thoughts on what you're seeing for solar costs, all in per watt at this point?

Chris, nothing that deviates significantly than what we've had historically. I know there's been some inflationary pressures. We've had some hedging in some of our solar panels as well. But we're continuing to install solar that's probably around that $2 a watt type range, give or take a few pennies. So hopefully that helps.

Yeah, that helps. Through the CSI process this year, have you guys gleaned anything that's valuable?

I don't think the CSI process has been that robust. There's been some changes to BPU and things like that. So a number of these initiatives have been drawn out a little bit. They're still working through it. I believe that the bids are all due in February, and then there's going to be some time to analyze those. So continuing to move along, but really nothing to share as far as kind of a milestone event or some sort of a change or insight into what's happening next.

Okay. One last thing. As far as the rate case goes, is there anything that you are aware of sort of in the BPU environment ecosystem that would suggest sort of a traditional settlement is unlikely?

Hey Chris, this is Patrick Migliaccio. As we've talked really for quite some time now, this is a vanilla rate case. We're seeking recovery of investments in safety and reliability. So think pre-'70s pipe and other, as well as some minor recovery for our IT investments. I think if you look across the outcomes that have occurred in a variety of the rate cases, they've been constructive. Our historical rate case has been constructive. So I would not expect any deviation from that.

Okay, great. That's helpful. Alright, thanks a lot. I appreciate it.

[Operator Instructions] And our next question comes from the line of Roger Liddell with Clear Harbor Asset Management. Roger, go ahead.

Thank you. Good morning.

Hey, Roger.

Hi, Roger.

I wanted to get some texture on the energy efficiency program. To me, it's asymmetrically important, because it illustrates how far this company has gone beyond the industry standard mindset of, in the old days, the customer was the meter. And you guys have just transformed that kind of old model and the seriousness, the gravamen of the efficiency offerings to me illustrates that point, so it matters. I'm looking at the, call it disconnect between the $60 million of energy efficiency investments and the $482 million, which I believe you said is a three-year program. So how do we get from the $60 million kinds of levels to the aggregate $482 million? And how are you measuring the outcomes of those programs? Is it simply on the investment being made or are there some measurable that you can take back and use for fine tuning the program?

Hey. Good morning, Roger. It's Pat Migliaccio. Thank you for your question and thank you for your long ownership in NJR. Good to hear from you. So I appreciate you acknowledging the role that energy efficiency plays in greenhouse gas emissions. We believe it's one of the most important things we can do to help drive a reduction in GHG over time. And because we are decoupled, we are able to offer those energy efficiency programs. So that $60 million that you referred to is a significant number, because it's our largest ever investment in energy efficiency. But that was under the old, same old, Trinium 1 [ph] or Q1 as we refer to it. And so that was a three-year, roughly $39 million program that that spending is being recovered and invested under. The upcoming Trinium 2, which is the $482 million that you referred to, that includes an increase in the size of certain programs that we normally offer. What we refer to as customized energy programs for small and large commercial customers, but also new elements that are related to building decarburization. And to your point, while we do measure the investment, certainly saving it for our investors, they are also measurable goals related to energy savings that we have to hit as well as part of that approval of that program. I hope that answers your question, Roger.

Yes, it does. Thank you. A related question is a year or so ago, the context is hydrogen. Your estimate back then at least was in the range of $8 in MCF equivalent and the contrast with the federal objective of around $2. Is there any progress to speak of? Has that number drifted the right direction?

The program is still being put together now and some of the rules associated with the taxes and how they are going to apply are coming through. But I think generally speaking, the amount of dollars going towards hydrogen is going to drive down that price of hydrogen with their target price being around $1 a kilogram, which equates to about $8 in MMBTU natural gas. It almost brings it in parity. So we expect it to go in that direction, but those programs are moving forward as we speak and we'll see in time where it finally ends up.

Last question. You mentioned gas-fired heat pumps and maybe its better handled offline, but is it useful for the call. I wasn't really aware that there was a critical mass of technology in the gas-fired heat pump area. Could that be a meaningful opportunity?

Roger, this is Patrick Migliaccio again. Yes. So gas heat pumps have been available at the commercial level for some time. There are a number of vendors and manufacturers that have, I'll call them early stage, but commercially available residential gas heat pumps. Some are being used in the European market, not broadly here yet in North America. But those heat pumps get an equivalent efficiency of north of 130%, and so they represent an improvement over a high efficiency natural gas or furnace today. And so we do think that moving into the future, that represents an opportunity for us to continue to drive efficiency gains in natural gas heating appliances.

Great. And thank you, and thank you all for the execution that you deliver again and again.

Thanks Roger. Thanks for the questions.

[Operator Instructions]. And our next question comes from the line of Gabe Moreen with Mizuho. Gabe, please go ahead.

Thank you. Good morning, everyone. Just had a question on the CEV backlog additions. It seems like you had success in adding to the backlog, and it skewed heavily towards out of New Jersey. I'm just wondering if anything happened in changing in the competitive landscape to make that happen this past quarter. And also just longer term, how you envision, I guess, the breakup between New Jersey and non-New Jersey projects kind of shaking down, if there's an ideal target that you're targeting?

So, we've talked for a long time, Gabe, about diversifying outside the state of New Jersey and heading towards jurisdictions that we believe have a similar risk profile. And what you see in that number is essentially just executing that plan. So, do we have a target on a percentage split? No, I don't think so. At this point, it's really where's the jurisdiction that's friendly towards solar, and where can we make the investments, and where does it fit best or the deals that we're able to put together? But we're happy to see that number growing, that project pipeline, and our available investments in that space continue and increase and support our continued investment in solar going forward.

Thanks, Steve. And I think I ask it maybe every quarter, but any update on a potential Leaf River expansion? I'm also just curious with more winter weather under your belt in Adelphia, how that asset's been performing and whether there's any room to squeeze more capacity out?

So, I'll take the first one. So, we're continuing to look at Leaf River and like I keep saying, we're working on transactions. We don't have anything to update at this point in time, but certainly the market is supportive. And, Leaf River's – Adelphia Gateway is doing well. I know throughput year-on-year is up by a significant percentage, and we're continuing to watch that asset and see where we can pursue organic growth opportunities just like we are across the whole company.

Okay. Thanks, Steve.

Alright. Thanks Gabe.

Thank you. That concludes our Q&A session for today. And with that, I will pass it back over to Adam for some closing remarks.

Thanks, Jessica. Thanks everyone for joining us this morning. As a reminder, a recording of this call is available for replay on our website. And as always, we appreciate your interest and investment in NJR. Thanks everyone. Have a good morning.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.