New Jersey Resources Corp 2026 Q3 Earnings Call

Welcome to New Jersey Resources Fiscal 2026 third quarter and year-to-date conference call and webcast. I am 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 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 on slide two. These items can also be found in the forward-looking statements section of yesterday'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 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 NFE. We believe that NFE, net financial loss, utility gross margin, financial margin, adjusted EBITDA, 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 as substitute for GAAP. Our non-GAAP financial measures are discussed more fully in item seven of our 10-K. The slides for today's presentation are available on our website and were furnished on our Form 8-K filed yesterday. Steve will start with this quarter's highlights and a business unit overview beginning on slide five. Roberto will then review our financial results. We'll open it up for your questions.

With that said, I'll turn the call over to our President and CEO, Steve Westhoven. Please go ahead, Steve. Thanks, Adam.

NJR delivered a solid performance for this quarter, driven by disciplined execution across our complementary businesses. At New Jersey Natural Gas, we've taken important steps to balance affordability for our customers while continuing to invest in the reliability of our system. We reached a key regulatory milestone at S&T, receiving the FERC certificate for our expansion at Adelphia Gateway ahead of schedule, allowing us to advance the project and support the growth opportunities we see ahead. At NJR Clean Energy Ventures, we continue to add in-service capacity and advance a deep pipeline of investment options while maintaining the flexibility to deploy capital where it generates the best returns. Overall, the consistent execution you're seeing across our businesses supports our outlook for the year and positions us well for continued growth. With that, I'll turn to New Jersey Natural Gas.

As we think about our role as a utility, our objective is to deliver the most affordable energy possible for our customers, while also investing to ensure the continued reliability and resilience of our system. That philosophy is reflected in the filings we submitted to the BPU on June first. Taken together, these filings are designed to provide our customers with meaningful bill relief ahead of this upcoming winter, while also supporting the long-term investments necessary to serve our customers safely and reliably. Importantly, we structured these filings as a cohesive package, combining adjustments to our gas supply, conservation, and energy efficiency programs alongside our base rate case. From an overall bill perspective, the goal is straightforward, providing stability for our customers with bills expected to remain nearly flat once all elements of the filings are implemented. When you step back, this is all about balance.

Delivering affordability today while continuing to make investments required to serve our customers over the long term. From there, I'll turn to Storage and Transportation on the next slide. At S&T, the drivers of the business remain consistent with what we've discussed previously. In the near term, S&T's performance is supported by favorable recontracting, which provides strong visibility into earnings and reinforces the stability of the business. Looking ahead, we expect this uplift to support a doubling of earnings from fiscal 2025 to 2027. At the same time, we are making progress on future growth opportunities at Adelphia Gateway. Our capacity expansion project remains on track. We recently received our FERC certificate, a significant regulatory milestone that supports our expected development timeline.

Overall, this is a business where we see a combination of near-term certainty and long-term growth, supported by both strong market fundamentals and disciplined execution through the investment in organic growth opportunities. With that, I'll turn to NJR Clean Energy Ventures on slide eight. At CEV, we continue to make steady progress with additional capacity being placed into service. At the same time, we're focused on maintaining a portfolio that maximizes the value of our existing interconnections, position us well to help address growing capacity needs. Our project pipeline provides a broad set of investment opportunities with multiple ways to deploy capital, whether through new project development or by enhancing and optimizing existing sites. That flexibility is intentional. It allows us to remain disciplined in how we invest while maintaining the ability to adapt to evolving market conditions, regulatory changes, and opportunities.

Overall, we feel very good about both the progress we've made and the strength of the platform we're continuing to build. I'll turn the call over to Roberto for a financial review and then return for a few closing remarks.

Roberto? Thanks, Steve. Turning to slide 10.

Based on performance for the first nine months, we're tightening our fiscal 2026 NFEPS guidance range to $3.52-$3.62 per share, narrowing the range while increasing the midpoint. This update reflects greater visibility into full year results and the ongoing benefit of our diversified model. With that context, let me walk through the quarter in more detail on slide 11. Fiscal 2026 third quarter consolidated net financial earnings were $11.3 million, or $0.11 per share, an increase over the $6.2 million, or $0.06 per share, reported in the third quarter of fiscal 2025. Results for the quarter reflect improved contributions across several businesses, with higher earnings at Clean Energy Ventures as additional projects have been placed into service, along with continued uplift at Storage and Transportation, driven by favorable recontracting activity.

For the year-to-date period, the higher net loss at CEV simply reflects last year's one-time gain resulting from the sale of our residential solar business. With that, let's turn to our capital plan on the next slide. We deployed approximately $630 million across our businesses year-to-date. New Jersey Natural Gas represented roughly two-thirds of total capital spend, with increased investment focused on core infrastructure, particularly in safety and reliability as we continue to support system resiliency and customer growth. For fiscal 2026, we have increased our capital investment expectations to a range of $815 million-$950 million, up from our prior outlook of $775 million-$930 million. This increase is primarily driven by additional investment at the utility, reflecting our focus on safety and reliability initiatives.

At Clean Energy Ventures, we're maintaining our current investment range, reflecting the depth of opportunities in our project pipeline and the flexibility we have in deploying capital. Based on projects already underway, we remain confident in achieving the lower end of that range, with project optionality that could move us toward the top end. We do not have any change to our estimates for fiscal 2027, and we're reaffirming our five-year CapEx outlook of $4.8 billion-$5.2 billion through fiscal 2030. This level of investment supports our 7%-9% long-term NFEPS growth target, while remaining consistent with strong credit metrics. Our capital plan remains highly visible and originates from a diverse set of investment opportunities across our complementary businesses, rather than being dependent on any single project or outcome. We expect to provide further clarity as we roll our outlook forward in November.

Turning to our balance sheet on slide 13. The cash generation prevalent throughout our businesses is a main source of funding for our capital plan. We expect our Adjusted FFO to adjusted debt ratio to exceed 20% in fiscal 2026, reflecting the stability of our earnings and our disciplined approach to capital allocation. From a liquidity standpoint, we have substantial available capacity and maintain a well-laddered debt maturity profile that limits near-term refinancing risk and positions us well across different market environments. Together, these factors reinforce the strength of our financial position and our ability to execute on our long-term plan. Turning to slide 14. We're tightening our fiscal 2026 NFEPS guidance range to $3.52 to $3.62 per share, reflecting improved performance through the year and raising the midpoint of our range. We tightened our expected segment contribution ranges with relatively minor changes compared to our second quarter conference call.