New Jersey Resources Fiscal 2026 Third Quarter Conference Call

Call over to Roberto for a financial review and then return for a few closing remarks. Thanks, Steve. Turn to slide 10. Based on performance through the first nine months, we're tightening our fiscal 2026 NFPS guidance range to $3.52 to $3.52 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 dollars or 11 cents per share an increase over the 6.2 million dollars or six cents 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 CEB 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 to $950 million, up from our prior outlook of $775 million to $930 million. This increase is primarily driven by additional investment at a 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 to 5.2 billion dollars through fiscal 2030. This level of investment supports our seven to nine percent long-term NFPS 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 prevalence 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-ladder debt maturity profile that limits near-term refinancing risk and positions as 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. We're tightening our fiscal 2026 NFAPS 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.

As we look ahead, we expect to revisit our segment mix in November as we roll our fiscal 2027 outlook forward and normalize expectations consistent with our approach each year with that i'll turn to steve for concluding remarks on slide 15. thanks roberto overall njr is executing well and remains on track to achieve our long-term growth objectives our outlook remains anchored by our regulated utility with continued capital investment in new jersey natural gas helping to ensure safe and reliable operations while supporting long-term growth at the same time natural gas remains one of the lowest cost ways to heat a home reinforcing its value proposition for customers storage and transportation is well positioned supported by near-term earnings visibility and additional upside as expansion opportunities progress at clean energy ventures our portfolio is scaling as expected driven by a secure development pipeline and disciplined capital deployment. This consistent execution reflects the strength and durability of our business model and gives us confidence in the path ahead. Finally, I want to take a moment to thank our employees across NJR. Over the past year, we've talked a lot about our performance during a demanding winter, speaking to the reliability of our system, and more recently, we were tested again by the extreme heat and severe storms. During these moments, the commitment of our people truly shines such as our home services employees working through extreme heat to ensure customers remain comfortable and safe when we perform through conditions like this it reflects the strength of our infrastructure and the dedication of our people and that's something we're incredibly proud of and thankful for with that let's open up the line for questions we will now begin the question and answer session please limit yourself to one question and one follow-up If you would like to ask a question, please press star 1 to raise your hand.

To withdraw your question, press star 1 again. We ask that you pick up your handset closer to your mouth when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. And an addendum. Please do not feel the need to limit yourself to one question and one follow-up. Ask as many as you'd like. Your first question comes from the line of Eli Josen of J.P. Morgan. Eli, your line is now open. Please go ahead. Hey, good morning. Thanks for the question.

Just wanted to start on the rate case in New Jersey, just thinking about some of the backdrops on affordability and some of the EO1 legislation that we've seen and the report from the BPU. How should we think about that filing in the context of the broader climate, recognizing that you guys have had you know, pretty strong outcomes in the past. And, you know, obviously gas is in a different position than electric, but just curious thoughts there. Thanks.

Hey, Eli, thanks for the question. So, you know, you saw our filing back in June where we, you know, combined our rate case with a number of other filings to, you know, really, you know, protect, you know, costs, you know, for consumers. Obviously that was done, you know, purposely. So, you know, we're well aware of, know the cost issues um so you know you know moving forward uh you know the process to date you know has been you know normal um and you know you're going to see you know as we uh as we move you know through this process um you know hopefully just a you know normal cycle going forward um just one other note to there to add to that you know natural gas cheapest way you know heat your home business so we feel like we're in a good position um and uh yeah we look forward to just working through the process awesome and then you know maybe just thinking about some of the

recent strengths in the context of your guidance um you know obviously you guys are tracking well above you know where we would think um 27 would be um can you just remind us how you think about rebasing and obviously, you know, just in the context of what implied 27 numbers would be and, you know, when you might think about updating that rebasing. Thanks.

Eli, this is Roberto. Thanks for the question. So we're going to provide our guidance in November for the next year, but as we usually do, we base our guidance on the 79 percent from from the starting point, and that's not changing. If you remember, that starting point was $2.73 for 2025. So from there on, you can draw your 79%, and that's kind of what you should expect.

Got it. All right. I'll leave it there. Thanks, guys. Thank you.

Your next question comes from the line of Konstantin Lednev of Wells Fargo. Your line is now open.

Please go ahead. hi good morning team congrats on a solid quarter um maybe just a good morning uh maybe just a quick follow-up on kind of some of the rate case questions any feedback that you have been receiving from kind of the bill mitigation proposals and do you see any structural differences with this cycle versus prior cycles i guess maybe another way to ask is there kind of opportunities to settle similar to prior cases so i mean this hasn't you know been any different than any other you know ray case um just as a little extra color you know this is a normal you know kind of plain vanilla you know ray case um like we've had before so really you know no differences and we've just started to the process so you know not a lot of color but um i guess if anything you know not any differences to point out you know okay and then maybe a small follow-up kind of to the EL1 kind of business, the utility business strategy review, the recommendations obviously kind of came out a couple of months earlier, but do you see kind of any core sticking points, I guess, is there opportunities for more certainty through this process, through anything like a multi-year or formulaic rate-making process? Does that kind of create some considerations for the BPU in the near term?

Yeah, I think that, you know, needs to play out a little bit more. You know, to date, you know, those executive orders have really been focused on electric companies. We have not been, you know, closely involved in it. But, you know, we're certainly watching it, you know, for opportunities, just like you pointed out, that if we can make this a smoother process, you know, for all, you know, we could certainly, you know, look to do so. But right now, you know, kind of be an opportunistic with this process.

Okay, understood. And then maybe a short kind of housekeeping follow-up just on the kind of incremental S&T capacity kind of moving up and even kind of going beyond the 55 BCF. Do you kind of anticipate the same capital intensity kind of going forward through time and maybe any color on kind of the re-contracting, contracting the incremental capacity, any kind of pricing data points that you're seeing?

I mean, there's certainly strong demand, you know, for the services that, you know, our, you know, midstream facilities provide. You know, as far as, you know, moving forward, you know, I'd expect that, you know, expansions, you know, would continue and that capital intensity would continue. So, I think there is, you know, opportunities, you know, we've got the ability to expand, you know, they'll be a gateway, add compression and do other things. You know, None of these are in our capital plan, you know, currently, but, you know, we would expect, you know, to continue in those assets because they are a very valuable market and those services are being sought after. And you can see that reflected, you know, in the recon.

Right. And would that be covered kind of by the roll forward update next quarter or is that there's some more kind of, I guess, contemplation embedded in there?

I mean, you know, when we do, you know, our, you know, next year's early in November and our capital plan, you know, we'll be, you know, you'll see that, you know, and we'll provide for more detail, but I don't really expect it to be.

Excellent. Really appreciate taking the questions. Take care.

Your next question comes from the line of Gabe Maureen with Mizuho. Gabe, your line is now open. Please go ahead. Hey, everyone.

This is Dylan Lipton on for Gabe. Congrats on a good quarter. I want to pivot to a little stuff on CEV here. Now, how do you expect the ongoing debate around capacity markets, resource adequacy, and interconnection reform to impact CEV's project pipeline and long-term returns?

We see opportunity with CEV. We've talked about it before. you know, the ability to use, you know, our existing interconnect and existing infrastructure, you know, to expand and add to the capacity markets, you know, capacities, you know, more valuable. That's what we need to add to the grid in order to lower, you know, prices to consumers. So we're looking at ways to be able to participate in that. And, you know, we've said for a long time, you know, the cheapest way to basically add new capacity to the market is through your existing infrastructure and we have you know considerable existing infrastructure you know not only in new jersey but in the northeast so being able to add to that you know should be you know the next you know best cost to the grid so we're working at ways we're looking at ways to do that um you know this capex you know really isn't in our plan at this point in time it's just you know new solar build and see um and we you know come up with a structure and you guys garnering

you know, a lot more interest given, you know, how much of a topic of debate this has become for CEV?

Yeah, I mean, there's interest, right? There's interest in adding capacity to the market and, you know, the load factor on our interconnects, you know, is not 100%, so there's room to be able to, you know, is this something we can potentially see, you know, on the next quarter call with, you know, the guidance revamp? I mean, it's hard to predict exactly when you're going to break through you know it'd be nice to see the next call but i can't make it you know kind of that prediction no i appreciate the color guys have a you know have a great rest of your day all right thank you there are no further questions at this time i will now turn the call back to adam prior for closing remarks all of you for joining us as always we appreciate your interest and investment in njr and have a good rest of your day this concludes today's call thank you for attending you may now disconnect.