Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- New Jersey Resources Corp reported strong net financial earnings of $1.41 per share for the fiscal 2024 second quarter and reaffirmed its NFEPS guidance range of $2.85 to $3 per share.
- The company demonstrated strong customer growth at New Jersey Natural Gas and achieved higher utility gross margin for the quarter.
- New Jersey Resources Corp remains active at Clean Energy Ventures with approximately 34 megawatts of projects under construction, adding to the 5 megawatts of capacity placed in service this year.
- The company reported solid contributions from Storage & Transportation (S&T) and capitalized on brief periods of pricing volatility in energy services.
- New Jersey Resources Corp is pursuing new innovations in energy efficiency, green fuels, renewables, and other emerging technologies like carbon capture to achieve long-term emissions reduction goals.
Negative Points
- Higher depreciation and operating expenses partially offset the higher utility gross margin at New Jersey Natural Gas.
- The base rate case, requesting an increase of approximately $223 million, is still pending, with new rates expected to be in place for fiscal 2025, indicating a period of uncertainty.
- While the company has a strong project pipeline, the competitive and regulatory environment can impact the pace and profitability of these projects.
- The company's reliance on weather conditions and customer usage can introduce volatility to earnings, despite utility gross margin being decoupled.
- Significant capital investments, projected between $1.2 billion and $1.5 billion in the coming years, pose a risk of increased debt or financial strain if not managed effectively.
Q & A Highlights
Q: Can you elaborate on the capacity recovery project at Leaf River and its potential as a precursor to a larger expansion?
A: Steve Westhoven, President and CEO: We have no announcements regarding a larger expansion at Leaf River. The current work could aid future expansions, focusing on organic growth. The recent open season concluded successfully, and we are optimistic about proceeding with the project based on the contracts and economics involved.
Q: With the new CSI program in New Jersey, how does NJR view its future in deploying more megawatts through this process?
A: Steve Westhoven, President and CEO: We are positive about the CSI program and our participation with one project already. Our project pipeline in CEV is robust at 874 megawatts, providing ample investment opportunities. We aim for high single-digit returns on these projects.
Q: How does NJR perceive the impact of data center demand and state efforts on the CEV outlook, particularly in New Jersey or regionally?
A: Steve Westhoven, President and CEO: The growing energy demand from data centers underscores the need for substantial infrastructure to support various energy-intensive activities. This demand aligns well with our infrastructure assets, presenting positive prospects for our business.
Q: Could you discuss the financial impact and timing of contributions from the incremental capacity at Leaf River?
A: Steve Westhoven, President and CEO: The financial impact and specific timings are pending final contract details. However, the project aligns with our strategy for organic growth and infrastructure utilization, and we are confident about moving forward based on the current project dynamics.
Q: What are NJR's expectations regarding future solar project deployments in New Jersey, considering the recent solicitations?
A: Steve Westhoven, President and CEO: We are encouraged by the progress of the CSI program and our ongoing involvement. Our extensive project pipeline ensures we have sufficient opportunities for investment, maintaining our target for high single-digit returns.
Q: How does NJR plan to address the increasing demand from data centers in terms of energy supply and infrastructure?
A: Steve Westhoven, President and CEO: The rising demand highlights the critical need for robust infrastructure to support energy needs for data centers and other high-demand sectors. Our strategic assets and infrastructure are well-positioned to meet these demands, reinforcing the strength of our business model in the energy sector.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
