Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- New Jersey Resources Corp (NJR, Financial) remains on track to achieve its fiscal 2024 NFEPS guidance of $2.85 to $3 per share.
- Clean Energy Ventures reported solid year-over-year revenue growth and continues to expand its project pipeline.
- The SAVEGREEN program reached a milestone, serving its 100,000th customer since inception in 2009, significantly reducing energy bills and carbon emissions.
- Energy Services outperformed expectations, leading to an increase in NFEPS guidance by $0.15 per share.
- NJR expects a significant year-over-year increase in NFE for the upcoming fourth quarter due to substantial revenue recognition from asset management agreements.
Negative Points
- NJR reported a net financial loss of $8.9 million for the fiscal 2024 third quarter, compared to a net financial earnings of $9.7 million in the same period last year.
- Clean Energy Ventures reported a net financial loss of $6.7 million for the period due to the resolution of an income tax valuation allowance last year that did not reoccur.
- Increased depreciation and interest expenses offset higher revenues at Clean Energy Ventures and S&T.
- The rate case resolution is still pending, with an expected resolution by the end of 2024.
- NJR's adjusted FFO to adjusted debt ratio is projected to be between 17% and 18%, indicating a need for careful financial management.
Q & A Highlights
Q: Starting with the rate case, is everything still progressing as expected towards the settlement? Should we expect an announcement this month or next?
A: (Patrick Migliaccio, COO) The rate case is progressing as expected. We anticipate finalizing the rate case with rates effective sometime in our first fiscal quarter of '25.
Q: Can you quantify your open megawatts and if power prices could be a tailwind to 4Q or even put 2025 earnings above the 7% to 9% outlook range?
A: (Stephen Westhoven, CEO) The impact of power prices on earnings should be relatively minor for this year. The pricing has been remarkable this summer, but there's not much of the fiscal year left to see a significant change in earnings.
Q: What are you seeing in terms of solar pricing and costs for new projects?
A: (Stephen Westhoven, CEO) Solar pricing has been steady, and the cost of development and construction has not seen significant changes. The states continue to support renewable portfolio standards, allowing us to grow our solar portfolio.
Q: Are you seeing demand from data centers for either primary or backup gas generation in your service territory?
A: (Stephen Westhoven, CEO) We currently do not have data centers in our service territory. However, the increased demand for reliability and electricity supports our infrastructure investments across all business units.
Q: Does the current power price environment make you want to invest more in the sector?
A: (Stephen Westhoven, CEO) Yes, the high power prices support our strategy of growing infrastructure investments. The recent PJM capacity auction results are a strong market signal that supports our business strategy.
Q: Are you considering acquiring already operating projects?
A: (Stephen Westhoven, CEO) Yes, we have considered acquiring operating assets in the past and will continue to do so if it aligns with our business strategy.
Q: What areas are you focused on for future expansion in the S&T segment?
A: (Stephen Westhoven, CEO) We are focused on areas where we can secure long-term contracts to support expansion, such as Adelphia Gateway and Leaf River. We are pursuing organic growth opportunities.
Q: Can you discuss the business opportunities referenced in your customer growth commentary?
A: (Patrick Migliaccio, COO) Customer growth is driven by new construction and conversions in our service territory. This growth supports the utility's overall growth rate.
Q: What is the latest on the request for authorization to use Leaf River facilities for hydrogen storage?
A: (Stephen Westhoven, CEO) We are exploring all options for Leaf River, including hydrogen storage. We are preserving our position to expand in that fashion but have no specific announcements at this time.
Q: Does electricity sales become more of a factor in deciding where to locate solar projects?
A: (Stephen Westhoven, CEO) Power prices are a factor, but other considerations like land availability, interconnectability, and developer transactions take precedence. Rising power prices generally support all our solar projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
