Q3 2024 New Jersey Resources Corp Earnings Call

Ellie: Hello, my name is Ellie and I will be your operator for today. I would like to welcome everyone to New Jersey Resources' fiscal 2024 third quarter conference call.

Unknown Executive: and every one to New Jersey Resources, fiscal 2013 or third quarter conference call. For those of you listening on the live call, all participants will be on listen mode only. After today's participation and presentation, there will be an opportunity to ask for questions. If you'd like to ask a question during that time, please press star 1.

Speaker Change: For those of you listening on the live call, all participants will be on listen mode only. After today's participation and presentation, there will be an opportunity to ask for questions.

Speaker Change: If you'd like to ask a question during that time, please press star 1. Thank you. I'd now like to hand over to Adam Prior, Head of Investor Relations.

Adam Prior: I'd now like to hand over to Adam Prior. Have the best of relations.

Unknown Executive: You may now be there.

Steve Westhoven: Welcome to New Jersey Resources fiscal 2024, third quarter conference call and webcam. I'm 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.

Adam Pryor: Thank you. Welcome to New Jersey Resources fiscal 2024 third quarter conference call and webcast. I'm joined here today by Steve 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.

Unknown Executive: Children's statements in today's call contain estimates and other forward-looking statements with as a meaning of the security laws. We wish to caution listeners of this call of the current expectations or assumptions and beliefs forming the basis of our forward-looking statements, including many factors that are beyond our ability to control or estimate precisely. This could cause results in a terribly different 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.

Speaker Change: Certain statements in today's call contain estimates and other forward-looking statements within the meaning of the securities laws.

Speaker Change: 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 1.

Speaker Change: These items can also be found in the forward-looking statement section of today's earnings release furnished on Form 8K and in our most recent Forms 10-K and 10-Q as filed with the SEC.

Unknown Executive: We do not, by including the statement, assume any obligation to review or revise any particular forward-looking statement, reference to your end in light of future events.

Speaker Change: 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.

Unknown Executive: We will also be referring to certain non-GAAP financial measures such as net financial earnings or NFC. We believe that NFC, 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-gap financial measures are not intended to be a substitute for gap. Our non-gap financial measures are discussed more fully in item 7 of our 10k.

Speaker Change: We will also be referring to certain non-GAAP financial measures such as net financial earnings or NFV.

Speaker Change: We believe that NSE, Net Financial Loss, Utility Gross Margin, Financial Margin, Adjusted Funds from Operations, and Adjusted Debt provide a more complete understanding of our financial performance.

Speaker Change: However, these non-GAAP financial measures are not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in Item 7 of our 10-K.

Unknown Executive: The slides accompanying today's presentation are available on our website, and we're furnished on our Form 8-K filed this morning. Our agenda for today is found on slide four. People will begin with this year's highlight, followed by Roberto, who will review our financial results. And we'll open up for your questions.

Speaker Change: The slides accompanying today's presentation are available on our website and were furnished on our Form 8K file this morning. Our agenda for today is found on slide 4. Steve will begin with this year's highlights, followed by Roberto, who will review our financial results. Then we will open up for your questions.

Steve Westhoven: With that said, I will turn the call over to our president and CEO, Steve Westohen.

Unknown Executive: Please go ahead, Steve.

Speaker Change: With that said, I will turn the call over to our President and CEO , Steve Westhoven. Please go ahead, Steve.

Steve Westhoven: Thanks, Adam, and good morning, everyone. We at Solid Quarter NJR, as our complementary portfolio of businesses performed in line with our expectations. And we remain on track to achieve our fiscal 2024 and FEPS guidance of $2.85 to $3 per share. Thank you through the highlights as shown on slide five. A New Jersey NJR gas, our rate cases preceding that's expected. And we anticipate a resolution before the end of 2024. Clean Energy Ventures reported a solid year-over-year revenue growth, while continuing to expand our robust project pipeline. This provides a long runway investment options that deliver a minimum of high single digits unlevered returns for each project, along with upside potential from increases in power demand.

Steve Westhoven: Thanks Adam and good morning everyone. We had a solid quarter at NJR as our complimentary portfolio of businesses performed in line with our expectations.

Speaker Change: and we remain on track to achieve our fiscal 2024 NFEPS guidance of $2.85 to $3.00 per share.

Speaker Change: I'll take you through the highlights as shown on slide 5.

Speaker Change: At New Jersey Natural Gas, our rate case is proceeding as expected, and we anticipate a resolution before the end of 2024.

Speaker Change: Clean Energy Ventures reported a solid year-over-year revenue growth while continuing to expand our robust project pipeline.

Speaker Change: This provides a long runway of investment options that deliver a minimum of high single-digit unlevered returns for each project, along with upside potential from increases in power demand.

Steve Westhoven: This quarter, we also saw solid contributions from S&T, the performance of energy services that was in line with expectations.

Speaker Change: This quarter, we also saw solid contributions from S&T and performance from Energy Services that was in line with expectations.

Steve Westhoven: Moving to slide six, in November, we provided an initial and FEPS guidance range of $2.70 to $2.85 per share. In February, due to our outperformance and energy services, we increased this guidance by 15 cents per share to $2.85 to $3 per share. As discussed in prior calls, we expect our fiscal 2024 to exceed our long-term growth rate of 79%. Slide seven outlines the expected NFPS percentage contribution by business segment for fiscal 2024 and beyond. This year, energy services will represent a higher percentage than prior years due to the AMAs in recent outperformance. However, in future years, we expect to return to a more normalized segment breakout, with over 60% of our NFPS coming from our utility business.

Speaker Change: Moving to slide 6, in November , we provided an initial NFBPS guidance range of $2.70 to $2.85 per share. In February , due to our outperformance in energy services, we increased this guidance by $0.15 per share to $2.85 to $3.00 per share.

Speaker Change: As discussed in prior calls, we expect our fiscal 2024 to exceed our long-term growth rate of 79 percent.

Speaker Change: Slide 7 outlines the expected NFEPS percentage contribution by business segment for fiscal 2024 and beyond.

Speaker Change: This year, energy services will represent a higher percentage than prior years due to the AMAs and recent outperformance.

Speaker Change: However, in future years, we expect to return to a more normalized segment breakout with over 60% of our NFBPS coming from our utility business.

Steve Westhoven: Now let's discuss our business units, starting with New Jersey Natural Gas on sliding. We have invested $345 million year to date at New Jersey Natural Gas in fiscal 2024, with 43% of that cap ex providing near real-time returns. This includes the SAID Green program, which helps customers lower their energy usage. In June, SAID Green reached a milestone, serving our 100,000 customers since its inception in 2009. Over the lifetime of this program, participating customers have significantly cut their energy bills and reduced their carbon emissions by over 312 million pounds, equal to the energy use of over 18,000 homes.

Unknown Executive: This includes the Save Green Program, which helps customers lower their energy usage. Finally, on slide 11, our S&T business met expectations this period.

Steve Westhoven: Congrats to the entire SAID Green team on this accomplishment. Customer growth has remained steady all year, driven by a combination of both new construction and conversions. We also see unique business opportunities that should help drive growth well into the future, such as the redevelopment project in Monham County to transform a mall into multi-family units, along with retail, commercial, and medical spaces. Turning to slide nine, our base rate case is progressing as planned. It may be adjusted our filing to include nine months of actual results and aim to reach a resolution that balances our customers' and companies' interest by the end of 2024.

Steve Westhoven: Moving to slide 10, Clean Energy Ventures continue to add new solar capacity during this fiscal year. We are also growing our solar pipeline, which now includes over 870 megawatts of potential investment options, with an additional 51 megawatts under construction. Finally, on slide 11, our S&T business met expectations this period. Last quarter, we announced the start of the capital investment project that leaves River to expand working capacity within our caverns. We completed an open season and contracted a portion of that capacity in terms that will pay back full cost of that investment in less than four years.

Roberto Bell: And with that, I'll turn the call over to Roberta to review our financial results. Roberta. Thank you, Steve, and good morning, everyone. It's like 13 highlights the main drivers of our NFE for fiscal 2020 for third quarter and year to date. We reported an extra national loss of $8.9 million or nine cents per share compared with any few $9.7 million or 10 cents per share last year. That quarterly results for this segment are consistent with our expectations, with steady margin contribution at NG and energy services and higher revenues at CV and S&T compared to a prior period.

Speaker Change: Thank you, Steve, and good morning, everyone. Slide 13 highlights the main drivers of our NFE for fiscal 2024 third quarter and year to date.

Speaker Change: that quarterly results of our business segment were consistent with our expectations.

Roberto Bell: Also by increased depreciation and interest expenses. Clean energy venture reported the net financial law for the period of $6.7 million. A difference from the prior year period was due to the resolution of an income tax solution allowance last year that did not reoccur.

Roberto Bell: Looking ahead, we expect a significant year-over-year increase in NFE for the upcoming fourth quarter, as salary services will recognize a substantial portion of the asset management agreements' total revenue during the period.

Speaker Change: Looking ahead, we expect a significant year-over-year increase in NFE for the upcoming fourth quarter as Energy Services will recognize a substantial portion of the Asset Management Agreement's total revenue during the period.

Roberto Bell: Turning to our capital plan in slide 14, for the next two years, we expect to invest between $1.2 and $1.5 billion across the company. For fiscal 2024, we have tied in our overall capex range with slight increases at NGE and S&D, offset by a reduction in the top end at CV. For India as a whole, the midpoint of our total capex remains largely the same for the year.

Speaker Change: Turning to our capital plan in slide 14.

Speaker Change: Over the next two years, we expect to invest between $1.2 and $1.5 billion across the company.

Speaker Change: For fiscal 2024, we have tightened our overall capex range with slight increases at NJ&G and S&P, offset by a reduction in the top end at CEB.

Speaker Change: For NGR as a whole, the midpoint of our total capex remained largely the same for the year.

Roberto Bell: In November, we'll update our capex stations for fiscal year 2025 and provide fiscal 2026. Our capital projections are high and poor by strong cash flow from operations. On slide 15, we'll state cash flow from operations to range between $400 and $415 million in fiscal 2024.

Speaker Change: In November , we'll update our capex expectations for fiscal year 2025 and provide fiscal 2026.

Speaker Change: Our capital projections are anchored by strong cash flow from operations.

Speaker Change: On slide 15, which state cash flow from operations to range between $420 and $450 million in fiscal 2024.

Roberto Bell: Slide 16 is placed in Year Credit Metrics. We project in year suggested it for to adjust its debt to be between 17 and 18 percent this year. While we have no plans to issue block equity, our existing delivery investment program includes a waiver discount feature that allows us to raise equity on an opportunistic basis. To like 17, provides a very close of our long-term debt, which is six rates with no significant maturity in any particular year.

Speaker Change: Slide 16 displays in-year credit metrics.

Speaker Change: Our existing dual reinvestment program includes a waiver discount feature that allows us to raise equity on an opportunistic basis.

Speaker Change: Slide 17 provides a breakout of our long-term debt, which is fixed rate with no significant maturities in any particular year.

Roberto Bell: We don't have any additional fees for direct fiscal 2020 form and maintain substantial liquidity at both in year and in year.

Steve Westhoven: With that, I'll turn it back to Steve for concluding remarks on slide 18.

Steve Westhoven: Thanks, Roberto. In conclusion, NJR continues to deliver long-term value for its shareholders, anchored by our regulated utility and the infrastructure investment opportunities provided by the other business segments. Our rate case is progressing on schedule, and we look forward to a resolution later this year. To summarize, we offer investors an attractive 11 to 13 percent expected total return based on our long-term NFEPS growth rate of 79 percent and a current dividend yield of approximately 4 percent. We expect to grow our dividend to our shareholders in line with our earnings, as NJR has raised the dividend to every year for the last 28 years.

Speaker Change: Thanks, Roberto. In conclusion, NJR continues to deliver long-term value for its shareholders, anchored by our regulated utility and the infrastructure investment opportunities provided by the other business segments. Our rate case is progressing on schedule, and we look forward to a resolution later this year.

Unknown Executive: To summarize, we offer investors an attractive 11 to 13 percent expected total return based on our long-term NFEPS growth rate of 7 to 9 percent and a current dividend yield of approximately 4 percent.

Speaker Change: To summarize, we offer investors an attractive 11-13% expected total return based on our long-term NFEPS growth rate of 7-9% and a current dividend yield of approximately 4%.

Steve Westhoven: Our next dividend announcement will come in September.

Steve Westhoven: We appreciate that you took the time to join us today, and I'd like to recognize and thank our employees for all their hard-working dedication that drives our performance.

Speaker Change: We appreciate that you took the time to join us today, and I'd like to recognize and thank our employees for all their hard work and dedication that drives our performance.

Unknown Executive: So let's now open up the call questions.

Unknown Executive: Thank you so much. We are now opening your floor for question and answer session. If you'd like to ask a question, please pass star one.

Operator: Thank you so much. We are now opening the floor to questions and answers. If you'd like to ask a question, please press star one. Our first question comes from Richard Sunderland from JP Morgan. Your line is now open.

Richard Sunderland: Our first question comes from Richard Sunderland from JP Morgan. Your line is now open. Hi, good morning.

Patrick Migliaccio: Thank you for the time today. Starting with the rate case, is everything still progressing as expected towards the settlement. I'm just looking at the slide language here on settlement discussions and curious if we should expect an announcement. I guess either this month or next under that timeline.

Speaker Change: terris.

Patrick Migliaccio: Patrick, did you see him on that? Yeah, Pat Migliaccio, to take that question. Patrick, you know, just as a reminder, this is a plain military case to an essence around safety, reliability, and some IT investments.

Speaker Change: Hey Rich, this is Steve. I'm going to ask Pat Migliaccio to take that question.

Speaker Change: Hey Rich, just as a reminder, this is a plain millery case, investments around safety, reliability, and some IT investments. With the...

Patrick Migliaccio: With the filing of our 10-Q today, that will pay the way for us to file a 12 and only the word coming utilities in the next couple of days. But as far as some discussion, discussions, the progressing as we would expect them to, and no change to our previously communicated timing guidance, which is we expect to finalize our case with reineffective some time in our first fiscal quarter of 25.

Speaker Change: Thank you for joining us for the first filing of our 10-Q today. That will pave the way for us to file a 12-0 with the Board of Public Utilities in the next couple of days, but as far as some of the discussions, they're progressing as we would expect them to, and no change to our previously communicated

Speaker Change: Timing Guidance, which is we expect to finalize the rate case with rates effective sometime in our first fiscal quarter of 2025.

Unknown Executive: Got it, thank you for that.

Unknown Executive: And then starting to see EV, can you quantify your open megawatts in this power prices could be a tail end to 4Q, or even put 20, 25 earnings above the 7 to 9 percent outlook range? So we've got a little bit of this fiscal year left, and a little bit of, I guess, make a lot of pricing to do for the rest of the season. You can, I guess, look to years past; it's determined how that could impact our earnings going forward. But, you know, I would expect to characterize it should be relatively minor contribution for this year's pin of the word power prices.

Speaker Change: Got it. Thank you for that. And then turning to CEV, can you quantify your open megawatts and if power prices could be a tailwind of 4Q or even put 2025 earnings above the 7 to 9 percent outlook range?

Speaker Change: So, we've got a little bit of this fiscal year left and a little bit of, I guess, maybe a lot of pricing to do for the rest of this season. You can, I guess, look to years past to determine, you know, how that could impact.

Ernie: Our earnings going forward, but you know, I would expect to characterize it, you know, should be relatively, you know, minor contribution, you know, for this year's Pandas and Bird of Powerfruits discount.

Unknown Executive: Great. Thanks for the color there.

Unknown Executive: I'll leave it there. Thank you.

Unknown Executive: All right. Thanks, Rich.

Ernie: Great. Thank you for the color there. I'll leave it there. Thank you. All right. Thanks, Rich.

Travis Miller: Before you move on to our next question, again, if you'd like to ask a question to our presenters, please press star one again, that star one on your telephone keypad. Our next question comes from Travis Miller from Morningstar.

Speaker Change: Before we move on to our next question, again, if you'd like to ask a question to our presenters, please press star 1. Again, that's star 1 on your telephone keypad. Our next question comes from Travis Miller from Morningstar. Your line is now open.

Unknown Executive: Your line is now open.

Unknown Executive: Morning, everyone. Thank you. Now, I guess I was going to ask Richard's question, but I'll ask you kind of a different way or clarify if I didn't hear you correctly. The open megawatts and then the high level, what are you seeing in terms of pricing as a stronger weaker than you expected, not necessarily for earnings, but just in general in the market. How are you seeing solar pricing? So, I mean, you know, you can see the pricing as well as we can. If you look at PVA and Delta liquidation, you know, where pricing is occurring on a daily basis.

Travis Miller: Good morning, everyone. Thank you.

Travis Miller: I guess I was going to ask Richard's question, but I'll ask it kind of a different way or clarify if I didn't hear you correctly. The Open Megawatts and then.

Travis Miller: The high level, what are you seeing in terms of pricing? Is it stronger, weaker than you expected? Not necessarily for earnings, but just in general in the market. How are you seeing solar pricing?

Speaker Change: So, I mean, you know, you can see the pricing as well as we can if you look at PPM, daily liquidation, you know, where pricing is occurring on a daily basis. I can't say that it's been, you know, remarkable, you know, for this summer in comparison to previous summers.

Unknown Executive: I can't say it's been, you know, remarkable, you know, for this summer, compared to previous summers, but like I just said to Rich, if you're looking at an indication on how it may impact us, you can look at years past. But I think all in all, you know, not much that this will year less, you know, for us, and you have to see some extreme pricing to make significant change in our future. Okay. And about how much do you still have the price? You know, I don't have that number off the top of my head, but if you look at our portfolio on a radio, I'm sure to be calculated out on how much that would price on a daily basis, especially considering big portions of our portfolio or a grid check.

Speaker Change: But like I just said to Rich, if you're looking at a

Speaker Change: Indication on, you know, how it may impact us, you can look at years past, but I think all in all, you know, not much of the fiscal year left, you know, for us, and you have to see some extreme pricing to make significant change in our age of this year.

Speaker Change: Okay, and about how much do you still have to price?

Speaker Change: I don't have that number off the top of my head, but if you look at our portfolio in a radius, I'm sure you can calculate it out on how much that we price on a daily basis, especially considering big portions of our portfolio are grid-connected.

Unknown Executive: Okay, okay, very good. And then, staying on that subject, cost side, what are you seeing in terms of your growth? Not necessarily catbacks, but just growth and solar costs, what are you seeing on the cost side for your new projects? You know, I think they've been pretty steady characterizing; you're talking about our cost and cost development, just our normal construction. I think things have been steady for the recent past. Nothing remarkable there either. The only thing I'd add there is that in the States, you still have a pre robust and support of the renewable portfolio standard, so we're still able to make investments in the computer size of our portfolio continues to grow as well.

Speaker Change: Okay, okay, very good. And then staying on that subject, cost side, what are you seeing in terms of your growth, not necessarily CapEx, but just growth in solar costs? What are you seeing on the cost side for your new projects?

Speaker Change: You know, I think they've been pretty steady, characterized, if you're talking about our cost and, you know, cost of development, just our normal, you know, construction, I think things have been steady, you know, for, uh...

Speaker Change: You know, for the, I guess, recent past, nothing remarkable there, you know, either. The only thing I'd add there is that the United States still has a pretty robust support of the Renewable Portfolio Standard. So we're still able to make investments, and you can see the size of our portfolio continues to grow as well.

Unknown Executive: Okay, perfect. And then different subjects, high level everybody's asking the electric utilities about data centers. From your perspective, I've understood that a lot of gas utilities are seeing demand or have had demand for a while. From data centers in terms of either primary or backup generation, what does it look like in your service territory? Have you had data center customers for a while? Are you seeing demand for that either backup or primary onsite gas generation or service? So we don't have, I don't believe we have any data centers within our service territory at this point, but I'd add to that that the increase in electric use, the increase in need for reliability, matches up nicely with our portfolio across really all of our companies.

Speaker Change: Okay, perfect. And then different subjects. I love it. Everybody's asking the electric utilities about data centers.

Speaker Change: From your perspective, I've understood that a lot of gas utilities are seeing demand or have had demand for a while from data centers in terms of either primary or backup generation. What does it look like in your service territory? Have you had data center customers?

Speaker Change: For a while, are you seeing demand for that either backup or primary on-site gas generation or service?

Speaker Change: So, we don't have, I don't believe we have any data centers within our service territory at this point, but I'd add to that that, you know, the increase

Speaker Change: and, you know, electric use, the increase in need for reliability, you know, matches up nicely with our portfolio across really all of our companies.

Unknown Executive: That reliability, the need for cost and electricity to run those facilities, whether it's our utility and the infrastructure there, our S&T assets, supportive of power prices for our CDV portfolio, volatility that gets introduced for our energy services segment. You know, all those business units should participate in this market as becomes higher, and there's a greater demand for power and reliability.

Speaker Change: That reliability, the need for, you know, constant electricity to run those facilities.

Speaker Change: You know, whether it's our utility and the infrastructure there, you know, our S&T assets.

Speaker Change: you know, power prices, or, you know, our CEV portfolio.

Speaker Change: You know, volatility that gets introduced for our energy services segment, you know, all those business units, you know, should participate in this market as it becomes higher and there's a greater demand for power and reliability.

Unknown Executive: Okay, so I appreciate it. That's all ahead.

Unknown Executive: Thank you, Travis.

Speaker Change: Okay, sure thing. Yep, appreciate it. That's all I had. Thanks Travis.

Michael Bogler: Our next question comes from Michael Bogler from Jamie Montgomery Scott.

Speaker Change: Our next question comes from Michael Gaugler from Jamie Montgomery Scott. Your line is now open.

Unknown Executive: Your line is now open.

Unknown Executive: Good morning, everyone. Steve, I know one more power price question. So as you look forward, future planning for CapEx. You know, does it make you want to invest more in the sector, given where power prices are going? Give them what you're saying, you know, particularly in the, like you referenced the high prices we're seeing in PJN. Yeah, you know, I think, you know, like I said, the Travis, you know, supports all our infrastructure and infrastructure investment. And it really supports our general strategy and growing that infrastructure going forward. You saw the recent PJN capacity auction that was 10 times where it was the previous year.

Michael Gogler: Good morning, everyone. Good morning.

Michael Gogler: Steve, I've got one more power price question for you.

Speaker Change: So, as you're looking forward, future planning for CAPEX.

Michael Gogler: You know, does it make you want to invest more in the sector given where power prices are going, given what you're seeing, you know, particularly in the, like you referenced the high prices we're seeing in PJM?

Steve Westhoven: Yeah, you know, I think, you know...

Speaker Change: Like I just said to Travis, you know, it supports all our infrastructure, infrastructure investment, and it really supports our general strategy in growing that infrastructure going forward. You saw the recent PJN capacity auction, that was ten times what it was.

Steve Westhoven: You know, that's a real market signal that you put out there, and certainly there's a lot of end of the little market signals that have been supported as well. So, you know, I answer yes; you know, it certainly supports, you know, our business and really the strategy that we've been talking about for quite some time.

Speaker Change: Previous year, you know, that's a real market signal that's been put out there, and certainly there's a lot of anecdotal market signals that have been supported as well. So, you know, I answer yes. You know, it certainly supports, you know, our business and really the strategy that we've been talking about for quite some time.

Steve Westhoven: Does it make sense to look at projects that are already operating? Yeah, I mean, you know, we've done that as a course of business in the past, you know, going to that support polio at CEV or operating assets and S&T. We've looked at those in the past, so yeah, I'd say yes to that.

Speaker Change: Does it make sense to look at projects that are already operating?

Speaker Change: Yeah, I mean, you know, we've done that as a course of business in the past, you know, whether that's a portfolio at CEV or, you know, an operating asset at S&T. We've looked at those in the past. So yeah, I'd say yes to that.

Steve Westhoven: Okay, and then one last one, maybe S&T segment, you know, beyond what you're doing at Leif River, expanding capacity. What are you focused on in terms of future expansion of that business? You know, anywhere that we can get, you know, a contract that's long term that can support the expansion, whether it's Delta Gateway or whether it's at Leif River, and you know, we can essentially grow organically, you know, making it easy to get permits, you know, connecting to an existing asset. You know, we'll look at, you know, we don't have anything to announce beyond what we've talked about already, but some of our energy expansion, but you know, that we are pursuing that.

Speaker Change: Okay, and then one last one. For the S&T segment, you know, beyond what you're doing at Leaf River to expand capacity, what areas are you focused on in terms of future expansion of that business?

Speaker Change: You know, anywhere that we can get, you know, a contract that's long-term that can support the expansion, whether it's Delphi Gateway or whether it's at Leap River, and, you know, we can essentially grow organically, you know, making it easy to get permits, you're, you know, connecting to an existing asset, you know, anything that's supportive, you know, we'll look at, you know, we don't have anything to announce beyond what we've talked about already for some of our organic expansion, but, you know, know that we are, you know, pursuing that. Thank you.

Unknown Executive: All right. That's all I have, John.

Unknown Executive: Thank you. All right.

Unknown Executive: That's right.

Speaker Change: All right. That's all I have, gentlemen. Thank you. All right. Thanks, Mike.

Robert Mosca: Our next question comes from Robert Mosca from the Euro.

Speaker Change: Our next question comes from Robert Mosca from Mizzou. Your line is now open.

Unknown Executive: Your line is now open.

Patrick Migliaccio: Hey, good morning, everyone. Hey, just wondering if you guys could talk about some of the business opportunities you referenced in your customer growth commentary. Just wondering how significant that is, and is this something that's already captured in your seven to nine percent growth outlook? Hey, Rob, I think we have to take that question. So, look, as we think about the customer growth, we're still in that, you know, 1.7 percent marker. We really included that just to illustrate as you think about your, you know, strategically the more specifically are service territory. This is a growing environment service territory.

Speaker Change: Hey Rob, so look, as we think about the customer growth, we're still in that 1.7% marker. Really included that just to illustrate that as you think about New Jersey strategically, but more specifically our service territory.

Patrick Migliaccio: So, we've got a lot of tailwinds both from the new construction market, because you continue to see people coming into the moment. So, we shouldn't carry specifically, but then also very healthy conversion market, because there are a number of customers are so on oil, propane, and alike, converting over. So, I would characterize it as something that's generally supportive of the totally square shape.

Unknown Executive: Appreciate it, Pat. And maybe turning to Leaf River, looking at that request for authorization to use some of those leasing facilities for hydrogen stores, just wondering what the latest on that is, and how does that? What's that interplay with this working capacity expansion that you seem to have FID on the gas side? So, you know, we're keeping all our options open, you know, data leaf river, and certainly exploring, you know, like I said, right before, you know, every option that was available to us in order to expand, you know, our SMG assets. There's been a lot of, you know, market, you know, pole, net area; you've seen that contract has been executed out there, you know, certainly elevated in price.

Robert Moska: Appreciate it, Pat. And maybe turning to Leaf River, looking at that request for authorization to use some of those leasing facilities.

Unknown Executive: So, I think that if you want that, this point is a marker that basically preserves our position in order to expand in that fashion. You know, we don't really have anything to announce just yet, but you can see how we're thinking about that asset and the many uses that it might be able to be applied to this market.

Speaker Change: So, I think the view on that at this point is a marker that basically preserves our position in order to expand in that fashion, you know, we don't really have anything to announce.

Speaker Change: Just yet, but you can see how we're thinking about that asset and the many uses that it might be able to be applied to this market.

Unknown Executive: Got it. That's helpful.

Unknown Executive: And maybe just a quick last one for me on the subject of power. Just wondering, is the electricity sales become more of a factor in where you decide to locate some of these solar projects, or the economic still really be focused on, you know, what the solar credits look like in the space that you do construct? Yeah, I think, you know, power prices and power moves so quickly, you know, it's pretty fun for another certain areas that you've got, you know, constraints you can ask for price cost. But for the most part, you know, there's a higher ARP of areas that we need to clear in order to build the solar project, you know, having a plan to have the intercontactability, you know, having the right, you know, transaction with the developer, and so on and so forth.

Speaker Change: Got it, that's helpful. And maybe just a quick last one for me on the on the subject of power. Just wondering, is

Speaker Change: Does electricity sales become more of a factor in where you decide to locate some of these solar projects? Or are the economics still really going to be focused on, you know, what the solar credits look like in the space that you do construct?

Speaker Change: Yeah, I think, you know, you know, power prices and, you know, power moves so quickly, you know, it's pretty fungible. I know there's certain areas that you've got, you know, constraints and you can have some price pops, but for the most part, you know, there's a hierarchy of areas that we need to clear in order to build a solar project, you know, having the land, having the interconnectability, you know, having the right, you know, transaction with the developer, and so on and so forth. I think those would take more of a precedent. I believe that, you know, power, for the most part, as it increases, you know, will increase, maybe not uniformly, but, you know, generally speaking, you know, that rising tide lifts all boats in that way.

Unknown Executive: I think those would take more of a precedent. I believe that, you know, power for the most part, as it increases, you know, will increase, maybe not uniformly, but generally speaking, you know, that drives the total list of all votes in that way. Maybe it's one thing to add their rock to this or so, is that just keep in mind when you look at our assets, right, that the type of revenue that is that comes from power is very minor, right? On that, in a regular year, it's about 10-15% only, so we look at it in, you know, need that length.

Unknown Executive: Understood. No, that's helpful.

Unknown Executive: And all right, have a great day, everyone.

Speaker Change: Understood. That's helpful. Have a great day, everyone.

Unknown Executive: All right, that's all. Again, if you'd like to ask a question, please press star one. That is star one.

Speaker Change: All right, next round.

Speaker Change: [inaudible]

Speaker Change: Again, if you'd like to ask a question, please press star 1, that is star 1. Thank you.

Unknown Executive: Thank you.

Adam Prior: Before we don't have any pending questions, I'd now like to hand back over to Adam Prior for further remarks. Thank you, Elliot. I'd like to thank everyone of all of you today for joining us. I'd always be appreciate your interest and best friend in NJR. Thank you so much.

Speaker Change: So far we don't have any pending questions. I'd now like to hand back over to Adam Prior for further remarks.

Adam Prior: Thank you. I'd like to thank everyone on the call here today for joining us and, as always, we appreciate your interest and investment in NJR. Thank you so much and have a good rest of your morning.

Unknown Executive: Have a good rest of your mind.

Unknown Executive: Thank you, everyone, for attending today's call.

Unknown Executive: You may now disconnect.

Unknown Executive: Have a wonderful day.

Adam Prior: Thank you everyone for attending today's call. You may now disconnect. Have a wonderful day.