Q2 2026 New Jersey Resources Corp Earnings Call

May 5, 2026

Speaker #1: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Jersey Resources Fiscal 2026 Second Quarter Financial Results Conference Call.

Operator: Hello. Thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Jersey Resources Fiscal 2026 Q2 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question on today's call, simply press star 1 on your telephone keypad. I would now like to turn the call over to Adam Prior, Director of Investor Relations. Adam, please go ahead.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question on today's call, simply press star, then the number 1 on your telephone keypad.

Speaker #1: I would now like to turn the call over to Adam Prior, Director of Investor Relations. Adam, please go ahead.

Speaker #2: Thank you. Welcome to NEW JERSEY RESOURCES FISCAL 2026 SECOND QUARTER AND FIRST HALF CONFERENCE CALL ON WEBCAST. I am 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.

Adam Prior: Thank you. Welcome to New Jersey Resources fiscal 2026 Q2 and H1 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. Certain statements in today's call contain estimates and other forward-looking statements within the meaning of the securities law. 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 2.

Speaker #2: 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.

Speaker #2: This could cause results that materially differ from our expectations established on slide 2. These items can also be found in the forward-looking statements section of yesterday's earnings release, furnished on Form 8K and in our most recent Forms 10K and 10Q as filed with the SEC.

Adam Prior: These items can also be found in the forward-looking statement 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 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 a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in item 7 of our 10-K.

Speaker #2: 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.

Speaker #2: 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 funds from operations, and adjusted debt provide a more complete understanding of our financial performance.

Speaker #2: However, these non-GAAP measures are not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in item 7 of our 10K.

Speaker #2: The slides for today's presentation are available on our website and were furnished on our Form 8K filed yesterday. Steve will start with this quarter's highlights and a business unit overview.

Adam Prior: 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 5. 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.

Speaker #2: Beginning on slide 5. Roberto will then review our financial results. Then we'll open it up for your questions. With that said, I'll turn the call over to our President and CEO, Steve Westhoven.

Speaker #2: Please go ahead, Steve.

Speaker #3: Thanks, Adam. NJR reported excellent second-quarter results during one of the most demanding winter periods in recent years. January and February brought sustained freezing temperatures in the northeast region of the country.

Steve Westhoven: Thanks, Adam. NJR reported excellent Q2 results during one of the most demanding winter periods in recent years. January and February brought sustained freezing temperatures in the Northeast region of the country. New Jersey Natural Gas experienced the highest send-out days in its history, and our infrastructure, planning, and operations delivered. Our teams provided safe, reliable service to homes, schools, hospitals, and critical services across our communities. Our system operated exactly as designed when customers needed us most. This reflects years of disciplined investment in our infrastructure and a continued focus on safety and reliability. At S&T, Adelphia Gateway had multiple days of operating at maximum capacity. Leaf River had withdrawals that exceeded Winter Storm Uri of 2021. Finally, our energy services team delivered exceptional results.

Speaker #3: New Jersey nitric acid experienced the highest send-out days in its history. In our infrastructure, planning, and operations delivered. Our teams provided safe, reliable service to homes, schools, hospitals, and critical services across our communities.

Speaker #3: Our system operated exactly as designed when customers needed us most. This reflects years of disciplined investment in our infrastructure and a continued focus on safety and reliability.

Speaker #3: At S&T, Adelphi Gateway had multiple days of operating at maximum capacity and Leaf River had withdrawals that exceeded winter storm Uri of 2021. Finally, our energy services team delivered exceptional results.

Speaker #3: As a result of energy services outperformance, we were able to raise our fiscal 2026 NFEPS guidance for the second time this year. Roberto will provide additional details on our financial projections later in the call.

Steve Westhoven: As a result of Energy Services' outperformance, we were able to raise our fiscal 2026 NFEPS guidance for the second time this year. Roberto will provide additional details on our financial projections later in the call. With that, I'll turn to New Jersey Natural Gas and walk through how our efforts directly benefited customers on the next slide. Natural gas remains by far the most cost-effective option for home heating, particularly during periods of sustained cold. Affordability and reliability go hand in hand. The same planning and operational discipline that allows us to meet record demand this winter also helps customers manage costs during periods of higher usage. That's why we take a proactive approach to managing gas costs. Each year, we secure a significant portion of winter gas supply well in advance, limiting our customers' exposure to sharp commodity price increases.

Speaker #3: With that, I'll turn to NEW JERSEY NITRIC ACID and walk through how our efforts directly benefited customers on the next slide. Nitric acid remains by far the most cost-effective option for home heating, particularly during periods of sustained cold.

Speaker #3: Affordability and reliability go hand in hand. The same planning and operational discipline that allows us to meet record demand this winter also helps customers manage costs during periods of higher usage.

Speaker #3: That's why we take a proactive approach to managing gas costs. Each year, we secure a significant portion of winter gas supply well in advance limiting our customers' exposure to sharp commodity price increases.

Speaker #3: As we noted last quarter, going into this winter, the projected gas supply requirements at NEW JERSEY NITRIC ACID were over 87% hedged securing cost-effective supply to serve our customers.

Steve Westhoven: As we noted last quarter, going into this winter, the projected gas supply requirements at New Jersey Natural Gas were over 87% hedged, securing cost-effective supply to serve our customers. The average hedge price used for our customers was approximately $2.27 per dekatherm for storage and LNG, compared with Citygate price, which we avoided, that traded in excess of $135 per dekatherm. This winter, New Jersey Natural Gas also delivered meaningful savings to our customers under the state-approved Basic Gas Supply Service incentive program. This helps to further manage gas costs during the periods of high usage and elevated commodity prices, which we highlighted on the slide. Under this program, we generated over $93 million in gross customer savings over the winter season.

Speaker #3: The average hedged price used for our customers was approximately $2.27 per deck of them for storage in LNG. Compared to a city gate price, excess of $135 per deck of them.

Speaker #3: This winter, NEW JERSEY NITRIC ACID also delivered meaningful savings to our customers under the state-approved basic gas supply service incentive program. This helps to further manage gas costs during the periods of high usage and elevated commodity prices, which we highlighted on the slide.

Speaker #3: Under this program, we generated over $93 million in gross customer savings over the winter season. Over the life of the program, we have generated over $1.6 billion in gross customer savings by optimizing our gas supply while also creating value for our shareholders.

Steve Westhoven: Over the life of the program, we have generated over $1.6 billion in gross customer savings by optimizing our gas supply while also creating value for our shareholders. In parallel, we continue to invest in energy efficiency through our SAVEGREEN program. More than 115,000 customers have taken part in our programs to date, with those utilizing our whole home offerings realizing bill savings of up to 30%. Finally, we provide payment flexibility and offer targeted assistance that helps customers manage usage and bills over time. Turning to slide 7, the cost advantage of natural gas continues to support steady customer growth across our service territory. That growth reflects a combination of new construction, conversions, and targeted infrastructure expansion, all driven by customer demand.

Speaker #3: In parallel, we continue to invest in energy efficiency through our SaveGreen program. More than 115,000 customers have taken part in our program to date with those utilizing our whole home offerings realizing bill savings of up to 30%.

Speaker #3: Finally, we provide payment flexibility and offer targeted assistance that helps customers manage usage and bills over time. Turning to slide 7, the cost advantage of natural gas continues to support steady customer growth across our service territory.

Speaker #3: That growth reflects a combination of new construction, conversions, and targeted infrastructure expansion all driven by customer demand. A recent example is Chester Township in Morris County.

Steve Westhoven: A recent example is Chester Township in Morris County, which is now formally included in New Jersey Natural Gas's regulated service territory. This reflects our ability to partner with communities and regulators to thoughtfully expand our footprint while continuing to deliver safe, reliable service. Turning to our storage and transportation business on the next slide. As we discussed on our year-end earnings call, we expect net financial earnings from this segment to more than double over the next 2 years, and we remain on track to achieve or surpass that goal. Over the next 2 years, our growth is driven by strong recontracting activity at both Adelphia and Leaf River. These are fixed-price, fee-based agreements with high-quality, creditworthy counterparties, providing a high degree of predictability in our earnings. Moving to longer-term growth, at Leaf River, we continue to make steady progress on our expansion plans.

Speaker #3: Which is now formally included in NEW JERSEY NITRIC ACID's regulated service territory. This reflects our ability to partner with communities and regulators to thoughtfully expand our footprint while continuing to deliver safe, reliable service.

Speaker #3: Now turning to our storage and transportation business on the next slide. As we discussed on our year-end earnings call, we expect net financial earnings from this segment to more than double over the next two years, and we remain on track to achieve or surpass that goal.

Speaker #3: Over the next two years, our growth is driven by strong re-contracting activity at both Adelphi and Leaf River. These are fixed-price fee-based agreements with high-quality creditworthy counterparties providing a high degree of predictability in our earnings.

Speaker #3: Moving to longer-term growth, at Leaf River we continue to make steady progress on our expansion plans. During the first quarter, we filed a FERC application in which we proposed increasing working gas capacities by more than 70% over the next few years.

Steve Westhoven: During Q1, we filed a FERC application in which we proposed increasing working gas capacities by more than 70% over the next few years. We recently received the environmental assessment from FERC, which represents another important step in the review process. The filing is progressing as expected. We've also secured a long-term contract supporting the initial expansion at our existing caverns, with the remaining phases to be underpinned by long-term fee-based contracts as well. Overall, this project remains on track with regulatory review proceeding in line with our expectations. We'll continue to provide updates as we move through the process. Moving to Clean Energy Ventures on slide 9, during fiscal 2025, CEV increased its installed capacity by almost 25%, and this momentum has continued with 33 MW of new capacity brought into service this year.

Speaker #3: We recently received the Environmental Assessment from FERC, which represents another important step in the review process and the filing is progressing as expected. We've also secured a long-term contract supporting the initial expansion at our existing caverns, with the remaining phases to be underpinned by long-term fee-based contracts as well.

Speaker #3: Overall, this project remains on track with regulatory review preceding in line with our expectations. And we'll continue to provide updates as we move through the process.

Speaker #3: Moving to clean energy ventures on slide 9, during fiscal 2025, CEV increased its installed capacity by almost 25%, and this momentum has continued with 33 megawatts of new capacity brought into service to increase installed capacity by an additional 50% through the end of fiscal 2027, supported by a pipeline of safe-harbored investment options in markets with supportive policy and strong demand growth.

Steve Westhoven: We expect to increase installed capacity by an additional 50% through the end of fiscal 2027, supported by a pipeline of safe harbored investment options in markets with supportive policy and strong demand growth. This diverse project pipeline that grants us the right, but not the obligation to invest, is over 1.2 gigawatts, well in excess of our capital deployment targets. Deal flow has been strong in this segment, a result of broad industry relationships and steps taken last year to preserve investment tax credits. CEV is positioned to be increasingly selective with our investment decisions, with strong investment returns in the high single to low double-digit unlevered after-tax range. In addition, New Jersey and PJM require incremental electric capacity to meet rising demand, and solar offers the most expedient path to adding new supply to the grid in the near term.

Speaker #3: This diverse project pipeline, that grants us the right but not the obligation to invest, is over $1.2 gigawatts, well in excess of our capital deployment targets.

Speaker #3: Deal flow has been strong in this segment, a result of broad industry relationships and steps taken last year to preserve investment tax credits. CEV is positioned to be increasingly selective with our investment decisions, with strong investment returns in the high single to low double-digit unlevered after-tax range.

Speaker #3: In addition, NEW JERSEY and PJM require incremental electric capacity to meet rising demand. In solar offers the most expedient path to adding new supply to the grid in the near term.

Speaker #3: CEV stands ready to be part of the solution. The team at CEV is in the early stages of exploring ways to leverage our portfolio of operational assets and existing PJM interconnections to add more supply to the grid in the near term.

Steve Westhoven: CEV stands ready to be part of the solution. The team at CEV is in the early stages of exploring ways to leverage our portfolio of operational assets and existing PJM Interconnection to add more supply to the grid in the near term. Technologies like linear generators, fuel cells, and batteries offer CEV a potential opportunity to optimize existing solar sites and benefit from investment tax credits into the 2030s. Moving to financing, we've historically utilized sale leasebacks as the main mechanism to efficiently monetize the tax attributes of our solar investments. In the future, this may include the use of tax credit transferability as an additional tool. We will continue to evaluate the most economically advantageous structures available to support long-term shareholder value. Finally, last month, we reached an important milestone at CEV, surpassing 500 MW of in-service capacity.

Speaker #3: Technologies like linear generators, fuel cells, and batteries offer CEV a potential opportunity to optimize existing solar sites and benefit from investment tax credits into the 2030s.

Speaker #3: Moving to financing, we have historically utilized sale leasebacks as the main mechanism to efficiently monetize the tax attributes of our solar investments. In the future, this may include the use of tax credit transferability as an additional tool.

Speaker #3: We will continue to evaluate the most economically advantageous structures available to support long-term shareholder value. Finally, last month, we reached an important milestone at CEV, surpassing $500 megawatts of in-service capacity.

Speaker #3: I want to thank the entire CEV team for their strong execution. With that, I'll turn the call over to Roberto for a financial review, and then I'll return for a few closing remarks.

Steve Westhoven: I want to thank the entire CEV team for their strong execution. With that, I'll turn the call over to Roberto for a financial review, and then I'll return for a few closing remarks. Roberto?

Speaker #3: Roberto?

Speaker #4: Thanks, Steve. Turning to slide 11, the second quarter reflects strong execution across the portfolio and continued momentum into the second half of the year.

Roberto Bel: Thanks, Dave. Turning to slide 11, Q2 reflects strong execution across our portfolio and continued momentum into H2 of the year. We delivered solid net financial earnings across both our regulated and non-regulated businesses, with continued outperformance at Energy Services. As a result, we're raising fiscal 2026 guidance for the second time this year. We'll continue to fund our capital plan and maintain a strong balance sheet. Moving to a brief walk for Q2 on slide 12. Fiscal 2026 Q2 consolidated net financial earnings was $221.5 million or $2.20 per share, a significant increase over the $117.3 million or $1.78 per share reported in Q2 of fiscal 2025.

Speaker #4: We delivered solid net financial earnings across both our regulated and non-regulated businesses, with continued outperformance at energy services. As a result, we're raising fiscal 2026 guidance for the second time this year.

Speaker #4: We'll continue to fund our capital plan and maintain a strong balance sheet. Moving to a brief walk for the quarter on slide 12. Fiscal 2026 second quarter consolidated net financial earnings was $221.5 million.

Speaker #4: Or $2.20 per share. A significant increase over the $178.3 million or $1.78 per share reported in the second quarter of fiscal 2025. Net financial earnings reflect solid performance across the portfolio, with a notably higher contribution from energy services.

Roberto Bel: Net financial earnings reflect solid performance across the portfolio, with a notably higher contribution from Energy Services. For the year-to-date period, the higher net loss at CEV simply reflect last year's one-time gain resulting from the sale of our residential solar business. Overall, the mix of results underscores the value of our diversified model. With that, let's turn to our capital plan on the next slide. We deployed approximately $400 million of capital across our businesses year to date. New Jersey Natural Gas represented roughly two-thirds of total capital spending, with investments focused on strengthening core infrastructure, enhancing safety and reliability, and supporting continued customer growth. We do not have any change to our estimates for fiscal 2026 and fiscal 2027 and are reaffirming our five-year CapEx outlook of $4.8 to 5.2 billion through fiscal 2030.

Speaker #4: 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.

Speaker #4: Overall, the mix of results underscores the value of our diversified model. With that, let's turn to our capital plan on the next slide. We deployed approximately $400 million of capital across our businesses year-to-date.

Speaker #4: NEW JERSEY Natural Gas represented roughly two-thirds of total capital spending, with investments focused on strengthening core infrastructure, enhancing safety and reliability, and supporting continued customer growth.

Speaker #4: We do not have any change to our estimates for fiscal 2026 and fiscal 2027, and are reaffirming our five-year CapEx x outlook of $4.8 to $5.2 billion through fiscal 2030.

Speaker #4: More than 60% of this capital is expected to be invested at the utility, with clean energy ventures and storage and transportation comprising the balance.

Roberto Bel: More than 60% of this capital is expected to be invested at the utility, with Clean Energy Ventures and storage and transportation comprising the balance. Collectively, these investments support our 7% to 9% long-term NFEPS growth target while remaining well within our long-term credit parameters, which I'll cover on the next slide. On slide 14, we highlight the strength of our balance sheet, which continues to improve during periods of strong performance like this winter. We raised our adjusted FFO to adjusted debt ratio expectations for fiscal 2026 and are projected to remain around 20% for the next 5 years. Energy Services incremental cash flow disclosure enhances our ability to find capital investment, support credit metrics, and reinforces that we see no need for block equity in the foreseeable future.

Speaker #4: Collectively, these investments support our 7 to 9 percent long-term NFPS growth target. While remaining well within our long-term credit parameters, which I'll cover on the next slide.

Speaker #4: On slide 14, we highlight the strengths of our balance sheet, which continues to improve during periods of strong performance. Like this winter. We raised our adjusted deficit to adjusted debt ratio expectations for fiscal 2026, and are projected to remain around 20% for the next five years.

Speaker #4: Energy services incremental cash flow this quarter enhances our ability to fund capital investment, support credit metrics, and reinforces that we see no need for block equity in the foreseeable future.

Speaker #4: In addition, ample liquidity and a well-levered debt maturity profile limit near-term refinancing risk and preserve financial flexibility. And finally, as shown on slide 15, we're again raising our NFPS guidance range for fiscal 2026.

Roberto Bel: In addition, ample liquidity and a well-laddered debt maturity profile limit near-term refinancing risk and preserve financial flexibility. Finally, as shown in slide 15, we're again raising our NFEPS guidance range for fiscal 2026. During our prior conference call, we raised our guidance by $0.25 per share, driven by Energy Services outperformance in January 2026. With favorable results at Energy Services continuing through February and March, we're increasing our NFEPS guidance by an additional $0.20 to a higher range of $3.48 to $3.63 per share. We're also revising our expected NFEPS contributions by segment, with Energy Services percentage rising as a result of its outperformance and all the other businesses adjusting accordingly. New Jersey Natural Gas will represent approximately 60% of the company's NFEPS for fiscal 2026.

Speaker #4: During our prior conference call, we raised our guidance by 25 cents per share driven by energy services outperformance in January 2026. With favorable results at energy services continuing through February and March, we're increasing our NFPS guidance by an additional 20 cents to a higher range of $3.48 to $3.63 per share.

Speaker #4: We're also revising our expected NFPS contributions by segment, with energy services percentage rising as a result of its outperformance and all the other businesses adjusting accordingly.

Speaker #4: NEW JERSEY Natural Gas will represent approximately 60% of the company's NFPS for fiscal 2026. With that, I'll turn it to Steve for concluding remarks on slide 16.

Roberto Bel: With that, I'll turn it to Steve for concluding remarks on slide 16.

Speaker #5: Thanks, Roberto. NJR once again delivered exceptional results through a demanding winter period, reinforcing the reliability of our system and the durability of our business model.

Steve Westhoven: Thanks, Roberto. NJR once again delivered exceptional results through a demanding winter period, reinforcing the reliability of our system and the durability of our business model. Our long-term growth continues to be anchored by our regulated utility, with clear visibility into capital investment at New Jersey Natural Gas and a continued focus on operating safely and reliably when customers need us most. Storage and transportation remains well-positioned with clear earnings visibility in the near term, and additional upside over time as capacity expansion opportunities progress. At Clean Energy Ventures, our portfolio continues to scale as expected, supported by a secure development pipeline and disciplined capital deployment. Taken together, execution across our complementary businesses provides momentum into the remainder of the year and reinforces our confidence in the path ahead. Finally, I want to thank our employees across NJR.

Speaker #5: Our long-term growth continues to be anchored by our regulated utility, with clear visibility into capital investment at NEW JERSEY Natural Gas and a continued focus on operating safely and reliably when customers need us most.

Speaker #5: Storage and transportation remains well-positioned with clear earnings visibility in the near term and additional upside over time as capacity expansion opportunities progress. At Clean Energy Ventures, our portfolio continues to scale as expected, supported by a secure development pipeline and disciplined capital deployment.

Speaker #5: Taken together, execution across our complementary businesses provides momentum into the remainder of the year and reinforces our confidence in the path ahead. Finally, I want to thank our employees across NJR, your dedication, professionalism, and commitment, especially through another challenging winter, are the foundation for our success.

Steve Westhoven: Your dedication, professionalism, and commitment, especially through another challenging winter, are the foundation for our success. With that, let's open up the line for questions.

Speaker #5: With that, let's open up the line for questions.

Speaker #6: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again.

Operator: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Gabriel Moreen with Mizuho. Please go ahead.

Speaker #6: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Gabe Maureen with Mizuho. Please go ahead.

Operator: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Gabriel Moreen with Mizuho. Please go ahead.

Dylan Liparon: hey, everybody, it's Dylan Liparon for Gabe.

Speaker #7: Hey, everybody. It's Dylan Lepperon for Gabe. I got some good quarter. Just want to kind of hit back on CEV. If you guys could provide some more color on what you're seeing today in terms of solar project opportunities and outreach from PGM and the state, particularly as NEW JERSEY looks to generation gap.

Dylan Liparon: hey, everybody, it's Dylan Liparon for Gabe.

Steve Westhoven: Hey, Dylan.

Dylan Liparon: Congrats on a good quarter. Just wanna kinda hit back on CEV. If you guys could provide some more color on what you're seeing, say, in terms of solar project opportunities and outreach from PJM and the state, particularly as New Jersey looks to generation gap.

Speaker #5: Yeah. Really, it's been playing out just like we said all along. We saved Harvard in a number of projects. We've got a $1.2 gigawatt number of projects available to us.

Steve Westhoven: Yeah, you know, really it's been playing out just like we said all along. You know, we safe harbored a number of projects. We've got 1.2 gigawatt, you know, you know, number of projects available to us. The state has been, you know, certainly encouraging solar development, you know. With the capacity shortfalls in PJM, the quickest way to bring, you know, new capacity to market is through solar. Yeah, we're continuing to make investments and we've got a number of really attractive choices in that space and we're continuing to develop solar. You know, all things to go and certainly playing out just like we've said over the past few calls.

Speaker #5: And the state has been certainly encouraging solar development with the capacity shortfalls in PJM, the quickest way to bring new capacity to the market is through solar.

Speaker #5: So yeah, we're continuing to make investments and we've got a number of really attractive choices in that space and we're continuing to develop solar.

Speaker #5: So all things that go and certainly playing out just like we've said over the past few calls.

Speaker #7: Gotcha. And do you guys see this playing out more in the near term or towards the end of the decade?

Dylan Liparon: Gotcha. Do you guys see this playing out more in the near term or towards the end of the decade?

Speaker #5: I mean, we're not changing our CapEx guidance. So we're still continuing to move forward to hit those numbers. So really, the things that I was talking about, the pressure on the market to develop and bring more capacity, two electric customers in NEW JERSEY is moving forward and certainly an important part of the shareholder administration's goals of trying to lower electric.

Steve Westhoven: I mean, we're not changing our CapEx guidance, you know, we're still, you know, continuing to move forward, you know, to hit those numbers. You know, really, you know, the things that I was talking about, you know, the pressure on the market to develop and bring more capacity, you know, to electric customers in New Jersey is moving forward and, you know, certainly an important part of the, you know, Murphy administration's, you know, goals of trying to lower electric prices.

Dylan Liparon: Gotcha. All right, well, great. Congrats on a really great quarter. Looking forward to seeing you guys soon in Scottsdale.

Speaker #7: Gotcha. All right, Rob. Great. Congrats on a really great quarter. Look forward to seeing you guys soon in Scottsdale.

Speaker #5: All right. Thank you.

Steve Westhoven: Thank you.

Speaker #6: Again, to ask a question, it is star one on your telephone keypad. Your next question comes from the line of Travis Miller with Morningstar.

Operator: Again, to ask a question, it is star one on your telephone keypad. Your next question comes from the line of Travis Miller with Morningstar. Please go ahead.

Speaker #6: Please go ahead.

Speaker #8: Good morning, everyone. Thank you.

Travis Miller: Good morning, everyone. Thank you.

Speaker #5: Hey, Travis.

Steve Westhoven: Hey, Travis.

Travis Miller: I wonder if you could go into a little more on energy services. What's happening fundamentally since February that's changed both your outlook and what you're actually realizing in that business?

Speaker #8: I wonder if you could go into a little more on energy services. What's happening fundamentally since February? That's changed both your outlook and what you're actually realizing.

Speaker #8: In that business.

Speaker #5: Are you just referring to the raise in guidance?

Steve Westhoven: Are you just referring to the raising guidance report?

Speaker #8: Right. Yeah. The raise in guidance—yeah. Relative to what you talked about in February, obviously, less winter in March and April. But wondering what's going on there—what you're seeing differently.

Travis Miller: The raising guidance relative to what you talked about in February, obviously last winter in March and April. Wondering what's going on there, what you're seeing differently?

Speaker #5: Yeah. Really, when we raise guidance back in February, that was previous period. So much of the winter hadn't transpired to that point. And through February and March, that book continued to increase in value and add value.

Steve Westhoven: Yeah. You know, really, when we, you know, raised guidance back in February, that was, you know, for previous periods. You know, much of the winter hadn't transpired to that point. You know, through February and March, you know, that book continued to increase in value and add value. With, you know, conclusion of the winter, we were able to, you know, close the books and look at those numbers. Certainly the earnings guidance raise that you see here is reflective of that. NJR Energy Services continues to be a business that performs, you know, does good things for us long term, you know, lowers our debt and equity needs by the cash that they're able to bring in and, you know, all at, you know, a low risk profile.

Speaker #5: And the conclusion of the winter, we were able to close the books and look at those numbers and certainly be earnings guidance raised that you see here is reflective of that.

Speaker #5: Energy services continues to be a business that performs does good things for us long term, lowers our debt and equity needs by the cash that they're able to bring in.

Speaker #5: And all at a low-risk profile. So we hope it continues going forward. But really, the whole reason for the raise before and now a raise now was really just timing and having the winter conclude.

Steve Westhoven: You know, we hope it continues going forward. Really, the whole reason for the, you know, raise before and now our raise now was really just timing and having the winter conclude.

Speaker #8: Okay. So the initial one incorporated Fern, right? And then subsequent here, now this is incorporated additional post-Fern. Is that right?

Travis Miller: Okay. The initial one incorporated FERC, right? Subsequent here now this has incorporated additional post-FERC. Is that right?

Speaker #5: Yeah. That's right.

Steve Westhoven: Yeah, that's right.

Speaker #8: Okay. Okay. And then late for when does that expansion CapEx start to come into the plan? And related to that, at what point do you need some extra financing above and beyond your plan, either equity or debt, to support the Leaf River?

Travis Miller: Okay. Okay. Leaf River, when does that expansion CapEx start to come into the plan? Related to that, at what point do you need some extra financing above and beyond your plan, either equity or debt, to support the Leaf River expansion?

Speaker #8: Expansions?

Steve Westhoven: We won't need any additional financing, you know, for Leaf River. You know, capital expenditures, you know, we're starting now. You know, we've started to make commitments on equipment and, you know, arrange for, you know, contractors and other things that to begin that process of construction. You saw that we received the environmental assessment for FERC not too long ago. Everything's moving along as it should according to schedule. Of course, we've got that all backed by a long-term contract. Yeah, we're moving forward with that project and expect to have that into service in fiscal year 2027, 2028.

Speaker #5: We won't need any additional financing for Leaf River. But capital expenditures—we're starting out. We've started to make commitments on equipment and arrange for contractors and other things that begin that process of construction.

Speaker #5: You saw that we received the environmental assessment for FERC not too long ago. So everything's moving along as it should according to schedule. And of course, we've got that all backed by a long-term contract.

Speaker #5: So we're moving forward with that project and expect to have that into service in fiscal year 2027-28.

Speaker #8: Okay. Very good. That's all I have for now. Thanks.

Travis Miller: Okay. Very good. That's all I have for now. Thanks.

Speaker #5: Thanks, Travis.

Steve Westhoven: Thanks, Josh.

Operator: That concludes our question and answer session. I will now turn the call back over to Adam Prior for closing remarks.

Speaker #6: That concludes our question and answer session. I will now turn the call back over to Adam Pryor for closing remarks.

Speaker #5: Thanks so much. And I'd like to thank everybody for joining us this morning. As always, we appreciate your interest and investment in NJR. We'll see many of you in Scottsdale at AGA in May.

Adam Prior: Thanks so much, and I'd like to thank everybody for joining us this morning. As always, we appreciate your interest and investment in NJR. We'll see many of you in Scottsdale at AGA in May. Have a good rest of your day. Appreciate it.

Speaker #5: And have a good rest of your day. Appreciate it.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.