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DATE

Tuesday, Feb. 3, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Stephen D. Westhoven
  • Senior Vice President and Chief Financial Officer — Roberto Bel
  • Director of Investor Relations — Adam Prior

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TAKEAWAYS

  • NFEPS Guidance Raised -- Fiscal 2026 net financial earnings per share guidance increased by $0.25 to a range of $3.28 to $3.43, driven by Energy Services' outperformance during the extreme cold event.
  • NFE for the Quarter -- Net financial earnings for the quarter were $118.2 million, or $1.17 per share, reflecting higher utility contribution from new base rates and offset by a lower Clean Energy Ventures (CEV) contribution due to prior year solar asset sales.
  • Record Weather Event Impact -- The company managed the highest sendouts in its history during a seven-day cold stretch without interruption to service, highlighting the reliability of assets and operations.
  • Utility Hedging Performance -- New Jersey Natural Gas entered the winter season over 87% hedged at an average price of approximately $2.20 per dekatherm, compared to Citygate prices above $135 per dekatherm during the peak cold event.
  • Customer Bill Mitigation -- More than 110,000 utility customers participated in energy efficiency programs, with whole home offering users seeing approximately 30% reductions in bill amounts; over $16.5 million in energy assistance provided.
  • Customer Growth -- Ongoing additions include the upcoming Monmouth County housing development that will add roughly 350 new customers, supported by demand from construction and conversions.
  • Storage and Transportation Expansion -- FERC application filed to expand Leaf River working capacity by more than 70%; initial phase already has a long-term contract, with later phases contingent on additional fee-based contracts.
  • Storage and Transportation NFE Outlook -- Segment expected to double net financial earnings over the next two years, mainly due to recontracting at Adelphia and Leaf River.
  • CEV Capacity Growth -- Clean Energy Ventures added approximately 10 megawatts of capacity during the quarter and plans to grow in-service capacity by more than 50% in the next two years, supported by safe harboring for federal tax incentives.
  • PJM Solar Development -- CEV is advancing significant wholesale PJM solar assets, capitalizing on regional shortfalls and speed-to-market capability to address capacity needs.
  • Q1 CapEx -- $119 million deployed across businesses in the quarter; 70% directed to New Jersey Natural Gas for infrastructure, safety, reliability, and customer growth.
  • Five-Year CapEx Plan -- $4.8 to $5.2 billion projected through fiscal 2030; more than 60% to be allocated to the regulated utility.
  • Balance Sheet Metrics -- Adjusted funds from operations to adjusted debt ratio projected at around 20% for the next five years; no block equity required, supported by strong cash generation and a well-laddered debt maturity profile.
  • Dividend Track Record -- Company reports 30 consecutive years of dividend increases.
  • Segment NFEPS Contributions -- Utility to remain the majority of NFEPS in 2026, with a rising percentage from Energy Services due to recent margin capture.

SUMMARY

New Jersey Resources Corporation (NJR +3.73%) experienced a record winter weather event that drove exceptional performance in its Energy Services segment, resulting in a $0.25 per share increase to fiscal 2026 NFEPS guidance. The company reported first-quarter NFE of $118.2 million, with utility results lifted by new rates and proactive hedging, while prior-year solar asset sales led to a lower CEV contribution this quarter. Management confirmed no need for block equity to execute its $4.8 to $5.2 billion five-year capital plan, with a majority of investments concentrated in regulated utility infrastructure. The company secured a long-term contract for the initial Leaf River capacity expansion, while ongoing organic growth opportunities in both storage and solar asset development may offer future upside. Regulatory developments in New Jersey, including recent executive orders and a supportive regulatory framework, may impact the pace of clean energy and infrastructure investments.

  • President Westhoven stated, "New Jersey Natural Gas delivered the highest sendouts in its company's history" during the weather event, emphasizing the resiliency and critical role of natural gas.
  • The Leaf River fourth cavern expansion is not yet contracted but management cited "constructive" open seasons and expects to start construction around 2029, based on market response and future signed agreements.
  • Utility hedging strategy—backed by regulatory approval—resulted in a "minimum of 75% of the upcoming winter season's projected gas needs are secured in advance." each year.
  • CEV is advancing technology enhancements, such as distributed generation and battery storage, leveraging existing grid interconnections to unlock new grid capacity; management sees these potential projects as outside of current financial plans and thus additive if realized.
  • No near-term rate case activity is anticipated, with management noting, "we completed a rate case which went into effect about fourteen months ago or so, fifteen months ago or so. So we don't have any pressing needs to jump into the regulatory process."

INDUSTRY GLOSSARY

  • NFEPS: Net Financial Earnings Per Share, a non-GAAP earnings metric reported by NJR for investor guidance and performance tracking.
  • FERC: Federal Energy Regulatory Commission, the U.S. agency responsible for authorizing and regulating interstate gas infrastructure expansions like Leaf River.
  • CapEx: Capital expenditures invested by NJR across its business segments, particularly for infrastructure and growth projects.
  • Safe Harboring: Securing eligibility for federal tax incentives on solar projects by meeting investment criteria ahead of future regulatory changes.
  • PJM: Regional transmission organization managing wholesale electricity markets across parts of the eastern U.S., relevant for CEV's solar asset development.
  • Sendout: The volume of natural gas delivered by the utility to customers, particularly during peak demand periods.
  • BGSS: Basic Gas Supply Service, a regulated pricing mechanism filed with state regulators governing natural gas procurement and pass-through to customers.

Full Conference Call Transcript

Stephen D. 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 laws. 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 two.

These items can also be found in the forward-looking statements section of yesterday's earnings release, furnished on Form 8-Ks and in our most recent Forms 10-Ks 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 seven of our 10-Ks. The slides for today's presentation are available on our website and were furnished on our Form 8-K filed yesterday. Stephen will start with this year's highlights in a business unit overview, beginning on slide five. Roberto will then review our financial results.

Stephen D. Westhoven: Then we will open it up for your questions. With that said, I will turn the call over to our President and CEO, Stephen D. Westhoven. Please go ahead, Stephen. Thanks, Adam, and good morning, everyone. I hope you all had a chance to review our earnings materials, which include detailed disclosures on our growth prospects. I wanted to start by discussing a few highlights. We delivered excellent results in fiscal 2025, driven by strong execution and performance. For the fifth year in a row, we exceeded initial earnings guidance and long-term growth targets. After a successful 2025, there were a few key themes as we look ahead to fiscal 2026 and beyond. First, consistency and execution.

We are guiding to NFEPS at $3.03 to $3.18 per share in fiscal 2026. The range is consistent with our long-term 7% to 9% growth rate, while leaving additional room for upside. Second, targeted capital deployment. We expect to invest roughly $5 billion over the next five years across the whole company, with roughly 60% allocated to our utility New Jersey Natural Gas. To put the $5 billion into context, this represents a 40% increase compared to the CapEx spent over the last five years. Third, a healthy balance sheet anchored in disciplined financial management. We expect credit metrics to remain strong with healthy cash flows, ample liquidity, and a balanced debt maturity profile that supports long-term stability.

Importantly, NJR requires no block equity issuance to execute on its capital plan. On the next slide, we highlight a few of the key drivers at our business segments. To begin, New Jersey Natural Gas is positioned for high single-digit rate base growth through 2030. S and T is expected to more than double net financial earnings by 2027 driven by favorable recontracting of both Adelphia and Leaf River. And looking ahead, we recently filed with FERC a plan to increase working gas capacity by over 70% at Leaf River. And at Clean Energy Ventures, we expect to expand capacity by more than 50% over the next two years with a robust pipeline of safe harbored projects.

In short, through a disciplined capital investment strategy, we have visibility to deliver sustainable growth well into the future, supported by a solid balance sheet. And we are able to achieve all this with minimal dilution to shareholders. Let me turn to a brief discussion of each business unit starting with the New Jersey Natural Gas on Slide seven. Our planned investments in New Jersey Natural Gas are expected to drive high single-digit rate base growth through 2030. New Jersey Natural Gas operates within a constructive utility framework and continues to make responsible investments in safety and reliability while prioritizing affordability for our customers. Natural gas is by far the cheapest option for customers to heat their homes.

Energy efficiency programs such as Save Green further reduce usage and cost while aligning with environmental goals. For example, residential customers who fully participate in Save Green Whole Home offerings see a reduction of up to 30% in their energy usage, saving hundreds of dollars in utility costs every year. Moving to the next slide, Storage and Transportation is emerging as a key earnings growth driver for NJR. Over the next two years, we expect NFE to more than double at S and T. And this is largely driven by strong recontracting in both Adelphia and Leaf River. These are fixed price contracts with quality and creditworthy counterparties.

When we recently reached a settlement in our first rate case at Adelphia, this constructive outcome enables recovery of the substantial investments and operational improvements made in recent years. While near-term earnings are set to double, we are actively pursuing organic growth opportunities for additional upside at Leaf River, which we outlined on the next slide. When we acquired Leaf River in 2019, it positioned NJR as a leading service provider in the Gulf Coast, one of the highest growing energy demand centers in the United States. In addition to the prime location, the long-term value of the asset was enhanced by expansion options beyond the three existing operating caverns. Since our purchase of the asset, market demand has strengthened.

Throughout fiscal 2025, we conducted a number of nonbinding open seasons which confirmed a high level of commercial interest in capacity expansion. Following this favorable response, we filed a FERC application in October that included several complementary investments to increase Leaf River's working gas capacity by over 70%. They include the expansion in our existing caverns to a working gas capacity of 43 Bcf by 2028 and the development of an additional fourth cavern that will bring total capacity to 55 Bcf. Each phase of the investment is expected to be backed by long-term fee-based contracts.

Building on our already strong NFE growth, this phased approach has an inherent speed to market advantage that positions NJR ahead of greenfield development options. To conclude, we see considerable upside in both the near and long term as S and T becomes a greater contributor to NJR's earnings profile. Moving to Clean Energy Ventures on Slide 10. We expect to grow in-service capacity by more than 50% over the next two years. Looking ahead, we have a strong project pipeline designed to maintain investment tax credits through strategic safe harboring. This positions CEV to deliver continued growth in high single-digit unlevered returns. So with that, I'll turn the call over to Roberto for a financial review. Roberto?

Roberto Bel: Thanks, Stephen. Fiscal 2025 was an excellent year, with strong earnings growth, a solid balance sheet, and continued investment across our businesses. Slide 12 highlights a few fiscal 2025 accomplishments. New Jersey Natural Gas achieved a constructive outcome in its recent rate case and delivered record investments for Save Green. Clean Energy Ventures added a record new capacity. In fiscal 2025, CEV placed 93 megawatts of new commercial solar capacity into service, expanding our portfolio to 479 megawatts. In addition, CEV secured investment options for years to come through effective safe harboring. In Storage and Transportation, Adelphia received approval for a settlement on its first rate case with Leaf River advancing expansion initiatives.

Energy Services achieved strong cash flow generation, and our Home Services business was named a Root's top 20 pro partner for the ninth consecutive year. We also marked an important milestone, thirty consecutive years of dividend increases, restoring confidence in our long-term plan. On the next slide, we finished the year at the top end of our guidance range, which was raised earlier this year. With the year-end financial results ahead of expectations, roughly two-thirds of total NFEPS came from the utility, and when you exclude the net impact of the sale of our residential solar assets, that figure raises to over 70%, underscoring the stability of our earnings.

Drivers of our performance include the completion of a rate case and a record year of Save Green investment. Additional drivers include approximately 30¢ per share from the sale of our initial solar portfolio, improved performance from our Storage and Transportation business, and solid winter results from Energy Services. Moving to a discussion of CapEx on slide 14, we deployed $850 million across our businesses, which I'll highlight in the next few slides. On slide 15, New Jersey Natural Gas represented approximately 64% of total CapEx, with investments directed towards strengthening core infrastructure, enhancing system safety and reliability, and supporting customer growth. Almost half of these investments are in recovery with minimal lag.

As shown on slide 16, fiscal 2025 CapEx for CEV came in well above expectations, reflecting accelerated progress. Importantly, our capital deployment target is fully safe harbored, securing tax benefits for future capital expenditures. Building on this strong 2025, I wanted to shift to our CapEx outlook on Slide 17. We are sharing a five-year CapEx outlook of $4.8 to $5.2 billion through fiscal 2030. This represents a 40% increase over the previous five years of capital spending across our businesses. We expect that more than 60% of our total projected CapEx will be dedicated to the utility, with CEV and S and T representing the balance.

Together, these investments support our 7% to 9% long-term NFEPS growth target while maintaining a solid balance sheet as discussed in the next slide. Strong cash generation across our businesses translates to an adjusted FFO to adjusted debt ratio that's projected to remain at around 20% for the next five years with no block equity needed. Additionally, ample liquidity and a well-laddered debt maturity profile minimize near-term refinancing risk and preserve financial flexibility. And finally, we are initiating fiscal 2026 NFEPS guidance with a range of $3.03 to $3.18 per share. The range is consistent with our long-term 7% to 9% growth rate while leaving additional room for upside.

The utility is expected to contribute approximately 70% of fiscal 2026 NFEPS, complemented by earnings growth from CEV and S and T, and a baseline outlook for Energy Services. With that, I'll turn it back to Stephen for concluding remarks on slide 21.

Stephen D. Westhoven: Thanks, Roberto. Over the last twenty-five years, we've delivered industry-leading returns reflecting both the quality of our utility investments and disciplined contributions from our non-utility businesses. While our infrastructure investments have been the foundation of this performance, Energy Services has complemented that strength, enhancing consolidated returns and providing flexibility to reinvest in our infrastructure businesses. To recap, fiscal 2025 was another year of solid execution, marking five consecutive years of exceeding initial earnings expectations. Our long-term growth remains anchored by our regulated utility, with clear visibility into capital spending at New Jersey Natural Gas.

Storage and Transportation is set for accelerated growth with earnings expected to more than double in the near term before we even begin to factor in those capacity expansions we highlighted earlier. Over the next two years, Clean Energy Ventures expects a 50% increase in installed capacity, and our project pipeline is secured into the future through proactive safe harboring. NJR today stands as a balanced, diversified energy infrastructure company built for long-term stability and value creation. The outlook for fiscal 2026 and beyond is clear, well-funded, and utility-anchored. As we all know, New Jersey recently had a gubernatorial election. Electricity prices and affordability issues were front and center.

We understand the challenge the state is facing today, and we look forward to working with the incoming governor to meet her call for swift deployment of clean energy solutions and to continue providing affordable natural gas service to families and businesses. And finally, a sincere thank you to all NJR employees for your dedication and hard work throughout the past year. Your commitment is the foundation for our continued success. So with that, let's open the line for questions.

Operator: Ladies and gentlemen, I will now turn the call over to Adam Prior, Director of Investor Relations. Please go ahead.

Adam Prior: Thank you, Kelvin. Well, for those of you on the call, I'm sure you noticed that we just ran through our fourth quarter script, which we read in November. And we want to give you an update for Q1. And so we're going to go through our presentation for that script now, and I'll turn it over to Stephen D. Westhoven. He'll go through our first quarter results, and Roberto Bel will follow with our financial results. And then we'll be happy to take your questions. And thank you for your patience.

Stephen D. Westhoven: Yeah. Thanks, Adam. Yeah. Sorry, everybody. We'll run through the scripts now reflecting this quarter. So the natural gas industry just navigated an extraordinary weather event with record-setting demand. And once again, NJR's diversified businesses responded with extraordinary performance. I want to start today's call by acknowledging our team's execution during this prolonged period of extreme cold weather, which hasn't been seen in decades. And thanks to all of our employees for your collective efforts on behalf of our customers. Our assets were operated safely and successfully across our entire natural gas portfolio.

Looking at this event and at recent major winter storms, we consistently demonstrate that our systems and our people are prepared, resilient, and able to execute under pressure. At New Jersey Natural Gas, these past few weeks highlighted how critical our lifeline services are to our customers. The utility kept homes and businesses warm and supported emergency providers without interruption. Our non-utility business held true to the same level of performance. Both Adelphia and Leaf River experienced high utilization and continuously delivered despite regional disruptions. And our Energy Services team once again expertly executed. Our strategically located assets generated significant value volatility created by the prolonged cold temperatures.

And as a result of Energy Services' performance, we're able to increase our fiscal 2026 NFEPS guidance by $0.25 a share to a range of $3.28 to $3.43 per share. This represents the sixth consecutive year of raising guidance as a result of the strength of our complementary portfolio of businesses. As I started, this was an extraordinary weather event met with NJR's extraordinary performance. I'll turn now to look at how New Jersey Natural Gas took steps to protect customers against high natural gas prices during the recent cold weather. Over a seven-day stretch, New Jersey Natural Gas delivered the highest sendouts in its company's history.

This demand underscores how all aspects of our local economy rely on natural gas, even more so under extreme conditions when our customers need us most. Sustained low temperatures likely result in higher gas use by our customers, which will have an impact on bills. With the supportive regulatory framework approved by the New Jersey Board of Public Utilities, New Jersey Natural Gas is proactive in helping to protect customers against these high use increases. Each year, the utility purchases natural gas well in advance of the heating season when commodity prices are more likely to increase and spike during the winter weather events.

As a matter of policy, a minimum of 75% of the upcoming winter season's projected gas needs are secured in advance. Going into this winter, New Jersey Natural Gas was over 87% hedged. This is impactful. Our average hedge price is approximately $2.20 per decatherm for gas in storage and LNG. And that compares to a Citygate pricing that traded in excess of $135 per dekatherm during the event. This disciplined approach prioritizes affordability as it allows us to secure cost-effective supply to serve our customers. In addition, throughout the year, our energy efficiency programs, namely Save Green, help customers reduce usage and lower bills.

More than 110,000 customers have taken part in our programs to date, and those utilizing our whole home offerings are realizing bill savings of roughly 30%. In addition to managing usage, we also provide support through financial assistance programs, equal payment plans, and proactive outreach. These efforts help connect customers with more than $16.5 million in energy assistance funding. Now let's turn to customer growth. Natural gas remains the cheapest option to heat homes and businesses, supporting New Jersey Natural Gas' strong customer growth rate. This growth also reflects favorable trends in new construction and conversions across our service territory.

In our slide deck, we included a photo of the new housing development in Monmouth County that will add roughly 350 new customers once completed. It's a clear example of the meaningful customer-driven opportunity ahead. Now switching to a discussion of our Storage and Transportation business on slide eight. As we noted on our year-end earnings call, we expect to double NFE over the next two years at S and T. This is driven by strong recontracting in both Adelphia and Leaf River. These are fixed price contracts with quality credit rating categories.

During the first quarter, we filed a FERC application that includes several complementary businesses that would increase Leaf River's working capacity by more than 70% over the next few years. Today, we're announcing that we've already secured a long-term contract that covers the initial capacity expansion at our existing caverns. The remaining phases of the project will be supported by long-term fee-based contracts. We're currently active in the FERC process with likely authorization to decision coming by the end of the fiscal year. This is on track with our expectations, and we'll provide updates as the project progresses. Moving to Clean Energy Ventures on slide nine. We added approximately 10 megawatts of capacity during the quarter.

Looking ahead, we expect to grow in-service capacity by more than 50% over the next two years. And our proactive safe harboring initiatives to preserve federal tax incentives further strengthen our leading position in the marketplace. In a region where energy affordability concerns are driven in large part by supply shortages, CEV's speed to market capability is a competitive advantage. Specifically, CEV is advancing significant wholesale PJM solar assets as PJM demand projects are trending upward. We expect these operating assets to continue to increase in value. At the same time, market shortages are opening up additional organic growth opportunities, including new technologies to optimize our existing interconnections.

These technologies have the potential to unlock incremental value and add new supply to the grid at a time when New Jersey and PJM need it most. So with that, I'll turn the call over to Roberto for a financial review.

Roberto Bel: Thanks, Stephen. I'll start with a brief walk for the quarter on slide 11. We reported NFE of $118.2 million or $1.17 per share for the quarter, reflecting disciplined execution and solid performance across our businesses. We saw a higher contribution from the utility in this period, largely due to new base rates being in place for the entire quarter in fiscal 2026. It was offset by a lower CEV contribution given the gain on the sale of our initial solar assets in the prior year period. Let's move to a discussion of our capital plan on the next slide. We deployed approximately $119 million across our businesses during the quarter.

New Jersey Natural Gas represented approximately 70% of total CapEx for the period, with investments directed towards strengthening core infrastructure, enhancing system safety and reliability, and supporting continued customer growth. We're reaffirming our five-year CapEx outlook of $4.8 to $5.2 billion through fiscal 2030. We expect that more than 60% of our total projected CapEx will be dedicated to the utility, with CEV and S and T representing the balance. At CEV, our total deployment target is fully safe harbored, securing its future size of entities. Together, these investments support our 7% to 9% long-term initiative growth targets while maintaining a solid balance sheet as discussed in the next slide.

On slide 13, we highlight the strengths of our balance sheet. Strong cash generation across our businesses translates into an adjusted FFO to adjusted debt ratio that's projected to remain around 20% for the next five years. Energy Services' outperformance this quarter provides meaningful additional cash flow, enhances our ability to manage capital spending and maintain strong credit metrics, and reinforces that we have no need for block equity in the foreseeable future. Additionally, ample liquidity and a well-laddered debt maturity profile minimize near-term refinancing risk and preserve financial flexibility.

And finally, as a result of the outperformance from Energy Services during the winter to date, we're raising our NFEPS guidance range by 25¢ to a higher range of $3.28 to $3.43 per share. We're also revising our expected segment NFEPS contribution percentages as a result of this outperformance. The utility will remain the majority of the company's NFEPS for fiscal 2026, with Energy Services' percentage rising as a result of capturing additional financial margin during this period. With that, I'll turn it back to Stephen for concluding remarks on slide 15.

Stephen D. Westhoven: Thanks, Roberto. Last month, we issued NJR's fiscal 2025 Corporate Sustainability Report, which reflects our commitment to transparency with our stakeholders. The focus of this year's report is appropriately on affordability. The report brings greater detail around our energy efficiency and customer system efforts. Lower natural gas prices are effectively helping reduce overall household energy, an important factor when addressing affordability. As many of you know, New Jersey welcomed a new governor last month. Governor Sherrill moved quickly to outline her priorities, signing two executive orders aimed at addressing rising electric utility costs and New Jersey's broader energy supply challenges. These actions are consistent with what she emphasized during the campaign, focusing on affordability for customers.

These discussions are an important issue for the state, and we look forward to continuing our dialogue and working with the new administration to help drive solutions forward while growing our business. To conclude, our long-term growth remains anchored by our regulated utility with clear visibility into capital spending at New Jersey Natural Gas. Our top priority is making sure our system operates reliably when it's needed most. Storage and Transportation is set for accelerated growth with earnings expected to more than double in the near term before we begin to factor in capacity expansions at Leaf River.

Over the next two years, Clean Energy Ventures expects a 50% increase in installed capacity, and our project pipeline is secured into the future through proactive safe harboring. Overall, the momentum across all of our businesses reinforces our confidence in the path ahead. And finally, I want to thank everyone again, our NJR employees, for your dedication and hard work. So with that, let's open up the line for questions.

Operator: Ladies and gentlemen, we will now begin the question and answer session. If you would like to withdraw your question, please press 1 again. Your first question comes from the line of Gabriel Moreen of Mizuho. Please go ahead.

Gabriel Moreen: I guess the story is so good you have to tell it twice. So I wanted to start off on Energy Services. Clearly, outstanding performance here. It's supposed to be single-digit weather again up and down the Eastern Seaboard this upcoming weekend for a couple of days. Can you just talk about to the extent your revision here may capture weather events for the rest of the quarter or there's the potential for further upside should, you know, volatility continue to materialize?

Stephen D. Westhoven: Yeah. Thanks, Gabriel. Thanks for the question. Yeah. Sorry about the double repeat there. Yeah. The Energy Services group and, you know, our guidance that we issued last night is based on results to date or, you know, kind of our estimates through January. So, obviously, we've got a lot of fiscal year that's left. And, you know, not able to incorporate events that haven't happened yet. So, yeah, we'll see how those, you know, continue to play out. But, certainly, you know, January was obviously very constructive, you know, for our results here at NJR.

Gabriel Moreen: Thanks, Stephen. And maybe if I can follow-up on S and T, you know, the capacity going from 43 to 55, just want to confirm you've got contracts for that portion of the expansion. And then also, but maybe if you'd also speak to some of the blue sky opportunities around expanding beyond the 55? Are you getting reverse customer inquiries? Is there potential for that capacity growth to accelerate either in size or timeline? And then also, are the economics there? You talked last quarter about some of the economics behind your contract. And how that stepped up, but are those supportive now in your mind of full greenfield development around your around Leaf River?

Stephen D. Westhoven: Yeah. So, you know, the whole story at Leaf River, you know, we're doubling our earnings, and that's largely through, you know, contract upgrades at Adelphia Gateway and Leaf River through 2027. The FERC filing, you know, shows compression expansion, existing cavern expansion, and then a fourth cavern expansion, which is what you're referring to from the, you know, approximate 43 to the 55, you know, Bcf. So what we have contracted for now and what we're talking about on today's call is that compression expansion and existing capacity expansion. That fourth cavern, we do not have contracts for yet. But as you can imagine, you know, the market has been very constructive.

But we're still, you know, working through that. We held an open season and certainly, like I said, constructive to that point of expanding going forward. There is additional expansion, you know, both at Adelphia Gateway and Leaf River, but on what we've talked about here today. You know, we'll continue to work, you know, the markets and see what they're willing to pay for. Remember, if we get signed contracts, then those will essentially drive, you know, our investment at those facilities. So we'll back to back those. And as those come in, you know, we'll certainly share it, you know, with our investors.

But, you know, good news today, and certainly the market and even recent conditions, you know, drive for the need for more storage and capacity in the Northeast, Southeast, you know, really all over the US.

Gabriel Moreen: Thanks, Stephen. Appreciate it.

Operator: Your next question comes from the line of Elias Jossen of JPMorgan. Please go ahead.

Elias Jossen: Hey. Good morning, everyone. Just wanted to start on the evolving regulatory backdrop. So how should we think about the New Jersey affordability efforts that you highlighted in the release, particularly as it pertains to future rate case filings and the overall regulatory strategy at the utility?

Stephen D. Westhoven: Thanks, Elias. Yeah. And, you know, affordability has always been important, you know, for us at NJR. You know, we talked in our narrative about, you know, the way that we hedge our gas, you know, driving energy efficiency, you know, reducing customer usage in order to lower their bills, you know, energy assistance, you know, for those that need it. So that's not a new narrative for us. You know, we'll continue, you know, to drive that forward. Remember, you know, we completed a rate case which went into effect about fourteen months ago or so, fifteen months ago or so. So we don't have any pressing needs to jump into the regulatory process.

You know, we're going to continue to, you know, work with the administration and take advantage of the opportunities that present themselves. You know, we do have capacity needs that are clearly stated, you know, in the state of New Jersey. We're going to work proactively with the administration to achieve our shared goals. So, you know, that's the way that we're looking at it.

Elias Jossen: Awesome. But then, you know, maybe just pivoting more towards the second executive order, EO2, and the opportunity set that it offers you at CEV. Can you just talk about the plan for that business moving forward, thinking about the backlog of installs that you guys have and the safe harboring? I know you're kind of substantially through that, but just the outlook for that segment and whether or not there's any impact from recent regulation or legislation?

Stephen D. Westhoven: Yeah. It's encouraging. You know? Thanks for asking the question. You know? Permit reform, you know, ways to accelerate interconnects, ways to accelerate our ability to develop, you know, our safe harbored assets in the state of New Jersey are the quickest, you know, capacity that can be brought to market. So all those things are encouraging. You know, we're going to work with the administration. Yeah. They've got some work to do in order to effectuate all that. But, you know, those tailwinds are clearly in the making in order to develop more.

And, you know, when we are able to, you know, some evidence that we're able to move forward, then we'll certainly share that with the investing community.

Elias Jossen: Awesome. Appreciate it. Thanks.

Operator: Your next question comes from the line of Jamieson Ward of Jefferies. Please go ahead.

Jamieson Ward: Hi, guys. I actually got Jamieson Ward on here for Julian. How are you?

Stephen D. Westhoven: Hello, Jamieson.

Jamieson Ward: Hey. Great color that you've given on affordability, the executive orders. So I really appreciate that. As well on the 4th Cavern heading to 55 Bcf, you mentioned not having contracts yet, but can you characterize the level of commercial interest you're seeing? Give us a sense of the expected capital intensity relative to the existing expansion. Maybe help us think about the timing of any associated earnings contribution, kind of helps give clarity on the longer-term run, right, into 2029, 2030, and so on.

Stephen D. Westhoven: Yeah. I think the open seasons that we've had to date have been, you know, constructive. You know, the things that we need to do are to be able to turn, you know, those open seasons and the pricing and the terms into an agreement that we can then, you know, turn it and build upon. You know, right now, the timing is perfect. You know, we're able to put in the compression. We can expand our existing facilities. You know, that, obviously, that put more brownfield expansion a little bit cheaper to come to market than a greenfield.

But the pricing we're seeing, you know, gives us confidence that being able to, you know, develop this fourth cavern, you know, is certainly, you know, possible in the future, and we're working towards that. You know, as far as timelines go, you know, we've already said, you know, we're going to double earnings through 2027. Then, you know, we're working, you know, after we get our first certificate construction through the facility. So then you see, you know, the existing tower expansion and capacity, you know, come to market with that matching contract and, like, a 2028 time frame, and then Fort Tavern expansion as this market develops.

You know, like I said, you know, certainly recent events are supportive. Looks like, you know, 2029 time frame, you know, starting construction, obviously, sometime prior to that. So we'll have to, you know, see how that ends up playing out. But like I said, the open season's recent market, you know, volatility all points towards the need for more storage in that area and know that we're pursuing that aggressively.

Jamieson Ward: That's great. Thank you very much. Another really strong start to the year, guys. Impressive. Thanks a lot. Back in the queue.

Operator: Your next question comes from the line of Christopher Ronald Ellinghaus of Siebert William Shank. Please go ahead.

Christopher Ronald Ellinghaus: Hey, good morning, everybody. Another great quarter. Thanks. Stephen, can you talk about sort of what you're seeing in the solar pipeline outside of New Jersey and sort of given the EOs, you know, has that changed your thought process about sort of geographic diversity at this point?

Stephen D. Westhoven: No. I mean, we're still moving forward. You know, we've got about, I guess, 50% of our forward-looking projects are outside the state of New Jersey. Percent obviously inside the state of New Jersey, you know, we're continuing to pursue projects that, you know, meet our rate of return and, you know, build in, you know, an area that it's friendly from a regulatory perspective. And there's a number of states that are around us that are friendly from a regulatory perspective. So, you know, we see those markets continuing. And remember, PJM's big. Right? And, you know, certainly, any power grid isn't independent from those adjacent to it. Got a capacity shortage in one.

It usually means there's capacity shortage in others. So, you know, this trend and the ability to quickly bring, you know, solar capacity to market, you know, more quickly than, you know, other forms, you know, nuclear, you know, some larger gas-fired generations and instances like that is important. So while these are constructive, you couple on, you know, the EO and potential permitting reform and things like that. You know, hopefully, we see some acceleration, you know, in the near future trying to solve this problem of being short capacity in the short term.

Christopher Ronald Ellinghaus: Okay. As far as storage and transmission goes, the growth is great. Can you, outside of the Adelphia Gateway outcome, can you sort of give us any color vis a vis sort of the proportionality of the recontracting price improvement versus, say, the capacity? I think it's slide eight. You know, how should we think about the timing of the growth to the new target, you know, price versus volume?

Stephen D. Westhoven: Yeah. I, you know, it's hard to kind of differentiate that, but I think it's, you know, pretty clear if you go back to what our historical earnings are. We're going to double our earnings from that segment by 2027. And, you know, in that is, you know, quite a bit of recontracting. You know? When purchasing Leaf River, you know, part of our investment that, you know, storage rates were going to go up, and you see that being executed.

The Adelphia Gateway, you know, like a normal interstate pipeline going through rate cases, being able to, you know, raise rates to reflect capital that was invested on the pipeline in the future, you know, certainly being reflected as well. You know, I think, you know, this recent weather event continues to reinforce, you know, how short our region is. And we're already talking about that from an electric perspective, you know, for quite some time. So this infrastructure is very needed. The easiest way to expand infrastructure is to expand already existing infrastructure, which we have in both, you know, Southeast and Leaf River. The Adelphia Gateway in the Northeast.

So we continue to look at ways to expand that as well in order to grow. So we've got our capital plans that are out there that'll give you what we're, you know, very certain we're going to be able to execute. And I think, you know, other factors like the ones I just mentioned are additive. So we're going to continue to work on those, and then we'll share those when they come to fruition.

Christopher Ronald Ellinghaus: Okay. Great. Stephen, you sort of alluded to CEV having some technology opportunities for upside. Can you elaborate on that a little bit?

Stephen D. Westhoven: Yes. We own, you know, a number of grid-connected facilities. You know, those interconnections are very valuable. Being able to use those at a much higher load factor through distributed generation, battery power, those all bring capacity to the grid. And you can bring capacity to the grid in that way, you know, very quickly. And, you know, being able to deploy quickly is exactly what the market needs. So now it's just a matter of how do we put together the regulatory constructs aligned with the economics of being able to make the investments to make all this work. But we think we've got a leg up because we have brownfield, you know, infrastructure. Right?

Infrastructure that's already in place, the ability to expand without the need to build, you know, pure greenfield gives us that advantage, and it should make us some first mover in this space. So those are the things we're thinking about and certainly trying to drive forward. Again, all those things are outside of our plan, so that would be upside to our plan. So our plan shows exactly what we know is going to, you know, we're making the investments on, outside of the plan are the things that we're talking about here. You know, forward vision and what we're trying to drive as a management team to execute.

Christopher Ronald Ellinghaus: That sort of suggests some storage opportunities, which are certainly high ticket items. So, you know, that you sort of alluded to that possibility in terms of maybe some CapEx upside. Is that what your thought process is?

Stephen D. Westhoven: Yeah. Yeah. Exactly it. Exactly it.

Christopher Ronald Ellinghaus: Okay. One last question. Obviously, your hedging strategy has really paid off handsomely in the first quarter. You know, do regulators fully appreciate the benefit that you bring there? And or how do you sort of capitalize on that by, you know, reinforcing the value proposition that you bring with your hedging strategy?

Stephen D. Westhoven: Yeah. I mean, the regulators were part of the construct in putting that together, so they certainly are aware of it. We talk about it, and we file our BGSS that can be recognized. You know, certainly, they see, you know, our rates in the ground. You know, having an average price of storage of $2.27 when, you know, Citygate prices were over $100, you know, even if you look at some of the supplier pricing $30, $40, you know, dollars down in those areas. Being able to avoid those purchases, you know, has a, you know, just a huge benefit to our customers, not having to pay spot prices for that natural gas.

So, yeah, they're certainly aware of it. You know, we talk about it, and, you know, those programs are in place for a reason. They work and mitigate, you know, cost to our customers longer term.

Christopher Ronald Ellinghaus: Alright. Thanks. I appreciate it.

Operator: Thank you. Your next question comes from the line of Travis Miller of Morningstar. Please go ahead.

Travis Miller: Good morning, everyone. Thank you. Just a quick clarification on the guidance raise, the $0.25, was that all from what you're anticipating in Q2, or was there some of that in outperformance in Q1 relative to what you were expecting?

Stephen D. Westhoven: So, Travis, you know, we looked at our book and we saw the performance in January and decided that it was significant enough to warrant a raise during this call. So, really, this is an estimate, you know, through the January at this point.

Travis Miller: Okay. Okay. Clear. And then in terms of CapEx for the contracted compression and existing expansion, when are we going to see that flow through? I'm assuming that's not in your CapEx guidance right now. So would we see that in the coming quarters?

Stephen D. Westhoven: Yeah. It actually is in our CapEx guidance right now. So you'll see that on the schedule. There's an appendix schedule to what we posted last night. You can go through that. So that is part of our capital schedule right now.

Travis Miller: Okay. For the Leaf River line?

Stephen D. Westhoven: That's right.

Travis Miller: 2027, I assume. Right?

Stephen D. Westhoven: Yes. 2026 and 2027.

Travis Miller: 2627, probably.

Travis Miller: Okay. Okay. Okay. Makes sense. And then higher-level question, in New Jersey, politics, etcetera, would you be interested in rate base solar or rate base any kind of generation or energy other than natural gas distribution?

Stephen D. Westhoven: Yeah. You know, we would certainly work with the administration and do, you know, anything to be able to, you know, lower cost, improve, you know, the amount of capacity within the state of New Jersey, you know, to lower, you know, cost to consumers. So there's a number of, you know, items that are on the table. You know, we're not part of any kind of rate-based generation discussions at this point, but if it made sense, had the right risk profile, and we were able to deploy capital, you know, in the energy infrastructure space, then certainly we would consider it.

Travis Miller: Okay. Great. I appreciate the thoughts.

Stephen D. Westhoven: Alright. Thanks, Travis.

Operator: There are no further questions at this time. And with that, I will now turn the call back over to Adam Prior, Director of Investor Relations, for closing remarks. Please go ahead.

Adam Prior: Thanks so much. I'd like to thank all of you for your patience and for joining us this morning. We appreciate your interest and investment in NJR, and have a good day and the rest of your week.

Operator: Thank you so much. Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.