New Jersey Resources Corporation Stock

Hello, everyone. Thank you for joining us, and welcome to the New Jersey Resources Fiscal 2026 Quarter 3 and year-to-date Webcast and Conference Call. My name is Matthew, and I will be your moderator today. Please note that today's call will be recorded. [Operator Instructions] I will now hand the conference over to Adam Prior, Director of Investor Relations. Adam, please go ahead.

Thank you. Welcome to New Jersey Resources Fiscal 2026 Third Quarter and -- year-to-date Conference Call and 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. 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. This could cause results to materially differ from our expectations as found on Slide 2.

These items can also be found in the forward-looking statements 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 EBITDA, 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. 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. 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. Please go ahead, Steve.

Thanks, Adam. NJR delivered a solid performance for this quarter, driven by disciplined execution across our complementary businesses. At New Jersey Natural Gas, we've taken important steps to balance affordability for our customers while continuing to invest in the reliability of our system. We reached a key regulatory milestone at S&T, receiving the first certificate for our expansion at Leaf River ahead of schedule, allowing us to advance the project and support the growth opportunities we see ahead. At Clean Energy Ventures, we continue to add in-service capacity and advance a deep pipeline of investment options while maintaining the flexibility to deploy capital where it generates the best returns. Overall, the consistent execution you're seeing across our businesses supports our outlook for the year and positions us well for continued growth. With that, I'll turn to New Jersey Natural Gas.

As we think about our role as a utility, our objective is to deliver the most affordable energy possible for our customers while also investing to ensure the continued reliability and resilience of our system. That philosophy is reflected in the filings we submitted to the BPU on June 1. Taken together, these filings are designed to provide our customers with meaningful bill relief ahead of this upcoming winter, while also supporting the long-term investments necessary to serve our customers safely and reliably. Importantly, we structured these filings as a cohesive package, combining adjustments to our gas supply, conservation and energy efficiency programs alongside our base rate case. From an overall bill perspective, the goal is straightforward, providing stability for our customers with bills expected to remain nearly flat once all elements of the filings are implemented. So when you step back, this is all about balance, delivering affordability today while continuing to make investments required to serve our customers over the long term. From there, I'll turn to Storage and Transportation on the next slide.

At S&T, the drivers of the business remain consistent with what we've discussed previously. In the near term, S&T's performance is supported by favorable recontracting, which provides strong visibility into earnings and reinforces the stability of the business. Looking ahead, we expect this uplift to support a doubling of earnings from fiscal 2025 to 2027. At the same time, we are making progress on future growth opportunities at Leaf River. Our capacity expansion project remains on track. We recently received our FERC certificate, a significant regulatory milestone that supports our expected development time line. Overall, this is a business where we see a combination of near-term certainty and long-term growth, supported by both strong market fundamentals and disciplined execution through the investment in organic growth opportunities. With that, I'll turn to Clean Energy Ventures on Slide 8.

At CEV, we continue to make steady progress with additional capacity being placed into service. At the same time, we're focused on maintaining a portfolio that maximizes the value of our existing interconnections, positions us well to help address growing capacity needs. Our project pipeline provides a broad set of investment opportunities with multiple ways to deploy capital, whether through new project development or by enhancing and optimizing existing sites. That flexibility is intentional. It allows us to remain disciplined in how we invest while maintaining the ability to adapt to evolving market conditions, regulatory changes and opportunities. So overall, we feel very good about both the progress we've made and the strength of the platform we're continuing to build. I'll turn the call over to Roberto for a financial review and then return for a few closing remarks. Roberto?

Thanks, Steve. Turning to Slide 10. Based on performance through the first 9 months, we're tightening our fiscal 2026 and NFEPS guidance range to $3.52 to $3.62 per share, narrowing the range while increasing the midpoint. This update reflects greater visibility into full year results and the ongoing benefit of our diversified model. With that context, let me walk through the quarter in more detail on Slide 11. Fiscal 2026 third quarter consolidated net financial earnings were $11.3 million or $0.11 per share, an increase over the $6.2 million or $0.06 per share reported in the third quarter of fiscal 2025. Results for the quarter reflect improved contributions across several businesses with higher earnings at Clean Energy Ventures as additional projects have been placed into service, along with continued uplift at Storage and Transportation, driven by favorable recontracting activity. For the year-to-date period, the higher net loss at CEV simply reflects last year's onetime gain resulting from the sale of our residential solar business. With that, let's turn to our capital plan on the next slide.

We deployed approximately $630 million across our businesses year-to-date. New Jersey Natural Gas represented roughly 2/3 of total capital spend with increased investment focused on core infrastructure, particularly in safety and reliability as we continue to support system resiliency and customer growth. For fiscal 2026, we have increased our capital investment expectations to a range of $815 million to $950 million, up from our prior outlook of $775 million to $930 million. This increase is primarily driven by additional investments at the utility, reflecting our focus on safety and reliability initiatives. At Clean Energy Ventures, we're maintaining our current investment range, reflecting the depth of opportunities in our project pipeline and the flexibility we have in deploying capital.

Based on projects already underway, we remain confident in achieving the lower end of that range with project optionality that would move us towards the top end. We do not have any change to our estimates for fiscal 2027, and we're reaffirming our 5-year CapEx outlook of $4.8 billion to $5.2 billion through fiscal 2030. This level of investment supports our 7% to 9% long-term NFEPS growth target while remaining consistent with strong credit metrics. Our capital plan remains highly visible and originates from a diverse set of investment opportunities across our complementary businesses rather than being dependent on any single project or outcome. We expect to provide further clarity as we roll our outlook forward in November.

Turning to our balance sheet on Slide 13. The cash generation prevalent throughout our businesses is the main source of funding for our capital plan. We expect our adjusted FFO to adjusted debt ratio to exceed 20% in fiscal 2026, reflecting the stability of our earnings and our disciplined approach to capital allocation. From a liquidity standpoint, we have substantial available capacity and maintain a well-laddered debt maturity profile that limits near-term refinancing risk and positions us well across different market environments. Together, these factors reinforce the strength of our financial position and our ability to execute on our long-term plan.

Turning to Slide 14. We're tightening our fiscal 2026 and NFEPS guidance range to $3.52 to $3.62 per share, reflecting improved performance through the year and raising the midpoint of our range. We tightened our expected segment contribution ranges with relatively minor changes compared to our second quarter conference call. As we look ahead, we expect to revisit our segment mix in November as we roll our fiscal 2027 outlook forward and normalize expectations, consistent with our approach each year. With that, I'll turn to Steve for concluding remarks on Slide 15.

Thanks, Roberto. Overall, NJR is executing well and remains on track to achieve our long-term growth objectives. Our outlook remains anchored by our regulated utility with continued capital investment in New Jersey Natural Gas, helping to ensure safe and reliable operations while supporting long-term growth. At the same time, natural gas remains one of the lowest cost ways to heat a home, reinforcing its value proposition for customers. Storage and Transportation is well positioned, supported by near-term earnings visibility and additional upside as expansion opportunities progress. At Clean Energy Ventures, our portfolio is scaling as expected, driven by a secured development pipeline and disciplined capital deployment. This consistent execution reflects the strength and durability of our business model and gives us confidence in the path ahead.

Finally, I want to take a moment to thank our employees across NJR. Over the past year, we've talked a lot about our performance during a demanding winter, speaking to the reliability of our system. And more recently, we were tested again by the extreme heat and severe storms. During these moments, the commitment of our people truly shines, such as our home services employees working through extreme heat to ensure customers remain comfortable and safe. When we perform through conditions like this, it reflects the strength of our infrastructure and the dedication of our people, and that's something we're incredibly proud of and thankful for. With that, let's open up the line for questions.

[Operator Instructions] Your first question comes from the line of Elias Jossen of JPMorgan.

Just wanted to start on the rate case in New Jersey. Just thinking about some of the backdrops on affordability and some of the EO1 legislation that we've seen and the report from the BPU. How should we think about that filing in the context of the broader climate, recognizing that you guys have had pretty strong outcomes in the past. And obviously, gas is in a different position than electric, but just curious thoughts there.

Eli, thanks for the question. So you saw our filing back in June where we combined our rate case with a number of other filings to really protect cost for consumers. Obviously, that was done purposely. So we're well aware of the cost issues for consumers. So moving forward, the process to date has been normal. And you're going to see as we move through this process, hopefully, just a normal cycle going forward. Just one other note there to add to that, natural gas is the cheapest way to heat your home and business. So we feel like we're in a good position. And we look forward to just working through the process.

Awesome. And then maybe just thinking about some of the recent strength in the context of your guidance. Obviously, you guys are tracking well above where we would think '27 would be. Can you just remind us how you think about rebasing? And obviously, just in the context of what implied '27 numbers would be and when you might think about updating that rebasing?

This is Roberto. Thanks for the question. So we're going to provide our guidance in November for the next year. But as we usually do in -- we base our guidance on the 7% to 9% from a starting point, and that's not changing. If you remember, the starting point was $2.73 for 2025. So from there on, you can grow your 7% to 9%, and that's kind of what you should expect.

Your next question comes from the line of Constantine Lednev of Wells Fargo.

Congrats on a solid quarter. Maybe just a quick follow-up on kind of some of the rate case questions. Any feedback that you have been receiving from kind of the bill mitigation proposals? And do you see any structural differences with this cycle versus prior cycles? I guess maybe another way to ask, is there kind of opportunities to settle similar to prior cases?

So I mean, this hasn't been any different than any other rate case. Just a little extra color. This is a normal kind of plain vanilla rate case like we've had before. So really no differences, and we've just started the process. So not a lot of color, but I guess, if anything, not any differences to point out at this point.

Okay. And then maybe small follow-up kind of to the EO1 kind of business -- utility business strategy review. The recommendations obviously kind of came out earlier, a couple of months earlier. But do you see kind of any core sticking points? I guess, is there opportunities for more certainty through this process through anything like a multiyear or formulaic ratemaking process? Does that kind of create some considerations for the BPU in the near term?

Yes. I think that needs to play out a little bit more. To date, those executive orders have really been focused on the electric companies. We have not been closely involved in it. But we're certainly watching it for opportunities, just like you pointed out that if we can make this a smoother process for all, we certainly look to do so. But right now, kind of being opportunistic with this process at this point.

Okay. Understood. And then maybe a short kind of housekeeping follow-up. Just on the incremental S&T capacity kind of moving up and even kind of going beyond the 55 Bcf. Do you kind of anticipate the same capital intensity kind of going forward through time? And maybe any color on kind of the recontracting, contracting the incremental capacity, any kind of pricing data points that you're seeing?

I mean there's certainly strong demand for the services that our midstream facilities provide. As far as moving forward, I'd expect that expansions would continue and that capital intensity would continue. So I think there is opportunities. We've got the ability to expand Adelphia Gateway, add compression and do other things. None of these are in our capital plan currently, but we would expect to continue to invest in those assets because they are very valuable market and those services are being sought after. And you can see that reflected in the recontracting rates and the increases that we're seeing there.

Right. And then would that be covered kind of by the roll-forward update next quarter? Or is that -- is there some more kind of, I guess, contemplation embedded in there?

I mean when we do our next year's in November and our capital plan, we'll be -- you'll see that, I guess, in the next call, and we'll provide for more detail. But I don't really expect it to deviate from what I just described.

Your next question comes from the line of Gabe Moreen with Mizuho.

This is Dylan Lipner on for Gabe. Congrats on a good quarter. I want to pivot to a little stuff on CEV here. How do you expect the ongoing debate around capacity markets, resource adequacy and interconnection reform to impact CEV's project pipeline and long-term returns?

So we see opportunity with CEV. We've talked about it before, the ability to use our existing interconnect and existing infrastructure to expand and add to the capacity markets. Capacity is more valuable. That's what we need to add to the grid in order to lower prices to consumers. So we're looking at ways to be able to participate in that. And we said for a long time, the cheapest way to basically add new capacity to the market is through your existing infrastructure, and we have considerable existing infrastructure, not only in New Jersey, but in the Northeast. So being able to add to that should be the next best cost to the grid.

So we're working at ways -- we're looking at ways to do that. This CapEx really isn't in our plan at this point in time. It's just new solar build in CEV at this point. So it would be additive to the plan. And when we come up with a structure and have some more firmness around how we invest this capital, we'll share it. But suffice to say that we're optimistic about participating in this market longer term.

Got you. And are you guys garnering a lot more interest given how much of a topic of debate this has become for CEV?

Yes. I mean there's interest, right? There's interest in adding capacity to the market. And the load factor on our interconnects is not 100%. So there's room to be able to use existing infrastructure to do so. It's just a matter of coming up with the right structure and the right investment and the right returns and the right risk profile in order for us to make an investment. And rest assured, that's something we're working very hard on.

Got you. Is this something we can potentially see on the next quarter call with the guidance revamp?

I mean it's hard to predict exactly when you're going to break through. It would be nice to see in the next call, but I can't make kind of a prediction at this point.

There are no further questions at this time. I will now turn the call back to Adam Prior for closing remarks.

Thank you, and I'd like to thank all of you for joining us. As always, we appreciate your interest and investment in NJR, and have a good rest of your day.

This concludes today's call. Thank you for attending. You may now disconnect.

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 Instructions].

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

Thank you. Welcome to New Jersey Resources Fiscal 2026 Second Quarter and First Half 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 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. This could cause results to materially differ from our expectations as found on Slide 2.

These items can also be found in the forward-looking statements 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.

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 business unit overview 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. Please go ahead, Steve.

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. New Jersey Natural Gas experienced the highest send-out days in its history in our infrastructure, planning and operations delivered. Our teams provided safe, reliable service to home schools, hospitals and critical services across our communities. Our system operates 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 and Leaf River had withdrawals that exceeded Winter Storm year of 2021. Finally, our Energy Services team delivered exceptional results. 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 extreme 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 advanced, limiting our customers' exposure to sharp commodity price increases.

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 $3.27 per dekatherm per storage in 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. 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 utilized in 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.

A recent example is Chester Township in Morris County, which is now formally included in New Jersey Natural Gas' 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. 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 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 Philadelphia and Leaf River. These are fixed price fee-based agreements with high-quality credit-weighted 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. 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.

We recently received the environmental accession 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. Overall, this project remains on track with regulatory review proceeding in line with our expectations, and 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 installed capacity by almost 25%, and this momentum has continued with 33 megawatts of new capacity brought into service this year. We expect to increase installed capacity by an additional 50% through the end of fiscal 2027. And supported by a pipeline of safe harbor investment options in markets with supported policy and strong demand growth. This is diverse project pipeline that grant 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 selected 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 add a new supply to the grid in the near term. CEV stands ready to be part of the solution.

The team at CEV is in the early stages of exploring was to leverage our portfolio of operational assets and existing PJM interconnections 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 to 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 advantaged structures available to support long-term shareholder value. Finally, last month, we reached an important milestone in CEV, surpassing 500 megawatts of in-service capacity. 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?

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. We delivered solid net financial earnings across both our regulated and nonregulated businesses with continuous outperformance at energy services. As a result, our raising fiscal 2026 guidance for the second time this year, while continuing to fund our capital plan and maintain a strong balance sheet. Moving to a brief walk for the quarter 2. Fiscal 2026 second quarter consolidated net financial earnings was $221.5 million or $2.20 per share, a significant increase over the $17.3 million or $0.38 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. For the year-to-date period, the higher net loss at CEV simply reflects last year's onetime gain resulting from the sale of our residential solar business. Overall, the mix of results restore 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 2/3 of total catalog 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 estimate for fiscal 2026 and fiscal 2027 and have reassuring our 5-year CapEx outlook of $4.8 billion to $5.2 billion through fiscal 2030. More than 60% of this capital is expected to be invested as a utility with clean energy ventures and Storage and Transportation comprising the balance.

Collectively, these investments support our 7% to 9% long-term net 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 debt-to-capital to adjust the debt ratio expectations for fiscal 2026 and are projected to remain around 20% for the next 5 years. Energy Services incremental cash flow this quarter enhances our ability to find capital investment, support credit metrics and reinforces that we see no need for block equity in the foreseeable future.

In addition, ample liquidity and a well-laddered debt maturity profile led near-term refinancing risk and preserve financial flexibility. And finally, as shown we're generating our indicative guidance range for fiscal 2026. During our prior conference call, we raised our guidance by $0.25 per share, driven by Energy Service outperformance in January 2026. With favorable results as energy services continued into February and March, while increasing our NFEPS guidance by an additional $0.20 to a higher range of $3.48 to $3.62 per share.

We are also revising our expected NFEPS contribution by segment. with Energy Services percentage rising as a result of its outperformance and all the other businesses digesting accordingly. New Jersey Natural Gas will represent approximately 60% of the company's NFEPS for fiscal 2026.

With that, I'll turn to Steve for concluding remarks on Slide 16.

Thanks, Roberto. NJR, once again, delivered exceptional results that are 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 in New Jersey Natural Gas and a continued focus on operating safely and reliably when customers needs us the 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. Clean Energy Ventures, our portfolio continues to scale, as expected, supported by a secured 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, 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.

[Operator Instructions]. Your first question comes from the line of Gabe Moreen with Mizuho.

Hi, everybody. This is Dylan Lipner on for Gabe. Good quarter. Just want to kind of hit back on CEV. If you guys could provide some more color on what you're seeing in the sense of solar project opportunities and outreach from PJM in the state particularly as New Jersey looks to generation gap?

Yes. Really, it's been playing out just like we said all along, we see [ harbor ] a number of projects. We've got a 1.2 gigawatt number of projects available to us and the state has been certainly encouraging for development with the capacity shortfalls in PJM, the quickest way to bring new capacity to market is through solar.

So yes, 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. So all things that go and certainly playing out just like we've said over the past few calls.

Got you. And do you guys see this playing out more in the near term or towards the end of the day?

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 developed and bringing more capacity to electric customers in New Jersey is moving forward and certainly an important part of the Shell Administration's goals of trying to lower electric.

[Operator Instructions]. Your next question comes from the line of Travis Miller with Morningstar.

Good morning, everyone. Thank you. I wonder if you can 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?

Are you just referring to the raising guidance rating?

Yes, the raising guidance, yes. Relative to what you talked about in February, obviously, last winter in March and April. But wondering what's going on there, what you're seeing differently?

Yes. Really, when we raised guidance back in February, that was previous period. So much of the winter had not transpired to that point. And through February and March, that book continues to increase in value and add value and conclusions of the winter, we're able to close the books and look at those numbers. And certainly the earnings guidance raise that you see here is reflective of that. Energy Services continues to be a business that performs just good things for us long term. Lowers our debt and equity needs by the cash that they are able to bring in 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 winter conclude.

Okay. So the initial one incorporated firm right? And then subsequent here now, this has incorporated additional post per. Is that right?

Yes, that's right.

Okay. And then Leaf River, 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 expansion?

So we won't need any additional financing for Leaf River, but capital expenditures are starting now. We started to make commitments on equipment and arrange for contractors and other things that begin that process of construction. You saw that we received the environmental assessment for FERC not too long ago. So everything is moving along as it should according to schedule. And of course, we've got that all backed by a long-term contract. So we're moving over that project and expect to have that service in fiscal year 2027-'28.

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

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, and have a good rest of your day. Appreciate it.

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

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kevin, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Jersey Resources Fiscal 2026 First Quarter Conference Call [Operator Instructions] I would now like to turn the call over to Adam Prior, Director of Investor Relations. Please go ahead.

Thank you. Welcome to New Jersey Resources Fiscal 2025 Fourth Quarter and Year-end Conference Call and Webcast. 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. 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 2. These items can also be found in the forward-looking statements section of yesterday's earnings release for initial 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'll 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. The force for today's presentation are available on our website and were furnished on our Form 8-K filed yesterday. Steve will start with this year's highlights and a business unit overview beginning on Slide 5. Roberto will then review our financial results. Then we will open it up for your questions. With that said, I will turn the call over to our President and CEO, Steve Westhoven. Please go ahead, Steve.

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 are a few key themes as you look ahead for fiscal 2026 and beyond. First, consistency and execution.

We're guiding to NFEPS of $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 5 years across the whole company with roughly 60% allocated to our utility New Jersey Natural Gas. It was the $5 billion in the context. This represents a 40% increase compared to the CapEx spent over the last 5 years.

Third, a healthy balance sheet anchored and disciplined financial management. We expect credit metrics to remain strong with healthy cash flows and the liquidity and a balanced debt maturity profile that supports long-term stability. Importantly, NJR requires no block equity instruments to execute on its capital plan. On the next slide, we highlight a few of the key drivers of our business segments.

To begin, New Jersey Natural Gas is positioned for high single-digit rate base growth through 2030. S&T is expected to more than double net financial earnings by 2027, driven by favorable recontracting at 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 in Clean Energy Ventures, we expect to expand capacity by more than 50% over the next 2 years with a robust pipeline of safe harbor 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 7.

Our planned investments at New Jersey and Natural Gas are expected to drive high single-digit rate base growth through 2030. The 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 eat their home. Energy efficiency programs such as SAVEGREEN further reduce usage and costs while aligning with environmental goals.

For example, residential customers who fully participate in SAVEGREEN 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 2 years, we expect NFE to more than double at S&T, and this is largely driven by strong recontracting in both the Delphi and Leaf River. These are fixed-price contracts of quality and creditworthy counterparties.

We recently reached a settlement in our FERC rate case Philadelphia. 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 of Leaf River, which we outlined on the next slide.

When we acquired Leaf River in 2019, we positioned NJR as a leading service provider in the Gulf Coast, 1 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 3 existing operating taverns. 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 and capacity expansion. Following this favorable response we filed the FERC application at the end of October that included several complementary investments to increase Leaf River's working gas capacity by over 70%.

They include the expansion of our existing cabins to working gas capacity of 43 Bcf by 2028, and the development of an additional fourth cabin 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 entity 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&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 2 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?

Thanks, Steve. Fiscal 2025 was an excellent year with stronger 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 retail rate case and deliver record investments for SAVEGREEN. Clean Inari ventures added record new capacity. In fiscal 2025, CB placed 93 megawatts of new commercial solar capacity into service, expanding our portfolio to 479 megawatts.

In addition, CD secured investment options for years to come through effective safe harboring. In storage and transportation, Adelphia received approval settlement on its first rate case while levering our advanced expansion initiatives. Energy Services achieved strong cash flow generation and our Home Services business was named a road top 20 ProPartner for the ninth consecutive year.

We also marked an important milestone, 30 consecutive years of dividend increases and reporting 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. We deliver financial results ahead of expectations, roughly 2/3 of total EPS came from the utility. And when you exclude the net impact of the sale of our residential solar assets, figure raises to over 70%, underscoring the stability of our earnings.

Drivers of our performance include the completion of our rate case and a record year of having investment. Additional drivers include approximately $0.30 per share from the sale of our initial solar portfolio, improved performance from our storage and transportation business and a 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 54% 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 recovered with minimal lag.

As shown on Slide 16, fiscal 2025 CapEx for CV came in well above expectations, reflecting accelerated progress. Importantly, our capital deployment target is fully safe harbor securing tax benefit for future capital expenditures. Building on this from 2025, I wanted to shift our CapEx outlook on Slide 17. We are sharing a 5-year CapEx outlook of $4.8 billion to $5.2 billion through fiscal 2030. This represents a 40% increase over the previous 5 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 CV and S&P representing the balance. Together, these investments support our 7% to 9% long-term initiative growth target while maintaining a solid balance sheet as discussed in the next slide. Strong cash generation across our businesses translating to an adjusted FFO to adjusted debt ratio that is projected to remain at around 20% for the next 5 years with no block equity needed.

Additionally, ample liquidity and a well-led debt maturity profile minimize near-term refinancing risk and preserve financial flexibility. And finally, we're initiating fiscal 2026 and 5-year 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 in FEPS complemented by earnings growth from CB and S&P and a baseline outlook for Energy Services. With that, I'll turn it back to Steve for concluding remarks on Slide 21.

Thanks, Roberto. Over the last 25 years, we've delivered industry-leading returns, reflecting both the quality of our utility investments and disciplined contributions from our nonutility businesses. While our infrastructure investments have been the foundation of this performance Energy Services has complement to 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 5 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 2 years, Clean Energy Ventures expects a 50% increase in installed capacity and our project pipeline is secured into the future through proactive safe harboring. As they are 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 challenges this data is facing today, and we look forward to working with the incoming governor to meet our 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.

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

Thank you, Colin. 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 Steve Westhoven, and he'll go through our first quarter results and Roberto Bell follow with our financial results, and then we'll be happy to take your questions, and thank you for your patience.

Yes. Thanks, Adam. Yes, sorry, everybody. We'll run through the scripts now reflecting this quarter. So natural gas industry just navigated an extraordinary weather event with record center 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 have 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 nonutility business fell 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 from volatility created by the prolonged cold temperatures.

And as a result of Energy Services performance, we're able to increase our fiscal 2026 NPM's 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 how New Jersey Natural Gas took steps to protect customers against high natural gas prices during the recent cold weather.

Over 7 days stretch, New Jersey Natural Gas delivered the highest send-outs 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 motes. Sustainable textures likely will result in higher gas used by our customers, which will have an impact on bills.

With a supportive regulatory framework approved by the New Jersey Board of Public Utilities, New Jersey Natural Gas is proactive and helping to protect customers against these high-use increases. Each year, the utility purchases natural gas well advanced on the heating season when commodity prices are more likely to increase in spike during the winter weather events. As a matter of policy, a minimum of 75% of the upcoming winter seasons projected gas needs are secured in advance. Poten this winter, New Jersey and Natural gas was over 87% hedged, and this is impactful. Our average hedge price is approximately $2.20 per decatherm for gas and storage and LNG, and that compares to a city gate pricing that trade in excess of $135 per decatherm 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 SAVEGREEN help customers reduce usage in lower bills, more than 110,000 customers have taken part in our programs to date and those utilizing our whole home offerings, 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 a new housing development mono-country, that will add roughly 350 new customers once completed, is a clear example of the meaningful customer-driven opportunity ahead.

Now switching to a discussion of our Storage and Transportation business on Slide 8. As we noted on our year-end earnings call, we expect to double NFE over the next 2 years at S&T. This is driven by strong recontract in both Adelphia and Leaf River. These are fixed price contracts, quality, credit-rating counterparties. During the first quarter, we filed the FERC application that includes several complementary businesses that would increase refurbish 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 lightly authorization 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 9. 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 2 years and our proactive safe harboring initiatives to preserve federal tax incentives further strengthens our leading position in the marketplace. In a region where energy affordability concerns are driven in large part by supply shortages see the speed to market capability is a competitive advantage.

Specifically, CEV is advancing significant wholesale PJM solar assets as PJA demand projects are trending upward. We expect these operating assets to continue to increase in values. At the same time, market shortages are opening up additional organic growth opportunities, including new technologies to optimize our existing intersections. These technologies have potential to unlock incremental value and add new supply to the grid at a time New Jersey and PJM Dapost. So with that, I'll turn the call over to Roberto for a financial review.

Thanks, Mili. I'll start with a brief walk for the quarter on Slide 11. We reported NAV of $118.2 million or over $0.17 per share for the quarter. reflecting decel execution and solid performance across our businesses. We saw higher contribution from the utility period, largely due to new base rates being in place for an entire quarter in fiscal 2026. This was offset by a lower CV contribution, given the gain on the sale of our residential solar assets in the prior year period.

Let's move to the 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 all CapEx for the period, with investments directed towards strengthening core infrastructure enhancing system safety and reliability and supporting continued customer growth.

We are reaffirming our 5-year CapEx outlook of $4.8 billion 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 CV and S&P representing the balance. At CV, our total deployment target is fully safe harbor, securing the future site of nets. Together, these investments support our 7% to 9% long-term it growth targets while maintaining a solid balance sheet as discussed in the next slide.

On Slide 13, we highlight the strength of our balance sheet. Strong cash generation across our businesses translates into an adjusted FFO to adjusted debt ratio is projected to remain around 20% over the next 5 years. Energy Services outperformance this quarter provides meaningful additional cash flow, enhances our ability to manage capital spending and maintain strong credit metrics and reinforce it that we have no need for block equity in the foreseeable future. Additionally, Antiquity 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 in that winter today, we're raising our EPS guidance range by $0.25 to a higher range of $3.28 to $3.43 per share. We're also revising our expected segment and DPF contribution percentages as a result of this outperformance. Viability will remain the majority of the company's in EPS for fiscal 2026 with energy services percentage rising as a result of capturing additional financial margin during this period of volatility. With that, I'll turn it back to Steve for concluding remarks on Slide 15.

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 reporting greater detail around our energy efficiency and customer assistant efforts. Lower natural gas prices are effectively helping reduce overall household energy costs, an important factor when addressing affordability. .

As many of you know, New Jersey welcome the new governor last month, Governor Cheryl moved quickly to outline our priorities, signing 2 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 reliable in the 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 2 years, Clean Energy Ventures expects 50% increase in installed capacity and our project pipeline is secured into the future through proactive safe harbor.

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.

Ladies and gentlemen, we will now begin the question-and-answer session [Operator Instructions] Your first question comes from the line of Gabe Moreen of Mizuho.

Hey, good morning, everybody. I guess the story said that, hey, I get the story, we still 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 volatility continue to materialize?

Yes. Thanks, Dave. Thanks for the question. Yes, sorry about the double repeat there. The Energy Services Group and our guidance that we issued last night based on results to date or kind of our estimates through the end of January. So obviously, we've got a lot of fiscal year that's left and not able to corporate events that haven't happened yet. So we'll see how those continue to play out. But certainly, January was obviously very constructive for our results here in NJR.

And maybe if I can follow up on S&T. The capacity going from 43% to 55%. I just want to confirm, you've got contracts for that portion of the expansion and then also, but maybe if you could 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 time line? And then also, are the economics there you talked last quarter about some of the economics behind your contracts and how that stepped up. But are those supportive now in your mind of full greenfield development around our Leaf River?

Yes. So the whole story, at least forever, we're going to double earnings, and that's largely through contract upgrades at Delegateway and the Furberg 2027. And the FERC filing shows compression expansion, existing cavern expansion and then a fourth cavern expansion, which is what you're referring to from the approximately 43% to the 55% Bcf -- so what we have contracted for now and what we were talking about on today's call is that compression expansion and existing capacity expansion. -- that fourth cabin, we do not have contracts for you yet.

But as you can imagine, the market has been very constructive, but we're still 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 both at Adelphia Gateway and at Leaf River what we've talked about here today. We'll continue to work the markets and see what they're willing to pay for.

Remember, if we get signed contracts and then those will essentially drive our investment at those facilities. So we'll back to back those. And as those come in, we'll certainly share it with our investors, but good news to date and certainly, the market and even recent conditions drive for the need for more storage and capacity in the Northeast, Southeast, really all over the U.S.

Your next question comes from the line of El Jose of JPMorgan.

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.

Thanks, Eli. Yes. Affordability has always been important for us at NJR. We talked in our narrative about the way that we hedge our gas driving energy efficiency, reducing customer usage in order to lower their bills, energy assistance for those that need it. So that's not a new narrative for us. We'll continue to drive that forward. .

Remember, we completed a rate case which went into effect about 14 months ago or so -- 15 months ago or so. So we don't have any pressing needs to jump into the regulatory process. We're going to continue to work with the administration, take advantages -- take advantage of the opportunities that present themselves. We do have capacity needs that are clearly stated in the state of New Jersey.

And we're going to work proactively with the administration to achieve our shared goals. So that's the way that we're looking at it.

Awesome. But then maybe just pivoting more towards the second executive order EO2 and the opportunity set that it offers you at CEB. 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 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 .

Yes, it's encouraging. Thanks for asking the question. Permit reform, ways to accelerate interconnects, ways to accelerate our ability to develop our safe harbored assets in the state of New Jersey are the quickest capacity that can be brought to market, so all those things are encouraging. We're going to work with the administration.

They've got some work to do in order to effectuate all that. But those tailwinds are clearly in the making in order to develop more. And when we are able to achieve some evidence that we're able to move forward and we'll certainly share that with the investing community.

Your next question comes from the line of Julian DeMonSmith of Jefferies.

We've actually got James Ward on here for Julien. Great color that you've given on affordability, the executive orders. So I really appreciate that. as well on the fourth 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 '29, '30 and so on? .

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

But the pricing we're seeing gives us confidence that being able to develop this fourth cavern is certainly possible in the future, and we're working towards that. As far as time lines go, we've already said we're going to double earnings through 2027 that we're working after we get our FERC certificate of construction through the facility.

So then you see the existing cavern expansion and capacity come to market with that matching contract in like the [ 2028 ] time frame. And then fourth carbon expansion as this market develops, like I said, certainly recent events are supportive. It looks like a 2029 time frame, starting construction, obviously, some time prior to that. So we'll have to -- we'll see how that ends up playing out, but like I said, the open seasons recent market volatility all points towards the need for more storage in that area and know that we're pursuing that aggressively.

That's great. Another really strong start to the year, guys. -- impressive.

Your next question comes from the line of Chris Ellinghaus of Siebert Williams Shank.

Another great quarter. Thanks. Steve, can you talk about sort of this -- what you're seeing in the solar pipeline outside of New Jersey and sort of given the EOs, has that changed your thought process about sort of geographic diversity at this point?

No. I mean we're still moving forward. We've got about, I guess, 50% of our forward-looking projects are outside the state of New Jersey, 50%, obviously, inside the state of New Jersey. We're continuing to pursue projects that meet our rate of return and build in 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 we see those markets continuing. And remember, PJM is big, right? And certainly, any power grid isn't independent from those adjacent to it. You've got a capacity shortage in one. It usually means there's capacity shortage in others.

So this trend and the ability to quickly bring solar capacity to market more quickly than other forms, nuclear, some larger gas-fired generations and instances like that is important. So all these are constructive you couple on the EO and potential permitting performance and things like that, hopefully, we see some acceleration in the near future, trying to solve this problem of being short capacity in the short term.

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 the sort of the proportionality of the recontracting price improvement versus say, the capacity, I think it's Slide 8. What -- how should we think about the timing of the growth to the new target price versus volume?

Yes. It's hard to kind of differentiate that, but I think it's pretty clear if you go back to what our historical earnings are, we're going to double earnings from that segment by 2027 and in that is quite a bit of recontracting the purchasing Leaf River, part of our investment thesis that storage rates were going to go up and you see that being executed. Adelphie Gateway, like a normal interstate pipeline going through rate cases, being able to raise rates to reflect capital that was invested on the pipeline in the future, certainly being reflected as well. .

I think this recent weather event continues to reinforce how short our region is, and we're already talking about that from an electric perspective, 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 Southeast and Leaf River, 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 will give you what we're very certain we're going to be able to execute and I think other factors like the ones I just mentioned, are additive. So we're going to continue to work on those and we'll share those when they come to fruition.

Okay. Great. Steve, you had sort of alluded to CEV having some technology opportunities for upside. Can you elaborate on that a little bit?

We own a number of grid connected facilities 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 very quickly and being able to deploy capacity 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 infrastructure, right, infrastructure that's already in place the ability to expand without the need to build pure greenfield gives us that advantage and 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 these things are outside of our plant, so that would be upside to our plan. So our plans show exactly what we know is going to make the investments on outside of the plan are the things that we're talking about here, forward vision and what we're trying to drive as a management team to execute.

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

Yes, exactly exactly.

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

Yes. I mean the regulators are 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 certainly, they see our rates in the ground, having an average price of storage of $2.27 when city gate prices were over $100.

Even if you look at some of the supplier pricing $30, $40 down in those areas, being able to avoid those purchases has just a huge benefit to our customers not having to spot prices for that natural gas. So yes, they're certainly aware of it. We talk about it and those programs are in place for a reason they work and mitigate cost to our customers longer term.

Your next question comes from the line of Travis Miller from Morningstar.

Thank you. Just a quick clarification on the guidance raise at $0.25. Was that all from what you're anticipating in Q2? Or was there some of that outperformance in Q1 relative to what you were expecting?

Yes, Charles, we looked at our book, and we saw the performance in January and decided that it was significant enough to warrant raise during this call. So really, this is an estimate through the end of January at this point.

Okay. Okay. That's 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?

Yes. 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 and you can go through that. So that is part of our capital schedule right now.

Okay. For the Leaf River line in 2027, I assume, right? .

Yes, 2026 and 2027. .

2026 and 2027, probable. .

Okay. Okay. Okay. Makes sense. And then a higher-level question. In New Jersey, Pasco, et cetera, -- would you be interested in rate base solar or rate base? Any kind of generation or energy other than natural gas distribution?

Yes, we would certainly work with the administration and do anything to be able to lower customer costs, improve the amount of capacity within this data New Jersey to lower cost to consumers. So there's a number of items that are on the table. We're not part of any kind of rate base generation discussions at this point. But if it made sense, had the right risk profile, and we're able to deploy capital in the energy infrastructure space, then certainly, we would consider it.

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. .

Thanks so much. I'd like to thank all of you for your patience and for joining us this morning. And we appreciate your interest and investment in NJR and have a good day and the rest of your year. .

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

Ladies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the New Jersey Resources Fiscal 2025 Fourth Quarter and Year-End Financial Results Conference Call. [Operator Instructions]. Thank you. And I would now like to turn the conference over to Adam Prior, Director of Investor Relations. You may begin.

Thank you. Welcome to New Jersey Resources Fiscal 2025 Fourth Quarter and Year-End 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 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 2. These items can also be found in the forward-looking statements 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'll 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. The plan for today's presentation are available on our website and were furnished on our Form 8-K filed yesterday.

Steve will start with this year's highlights and a business unit overview beginning on Slide 5. Roberto will then review our financial results. Then we will open it up for your questions. With that said, I will turn the call over to our President and CEO, Steve Westhoven. Please go ahead, Steve.

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 are a few key themes as we look ahead for fiscal 2026 and beyond. First, consistency and execution. We're guiding to NFEPS of $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 5 years across the whole company with roughly 60% allocated to our utility New Jersey Natural Gas.

To put the $5 billion in the context, this represents a 40% increase compared to the CapEx spend over the last 5 years. Third, a healthy balance sheet anchored and 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 of our business segments. To begin, New Jersey Natural Gas is positioned for high single-digit rate base growth through 2030. S&T is expected to more than double net financial earnings by 2027, driven by favorable recontracting of both Adelphia and Leaf River.

Looking ahead, we recently filed with FERC, a plan to increase working gas capacity by over 70% at Leaf River. And in Clean Energy Ventures, we expect to expand capacity by more than 50% over the next 2 years with a robust pipeline of safe harbor 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 units, starting with the New Jersey Natural Gas on Slide 7. Our planned investments at New Jersey Natural Gas are expected to drive high single-digit rate base growth through 2030. The 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 eat their home.

Energy efficiency programs such as SAVEGREEN further reduce usage and costs while aligning with environmental goals. For example, residential customers who fully participate in say agreeing a 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 & Transportation is emerging as a key earnings growth driver for NJR. Over the next 2 years, we expect NFE to more than double at S&T, and this is largely driven by strong recontracting in both the Adelphia and Leaf River. These are fixed-price contracts with quality and creditworthy counterparties. When we recently reached a settlement in our FERC rate case Philadelphia, 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 of Leaf River, which we outlined on the next slide.

When we acquired Leaf River in 2019, we 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 taverns. Since our purchase of the asset, market demand has strengthened. Throughout fiscal 2025, we conducted a number of nonbinding open seasons, which confirmed the high level of commercial interest and capacity expansion. Following this favorable response we filed a FERC application at the end of October that included several complementary investments to increase Leaf River's working gas capacity by over 70%. They include the expansion of our existing caverns to working gas capacity of 43 Bcf by 2028, and the development of an additional for cabin 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 entity 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&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 2 years. Looking ahead, we have a strong project pipeline designed to maintain investment tax credits through strategic safe harboring. This position 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?

Thanks, Steve. Fiscal 2025 was an excellent year with strong even 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 deliver record investments for Leaf Green. Clean Energy Ventures added record new capacity. In fiscal 2025, CV placed 93 megawatts of new commercial solar capacity into service, expanding our portfolio to 479 megawatts. In addition, CD secured investment options for years to come through effective safe harboring. In Storage & Transportation, Adelphia received approval settlement on its third rate case we levering our advanced expansion initiatives. Energy Services achieved strong cash flow generation and our Home Services business was named a road top 20 ProPartner for the ninth consecutive year.

We also marked an important milestone, 30 consecutive years of dividend increases and reporting 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. We deliver financial results ahead of expectations, roughly 2/3 of total EPS came from the utility. And when you exclude the net impact of the sale of our residential solar assets, that figure raises over 70% underscoring the stability of our earnings. Drivers of our performance include the completion of our rate case and a record year of saving investment. Additional drivers include approximately $0.30 per share from the sale of our initial solar portfolio, improved performance from our storage and transportation business and a 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 recovered with minimal lag. As shown on Slide 16, fiscal 2025 CapEx for CV came in well above expectations, reflecting accelerated progress. Importantly, our capital deployment target is fully safe harbor securing tax benefit for future capital expenditures. Building on this from 2025, I wanted to shift our CapEx outlook on Slide 17. We're sharing a 5-year CapEx outlook of $4.8 billion to $5.2 billion through fiscal 2030. This represents a 40% increase over the previous 5 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 CV and S&P 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 translate into an adjusted FFO to adjusted debt ratio that is projected to remain at around 20% for the next 5 years with no block equity needed. Additionally, ample liquidity and a well laser debt maturity profile minimize near-term refinancing risk and preserve financial flexibility. And finally, we're initiating fiscal 2026 and EPS 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 in the CPS complemented by earnings growth from CB and S&P and a baseline outlook for Energy Services.

With that, I'll turn it back to Steve for concluding remarks on Slide 21.

Thanks, Roberto. Over the last 25 years, we've delivered industry-leading returns, reflecting both the quality of our utility investments and disciplined contributions from our nonutility businesses. While our infrastructure investments have been the foundation of this performance energy services that complement 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 5 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 2 years, Clean Energy Ventures expects a 50% increase in installed capacity, and our project pipeline is secured into the future through proactive safe harboring. As they are 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 challenges this data is facing today, and we look forward to working with you coming governor to meet your 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 Instructions]. And our first question comes from the line of Gabe Moreen with Mizuho.

Good morning, everyone. Just a question maybe to start off on S&T here and Leaf River. It seems like a lot of positive developments. One, can you just talk about contract renegotiations and the extent to which, at this point, maybe all the original contracts have rolled over on a remarketed or resigned at market rates at this point? Or is there still more to go on that front in the years ahead? And then secondly, around the FID of some of the bigger expansions that you may be looking at, can you just talk about potential timing for FID-ing those projects given the customer interest that you've seen in some of the nonbinding open seasons?

Yes, sure. So talking about the contracts the contract tenure at Leaf River, they've got various terms. So we've always got contracts that are coming on and off. I would say there's probably a bias towards the longer-term contracts currently. And certainly, the way the market is moving, any contract that you're signed enough for in the future is higher than ones in the past. Remember, when we purchased that deal, the average contract rate was probably about $0.09 a dekatherm per month. We're now up to almost $0.20 dekatherm per month on average. So big contract upgrade there.

And that's really driving the doubling of the net from S&T over the next few years. And then moving forward, further constructive story, the open season provided for about 3x the amount of capacity that we had available. And if you look at the first filing we've got a few stages or phases of investment and expansion at that facility. I would say that before we make any investment, we've got contracts to back it. That's something we've talked about for a long time and we're not going to deviate from that. So we've got signed contracts in certain really quite a bit of clarity on where the revenues are coming to support those investments. So you can make that assumption moving forward. So as we make these investments, first two, we've got a expansion of the compressor station.

We've got the enlargement of some of the existing facilities those -- we're starting to spend money and put this in motion. You can see this in our capital plan moving forward. Those are going to lead really nicely into a fourth cavern expansion in the out years, we'll make that idea as we get closer to that. But like we said, the open season certainly supports it, and it's very instructive for that business moving forward.

And maybe if I can turn to CV, and I think a little bit more confidence in terms of the growth outlook there. Can you just talk about has anything shifted on the ground in terms of your ability to start construction, how much of the 50% increase here has actually started construction or waiting on interconnects and why you think you may be past some of the delays, I think that you may have seen in the past at this segment?

Yes, we certainly have spent quite a bit of money. As you can imagine, the construction cycles are a little bit longer and they go across fiscal years. So we're spending money now for products that are going to be coming into service in the next fiscal year and then the fiscal year afterwards. When we talked about in the last call, we've safe harbor a little bit of projects, a large amount of megawatts. So we've got great options moving forward. I think the other thing to consider as well is that the capacity electric capacity shortfall, the State of New Jersey and PJM the quickest way to bring capacity to the market? Are those projects that are shovel-ready and we have a number of those. So we feel well positioned going forward. That combined with the fact that we've got mature positions within the PJM as well.

So everything is moving forward. We've got a good position, a great number of options. And you can see by our capital plan and the extension of that capital plan out 5 years, the confidence that we have in our investments moving forward.

And our next question comes from the line of Jamieson Ward with Jefferies.

Congrats on another strong result, and thanks for the extra visibility with the 5-year look on CapEx and on CEV, which I'll maybe build on Gabe's question here. With the favorable treasury guidelines and then, of course, all the planned investment in safe harbor, what's the realistic deployment time line. It's probably the most common inbound question we get. But as we think about that pipeline, how should we model the earnings cadence?

So for the investments, we've got the capital plan that we put out there. Certainly, I just talked about it with Gabe from a policy perspective, we believe that there's going to be a lot of pressure to add as much capacity as great as possible, and that's favorable for our business. If you look at the amount of safe harbor projects we have especially over the next 2 years, we've got projects that are safe harbor that are far in excess of what we need in our capital plan. So you've got some ability to accelerate that. But the capital plan that we have is the most accurate picture of what we're going to be able to achieve. And I think looking at that, you can take your guidance from there.

That's terrific. I'll skip S&P because it was a very thorough answer before. I'll just ask one more quick one on CEV and then on the overall plan. So as we think about SREs, TREs, et cetera, what's the weighted average contract life? How should we be thinking about the time frame. That's the second most common question we get and it's CEV related. I think you're going to find a lot less questions after this deck. So thanks for all the information. But I'll just ask that one.

So you say from a time-related perspective, the amount of time allotted into kind of TREs and SREs and how long they live? What's the -- I'm trying to get to the specifics of what you're asking.

Yes. So just at a high level, so we modeled like roll off over the next few years. And the question that we get is just how confident are you in basically the numbers that you've got there. So just looking for a very high level, just a weighted average life remaining, right? Because, of course, the strike sort of trimmed down or tailored down over the last few years, and you're going to have SMT, which you were speaking to earlier. Obviously doubling and picking up a lot of that lag there. So just a quick question on that and then one on the overall 2030 CapEx plan.

So I'll talk about solar just from a kind of a broader perspective. We just talked about it was the quickest way to bring capacity to the market, and you can see the capital that we're able to deploy over the next 2 years being significant and potentially maybe be able to accelerate with certain policy adjustments. The process that we have, we've got the schedule for TRECs, SRECs, everybody knows the longevity of those I would also add that as infrastructure becomes harder to build in each of these facilities you've got the ability to repower or put in battery. You've already got an interconnect that's there as well. You've got kind of increases in Class 1 RECs that have been having over time. So speaking to just the long-term value of these facilities. As we need more capacity, it's not going to be constructive to retire capacity.

So there's going to be some expectation that you continue to operate these facilities and moving forward? And then how do you make improvements in them as well. So we really view this as a long-term business, one that's supportive of the growing energy need that is certainly in the east, but over the entire U.S. as well. And you're going to see us looking to enhance whatever we can do with these facilities move forward, just like you'd expect, organic growth is important to us and how do we organically improve and grow those facilities as well. So hopefully, that answers your kind of long-term view of how we're how we're thinking about these assets.

Actually, that's terrific. I think actually, I'm good on the 4.8% to 5.2% through 2030 as well as I go through here. I was going to ask one on affordability, but saw your slides towards the end of the deck in the appendix there. You want to throw it down because that's the other -- as a final question. It's the other one we get, of course, just given everything in New Jersey, you spoke to it in the prepared remarks, you've got some great slides here, but anything else you'd want to add as we think about the next rate case. Of course, we just got new rates November of '24. But as we look ahead, how should we think about your affordability efforts in New Jersey specifically. And that's it for me.

Thanks, Jamieson. So natural gas is the cheapest way that you can keep your home in business. So we like our position when the affordability conversation comes up. And like I said in the presentation, we've got energy efficiency programs and SAVEGREEN, we're able to save customers' money as well. And we look forward to working with the new administration and seeing ways that we can keep the affordability story going from our company and helping our customers reduce costs as much as possible.

And our next question comes from the line of Eli Jossen with JPMorgan.

Just wanted to start on the EPS growth outlook. Seeing some kind of drivers within the Leaf River storage capacity and overall S&T earnings upside. Are there any kind of headwinds elsewhere in the business to keep the growth rate largely the same possible decline in CEV contributions? Or can you just kind of frame tailwinds and headwinds for the overall range?

Yes. I'd say that we're an energy infrastructure energy services company, and this country needs more energy. So we're going to make investments in order to grow that. And you can see that reflected in our capital. So it's all positive at this point. And we're at this point, just looking to execute on that plan in order to increase our earnings going forward. So confident in all those things.

Got it. Maybe just to frame it differently. Is there sort of material upside from this S&T business within the growth range should you execute on some of the projects that you outlined?

I mean there's always upside in our business. We're the same business that we were last year and the year before, and we've always been able to grab some upside in these markets. We certainly kind of normalize our expectations on basis, there's an ability to accelerate any of these infrastructure projects given the right policy initiatives. So there's always an ability to upside, but we put together a plan that we believe is executable. And we hope for the best. So hopefully, some of those things will come through, and we'll be able to execute maybe more quickly.

[Operator Instructions]. The next question comes from the line of Travis Miller with Morningstar.

Kind of a combined question here on Slides 8 and 9. How much of that increase from fiscal 2025 to '27 on 8? Is the Adelphia rate case versus the recontracting and leaf River and then going to Slide 9, is that capacity expansion trajectory also earnings trajectory I guess the crux in both of those is the recontracting element. So first, that split between Adelphia rate case and the recontracting. And then is the recontracting and extra above that capacity addition. That makes sense?

But there's probably more coming on Leaf River recontracting at sectors numbers. But the bottom line is that for existing assets and no capital investment we've been able to double the earnings coming from those assets, and that's really driven by better contracts, higher contracts coming from the customers. So great story. As far as looking at your forward growth opportunities, you're stating the beginning of expansion at Leaf River. We didn't talk about it, but you still got the ability to expand a little bit at Adelphia Gateway and add more customers in that pipeline as well.

So depending on how far this market goes, and I believe it is going to go forward is going to need more and more energy and expansion of organic infrastructure. It's hard to determine where it will stop, right. But certainly, because we've got existing assets, we're able to expand that, and we're also able to make the investments that you see, at least in the short term. And then I would guess it is going to continue in the longer term as well.

Okay. Is that recontracting assumption based on today's rate at $0.27 -- at $0.20 dekatherm that you mentioned? Or is there another assumption you're making on the recontract?

Yes. It's not assumption, Travis. These are contracts that we have in hand. So these aren't estimates of what forward value are. These are contracts that we've got signed in our hands and are driving our earnings over the next 2 years in that business unit.

The one high-level question. With all the CapEx you have and obviously the Leaf River, et cetera, how much capacity might you have to do more M&A in organic growth, either logistical, operational or financial.

Yes. I mean we're always looking to kind of bolt-on acquisitions and things in happen or assets that are available. we're building these businesses. So if something comes along and it happens to fit and fits organically, we would take a look at it. So we've got the capacity on our balance sheet, and we like these businesses, the infrastructure business. So we'll continue to pursue it like we have in the past.

And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the conference back over to Adam Prior for closing remarks.

Thanks, Abby, and I'd like to thank all of you for joining us. As always, we appreciate your interest and investment in NJR and we look forward to talking to all of you at Utility Week in a couple of weeks, and thanks so much. Have a good rest of your day

And this concludes today's call, and we thank you for your participation. You may now disconnect.