Dennis Puma - Investor Relations Larry Downes - President and Chief Executive Officer Glenn Lockwood - Executive Vice President and Chief Financial Officer Craig Lynch - Senior VP of Operations

Michael Gaugler - Brean Capital. Mark Barnett - Morningstar Good morning everyone and welcome to the New Jersey Resources Fiscal 2014 Conference Call and webcast.

All participants will be in a listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions.

(Operator Instructions) Please also note that today's event is being recorded. I would now like to turn the conference call over to Mr.

Dennis Puma. Sir, please go ahead.

Thank you, Jamie, and good morning everybody. Welcome to New Jersey Resources' fiscal 2014 year-end conference call and webcast.

I'm joined here today by Larry Downes, our Chairman and CEO; Glenn Lockwood, our Chief Financial Officer, as well as other members of the senior management team. As you know, certain statements in our news release and in today's call contain estimates and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

We wish to caution readers of our news release and listeners to this call that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJR's ability to control or estimate precisely which could cause results to materially differ from the company's expectations. A list of these items can be found, but is not limited to the forward-looking statements section of today's news release filed on Form 8-K, and on our Form 10-K to be filed later today.

Both of these items can be found at sec.gov. NJR does not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.

I'd also like to point out that there are slides accompanying today's discussions which are available on our website and were also filed on our Form 8-K this morning. With that said, I'd like to turn the call over to our Chairman and CEO, Larry Downes.

Larry?

Thanks, Dennis. Good morning, everyone, and thank you for joining us.

For those of you who follow our company or seen this morning's press release, you know that fiscal 2014 was a very strong year for New Jersey Resources, and I think you also know that our results have allowed us to increase both our long-term earnings and dividend growth outlook. During my presentation this morning I'll be discussing our future and making forward-looking statements.

Our actual results are going to be affected by many different factors including those that are listed on slide one. The complete list is included on our 10-K and I would ask you to please take the time to review that carefully.

Also as we've noted on slide two, I'll be referring to certain non-GAAP measures such as net financial earnings, I will also refer to that as NFE, as I discuss our results. We believe that NFE provides a better measure of our financial performance.

However, NFE is not intended to be a substitute for GAAP or non-GAAP measures that are discussed more fully in Item 7 of our 10-K and I'd ask you to please take the time to review that disclosure carefully as well. On slide 3 you can see that fiscal 2014 was an outstanding year for New Jersey Resources.

This morning we reported record net financial earnings of $4.20 per share which exceeded expectations and was driven by the excellent results from NJR Energy Services as well as solid performance from both New Jersey Natural Gas and NJR Clean Energy ventures. This performance allowed us to increase our dividend by 7.1% in September to an annual rate of $1.80 per share.

We have now raised our dividend 21 times in the last 19 years. Total shareholder return for the fiscal year was 18.8%.

It was also another year of extensive infrastructure investment by New Jersey Natural Gas as we were able to improve both the reliability and resiliency of our system. Customer growth also remained strong.

Results of NJR Energy Services which drove our performance were helped by short-term volatility as well as our team's ability to create value from extreme market conditions. We were also able to identify new producer services opportunities.

We continued during the year to build out our inventory of grid-connected solar projects, and our residential program, the Sunlight Advantage, reached an important milestone this year with the addition of its 3,000th customer. We made important steps in the diversification of our renewal portfolio by announcing two wind projects in fiscal 2014.

A third project, the Alexander Wind project, was announced in October. The strong performance of NJRES increased our earnings retention which improved our financial profile and reduced our need for future equity issuances.

As a result last March we increased our long-term earnings growth rate from a range of 4% to 6% to 5% to 9%. We also increased our dividend growth rate to a range of 6% to 8% from the previous target of 5%.

And finally we continue to maintain a strong financial profile to make sure that we are able to efficiently attract the capital that we need to support our capital investment. All-in-all fiscal 2014 was a very successful year.

Moving to slide 4, this morning we announced record net financial earnings of $176.9 million or $4.20 per share for fiscal 2014. That compared with $113.7 million or $2.73 per share last year.

These earnings are at the upper range of our -- the upper end of our guidance range and represent our 23rd consecutive year of improved financial performance. In looking at our annual 2014 results, you can see that the outstanding contribution from NJRES earnings that resulted from volatility caused by cold weather and the skills of our team.

Our record fiscal 2014 earnings were also driven by steady growth from our two regulated businesses, New Jersey Natural Gas and NJR Midstream, and increased earnings from NJR Clean Energy ventures. Moving to slide 5, this morning we also announced NFE guidance for fiscal 2015 in the range of $2.90 to $3.10 per share.

As you can see we expect our regulated businesses, New Jersey Natural Gas and NJR Midstream to contribute between 65% and 80% to fiscal 2015 net financial earnings. We also expect NJR Energy Services to contribute between 5% and 15% of net financial earnings which is consistent with their results in recent years prior to their outstanding performance in fiscal 2014.

Moving to slide 6, as I mentioned earlier, we increased our annual dividend growth rate to a range of 6% to 8% from the previous 5% target. We are also projecting a payout ratio goal of 60% to 65%.

As I mentioned earlier in September, we raised our dividend by 7.1%. Our dividend growth rate remains strong compared with our peers and we expect to maintain a payout ratio that will allow us to both reinvest in the company to support both our capital expenditure program and future earnings growth.

Now before I turn the call over to Glenn, who will review our financial results in more detail, I want to spend just a few minutes on slide 7 talking about our strategy for fiscal 2015 and beyond. I know that many of you were at our Investor Conference in October and learned more about the details of our strategy but there are a number of the key elements that I want to emphasize.

First and foremost, New Jersey Natural Gas will remain the primary driver of our strategy and our performance. It will comprise the majority of our earnings, assets, people and capital investments.

Our Midstream investments will also contribute to our regulated earnings. Through NJR Clean Energy ventures, we will continue to provide our customers with cost efficient renewable electricity primarily from wind and solar.

And at the same time, we are committed to transitioning our Clean Energy investments away from solar investment tax credits. We will achieve that through portfolio diversification, mainly and on through our wind investments and through improving SREC fundamentals which provide a more steady stream of earnings.

And lastly NJR Energy Services will continue to provide physical and producer natural gas services. As I said New Jersey Natural Gas will represent the majority of our future capital investment which is illustrated on slide 8.

You can see that we expect an aggressive capital plan through fiscal 2017; normal capital investments including customer growth and system maintenance should comprise about $350 million which is about 44% of New Jersey Natural Gas company's total spending. We also remain focused on enhancing the reliability of safety of our system.

Some of these programs are already contributing to earnings such as our safe program which allows us to replace the older cast iron and bare steel pipe. Through our recently approved NJ RICE program, we will invest over $100 million for storm hardening and mitigation projects in the more storm-prone portions of our service territory.

Our Southern Reliability Link will add a second interstate pipeline connection to our service territory in Ocean County which is an area where we expect strong future customer growth. And our liquefaction project in Howell, New Jersey, will give us the ability to liquefy pipeline gas for our peak day needs and create benefits for both our customers and shareowners.

Equipment manufacturing for that facility is currently underway. You will see that we have added our Clean Energy capital investment estimate to this slide which shows our planned reduction of solar spending from fiscal 2017 as well as our onshore wind investments.

Turning to slide 9, I want to discuss just a bit, New Jersey Natural Gas company's strong fundamentals beginning with our customer growth. We added nearly 7,600 customers in fiscal 2014.

Our service territory remains amongst the fastest growing in the state with Ocean County now representing about half of our customer base. Going forward, we expect continued growth in Ocean County driven by its strong and favorable demographics.

Moving to slide 10, our future remains bright for both new construction and conversion markets. Overtime we see the potential for over 2000 and won 500 additional customers.

Longer-term we expect a steady pipeline of new customers with good balance between new construction and conversions. In fiscal 2014, conversions accounted for about 51% of our new customer additions.

On slide 11, we talk about our regulatory strategy and as you can see working collaboratively with our regulators remains an essential element of our strategy. Our BGSS incentive programs which are comprised of our off-system sales and capacity release programs, our storage incentive program and our FRM program have saved customers over $700 million since 1992 and added an average of about $0.09 per share to net financial earnings annually.

Our conservation incentive program which is extended by the BPU in January of 2014, protects NJNG's gross margin from declining usage and weather while encouraging customer conservation. Since the inception of the CIP in 2006, customers saved more than $300 million.

Our accelerated infrastructure programs have improved the reliability and resiliency of our system, supported economic development and benefited both customers and shareowners. At SAVEGREEN, our energy efficiency program provides handsome [ph] incentives to customers to install high efficiency equipment.

SAVEGREEN is in place through June of 2015 and we intend to file soon for an extension. SAVEGREEN has also supported New Jersey's energy efficiency goals while helping both our customers and our shareowners.

Moving to slide 12, we announced our latest Midstream investment in August, the PennEast pipeline, which will provide Marcellus supply to Northeast markets including New Jersey. Total capital expenditures are currently estimated at $1 billion and we are pleased that PSEG and Spectra Energy recently joined the partnership.

And just to remind everyone, we have a 20% interest in PennEast. We pre-filed with the FERC in October and although we are early in the process, we remain on track for commencement of commercial operations in late 2017 which will be early fiscal 2018 for New Jersey resources.

On slide 13 as I previously noted, NJRES' outstanding results were a key driver of our performance in fiscal 2014. Our team did an excellent job this year meeting our customer needs during periods of extreme weather and has developed a portfolio of competitively priced storage and transportation assets.

And while we assume normal weather in the future, we also remain positioned to take advantage of market opportunities similar to what we saw in fiscal 2014. And as I previously noted, we currently forecast NJRES contribution to NFE will return to a range of 5% to 15% of our total NFE in fiscal 2015 to 2017.

And moving to slide 14, we closed on our third onshore wind project acquisition, the Alexander Wind Farm, which is located in Kansas, in October. Alexander will be our largest project to date representing approximately $85 million capital investment where 48 megawatts of output are fully contracted and will be sold to the Kansas City Board of Public Utilities and Yahoo!.

Commercial operations are expected sometime in the fall of 2015. Our existing onshore wind projects continue to meet our expectations.

Our 9.7 megawatt Two Dot project in Montana became operational in mid-June. Our second project, Carroll Area, which is a 20.7 megawatt project located in Iowa, is under construction and expected to begin operating in the spring of 2015.

We have 25-year power purchase agreements in place with Northwestern Energy for Two Dot and Berkshire Hathaway Energy for Carroll Area which will provide us with steady income streams. It's important to emphasize that the main value drivers of our onshore wind strategy which include renewable portfolio standards in various states, production based tax credits and long-term power purchase agreements should provide consistent annual returns.

And with that I will turn it over to Glenn, and he's going to take us through the financial results in more detail.

Thanks, Larry, and good morning, everyone. I'll take a few minutes to review the results for each of our business segments.

The increase in utility firm gross margin that we show on slide 15 for both the fourth fiscal quarter and the year is due primarily to the impact of our infrastructure investments, better earning and immediate return, SAVEGREEN, customer growth and incentive programs. NJNGE's NFE for the year were $74.2 million compared with $73.8 million in fiscal 2013 and was driven by that growth in utility gross margin.

For the three months NJNG reported a net financial loss of $5.4 million compared with a net financial loss of $3 million last year. The weaker fourth quarter results were due primarily to higher discretionary expenses including the impact of a voluntary early retirement program.

We added 7,599 new customers to our system in fiscal '14, about 2% more than last year. As Larry said, approximately 51% converging from other fuels, primarily fuel oil.

Our BGSS incentive programs had a very strong year this year adding $0.22 per share to earnings which equates to about 130 basis points of return on equity at NJNG. As we turn to slide 16, you can see the effect that our customer growth and regulatory initiatives will have on NJNG’s gross margin over the next three years.

Customer growth will remain the largest component. However we will also receive important contributions from SAVEGREEN, the NGV Advantage and our BGSS incentive programs.

You will also notice a contribution from Myrtle beginning in fiscal 2015. In late 2013 we received an approval from the BPU to serve this generating facility located in Sayreville, New Jersey.

Red Oak will become our largest single customer and is expected to contribute over $2 million annually to the company's gross margin. Turning to slide 17, fiscal 2014 NFE at NJRES totaled $79.9 million compared with $19.3 million in fiscal 2013.

The extraordinary growth was due primarily to increase gross margin attributable to the extreme cold weather this past winter which created increased demand and volatility in the short-term natural gas markets. In the fourth quarter, NJRES experienced an expected larger financial loss -- net financial loss of 10.4 million compared with a $2.2 million loss in the same period last year.

As Larry mentioned in his remarks, the quarterly results reflect a seasonal nature of NJRES' business as well as discretionary expenses. Moving to slide 18, fiscal 2014 NFE at NJR CEV totaled $12.7 million compared with $10.1 million in fiscal 2013.

The higher results were due primarily to increased investment tax credits from capital expenditures placed into service, and the receipt of a one-time credit support payment related to a change in ownership at the site of one of CEV's commercial solar projects. During the year we placed four grid-connected systems into service with a total capacity of 70 megawatts.

We currently have five commercial solar projects; we plan to place in service during 2015, under construction. We also invested $31.4 million in fiscal '14 in our Sunlight Advantage program, a residential solar program which provides savings to eligible homeowners.

The Sunlight Advantage program added 1,049 customers with 10.4 megawatts in fiscal 2014 bringing the total number of customers to 3,135. CEV expects to invest approximately 33.7 million in residential solar systems in fiscal 2015.

Current total capacity of all of CEV solar projects is now 83.4 megawatts which is expected to produce approximately 100,000 SRECs annually. And on slide 19 you can see that monthly solar capacity additions have actually declined significantly from their peak in 2012 in the state which combined with the annual increase in the renewal portfolio standard has supported a corresponding increase in SREC prices.

Recently we have actually seen SREC prices over $200. We believe these fundamentals will continue to support higher SREC prices in the future.

So when we look out to fiscal '17, we currently expect the majority of CEV's earnings will come from the growing number of SRECs being generated, higher SREC prices and the returns on our wind investments. These fundamentals continue to support our forecast of between 10% and 20% of our total NFE coming from CEV.

On slide 20, you see NJR Home Services NFE totaled 2.5 million in fiscal 2014 compared with 3.1 million in fiscal '13. The weaker results are reflective of a strong than normal fiscal '13 when our installation revenue and generated sales increased substantially as a result of Superstorm Sandy.

Now I will turn the call back to Larry for some closing remarks.

Thanks Glenn. I would like to conclude with slide 21 which we introduced at our investor conference in October.

It summarizes our key initiatives over the next four fiscal years. When you look at these initiatives you will see that they will drive our strategy of delivering 5% to 9% net financial earnings growth and 6% to 8% dividend growth annually.

So when you look at the chart, you can see that our growth plan is based upon strong customer growth infrastructure investments and regulatory initiatives from NJNG, taking advantage of expected demand growth and volatility at NJR Energy Services while providing producer and asset management services, gradually diversifying our renewable portfolio that will provide steady income streams and executing on a mid-stream strategy including PennEast. So I think as you can see, our fundamentals remain strong and position us well for future growth.

So as I close and before we open up for questioning, I also want to say thank you to our more than 980 employees for the continued hard work and dedication. Without their efforts we could not have achieved the excellent results we are sharing with you this morning.

And I just want to tell you again, our employees are the foundation of our company and I am grateful for what they do everyday. So with that we would be happy to take your questions and comments.

Morning everyone.

Hi Mike.

Hello Mike.

Just taking a look at your stats and the slides on the PennEast project, certainly looks fully subscribed. Wondering if you can share any thoughts on the partnership consideration of upsizing the pipe at this point?

Mike, this is Glenn. The current expectation is for a 36-inch pipe which originally was 30 and as you mentioned because it is storm subscription, we are currently looking at a 36-inch pipe.

Is that why you think that's probably the final size?

Yes.

Okay. That's all I had.

Great.

Thank you guys.

Thanks Mike.

Hey, good morning guys. I just had a jump on from a sales call.

So pardon me if you addressed this. I am looking at your CapEx slide here on slide 8, and it's a project we have talked about a lot, it's one of the more sizable utility projects, the Southern Reliability.

Just if you can give me an update on where you stand with the final planning for that and is the root kind of finalized and should we take this timeframe as pretty solid at this point?

We have Craig Lynch, who is our Senior VP of Operations - Energy Delivery. So Craig will answer that.

Yeah, we've developed a couple routes that we are evaluating right now. We do have a primary route that we like.

So we are still in the early stages of betting that. But we are at a point right now that we have a route that we like.

Okay. So you think that in general, we are probably, based on those -- the different bucket of things are probably pretty firm on the CapEx spend?

Yes.

Absolutely.

Yeah, absolutely.

Okay, great. And could you just remind me on the timing of the next rate case in terms of "like a quarterly" kind of estimate here?

I know we've talked about this in the past but it's been a rushed morning, so…

Okay. It will be filed in November of 2015 next year.

Okay. And one last thing.

Thanks for breaking out in your earnings. I think this is the first time you have quantified the full amount here of the ITC impact for the full year.

Any particular reason you've decided to move towards doing that? And I know you have commented on moving away from that in the future.

Do you think we are going to see a meaningful tick-down from that impact in 2015?

Mark, we talked at length at the Investor Conference that we are actually building out our approved grid-connected projects and commercial projects. So there'll actually be a strong 2015.

But after that we are projecting a pretty dramatic decrease beyond 2015 into 2016 and '17. And breaking out the ITC, I think it might have been on the slide, but we've always done it in the SEC documents.

So that's just being a little bit more transparent for you -- for the analysts.

Yeah, I guess I meant just putting it a little bit more front and center-end. But thanks for the clarification guys.

I appreciate it.

Welcome.

Hey, good morning again.

Okay, Mike.

Taking a look at your CapEx slide, your solar investments drop off materially with the ITC reduction which is understandable out in 2017. But given the increase in the SREC pricing, I am wondering is there a price point on SRECs where you can reconsider solar CapEx with an upward bias.

Well Mike, one of the realities is that the -- there is a limit on grid-connected projects that can built in a state and part of that reduction in 2017 is just dealing with that elimination of any more grid connected projects which as you know are the larger projects. We actually assume that our residential program, for example, will be economic especially with the strong SREC prices we are seeing and the current expectation is to continue the residential solar program.

Got it. Thanks.

You are welcome.

All right. Thank you Jamie and thanks everybody for joining us this morning.

As a reminder a recording of this call's available for replay on our website. Again, we thank you for interest and investment in New Jersey Resources and we wish you all a safe and healthy holiday season.

Thank you. Good Bye.