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Nov 20, 2018

New Jersey Resources Reports Fourth-Quarter and Fiscal 2018 Results

WALL, N.J.--(BUSINESS WIRE)--Nov. 20, 2018-- Today, New Jersey Resources (NYSE: NJR) reported results for fiscal 2018. Highlights for the fiscal year include:

  • Consolidated net income of $233.4 million, compared with $132.1 million in fiscal 2017
  • Consolidated net financial earnings (NFE), a non-GAAP financial measure, were $240.5 million, compared with NFE of $149.4 million in fiscal 2017
  • Announced fiscal 2019 NFE per-share guidance of $1.95 to $2.05 per share
  • Increased annual dividend rate by 7.3 percent to $1.17 per share
  • NJNG added 9,596 new customers; a five percent increase over fiscal 2017
  • Clean Energy Ventures (CEV) completed three commercial solar installations, adding 33.7 megawatts (MW) to total capacity

Fiscal 2018 net income totaled $233.4 million, or $2.66 per share, compared with $132.1 million, or $1.53 per share, in fiscal 2017. Fiscal 2018 NFE totaled $240.5 million, or $2.74 per share, compared with $149.4 million, or $1.73 per share, in fiscal 2017.

Fourth-quarter fiscal 2018 net loss totaled $16.3 million, or a loss of $0.18 per share, compared with a net loss of $36.5 million, or a loss of $0.42 per share, during the same period in fiscal 2017. Fourth-quarter fiscal 2018 net financial loss totaled $28.9 million, or a loss of $0.33 per share, compared with a net financial loss of $12.5 million, or a loss of $0.14 per share, during the same period last year.

"Thanks to the talent of our team of more than 1,000 women and men, New Jersey Resources delivered another strong year in fiscal 2018," said Laurence M. Downes, chairman and CEO of New Jersey Resources. "As our results reflect, we are dedicated to meeting our customers' expectations for safe and reliable service, advancing sustainability through our infrastructure and clean energy investments and rewarding the confidence of our shareowners - as evidenced this year with a 7.3 percent dividend increase. We look forward to executing our strategic plan and leading the way to a stronger energy future."

"Our strong fiscal 2018 results were largely driven by the out-performance of our Energy Services segment," said Steve Westhoven, president and COO of New Jersey Resources. "With our focus on regulated infrastructure investments and complementary non-regulated energy investments, we are committed to delivering results for our customers and shareowners in fiscal 2019."

A reconciliation of net income to NFE for the three and twelve months ended September 30 of fiscal years 2018 and 2017 is provided below.

               
        Three Months Ended     Twelve Months Ended
        September 30,     September 30,
(Thousands)       2018     2017     2018     2017
Net (loss) income*       $ (16,255 )     $ (36,523 )     $ 233,436       $ 132,065  
Add:                          
Unrealized loss (gain) on derivative instruments and related transactions       866       31,293       26,770       (11,241 )

Tax effect

      (592 )     (11,845 )     (4,512 )     4,062  
Effects of economic hedging related to natural gas inventory       (7,782 )     8,878       (22,570 )     38,470  
Tax effect       1,844       (2,887 )     7,362       (13,964 )
Net income to NFE tax adjustment       (6,987 )     (1,408 )            
Net financial (loss) earnings       $ (28,906 )     $ (12,492 )     $ 240,486       $ 149,392  
                           
Weighted Average Shares Outstanding                          
Basic       88,279       86,513       87,689       86,321  
Diluted       88,279       86,513       88,315       87,144  
                           
Basic (loss) earnings per share       $ (0.18 )     $ (0.42 )     $ 2.66       $ 1.53  
Add:                          
Unrealized loss (gain) on derivative instruments and related transactions       0.01       0.36       0.31       (0.13 )

Tax effect

      (0.01 )     (0.13 )     (0.05 )     0.05  
Effects of economic hedging related to natural gas inventory       (0.09 )     0.10       (0.26 )     0.45  
Tax effect       0.02       (0.03 )     0.08       (0.17 )
Net income to NFE tax adjustment       (0.08 )     (0.02 )            
Basic net financial (loss) earnings per share       $(0.33)     $ (0.14 )     $ 2.74       $ 1.73  
                                       

*Results during fiscal 2018 included an income tax benefit of $59.6 million, or $0.68 per share, due to the revaluation of deferred taxes resulting from the reduction in the federal corporate tax rate.

NFE/net financial loss is a financial measure not calculated in accordance with Generally Accepted Accounting Principles (GAAP) of the United States. It is a measure of earnings based on eliminating timing differences surrounding the recognition of certain gains or losses, net of applicable tax adjustments, to effectively match the earnings effects of the economic hedges with the physical sale of natural gas, Solar Renewable Energy Credits (SRECs) and foreign currency contracts. NFE/net financial loss eliminates the impact of volatility to GAAP earnings associated with unrealized gains and losses on derivative instruments in the current period. For further discussion of this financial measure, please see the explanation below under “Non-GAAP Financial Information.”

A table summarizing our key performance metrics for the three and twelve months ended September 30 of fiscal years 2018 and 2017 is provided below.

               
        Three Months Ended     Twelve Months Ended
        September 30,     September 30,
($ in Thousands)       2018     2017     2018     2017
Net (loss) income       $ (16,255 )     $ (36,523 )     $ 233,436       $ 132,065
Basic EPS       $ (0.18 )     $ (0.42 )     $ 2.66       $ 1.53
NFE       $ (28,906 )     $ (12,492 )     $ 240,486       $ 149,392
Basic NFE per share       $ (0.33 )     $ (0.14 )     $ 2.74       $ 1.73
                                         

A table detailing NFE for the three and twelve months ended September 30 of fiscal years 2018 and 2017 is provided below.

               
        Three Months Ended     Twelve Months Ended
        September 30,     September 30,
(Thousands)       2018     2017     2018     2017
Net financial (loss) earnings                          
New Jersey Natural Gas       $ (12,943 )     $ (9,602 )     $ 84,048       $ 86,930  
Midstream       2,052       2,563       24,367       12,857  
Subtotal Regulated       (10,891 )     (7,039 )     108,415       99,787  
Clean Energy Ventures       (4,623 )     (6,988 )     75,849       24,873  
Energy Services       (17,649 )     (1,612 )     60,378       18,554  
Home Services and Other       4,382       3,266       (3,829 )     6,811  
Subtotal Non-Regulated       (17,890 )     (5,334 )     132,398       50,238  
Subtotal       (28,781 )     (12,373 )     240,813       150,025  
Eliminations       (125 )     (119 )     (327 )     (633 )
Total       $ (28,906 )     $ (12,492 )     $ 240,486       $ 149,392  
                                           

NJR Announces Fiscal 2019 NFE Guidance:

NJR announced fiscal 2019 NFE guidance of $1.95 to $2.05 per share, subject to the risks and uncertainties identified below under “Forward-Looking Statements.” NJR expects its regulated businesses to generate between 50 to 65 percent of total NFE, with NJNG continuing to be the largest contributor. The following chart represents NJR’s current expected contributions from its subsidiaries for fiscal 2019 and beyond:

                 
Company       Expected Fiscal 2019
Net Financial Earnings Contribution
     

Expected Fiscal 2020 and
Beyond Net Financial Earnings
Contribution

New Jersey Natural Gas       45 to 50 percent       50 to 60 percent
Midstream       5 to 15 percent       10 to 25 percent
Total Regulated       50 to 65 percent       60 to 85 percent
Clean Energy Ventures       25 to 35 percent       10 to 20 percent
Energy Services       5 to 15 percent       5 to 15 percent
Home Services and Other       0 to 2 percent       0 to 2 percent
Total Non-Regulated       30 to 52 percent       15 to 37 percent

In providing fiscal 2019 NFE guidance, management is aware there could be differences between reported GAAP earnings and NFE due to matters such as, but not limited to, the positions of our energy-related derivatives. Management is not able to reasonably estimate the aggregate impact or significance of these items on reported earnings and, therefore, is not able to provide a reconciliation to the corresponding GAAP equivalent for its operating earnings guidance without unreasonable efforts.

Regulated Business Update:

New Jersey Natural Gas

NJNG reported fiscal 2018 NFE of $84 million, compared with $86.9 million in fiscal 2017. The decrease in fiscal 2018 was due primarily to higher O&M expenses and lower Basic Gas Supply Service (BGSS) incentives. Net financial losses for the fourth quarter of fiscal 2018 and 2017 were $12.9 million and $9.6 million, respectively, and reflect the seasonal nature of the business.

Customer Growth:

  • NJNG added 9,596 new customers during fiscal 2018, compared with 9,126 during fiscal 2017, primarily driven by the residential new construction market. In addition, 613 existing NJNG customers expanded their natural gas service during fiscal 2018.
  • NJNG expects to add between 28,000 and 30,000 new customers through fiscal 2021, representing an average annual growth rate of 1.8 percent and a cumulative increase in utility gross margin of approximately $16.5 million. For more information on utility gross margin, please see “Non-GAAP Financial Information” below.

NJNG Infrastructure Update:

  • The Southern Reliability Link (SRL),which is designed to provide a secondary interstate feed into the southern end of NJNG’s delivery system, is expected to begin construction in the first quarter of fiscal 2019. NJNG expects SRL to be in service during 2019, and plans to recover its capital costs through a future rate case.
  • Safety Acceleration and Facilities Enhancement (SAFE) II is the five-year program approved by the New Jersey Board of Public Utilities (BPU) in September 2016 to replace the remaining 276 miles of unprotected steel main and associated services in NJNG’s distribution system. During fiscal 2018, NJNG invested $45.7 million to replace 60 miles of unprotected steel main and services.
  • The New Jersey Reinvestment in System Enhancement (NJ RISE) programis the five-year, $102.5 million investment that began in 2014. During fiscal 2018, NJNG installed two new distribution mains under the Barnegat Bay to improve service resiliency into the northern and southern portions of the Seaside Barrier Island. In addition, NJNG completed the reinforcement of a regulator station in Long Beach Island.
  • The SAFE II and NJ RISE programs are eligible for annual base rate increases. On March 29, 2018, NJNG filed its annual petition with the BPU, requesting a base rate increase for the recovery of these related capital costs through June 30, 2018. The filing was updated in July 2018 to reflect actual results through June 30, 2018, with an updated base rate change of $6.8 million effective October 1, 2018.

BGSS Incentive Programs:

  • BGSS incentive programs contributed $12.5 million to utility gross margin in fiscal 2018, compared with $13.7 million during the same period in fiscal 2017. The lower result was due primarily to a decrease in margin in NJNG's storage incentive program and lower volumes associated with the capacity release program.

Energy Efficiency Programs:

  • The SAVEGREEN Project®, NJNG’s energy-efficiency program, invested $12.3 million during fiscal 2018 in grants and financing options designed to help customers with energy-efficiency upgrades for their homes and businesses.
  • NJNG received approval from the BPU to expand its energy-efficiency programs through The SAVEGREEN Project® to help customers better understand and manage their energy usage, reduce emissions and save money. NJNG is authorized to invest $135 million through December 31, 2021 to provide assistance to customers.

Midstream

Midstream reported fiscal 2018 NFE of $24.4 million, compared with $12.9 million during fiscal 2017. The higher results reflect the benefits of tax reform. For the three months ended September 30, 2018, NFE were $2.1 million, compared with $2.6 million during the same period in fiscal 2017. The quarterly decrease is due to a decrease in Allowance for Funds Used During Construction (AFUDC) related to the PennEast project.

Infrastructure Projects:

  • Adelphia Gateway - On January 15, 2018, NJR filed with the Federal Energy Regulatory Commission (FERC) seeking a Certificate of Public Convenience and Necessity for the proposed Adelphia Gateway natural gas pipeline. On January 23, 2018, FERC formally noticed the application and on October 19, 2018, NJR received the Notice of Schedule for the Environmental Review of the Adelphia Gateway Project. Adelphia Gateway will deliver natural gas to under-served areas in the greater Philadelphia region, and NJR expects the project to be in service in fiscal 2019 and contribute to earnings in fiscal 2020.
  • PennEast Pipeline - On January 19, 2018, the FERC issued a Certificate of Public Convenience and Necessity for the PennEast Pipeline. PennEast is working through the details of gaining access to land to complete surveys in order to submit certain permit applications. PennEast has advised it currently expects the pipeline to be completed and operational in 2019. However, the project could be delayed beyond 2019 due to factors beyond PennEast's ability to control or estimate precisely, including potential delays in obtaining (or inability to obtain) governmental and regulatory approvals and land-use rights and unforeseen construction delays.

Non-Regulated Businesses Update:

Energy Services

Energy Services reported fiscal 2018 NFE of $60.4 million, compared with $18.6 million during fiscal 2017. The increase was primarily due to the out-performance of the diversified portfolio of strategic assets driven by volatility and favorable pricing spreads in the physical natural gas market in the first half of fiscal 2018. Fourth-quarter fiscal 2018 net financial losses were $17.6 million, compared with net financial losses of $1.6 million during the same period in fiscal 2017. The quarterly decrease in NFE was due primarily to increased demand fees and O&M expenses during the quarter compared with the same period last year.

Clean Energy Ventures (CEV)

CEV reported NFE of $75.8 million in fiscal 2018, compared with $24.9 million in fiscal 2017. The improved results were due primarily to a benefit of $61.4 million related to the revaluation of deferred income taxes as a result of tax reform. The fourth-quarter fiscal 2018 net financial loss was $4.6 million, compared with a net financial loss of $7 million in the same period last year. The lower quarterly results were due primarily to a realization of fewer Investment Tax Credits (ITC), compared with the same period in fiscal 2017, as a result of the sale leaseback financings for all fiscal 2018 commercial solar projects placed in service.

Fiscal 2018 highlights:

  • Three commercial solar projects were placed into service during fiscal 2018. The three projects, located in Raritan, South Brunswick and Old Bridge, N.J., total 33.7 MW of capacity.
  • The Sunlight Advantage®, CEV's residential solar leasing program, added 910 residential customers during fiscal 2018 and now serves approximately 7,300 residential customers, representing an investment of $217.2 million.
  • On March 2, 2018, CEV entered into a purchase and sale agreement of its 9.7 MW wind farm in Two Dot, Montana for a total sale price of $18.5 million. The sale closed on June 1, 2018, and CEV realized a pre-tax gain of approximately $951,000.

Home Services and Other Operations

In the fourth quarter of fiscal 2018, Home Services and Other Operations reported NFE of $4.4 million, compared with $3.3 million in fiscal 2017. The increase was due primarily to a lower effective tax rate. Home Services and Other Operations reported a net financial loss of $3.8 million in fiscal 2018, compared with NFE of $6.8 million in fiscal 2017. The fiscal 2018 decrease was due to an estimated $9.7 million charge primarily attributed to Other Operations resulting from the revaluation of deferred income taxes resulting from tax reform.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile while continuing to invest capital in regulated and non-regulated projects.

  • During fiscal 2018, NJR generated operating cash flows of $398.3 million, compared with $248 million during the same period in fiscal 2017.
  • Fiscal 2018 capital expenditures were $406.5 million, of which $274.2 million were related to regulated assets, compared with $326.8 million, of which $204.7 million were related to regulated assets, during the same period in fiscal 2017.

Effective Tax Rate:

NJR’s estimated annual effective tax rate was a benefit of 29.9 percent in fiscal 2018, compared to 12.2 percent in fiscal 2017. The decrease is due to the reduced federal tax rate combined with the one-time tax benefit associated with the revaluation of the net deferred tax liability that was partially offset by a year-over-year reduction in federal tax credits.

For NFE purposes, NJR recognized $19.3 million in tax credits, net of deferred taxes, during fiscal 2018, compared with $29.6 million during fiscal 2017. Further detail can be found in Note 12 “Income Taxes” within our 10-K filing.

Webcast Information:

NJR will host a live webcast to discuss its financial results today at 10 a.m. EDT. A few minutes prior to the webcast, go to njresources.com and select “Investor Relations,” then scroll down to the “Events & Presentations” section and click on the webcast link.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. NJR cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJR’s ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants. Words such as “anticipates,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans,” “believes,” “should” and similar expressions may identify forward-looking statements and such forward-looking statements are made based upon management’s current expectations, assumptions and beliefs as of this date concerning future developments and their potential effect upon NJR. There can be no assurance that future developments will be in accordance with management’s expectations, assumptions and beliefs or that the effect of future developments on NJR will be those anticipated by management. Forward-looking statements in this release include, but are not limited to, certain statements regarding NJR’s NFE guidance for fiscal 2019, forecasted contribution of business segments to fiscal 2019 NFE, future NJNG customer and utility gross margin growth, future NJR capital expenditures, infrastructure investments and solar sale leaseback transactions, Clean Energy Ventures’ ITC-eligible projects and demand for residential solar, the impact of the Tax Act, earnings and dividend growth, as well as the ability to close and successfully implement the Adelphia Gateway acquisition, the sale of our wind farms and construct the SRL and PennEast Pipeline projects.

The factors that could cause actual results to differ materially from NJR’s expectations include, but are not limited to, risks associated with our investments in clean energy projects, including the availability of regulatory and tax incentives, the availability of viable projects, our eligibility for ITCs, the future market for SRECs and electricity prices, and operational risks related to projects in service; the ability to obtain governmental and regulatory approvals, land-use rights, electric grid connection (in the case of clean energy projects) and/or financing for the construction, development and operation of our unregulated energy investments, pipeline transportation systems and NJNG and Midstream infrastructure projects, including NJ RISE, SRL, PennEast and Adelphia Gateway, in a timely manner; risks associated with acquisitions and the related integration of acquired assets with our current operations, including our planned Adelphia Gateway acquisition; volatility of natural gas and other commodity prices and their impact on NJNG customer usage, NJNG’s BGSS incentive programs, our Energy Services segment operations and our risk management efforts; the ability to comply with current and future regulatory requirements; the level and rate at which NJNG’s costs and expenses are incurred and the extent to which they are approved for recovery from customers through the regulatory process, including through future base rate case filings; the impact of a disallowance of recovery of environmental-related expenditures and other regulatory changes; the performance of our subsidiaries; operating risks incidental to handling, storing, transporting and providing customers with natural gas; access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply; the regulatory and pricing policies of federal and state regulatory agencies; timing of qualifying for ITCs due to delays or failures to complete planned solar projects and the resulting effect on our effective tax rate and earnings; the results of legal or administrative proceedings with respect to claims, rates, environmental issues, natural gas cost prudence reviews and other matters; changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to our company; risks related to cyberattack or failure of information technology systems; the impact of volatility in the equity and credit markets on our access to capital; the impact to the asset values and resulting higher costs and funding obligations of our pension and post-employment benefit plans as a result of potential downturns in the financial markets, lower discount rates, revised actuarial assumptions or impacts associated with the Patient Protection and Affordable Care Act; commercial and wholesale credit risks, including the availability of creditworthy customers and counterparties, and liquidity in the wholesale energy trading market; accounting effects and other risks associated with hedging activities and use of derivatives contracts; the ability to optimize our physical assets; weather and economic conditions; changes to tax laws and regulations; any potential need to record a valuation allowance for our deferred tax assets; the ability to comply with debt covenants; demographic changes in NJR’s service territory and their effect on NJR’s customer growth; the impact of natural disasters, terrorist activities and other extreme events on our operations and customers; the costs of compliance with present and future environmental laws, including potential climate change-related legislation; environmental-related and other uncertainties related to litigation or administrative proceedings; risks related to our employee workforce; and risks associated with the management of our joint ventures and partnerships, and investment in a master limited partnership. The aforementioned factors are detailed in the “Risk Factors” sections of our Form 10-K that we filed with the Securities and Exchange Commission (SEC) on November 20, 2018, which is available on the SEC’s Web site at sec.gov. Information included in this release is representative as of today only, and while NJR periodically reassesses material trends and uncertainties affecting NJR’s results of operations and financial condition in connection with its preparation of management’s discussion and analysis of results of operations and financial condition contained in its Quarterly and Annual Reports filed with the SEC, 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.

Non-GAAP Financial Information:

This release includes the non-GAAP financial measures NFE/net financial losses, financial margin and utility gross margin. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. As an indicator of NJR’s operating performance, these measures should not be considered an alternative to, or more meaningful than, net income or operating revenues as determined in accordance with GAAP. This information has been provided pursuant to the requirements of SEC Regulation G.

NFE/net financial loss and financial margin exclude unrealized gains or losses on derivative instruments related to the company’s unregulated subsidiaries and certain realized gains and losses on derivative instruments related to natural gas that has been placed into storage at Energy Services, net of applicable tax adjustments as described below. Volatility associated with the change in value of these financial instruments and physical commodity contracts is reported on the income statement in the current period. In order to manage its business, NJR views its results without the impacts of the unrealized gains and losses, and certain realized gains and losses, caused by changes in value of these financial instruments and physical commodity contracts prior to the completion of the planned transaction because it shows changes in value currently instead of when the planned transaction ultimately is settled. An annual estimated effective tax rate is calculated for NFE purposes and any necessary quarterly tax adjustment is applied to Clean Energy Ventures, as such the adjustment is related to tax credits generated by Clean Energy Ventures.

NJNG’s utility gross margin represents the results of revenues less natural gas costs, sales, expenses and other taxes and regulatory rider expenses, which are key components of NJR’s operations. Natural gas costs, sales, expenses and other taxes and regulatory rider expenses are passed through to customers and, therefore, have no effect on utility gross margin. Management uses these non-GAAP financial measures as supplemental measures to other GAAP results to provide a more complete understanding of NJR’s performance. Management believes these non-GAAP financial measures are more reflective of NJR’s business model, provide transparency to investors and enable period-to-period comparability of financial performance. A reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. For a full discussion of NJR’s non-GAAP financial measures, please see NJR’s 2018 Form 10-K, Item 7.

About New Jersey Resources

New Jersey Resources (NYSE: NJR) is a Fortune 1000 company that, through its subsidiaries, provides safe and reliable natural gas and clean energy services, including transportation, distribution, asset management and home services. NJR is composed of five primary businesses:

  • New Jersey Natural Gas, NJR’s principal subsidiary,operates and maintains over 7,500 miles of natural gas transportation and distribution infrastructure to serve over half a million customers in New Jersey’s Monmouth, Ocean and parts of Morris, Middlesex and Burlington counties.
  • NJR Clean Energy Ventures invests in, owns and operates solar and onshore wind projects with a total capacity of more than 350 megawatts, providing residential and commercial customers with low-carbon solutions.
  • NJR Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.
  • NJR Midstream serves customers from local distributors and producers to electric generators and wholesale marketers through its 50 percent equity ownership in the Steckman Ridge natural gas storage facility, as well as its 20 percent equity interest in the PennEast Pipeline Project.
  • NJR Home Services provides service contracts as well as heating, central air conditioning, water heaters, standby generators, solar and other indoor and outdoor comfort products to residential homes throughout New Jersey.

NJR and its more than 1,000 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve® and initiatives such as The SAVEGREEN Project® and The Sunlight Advantage®.

For more information about NJR:

www.njresources.com.
Follow us on Twitter @NJNaturalGas.
“Like” us on facebook.com/NewJerseyNaturalGas.
Download our free NJR investor relations app for iPad, iPhone and Android.

NJR-E

NEW JERSEY RESOURCES                          
(Unaudited)                          
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                    
                           
      Three Months Ended     Twelve Months Ended  
      September 30,     September 30,  
(Thousands, except per share data)     2018     2017     2018     2017  
OPERATING REVENUES                          
Utility     $ 100,476       $ 93,173       $ 731,865       $   695,637  
Nonutility     546,850       443,347       2,183,244       1,572,980  
Total operating revenues     647,326       536,520       2,915,109       2,268,617  
OPERATING EXPENSES                          
Gas purchases                          
Utility     48,737       37,798       276,005       258,687  
Nonutility     501,791       431,509       1,990,832       1,436,740  
Related parties     2,113       2,081       8,505       8,340  
Operation and maintenance     84,612       66,173       266,919       226,356  
Regulatory rider expenses     2,054       2,533       38,969       40,243  
Depreciation and amortization     21,067       21,493       85,701       81,841  
Energy and other taxes     6,247       6,984       52,102       49,366  
Total operating expenses     666,621       568,571       2,719,033       2,101,573  
OPERATING (LOSS) INCOME     (19,295 )     (32,051 )     196,076       167,044  
Other income, net     5,264       2,050       16,853       14,437  
Interest expense, net of capitalized interest     11,546       11,671       46,286       44,886  
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES     (25,577 )     (41,672 )     166,643       136,595  
Income tax (benefit) provision     (5,984 )     (1,791 )     (53,785 )     18,343  
Equity in earnings of affiliates     3,338       3,358       13,008       13,813  
NET (LOSS) INCOME     $ (16,255 )     $ (36,523 )     $ 233,436       $   132,065  
                           
(LOSS) EARNINGS PER COMMON SHARE                          
Basic     $ (0.18 )     $ (0.42 )     $ 2.66       $   1.53  
Diluted     $ (0.18 )     $ (0.42 )     $ 2.64       $   1.52  
                           
DIVIDENDS DECLARED PER COMMON SHARE     $ 0.2925       $ 0.2725       $ 1.1100       $   1.0375  
                           
WEIGHTED AVERAGE SHARES OUTSTANDING                          
Basic     88,279       86,513       87,689       86,321  
Diluted     88,279       86,513       88,315       87,144  
                                 
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES      
                         
      Three Months Ended     Twelve Months Ended
      September 30,     September 30,
(Thousands)     2018     2017     2018     2017
NEW JERSEY RESOURCES            
 
A reconciliation of net income, the closest GAAP financial measurement, to net financial earnings is as follows:
                         
Net (loss) income     $ (16,255 )     $ (36,523 )     $ 233,436       $ 132,065  
Add:                        
Unrealized loss (gain) on derivative instruments and related transactions     866       31,293       26,770       (11,241 )
Tax effect     (592 )     (11,845 )     (4,512 )     4,062  
Effects of economic hedging related to natural gas inventory     (7,782 )     8,878       (22,570 )     38,470  
Tax effect     1,844       (2,887 )     7,362       (13,964 )
Net income to NFE tax adjustment     (6,987 )     (1,408 )            
Net financial (loss) earnings     $ (28,906 )     $ (12,492 )     $ 240,486       $ 149,392  
                         
Weighted Average Shares Outstanding                        
Basic     88,279       86,513       87,689       86,321  
Diluted     88,279       86,513       88,315       87,144  
                         
A reconciliation of basic earnings per share, the closest GAAP financial measurement, to basic net financial earnings per share is as follows:
                         
Basic (loss) earnings per share     $ (0.18 )     $ (0.42 )     $ 2.66       $ 1.53  
Add:                        
Unrealized loss (gain) on derivative instruments and related transactions     $ 0.01       $ 0.36       $ 0.31       $ (0.13 )
Tax effect     $ (0.01 )     $ (0.13 )     $ (0.05 )     $ 0.05  
Effects of economic hedging related to natural gas inventory     $ (0.09 )     $ 0.10       $ (0.26 )     $ 0.45  
Tax effect     $ 0.02       $ (0.03 )     $ 0.08       $ (0.17 )
Net income to NFE tax adjustment     $ (0.08 )     $ (0.02 )     $       $  
Basic NFE per share     $ (0.33 )     $ (0.14 )     $ 2.74       $ 1.73  
                         
NATURAL GAS DISTRIBUTION            
                         
A reconciliation of operating revenue, the closest GAAP financial measurement, to utility gross margin is as follows:
                         
Operating revenues     $ 100,476       $ 93,173       $ 731,865       $ 695,637  
Less:                        
Gas purchases     51,061       40,123       333,208       269,480  
Energy and other taxes     3,656       4,121       39,426       37,917  
Regulatory rider expense     2,054       2,533       38,969       40,243  
Utility gross margin     $ 43,705       $ 46,396       $ 320,262       $ 347,997  
                         
CLEAN ENERGY VENTURES                        
                         
A reconciliation of net income to net financial earnings is as follows:                  
                         
Net income (loss)     $ 2,364       $ (5,580 )     $ 75,849       $ 24,873  
Add:                        
Net income to NFE tax adjustment     (6,987 )     (1,408 )            
Net financial (loss) earnings     $ (4,623 )     $ (6,988 )     $ 75,849       $ 24,873  
                         
                         
      Three Months Ended     Twelve Months Ended
(Unaudited)     September 30,     September 30,
(Thousands)     2018     2017     2018     2017
ENERGY SERVICES                        
                         
The following table is a computation of financial margin:                        
                         
Operating revenues     $ 500,105       $ 398,074       $ 2,112,804       $ 1,462,681  
Less: Gas purchases     502,917       432,635       1,995,335       1,441,310  
Add:                        
Unrealized loss (gain) on derivative instruments and related transactions     2,230       31,598       26,728       (10,063 )
Effects of economic hedging related to natural gas inventory     (7,782 )     8,878       (22,570 )     38,470  
Financial margin     $ (8,364 )     $ 5,915       $ 121,627       $ 49,778  
                         
A reconciliation of operating income, the closest GAAP financial measurement, to financial margin is as follows:
             
Operating (loss) income     $ (20,046 )     $ (41,711 )     $ 81,840       $ (793 )
Add:                        
Operation and maintenance expense     17,029       6,485       32,821       20,313  
Depreciation and amortization     26       14       76       63  
Other taxes     179       651       2,732       1,788  
Subtotal     (2,812 )     (34,561 )     117,469       21,371  
Add:                        
Unrealized loss (gain) on derivative instruments and related transactions     2,230       31,598       26,728       (10,063 )
Effects of economic hedging related to natural gas inventory     (7,782 )     8,878       (22,570 )     38,470  
Financial margin     $ (8,364 )     $ 5,915       $ 121,627       $ 49,778  
                         
A reconciliation of net income to net financial earnings is as follows:                  
                         
Net (loss) income     $ (13,024 )     $ (27,241 )     $ 53,139       $ 476  
Add:                        
Unrealized loss (gain) on derivative instruments and related transactions     2,230       31,598       26,728       (10,063 )
Tax effect     (917 )     (11,960 )     (4,281 )     3,635  
Effects of economic hedging related to natural gas, net of taxes     (7,782 )     8,878       (22,570 )     38,470  
Tax effect     1,844       (2,887 )     7,362       (13,964 )
Net financial (loss) earnings     $ (17,649 )     $ (1,612 )     $ 60,378       $ 18,554  
                         
                         
Home Services and Other                        
                         
A reconciliation of net income to net financial earnings is as follows:                  
                         
Net income (loss)     $ 4,427       $ 3,266       $ (3,555 )     $ 6,811  
Add:                        
Unrealized loss on derivative instruments and related transactions     (56 )           (381 )      
Tax effect     11             107        
Net financial earnings (loss)     $ 4,382       $ 3,266       $ (3,829 )     $ 6,811  
                                         
             
      Three Months Ended     Twelve Months Ended
      September 30,     September 30,
(Thousands, except per share data)     2018     2017     2018     2017
NEW JERSEY RESOURCES                        
                         
Operating Revenues                        
Natural Gas Distribution     $ 100,476       $ 93,173       $ 731,865       $ 695,637  
Clean Energy Ventures     29,165       28,969       71,375       64,394  
Energy Services     500,105       398,074       2,112,804       1,462,681  
Midstream                        
Home Services and Other     17,080       16,673       50,057       49,591  
Sub-total     646,826       536,889       2,966,101       2,272,303  
Eliminations     500       (369 )     (50,992 )     (3,686 )
Total     $ 647,326       $ 536,520       $ 2,915,109       $ 2,268,617  
                         
                         
Operating (Loss) Income                        
Natural Gas Distribution     $ (15,787 )     $ (8,043 )     $ 100,573       $ 151,641  
Clean Energy Ventures     12,770       12,539       12,063       7,903  
Energy Services     (20,046 )     (41,711 )     81,840       (793 )
Midstream     (2,972 )     (1,565 )     (4,454 )     (2,322 )
Home Services and Other     4,224       5,179       1,504       4,611  
Sub-total     (21,811 )     (33,601 )     191,526       161,040  
Eliminations     2,516       1,550       4,550       6,004  
Total     $ (19,295 )     $ (32,051 )     $ 196,076       $ 167,044  
                         
                         
Equity in Earnings of Affiliates                        
Midstream     $ 4,061       $ 4,298       $ 16,165       $ 17,797  
Eliminations     (723 )     (940 )     (3,157 )     (3,984 )

Total

    $ 3,338       $ 3,358       $ 13,008       $ 13,813  
                         
                         
Net (Loss) Income                        
Natural Gas Distribution     $ (12,943 )     $ (9,602 )     $ 84,048       $ 86,930  
Clean Energy Ventures     2,364       (5,580 )     75,849       24,873  
Energy Services     (13,024 )     (27,241 )     53,139       476  
Midstream     2,052       2,563       24,367       12,857  
Home Services and Other     4,427       3,266       (3,555 )     6,811  
Sub-total     (17,124 )     (36,594 )     233,848       131,947  
Eliminations     869       71       (412 )     118  
Total     $ (16,255 )     $ (36,523 )     $ 233,436       $ 132,065  
                         
                         
Net Financial (Loss) Earnings                        
Natural Gas Distribution     $ (12,943 )     $ (9,602 )     $ 84,048       $ 86,930  
Clean Energy Ventures     (4,623 )     (6,988 )     75,849       24,873  
Energy Services     (17,649 )     (1,612 )     60,378       18,554  
Midstream     2,052       2,563       24,367       12,857  
Home Services and Other     4,382       3,266       (3,829 )     6,811  
Sub-total     (28,781 )     (12,373 )     240,813       150,025  
Eliminations     (125 )     (119 )     (327 )     (633 )
Total     $ (28,906 )     $ (12,492 )     $ 240,486       $ 149,392  
                         
                         
Throughput (Bcf)                        
NJNG, Core Customers     21.6       24.1       116.1       118.8  
NJNG, Off System/Capacity Management     40.7       48.6       150.2       178.4  
Energy Services Fuel Mgmt. and Wholesale Sales     177.3       160.8       662.4       521.6  
Total     239.6       233.5       928.7       818.8  
                         
                         
Common Stock Data                        
Yield at September 30     2.5 %     2.6 %     2.5 %     2.6 %
Market Price                        
High     $ 47.85       $ 44.30       $ 47.85       $ 44.30  
Low     $ 44.45       $ 39.50       $ 35.55       $ 30.46  
Close at September 30     $ 44.75       $ 42.15       $ 46.10       $ 42.15  
Shares Out. at September 30     88,293       86,556       88,293       86,556  
Market Cap. at September 30     $ 4,070,305       $ 3,648,315       $ 4,070,305       $ 3,648,315  
                                         
             
      Three Months Ended     Twelve Months Ended
(Unaudited)     September 30,     September 30,
(Thousands, except customer and weather data)     2018     2017     2018     2017
NATURAL GAS DISTRIBUTION                        
                         
Utility Gross Margin                        
Operating revenues     $ 100,476       $ 93,173       $ 731,865       $ 695,637  
Less:                        
Gas purchases     51,061       40,123       333,208       269,480  
Energy and other taxes     3,656       4,121       39,426       37,917  
Regulatory rider expense     2,054       2,533       38,969       40,243  
Total Utility Gross Margin     $ 43,705       $ 46,396       $ 320,262       $ 347,997  
                         
Utility Gross Margin, Operating Income and Net Income                        
Residential     $ 23,750       $ 24,159       $ 203,195       $ 218,093  
Commercial, Industrial & Other     6,878       7,353       46,636       51,510  
Firm Transportation     8,586       9,314       51,880       58,172  

Total Firm Margin

    39,214       40,826       301,711       327,775  
Interruptible     1,778       1,954       6,069       6,498  
Total System Margin     40,992       42,780       307,780       334,273  
Off System/Capacity Management/FRM/Storage Incentive     2,713       3,616       12,482       13,724  
Total Utility Gross Margin     43,705       46,396       320,262       347,997  
Operation and maintenance expense     44,661       40,716       161,723       142,509  
Depreciation and amortization     13,599       12,629       53,208       49,347  
Other taxes not reflected in gross margin     1,232       1,094       4,758       4,500  
Operating (Loss) Income     $ (15,787 )     $ (8,043 )     $ 100,573       $ 151,641  
                         
Net (Loss) Income     $ (12,943 )     $ (9,602 )     $ 84,048       $ 86,930  
                         
Net Financial (Loss) Earnings     $ (12,943 )     $ (9,602 )     $ 84,048       $ 86,930  
                         
Throughput (Bcf)                        
Residential     2.8       3.0       45.5       40.7  
Commercial, Industrial & Other     0.7       0.8       8.9       8.7  
Firm Transportation     1.6       1.7       15.5       14.4  
Total Firm Throughput     5.1       5.5       69.9       63.8  
Interruptible     16.5       18.6       46.2       55.0  
Total System Throughput     21.6       24.1       116.1       118.8  
Off System/Capacity Management     40.7       48.6       150.2       178.4  
Total Throughput     62.3       72.7       266.3       297.2  
                         
Customers                        
Residential     474,495       460,013       474,495       460,013  
Commercial, Industrial & Other     28,037       26,947       28,037       26,947  
Firm Transportation     36,126       42,790       36,126       42,790  
Total Firm Customers     538,658       529,750       538,658       529,750  
Interruptible     31       33       31       33  
Total System Customers     538,689       529,783       538,689       529,783  
Off System/Capacity Management*     28       27       28       27  
Total Customers     538,717       529,810       538,717       529,810  
*The number of customers represents those active during the last month of the period.
Degree Days                        
Actual     14       24       4,537       4,129  
Normal     32       33       4,561       4,589  
Percent of Normal     43.7 %     72.7 %     99.5 %     90.0 %
                                 
             
      Three Months Ended     Twelve Months Ended
(Unaudited)     September 30,     September 30,
(Thousands, except customer, SREC and megawatt)     2018     2017     2018     2017
CLEAN ENERGY VENTURES                        
                         
Operating Revenues                        
SREC sales     $ 21,498       $ 22,644       $ 41,548       $ 40,453  
Wind electricity sales and other     2,795       2,722       14,758       12,953  
Solar electricity sales and other     2,807       1,849       7,284       4,833  
Sunlight Advantage     2,065       1,755       7,785       6,155  
Total Operating Revenues     $ 29,165       $ 28,970       $ 71,375       $ 64,394  
                         
Depreciation and Amortization     $ 7,312       $ 8,716       $ 31,877       $ 31,834  
                         
Operating Income     $ 12,770       $ 12,539       $ 12,063       $ 7,903  
                         
Income Tax Provision (Benefit)     $ 7,343       $ 13,604       $ (79,932 )     $ (31,161 )
                         
Net Income (Loss)     $ 2,364       $ (5,580 )     $ 75,849       $ 24,873  
                         
Net Financial (Loss) Earnings     $ (4,623 )     $ (6,988 )     $ 75,849       $ 24,873  
                         
Solar Renewable Energy Certificates Generated     91,932       71,791       245,147       197,521  
                         
Solar Renewable Energy Certificates Sold     99,750       96,630       188,312       173,299  
                         
Solar Megawatts Eligible for ITCs     13.5       7.6       42.2       39.5  
                         
Solar Megawatts Under Construction     19.6       11.2       19.6       11.2  
                         
Wind Megawatts Installed/Acquired                       39.9  
                         
ENERGY SERVICES                        
                         
Operating Income                        
Operating revenues     $ 500,105       $ 398,074       $ 2,112,804       $ 1,462,681  
Less:                        
Gas purchases     502,917       432,635       1,995,335       1,441,310  
Operation and maintenance expense     17,029       6,485       32,821       20,313  
Depreciation and amortization     26       14       76       63  
Energy and other taxes     179       651       2,732       1,788  
Operating (Loss) Income     $ (20,046 )     $ (41,711 )     $ 81,840       $ (793 )
                         
Net (Loss) Income     $ (13,024 )     $ (27,241 )     $ 53,139       $ 476  
                         
Financial Margin     $ (8,364 )     $ 5,915       $ 121,627       $ 49,778  
                         
Net Financial (Loss) Earnings     $ (17,649 )     $ (1,612 )     $ 60,378       $ 18,554  
                         
Gas Sold and Managed (Bcf)     177.3       160.8       662.4       521.6  
                         
MIDSTREAM                        
                         
Equity in Earnings of Affiliates     $ 4,061       $ 4,298       $ 16,165       $ 17,797  
                         
Other Income, Net     $ 1,640       $ 1,169       $ 5,775       $ 4,162  
                         
Income Tax Provision (Benefit)     $ 175       $ 1,060       $ (8,548 )     $ 5,820  
                         
Net Income     $ 2,052       $ 2,563       $ 24,367       $ 12,857  
                         
HOME SERVICES AND OTHER                        
                         
Operating Revenues     $ 17,080       $ 16,673       $ 50,057       $ 49,591  
                         
Operating Income (Loss)     $ 4,224       $ 5,179       $ 1,504       $ 4,611  
                         
Other Income, Net     $ 633       $ 366       $ 6,892       $ 6,467  
                         
Net Income (Loss)     $ 4,427       $ 3,266       $ (3,555 )     $ 6,811  
                         
Net Financial Earnings (Loss)     $ 4,382       $ 3,266       $ (3,829 )     $ 6,811  
                         
Total Service Contract Customers at September 30     110,133       111,847       110,133       111,847  
                                 

 

Source: New Jersey Resources

Media Contact:
Michael Kinney
732-938-1031
mkinney@njresources.com
or
Investor Contact:
Dennis Puma
732-938-1229
dpuma@njresources.com

 

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