NJR
$43.60
Newjersey Resources
($.20)
(.46%)
Earnings Details
4th Quarter September 2017
Tuesday, November 21, 2017 7:00:02 AM
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Summary

New Jersey Resources Sees 2018 Below Estimates

Newjersey Resources (NJR) reported a 4th Quarter September 2017 loss of $0.14 per share on revenue of $536.5 million. The consensus estimate was a loss of $0.12 per share on revenue of $480.9 million. Revenue grew 14.3% on a year-over-year basis.

The company said it expects fiscal 2018 earnings of $1.75 to $1.85 per share. The current consensus earnings estimate is $1.87 per share for the year ending September 30, 2018.

New Jersey Resources Corporation is an energy services holding company engaged in the distribution of natural gas through a regulated utility. It provides other retail and wholesale energy services to customers and invests in midstream assets.

Results
Reported Earnings
($0.14)
Earnings Whisper
-
Consensus Estimate
($0.12)
Reported Revenue
$536.5 Mil
Revenue Estimate
$480.9 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

New Jersey Resources Reports Fiscal 2017 Results and Announces Fiscal 2018 Earnings Guidance

Today, New Jersey Resources (NJR) reported results for fiscal 2017. Key highlights for the fiscal year include:

Consolidated net income was $132.1 million, compared with $131.7 million in fiscal 2016.

Consolidated net financial earnings (NFE), a non-GAAP financial measure, were $149.4 million, compared with $138.1 million in fiscal 2016.

-- Increased annual dividend rate by 6.9 percent to $1.09 per share.

Higher base rates and customer growth led to 14.2 percent NFE growth at New Jersey Natural Gas (NJNG), compared with fiscal 2016.

Southern Reliability Link approved by New Jersey Pinelands Commission; the final regulatory milestone.

NJR Clean Energy Ventures (NJRCEV), a leading solar provider in the state, completed five commercial installations with a total capacity of 27.1 megawatts (MWs); strong demand for residential solar continues.

"New Jersey Resources delivered strong results in fiscal 2017, thanks to the efforts of our talented employees," said Laurence M. Downes, chairman and CEO of New Jersey Resources. "Our performance was primarily driven by higher utility gross margin and customer growth, as well as strong contributions from our clean energy and midstream segments."

Fiscal 2017 net income totaled $132.1 million, or $1.53 per share, compared with $131.7 million, or $1.53 per share, in fiscal 2016. Fiscal 2017 NFE totaled $149.4 million, or $1.73 per share, compared with $138.1 million, or $1.61 per share, in fiscal 2016.

Net losses for the fourth quarter of fiscal 2017 totaled $36.5 million, or $(.42) per share, compared with net income of $25.4 million, or $.30 per share, during the same period last year. Fourth-quarter fiscal 2017 net financial losses totaled $12.5 million, or $(.14) per share, compared with a net financial loss of $2.1 million, or $(.02) per share, during the same period last year.

A reconciliation of net income to NFE for the three and twelve months ended September 30 of fiscal years 2017 and 2016, is provided below.

Three Months Ended
Twelve Months Ended
September 30,
September 30,
(Thousands)
2017
2016
2017
2016
Net (loss) income
$ (36,523 )
$ 25,400
$ 132,065
$ 131,672
Add:
Unrealized loss (gain) on derivative instruments and related
31,293
(11,027 )
(11,241 )
46,883
transactions
Tax effect
(11,845 )
4,003
4,062
(17,018 )
Effects of economic hedging related to natural gas inventory
8,878
(28,195 )
38,470
(36,816 )
Tax effect
(2,887 )
10,235
(13,964 )
13,364
Net income to NFE tax adjustment
(1,408 )
(2,475 )
--
--
Net financial (loss) earnings
$ (12,492 )
$ (2,059 )
$ 149,392
$ 138,085
Weighted Average Shares Outstanding
Basic
86,513
86,060
86,321
85,884
Diluted (GAAP basis)
86,513
86,940
87,144
86,731
Diluted (NFE basis)
86,513
86,060
87,144
86,731
Basic (loss) earnings per share
$
(0.42 )
$
0.30
$
1.53
$
1.53
Add:
Unrealized loss (gain) on derivative instruments and related
0.36
(0.13 )
(0.13 )
0.55
transactions
Tax effect
(0.13 )
0.05
0.05
(0.20 )
Effects of economic hedging related to natural gas inventory
0.10
(0.33 )
0.45
(0.43 )
Tax effect
(0.03 )
0.12
(0.17 )
0.16
Net income to NFE tax adjustment
(0.02 )
(0.03 )
--
--
Basic net financial (loss) earnings per share
$
(0.14 )
$
(0.02 )
$
1.73
$
1.61

NFE is a financial measure not calculated in accordance with generally accepted accounting principles (GAAP) of the United States as it excludes all unrealized, and certain realized, gains and losses associated with derivative instruments, net of applicable tax adjustments. 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 2017 and 2016, is provided below.

Three Months Ended
Twelve Months Ended
September 30,
September 30,
($ in Thousands)
2017
2016
2017
2016
Net (loss) income
$ (36,523 )
$ 25,400
$ 132,065
$
131,672
EPS
$
(0.42 )
$
0.30
$
1.53
$
1.53
NFE
(12,492 )
(2,059 )
149,392
138,085
Basic net financial (loss) per share
$
(0.14 )
$
(0.02 )
$
1.73
$
1.61

A table detailing NFE for the three and twelve months ended September 30 of fiscal years 2017 and 2016, is provided below.

Three Months Ended
Twelve Months Ended
September 30,
September 30,
(Thousands)
2017
2016
2017
2016
Net financial (loss) earnings
New Jersey Natural Gas
$
(9,602 )
$ (7,390 )
$
86,930
$
76,104
NJR Midstream
2,563
2,496
12,857
9,406
Subtotal Regulated
(7,039 )
(4,894 )
99,787
85,510
NJR Clean Energy Ventures
(6,988 )
6,495
24,873
28,393
NJR Energy Services
(1,612 )
(5,651 )
18,554
21,934
NJR Home Services and Other
3,266
2,220
6,811
2,882
Subtotal Non-Regulated
(5,334 )
3,064
50,238
53,209
Subtotal
(12,373 )
(1,830 )
150,025
138,719
Eliminations
(119 )
(229 )
(633 )
(634 )
Total
$ (12,492 )
$ (2,059 )
$ 149,392
$ 138,085

NJR Announces Fiscal 2018 NFE Guidance:

NJR announced fiscal 2018 NFE guidance of $1.75 to $1.85 per share, subject to the risks and uncertainties identified below under "Forward-Looking Statements." NJR expects its regulated businesses to generate between 55 to 75 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 2018:

Company
Expected Fiscal 2018
Net Financial Earnings
Contribution
New Jersey Natural Gas
50 to 60 percent
NJR Midstream
5 to 15 percent
Total Regulated
55 to 75 percent
NJR Clean Energy Ventures
20 to 30 percent
NJR Energy Services
5 to 10 percent
NJR Home Services
1 to 3 percent

In providing fiscal 2018 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 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

Reported fiscal 2017 NFE of $86.9 million compared with $76.1 million during the same period in fiscal 2016. Strong results for the fiscal year were driven primarily by higher base rates and utility gross margin from new customer additions. Net financial losses for the fourth quarter of fiscal 2017 and 2016 were $9.6 million and $7.4 million, respectively, and reflect the seasonal nature of the business.

Customer Growth:

Added, 9,126 new customers for the fiscal year -- its highest total since 2006 -- compared with 8,170 last year; new customer additions contributed $5.5 million to annual utility gross margin.

NJNG expects to invest approximately $40 million per year in capital expenditures to support new customer growth through fiscal 2020. NJNG expects to add 26,000 to 28,000 new customers through fiscal 2020, representing an annual growth rate of 1.7 percent and a cumulative increase in utility gross margin of approximately $16 million through fiscal 2020. For more information on utility gross margin, please see "Non-GAAP Financial Information" below.

Infrastructure Update:

The Southern Reliability Link (SRL) is a proposed 30-mile transmission pipeline designed to provide a secondary interstate feed into the southern end of NJNG’s delivery system to enhance resiliency and supplier diversity.

Approved by New Jersey Pinelands Commission on September 14, 2017; the final regulatory milestone.

We are actively pursuing the remaining easements and road opening permits. Once approved, the construction process will begin and the SRL is expected to be in-service in the first quarter of fiscal 2019.

New Jersey Reinvestment in System Enhancement (NJ RISE) Program is a five-year, $102.5 million investment that began in 2014 to enhance system resiliency and improve NJNG’s service disruption response capabilities.

Completed the reconstruction of the Ship Bottom Regulator Station on Long Beach Island.

Installation of a secondary natural gas distribution main in the northern section of the Seaside barrier island in Ocean County, New Jersey has begun, along with improvements to the associated primary and backup regulator stations.

Two additional NJ RISE projects are in the permitting phase, with expected completion dates in fiscal 2019.

Safety Acceleration and Facilities Enhancement (SAFE) Program II is a five-year program designed to replace the remaining 276 miles of unprotected steel main and associated services in NJNG’s distribution system. As a condition of the New Jersey Board of Public Utilities’ (BPU) approval, NJNG is required to file a base rate case no later than November 2019.

In fiscal 2017, $39.8 million was invested to replace 69.7 miles of unprotected steel main and services.

NJNG earns an Allowance for Funds Used During Construction (AFUDC) on its invested capital during construction, and requests base rate increases for the approved $157.5 million of SAFE II spending in annual filings.

BPU approved a $4.1 million base rate increase, effective October 1, 2017, to recover NJ RISE and SAFE II capital investments for the period ending June 30, 2017.

Basic Gas Supply Service (BGSS) Incentive Programs:

Contributed $13.7 million in fiscal 2017 to utility gross margin compared with $15 million during the same period in fiscal 2016, reflecting a decrease in the value of capacity and lower volumes associated with the capacity release program.

Energy Efficiency:

The SAVEGREEN Project(R), NJNG’s energy-efficiency program, invested $13.1 million during fiscal 2017 in grants and financing options designed to help customers with energy-efficiency upgrades for their homes and businesses.

Since inception in 2009, NJNG has invested nearly $150 million and is authorized to earn an overall return on its investments, ranging from 6.69 to 7.76 percent, with a return on equity (ROE) that ranges from 9.75 to 10.3 percent.

NJR Midstream

Reported fiscal 2017 NFE of $12.9 million compared with $9.4 million during the same period in fiscal 2016. For the three-month period ended September 30, 2017, NFE were $2.6 million, compared with $2.5 million during the same period in fiscal 2016. The improved results were due primarily to AFUDC associated with the PennEast Pipeline project.

On October 27, 2017, Adelphia Gateway, LLC, a subsidiary of NJR, entered into an agreement with Talen Generation LLC to acquire all of the membership interests in Interstate Energy Company LLC, which owns and operates an existing 84-mile pipeline in southeastern Pennsylvania. The transaction is expected to close following receipt of all of the necessary permits and regulatory actions, including those from the Federal Energy Regulatory Commission (FERC) and the Pennsylvania Public Utility Commission.

PennEast is awaiting final approval of its Certificate of Public Convenience and Necessity from FERC.

Once the FERC certificate is received, the project will move quickly to secure the remaining permits and reassess the project timeline. PennEast expects the project to be in service in 2019.

Non-Regulated Business Update:

NJR Clean Energy Ventures

Reported NFE of $24.9 million in fiscal 2017, compared with $28.4 million in fiscal 2016. During the three-month period ended September 30, 2017, NJRCEV reported a net financial loss of $7 million, compared with NFE of $6.5 million during the same period in fiscal 2016. The quarterly results were due primarily to lower investment tax credits (ITCs) driven by NJRCEV’s decision to finance two of its commercial assets through a sale leaseback arrangement, which is described below. Solar highlights include:

Five commercial solar projects were placed into service, adding 27.1 MWs to its growing portfolio of solar assets.

The Sunlight Advantage(R) residential solar program added 1,300 new customers, compared with 1,123 during the same period in fiscal 2016.

Solar-related capital expenditures for projects eligible for ITCs during fiscal 2017 were $120.3 million, $87.5 million net of sale leaseback, compared with $85.6 million during fiscal 2016.

Completed sale leaseback financing of two commercial solar asset projects totaling $32.9 million. Under the sale leaseback financing, NJRCEV retains all Solar Renewable Energy Credits (SRECs) and proceeds from electricity sales while transferring the tax benefits associated with the ITCs and bonus depreciation to the lessor.

NJR Energy Services (NJRES)

Reported NFE of $18.6 million in fiscal 2017 compared with $21.9 million during the same period in fiscal 2016.

Reported a net financial loss of $1.6 million in the fourth quarter of fiscal 2017, compared with a net financial loss of $5.7 million during the same period in fiscal 2016.

Lower results in fiscal 2017 were due primarily to fewer market opportunities related to transportation assets and timing of certain transactions related to storage withdrawals, along with warmer-than-normal weather during fiscal 2017.

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.

NJR generated operating cash flows of $248 million in fiscal 2017, compared with $142.6 million during the same period in fiscal 2016. The increase was attributed primarily to higher utility gross margin and lower broker margin requirements, as well as a discretionary contribution of $30 million to NJR’s pension plan during fiscal 2016 that did not recur in fiscal 2017.

Fiscal 2017 capital expenditures were $326.8 million, of which $204.7 million were related to regulated assets. For the fourth quarter of fiscal 2017, capital expenditures were $80.3 million, compared with $133.4 million during the same period in fiscal 2016.

NJR reported aggregate capital expenditures of $410.8 million and dividend payments of $88 million for fiscal 2017, of which $248.1 million was funded from operating cash flows, $32.9 million from sale leaseback financing, $206.7 million from other proceeds from debt and $11.1 million from equity issuances.

Effective Tax Rate:

NJR’s annual effective tax rate decreased compared with the previous year. In fiscal 2017, $29.6 million related to tax credits net of deferred taxes were recognized, compared with $27.3 million, in the same period last year.

For NFE purposes, the effective tax rate also decreased and NJR recognized $29.6 million in tax credits net of deferred taxes. Further detail can be found in Note 13 "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. EST. 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 2018, forecasted contribution of business segments to fiscal 2018 NFE, future NJNG customer growth, future NJR capital expenditures and infrastructure investments, NJRCEV’s ITC-eligible projects and demand for residential solar, SREC prices and electricity sales, future base rate cases, earnings and dividend growth, the ability to close and successfully implement the Adelphia Gateway acquisition, as well as 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 and PTCs, 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 and NJNG’s infrastructure projects in a timely manner; risks associated with acquisitions and the related integration of acquired assets with our current operations; 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 on our risk management efforts; 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 and PTCs due to delays or failures to complete planned solar and wind energy 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, gas cost prudence reviews and other matters; risks related to cyberattack or failure of information technology systems; changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to our company; the ability to comply with current and future regulatory requirements; 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 postemployment 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; any potential need to record a valuation allowance for our deferred tax assets; changes to tax laws and regulations; weather and economic conditions; 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 21, 2017, which is available on the SEC’s website 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 (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 (losses) 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 NJRES, 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 NJRCEV, as such adjustment is related to tax credits generated by NJRCEV.

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 that move in relation to each other. Natural gas costs, sales, expenses and other taxes and regulatory rider expenses are passed through to customers and, therefore, have no effect on 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 2017 Form 10-K, Item 7.

About New Jersey Resources

New Jersey Resources (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 7,400 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 315 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 and its stake in Dominion Midstream Partners, L.P., 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(R) and initiatives such as The SAVEGREEN Project(R) and The Sunlight Advantage(R).

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
=========================================================== ==================== =============================================================== =============================================================== =============================================================== ======================
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Twelve Months Ended
September 30,
September 30,
(Thousands, except per share data)
2017
2016
2017
2016
OPERATING REVENUES
Utility
$
93,173
$
80,998
$
695,637
$
594,346
Nonutility
443,347
388,243
1,572,980
1,286,559
Total operating revenues
536,520
469,241
2,268,617
1,880,905
OPERATING EXPENSES
Gas purchases
Utility
37,798
30,295
258,687
205,034
Nonutility
431,509
308,820
1,436,740
1,139,301
Related parties
2,081
2,092
8,340
8,351
66,173
57,596
226,356
208,421
Operation and maintenance
Regulatory rider expenses
2,533
2,097
40,243
39,300
Depreciation and amortization
21,493
19,851
81,841
72,748
Energy and other taxes
6,984
6,010
49,366
40,215
Total operating expenses
568,571
426,761
2,101,573
1,713,370
OPERATING (LOSS) INCOME
(32,051 )
42,480
167,044
167,535
Other income, net
2,050
2,764
14,437
9,196
Interest expense, net
11,671
9,111
44,886
31,044
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF
(41,672 )
36,133
136,595
145,687
AFFILIATES
Income tax (benefit) provision
(1,791 )
13,183
18,343
23,530
Equity in earnings of affiliates
3,358
2,450
13,813
9,515
NET (LOSS) INCOME
$
(36,523 )
$
25,400
$
132,065
$
131,672
(LOSS) EARNINGS PER COMMON SHARE
Basic
$
(0.42 )
$
0.30
$
1.53
$
1.53
Diluted
$
(0.42 )
$
0.29
$
1.52
$
1.52
DIVIDENDS DECLARED PER COMMON SHARE
$
0.27
$
0.26
$
1.04
$
0.98
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic
86,513
86,060
86,321
85,884
Diluted
86,513
86,940
87,144
86,731
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
Three Months Ended
Twelve Months Ended
September 30,
September 30,
(Thousands)
2017
2016
2017
2016
NEW JERSEY RESOURCES
================================================================== ==================== ======================================================================================================================================================================= =================================================================================== ===============================================================
A reconciliation of net income, the closest GAAP financial
measurement, to net financial earnings, is as follows:
Net (loss) income
$
(36,523 )
$
25,400
$
132,065
$
131,672
Add:
Unrealized loss (gain) on derivative instruments and related
31,293
(11,027 )
(11,241 )
46,883
transactions
Tax effect
(11,845 )
4,003
4,062
(17,018 )
Effects of economic hedging related to natural gas inventory
8,878
(28,195 )
38,470
(36,816 )
Tax effect
(2,887 )
10,235
(13,964 )
13,364
Net income to NFE tax adjustment
(1,408 )
(2,475 )
--
--
Net financial (loss) earnings
$
(12,492 )
$
(2,059 )
$
149,392
$
138,085
Weighted Average Shares Outstanding
Basic
86,513
86,060
86,321
85,884
Diluted
86,513
86,060
87,144
86,731
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
$
(0.42 )
$
0.30
$
1.53
$
1.53
Add:
Unrealized loss (gain) on derivative instruments and related
$
0.36
$
(0.13 )
$
(0.13 )
$
0.55
transactions
Tax effect
$
(0.13 )
$
0.05
$
0.05
$
(0.20 )
Effects of economic hedging related to natural gas inventory
$
0.10
$
(0.33 )
$
0.45
$
(0.43 )
Tax effect
$
(0.03 )
$
0.12
$
(0.17 )
$
0.16
Net income to NFE tax adjustment
$
(0.02 )
$
(0.03 )
$
--
$
--
Basic NFE per share
$
(0.14 )
$
(0.02 )
$
1.73
$
1.61
NATURAL GAS DISTRIBUTION
================================================================== ==================== ======================================================================================================================================================================= =================================================================================== ===============================================================
A reconciliation of operating revenue, the closest GAAP financial
measurement, to utility gross margin is as follows:
Operating revenues
$
93,173
$
80,998
$
695,637
$
594,346
Less:
Gas purchases
40,123
33,003
269,480
215,849
Energy and other taxes
4,121
3,566
37,917
29,832
Regulatory rider expense
2,533
2,097
40,243
39,300
Utility gross margin
$
46,396
$
42,332
$
347,997
$
309,365
Three Months Ended
Twelve Months Ended
September 30,
September 30,
(Thousands)
2017
2016
2017
2016
CLEAN ENERGY VENTURES
================================================================== ==================== =================================================================================== =================================================================================== =================================================================================== ===============================================================
A reconciliation of net income to net financial earnings, is as
follows:
Net (loss) income
$
(5,580 )
$
8,970
$
24,873
$
28,393
Add:
Net income to NFE tax adjustment
(1,408 )
(2,475 )
--
--
Net financial earnings
$
(6,988 )
$
6,495
$
24,873
$
28,393
NJR ENERGY SERVICES
================================================================== ==================== =================================================================================== =================================================================================== =================================================================================== ===============================================================
The following table is a computation of financial margin:
Operating revenues
$
398,074
$
348,295
$
1,462,681
$
1,197,253
Less: Gas purchases
432,635
309,975
1,441,310
1,153,911
Add:
Unrealized loss (gain) on derivative instruments and related
31,598
(11,703 )
(10,063 )
48,855
transactions
Effects of economic hedging related to natural gas inventory
8,878
(28,195 )
38,470
(36,816 )
Financial margin
$
5,915
$
(1,578 )
$
49,778
$
55,381
A reconciliation of operating income, the closest GAAP financial
measurement, to financial margin is as follows:
Operating (loss) income
$
(41,711 )
$
31,208
$
(793 )
$
22,292
Add:
Operation and maintenance expense
6,485
6,862
20,313
20,025
Depreciation and amortization
14
19
63
88
Other taxes
651
231
1,788
937
Subtotal
(34,561 )
38,320
21,371
43,342
Add:
Unrealized loss (gain) on derivative instruments and related
31,598
(11,703 )
(10,063 )
48,855
transactions
Effects of economic hedging related to natural gas inventory
8,878
(28,195 )
38,470
(36,816 )
Financial margin
$
5,915
$
(1,578 )
$
49,778
$
55,381
A reconciliation of net income to net financial earnings, is as
follows:
Net (loss) income
$
(27,241 )
$
19,764
$
476
$
14,265
Add:
Unrealized loss (gain) on derivative instruments and related
31,598
(11,703 )
(10,063 )
48,855
transactions
Tax effect
(11,960 )
4,248
3,635
(17,734 )
Effects of economic hedging related to natural gas, net of taxes
8,878
(28,195 )
38,470
(36,816 )
Tax effect
(2,887 )
10,235
(13,964 )
13,364
Net financial (loss) earnings
$
(1,612 )
$
(5,651 )
$
18,554
$
21,934
Three Months Ended
Twelve Months Ended
September 30,
September 30,
(Thousands, except per share data)
2017
2016
2017
2016
NEW JERSEY RESOURCES
====================================== ==================== =================================================================================== =================================================================================== =================================================================================== ===============================================================
Operating Revenues
Natural Gas Distribution
$
93,173
$
80,998
$
695,637
$
594,346
Clean Energy Ventures
28,969
25,381
64,394
53,540
Energy Services
398,074
348,295
1,462,681
1,197,253
Midstream
--
--
--
--
Home Services and Other
16,673
16,585
49,591
48,497
Sub-total
536,889
471,259
2,272,303
1,893,636
Eliminations
(369 )
(2,018 )
(3,686 )
(12,731 )
Total
$
536,520
$
469,241
$
2,268,617
$
1,880,905
Operating (Loss) Income
Natural Gas Distribution
$
(8,043 )
$
(5,937 )
$
151,641
$
126,233
Clean Energy Ventures
12,539
12,656
7,903
9,772
Energy Services
(41,711 )
31,208
(793 )
22,292
Midstream
(1,565 )
(358 )
(2,322 )
(1,243 )
Home Services and Other
5,179
4,459
4,611
3,633
Sub-total
(33,601 )
42,028
161,040
160,687
Eliminations
1,550
452
6,004
6,848
Total
$
(32,051 )
$
42,480
$
167,044
$
167,535
Equity in Earnings of Affiliates
Midstream
$
4,298
$
3,524
$
17,797
$
13,936
Eliminations
(940 )
(1,074 )
(3,984 )
(4,421 )
Total
$
3,358
$
2,450
$
13,813
$
9,515
Net (loss) income
Natural Gas Distribution
$
(9,602 )
$
(7,390 )
$
86,930
$
76,104
Clean Energy Ventures
(5,580 )
8,970
24,873
28,393
Energy Services
(27,241 )
19,764
476
14,265
Midstream
2,563
2,496
12,857
9,406
Home Services and Other
3,266
2,220
6,811
2,882
Sub-total
(36,594 )
26,060
131,947
131,050
Eliminations
71
(660 )
118
622
Total
$
(36,523 )
$
25,400
$
132,065
$
131,672
Net financial (loss) earnings
Natural Gas Distribution
$
(9,602 )
$
(7,390 )
$
86,930
$
76,104
Clean Energy Ventures
(6,988 )
6,495
24,873
28,393
Energy Services
(1,612 )
(5,651 )
18,554
21,934
Midstream
2,563
2,496
12,857
9,406
Home Services and Other
3,266
2,220
6,811
2,882
Sub-total
(12,373 )
(1,830 )
150,025
138,719
Eliminations
(119 )
(229 )
(633 )
(634 )
Total
$
(12,492 )
$
(2,059 )
$
149,392
$
138,085
Throughput (Bcf)
NJNG, Core Customers
24.1
23.9
118.8
119.8
NJNG, Off System/Capacity Management
48.6
54.4
178.4
216.7
NJRES Fuel Mgmt. and Wholesale Sales
160.8
140.7
521.6
551.1
Total
233.5
219.0
818.8
887.6
Common Stock Data
Yield at Sept. 30
2.6
%
3.1
%
2.6
%
3.1
%
Market Price
High
$
44.30
$
38.92
$
44.30
$
38.92
Low
$
39.50
$
32.27
$
30.46
$
28.02
Close at Sept. 30
$
42.15
$
32.86
$
42.15
$
32.86
Shares Out. at Sept. 30
86,556
86,086
86,556
86,086
Market Cap. at Sept. 30
$
3,648,315
$
2,828,798
$
3,648,315
$
2,828,798
Three Months Ended
Twelve Months Ended
(Unaudited)
September 30,
September 30,
(Thousands, except customer and weather data)
2017
2016
2017
2016
NATURAL GAS DISTRIBUTION
====================================================== ==================== =============================================================== =============================================================== =============================================================== ===========================================
Utility Gross Margin
Operating revenues
$
93,173
$
80,998
$
695,637
$
594,346
Less:
Gas purchases
40,123
33,003
269,480
215,849
Energy and other taxes
4,121
3,566
37,917
29,832
Regulatory rider expense
2,533
2,097
40,243
39,300
Total Utility Gross Margin
$
46,396
$
42,332
$
347,997
$
309,365
Utility Gross Margin, Operating Income and Net Income
Residential
$
24,159
$
22,271
$
218,093
$
187,762
Commercial, Industrial & Other
7,353
6,839
51,510
46,878
Firm Transportation
9,314
8,737
58,172
54,841
Total Firm Margin
40,826
37,847
327,775
289,481
Interruptible
1,954
1,223
6,498
4,906
Total System Margin
42,780
39,070
334,273
294,387
Off System/Capacity Management/FRM/Storage Incentive
3,616
3,262
13,724
14,978
Total Utility Gross Margin
46,396
42,332
347,997
309,365
Operation and maintenance expense
40,716
34,453
142,509
130,575
Depreciation and amortization
12,629
12,695
49,347
47,828
Other taxes not reflected in gross margin
1,094
1,121
4,500
4,729
Operating (Loss) Income
$
(8,043 )
$
(5,937 )
$
151,641
$
126,233
Net (Loss) Income
$
(9,602 )
$
(7,390 )
$
86,930
$
76,104
Throughput (Bcf)
Residential
3.0
2.6
40.7
36.9
Commercial, Industrial & Other
0.8
0.6
8.7
7.3
Firm Transportation
1.7
1.7
14.4
14.1
Total Firm Throughput
5.5
4.9
63.8
58.3
Interruptible
18.6
19.0
55.0
61.5
Total System Throughput
24.1
23.9
118.8
119.8
Off System/Capacity Management
48.6
54.4
178.4
216.7
Total Throughput
72.7
78.3
297.2
336.5
Customers
Residential
460,013
448,273
460,013
448,273
Commercial, Industrial & Other
26,947
26,218
26,947
26,218
Firm Transportation
42,790
46,608
42,790
46,608
Total Firm Customers
529,750
521,099
529,750
521,099
Interruptible
33
34
33
34
Total System Customers
529,783
521,133
529,783
521,133
Off System/Capacity Management*
27
30
27
30
Total Customers
529,810
521,163
529,810
521,163
*The number of customers represents those active during the last
month of the period.
Degree Days
Actual
24
17
4,129
3,867
Normal
33
35
4,589
4,689
Percent of Normal
72.7
%
48.6
%
90.0
%
82.5
%
Three Months Ended
Twelve Months Ended
(Unaudited)
September 30,
September 30,
(Thousands, except customer, SREC and megawatt)
2017
2016
2017
2016
CLEAN ENERGY VENTURES
================================================ ==================== =============================================================== =============================================================== =============================================================== ======================
Operating Revenues
SREC sales
$
22,644
$
20,216
$
40,453
$
36,243
Wind electricity sales and other
2,722
2,337
12,953
8,747
Solar electricity sales and other
1,849
1,460
4,833
3,867
Sunlight Advantage
1,755
1,367
6,155
4,683
Total Operating Revenues
$
28,970
$
25,380
$
64,394
$
53,540
Depreciation and Amortization
$
8,716
$
6,915
$
31,834
$
23,971
Operating Income
$
12,539
$
12,656
$
7,903
$
9,772
Income Tax (Provision) Benefit
$
(13,604 )
$
(1,841 )
$
31,161
$
26,592
Net (Loss) Income
$
(5,580 )
$
8,970
$
24,873
$
28,393
Net Financial (Loss) Earnings
$
(6,988 )
$
6,495
$
24,873
$
28,393
Solar Renewable Energy Certificates Generated
71,791
59,011
197,521
160,009
Solar Renewable Energy Certificates Sold
96,630
92,708
173,299
169,077
Solar Megawatts Eligible for ITCs
7.6
15.8
39.5
32.2
Solar Megawatts Under Construction
11.2
0.7
11.2
0.7
Wind Megawatts Installed/Acquired
--
6.3
39.9
57.0
Wind Megawatts Under Construction
--
39.9
--
39.9
================================================ ==================== =============================================================== =============================================================== =============================================================== ======================
ENERGY SERVICES
================================================ ==================== =============================================================== =============================================================== =============================================================== ======================
Operating Income
Operating revenues
$
398,074
$
348,295
$
1,462,681
$
1,197,253
Less:
Gas purchases
432,635
309,975
1,441,310
1,153,911
Operation and maintenance expense
6,485
6,862
20,313
20,025
Depreciation and amortization
14
19
63
88
Energy and other taxes
651
231
1,788
937
Operating (Loss) Income
$
(41,711 )
$
31,208
$
(793 )
$
22,292
Net (Loss) Income
$
(27,241 )
$
19,764
$
476
$
14,265
Financial Margin
$
5,915
$
(1,578 )
$
49,778
$
55,381
Net Financial (Loss) Earnings
$
(1,612 )
$
(5,651 )
$
18,554
$
21,934
Gas Sold and Managed (Bcf)
160.8
140.7
521.6
551.1
MIDSTREAM
================================================ ==================== =============================================================== =============================================================== =============================================================== ======================
Equity in Earnings of Affiliates
$
4,298
$
3,524
$
17,797
$
13,936
Other Income
$
1,169
$
848
$
4,162
$
3,130
Income Tax Provision
$
1,060
$
1,459
$
5,820
$
6,130
Net Income
$
2,563
$
2,496
$
12,857
$
9,406
HOME SERVICES AND OTHER
================================================ ==================== =============================================================== =============================================================== =============================================================== ======================
Operating Revenues
$
16,673
$
16,585
$
49,591
$
48,497
Operating Income
$
5,179
$
4,459
$
4,611
$
3,633
Other Income, Net
$
366
$
266
$
6,467
$
869
Net Income
$
3,266
$
2,220
$
6,811
$
2,882
Total Service Contract Customers at September 30
111,847
113,791
111,847
113,791

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SOURCE: New Jersey Resources

New Jersey Resources
Media:
Michael Kinney, 732-938-1031
mkinney@njresources.com
or
Investors:
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