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New Jersey Resources Reports Second-Quarter Fiscal 2021 Results and Increases Net Financial Earnings Guidance for Fiscal 2021

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Second Guidance Increase This Fiscal Year

Today, New Jersey Resources (NYSE: NJR) reported results for the second-quarter of fiscal 2021. Highlights include:

  • Consolidated net income of $149.8 million, compared with $73.8 million in the second-quarter of fiscal 2020

  • Consolidated net financial earnings (NFE), a non-GAAP financial measure, of $170.6 million, or $1.77 per share, compared with $84.3 million, or $0.88 per share, in the second quarter of fiscal 2020

  • Increased NFE per share (NFEPS) guidance to a range of $2.05 to $2.15 for fiscal 2021 primarily driven by the performance of our Energy Services business

  • Energy Services reported second-quarter 2021 NFE of $96.5 million driven by strong market demand due to colder weather in February 2021

  • New Jersey Natural Gas (NJNG) filed a rate case with the New Jersey Board of Public Utilities (BPU), seeking a $165.7 million increase in delivery rates

  • NJNG received approval from the BPU for SAVEGREEN 2020, a new three-year, $259 million energy efficiency program

Second-quarter fiscal 2021 net income totaled $149.8 million, or $1.56 per share, compared with $73.8 million, or $0.78 per share, during the same period in fiscal 2020. Fiscal 2021 year-to-date net income totaled $230.9 million, or $2.40 per share, compared with $149.6 million, or $1.60 per share, for the same period in fiscal 2020.

Second-quarter fiscal 2021 NFE totaled $170.6 million, or $1.77 per share, compared with $84.3 million, or $0.88 per share, during the same period in fiscal 2020. Fiscal 2021 year-to-date NFE totaled $215.3 million, or $2.24 per share, compared with $119.2 million, or $1.27 per share, for the same period in fiscal 2020.

"The results in the second quarter illustrate the value of Energy Services' long-option strategy as we work to deliver more fee-based revenues," said Steve Westhoven, President and CEO of New Jersey Resources. "These impressive results have enabled us to increase our fiscal 2021 guidance for the second time this year and continue to deliver value to our shareowners."

Key Performance Metrics

Three Months Ended

Six Months Ended

March 31,

March 31,

($ in Thousands)

2021

2020

2021

2020

Net income

$

149,809

$

73,846

$

230,854

$

149,598

Basic EPS

$

1.56

$

0.78

$

2.40

$

1.60

Net financial earnings

$

170,604

$

84,291

$

215,261

$

119,222

Basic net financial earnings per share

$

1.77

$

0.88

$

2.24

$

1.27

Effective October 1, 2020, NJR changed its method of accounting for Investment Tax Credits (ITCs) from the flow through method to the deferral method. The change is applied retrospectively to all periods presented in our second-quarter fiscal 2021 Form 10-Q (Form 10-Q) that will be filed with the U.S. Securities and Exchange Commission (SEC). Our historical financial reporting presented herein has been retrospectively revised to apply this change. For additional details, please refer to our Form 10-Q.

A reconciliation of net income to NFE for the three and six months ended March 31, 2021, and 2020, is provided below.

Three Months Ended

Six Months Ended

March 31,

March 31,

(Thousands)

2021

2020

2021

2020

Net income

$

149,809

$

73,846

$

230,854

$

149,598

Add:

Unrealized loss (gain) on derivative instruments and related transactions

29,255

(3,773)

(8,235)

(45,539)

Tax effect

(6,954)

897

1,958

10,828

Effects of economic hedging related to natural gas inventory

(7,209)

14,622

(14,741)

5,735

Tax effect

1,713

(3,475)

3,503

(1,363)

Net income to NFE tax adjustment

3,990

2,174

1,922

(37)

Net financial earnings

$

170,604

$

84,291

$

215,261

$

119,222

Weighted Average Shares Outstanding

Basic

96,248

95,584

96,181

93,747

Diluted

96,618

95,890

96,598

94,073

Basic earnings per share

$

1.56

$

0.78

$

2.40

$

1.60

Add:

Unrealized loss (gain) on derivative instruments and related transactions

0.30

(0.04)

(0.09)

(0.49)

Tax effect

(0.08)

0.01

0.02

0.11

Effects of economic hedging related to natural gas inventory

(0.07)

0.15

(0.15)

0.06

Tax effect

0.02

(0.04)

0.04

(0.01)

Net income to NFE tax adjustment

0.04

0.02

0.02

Basic net financial earnings per share

$

1.77

$

0.88

$

2.24

$

1.27

NFE 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 Certificates (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."

GAAP requires NJR, during the interim periods, to estimate its annual effective tax rate and use this rate to calculate the year-to-date tax provision. NJR also determines an annual estimated effective tax rate for NFE purposes and calculates a quarterly tax adjustment based on the differences between its forecasted net income and its forecasted NFE for the fiscal year.

A table detailing NFE for the three and six months ended March 31, 2021, and 2020, is provided below.

Net Financial Earnings (Loss) by Business Unit

Three Months Ended

Six Months Ended

March 31,

March 31,

(Thousands)

2021

2020

2021

2020

New Jersey Natural Gas

$

80,541

$

86,336

$

130,008

$

130,192

Clean Energy Ventures

(8,872)

(8,829)

(19,146)

(17,008)

Storage and Transportation

4,711

4,258

8,219

7,262

Energy Services

96,528

2,487

98,028

(2,635)

Home Services and Other

747

148

685

1,257

Subtotal

173,655

84,400

217,794

119,068

Eliminations

(3,051)

(109)

(2,533)

154

Total

$

170,604

$

84,291

$

215,261

$

119,222

Fiscal 2021 NFE Guidance Increased Again:

NJR increased fiscal 2021 NFE guidance to a range of $2.05 to $2.15 per share primarily driven by the performance of our Energy Services business during the February weather event. The March 15th guidance update included an estimate of potential bad debt exposure and our revised guidance reflects a refined estimate of our remaining exposure. Today's fiscal 2021 NFE guidance increase is subject to the risks and uncertainties identified below under "Forward-Looking Statements." The following chart represents NJR’s current expected contributions from its subsidiaries for fiscal 2021:

Company

Expected Fiscal 2021
Net Financial Earnings
Contribution

New Jersey Natural Gas

51 to 55 percent

Clean Energy Ventures

9 to 14 percent

Storage and Transportation

6 to 10 percent

Energy Services

25 to 30 percent

Home Services and Other

0 to 2 percent

In providing fiscal 2021 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.

New Jersey Natural Gas

NJNG reported second-quarter fiscal 2021 NFE of $80.5 million, compared to NFE of $86.3 million during the same period in fiscal 2020. The decrease in NFE for the quarter was due primarily to higher O&M expenses related to increased compensation and technology expense. Fiscal 2021 year-to-date NFE was $130.0 million, compared to NFE of $130.2 million during the same period in fiscal 2020.

Customer Growth:

  • NJNG added 3,694 new customers during the first six months of fiscal 2021, compared with 4,339 during the same period in fiscal 2020. The lower customer growth was due primarily to the effects of the COVID-19 pandemic. NJNG continues to expect to add approximately 28,000 to 30,000 new customers during the three-year period of fiscal 2021 through 2023.

Base Rate Filing:

  • On March 30, 2021, NJNG filed a base rate case with the BPU, seeking a $165.7 million increase to its base rates. The filing is based on an overall return of 7.53 percent with a return on equity of 10.5 percent. The proposed increase reflects a 56.9 percent common equity component.

Infrastructure Update:

  • The Southern Reliability Link (SRL) will diversify supply to our customers by providing a new intrastate feed into the southern end of NJNG’s distribution system. Construction on SRL began in the first quarter of fiscal 2019 and is over 97 percent complete. The total cost of SRL is estimated to be approximately $308 million. NJNG expects the project to be placed in service in fiscal 2021.

  • NJNG's Infrastructure Investment Program (IIP) is a new, five-year, $150 million program approved by the BPU on October 28, 2020. The IIP consists of a series of infrastructure projects designed to enhance the safety and reliability of NJNG's natural gas distribution system.

  • Safety Acceleration and Facilities Enhancement (SAFE) II is the five-year, $158 million program approved by the BPU in September 2016 to replace the remaining unprotected bare steel main and associated services in NJNG’s distribution system. In the first six months of fiscal 2021, NJNG invested $15.5 million to replace 14 miles of unprotected bare steel main and services.

  • The New Jersey Reinvestment in System Enhancement (NJ RISE) program is a $102.5 million investment program comprised of six projects related to storm hardening and mitigation. During the second-quarter of fiscal 2021, construction continued on a new regulator station, the final portion of the North Seaside Reinforcement project. The project is expected to be complete in the third quarter of fiscal 2021.

  • The SAFE II and NJ RISE programs are eligible for annual base rate increases. On March 31, 2021, NJNG filed its annual petition with the BPU, requesting a base rate increase of approximately $0.3 million for the recovery of the related capital costs through June 30, 2021. NJNG expects to update the filing in July 2021 to reflect actual results through June 30, 2021, with changes to base rates expected to be effective October 1, 2021. The IIP program will have a similar rate recovery mechanism which is expected to be filed in March 2022.

BGSS Incentive Programs:

BGSS incentive programs contributed $2.1 million to utility gross margin in the second-quarter of fiscal 2021, compared with $1.6 million during the same period in fiscal 2020. The higher results for the second quarter were due primarily to improved margins in off-system sales compared to the same period last year.

Fiscal 2021 year-to-date, these programs contributed $6.7 million to utility gross margin, compared with $4.3 million during the same period in fiscal 2020, a 56 percent increase. The higher results for fiscal 2021 year-to-date were due primarily to improved margins in off-system sales and storage incentives compared to the same period last year.

For more information on utility gross margin, please see "Non-GAAP Financial Information" at the end of the press release.

Energy-Efficiency Programs:

SAVEGREEN invested $9.4 million during the first six months of fiscal 2021 to help customers with energy-efficiency upgrades for their homes and businesses. NJNG recovered $5.3 million of its outstanding investments during the first six months of fiscal 2021.

  • On March 4, 2021, NJNG received approval from the BPU for a three-year, $259 million SAVEGREEN 2020 program. The program is effective on July 1, 2021.

Clean Energy Ventures (CEV)

CEV reported a net financial loss of $8.9 million during the second quarter of fiscal 2021, compared with a net financial loss of $8.8 million during the same period in fiscal 2020. Fiscal 2021 year-to-date net financial loss was $19.1 million, compared with a net financial loss of $17.0 million during the same period in fiscal 2020.

The year-to-date decrease in NFE was due primarily to lower income tax benefit and higher O&M related to increased project maintenance and information technology expenses, partially offset by decreased depreciation expense.

Solar Investment Update:

  • In the second-quarter of fiscal 2021, CEV placed the East Hampton solar facility into service, adding 2.7 MW to total installed capacity.

Storage and Transportation

Storage and Transportation, formerly known as our Midstream reporting segment, reported second-quarter fiscal 2021 NFE of $4.7 million, compared with $4.3 million during the same period in fiscal 2020. Fiscal 2021 year-to-date NFE was $8.2 million, compared with NFE of $7.3 million during the same period in fiscal 2020. The increase in both periods was due primarily to increased hub services revenue from Leaf River compared to the prior periods.

Infrastructure Updates:

  • Adelphia Gateway - During the second quarter of fiscal 2021, Adelphia Gateway received all necessary permits from the Pennsylvania Department of Environmental Protection and filed for a FERC Notice to Proceed for construction of laterals. NJR expects to place a number facilities into service by the end of the year.

  • PennEast - On February 3, 2021, the U.S. Supreme Court granted PennEast's petition for a writ of certiorari seeking to overturn the September 10, 2019 Third Circuit decision vacating the New Jersey Federal District Court's December 13, 2018 condemnation order. Oral arguments for the case were heard on April 28, 2021, and a decision is expected in fiscal 2021.

Energy Services

Energy Services reported second-quarter fiscal 2021 NFE of $96.5 million, compared with NFE of $2.5 million for the same period last fiscal year. Fiscal 2021 year-to-date NFE was $98.0 million, compared with a net financial loss of $2.6 million during the same period in fiscal 2020. The increase in NFE for both periods was due primarily to higher natural gas price volatility in February 2021, as a result of cold weather in regions where Energy Services had contracted rights to storage assets.

Home Services and Other Operations

Home Services and Other Operations reported second-quarter fiscal 2021 NFE of $0.7 million compared to NFE of $0.1 million for the same period in fiscal 2020. The increase in NFE for the quarter is due primarily to increased service contract and installation revenue. Fiscal 2021 year-to-date NFE was $0.7 million, compared with NFE of $1.3 million during the same period in fiscal 2020. The fiscal year-to-date decrease in NFE was due primarily to increased interest expense compared to the same period last year.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile.

  • During the first six months of fiscal 2021, capital expenditures spent and accrued were $257.6 million, of which $188.4 million were related to NJNG, compared with $381.8 million, of which $155.0 million were related to NJNG, during the same period in fiscal 2020. Fiscal 2020 capital expenditures include the $167.5 million acquisition cost of Adelphia Gateway.

  • During the first six months of fiscal 2021, cash flows from operations were $356.3 million, compared with $179.1 million during the same period of fiscal 2020. The increase was due primarily to increased NFE at Energy Services and changes in working capital.

Forward-Looking Statements:

This earnings 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. New Jersey Resources Corporation (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 earnings release include, but are not limited to, certain statements regarding NJR’s NFEPS guidance for fiscal 2021, results of ongoing and future rate cases, forecasted contribution of business segments to NJR’s NFE for fiscal 2021, customer growth at NJNG, future NJR and NJNG capital expenditures, infrastructure programs and investments such as SRL, IIP, SAFE II, NJ RISE and energy efficiency programs, the ability to construct and operate the Adelphia Gateway Pipeline project, and construct SRL and PennEast, and the timing of a U.S. Supreme Court decision regarding PennEast.

Additional information and factors that could cause actual results to differ materially from NJR’s expectations are contained in NJR’s filings with the SEC, including NJR’s Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC’s web site, http://www.sec.gov. Information included in this earnings 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 earnings release includes the non-GAAP financial measures NFE/net financial loss, NFE per basic share, 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 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 NJRES.

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 2020 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, Morris, Middlesex and Burlington counties.

  • Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of more than 360 megawatts, providing residential and commercial customers with low-carbon solutions.

  • 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.

  • Storage and Transportation serves customers from local distributors and producers to electric generators and wholesale marketers through its ownership of Leaf River and the Adelphia Gateway Pipeline Project, as well as our 50 percent equity ownership in the Steckman Ridge natural gas storage facility, and our 20 percent equity interest in the PennEast Pipeline Project.

  • 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 nearly 1,200 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.

NJR-E

NEW JERSEY RESOURCES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Six Months Ended

March 31,

March 31,

(Thousands, except per share data)

2021

2020

2021

2020

OPERATING REVENUES

Utility

$

310,167

$

297,220

$

505,896

$

516,843

Nonutility

492,020

342,394

750,596

737,807

Total operating revenues

802,187

639,614

1,256,492

1,254,650

OPERATING EXPENSES

Gas purchases

Utility

113,235

111,563

169,380

203,377

Nonutility

330,488

318,384

503,735

635,740

Related parties

1,730

1,506

3,464

3,030

Operation and maintenance

110,265

66,832

183,901

130,177

Regulatory rider expenses

18,413

15,330

29,114

27,072

Depreciation and amortization

26,848

27,516

54,210

52,153

Total operating expenses

600,979

541,131

943,804

1,051,549

OPERATING INCOME

201,208

98,483

312,688

203,101

Other income, net

5,007

7,261

9,124

7,547

Interest expense, net of capitalized interest

20,153

19,203

39,939

35,273

INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES

186,062

86,541

281,873

175,375

Income tax provision

39,057

16,284

56,498

32,755

Equity in earnings of affiliates

2,804

3,589

5,479

6,978

NET INCOME

$

149,809

$

73,846

$

230,854

$

149,598

EARNINGS PER COMMON SHARE

Basic

$

1.56

$

0.78

$

2.40

$

1.60

Diluted

$

1.55

$

0.77

$

2.39

$

1.59

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

96,248

95,584

96,181

93,747

Diluted

96,618

95,890

96,598

94,073

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES

Three Months Ended

Six Months Ended

March 31,

March 31,

(Thousands)

2021

2020

2021

2020

NEW JERSEY RESOURCES

A reconciliation of net income, the closest GAAP financial measurement, to net financial earnings is as follows:

...

Net income

$

149,809

$

73,846

$

230,854

$

149,598

Add:

Unrealized l...oss (gain) on derivative instruments and related transactions

29,255

(3,773)

(8,235)

(45,539)

Tax effect

(6,954)

897

1,958

10,828

Effects of economic hedging related to natural gas inventory

(7,209)

14,622

(14,741)

5,735

Tax effect

1,713

(3,475)

3,503

(1,363)

Net income to NFE tax adjustment

3,990

2,174

1,922

(37)

Net financial earnings

$

170,604

$

84,291

$

215,261

$

119,222

Weighted Average Shares Outstanding

Basic

96,248

95,584

96,181

93,747

Diluted

96,618

95,890

96,598

94,073

A reconciliation of basic earnings per share, the closest GAAP financial measurement, to basic net financial earnings per share is as follows:

Basic earnings per share

$

1.56

$

0.78

$

2.40

$

1.60

Add:

Unrealized loss (gain) on derivative instruments and related transactions

$

0.30

$

(0.04)

$

(0.09)

$

(0.49)

Tax effect

$

(0.08)

$

0.01

$

0.02

$

0.11

Effects of economic hedging related to natural gas inventory

$

(0.07)

$

0.15

$

(0.15)

$

0.06

Tax effect

$

0.02

$

(0.04)

$

0.04

$

(0.01)

Net income to NFE tax adjustment

$

0.04

$

0.02

$

0.02

$

Basic NFE per share

$

1.77

$

0.88

$

2.24

$

1.27

NATURAL GAS DISTRIBUTION

A reconciliation of operating revenue, the closest GAAP financial measurement, to utility gross margin is as follows:

Operating revenues

$

310,167

$

297,220

$

505,896

$

516,843

Less:

Gas purchases

118,452

114,256

177,761

210,078

Regulatory rider expense

18,413

15,330

29,114

27,072

Utility gross margin

$

173,302

$

167,634

$

299,021

$

279,693

Three Months Ended

Six Months Ended

(Unaudited)

March 31,

March 31,

(Thousands)

2021

2020

2021

2020

ENERGY SERVICES

The following table is a computation of financial margin:

Operating revenues

$

462,569

$

313,701

$

692,046

$

684,116

Less: Gas purchases

330,280

318,912

504,117

636,636

Add:

Unrealized loss (gain) on derivative instruments and related transactions

29,348

(3,146)

(9,433)

(45,340)

Effects of economic hedging related to natural gas inventory

(7,209)

14,622

(14,741)

5,735

Financial margin

$

154,428

$

6,265

$

163,755

$

7,875

A reconciliation of operating income, the closest GAAP financial measurement, to financial margin is as follows:

Operating income

$

99,278

$

(10,060)

$

150,860

$

37,864

Add:

Operation and maintenance expense

32,998

4,822

37,014

9,560

Depreciation and amortization

13

27

55

56

Subtotal

132,289

(5,211)

187,929

47,480

Add:

Unrealized loss (gain) on derivative instruments and related transactions

29,348

(3,146)

(9,433)

(45,340)

Effects of economic hedging related to natural gas inventory

(7,209)

14,622

(14,741)

5,735

Financial margin

$

154,428

$

6,265

$

163,755

$

7,875

A reconciliation of net income to net financial earnings is as follows:

Net income (loss)

$

75,662

$

(8,435)

$

114,534

$

27,590

Add:

Unrealized loss (gain) on derivative instruments and related transactions

29,348

(3,146)

(9,433)

(45,340)

Tax effect

(6,976)

747

2,243

10,780

Effects of economic hedging related to natural gas

(7,209)

14,622

(14,741)

5,735

Tax effect

1,713

(3,475)

3,503

(1,363)

Net income to NFE tax adjustment

3,990

2,174

1,922

(37)

Net financial earnings (loss)

$

96,528

$

2,487

$

98,028

$

(2,635)

FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)

Three Months Ended

Six Months Ended

March 31,

March 31,

(Thousands, except per share data)

2021

2020

2021

2020

NEW JERSEY RESOURCES

Operating Revenues

Natural Gas Distribution

$

310,167

$

297,220

$

505,896

$

516,843

Clean Energy Ventures

6,476

5,995

12,846

12,207

Energy Services

462,569

313,701

692,046

684,116

Storage and Transportation

13,926

11,076

27,030

20,148

Home Services and Other

12,773

12,365

25,350

25,272

Sub-total

805,911

640,357

1,263,168

1,258,586

Eliminations

(3,724)

(743)

(6,676)

(3,936)

Total

$

802,187

$

639,614

$

1,256,492

$

1,254,650

Operating Income (Loss)

Natural Gas Distribution

$

100,876

$

109,719

$

163,788

$

168,776

Clean Energy Ventures

(6,469)

(8,087)

(14,733)

(15,525)

Energy Services

99,278

(10,060)

150,860

37,864

Storage and Transportation

4,185

2,392

7,874

4,559

Home Services and Other

3,292

3,182

5,288

5,310

Sub-total

201,162

97,146

313,077

200,984

Eliminations

46

1,337

(389)

2,117

Total

$

201,208

$

98,483

$

312,688

$

203,101

Equity in Earnings of Affiliates

Storage and Transportation

$

3,386

$

3,921

$

6,579

$

7,585

Eliminations

(582)

(332)

(1,100)

(607)

Total

$

2,804

$

3,589

$

5,479

$

6,978

Net Income (Loss)

Natural Gas Distribution

$

80,541

$

86,336

$

130,008

$

130,192

Clean Energy Ventures

(8,872)

(8,829)

(19,146)

(17,008)

Energy Services

75,662

(8,435)

114,534

27,590

Storage and Transportation

4,711

4,258

8,219

7,262

Home Services and Other

747

148

685

1,257

Sub-total

152,789

73,478

234,300

149,293

Eliminations

(2,980)

368

(3,446)

305

Total

$

149,809

$

73,846

$

230,854

$

149,598

Net Financial Earnings (Loss)

Natural Gas Distribution

$

80,541

$

86,336

$

130,008

$

130,192

Clean Energy Ventures

(8,872)

(8,829)

(19,146)

(17,008)

Energy Services

96,528

2,487

98,028

(2,635)

Storage and Transportation

4,711

4,258

8,219

7,262

Home Services and Other

747

148

685

1,257

Sub-total

173,655

84,400

217,794

119,068

Eliminations

(3,051)

(109)

(2,533)

154

Total

$

170,604

$

84,291

$

215,261

$

119,222

Throughput (Bcf)

NJNG, Core Customers

33.5

32.3

57.9

63.0

NJNG, Off System/Capacity Management

23.6

28.2

49.5

56.1

Energy Services Fuel Mgmt. and Wholesale Sales

112.7

155.5

217.5

308.2

Total

169.8

216.0

324.9

427.3

Common Stock Data

Yield at March 31

3.3

%

3.6

%

3.3

%

3.6

%

Market Price at March 31

$

39.87

$

34.97

$

39.87

$

34.97

Shares Out. at March 31

96,262

95,643

96,262

95,643

Market Cap. at March 31

$

3,837,967

$

3,344,642

$

3,837,967

$

3,344,642

Three Months Ended

Six Months Ended

(Unaudited)

March 31,

March 31,

(Thousands, except customer and weather data)

2021

2020

2021

2020

NATURAL GAS DISTRIBUTION

Utility Gross Margin

Operating revenues

$

310,167

$

297,220

$

505,896

$

516,843

Less:

Gas purchases

118,452

114,256

177,761

210,078

Regulatory rider expense

18,413

15,330

29,114

27,072

Total Utility Gross Margin

$

173,302

$

167,634

$

299,021

$

279,693

Utility Gross Margin, Operating Income and Net Income

Residential

$

124,468

$

120,541

$

210,443

$

197,623

Commercial, Industrial & Other

23,050

22,884

40,090

38,071

Firm Transportation

22,878

21,469

40,166

37,128

Total Firm Margin

170,396

164,894

290,699

272,822

Interruptible

792

1,153

1,630

2,555

Total System Margin

171,188

166,047

292,329

275,377

Off System/Capacity Management/FRM/Storage Incentive

2,114

1,587

6,692

4,316

Total Utility Gross Margin

173,302

167,634

299,021

279,693

Operation and maintenance expense

52,951

39,815

96,589

76,000

Depreciation and amortization

19,475

18,100

38,644

34,917

Operating Income

$

100,876

$

109,719

$

163,788

$

168,776

Net Income

$

80,541

$

86,336

$

130,008

$

130,192

Net Financial Earnings

$

80,541

$

86,336

$

130,008

$

130,192

Throughput (Bcf)

Residential

22.7

18.9

36.3

33.5

Commercial, Industrial & Other

4.3

3.6

6.7

6.4

Firm Transportation

5.7

5.1

9.6

9.4

Total Firm Throughput

32.7

27.6

52.6

49.3

Interruptible

0.8

4.7

5.3

13.7

Total System Throughput

33.5

32.3

57.9

63.0

Off System/Capacity Management

23.6

28.2

49.5

56.1

Total Throughput

57.1

60.5

107.4

119.1

Customers

Residential

498,583

491,419

498,583

491,419

Commercial, Industrial & Other

31,313

30,545

31,313

30,545

Firm Transportation

31,545

32,013

31,545

32,013

Total Firm Customers

561,441

553,977

561,441

553,977

Interruptible

28

31

28

31

Total System Customers

561,469

554,008

561,469

554,008

Off System/Capacity Management*

17

28

17

28

Total Customers

561,486

554,036

561,486

554,036

*The number of customers represents those active during the last month of the period.

Degree Days

Actual

2,355

2,002

3,773

3,613

Normal

2,456

2,496

4,031

4,068

Percent of Normal

95.9

%

80.2

%

93.6

%

88.8

%

Three Months Ended

Six Months Ended

(Unaudited)

March 31,

March 31,

(Thousands, except customer, SREC, TREC and megawatt)

2021

2020

2021

2020

CLEAN ENERGY VENTURES

Operating Revenues

SREC sales

$

777

$

1,537

$

2,069

$

3,731

TREC sales

817

1,507

Solar electricity sales and other

2,268

1,989

3,988

3,547

Sunlight Advantage

2,614

2,469

5,282

4,929

Total Operating Revenues

$

6,476

$

5,995

$

12,846

$

12,207

Depreciation and Amortization

$

4,685

$

6,603

$

10,118

$

12,919

Operating (Loss)

$

(6,469)

$

(8,087)

$

(14,733)

$

(15,525)

Income Tax (Benefit)

$

(2,714)

$

(4,134)

$

(5,800)

$

(7,968)

Net (Loss)

$

(8,872)

$

(8,829)

$

(19,146)

$

(17,008)

Net Financial (Loss)

$

(8,872)

$

(8,829)

$

(19,146)

$

(17,008)

Solar Renewable Energy Certificates Generated

53,863

57,211

141,071

138,700

Solar Renewable Energy Certificates Sold

3,400

10,000

9,495

19,693

Transition Renewable Energy Certificates Generated

5,627

10,310

Solar Megawatts Under Construction

12.4

32.5

12.4

32.5

ENERGY SERVICES

Operating Income

Operating revenues

$

462,569

$

313,701

$

692,046

$

684,116

Less:

Gas purchases

330,280

318,912

504,117

636,636

Operation and maintenance expense

32,998

4,822

37,014

9,560

Depreciation and amortization

13

27

55

56

Operating Income (Loss)

$

99,278

$

(10,060)

$

150,860

$

37,864

Net Income (Loss)

$

75,662

$

(8,435)

$

114,534

$

27,590

Financial Margin

$

154,428

$

6,265

$

163,755

$

7,875

Net Financial Earnings (Loss)

$

96,528

$

2,487

$

98,028

$

(2,635)

Gas Sold and Managed (Bcf)

112.7

155.5

217.5

308.2

STORAGE AND TRANSPORTATION

Operating Revenues

$

13,926

$

11,076

$

27,030

$

20,148

Equity in Earnings of Affiliates

$

3,386

$

3,921

$

6,579

$

7,585

Operation and Maintenance Expense

$

7,139

$

6,094

$

13,681

$

10,972

Other Income, Net

$

1,591

$

4,671

$

2,845

$

5,368

Interest Expense

$

3,578

$

5,621

$

7,560

$

8,443

Income Tax Provision

$

873

$

1,105

$

1,519

$

1,807

Net Income

$

4,711

$

4,258

$

8,219

$

7,262

HOME SERVICES AND OTHER

Operating Revenues

$

12,773

$

12,365

$

25,350

$

25,272

Operating Income

$

3,292

$

3,182

$

5,288

$

5,310

Other Income (Expense), Net

$

(876)

$

(520)

$

(1,700)

$

(1,048)

Net Income

$

747

$

148

$

685

$

1,257

Net Financial Earnings

$

747

$

148

$

685

$

1,257

Total Service Contract Customers at March 31

106,471

107,648

106,471

107,648

View source version on businesswire.com: https://www.businesswire.com/news/home/20210506005634/en/

Contacts

Media Contact:
Michael Kinney
732-938-1031
mkinney@njresources.com

Investor Contact:
Dennis Puma
732-938-1229
dpuma@njresources.com