Form 8-K NEW JERSEY RESOURCES For: Aug 02
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 2, 2016
NEW JERSEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey (State or other jurisdiction of incorporation) | 001-08359 (Commission File Number) | 22-2376465 (IRS Employer Identification No.) | ||
1415 Wyckoff Road Wall, New Jersey | 07719 | |||
(Address of principal executive offices) | (Zip Code) | |||
(732) 938-1480
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On August 2, 2016, New Jersey Resources Corporation (“NJR”) issued a press release reporting financial results for the third fiscal quarter ended June 30, 2016 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
NJR will host a conference call and live internet webcast to discuss its financial results on August 2, 2016, at 10:00 a.m. ET. A copy of the presentation that will be used during the webcast is attached hereto as Exhibit 99.2 and incorporated by reference herein.
The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed to be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1 | Press Release dated August 2, 2016 |
Exhibit 99.2 | Presentation dated August 2, 2016 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NEW JERSEY RESOURCES CORPORATION | ||||
Date: August 2, 2016 | By: | /s/ Patrick J. Migliaccio | ||
Patrick J. Migliaccio | ||||
Senior Vice President and Chief Financial Officer | ||||
EXHIBIT INDEX
Exhibit Number | Exhibit |
Exhibit 99.1 | Press Release dated August 2, 2016 |
Exhibit 99.2 | Press Release dated August 2, 2016 |
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Date: August 2, 2016
Media Contact: | Investor Contacts: | |
Michael Kinney | Joanne Fairechio | |
732-938-1031 | 732-378-4967 | |
Dennis Puma | ||
732-938-1229 | ||
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS; REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
WALL, N.J. — New Jersey Resources (NYSE: NJR) today reported results for the third quarter of fiscal 2016 and reaffirmed net financial earnings (NFE) guidance for the year.
For the three-month period ended June 30, 2016, net loss was $17.4 million, or $.20 per share, compared with a net loss of $7.5 million, or $.09 per share, during the same period last year. Fiscal 2016 year-to-date net income totaled $106.3 million, or $1.24 per share, compared with $176.8 million, or $2.08 per share, during the first nine months of fiscal 2015.
For the three-month period ended June 30, 2016, NFE were $11 million, or $.13 per share, compared with $2.5 million, or $.03 per share, during the same period last year. Fiscal 2016 year-to-date NFE totaled $140.1 million, or $1.63 per share, compared with $156.7 million, or $1.84 per share, during the first nine months of fiscal 2015.
“Our results this quarter were primarily driven by continued strong customer growth at New Jersey Natural Gas and solid performances by our unregulated businesses. Our ongoing investments in infrastructure enhancement programs continue to improve the safety, reliability and resiliency of our system to benefit the customers and communities we serve. In this quarter alone, we invested more than $12 million in our infrastructure enhancement projects. Looking ahead, we remain confident we will deliver another year of strong performance in fiscal 2016 in line with our earnings guidance,” said Laurence M. Downes, Chairman and CEO of New Jersey Resources.
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NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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A reconciliation of net income to NFE for the third quarter of fiscal years 2016 and 2015 is provided below.
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net (loss) income | $ | (17,363 | ) | $ | (7,460 | ) | $ | 106,272 | $ | 176,763 | ||||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | 55,875 | 1,188 | 57,910 | (19,010 | ) | |||||||||||
Tax effect | (20,282 | ) | (294 | ) | (21,021 | ) | 7,132 | |||||||||
Effects of economic hedging related to natural gas inventory | (11,380 | ) | 16,464 | (8,621 | ) | (15,751 | ) | |||||||||
Tax effect | 4,130 | (5,937 | ) | 3,129 | 5,908 | |||||||||||
Net income to NFE tax adjustment | (8 | ) | (1,484 | ) | 2,475 | 1,687 | ||||||||||
Net financial earnings | $ | 10,972 | $ | 2,477 | $ | 140,144 | $ | 156,729 | ||||||||
Weighted Average Shares Outstanding | ||||||||||||||||
Basic | 85,960 | 85,449 | 85,823 | 85,110 | ||||||||||||
Diluted | 85,960 | 85,449 | 86,691 | 86,128 | ||||||||||||
Basic (loss) earnings per share | $ | (.20 | ) | $ | (.09 | ) | $ | 1.24 | $ | 2.08 | ||||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | .65 | .02 | .67 | (.22 | ) | |||||||||||
Tax effect | (.24 | ) | — | (.25 | ) | .08 | ||||||||||
Effects of economic hedging related to natural gas inventory | (.13 | ) | .19 | (.10 | ) | (.19 | ) | |||||||||
Tax effect | .05 | (.07 | ) | .04 | .07 | |||||||||||
Net income to NFE tax adjustment | — | (.02 | ) | .03 | .02 | |||||||||||
Basic net financial earnings per share | $ | .13 | $ | .03 | $ | 1.63 | $ | 1.84 | ||||||||
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 detailing NFE for the third quarter of fiscal years 2016 and 2015 is provided below.
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Financial Earnings (Loss) | ||||||||||||||||
New Jersey Natural Gas | $ | 3,607 | $ | 7,172 | $ | 83,494 | $ | 83,952 | ||||||||
NJR Energy Services | 276 | (5,270 | ) | 27,585 | 47,482 | |||||||||||
NJR Clean Energy Ventures | 2,440 | (3,792 | ) | 21,898 | 18,226 | |||||||||||
NJR Midstream | 2,338 | 2,487 | 6,910 | 7,211 | ||||||||||||
NJR Home Services and Other | 2,418 | 1,909 | 662 | (42 | ) | |||||||||||
Sub-total | 11,079 | 2,506 | 140,549 | 156,829 | ||||||||||||
Eliminations | (107 | ) | (29 | ) | (405 | ) | (100 | ) | ||||||||
Total | $ | 10,972 | $ | 2,477 | $ | 140,144 | $ | 156,729 | ||||||||
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NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
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▪ | NJR Reaffirms Fiscal 2016 NFE Guidance |
NJR reaffirmed previously announced fiscal 2016 NFE guidance in the range of $1.55 to $1.65 per share, subject to the risks and uncertainties identified below under “Forward-Looking Statements.” In providing fiscal 2016 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.
NJR expects its regulated businesses to generate between 65 to 80 percent of total NFE, with New Jersey Natural Gas (NJNG) continuing to be the largest contributor. The following chart represents NJR’s current expected contributions from its subsidiaries for fiscal year 2016:
Company | Expected Fiscal 2016 Net Financial Earnings Contribution |
New Jersey Natural Gas | 60 to 70 percent |
NJR Midstream | 5 to 10 percent |
Total Regulated | 65 to 80 percent |
NJR Clean Energy Ventures | 10 to 20 percent |
NJR Energy Services | 5 to 15 percent |
NJR Home Services | 1 to 3 percent |
Total Unregulated | 16 to 38 percent |
▪ | New Customers and Regulatory Incentives Drive Growth at New Jersey Natural Gas |
For the three-month period ended June 30, 2016, NFE at NJNG, the company's regulated utility subsidiary, were $3.6 million, compared with $7.2 million during the same period last year. Fiscal 2016 year-to-date NFE at NJNG were $83.5 million, compared with $84 million during the same period last year. Lower quarterly results were primarily due to the timing of Basic Gas Supply Service (BGSS) incentives and operation and maintenance (O&M) expenses. Steady results for the fiscal year were driven by utility gross margin from customer additions, BGSS incentive programs and regulatory initiatives, such as The SAVEGREEN Project® (SAVEGREEN) and the Safety Acceleration and Facility Enhancement (SAFE) program.
During the first nine months of fiscal 2016, NJNG added 5,289 new customers, compared with 5,750 during the same period last year; and, in the first nine months of fiscal 2016, a total of 545 existing non-heat customers converted to natural gas heat, compared with 567 during the same period last year. NJNG anticipates these new and conversion customers will contribute approximately $3.9 million annually to utility gross margin, a 16 percent increase over the same period last year, driven primarily by a large industrial customer switching from interruptible service to firm service.
NJNG is on target to add 8,150 new customers this fiscal year, which represents a 4 percent increase over fiscal 2015. Also, NJNG expects to add a total of 24,000 to 28,000 new customers between fiscal 2016 and 2018, representing a new customer annual growth rate of approximately 1.6 percent. NJNG anticipates these new customers and conversions will contribute approximately $4.4 million annually to utility gross
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margin. For more information on utility gross margin, please see “Non-GAAP Financial Information” below.
▪ | The SAVEGREEN Project Extended Through December 2018 |
The NJNG energy-efficiency program, SAVEGREEN, provides customers with grants and financing options to help make upgrading to high-efficiency natural gas equipment more affordable. In the third quarter of fiscal 2016, SAVEGREEN invested $2.7 million in grants and financing options — increasing the year-to-date investments to $16.2 million.
On June 29, 2016, NJNG received approval from the New Jersey Board of Public Utilities (BPU) to extend its energy-efficiency offerings under SAVEGREEN. As a result, NJNG will continue to invest approximately $220 million in the program through December 31, 2018. NJNG is authorized to earn an overall return on its SAVEGREEN investments, ranging from 6.69 percent to 7.76 percent with a return on equity (ROE) ranging from 9.75 percent to 10.3 percent. The recovery period varies from two to 10 years, depending on the type of investment.
Since its inception in 2009, SAVEGREEN investments, totaling approximately $134 million, have helped nearly 44,000 NJNG customers reduce energy consumption and lower their energy bills. This program directly supports New Jersey’s Energy Master Plan. In addition, NJNG has helped generate more than $327 million in economic activity by working with the more than 2,400 contractors who have participated in the project.
▪ | Basic Gas Supply Service Incentive Programs Contribute to Earnings |
In the third quarter of fiscal 2016, BGSS incentive programs at NJNG, which include off-system sales, capacity release and storage incentives, contributed $3.4 million to utility gross margin, compared with $5.8 million in the third quarter of fiscal 2015. In the first nine months of fiscal 2016, these incentive programs contributed $11.7 million to utility gross margin, compared with $13.1 million during the same period in fiscal 2015. The results were due primarily to decreased gross margin in the storage incentive program and a decrease in the value of capacity.
NJNG shares the utility gross margin earned from these incentive programs with customers and shareowners, according to utility gross margin-sharing formulas authorized by the BPU. Since their inception in 1992, these incentive programs have saved customers approximately $859 million and provided additional shareholder value.
▪ | New Jersey Natural Gas Continues to Work with Regulators on its Base Rate Case |
On November 13, 2015, NJNG filed a petition with the BPU seeking an increase of approximately $148 million to its base tariff delivery rates, which primarily covers the cost of constructing, operating and maintaining its natural gas infrastructure. NJNG has not filed a general petition to increase delivery rates since 2007. The timing of this filing was driven by NJNG’s substantial capital investment in infrastructure over the past seven fiscal years, as well as NJNG’s agreement to file a base rate case no later than November 15, 2015 in accordance with the BPU’s Order in the matter for approval of SAFE and NJNG's New Jersey Reinvestment in Facility Enhancements (NJ RISE) programs. The parties involved in the base rate case
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are actively engaged in settlement talks and are working toward resolution with new base rates expected to be effective in early fiscal 2017.
Progress Continues With the Southern Reliability Link Project
The SRL, a 30-mile, 30-inch transmission main to support system reliability and resiliency, continues to move forward. In March 2016, the BPU issued a second order finding the SRL project is reasonably necessary for the service, convenience or welfare of the public, and concluded certain ordinances, permits and regulations have no application to the project. This order, and one issued on January 27, 2016 approving the project, have been appealed. NJNG is confident the orders will be upheld by the appellate court. As of July 8, 2016, NJNG's permit applications were deemed administratively complete by the New Jersey Department of Environmental Protection (NJDEP). The NJDEP's determination is followed by public comment and technical review. NJNG continues to proceed with obtaining construction and road-opening permits for the SRL project.
Safety Acceleration and Facilities Enhancement Program
In the third quarter of fiscal 2016, NJNG invested $10.5 million in its SAFE program, for a total fiscal year-to-date investment of $23.8 million. This $130 million, four-year infrastructure investment was approved by the BPU in 2012. Through this program, NJNG is replacing 276 miles of its unprotected steel and cast iron distribution main to further ensure the safety, reliability and integrity of its natural gas delivery system. In December 2015, NJNG became the first energy utility in New Jersey to eliminate all cast iron main from its distribution system and is continuing efforts to replace 55 miles of unprotected steel main and associated services by September 30, 2016. Current SAFE investments will earn a weighted average cost of capital of 6.9 percent, including a 9.75 percent ROE. In November 2015, as part of the base rate case, NJNG filed with the BPU to replace the final 276 miles of unprotected steel main and associated services from its natural gas distribution pipeline network. This next phase of the project would span approximately five years and would require an investment of $200 million.
Reinvestment in System Enhancement Program
NJNG invested $1.9 million in the third quarter of fiscal 2016 in its NJ RISE program, bringing the total fiscal year-to-date investment to $9.4 million. NJ RISE, a five-year, $102.5 million investment, consists of six capital projects, designed to improve NJNG’s service disruption response and strengthen the overall safety, reliability and resiliency of its natural gas distribution and transmission systems. These system enhancements are designed to help diminish the impact of future major weather events and align with the State of New Jersey’s directive for improved energy resiliency and preparedness.
Liquefied Natural Gas Plant Operating; Will Supplement Peak-Day Supply and Reduce Emissions
On June, 30, 2016, NJNG began operating its natural gas liquefaction processing project at its LNG plant in Howell, NJ. This nearly $28 million investment provides NJNG with the ability to liquefy pipeline natural gas for peak-day use, ensure system integrity and reliability, as well as reduce LNG transportation and capacity costs. This project will benefit customers by lowering BGSS costs, help the environment by reducing emissions related to the transportation of LNG and create additional value for shareowners.
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By liquefying natural gas on-site, NJNG will eliminate the delivery of LNG from approximately 700 trucks per year, each traveling approximately 600 miles round trip from Everett, MA. This equates to an approximate reduction of 700 metric tons of greenhouse gas (GHG) emissions annually. NJNG expects to reduce the average annual LNG transportation charges by approximately 80 percent and eliminate all associated LNG contract costs.
▪ | NJR Clean Energy Ventures Places Three Commercial Solar Systems in Service; Adds Residential Customers |
For the three-month period ended June 30, 2016, NJR Clean Energy Ventures (NJRCEV) generated NFE of $2.4 million compared with a loss of $3.8 million during the same period last year. The 2016 fiscal year-to-date NFE at NJRCEV were $21.9 million compared with $18.2 million during the same period last year. The results reflect the increased amount of tax credits being recognized.
NJRCEV recently completed three ground-mounted, grid connected commercial solar projects in New Jersey. The projects, located in Flemington, Upper Freehold and East Amwell, total 10.9 megawatts (MW) of capacity and approximately $26 million of investments. Currently, NJRCEV has a total generating capacity of more than 210 MW, or enough to power nearly 41,000 homes for a year. Additionally, construction continues on two ground-mounted, grid connected systems also in New Jersey — a $16.8 million, 7.2 MW project in Buena Vista Township and a $9.9 million, 3.7 MW project in Bernards Township.
In the third quarter of fiscal 2016, NJRCEV's residential solar lease program, The Sunlight Advantage®, added 323 customers, totaling 3 MWs of capacity. During the first nine months of fiscal 2016, NJRCEV added 614 customers, totaling 5.5 MWs of capacity, compared with 468 customers and 4.5 MWs of capacity during the same period last year. The Sunlight Advantage currently provides savings to nearly 4,580 eligible homeowners through both roof- and ground-mounted solar systems, with no upfront installation or maintenance costs. NJRCEV expects to invest approximately $34 million in residential solar systems in fiscal 2016, compared with $25 million in fiscal 2015.
The extension of the federal Production Tax Credit (PTC) for wind and the Investment Tax Credit (ITC) for solar passed by Congress in December 2015, are expected to help sustain long-term growth in the wind and solar markets in the United States. NJRCEV will now have additional flexibility and options to deploy capital over the next few years.
▪ | Construction Continues at Ringer Hill Wind Farm |
NJRCEV expects the Ringer Hill Wind Farm to be operational during the first quarter of fiscal 2017. NJRCEV is investing approximately $84 million to construct, own and operate the Somerset County, Pennsylvania wind farm, consisting of 14 General Electric turbines, with a total capacity of 39.9 MW. The majority of the energy produced will be hedged under a 15-year agreement with Iron Mountain. When this project is complete, NJRCEV’s onshore wind capacity will total approximately120 MW, capable of producing enough energy to power 37,500 homes per year.
NJRCEV’s other wind farms include the Alexander Wind Farm in Kansas, Carroll Area Wind Farm in Iowa and the Two Dot Wind Farm in Montana, which have a combined capacity of approximately 80 MW.
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NJR’s effective tax rate is significantly impacted by the amount of tax credits forecasted to be earned during the fiscal year. GAAP requires NJR to estimate its annual effective tax rate and use this rate to calculate its year-to-date tax provision. Based on projects completed, NJRCEV’s forecast of projects to be completed for the balance of the fiscal year and projected pre-tax income for the year, NJR’s estimated annual effective tax rate is 10.3 percent, compared with 24.3 percent last year. Accordingly, $24.5 million related to tax credits, net of deferred taxes, were recognized during the first nine months of fiscal 2016, compared with $24 million related to tax credits, net of deferred taxes, recognized during the same period last year.
For NFE purposes, the effective tax rate for fiscal 2016 is estimated at 16.6 percent and $32.7 million of tax credits were recognized during the first nine months of fiscal 2016, compared with a 21.1 percent effective tax rate and $25.7 million of tax credits during the same period last year. For further discussion of this tax adjustment and reconciliation to the most comparable GAAP measure, please see the explanation below under “Non-GAAP Financial Information.”
The estimated effective tax rate is based on information and assumptions that are subject to change, and may have a material impact on quarterly and annual NFE. Factors considered by management in estimating completion of projects during the fiscal year include, but are not limited to, board of directors’ approval, regulatory approval, volatility of energy prices, execution of various contracts, including power purchase agreements, construction logistics, permitting and interconnection completion. See the “Forward-Looking Statements” section of this news release for further information regarding the inherent risks associated with solar investments.
▪ | NJR Energy Services Performs Within NJR's Guidance Range |
For the three-month period ended June 30, 2016, NFE at NJR Energy Services (NJRES), NJR's wholesale energy services provider, were $276,000, compared with a loss of $5.3 million during the same period last year. During the first nine months of fiscal 2016, NFE was $27.6 million, compared with $47.5 million during the same period last year. The results at NJRES reflect the seasonality of its portfolio and overall results for the year are based on a return to normal volatility when compared to the past two fiscal years. NJRES continues to perform within NJR's guidance range for NFE this fiscal year.
A leader in the wholesale natural gas marketplace, NJRES has physical assets strategically located across the country, including the Marcellus Shale region and the Midwest, and holds firm capacity on pipelines throughout North America. With its commitment to disciplined risk management, the NJRES team identifies growth opportunities and creates customized energy solutions for a diverse customer base. Currently, NJRES’ asset portfolio consists of approximately 45 billion cubic feet (Bcf) of firm storage capacity and 1.63 Bcf/day of firm transportation.
▪ | Steady NJR Midstream Results |
During the three-month period ended June 30, 2016, NJR Midstream, NJR's natural gas midstream asset segment, reported NFE of $2.3 million, compared with $2.5 million during the same period last year. NJR Midstream reported fiscal year-to-date NFE of $6.9 million, compared with $7.2 million during the same period in 2015. These results were due primarily to increased storage service demand and revenue at Steckman Ridge, a 12 Bcf natural gas storage facility in southwestern Pennsylvania, which partially offset the loss of revenue due to the transfer of ownership interest in the Iroquois Pipeline. In August 2015, NJR Midstream exchanged its 5.53 percent equity ownership in the Iroquois Gas Transmission System, LP for
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1.8 million common units of Dominion Midstream Partners, LP (NYSE: DM), a master limited partnership that owns several Federal Energy Regulatory Commission (FERC)-regulated assets.
NJR Midstream's investments include its 50 percent equity ownership in Steckman Ridge, jointly owned with Spectra Energy, as well as a 20 percent interest in the proposed PennEast Pipeline. This 118-mile pipeline is designed to bring lower cost natural gas produced in the Marcellus Shale region to homes and businesses in Pennsylvania and New Jersey, and provide greater system reliability for local utilities. PennEast filed a formal application with FERC in the fourth quarter of fiscal 2015 and currently estimates the system will be in-service during the last quarter of fiscal 2018 or the first quarter of fiscal 2019. On March 29, 2016, FERC issued a Notice of Availability of the final Environmental Impact Statement by December 16, 2016 and the 90-day Federal Authorization Decision Deadline is March 16, 2017.
▪ | NJR Home Services Reports Earnings |
In the third quarter of fiscal 2016, NJR Home Services (NJRHS), the company’s unregulated retail and appliance service subsidiary, reported NFE of $1.8 million, compared with $1.9 million during the same period last year. In the first nine months of fiscal 2016, NJRHS, reported a net financial loss of $746,000 compared with a net financial loss of $254,000 during the same period last year. Net financial losses are typical for NJRHS during the first nine months of the fiscal year due to the timing of service contract revenues are recognized.
NJRHS offers home comfort solutions including service contracts for heating and cooling systems, HVAC installations, plumbing and electrical services, standby generators and solar lease and purchase plans. NJRHS’ service territory includes Monmouth, Ocean, Middlesex, Morris, Sussex, Warren and Hunterdon counties in New Jersey.
Webcast Information
NJR will host a live webcast to discuss its financial results today at 10 a.m. ET. 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
Certain statements contained in this news release are 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 (NJR or the Company) 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 news
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release include, but are not limited to, certain statements regarding NJR’s NFE guidance for fiscal 2016, forecasted contribution of business segments to fiscal 2016 NFE, future NJNG customer growth, future NJNG capital expenditures and infrastructure investments, NJRCEV’s onshore wind and solar investments, NJR’s estimated effective tax rate, the extension of the PTC and ITC, and the PennEast Pipeline project.
The factors that could cause actual results to differ materially from NJR’s expectations include, but are not limited to, weather and economic conditions; changes in the rate of NJNG’s customer growth; volatility of natural gas and other commodity prices; changes in rating agency requirements and/or credit ratings; the impact of volatility in the credit markets; the ability to comply with debt covenants; the impact to the asset values and resulting higher costs and funding obligations of NJR’s pension and post-employment benefit plans as a result of downturns in the financial markets, lower discount rates, revised actuarial assumptions or impacts associated with the Patient Protection and Affordable Care Act; accounting effects and other risks associated with hedging activities and use of derivatives contracts; commercial and wholesale credit risks, including the availability of creditworthy customers and counterparties and liquidity in the wholesale energy trading market; the ability to obtain governmental and regulatory approvals, land-use rights, electrical grid connection and/or financing for the construction, development and operation of NJR’s non-regulated energy investments and NJNG’s planned infrastructure projects in a timely manner; risks associated with the management of the company’s joint ventures, partnerships and investment in a master limited partnership; risks associated with our investments in renewable energy projects, including the availability of regulatory and tax incentives, the availability of viable projects and NJR’s eligibility for ITCs and PTCs, the future market for SRECs and operational risks related to projects in service; timing of qualifying for ITCs and PTCs due to delays or failures to complete planned solar and wind energy projects; the level and rate at which NJNG’s costs and expenses are incurred and the extent to which they are allowed to be recovered from customers through the regulatory process, including through the base rate case filing; access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply; operating risks incidental to handling, storing, transporting and providing customers with natural gas; risks related to our employee workforce; the regulatory and pricing policies of federal and state regulatory agencies; the costs of compliance with present and future environmental laws, including potential climate change-related legislation; risks related to changes in accounting standards; the disallowance of recovery of environmental-related expenditures and other regulatory changes; environmental-related and other litigation and other uncertainties; risks related to cyber-attack or failure of information technology systems; and the impact of natural disasters, terrorist activities, and other extreme events on our operations and customers. The aforementioned factors are detailed in the “Risk Factors” sections of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on November 24, 2015, which is available on the SEC’s website at sec.gov. Information included in this news 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 news 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
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REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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financial measures calculated and reported in accordance with GAAP can be found below. As an indicator of the 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 2015 Form 10-K, Item 7 and most recent Form 10-Q, Part I, Item 2.
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. With annual revenues in excess of $2.7 billion, NJR is comprised of five primary businesses:
• | New Jersey Natural Gas, NJR’s principal subsidiary, operates and maintains over 7,300 miles of natural gas transportation and distribution infrastructure to serve over half a million customers in New Jersey’s Monmouth, Ocean and parts of Burlington, Morris and Middlesex counties. |
• | NJR Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services to its customers across North America. |
• | NJR Clean Energy Ventures invests in, owns and operates solar and onshore wind projects with a total capacity of more than 210 megawatts, providing residential and commercial customers with low-carbon solutions. |
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NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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• | 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. |
For more information about NJR:
Visit 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
-more-
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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NEW JERSEY RESOURCES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
OPERATING REVENUES | ||||||||||||||||
Utility | $ | 119,206 | $ | 116,307 | $ | 513,348 | $ | 699,737 | ||||||||
Nonutility | 274,007 | 342,160 | 898,316 | 1,595,944 | ||||||||||||
Total operating revenues | 393,213 | 458,467 | 1,411,664 | 2,295,681 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Gas purchases | ||||||||||||||||
Utility | 45,700 | 41,562 | 174,739 | 255,106 | ||||||||||||
Nonutility | 288,510 | 342,105 | 830,481 | 1,477,649 | ||||||||||||
Related parties | 2,108 | 3,102 | 6,259 | 9,490 | ||||||||||||
Operation and maintenance | 51,467 | 48,598 | 150,825 | 146,135 | ||||||||||||
Regulatory rider expenses | 6,360 | 8,516 | 37,203 | 72,671 | ||||||||||||
Depreciation and amortization | 18,671 | 15,574 | 52,897 | 45,164 | ||||||||||||
Energy and other taxes | 8,726 | 8,319 | 34,205 | 47,272 | ||||||||||||
Total operating expenses | 421,542 | 467,776 | 1,286,609 | 2,053,487 | ||||||||||||
OPERATING (LOSS) INCOME | (28,329 | ) | (9,309 | ) | 125,055 | 242,194 | ||||||||||
Other income, net | 2,306 | 1,491 | 6,432 | 2,518 | ||||||||||||
Interest expense, net | 7,787 | 7,327 | 21,933 | 21,005 | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES | (33,810 | ) | (15,145 | ) | 109,554 | 223,707 | ||||||||||
Income tax (benefit) provision | (14,190 | ) | (4,318 | ) | 10,347 | 56,693 | ||||||||||
Equity in earnings of affiliates | 2,257 | 3,367 | 7,065 | 9,749 | ||||||||||||
NET (LOSS) INCOME | $ | (17,363 | ) | $ | (7,460 | ) | $ | 106,272 | $ | 176,763 | ||||||
(LOSS) EARNINGS PER COMMON SHARE | ||||||||||||||||
Basic | $ | (.20 | ) | $ | (.09 | ) | $ | 1.24 | $ | 2.08 | ||||||
Diluted | $ | (.20 | ) | $ | (.09 | ) | $ | 1.23 | $ | 2.05 | ||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | .24 | $ | .23 | $ | .72 | $ | .68 | ||||||||
AVERAGE SHARES OUTSTANDING | ||||||||||||||||
Basic | 85,960 | 85,449 | 85,823 | 85,110 | ||||||||||||
Diluted | 85,960 | 85,449 | 86,691 | 86,128 | ||||||||||||
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES | ||||||||||||||||
NEW JERSEY RESOURCES | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
A reconciliation of net income, the closest GAAP financial measurement, to net financial earnings, is as follows: | ||||||||||||||||
Net (loss) income | $ | (17,363 | ) | $ | (7,460 | ) | $ | 106,272 | $ | 176,763 | ||||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | 55,875 | 1,188 | 57,910 | (19,010 | ) | |||||||||||
Tax effect | (20,282 | ) | (294 | ) | (21,021 | ) | 7,132 | |||||||||
Effects of economic hedging related to natural gas inventory | (11,380 | ) | 16,464 | (8,621 | ) | (15,751 | ) | |||||||||
Tax effect | 4,130 | (5,937 | ) | 3,129 | 5,908 | |||||||||||
Net income to NFE tax adjustment | (8 | ) | (1,484 | ) | 2,475 | 1,687 | ||||||||||
Net financial earnings | $ | 10,972 | $ | 2,477 | $ | 140,144 | $ | 156,729 | ||||||||
Weighted Average Shares Outstanding | ||||||||||||||||
Basic | 85,960 | 85,449 | 85,823 | 85,110 | ||||||||||||
Diluted | 85,960 | 85,449 | 86,691 | 86,128 | ||||||||||||
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 | $ | (.20 | ) | $ | (.09 | ) | $ | 1.24 | $ | 2.08 | ||||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | $ | .65 | $ | .02 | $ | .67 | $ | (.22 | ) | |||||||
Tax effect | $ | (.24 | ) | $ | — | $ | (.25 | ) | $ | .08 | ||||||
Effects of economic hedging related to natural gas inventory | $ | (.13 | ) | $ | .19 | $ | (.10 | ) | $ | (.19 | ) | |||||
Tax effect | $ | .05 | $ | (.07 | ) | $ | .04 | $ | .07 | |||||||
Net income to NFE tax adjustment | $ | — | $ | (.02 | ) | $ | .03 | $ | .02 | |||||||
Basic net financial earnings per share | $ | .13 | $ | .03 | $ | 1.63 | $ | 1.84 | ||||||||
NATURAL GAS DISTRIBUTION | ||||||||||||||||
A reconciliation of operating revenue, the closest GAAP financial measurement, to utility gross margin is as follows: | ||||||||||||||||
Operating revenues | $ | 119,206 | $ | 116,307 | $ | 513,348 | $ | 699,737 | ||||||||
Less: | ||||||||||||||||
Gas purchases | 51,337 | 45,190 | 182,846 | 323,320 | ||||||||||||
Energy and other taxes | 6,112 | 5,754 | 26,266 | 39,207 | ||||||||||||
Regulatory rider expense | 6,360 | 8,516 | 37,203 | 72,671 | ||||||||||||
Utility gross margin | $ | 55,397 | $ | 56,847 | $ | 267,033 | $ | 264,539 | ||||||||
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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NJR ENERGY SERVICES | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
The following table is a computation of financial margin: | ||||||||||||||||
Operating revenues | $ | 250,307 | $ | 321,775 | $ | 848,958 | $ | 1,607,667 | ||||||||
Less: Gas purchases | 289,703 | 343,883 | 843,936 | 1,483,325 | ||||||||||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | 56,513 | 793 | 60,558 | (18,988 | ) | |||||||||||
Effects of economic hedging related to natural gas inventory | (11,380 | ) | 16,464 | (8,621 | ) | (15,751 | ) | |||||||||
Financial margin | $ | 5,737 | $ | (4,851 | ) | $ | 56,959 | $ | 89,603 | |||||||
A reconciliation of operating income, the closest GAAP financial measurement, to financial margin is as follows: | ||||||||||||||||
Operating income | $ | (44,904 | ) | $ | (26,438 | ) | $ | (8,916 | ) | $ | 109,779 | |||||
Add: | ||||||||||||||||
Operation and maintenance expense | 5,232 | 4,104 | 13,163 | 13,435 | ||||||||||||
Depreciation and amortization | 23 | 23 | 69 | 68 | ||||||||||||
Other taxes | 253 | 203 | 706 | 1,060 | ||||||||||||
Subtotal – Gross margin | (39,396 | ) | (22,108 | ) | 5,022 | 124,342 | ||||||||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | 56,513 | 793 | 60,558 | (18,988 | ) | |||||||||||
Effects of economic hedging related to natural gas inventory | (11,380 | ) | 16,464 | (8,621 | ) | (15,751 | ) | |||||||||
Financial margin | $ | 5,737 | $ | (4,851 | ) | $ | 56,959 | $ | 89,603 | |||||||
A reconciliation of net income to net financial earnings, is as follows: | ||||||||||||||||
Net (loss) income | $ | (28,473 | ) | $ | (16,439 | ) | $ | (5,499 | ) | $ | 69,191 | |||||
Add: | ||||||||||||||||
Unrealized loss (gain) on derivative instruments and related transactions | 56,513 | 793 | 60,558 | (18,988 | ) | |||||||||||
Tax effect | (20,514 | ) | (151 | ) | (21,982 | ) | 7,122 | |||||||||
Effects of economic hedging related to natural gas, net of taxes | (11,380 | ) | 16,464 | (8,621 | ) | (15,751 | ) | |||||||||
Tax effect | 4,130 | (5,937 | ) | 3,129 | 5,908 | |||||||||||
Net financial earnings | $ | 276 | $ | (5,270 | ) | $ | 27,585 | $ | 47,482 | |||||||
CLEAN ENERGY VENTURES | ||||||||||||||||
A reconciliation of net income to net financial earnings, is as follows: | ||||||||||||||||
Net income (loss) | $ | 2,448 | $ | (2,308 | ) | $ | 19,423 | $ | 16,539 | |||||||
Add: | ||||||||||||||||
Net income to NFE tax adjustment | (8 | ) | (1,484 | ) | 2,475 | 1,687 | ||||||||||
Net financial earnings (loss) | $ | 2,440 | $ | (3,792 | ) | $ | 21,898 | $ | 18,226 | |||||||
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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NEW JERSEY RESOURCES | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Operating Revenues | ||||||||||||||||
Natural Gas Distribution | $ | 119,206 | $ | 116,307 | $ | 513,348 | $ | 699,737 | ||||||||
Energy Services | 250,307 | 321,775 | 848,958 | 1,607,667 | ||||||||||||
Clean Energy Ventures | 12,703 | 7,861 | 28,159 | 18,164 | ||||||||||||
Midstream | — | — | — | — | ||||||||||||
Home Services and Other | 14,408 | 14,592 | 31,912 | 32,190 | ||||||||||||
Sub-total | 396,624 | 460,535 | 1,422,377 | 2,357,758 | ||||||||||||
Eliminations | (3,411 | ) | (2,068 | ) | (10,713 | ) | (62,077 | ) | ||||||||
Total | $ | 393,213 | $ | 458,467 | $ | 1,411,664 | $ | 2,295,681 | ||||||||
Operating Income (Loss) | ||||||||||||||||
Natural Gas Distribution | $ | 9,384 | $ | 14,567 | $ | 132,170 | $ | 136,080 | ||||||||
Energy Services | (44,904 | ) | (26,438 | ) | (8,916 | ) | 109,779 | |||||||||
Clean Energy Ventures | 1,734 | (709 | ) | (2,884 | ) | (5,577 | ) | |||||||||
Midstream | (271 | ) | (125 | ) | (885 | ) | (467 | ) | ||||||||
Home Services and Other | 3,820 | 2,679 | (826 | ) | (1,129 | ) | ||||||||||
Sub-total | (30,237 | ) | (10,026 | ) | 118,659 | 238,686 | ||||||||||
Eliminations | 1,908 | 717 | 6,396 | 3,508 | ||||||||||||
Total | $ | (28,329 | ) | $ | (9,309 | ) | $ | 125,055 | $ | 242,194 | ||||||
Equity in Earnings of Affiliates | ||||||||||||||||
Midstream | $ | 3,359 | $ | 4,266 | $ | 10,412 | $ | 12,622 | ||||||||
Eliminations | (1,102 | ) | (899 | ) | (3,347 | ) | (2,873 | ) | ||||||||
Total | $ | 2,257 | $ | 3,367 | $ | 7,065 | $ | 9,749 | ||||||||
Net Income (Loss) | ||||||||||||||||
Natural Gas Distribution | $ | 3,607 | $ | 7,172 | $ | 83,494 | $ | 83,952 | ||||||||
Energy Services | (28,473 | ) | (16,439 | ) | (5,499 | ) | 69,191 | |||||||||
Clean Energy Ventures | 2,448 | (2,308 | ) | 19,423 | 16,539 | |||||||||||
Midstream | 2,338 | 2,487 | 6,910 | 7,211 | ||||||||||||
Home Services and Other | 2,418 | 1,909 | 662 | (42 | ) | |||||||||||
Sub-total | (17,662 | ) | (7,179 | ) | 104,990 | 176,851 | ||||||||||
Eliminations | 299 | (281 | ) | 1,282 | (88 | ) | ||||||||||
Total | $ | (17,363 | ) | $ | (7,460 | ) | $ | 106,272 | $ | 176,763 | ||||||
Net Financial Earnings (Loss) | ||||||||||||||||
Natural Gas Distribution | $ | 3,607 | $ | 7,172 | $ | 83,494 | $ | 83,952 | ||||||||
Energy Services | 276 | (5,270 | ) | 27,585 | 47,482 | |||||||||||
Clean Energy Ventures | 2,440 | (3,792 | ) | 21,898 | 18,226 | |||||||||||
Midstream | 2,338 | 2,487 | 6,910 | 7,211 | ||||||||||||
Home Services and Other | 2,418 | 1,909 | 662 | (42 | ) | |||||||||||
Sub-total | 11,079 | 2,506 | 140,549 | 156,829 | ||||||||||||
Eliminations | (107 | ) | (29 | ) | (405 | ) | (100 | ) | ||||||||
Total | $ | 10,972 | $ | 2,477 | $ | 140,144 | $ | 156,729 | ||||||||
Throughput (Bcf) | ||||||||||||||||
NJNG, Core Customers | 24.2 | 22.8 | 95.9 | 94.9 | ||||||||||||
NJNG, Off System/Capacity Management | 50.6 | 55.7 | 162.3 | 164.8 | ||||||||||||
NJRES Fuel Mgmt. and Wholesale Sales | 127.5 | 133.1 | 410.4 | 491.5 | ||||||||||||
Total | 202.3 | 211.6 | 668.6 | 751.2 | ||||||||||||
Common Stock Data | ||||||||||||||||
Yield at June 30 | 2.5 | % | 3.3 | % | 2.5 | % | 3.3 | % | ||||||||
Market Price | ||||||||||||||||
High | $ | 38.56 | $ | 32.05 | $ | 38.56 | $ | 33.73 | ||||||||
Low | $ | 33.91 | $ | 26.77 | $ | 28.02 | $ | 24.65 | ||||||||
Close at June 30 | $ | 38.55 | $ | 27.55 | $ | 38.55 | $ | 27.55 | ||||||||
Shares Out. at June 30 | 86,076 | 85,401 | 86,076 | 85,401 | ||||||||||||
Market Cap. at June 30 | $ | 3,318,242 | $ | 2,352,801 | $ | 3,318,242 | $ | 2,352,801 | ||||||||
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
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NATURAL GAS DISTRIBUTION | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(Unaudited) | June 30, | June 30, | ||||||||||||||
(Thousands, except customer & weather data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Utility Gross Margin | ||||||||||||||||
Operating revenues | $ | 119,206 | $ | 116,307 | $ | 513,348 | $ | 699,737 | ||||||||
Less: | ||||||||||||||||
Gas purchases | 51,337 | 45,190 | 182,846 | 323,320 | ||||||||||||
Energy and other taxes | 6,112 | 5,754 | 26,266 | 39,207 | ||||||||||||
Regulatory rider expense | 6,360 | 8,516 | 37,203 | 72,671 | ||||||||||||
Total Utility Gross Margin | $ | 55,397 | $ | 56,847 | $ | 267,033 | $ | 264,539 | ||||||||
Utility Gross Margin, Operating Income and Net Income | ||||||||||||||||
Residential | $ | 31,742 | $ | 30,787 | $ | 165,491 | $ | 160,540 | ||||||||
Commercial, Industrial & Other | 8,522 | 8,476 | 40,039 | 40,539 | ||||||||||||
Firm Transportation | 10,573 | 10,453 | 46,104 | 46,985 | ||||||||||||
Total Firm Margin | 50,837 | 49,716 | 251,634 | 248,064 | ||||||||||||
Interruptible | 1,127 | 1,321 | 3,683 | 3,395 | ||||||||||||
Total System Margin | 51,964 | 51,037 | 255,317 | 251,459 | ||||||||||||
Off System/Capacity Management/FRM/Storage Incentive | 3,433 | 5,810 | 11,716 | 13,080 | ||||||||||||
Total Utility Gross Margin | 55,397 | 56,847 | 267,033 | 264,539 | ||||||||||||
Operation and maintenance expense | 32,612 | 30,323 | 96,122 | 92,941 | ||||||||||||
Depreciation and amortization | 12,297 | 10,810 | 35,133 | 32,002 | ||||||||||||
Other taxes not reflected in gross margin | 1,104 | 1,147 | 3,608 | 3,516 | ||||||||||||
Operating Income | $ | 9,384 | $ | 14,567 | $ | 132,170 | $ | 136,080 | ||||||||
Net Income | $ | 3,607 | $ | 7,172 | $ | 83,494 | $ | 83,952 | ||||||||
Throughput (Bcf) | ||||||||||||||||
Residential | 6.1 | 5.3 | 34.3 | 43.1 | ||||||||||||
Commercial, Industrial & Other | 1.3 | 1.1 | 6.7 | 9.0 | ||||||||||||
Firm Transportation | 2.8 | 2.4 | 12.4 | 14.4 | ||||||||||||
Total Firm Throughput | 10.2 | 8.8 | 53.4 | 66.5 | ||||||||||||
Interruptible | 14.0 | 14.0 | 42.5 | 28.4 | ||||||||||||
Total System Throughput | 24.2 | 22.8 | 95.9 | 94.9 | ||||||||||||
Off System/Capacity Management | 50.6 | 55.7 | 162.3 | 164.8 | ||||||||||||
Total Throughput | 74.8 | 78.5 | 258.2 | 259.7 | ||||||||||||
Customers | ||||||||||||||||
Residential | 446,081 | 436,395 | 446,081 | 436,395 | ||||||||||||
Commercial, Industrial & Other | 26,668 | 26,204 | 26,668 | 26,204 | ||||||||||||
Firm Transportation | 47,041 | 49,357 | 47,041 | 49,357 | ||||||||||||
Total Firm Customers | 519,790 | 511,956 | 519,790 | 511,956 | ||||||||||||
Interruptible | 35 | 36 | 35 | 36 | ||||||||||||
Total System Customers | 519,825 | 511,992 | 519,825 | 511,992 | ||||||||||||
Off System/Capacity Management* | 24 | 30 | 24 | 30 | ||||||||||||
Total Customers | 519,849 | 512,022 | 519,849 | 512,022 | ||||||||||||
*The number of customers represents those active during the last month of the period. | ||||||||||||||||
Degree Days | ||||||||||||||||
Actual | 552 | 401 | 3,850 | 5,013 | ||||||||||||
Normal | 509 | 511 | 4,654 | 4,597 | ||||||||||||
Percent of Normal | 108.4 | % | 78.5 | % | 82.7 | % | 109.0 | % | ||||||||
NEW JERSEY RESOURCES REPORTS FISCAL 2016 THIRD-QUARTER RESULTS;
REAFFIRMS FISCAL 2016 EARNINGS GUIDANCE
Page 17 of 17
ENERGY SERVICES | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(Unaudited) | June 30, | June 30, | ||||||||||||||
(Thousands, except customer, SREC and megawatt) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Operating Income | ||||||||||||||||
Operating revenues | $ | 250,307 | $ | 321,775 | $ | 848,958 | $ | 1,607,667 | ||||||||
Gas purchases | 289,703 | 343,883 | 843,936 | 1,483,325 | ||||||||||||
Gross Margin | (39,396 | ) | (22,108 | ) | 5,022 | 124,342 | ||||||||||
Operation and maintenance expense | 5,232 | 4,104 | 13,163 | 13,435 | ||||||||||||
Depreciation and amortization | 23 | 23 | 69 | 68 | ||||||||||||
Energy and other taxes | 253 | 203 | 706 | 1,060 | ||||||||||||
Operating (Loss) Income | $ | (44,904 | ) | $ | (26,438 | ) | $ | (8,916 | ) | $ | 109,779 | |||||
Net (Loss) Income | $ | (28,473 | ) | $ | (16,439 | ) | $ | (5,499 | ) | $ | 69,191 | |||||
Financial Margin | $ | 5,737 | $ | (4,851 | ) | $ | 56,959 | $ | 89,603 | |||||||
Net Financial Earnings | $ | 276 | $ | (5,270 | ) | $ | 27,585 | $ | 47,482 | |||||||
Gas Sold and Managed (Bcf) | 127.5 | 133.1 | 410.4 | 491.5 | ||||||||||||
CLEAN ENERGY VENTURES | ||||||||||||||||
Operating Revenues | ||||||||||||||||
SREC sales | $ | 8,135 | $ | 5,285 | $ | 16,027 | $ | 11,291 | ||||||||
Electricity sales | 3,398 | 1,616 | 8,816 | 4,188 | ||||||||||||
Other | 1,170 | 960 | 3,316 | 2,685 | ||||||||||||
Total Operating Revenues | $ | 12,703 | $ | 7,861 | $ | 28,159 | $ | 18,164 | ||||||||
Depreciation and Amortization | $ | 6,070 | $ | 4,504 | $ | 17,056 | $ | 12,392 | ||||||||
Operating Income (Loss) | $ | 1,734 | $ | (709 | ) | $ | (2,884 | ) | $ | (5,577 | ) | |||||
Income Tax Benefit | $ | 2,784 | $ | 423 | $ | 28,433 | $ | 29,186 | ||||||||
Net Income (Loss) | $ | 2,448 | $ | (2,308 | ) | $ | 19,423 | $ | 16,539 | |||||||
Net Financial Earnings (Loss) | $ | 2,440 | $ | (3,792 | ) | $ | 21,898 | $ | 18,226 | |||||||
Solar Renewable Energy Certificates Generated | 43,403 | 39,916 | 100,998 | 79,910 | ||||||||||||
Solar Renewable Energy Certificates Sold | 39,137 | 30,855 | 76,369 | 65,583 | ||||||||||||
Solar Megawatts Installed | 13.9 | 6.2 | 16.4 | 25.0 | ||||||||||||
Solar Megawatts Under Construction | 13.1 | 6.5 | 13.1 | 6.5 | ||||||||||||
Wind Megawatts Installed | — | — | 50.7 | 20.0 | ||||||||||||
Wind Megawatts Under Construction | 39.9 | 48.3 | 39.9 | 48.3 | ||||||||||||
MIDSTREAM | ||||||||||||||||
Equity in Earnings of Affiliates | $ | 3,359 | $ | 4,266 | $ | 10,412 | $ | 12,622 | ||||||||
Operation and Maintenance Expense | $ | 238 | $ | 153 | $ | 847 | $ | 486 | ||||||||
Other Income | $ | 807 | $ | 246 | $ | 2,282 | $ | 727 | ||||||||
Interest Expense | $ | 56 | $ | 163 | $ | 228 | $ | 623 | ||||||||
Net Income | $ | 2,338 | $ | 2,487 | $ | 6,910 | $ | 7,211 | ||||||||
HOME SERVICES AND OTHER | ||||||||||||||||
Operating Revenues | $ | 14,408 | $ | 14,592 | $ | 31,912 | $ | 32,190 | ||||||||
Operating Income (Loss) | $ | 3,820 | $ | 2,679 | $ | (826 | ) | $ | (1,129 | ) | ||||||
Net Income (Loss) | $ | 2,418 | $ | 1,909 | $ | 662 | $ | (42 | ) | |||||||
Total Service Contract Customers at June 30 | 114,312 | 116,934 | 114,312 | 116,934 | ||||||||||||
SAFE, RELIABLE NATURAL GAS AT OUR
CORE … AND SO MUCH MORE
Fiscal 2016 Third-Quarter Update
August 2, 2016
Fiscal 2016 Third Quarter Update
Regarding Forward Looking Statements
Certain statements contained in this presentation are 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 (NJR or the Company) 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 or that the effect of future developments on NJR will be those anticipated by management. Forward-looking statements in this presentation include, but are not limited to,
certain statements regarding NJR's Net Financial Earnings (NFE) guidance for fiscal 2016 and NFE growth beyond 2016, forecasted contribution of business segments to fiscal 2016
NFE and to NFE beyond fiscal 2016, future New Jersey Natural Gas Company (NJNG) customer growth, future capital expenditures and infrastructure investments, the effect of the
federal Production Tax Credit (PTC) and federal Investment Tax Credit (ITC) extension on NJRCEV, the long-term outlook for NJR Clean Energy Ventures Corporation (NJCEV),
diversification of NJRCEV’s strategy, NJRCEV’s future solar and wind projects, NJRCEV’s other potential renewable/distribution projects and future opportunities and the PennEast
Pipeline project.
The factors that could cause actual results to differ materially from NJR’s expectations, assumptions and beliefs include, but are not limited to, weather and economic conditions;
changes in the rate of NJNG’s customer growth; volatility of natural gas and other commodity prices; changes in rating agency requirements and/or credit ratings; the impact of
volatility in the credit markets; the ability to comply with debt covenants; the impact to the asset values and resulting higher costs and funding obligations of NJR's pension and post-
employment benefit plans as a result of downturns in the financial markets, lower discount rates, revised actuarial assumptions or impacts associated with the Patient Protection and
Affordable Care Act; accounting effects and other risks associated with hedging activities and use of derivatives contracts; commercial and wholesale credit risks, including the
availability of creditworthy customers and counterparties and liquidity in the wholesale energy trading market; the ability to obtain governmental and regulatory approvals, land-use
rights, electrical grid connection and/or financing for the construction, development and operation of NJR’s non-regulated energy investments and NJNG’s planned infrastructure
projects in a timely manner; risks associated with the management of the company's joint ventures, partnerships and investment in a master limited partnership; risks associated with
our investments in renewable energy projects, including the availability of regulatory and tax incentives, the availability of viable projects and NJR's eligibility for ITCs and PTCs, the
future market for Solar Renewable Energy Certificates (SRECs) and operational risks related to projects in service; timing of qualifying for ITCs and PTCs due to delays or failures to
complete planned solar and wind energy projects; the level and rate at which NJNG's costs and expenses are incurred and the extent to which they are allowed to be recovered from
customers through the regulatory process, including through the base rate case filing; access to adequate supplies of natural gas and dependence on third-party storage and
transportation facilities for natural gas supply; operating risks incidental to handling, storing, transporting and providing customers with natural gas; risks related to our employee
workforce; the regulatory and pricing policies of federal and state regulatory agencies; the costs of compliance with present and future environmental laws, including potential climate
change-related legislation; risks related to changes in accounting standards; the disallowance of recovery of environmental-related expenditures and other regulatory changes;
environmental-related and other litigation and other uncertainties; risks related to cyber-attack or failure of information technology systems; and the impact of natural disasters,
terrorist activities, and other extreme events on our operations and customers. The aforementioned factors are detailed in the “Risk Factors” sections of our Annual Report on Form
10-K filed with the Securities and Exchange Commission (SEC) on November 24, 2015, which is available on the SEC’s website at sec.gov. Information included in this presentation
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.
2
Fiscal 2016 Third Quarter Update
Disclaimer Regarding Non-GAAP Financial Measures
This presentation includes the non-GAAP measure, Net Financial Earnings (NFE). As an indicator of the Company’s
operating performance, this measure should not be considered an alternative to, or more meaningful than, GAAP
measures, such as cash flow, net income, operating income or earnings per share.
NFE excludes 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 NJR
Energy Services (NJRES), net of applicable tax adjustments as described below. Volatility associated with the change in
value of these financial and physical commodity contracts is reported in 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 as opposed to 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.
Management uses NFE as a supplemental measure to other GAAP results to provide a more complete
understanding of the Company’s performance. Management believes this non-GAAP measure is more reflective
of the Company’s business model, provides transparency to investors and enables period-to-period
comparability of financial performance. In providing fiscal 2016 earnings guidance, management is aware that
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. At this time, 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. For a full
discussion of our non-GAAP financial measures, please see NJR’s most recent Form 10-K, Item 7. This
information has been provided pursuant to the requirements of SEC Regulation G.
3
Fiscal First Quarter 2016 Update 4Fiscal Third Quarter 2016 Update
4
Net Financial Earnings*
($MM)
Three Months Ended
June 30,
Nine Months Ended
June 30,
Company 2016 2015 2016 2015
New Jersey Natural Gas $3.6 $7.2 $83.5 $84.0
NJR Midstream 2.3 2.5 6.9 7.2
Subtotal 5.9 9.7 90.4 91.2
NJR Energy Services .3 (5.3) 27.6 47.5
NJR Clean Energy Ventures 2.4 (3.8) 21.9 18.2
NJR Home Services/Other 2.3 1.9 .3 (.1)
Total $11.0 $2.5 $140.1 $156.7
Per basic share $.13 $.03 $1.63 $1.84
Fiscal-Third Quarter 2016 Results
* A reconciliation form NFE to net income is set forth on slide 25 in the Appendix.
Our fiscal 2016 NFE is guidance $1.55 to $1.65 per share
Fiscal 2016 Third Quarter Update
Recent Highlights
Financial Results
Net Financial Earnings (NFE) of $.13 per share
Strategic Actions
NJNG
Liquefaction project operational
Base rate case in settlement discussions
The SAVEGREEN Project® extended
Ongoing infrastructure investments
NJR Midstream
FERC issues draft environmental impact statement on PennEast Pipeline
NJRCEV
Three commercial solar projects totaling 10.9 MW placed into service
Added 323 residential customers through Sunlight Advantage® program
Construction continues at Ringer Hill, our fourth onshore wind project
5
Fiscal 2016 Third Quarter Update
Base Rate Case Update
November 2015 base rate case filing established with
approval of SAFE in 2012
Parties are actively engaged in settlement talks
Suspension of schedule was granted by the Administrative
Law Judge
Working toward resolution with new base rates expected to
be effective in early fiscal 2017
6
Fiscal 2016 Third Quarter Update
Southern Reliability Link (SRL)
30-mile pipeline to support improved system integrity and
reliability in Monmouth, Ocean and Burlington Counties, the
southern portion of NJNG’s service area
Construction and route approved by BPU in January 2016
March 2016 BPU order found SRL reasonably necessary for
service, convenience, or welfare of the public
New Jersey Department of Environmental Protection recently
deemed SRL administratively complete. Public comment and
technical review will follow
NJNG continues to progress through the SRL permitting
process
7
Fiscal First Quarter 2016 Update 8Fiscal Third Quarter 2016 Update
8
Our Long-Term Average Annual NFE Growth Strategy
Remains 5 to 9 Percent
How will we achieve this?
Invest in infrastructure to support
customer growth and system
reliability and resiliency
Develop Midstream projects including
PennEast Pipeline
Invest and develop wind and solar
distributed power projects
Provide physical and producer
services to wholesale customers
60-70% 10-20%
5-15%
5-10%
1-3%
New Jersey Natural Gas NJR Midstream NJR Energy Services
NJR Home Services NJR Clean Energy Ventures
Fiscal 2016 Third Quarter Update
NJNG’s Regulated Growth Model
9
• Growing service area
• Healthy conversion
market
Customer
Growth
• SAVEGREEN
• CIP
• SAFE
• NJ RISE
• Off-system sales
• Capacity release
Energy
Efficiency
BGSS
Incentives
Utility
Gross
Margin
Infrastructure
Target 60 – 70 percent of Annual NFE
Fiscal 2016 Third Quarter Update
NJR Midstream’s Growth Model
10
• 50 percent interest in
12 Bcf storage facility
in southwest PA
• PennEast Pipeline
• FERC issued DEIS on July 22, 2016
• Currently anticipated in service date the last
quarter of fiscal 2018 or first quarter of fiscal
2019
• Investment value $51.7
million*
• Current annual distribution
rate of $0.854 per unit
Steckman
Ridge
Midstream
Projects
NFE
* Based on 1,838,932 units at closing price of $28.13 on June 30, 2016
Dominion
Midstream
Partners
Target 5 to 10 percent of Annual NFE
Fiscal 2016 Third Quarter Update
NJR Clean Energy Ventures’ Growth Model
11
• Three operating wind farms
• Additional 39.9 MW-Ringer Hill
under construction
• Fiscal 2016 wind capital
expenditures - $102 million
• 4,576 Sunlight Advantage®
customers
• Fiscal 2016 residential solar
capital expenditures - $34 million
NFE
• Additional 10.9 MW to come on
line by calendar year end 2016
• Fiscal 2016 commercial solar
capital expenditures - $75 million
Residential
Solar
(40.6 MW)
Onshore
Wind
(80.4 MW)
Commercial
Solar
(93.5 MW)
Target 10 to 20 percent of Annual NFE
Fiscal 2016 Third Quarter Update
NJR Energy Services’ Growth Model
12
Pipeline
Capacity
(1.6 Bcf/d)
NFE
Storage
Capacity
(45 Bcf)
Target 5 to 15 percent of Annual NFE
Producer
Services Utility Asset
Management
Electric
Generation
Supply
Fiscal First Quarter 2016 Update 13Fiscal Third Quarter 2016 Update
13
Net Financial Earnings (NFE) by Business Segment
Fiscal First Quarter 2016 Update 14Fiscal Third Quarter 2016 Update
14
Customer Growth Drives Higher Utility Gross Margin
Fiscal 2016 Third Quarter Update
Customer Growth Continues
15
5,289 new customers added in
first nine months of FY2016
• 2,884 new construction
customers
• 2,405 conversions
545 heat conversions
We expect these new and
conversion customers to
contribute approximately $3.9
million annually to utility gross
margin
On track to add 8,150 new
customers this year
Three-year forecast of 24,000 - 28,000 new customers
1.6 percent annual new customer growth rate
Fiscal First Quarter 2016 Update 16Fiscal Third Quarter 2016 Update
16
NJNG Capital Investment June 30, 2016 Update
CAPITAL INVESTMENT
($MM)
FYTD 2016E STATUS
NJNG
Customer Growth $24.6 $35.2 Added 5,289 customers in first nine months; on target to add 8,150 customers in FY2016
Maintenance/Other 64.2 70.4 Capital spending on track to enhance system safety and reliability
SAFE 23.8 38.4 SAFE extension of $200 million to complete replacement of unprotected steel pipe pending at BPU
NJ RISE 9.4 17.9 Installation of excess flow valves and engineering work continues
Liquefaction Project 9.6 9.8 Project began operation
Southern Reliability 1.8 31.7
Planned 30-mile route approved by BPU in January 2016. March 2016 BPU Order
found SRL reasonably necessary for service, convenience or welfare of the public.
Appeals pending. NJNG is confident that the order will be upheld by the Appellate
Court. July 2016 NJDEP deems NJNG’s permit applications administratively
complete, which is followed by public comment and technical review.
Total NJNG $133.4 $203.4
Fiscal First Quarter 2016 Update 17Fiscal Third Quarter 2016 Update
17
Steckman Ridge
12 Bcf natural gas storage facility in
southwest Pennsylvania
50/50 joint venture with Spectra Energy
Dominion Midstream Partners, LP
1.8 million units
Current annual distribution rate of $.854
PennEast Pipeline
20 percent ownership in 118-mile
transmission pipeline connecting
Marcellus shale region supply to
Northeast
Pipeline capacity of up to 1.1 MMdth/day
Draft Environmental Impact Study issued
by FERC on July 22, 2016
45 days for response from PennEast
NJR Midstream
Fiscal 2016 Third Quarter Update
NJR Clean Energy Ventures - Solar
18
Commercial
25 projects in service; 93.5 MW
The Sunlight Advantage
Nearly 4,600 customers; 40.6 MW
Fiscal 2016 Third Quarter Update
NJRCEV Is Hedging SRECs to Reduce Exposure to
Market Volatility
168 166
147
173
197
214
0
50
100
150
200
250
FY16E FY17E FY18E
Th
ousa
n
ds
of SR
EC
s
Hedged Expected Generated Current Generation
Pct. Hedged: 97% 84% 67%
Average Price: $214 $230 $227
As of June 30, 2016
19
Fiscal 2016 Third Quarter Update
NJR Clean Energy Ventures - Growing Onshore Wind
20
Project
In Service
Date PPA/Hedge
Size
(MW)
Capital
($MM) Location Contractor Turbines
Ringer Hill Year-end 2016 Majority of energy produced
will be hedged under 15-year
agreement with Iron
Mountain
39.9 $84 Pennsylvania
60 miles SE
of Pittsburgh
Mortensen
Construction
General
Electric
Two Dot June 2014 25-year PPA with
Northwestern Energy
9.7 $21 Montana
93 miles SE
of Helena
Mortensen
Construction
General
Electric
Carroll Area January 2015 25-year PPA with
MidAmerican Energy
20.0 $42 Iowa
65 miles NW
of Des
Moines
Mortensen
Construction
Siemens
Alexander December
2015
PPAs and financial hedges
with Kansas City BPU and
Yahoo!, Inc.
50.7 $85 Kansas
Rush County
Mortensen
Construction
Siemens
Total 120.3 $232
Over $230 million invested, four projects located in four states
Fiscal First Quarter 2016 Update 21Fiscal Third Quarter 2016 Update
21
Serves wholesale customers across North America
Diverse portfolio of physical natural gas assets
Firm storage (45 Bcf in the US and Canada)
Firm transportation (1.6 Bcf/day)
Services include:
• Transporting natural gas
• Selling storage gas during peak periods
• Asset management agreements
• Producer services
Fee-based service; located primarily in
the Marcellus shale region $0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2010 2011 2012 2013 2014 2015 3Q15 3Q16
$M
M
Financial Margin NFE
NJR Energy Services
Fiscal First Quarter 2016 Update 22Fiscal Third Quarter 2016 Update
22
Impact of Volatility
▪ Warmer weather has caused less volatility in fiscal 2016 than past two years
Source: Platts, a division of McGraw Hill Financial, TETCO M-3
Fiscal 2016 Third Quarter Update
Total Return Periods Ended June 30, 2016
44.1%
34.9%
4.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
NJR Dow Utilities S&P 500
1 Year Total Return
13.2%
9.8%
7.4%
0.0%
5.0%
10.0%
15.0%
NJR Dow Utilities S&P 500
10-Year Annualized Total Return
Assumes reinvested dividends
23
Fiscal 2016 Third Quarter Update
24
APPENDIX
Fiscal First Quarter 2016 Update 25Fiscal Third Quarter 2016 Update
25
Reconciliation to Non-GAAP Measures
A reconciliation of NFE for the three- and nine- months of fiscal 2016 and 2015 to net income is provided below:
Three Months Ended Nine Months Ended
June 30, June 30,
(Thousands) 2016 2015 2016 2015
Net (loss) income $ (17,363) $ (7,460) $ 106,272 $ 176,763
Add:
Unrealized loss (gain) on derivative instruments and related transactions 55,875 1,188 57,910 (19,010)
Tax effect (20,282) (294) (21,021) 7,132
Effects of economic hedging related to natural gas inventory (11,380) 16,464 (8,621) (15,751)
Tax effect 4,130 (5,937) 3,129 5,908
Net income to NFE tax adjustment (8) (1,484) 2,475 1,687
Net financial earnings $ 10,972 $ 2,477 $ 140,144 $ 156,729
Weighted Average Shares Outstanding
Basic 85,960 85,449 85,823 85,110
Diluted 85,960 85,449 86,691 86,128
Basic (loss) earnings per share $ (.20) $ (.09) $ 1.24 $ 2.08
Add:
Unrealized loss (gain) on derivative instruments and related transactions .65 .02 .67 (.22)
Tax effect (.24) — (.25) .08
Effects of economic hedging related to natural gas inventory (.13) .19 (.10) (.19)
Tax effect .05 (.07) .04 .07
Net income to NFE tax adjustment — (.02) .03 .02
Basic net financial earnings per share $ .13 $ .03 $ 1.63 $ 1.84
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