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New Jersey Resources Reports Fourth-Quarter and Fiscal 2018 Results

November 20, 2018 7:00 AM

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

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

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

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

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

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

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

Tax effect

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

Tax effect

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

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

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

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

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

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

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

NJR Announces Fiscal 2019 NFE Guidance:

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

� � � � � � � � �
Company � � � Expected Fiscal 2019
Net Financial Earnings Contribution 		� � �

Expected Fiscal 2020 and
Beyond Net Financial Earnings
Contribution

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

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

Regulated Business Update:

New Jersey Natural Gas

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

Customer Growth:

NJNG Infrastructure Update:

BGSS Incentive Programs:

Energy Efficiency Programs:

Midstream

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

Infrastructure Projects:

Non-Regulated Businesses Update:

Energy Services

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

Clean Energy Ventures (CEV)

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

Fiscal 2018 highlights:

Home Services and Other Operations

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

Capital Expenditures and Cash Flows:

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

Effective Tax Rate:

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

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

Webcast Information:

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

Forward-Looking Statements:

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

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

Non-GAAP Financial Information:

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

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

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

About New Jersey Resources

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

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

For more information about NJR:

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

NJR-E

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

Total

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

Total Firm Margin

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

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Source: New Jersey Resources

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