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Published: 2023-08-03 06:56:03 ET
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EX-99.1 2 brhc20056312_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1

NEW JERSEY RESOURCES REPORTS FISCAL 2023 THIRD-QUARTER RESULTS

WALL, N.J., August 3, 2023 — Today, New Jersey Resources Corporation (NYSE: NJR) reported results for the third quarter of fiscal 2023. Highlights include:

•
Consolidated net income of $1.5 million, compared with net income of $13.1 million in the third quarter of fiscal 2022
•
Consolidated net financial earnings (NFE), a non-GAAP financial measure, of $9.7 million, or $0.10 per share, compared to a net financial loss of $(3.6) million, or $(0.04) per share, in the third quarter of fiscal 2022
•
Re-affirmed fiscal 2023 net financial earnings per share (NFEPS) guidance range of $2.62 to $2.72
•
Maintains long-term projected NFEPS growth rate of 7 to 9 percent(1)

Third-quarter fiscal 2023 net income totaled $1.5 million, or $0.02 per share, compared with net income of $13.1 million, or $0.14 per share, during the same period in fiscal 2022. Fiscal 2023 year-to-date net income totaled $227.7 million, or $2.35 per share, compared with $220.4 million, or $2.29 per share, for the same period in fiscal 2022.

Third-quarter fiscal 2023 NFE totaled $9.7 million, or $0.10 per share, compared to a net financial loss of $(3.6) million, or $(0.04) per share, during the same period in fiscal 2022. Fiscal 2023 year-to-date NFE totaled $232.3 million, or $2.40 per share, compared with $192.4 million, or $2.00 per share, for the same period in fiscal 2022.

Steve Westhoven, President and CEO, stated, "We are on track to achieve net financial earnings within our fiscal 2023 guidance range, which was increased by $0.20 earlier this year, reflecting the strength of our diversified business model. We have continued our momentum at CEV, increasing our in-service capacity and growing our pipeline, with fiscal 2023 representing the largest year of capacity growth in CEV's history."

Key Performance Metrics
 
   
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
($ in Thousands)
  
2023
    
2022
    
2023
    
2022
  
Net income
  
$
1,532
    
$
13,053
    
$
227,700
    
$
220,400
  
Basic EPS
  
$
0.02
    
$
0.14
    
$
2.35
    
$
2.29
  
Net financial earnings (loss)
  
$
9,670
    
$
(3,551
)
  
$
232,264
    
$
192,425
  
Basic net financial earnings (loss) per share
  
$
0.10
    
$
(0.04
)
  
$
2.40
    
$
2.00
  

(1)
NFEPS long-term annual growth projections are based on the midpoint of the $2.20 - $2.30 initial guidance range for fiscal 2022, provided on February 1, 2021

NJR Reports Third Quarter Fiscal 2023 Results
Page 2 of 13
A reconciliation of net income to NFE for the three and nine months ended June 30, 2023 and 2022, is provided below.

   
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands)
  
2023
    
2022
    
2023
    
2022
  
Net income
  
$
1,532
    
$
13,053
    
$
227,700
    
$
220,400
  
Add:
                                
Unrealized gain on derivative instruments and related transactions
    
(12,970
)
    
(17,891
)
    
(30,502
)
    
(58,060
)
Tax effect
    
3,083
      
4,253
      
7,250
      
13,809
  
Effects of economic hedging related to natural gas inventory
    
24,116
      
428
      
36,885
      
25,160
  
Tax effect
    
(5,731
)
    
(102
)
    
(8,766
)
    
(5,979
)
Gain on equity method investment
    
(100
)
    
(4,021
)
    
(300
)
    
(4,021
)
Tax effect
    
24
      
1,003
      
74
      
1,003
  
NFE tax adjustment
    
(284
)
    
(274
)
    
(77
)
    
113
  
Net financial earnings (loss)
  
$
9,670
    
$
(3,551
)
  
$
232,264
    
$
192,425
  
                                 
Weighted Average Shares Outstanding
                                
Basic
    
97,168
      
96,154
      
96,849
      
96,055
  
Diluted
    
97,886
      
96,620
      
97,538
      
96,527
  
                                 
Basic earnings per share
  
$
0.02
    
$
0.14
    
$
2.35
    
$
2.29
  
Add:
                                
Unrealized gain on derivative instruments and related transactions
    
(0.14
)
    
(0.19
)
    
(0.31
)
    
(0.60
)
Tax effect
    
0.03
      
0.04
      
0.07
      
0.14
  
Effects of economic hedging related to natural gas inventory
    
0.25
      
—
      
0.38
      
0.26
  
Tax effect
    
(0.06
)
    
—
      
(0.09
)
    
(0.06
)
Gain on equity method investment
    
—
      
(0.04
)
    
—
      
(0.04
)
Tax effect
    
—
      
0.01
      
—
      
0.01
  
Basic net financial earnings (loss) per share
  
$
0.10
    
$
(0.04
)
  
$
2.40
    
$
2.00
  

NFE is a measure of earnings based on the elimination of timing differences to effectively match the earnings effects of the economic hedges with the physical sale of natural gas, Solar Renewable Energy Certificates (SRECs) and foreign currency contracts. Consequently, to reconcile net income and NFE, current-period unrealized gains and losses on the derivatives are excluded from NFE as a reconciling item. Realized derivative gains and losses are also included in current-period net income. However, NFE includes only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the derivatives with realized margins on physical natural gas flows. NFE also excludes certain transactions associated with equity method investments, including impairment charges, which are non-cash charges, and return of capital in excess of the carrying value of our investment. These are not indicative of the Company's performance for its ongoing operations. Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.

NJR Reports Third Quarter Fiscal 2023 Results
Page 3 of 13
A table detailing NFE for the three and nine months ended June 30, 2023 and 2022, is provided below.

Net financial earnings (loss) by Business Unit
 
   
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands)
  
2023
    
2022
    
2023
    
2022
  
New Jersey Natural Gas
  
$
891
    
$
2,648
    
$
156,252
    
$
156,511
  
Clean Energy Ventures
    
7,267
      
(5,098
)
    
(5,694
)
    
(18,410
)
Storage and Transportation
    
2,358
      
3,526
      
11,051
      
11,113
  
Energy Services
    
(1,604
)
    
(5,003
)
    
72,054
      
42,504
  
Home Services and Other
    
523
      
215
      
1,307
      
1,113
  
Subtotal
    
9,435
      
(3,712
)
    
234,970
      
192,831
  
Eliminations
    
235
      
161
      
(2,706
)
    
(406
)
Total
  
$
9,670
    
$
(3,551
)
  
$
232,264
    
$
192,425
  

Fiscal 2023 NFE Guidance:

NJR re-affirmed its fiscal 2023 NFE guidance range of $2.62 to $2.72, which was increased by $0.20 per share in the first quarter of fiscal 2023, subject to the risks and uncertainties identified below under "Forward-Looking Statements." The following chart represents NJR’s current expected contributions from its business segments for fiscal 2023:
 
 
Company
Expected Fiscal 2023
Net Financial Earnings
Contribution
 
New Jersey Natural Gas
48 to 53 percent
 
Clean Energy Ventures
18 to 20 percent
 
Storage and Transportation
4 to 8 percent
 
Energy Services
20 to 25 percent
 
Home Services and Other
0 to 1 percent

In providing fiscal 2023 NFE guidance, management is aware there could be differences between reported GAAP earnings and NFE due to matters such as, but not limited to, the positions of our energy-related derivatives. Management is not able to reasonably estimate the aggregate impact or significance of these items on reported earnings and, therefore, is not able to provide a reconciliation to the corresponding GAAP equivalent for its operating earnings guidance without unreasonable efforts.

New Jersey Natural Gas

NJNG reported third-quarter fiscal 2023 NFE of $0.9 million, compared to NFE of $2.6 million during the same period in fiscal 2022. The decrease in NFE for the quarter was due primarily to higher depreciation and operating expenses, partially offset by higher utility gross margin. Fiscal 2023 year-to-date NFE were $156.3 million, which was flat compared to NFE of $156.5 million during the same period in fiscal 2022.

NJR Reports Third Quarter Fiscal 2023 Results
Page 4 of 13
Customer Growth:

•
NJNG added 5,892 new customers during the first nine months of fiscal 2023, compared with 5,274 during the same period in fiscal 2022. NJNG expects these new customers to contribute approximately $5.0 million of incremental utility gross margin on an annualized basis.

Infrastructure Update:

•
NJNG's Infrastructure Investment Program (IIP) is a five-year, $150 million accelerated recovery program that began in fiscal 2021. IIP consists of a series of infrastructure projects designed to enhance the safety and reliability of NJNG's natural gas distribution system. During the first nine months of fiscal 2023, NJNG has spent $33.5 million under the program on various distribution system reinforcement projects. On March 30, 2023, NJNG submitted its annual IIP filing to the BPU requesting a rate increase for capital expenditures of $31.4 million through June 30, 2023, resulting in a $3.2 million revenue increase, with a proposed effective date of October 1, 2023.

Basic Gas Supply Service (BGSS) Incentive Programs:

BGSS incentive programs contributed $2.9 million to utility gross margin in the third quarter of fiscal 2023, compared with $1.9 million during the same period in fiscal 2022. Fiscal 2023 year-to-date, these programs contributed $17.4 million to utility gross margin, compared with $12.1 million during the same period in fiscal 2022. The increase in NFE for the fiscal 2023 quarter and year-to-date period was due primarily to an increase in storage incentive margin.

For more information on utility gross margin, please see "Non-GAAP Financial Information" below.

Energy-Efficiency Programs:

SAVEGREEN invested $39.7 million during the first nine months of fiscal 2023 in energy-efficiency upgrades for  customers' homes and businesses. NJNG recovered $15.9 million of its outstanding investments during the first nine months of fiscal 2023 through its energy efficiency rate.

Clean Energy Ventures (CEV)

CEV reported third-quarter fiscal 2023 net financial earnings of $7.3 million, compared with net financial loss of $(5.1) million during the same period in fiscal 2022. Fiscal 2023 year-to-date net financial loss was $(5.7) million, compared with net financial loss of $(18.4) million during the same period in fiscal 2022. The increase in NFE for the quarter was due primarily to a reversal of a valuation allowance on certain deferred tax assets during June 2023, which was determined to be no longer required. The increase in fiscal 2023 year-to-date NFE was due to the aforementioned reversal.

Solar Investment Update:
  •
During the first nine months of fiscal 2023, CEV placed 6 commercial projects into service, adding approximately 51 MW to total installed capacity.

•
As of June 30, 2023, CEV had approximately 441MW of solar capacity (including residential) in service in New Jersey, Rhode Island, New York and Connecticut.

•
Subsequent to quarter end, CEV acquired two operational assets, adding approximately 21MW of installed capacity for a total of approximately 462MW (including residential) currently in service.

NJR Reports Third Quarter Fiscal 2023 Results
Page 5 of 13
Storage and Transportation

Storage and Transportation reported third-quarter fiscal 2023 NFE of $2.4 million, compared with NFE of $3.5 million during the same period in fiscal 2022. Fiscal 2023 year-to-date NFE were $11.1 million, compared with NFE of $11.1 million during the same period in fiscal 2022. NFE for both periods decreased due to increased depreciation and interest expenses; partially offset by increased revenue.

Energy Services

Energy Services reported third-quarter fiscal 2023 net financial loss of $(1.6) million compared with net financial loss of $(5.0) million for the same period in fiscal 2022. Fiscal 2023 year-to-date NFE were $72.1 million, compared with NFE of $42.5 million during the same period in fiscal 2022. The improvement in NFE for the third quarter compared to the prior year period was due to higher financial margin and lower operating expenses. The increase in fiscal 2023 year-to-date NFE were due to higher natural gas price volatility during periods of colder than expected weather in December 2022 and February 2023, allowing Energy Services to capture additional margin.

Home Services and Other Operations

Home Services and Other Operations reported third-quarter fiscal 2023 NFE of $0.5 million compared with NFE of $0.2 million for the same period in fiscal 2022. Fiscal 2023 year-to-date NFE were $1.3 million, compared with NFE of $1.1 million during the same period in fiscal 2022. The increase in NFE for the quarter and year-to-date period was due primarily to increased installation and service contract revenue.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile:

•
During the first nine months of fiscal 2023, capital expenditures were $370.0 million, including accruals, of which $274.9 million were related to NJNG, compared with $419.4 million, of which $194.8 million were related to NJNG, during the same period in fiscal 2022. The decrease in capital expenditures was primarily due to the completion of the Adelphia Gateway Pipeline project, which was placed into service in September 2022.

•
During the first nine months of fiscal 2023, cash flows from operations were $387.9 million, compared with cash flows from operations of $235.9 million during the same period of fiscal 2022. The increase in operating cash flows was due to increased earnings and decreased working capital requirements as a result of a decline in gas prices during the period.

NJR Reports Third Quarter Fiscal 2023 Results
Page 6 of 13
Forward-Looking Statements:
This earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. NJR cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJR’s ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants. Words such as “anticipates,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans,” “believes,” “should” and similar expressions may identify forward-looking statements and such forward-looking statements are made based upon management’s current expectations, assumptions and beliefs as of this date concerning future developments and their potential effect upon NJR. There can be no assurance that future developments will be in accordance with management’s expectations, assumptions and beliefs or that the effect of future developments on NJR will be those anticipated by management. Forward-looking statements in this earnings release include, but are not limited to, certain statements regarding NJR’s NFEPS guidance for fiscal 2023, projected NFEPS growth rates, forecasted contribution of business segments to NJR’s NFE for fiscal 2023, customer growth at NJNG and their expected contributions, infrastructure programs and investments future decarbonization opportunities including IIP, the outcome or timing of future Base Rate Cases with the BPU, and other legal and regulatory expectations.

Additional information and factors that could cause actual results to differ materially from NJR’s expectations are contained in NJR’s filings with the SEC, including NJR’s Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC’s web site, http://www.sec.gov. Information included in this earnings release is representative as of today only and while NJR periodically reassesses material trends and uncertainties affecting NJR's results of operations and financial condition in connection with its preparation of management's discussion and analysis of results of operations and financial condition contained in its Quarterly and Annual Reports filed with the SEC, NJR does not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.

Non-GAAP Financial Information:

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

NFE and financial margin exclude unrealized gains or losses on derivative instruments related to NJR’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 and certain transactions related to NJR's investments in the PennEast Project, net of applicable tax adjustments as described below. Financial margin also differs from gross margin as defined on a GAAP basis as it excludes certain operations and maintenance expense and depreciation and amortization as well as the effects of derivatives as discussed above. Volatility associated with the change in value of these financial instruments and physical commodity reported on the income statement in the current period. In order to manage its business, NJR views its results without the impacts of the unrealized gains and losses, and certain realized gains and losses, caused by changes in value of these financial instruments and physical commodity contracts prior to the completion of the planned transaction because it shows changes in value currently instead of when the planned transaction ultimately is settled. An annual estimated effective tax rate is calculated for NFE purposes and any necessary quarterly tax adjustment is applied to NJR Energy Services Company.

NJNG’s utility gross margin is defined as operating revenues less natural gas purchases, sales tax, and regulatory rider expense. This measure differs from gross margin as presented on a GAAP basis as it excludes certain operations and maintenance expense and depreciation and amortization. Utility gross margin may also not be comparable to the definition of gross margin used by others in the natural gas distribution business and other industries. Management believes that utility gross margin provides a meaningful basis for evaluating utility operations since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and 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 most recent Report on Form 10-K, Item 7.

NJR Reports Third Quarter Fiscal 2023 Results
Page 7 of 13
About New Jersey Resources

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

•
New Jersey Natural Gas, NJR’s principal subsidiary, operates and maintains over 7,700 miles of natural gas transportation and distribution infrastructure to serve over 574,900 customers in New Jersey’s Monmouth, Ocean and parts of Morris, Middlesex, Sussex and Burlington counties.

•
Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of approximately 441 megawatts, providing residential and commercial customers with low-carbon solutions.

•
Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.

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

•
Home Services provides service contracts as well as heating, central air conditioning, water heaters, standby generators, solar and other indoor and outdoor comfort products to residential homes throughout New Jersey.

NJR and its over 1,300 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve® and initiatives such as The SAVEGREEN Project® and The Sunlight Advantage®.

For more information about NJR:
www.njresources.com.

Follow us on Twitter @NJNaturalGas.
“Like” us on facebook.com/NewJerseyNaturalGas.

NJR Reports Third Quarter Fiscal 2023 Results
Page 8 of 13
NEW JERSEY RESOURCES
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands, except per share data)
  
2023
    
2022
    
2023
    
2022
  
OPERATING REVENUES
                        
Utility
  
$
144,971
    
$
199,357
    
$
902,880
    
$
937,266
  
Nonutility
    
119,104
      
352,978
      
728,789
      
1,203,227
  
Total operating revenues
    
264,075
      
552,335
      
1,631,669
      
2,140,493
  
OPERATING EXPENSES
                                
Gas purchases
                                
Utility
    
42,344
      
100,277
      
381,160
      
435,438
  
Nonutility
    
75,917
      
290,806
      
468,351
      
980,135
  
Related parties
    
1,870
      
1,838
      
5,467
      
5,567
  
Operation and maintenance
    
94,213
      
88,373
      
272,809
      
243,143
  
Regulatory rider expenses
    
6,120
      
8,360
      
47,525
      
55,941
  
Depreciation and amortization
    
38,877
      
32,872
      
113,650
      
94,700
  
Total operating expenses
    
259,341
      
522,526
      
1,288,962
      
1,814,924
  
OPERATING INCOME
    
4,734
      
29,809
      
342,707
      
325,569
  
Other income, net
    
5,711
      
4,288
      
15,145
      
12,551
  
Interest expense, net of capitalized interest
    
30,119
      
21,411
      
89,871
      
59,814
  
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES
    
(19,674
)
    
12,686
      
267,981
      
278,306
  
Income tax (benefit) provision
    
(20,505
)
    
4,434
      
43,059
      
64,051
  
Equity in earnings of affiliates
    
701
      
4,801
      
2,778
      
6,145
  
NET INCOME
  
$
1,532
    
$
13,053
    
$
227,700
    
$
220,400
  
                                 
EARNINGS PER COMMON SHARE
                                
Basic
  
$
0.02
    
$
0.14
    
$
2.35
    
$
2.29
  
Diluted
  
$
0.02
    
$
0.14
    
$
2.33
    
$
2.28
  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING
                                
Basic
    
97,168
      
96,154
      
96,849
      
96,055
  
Diluted
    
97,886
      
96,620
      
97,538
      
96,527
  
                                 

NJR Reports Third Quarter Fiscal 2023 Results
Page 9 of 13
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
(Unaudited)

   
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands)
  
2023
    
2022
    
2023
    
2022
  
NEW JERSEY RESOURCES
              
   
A reconciliation of net income, the closest GAAP financial measure, to net financial earnings is as follows:
  
                         
Net income
  
$
1,532
    
$
13,053
    
$
227,700
    
$
220,400
  
Add:
                                
Unrealized gain on derivative instruments and related transactions
    
(12,970
)
    
(17,891
)
    
(30,502
)
    
(58,060
)
Tax effect
    
3,083
      
4,253
      
7,250
      
13,809
  
Effects of economic hedging related to natural gas inventory
    
24,116
      
428
      
36,885
      
25,160
  
Tax effect
    
(5,731
)
    
(102
)
    
(8,766
)
    
(5,979
)
Gain on equity method investment
    
(100
)
    
(4,021
)
    
(300
)
    
(4,021
)
Tax effect
    
24
      
1,003
      
74
      
1,003
  
NFE tax adjustment
    
(284
)
    
(274
)
    
(77
)
    
113
  
Net financial earnings (loss)
  
$
9,670
    
$
(3,551
)
  
$
232,264
    
$
192,425
  
                                 
Weighted Average Shares Outstanding
                                
Basic
    
97,168
      
96,154
      
96,849
      
96,055
  
Diluted
    
97,886
      
96,620
      
97,538
      
96,527
  
                                 
A reconciliation of basic earnings per share, the closest GAAP financial measure, to basic net financial earnings per share is as follows:
  
                                 
Basic earnings per share
  
$
0.02
    
$
0.14
    
$
2.35
    
$
2.29
  
Add:
                                
Unrealized gain on derivative instruments and related transactions
  
$
(0.14
)
  
$
(0.19
)
  
$
(0.31
)
  
$
(0.60
)
Tax effect
  
$
0.03
    
$
0.04
    
$
0.07
    
$
0.14
  
Effects of economic hedging related to natural gas inventory
  
$
0.25
    
$
—
    
$
0.38
    
$
0.26
  
Tax effect
  
$
(0.06
)
  
$
—
    
$
(0.09
)
  
$
(0.06
)
Gain on equity method investment
  
$
—
    
$
(0.04
)
  
$
—
    
$
(0.04
)
Tax effect
  
$
—
    
$
0.01
    
$
—
    
$
0.01
  
Basic net financial earnings (loss) per share
  
$
0.10
    
$
(0.04
)
  
$
2.40
    
$
2.00
  
                                 
NATURAL GAS DISTRIBUTION
                  
                                 
A reconciliation of gross margin, the closest GAAP financial measure, to utility gross margin is as follows:
  
                                 
Operating revenues
  
$
145,308
    
$
199,695
    
$
903,892
    
$
938,279
  
Less:
                                
Natural gas purchases
    
44,669
      
102,624
      
388,134
      
442,441
  
Operating and maintenance (1)
    
31,436
      
25,034
      
88,441
      
64,924
  
Regulatory rider expense
    
6,120
      
8,360
      
47,525
      
55,941
  
Depreciation and amortization
    
25,825
      
23,951
      
76,034
      
70,188
  
Gross margin
    
37,258
      
39,726
      
303,758
      
304,785
  
Add:
                                
Operating and maintenance (1)
    
31,436
      
25,034
      
88,441
      
64,924
  
Depreciation and amortization
    
25,825
      
23,951
      
76,034
      
70,188
  
Utility gross margin
  
$
94,519
    
$
88,711
    
$
468,233
    
$
439,897
  
(1) Excludes selling, general and administrative expenses of $26.9 million and $26.5 million for the three months ended June 30, 2023 and 2022, respectively, and $78.1 million and $76.1 million for the nine months ended June 30, 2023 and 2022, respectively.

NJR Reports Third Quarter Fiscal 2023 Results
Page 10 of 13
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES (continued)
(Unaudited)

(Unaudited)
  
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands)
  
2023
    
2022
    
2023
    
2022
  
ENERGY SERVICES
                        
                         
A reconciliation of gross margin, the closest GAAP financial measure, to Energy Services' financial margin is as follows:
  
                         
Operating revenues
  
$
70,172
    
$
307,815
    
$
588,684
    
$
1,089,704
  
Less:
                                
Natural Gas purchases
    
76,599
      
290,767
      
471,000
      
980,600
  
Operation and maintenance (1)
    
3,244
      
5,617
      
14,366
      
12,864
  
Depreciation and amortization
    
51
      
34
      
170
      
94
  
Gross margin
    
(9,722
)
    
11,397
      
103,148
      
96,146
  
Add:
                                
Operation and maintenance (1)
    
3,244
      
5,617
      
14,366
      
12,864
  
Depreciation and amortization
    
51
      
34
      
170
      
94
  
Unrealized gain on derivative instruments and related transactions
    
(13,601
)
    
(16,470
)
    
(39,692
)
    
(61,671
)
Effects of economic hedging related to natural gas inventory
    
24,116
      
428
      
36,885
      
25,160
  
Financial margin
  
$
4,088
    
$
1,006
    
$
114,877
    
$
72,593
  
(1) Excludes selling, general and administrative expenses of $0.5 million and $0.6 million for the three months ended June 30, 2023 and 2022, respectively, and $(1.2) million and $1.7 million for the nine months ended June 30, 2023 and 2022, respectively.

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

Net (loss) income
  
$
(9,336
)
  
$
7,501
    
$
74,271
    
$
70,214
  
Add:
                                
Unrealized gain on derivative instruments and related transactions
    
(13,601
)
    
(16,470
)
    
(39,692
)
    
(61,671
)
Tax effect
    
3,232
      
3,914
      
9,433
      
14,667
  
Effects of economic hedging related to natural gas
    
24,116
      
428
      
36,885
      
25,160
  
Tax effect
    
(5,731
)
    
(102
)
    
(8,766
)
    
(5,979
)
NFE tax adjustment
    
(284
)
    
(274
)
    
(77
)
    
113
  
Net financial (loss) earnings
  
$
(1,604
)
  
$
(5,003
)
  
$
72,054
    
$
42,504
  
                                 

NJR Reports Third Quarter Fiscal 2023 Results
Page 11 of 13
FINANCIAL STATISTICS BY BUSINESS UNIT
(Unaudited)

   
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands, except per share data)
  
2023
 
2022
    
2023
    
2022
  
NEW JERSEY RESOURCES
    
                 
     
                 
Operating Revenues
    
                 
Natural Gas Distribution
  
$
145,308
 
$
199,695
    
$
903,892
    
$
938,279
  
Clean Energy Ventures
    
13,178
   
13,795
      
40,376
      
35,805
  
Energy Services
    
70,172
   
307,815
      
588,684
      
1,089,704
  
Storage and Transportation
    
22,201
   
16,390
      
69,926
      
41,875
  
Home Services and Other
    
14,955
   
14,220
      
42,669
      
41,393
  
Sub-total
    
265,814
   
551,915
      
1,645,547
      
2,147,056
  
Eliminations
    
(1,739
)
    
420
      
(13,878
)
    
(6,563
)
Total
  
$
264,075
 
$
552,335
    
$
1,631,669
    
$
2,140,493
  
       
                       
       
                       
Operating Income (Loss)
      
                       
Natural Gas Distribution
  
$
10,391
 
$
13,200
    
$
225,700
    
$
228,694
  
Clean Energy Ventures
    
(3,344
)
    
(1,209
)
    
(8,667
)
    
(7,877
)
Energy Services
    
(10,177
)
    
10,833
      
104,370
      
94,479
  
Storage and Transportation
    
7,207
   
4,240
      
26,524
      
9,296
  
Home Services and Other
    
712
   
477
      
1,900
      
2,240
  
Sub-total
    
4,789
   
27,541
      
349,827
      
326,832
  
Eliminations
    
(55
)
    
2,268
      
(7,120
)
    
(1,263
)
Total
  
$
4,734
 
$
29,809
    
$
342,707
    
$
325,569
  
       
                       
       
                       
Equity in Earnings of Affiliates
      
                       
Storage and Transportation
  
$
377
 
$
5,274
    
$
2,263
    
$
7,586
  
Eliminations
    
324
   
(473
)
    
515
      
(1,441
)
Total
  
$
701
 
$
4,801
    
$
2,778
    
$
6,145
  
                                 
                                 
Net Income (Loss)
                                
Natural Gas Distribution
  
$
891
    
$
2,648
    
$
156,252
    
$
156,511
  
Clean Energy Ventures
    
7,267
      
(5,098
)
    
(5,694
)
    
(18,410
)
Energy Services
    
(9,336
)
    
7,501
      
74,271
      
70,214
  
Storage and Transportation
    
2,434
      
6,544
      
11,277
      
14,131
  
Home Services and Other
    
523
      
215
      
1,307
      
1,113
  
Sub-total
    
1,779
      
11,810
      
237,413
      
223,559
  
Eliminations
    
(247
)
    
1,243
      
(9,713
)
    
(3,159
)
Total
  
$
1,532
    
$
13,053
    
$
227,700
    
$
220,400
  
                                 
                                 
Net Financial Earnings (Loss)
                                
Natural Gas Distribution
  
$
891
    
$
2,648
    
$
156,252
    
$
156,511
  
Clean Energy Ventures
    
7,267
      
(5,098
)
    
(5,694
)
    
(18,410
)
Energy Services
    
(1,604
)
    
(5,003
)
    
72,054
      
42,504
  
Storage and Transportation
    
2,358
      
3,526
      
11,051
      
11,113
  
Home Services and Other
    
523
      
215
      
1,307
      
1,113
  
Sub-total
    
9,435
      
(3,712
)
    
234,970
      
192,831
  
Eliminations
    
235
      
161
      
(2,706
)
    
(406
)
Total
  
$
9,670
    
$
(3,551
)
  
$
232,264
    
$
192,425
  
                                 
                                 
Throughput (Bcf)
                                
NJNG, Core Customers
    
19.5
      
20.0
      
75.3
      
78.6
  
NJNG, Off System/Capacity Management
    
13.8
      
20.3
      
52.4
      
69.4
  
Energy Services Fuel Mgmt. and Wholesale Sales
    
24.0
      
40.7
      
109.0
      
180.9
  
Total
    
57.3
      
81.0
      
236.7
      
328.9
  
                                 
                                 
Common Stock Data
                                
Yield at June 30,
    
3.3
%
    
3.3
%
    
3.3
%
    
3.3
%
Market Price at June 30,
  
$
47.20
    
$
44.53
    
$
47.20
    
$
44.53
  
Shares Out. at June 30,
    
97,496
      
96,160
      
97,496
      
96,160
  
Market Cap. at June 30,
  
$
4,601,825
    
$
4,282,015
    
$
4,601,825
    
$
4,282,015
  
                                 

NJR Reports Third Quarter Fiscal 2023 Results
Page 12 of 13
(Unaudited)
  
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands, except customer and weather data)
  
2023
    
2022
    
2023
    
2022
  
NATURAL GAS DISTRIBUTION
                        
                         
Utility Gross Margin
                        
Operating revenues
  
$
145,308
    
$
199,695
    
$
903,892
    
$
938,279
  
Less:
                                
Natural gas purchases
    
44,669
      
102,624
      
388,134
      
442,441
  
Operating and maintenance (1)
    
31,436
      
25,034
      
88,441
      
64,924
  
Regulatory rider expense
    
6,120
      
8,360
      
47,525
      
55,941
  
Depreciation and amortization
    
25,825
      
23,951
      
76,034
      
70,188
  
Gross margin
    
37,258
      
39,726
      
303,758
      
304,785
  
Add:
                                
Operating and maintenance (1)
    
31,436
      
25,034
      
88,441
      
64,924
  
Depreciation and amortization
    
25,825
      
23,951
      
76,034
      
70,188
  
Total Utility Gross Margin
  
$
94,519
    
$
88,711
    
$
468,233
    
$
439,897
  
(1) Excludes selling, general and administrative expenses of $26.9 million and $26.5 million for the three months ended June 30, 2023 and 2022, respectively, and $78.1 million and $76.1 million for the nine months ended June 30, 2023 and 2022, respectively.
  
                                 
Utility Gross Margin, Operating Income and Net Income
                                
Residential
  
$
59,723
    
$
55,597
    
$
321,017
    
$
303,716
  
Commercial, Industrial & Other
    
14,897
      
15,387
      
65,742
      
64,609
  
Firm Transportation
    
15,815
      
14,729
      
61,503
      
57,101
  
Total Firm Margin
    
90,435
      
85,713
      
448,262
      
425,426
  
Interruptible
    
1,149
      
1,060
      
2,572
      
2,420
  
Total System Margin
    
91,584
      
86,773
      
450,834
      
427,846
  
Off System/Capacity Management/FRM/Storage Incentive
    
2,935
      
1,938
      
17,399
      
12,051
  
Total Utility Gross Margin
    
94,519
      
88,711
      
468,233
      
439,897
  
Operation and maintenance expense
    
58,303
      
51,560
      
166,499
      
141,015
  
Depreciation and amortization
    
25,825
      
23,951
      
76,034
      
70,188
  
Operating Income
  
$
10,391
    
$
13,200
    
$
225,700
    
$
228,694
  
                                 
Net Income
  
$
891
    
$
2,648
    
$
156,252
    
$
156,511
  
                                 
Net Financial Earnings
  
$
891
    
$
2,648
    
$
156,252
    
$
156,511
  
                                 
Throughput (Bcf)
                                
Residential
    
5.7
      
6.7
      
39.9
      
42.3
  
Commercial, Industrial & Other
    
1.2
      
1.3
      
7.7
      
7.9
  
Firm Transportation
    
2.2
      
2.3
      
10.7
      
11.5
  
Total Firm Throughput
    
9.1
      
10.3
      
58.3
      
61.7
  
Interruptible
    
10.4
      
9.7
      
17.0
      
16.9
  
Total System Throughput
    
19.5
      
20.0
      
75.3
      
78.6
  
Off System/Capacity Management
    
13.8
      
20.3
      
52.4
      
69.4
  
Total Throughput
    
33.3
      
40.3
      
127.7
      
148.0
  
                                 
Customers
                                
Residential
    
518,359
      
510,931
      
518,359
      
510,931
  
Commercial, Industrial & Other
    
32,084
      
31,469
      
32,084
      
31,469
  
Firm Transportation
    
24,360
      
26,152
      
24,360
      
26,152
  
Total Firm Customers
    
574,803
      
568,552
      
574,803
      
568,552
  
Interruptible
    
83
      
29
      
83
      
29
  
Total System Customers
    
574,886
      
568,581
      
574,886
      
568,581
  
Off System/Capacity Management*
    
14
      
19
      
14
      
19
  
Total Customers
    
574,900
      
568,600
      
574,900
      
568,600
  
*The number of customers represents those active during the last month of the period.
                  
Degree Days
                                
Actual
    
389
      
452
      
3,869
      
4,097
  
Normal
    
470
      
483
      
4,474
      
4,477
  
Percent of Normal
    
82.8
%
    
93.6
%
    
86.5
%
    
91.5
%
                                 

NJR Reports Third Quarter Fiscal 2023 Results
Page 13 of 13
(Unaudited)
  
Three Months Ended
June 30,
    
Nine Months Ended
June 30,
  
(Thousands, except customer, RECs and megawatt)
  
2023
    
2022
    
2023
    
2022
  
CLEAN ENERGY VENTURES
                        
                         
Operating Revenues
                        
SREC sales
  
$
184
    
$
1,010
    
$
10,307
    
$
7,839
  
TREC sales
    
4,720
      
1,709
      
8,007
      
3,574
  
Solar electricity sales and other
    
5,243
      
8,128
      
13,174
      
15,839
  
Sunlight Advantage
    
3,031
      
2,948
      
8,888
      
8,553
  
Total Operating Revenues
  
$
13,178
    
$
13,795
    
$
40,376
    
$
35,805
  
                                 
Depreciation and Amortization
  
$
6,672
    
$
5,358
    
$
18,713
    
$
15,902
  
                                 
Operating Loss
  
$
(3,344
)
  
$
(1,209
)
  
$
(8,667
)
  
$
(7,877
)
                                 
Income Tax Benefit
  
$
(18,237
)
  
$
(1,526
)
  
$
(23,079
)
  
$
(5,524
)
                                 
Net Income (Loss)
  
$
7,267
    
$
(5,098
)
  
$
(5,694
)
  
$
(18,410
)
                                 
Net Financial Earnings (Loss)
  
$
7,267
    
$
(5,098
)
  
$
(5,694
)
  
$
(18,410
)
                                 
Solar Renewable Energy Certificates Generated
    
130,978
      
120,779
      
292,753
      
278,681
  
                                 
Solar Renewable Energy Certificates Sold
    
1,314
      
6,573
      
48,871
      
38,773
  
                                 
Transition Renewable Energy Certificates Generated
    
31,144
      
12,210
      
52,013
      
25,471
  
                                 
Solar Renewable Energy Certificates II Generated
    
2,973
      
—
      
5,803
      
—
  
                                 
Solar Megawatts Under Construction
    
13.8
      
75.5
      
13.8
      
75.5
  
                                 
ENERGY SERVICES
                                
                                 
Operating Income
                                
Operating revenues
  
$
70,172
    
$
307,815
    
$
588,684
    
$
1,089,704
  
Less:
                                
Gas purchases
    
76,599
      
290,767
      
471,000
      
980,600
  
Operation and maintenance expense
    
3,699
      
6,181
      
13,144
      
14,531
  
Depreciation and amortization
    
51
      
34
      
170
      
94
  
Operating (Loss) Income
  
$
(10,177
)
  
$
10,833
    
$
104,370
    
$
94,479
  
                                 
Net (Loss) Income
  
$
(9,336
)
  
$
7,501
    
$
74,271
    
$
70,214
  
                                 
Financial Margin
  
$
4,088
    
$
1,006
    
$
114,877
    
$
72,593
  
                                 
Net Financial (Loss) Earnings
  
$
(1,604
)
  
$
(5,003
)
  
$
72,054
    
$
42,504
  
                                 
Gas Sold and Managed (Bcf)
    
24.0
      
40.7
      
109.0
      
180.9
  
                                 
STORAGE AND TRANSPORTATION
                                
                                 
Operating Revenues
  
$
22,201
    
$
16,390
    
$
69,926
    
$
41,875
  
                                 
Equity in Earnings of Affiliates
  
$
377
    
$
5,274
    
$
2,263
    
$
7,586
  
                                 
Operation and Maintenance Expense
  
$
8,687
    
$
7,840
    
$
23,951
    
$
22,524
  
                                 
Other Income, Net
  
$
1,815
    
$
1,882
    
$
4,829
    
$
7,141
  
                                 
Interest Expense
  
$
6,430
    
$
3,177
    
$
19,265
    
$
7,160
  
                                 
Income Tax Provision
  
$
535
    
$
1,675
    
$
3,074
    
$
2,732
  
                                 
Net Income
  
$
2,434
    
$
6,544
    
$
11,277
    
$
14,131
  
                                 
Net Financial Earnings
  
$
2,358
    
$
3,526
    
$
11,051
    
$
11,113
  
                                 
HOME SERVICES AND OTHER
                                
                                 
Operating Revenues
  
$
14,955
    
$
14,220
    
$
42,669
    
$
41,393
  
                                 
Operating Income
  
$
712
    
$
477
    
$
1,900
    
$
2,240
  
                                 
Net Income
  
$
523
    
$
215
    
$
1,307
    
$
1,113
  
                                 
Net Financial Earnings
  
$
523
    
$
215
    
$
1,307
    
$
1,113
  
                                 
Total Service Contract Customers at Jun 30
    
101,748
      
105,022
      
101,748
      
105,022