NEW JERSEY RESOURCES REPORTS FISCAL 2023 FOURTH-QUARTER

AND YEAR END RESULTS

Introduces Fiscal 2024 Guidance and Maintains its Long-term Projected Growth Rate

Management Commentary

Steve Westhoven, President and CEO, stated, "NJR reported an excellent year in fiscal 2023 supported by solid contributions from our complementary portfolio of businesses. We achieved NFEPS at the higher end of our guidance range, which was increased by $0.20 earlier this year as a result of the strong performance of our business units during Winter Storm Elliott, particularly Energy Services. Our performance this past year speaks to the strength of our diversified business model, and our ability to adapt to challenges in ways that benefit our customers and investors."

Key Performance Metrics

 

 

A reconciliation of net income to NFE for the three and twelve months ended September 30, 2023 and 2022, is provided below.

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.

A table detailing NFE for the three and twelve months ended September 30, 2023 and 2022, is provided below.

 

Fiscal 2024 NFE Guidance:

NJR is introducing its fiscal 2024 NFEPS guidance range of $2.70 to $2.85, which represents 12.3% percent year-over-year growth over the midpoint of the originally provided fiscal 2023 guidance range of $2.42 - $2.52, subject to the risks and uncertainties identified below under "Forward-Looking Statements."

In fiscal 2024, NJR expects Energy Services will represent a higher percentage of NFEPS than in prior years due to contributions from the Asset Management Agreements signed in 2020. The following chart represents NJR’s current expected contributions from its business segments for fiscal 2024:

 

                                                                           

In providing fiscal 2024 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")

NJNG reported fiscal 2023 NFE of $131.4 million, compared to NFE of $140.1 million during fiscal 2022. NJNG reported fourth-quarter fiscal 2023 net financial loss of $(24.8) million, compared to a net financial loss of $(16.4) million during the same period in fiscal 2022. The decrease in NFE for the year was due primarily to higher depreciation and operating expenses, including the deferral of bad debt costs in accordance with the July 2, 2020 BPU deferral order in fiscal 2022 that did not reoccur, partially offset by higher utility gross margin.

Customer Growth:

Infrastructure Update:

Basic Gas Supply Service (BGSS) Incentive Programs:

BGSS incentive programs contributed $20.0 million to utility gross margin in fiscal 2023, compared with $19.6 million during fiscal 2022. Increases in storage incentive margin and capacity release volumes in fiscal 2023, were partially offset by lower off-system sales.

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

Energy-Efficiency Programs:

SAVEGREEN invested $59.8 million in fiscal 2023 in energy-efficiency upgrades for customers' homes and businesses. NJNG recovered $26.3 million of its outstanding investments during fiscal 2023 through its energy efficiency rate.

Clean Energy Ventures (CEV)

CEV reported fiscal 2023 NFE of $44.5 million, compared with NFE of $39.4 million during fiscal 2022. Fourth-quarter fiscal 2023 NFE were $50.2 million, compared with NFE of $57.8 million during the same period in fiscal 2022. The increase in NFE for fiscal 2023 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 decrease in NFE for the fourth quarter of fiscal 2023 was largely due to lower SREC and electricity revenue for the period, partially offset by higher TREC revenue.

Solar Investment Update:

Storage and Transportation

Storage and Transportation reported fiscal 2023 NFE of $12.8 million, compared with NFE of $22.5 million during fiscal 2022. Fourth-quarter fiscal 2023 NFE were $1.8 million, compared with NFE of $11.3 million during the same period in fiscal 2022. NFE for both periods decreased due to increased depreciation and interest expense; resulting primarily from the southern portion of the Adelphia Gateway project, which was placed in service in September 2022.

Energy Services

Energy Services reported fiscal 2023 NFE of $68.5 million, compared with NFE of $39.1 million during fiscal 2022. Fourth-quarter fiscal 2023 net financial loss was $(3.5) million compared with net financial loss of $(3.4) million for the same period in fiscal 2022. The increase in fiscal 2023 NFE was due to higher natural gas price volatility during periods of colder than expected weather in December 2022 and February 2023 as compared to the prior year, allowing Energy Services to capture additional financial margin.

Home Services and Other Operations

Home Services and Other Operations reported fiscal 2023 NFE of $4.8 million, compared with a net financial loss of $(0.8) million during fiscal 2022. Fourth-quarter fiscal 2023 NFE were $3.5 million compared with a net financial loss of $(1.9) million for the same period in fiscal 2022. The increase in NFE for the quarter and year was due primarily to increased installation and service contract revenue.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile:

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 2024, projected NFEPS growth rates, NFEPS Contributions, forecasted contribution of business segments to NJR’s NFE for fiscal 2024, 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.

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.

About New Jersey Resources

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:

Follow us on X.com (Twitter) @NJNaturalGas.

“Like” us on facebook.com/NewJerseyNaturalGas.

NEW JERSEY RESOURCES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES

(Unaudited)

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES (continued)

(Unaudited)

FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)

		Three Months Ended								Twelve Months Ended
(Unaudited)		September 30,								September 30,
(Thousands, except customer and weather data)		2023				2022				2023				2022
NATURAL GAS DISTRIBUTION
Utility Gross Margin
Operating revenues		$	108,741			$	190,488			$	1,012,633			$	1,128,767
Less:
Natural gas purchases			37,323				114,791				425,457				557,232
Operating and maintenance (1)			31,605				30,805				115,292				93,164
Regulatory rider expense			3,017				3,496				50,542				59,437
Depreciation and amortization			26,292				24,391				102,326				94,579
Gross margin			10,504				17,005				319,016				324,355
Add:
Operating and maintenance (1)			31,605				30,805				115,292				93,164
Depreciation and amortization			26,292				24,391				102,326				94,579
Total Utility Gross Margin		$	68,401			$	72,201			$	536,634			$	512,098
(1) Excludes selling, general and administrative expenses of $28.7 million and $26.7 million for the three months ended September 30, 2023 and 2022, respectively, and $111.5 million and $102.8 million for the fiscal year ended September 30, 2023 and 2022, respectively.
Utility Gross Margin, Operating Income and Net Income
Residential		$	39,121			$	37,451			$	360,138			$	341,167
Commercial, Industrial & Other			10,808				13,020				76,550				77,629
Firm Transportation			14,611				12,832				76,114				69,933
Total Firm Margin			64,540				63,303				512,802				488,729
Interruptible			1,240				1,362				3,812				3,782
Total System Margin			65,780				64,665				516,614				492,511
Off System/Capacity Management/FRM/Storage Incentive			2,621				7,536				20,020				19,587
Total Utility Gross Margin			68,401				72,201				536,634				512,098
Operation and maintenance expense			60,281				57,531				226,780				198,546
Depreciation and amortization			26,292				24,391				102,326				94,579
Operating (Loss) Income		$	(18,172	)		$	(9,721	)		$	207,528			$	218,973
Net (Loss) Income		$	(24,838	)		$	(16,387	)		$	131,414			$	140,124
Net Financial (Loss) Earnings		$	(24,838	)		$	(16,387	)		$	131,414			$	140,124
Throughput (Bcf)
Residential			3.4				3.2				43.4				45.5
Commercial, Industrial & Other			0.4				0.8				8.4				8.7
Firm Transportation			1.1				1.5				12.1				13.0
Total Firm Throughput			4.9				5.5				63.9				67.2
Interruptible			12.5				15.5				29.5				32.4
Total System Throughput			17.4				21.0				93.4				99.6
Off System/Capacity Management			20.6				25.8				72.6				95.2
Total Throughput			38.0				46.8				166.0				194.8
Customers
Residential			520,682				512,264				520,682				512,264
Commercial, Industrial & Other			31,725				31,227				31,725				31,227
Firm Transportation			23,490				25,713				23,490				25,713
Total Firm Customers			575,897				569,204				575,897				569,204
Interruptible			83				88				83				88
Total System Customers			575,980				569,292				575,980				569,292
Off System/Capacity Management*			20				8				20				8
Total Customers			576,000				569,300				576,000				569,300
*The number of customers represents those active during the last month of the period.
Degree Days
Actual			28				33				3,897				4,130
Normal			24				27				4,498				4,504
Percent of Normal			116.7	%			122.2	%			86.6	%			91.7	%