New Jersey Resources Reports Second-Quarter Fiscal 2022 Results and Increases Net Financial Earnings Guidance for Fiscal 2022

Energy Services’ Long Option Strategy Contributes to Guidance Increase 

Today, New Jersey Resources Corporation (NYSE: NJR) reported results for the second-quarter of fiscal 2022. Highlights include:

  • Consolidated net income of $96.0 million, compared with $149.8 million in the second quarter of fiscal 2021.
  • Consolidated net financial earnings (NFE), a non-GAAP financial measure, of $130.2 million, or $1.36 per share, compared with $170.6 million, or $1.77 per share, in the second quarter of fiscal 2021.
  • The comparable prior year period included unusually high net financial earnings at Energy Services due to increased natural gas price volatility related to the extreme weather during February 2021.
  • Increased fiscal 2022 net financial earnings per share (NFEPS) guidance range to $2.30 to $2.40 from the previously announced range of $2.20 to $2.30.
  • Adelphia Gateway is now flowing gas to its South Zone, allowing for at least one large industrial customer in the Philadelphia metro area to replace coal power generation with natural gas.

Second-quarter fiscal 2022 net income totaled $96.0 million, or $1.00 per share, compared with $149.8 million, or $1.56 per share, during the same period in fiscal 2021. Fiscal 2022 year-to-date net income totaled $207.3 million, or $2.16 per share, compared with $230.9 million, or $2.40 per share, for the same period in fiscal 2021.

Second-quarter fiscal 2022 NFE totaled $130.2 million, or $1.36 per share, compared to NFE of $170.6 million, or $1.77 per share, during the same period in fiscal 2021. Fiscal 2022 year-to-date NFE totaled $196.0 million, or $2.04 per share, compared with $215.3 million, or $2.24 per share, for the same period in fiscal 2021.

Steve Westhoven, President and CEO, stated, "NJR reported strong operating results for the second quarter of fiscal 2022, led by our utility, New Jersey Natural Gas, and Energy Services. Better than expected performance from Energy Services is enabling us to raise our fiscal 2022 NFEPS guidance to a range of $2.30 to $2.40."

Key Performance Metrics

 

Three Months Ended

 

Six Months Ended

 

March 31,

 

March 31,

($ in Thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

Net income

$

96,035

 

$

149,809

 

$

207,347

 

$

230,854

Basic EPS

$

1.00

 

$

1.56

 

$

2.16

 

$

2.40

Net financial earnings

$

130,206

 

$

170,604

 

$

195,976

 

$

215,261

Basic net financial earnings per share

$

1.36

 

$

1.77

 

$

2.04

 

$

2.24

A reconciliation of net income to NFE for the three and six months ended March 31, 2022 and 2021, is provided below.

 

Three Months Ended

 

Six Months Ended

 

March 31,

 

March 31,

(Thousands)

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income

$

96,035

 

 

$

149,809

 

 

$

207,347

 

 

$

230,854

 

Add:

 

 

 

 

 

 

 

Unrealized loss (gain) on derivative instruments and related transactions

 

42,022

 

 

 

29,255

 

 

 

(40,169

)

 

 

(8,235

)

Tax effect

 

(9,980

)

 

 

(6,954

)

 

 

9,556

 

 

 

1,958

 

Effects of economic hedging related to natural gas inventory

 

1,155

 

 

 

(7,209

)

 

 

24,732

 

 

 

(14,741

)

Tax effect

 

(274

)

 

 

1,713

 

 

 

(5,877

)

 

 

3,503

 

Net income to NFE tax adjustment

 

1,248

 

 

 

3,990

 

 

 

387

 

 

 

1,922

 

Net financial earnings

$

130,206

 

 

$

170,604

 

 

$

195,976

 

 

$

215,261

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

Basic

 

96,068

 

 

 

96,248

 

 

 

96,006

 

 

 

96,181

 

Diluted

 

96,516

 

 

 

96,618

 

 

 

96,480

 

 

 

96,598

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.00

 

 

$

1.56

 

 

$

2.16

 

 

$

2.40

 

Add:

 

 

 

 

 

 

 

Unrealized loss (gain) on derivative instruments and related transactions

 

0.44

 

 

 

0.30

 

 

 

(0.42

)

 

 

(0.09

)

Tax effect

 

(0.10

)

 

 

(0.08

)

 

 

0.10

 

 

 

0.02

 

Effects of economic hedging related to natural gas inventory

 

0.01

 

 

 

(0.07

)

 

 

0.26

 

 

 

(0.15

)

Tax effect

 

 

 

 

0.02

 

 

 

(0.06

)

 

 

0.04

 

Net income to NFE tax adjustment

 

0.01

 

 

 

0.04

 

 

 

 

 

 

0.02

 

Basic net financial earnings per share

$

1.36

 

 

$

1.77

 

 

$

2.04

 

 

$

2.24

 

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 may exclude impairment charges associated with equity method investments, which are non-cash charges considered unusual in nature that occur infrequently and are not indicative of the Company's performance for its ongoing operations. For the six months ended March 31, 2022 and 2021, there were no impairments of equity method investments recorded to earnings. 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 six months ended March 31, 2022 and 2021, is provided below.

Net Financial Earnings (Loss) by Business Unit

 

Three Months Ended

 

Six Months Ended

 

March 31,

 

March 31,

(Thousands)

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

New Jersey Natural Gas

$

102,783

 

 

$

80,541

 

 

$

153,863

 

 

$

130,008

 

Clean Energy Ventures

 

(6,491

)

 

 

(8,872

)

 

 

(13,312

)

 

 

(19,146

)

Storage and Transportation

 

4,625

 

 

 

4,711

 

 

 

7,587

 

 

 

8,219

 

Energy Services

 

29,940

 

 

 

96,528

 

 

 

47,507

 

 

 

98,028

 

Home Services and Other

 

451

 

 

 

747

 

 

 

898

 

 

 

685

 

Subtotal

 

131,308

 

 

 

173,655

 

 

 

196,543

 

 

 

217,794

 

Eliminations

 

(1,102

)

 

 

(3,051

)

 

 

(567

)

 

 

(2,533

)

Total

$

130,206

 

 

$

170,604

 

 

$

195,976

 

 

$

215,261

 

Fiscal 2022 NFE Guidance:

NJR increased fiscal 2022 NFE guidance to $2.30 to $2.40 per share, subject to the risk and uncertainties identified below under "Forward-Looking Statements." The following chart represents NJR’s current expected contributions from its subsidiaries for fiscal 2022:

     

Company

Expected Fiscal 2022

Net Financial Earnings Contribution

     
     

New Jersey Natural Gas

60 to 62 percent

     
     

Clean Energy Ventures

17 to 20 percent

     
     

Storage and Transportation

5 to 8 percent

     
     

Energy Services

13 to 15 percent

     
     

Home Services and Other

0 to 1 percent

     

In providing fiscal 2022 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

New Jersey Natural Gas Company (NJNG) reported second-quarter fiscal 2022 NFE of $102.8 million, compared to NFE of $80.5 million during the same period in fiscal 2021. Fiscal 2022 year-to-date NFE were $153.9 million, compared to NFE of $130.0 million during the same period in fiscal 2021. The increase for both periods was due primarily to higher base rates, which became effective on December 1, 2021.

Customer Growth:

  • NJNG added 3,579 new customers during the first six months of fiscal 2022, compared with 3,694 during the same period in fiscal 2021. NJNG expects these new customers to contribute approximately $2.9 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. In the second quarter, NJNG spent $10.0 million under the program on various distribution system reinforcement projects. On March 31, 2022, the Company filed its first rate recovery request with the BPU for $25.6 million of estimated investments, including AFUDC, from November 30, 2020 through June 30, 2022.

BGSS Incentive Programs:

BGSS incentive programs contributed $6.3 million to utility gross margin in the second-quarter of fiscal 2022, compared with $2.1 million during the same period in fiscal 2021.

Fiscal 2022 year-to-date, these programs contributed $10.1 million to utility gross margin, compared with $6.7 million during the same period in fiscal 2021.

The increase in both periods was due primarily to increased margins from off-system sales, partially offset by the timing differences for storage incentives and lower capacity release volumes.

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

Energy-Efficiency Programs:

SAVEGREEN invested $24.2 million during the first six months of fiscal 2022 in energy-efficiency upgrades for their customers' homes and businesses. NJNG recovered $12.5 million of its outstanding investments during the first six months of fiscal 2022. On January 26, 2022, the BPU approved the annual SAVEGREEN filing, which will increase annual recoveries by $2.2 million, effective February 1, 2022.

Clean Energy Ventures (CEV)

CEV reported second-quarter fiscal 2022 net financial loss of $6.5 million, compared with net financial loss of $8.9 million during the same period in fiscal 2021. Fiscal 2022 year-to-date net financial loss was $13.3 million, compared with a net financial loss of $19.1 million during the same period in fiscal 2021. The improvement for both periods was due primarily to increased revenue from the sale of SRECs and higher electricity prices.

CEV now has over 680 megawatts (MW) of potential capital deployment through fiscal 2027 in projects under construction, under exclusivity or under contract. However, current policy transitions, interconnect delays, land-use constraints and supply chain issues are temporarily slowing CEV’s ability to deploy capital in the short-term and will delay our previously expected in-service timeline for fiscal year 2022.

Storage and Transportation

Storage and Transportation reported second-quarter fiscal 2022 NFE of $4.6 million, compared with NFE of $4.7 million during the same period in fiscal 2021. Fiscal 2022 year-to-date NFE were $7.6 million, compared with NFE of $8.2 million during the same period in fiscal 2021. The decrease in NFE was due primarily to lower equity in earnings of affiliates, partially offset by higher AFUDC equity at Adelphia Gateway.

Infrastructure Update:

  • Adelphia Gateway - Adelphia Gateway is an 84-mile pipeline running from Marcus Hook to Martins Creek, Pennsylvania originally built as an oil pipeline, which is now being repurposed to deliver natural gas to the Philadelphia and New Jersey markets. Adelphia Gateway is now flowing gas to its South Zone allowing for Kimberly Clark's mill in Chester, Pennsylvania to replace coal power generation with natural gas. Adelphia Gateway is now 90% complete and the project is expected to be completed by the end of the year.

Energy Services

Energy Services reported second-quarter fiscal 2022 NFE of $29.9 million, compared with NFE of $96.5 million for the same period last fiscal year. Fiscal 2022 year-to-date NFE were $47.5 million, compared with NFE of $98.0 million during the same period in fiscal 2021. The lower NFE for the second quarter of fiscal 2022 was due primarily to higher natural gas price volatility in February 2021, as a result of cold weather in regions where Energy Services had contracted rights to storage assets, offset by the recognition of revenues from the Asset Management Agreements entered into during fiscal 2021 that became effective during the first quarter of fiscal 2022.

Home Services and Other Operations

Home Services and Other Operations reported second-quarter fiscal 2022 NFE of $0.5 million compared to NFE of $0.7 million for the same period in fiscal 2021. The decrease was due to due primarily to increased O&M for the three months. Fiscal 2022 year-to-date NFE were $0.9 million, compared with NFE of $0.7 million during the same period in fiscal 2021. The increase was due primarily to higher operating income related to an increase in installation revenue.

Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile.

  • During the first six months of fiscal 2022, capital expenditures were $285.7 million, including accruals, of which $119.3 million were related to NJNG, compared with $257.6 million, of which $188.4 million were related to NJNG, during the same period in fiscal 2021.
  • During the first six months of fiscal 2022, cash flows from operations were $330.5 million, compared with cash flows from operations of $356.3 million during the same period of fiscal 2021. The decrease in operating cash flows was due primarily to the reduction in net income due to the outperformance of Energy Services in fiscal 2021.

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 2022, projected NFEPS growth rate, results of future rate cases, forecasted contribution of business segments to NJR’s NFE for fiscal 2022, customer growth at NJNG, future NJR and NJNG capital expenditures, infrastructure programs and investments such as IIP and energy efficiency programs, the ability to complete the Adelphia Gateway Pipeline project, 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 the impairment on 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 and NJR’s Form 10-Q filed on May 5, 2022.

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 7,600 miles of natural gas transportation and distribution infrastructure to serve over half a million 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 more than 370 megawatts, providing residential and commercial customers with low-carbon solutions.
  • Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.
  • Storage and Transportation serves customers from local distributors and producers to electric generators and wholesale marketers through its ownership of Leaf River and the Adelphia Gateway Pipeline Project, as well as our 50% 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 1,200 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve® and initiatives such as The SAVEGREEN Project® and The Sunlight Advantage®.

For more information about NJR:

www.njresources.com.

Follow us on Twitter @NJNaturalGas.

“Like” us on facebook.com/NewJerseyNaturalGas.

NEW JERSEY RESOURCES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 31,

 

March 31,

(Thousands, except per share data)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

OPERATING REVENUES

 

 

 

 

 

 

 

 

Utility

 

$

463,474

 

$

310,167

 

$

737,909

 

$

505,896

Nonutility

 

 

448,842

 

 

492,020

 

 

850,249

 

 

750,596

Total operating revenues

 

 

912,316

 

 

802,187

 

 

1,588,158

 

 

1,256,492

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Gas purchases

 

 

 

 

 

 

 

 

Utility

 

 

212,892

 

 

113,235

 

 

335,161

 

 

169,380

Nonutility

 

 

410,535

 

 

330,488

 

 

689,329

 

 

503,735

Related parties

 

 

1,883

 

 

1,730

 

 

3,729

 

 

3,464

Operation and maintenance

 

 

85,786

 

 

110,265

 

 

154,770

 

 

183,901

Regulatory rider expenses

 

 

30,910

 

 

18,413

 

 

47,581

 

 

29,114

Depreciation and amortization

 

 

31,435

 

 

26,848

 

 

61,828

 

 

54,210

Total operating expenses

 

 

773,441

 

 

600,979

 

 

1,292,398

 

 

943,804

OPERATING INCOME

 

 

138,875

 

 

201,208

 

 

295,760

 

 

312,688

Other income, net

 

 

4,127

 

 

5,007

 

 

8,263

 

 

9,124

Interest expense, net of capitalized interest

 

 

18,926

 

 

20,153

 

 

38,403

 

 

39,939

INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES

 

 

124,076

 

 

186,062

 

 

265,620

 

 

281,873

Income tax provision

 

 

28,810

 

 

39,057

 

 

59,617

 

 

56,498

Equity in earnings of affiliates

 

 

769

 

 

2,804

 

 

1,344

 

 

5,479

NET INCOME

 

$

96,035

 

$

149,809

 

$

207,347

 

$

230,854

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

Basic

 

$

1.00

 

$

1.56

 

$

2.16

 

$

2.40

Diluted

 

$

1.00

 

$

1.55

 

$

2.15

 

$

2.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

 

96,068

 

 

96,248

 

 

96,006

 

 

96,181

Diluted

 

 

96,516

 

 

96,618

 

 

96,480

 

 

96,598

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

 

March 31,

 

March 31,

(Thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

NEW JERSEY RESOURCES

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Net income

 

$

96,035

 

 

$

149,809

 

 

$

207,347

 

 

$

230,854

 

Add:

 

 

 

 

 

 

 

 

Unrealized loss (gain) on derivative instruments and related transactions

 

 

42,022

 

 

 

29,255

 

 

 

(40,169

)

 

 

(8,235

)

Tax effect

 

 

(9,980

)

 

 

(6,954

)

 

 

9,556

 

 

 

1,958

 

Effects of economic hedging related to natural gas inventory

 

 

1,155

 

 

 

(7,209

)

 

 

24,732

 

 

 

(14,741

)

Tax effect

 

 

(274

)

 

 

1,713

 

 

 

(5,877

)

 

 

3,503

 

Net income to NFE tax adjustment

 

 

1,248

 

 

 

3,990

 

 

 

387

 

 

 

1,922

 

Net financial earnings

 

$

130,206

 

 

$

170,604

 

 

$

195,976

 

 

$

215,261

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

Basic

 

 

96,068

 

 

 

96,248

 

 

 

96,006

 

 

 

96,181

 

Diluted

 

 

96,516

 

 

 

96,618

 

 

 

96,480

 

 

 

96,598

 

 

 

 

 

 

 

 

 

 

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

 

$

1.00

 

 

$

1.56

 

 

$

2.16

 

 

$

2.40

 

Add:

 

 

 

 

 

 

 

 

Unrealized loss (gain) on derivative instruments and related transactions

 

$

0.44

 

 

$

0.30

 

 

$

(0.42

)

 

$

(0.09

)

Tax effect

 

$

(0.10

)

 

$

(0.08

)

 

$

0.10

 

 

$

0.02

 

Effects of economic hedging related to natural gas inventory

 

$

0.01

 

 

$

(0.07

)

 

$

0.26

 

 

$

(0.15

)

Tax effect

 

$

 

 

$

0.02

 

 

$

(0.06

)

 

$

0.04

 

Net income to NFE tax adjustment

 

$

0.01

 

 

$

0.04

 

 

$

 

 

$

0.02

 

Basic NFE per share

 

$

1.36

 

 

$

1.77

 

 

$

2.04

 

 

$

2.24

 

 

 

 

 

 

 

 

 

 

NATURAL GAS DISTRIBUTION

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

463,812

 

 

$

310,167

 

 

$

738,584

 

 

$

505,896

 

Less:

 

 

 

 

 

 

 

 

Natural gas purchases

 

 

215,223

 

 

 

118,452

 

 

 

339,817

 

 

 

177,761

 

Operating and maintenance (1)

 

 

26,748

 

 

 

26,281

 

 

 

39,889

 

 

 

51,106

 

Regulatory rider expense

 

 

30,910

 

 

 

18,413

 

 

 

47,581

 

 

 

29,114

 

Depreciation and amortization

 

 

23,344

 

 

 

19,475

 

 

 

46,237

 

 

 

38,644

 

Gross margin

 

 

167,587

 

 

 

127,546

 

 

 

265,060

 

 

 

209,271

 

Add:

 

 

 

 

 

 

 

 

Operating and maintenance (1)

 

 

26,748

 

 

 

26,281

 

 

 

39,889

 

 

 

51,106

 

Depreciation and amortization

 

 

23,344

 

 

 

19,475

 

 

 

46,237

 

 

 

38,644

 

Utility gross margin

 

$

217,679

 

 

$

173,302

 

 

$

351,186

 

 

$

299,021

 

(1) Excludes selling, general and administrative expenses of $26.3 million and $26.7 million for the three months ended March 31, 2022 and 2021, respectively, and approximately $49.6 million and $45.5 million for the six months ended March 31, 2022 and 2021, respectively

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

(Unaudited)

 

March 31,

 

March 31,

(Thousands)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

ENERGY SERVICES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A reconciliation of gross margin, the closest GAAP financial measure, to Energy Services' financial margin is as follows:

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

412,645

 

 

$

462,569

 

 

$

781,889

 

 

$

692,046

 

Less:

 

 

 

 

 

 

 

 

Natural Gas purchases

 

 

411,146

 

 

 

330,280

 

 

 

689,833

 

 

 

504,117

 

Operation and maintenance (1)

 

 

3,978

 

 

 

20,924

 

 

 

7,247

 

 

 

24,608

 

Depreciation and amortization

 

 

32

 

 

 

13

 

 

 

60

 

 

 

55

 

Gross margin

 

 

(2,511

)

 

 

111,352

 

 

 

84,749

 

 

 

163,266

 

Add:

 

 

 

 

 

 

 

 

Operation and maintenance (1)

 

 

3,978

 

 

 

20,924

 

 

 

7,247

 

 

 

24,608

 

Depreciation and amortization

 

 

32

 

 

 

13

 

 

 

60

 

 

 

55

 

Unrealized loss (gain) on derivative instruments and related transactions

 

 

40,446

 

 

 

29,348

 

 

 

(45,201

)

 

 

(9,433

)

Effects of economic hedging related to natural gas inventory

 

 

1,155

 

 

 

(7,209

)

 

 

24,732

 

 

 

(14,741

)

Financial margin

 

$

43,100

 

 

$

154,428

 

 

$

71,587

 

 

$

163,755

 

(1) Excludes selling, general and administrative expenses of $0.6 million and $12.1 million for the three months ended March 31, 2022 and 2021, respectively, and approximately $1.1 million and $12.4 million for the six months ended March 31, 2022 and 2021, respectively.

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(3,031

)

 

$

75,662

 

 

$

62,713

 

 

$

114,534

 

Add:

 

 

 

 

 

 

 

 

Unrealized loss (gain) on derivative instruments and related transactions

 

 

40,446

 

 

 

29,348

 

 

 

(45,201

)

 

 

(9,433

)

Tax effect

 

 

(9,604

)

 

 

(6,976

)

 

 

10,753

 

 

 

2,243

 

Effects of economic hedging related to natural gas

 

 

1,155

 

 

 

(7,209

)

 

 

24,732

 

 

 

(14,741

)

Tax effect

 

 

(274

)

 

 

1,713

 

 

 

(5,877

)

 

 

3,503

 

Net income to NFE tax adjustment

 

 

1,248

 

 

 

3,990

 

 

 

387

 

 

 

1,922

 

Net financial earnings

 

$

29,940

 

 

$

96,528

 

 

$

47,507

 

 

$

98,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)

 

 

 

 

 

 

Three Months Ended

Six Months Ended

 

March 31,

March 31,

(Thousands, except per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NEW JERSEY RESOURCES

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

Natural Gas Distribution

$

463,812

 

$

310,167

 

$

738,584

 

$

505,896

 

Clean Energy Ventures

 

11,827

 

 

6,476

 

 

22,010

 

 

12,846

 

Energy Services

 

412,645

 

 

462,569

 

 

781,889

 

 

692,046

 

Storage and Transportation

 

13,342

 

 

13,926

 

 

25,485

 

 

27,030

 

Home Services and Other

 

13,222

 

 

12,773

 

 

27,173

 

 

25,350

 

Sub-total

 

914,848

 

 

805,911

 

 

1,595,141

 

 

1,263,168

 

Eliminations

 

(2,532

)

 

(3,724

)

 

(6,983

)

 

(6,676

)

Total

$

912,316

 

$

802,187

 

$

1,588,158

 

$

1,256,492

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

Natural Gas Distribution

$

141,311

 

$

100,876

 

$

215,494

 

$

163,788

 

Clean Energy Ventures

 

(2,696

)

 

(6,469

)

 

(6,668

)

 

(14,733

)

Energy Services

 

(3,132

)

 

99,278

 

 

83,646

 

 

150,860

 

Storage and Transportation

 

3,180

 

 

4,185

 

 

5,056

 

 

7,874

 

Home Services and Other

 

901

 

 

3,292

 

 

1,763

 

 

5,288

 

Sub-total

 

139,564

 

 

201,162

 

 

299,291

 

 

313,077

 

Eliminations

 

(689

)

 

46

 

 

(3,531

)

 

(389

)

Total

$

138,875

 

$

201,208

 

$

295,760

 

$

312,688

 

 

 

 

 

 

 

 

 

 

 

Equity in Earnings of Affiliates

 

 

 

 

Storage and Transportation

$

1,256

 

$

3,386

 

$

2,312

 

$

6,579

 

Eliminations

 

(487

)

 

(582

)

 

(968

)

 

(1,100

)

Total

$

769

 

$

2,804

 

$

1,344

 

$

5,479

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

 

 

 

Natural Gas Distribution

$

102,783

 

$

80,541

 

$

153,863

 

$

130,008

 

Clean Energy Ventures

 

(6,491

)

 

(8,872

)

 

(13,312

)

 

(19,146

)

Energy Services

 

(3,031

)

 

75,662

 

 

62,713

 

 

114,534

 

Storage and Transportation

 

4,625

 

 

4,711

 

 

7,587

 

 

8,219

 

Home Services and Other

 

451

 

 

747

 

 

898

 

 

685

 

Sub-total

 

98,337

 

 

152,789

 

 

211,749

 

 

234,300

 

Eliminations

 

(2,302

)

 

(2,980

)

 

(4,402

)

 

(3,446

)

Total

$

96,035

 

$

149,809

 

$

207,347

 

$

230,854

 

 

 

 

 

 

 

 

 

 

 

Net Financial Earnings (Loss)

 

 

 

 

Natural Gas Distribution

$

102,783

 

$

80,541

 

$

153,863

 

$

130,008

 

Clean Energy Ventures

 

(6,491

)

 

(8,872

)

 

(13,312

)

 

(19,146

)

Energy Services

 

29,940

 

 

96,528

 

 

47,507

 

 

98,028

 

Storage and Transportation

 

4,625

 

 

4,711

 

 

7,587

 

 

8,219

 

Home Services and Other

 

451

 

 

747

 

 

898

 

 

685

 

Sub-total

 

131,308

 

 

173,655

 

 

196,543

 

 

217,794

 

Eliminations

 

(1,102

)

 

(3,051

)

 

(567

)

 

(2,533

)

Total

$

130,206

 

$

170,604

 

$

195,976

 

$

215,261

 

 

 

 

 

 

 

 

 

 

 

Throughput (Bcf)

 

 

 

 

NJNG, Core Customers

 

34.0

 

 

33.5

 

 

58.6

 

 

57.9

 

NJNG, Off System/Capacity Management

 

24.0

 

 

23.6

 

 

49.1

 

 

49.5

 

Energy Services Fuel Mgmt. and Wholesale Sales

 

76.7

 

 

112.7

 

 

140.2

 

 

217.5

 

Total

 

134.7

 

 

169.8

 

 

247.9

 

 

324.9

 

 

 

 

 

 

 

 

 

 

 

Common Stock Data

 

 

 

 

Yield at March 31

 

3.1

%

 

3.3

%

 

3.1

%

 

3.3

%

Market Price at March 31

$

46.66

 

$

39.87

 

$

46.66

 

$

39.87

 

Shares Out. at March 31

 

96,082

 

 

96,262

 

 

96,082

 

 

96,262

 

Market Cap. at March 31

$

4,482,696

 

$

3,837,967

 

$

4,482,696

 

$

3,837,967

 

 

 

 

 

 

 

Three Months Ended

Six Months Ended

(Unaudited)

March 31,

March 31,

(Thousands, except customer and weather data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NATURAL GAS DISTRIBUTION

 

 

 

 

 

 

 

 

 

Utility Gross Margin

 

 

 

 

Operating revenues

$

463,812

 

$

310,167

 

$

738,584

 

$

505,896

 

Less:

 

 

 

 

Natural gas purchases

 

215,223

 

 

118,452

 

 

339,817

 

 

177,761

 

Operating and maintenance (1)

 

26,748

 

 

26,281

 

 

39,889

 

 

51,106

 

Regulatory rider expense

 

30,910

 

 

18,413

 

 

47,581

 

 

29,114

 

Depreciation and amortization

 

23,344

 

 

19,475

 

 

46,237

 

 

38,644

 

Gross margin

 

167,587

 

 

127,546

 

 

265,060

 

 

209,271

 

Add:

 

 

 

 

Operating and maintenance (1)

 

26,748

 

 

26,281

 

 

39,889

 

 

51,106

 

Depreciation and amortization

 

23,344

 

 

19,475

 

 

46,237

 

 

38,644

 

Total Utility Gross Margin

$

217,679

 

$

173,302

 

$

351,186

 

$

299,021

 

(1) Excludes selling, general and administrative expenses of $26.3 million and $26.7 million for the three months ended March 31, 2022 and 2021, respectively, and approximately $49.6 million and $45.5 million for the six months ended March 31, 2022 and 2021, respectively

 

 

 

 

 

Utility Gross Margin, Operating Income and Net Income

 

 

 

 

Residential

$

155,514

 

$

124,468

 

$

248,119

 

$

210,443

 

Commercial, Industrial & Other

 

30,120

 

 

23,050

 

 

49,222

 

 

40,090

 

Firm Transportation

 

25,090

 

 

22,878

 

 

42,372

 

 

40,166

 

Total Firm Margin

 

210,724

 

 

170,396

 

 

339,713

 

 

290,699

 

Interruptible

 

606

 

 

792

 

 

1,360

 

 

1,630

 

Total System Margin

 

211,330

 

 

171,188

 

 

341,073

 

 

292,329

 

Off System/Capacity Management/FRM/Storage Incentive

 

6,349

 

 

2,114

 

 

10,113

 

 

6,692

 

Total Utility Gross Margin

 

217,679

 

 

173,302

 

 

351,186

 

 

299,021

 

Operation and maintenance expense

 

53,024

 

 

52,951

 

 

89,455

 

 

96,589

 

Depreciation and amortization

 

23,344

 

 

19,475

 

 

46,237

 

 

38,644

 

Operating Income

$

141,311

 

$

100,876

 

$

215,494

 

$

163,788

 

 

 

 

 

 

Net Income

$

102,783

 

$

80,541

 

$

153,863

 

$

130,008

 

 

 

 

 

 

Net Financial Earnings

$

102,783

 

$

80,541

 

$

153,863

 

$

130,008

 

 

 

 

 

 

Throughput (Bcf)

 

 

 

 

Residential

 

23.0

 

 

22.7

 

 

35.6

 

 

36.3

 

Commercial, Industrial & Other

 

4.3

 

 

4.3

 

 

6.6

 

 

6.7

 

Firm Transportation

 

5.6

 

 

5.7

 

 

9.2

 

 

9.6

 

Total Firm Throughput

 

32.9

 

 

32.7

 

 

51.4

 

 

52.6

 

Interruptible

 

1.1

 

 

0.8

 

 

7.2

 

 

5.3

 

Total System Throughput

 

34.0

 

 

33.5

 

 

58.6

 

 

57.9

 

Off System/Capacity Management

 

24.0

 

 

23.6

 

 

49.1

 

 

49.5

 

Total Throughput

 

58.0

 

 

57.1

 

 

107.7

 

 

107.4

 

 

 

 

 

 

Customers

 

 

 

 

Residential

 

508,729

 

 

498,583

 

 

508,729

 

 

498,583

 

Commercial, Industrial & Other

 

32,116

 

 

31,313

 

 

32,116

 

 

31,313

 

Firm Transportation

 

27,226

 

 

31,545

 

 

27,226

 

 

31,545

 

Total Firm Customers

 

568,071

 

 

561,441

 

 

568,071

 

 

561,441

 

Interruptible

 

31

 

 

28

 

 

31

 

 

28

 

Total System Customers

 

568,102

 

 

561,469

 

 

568,102

 

 

561,469

 

Off System/Capacity Management*

 

22

 

 

17

 

 

22

 

 

17

 

Total Customers

 

568,124

 

 

561,486

 

 

568,124

 

 

561,486

 

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

 

 

Degree Days

 

 

 

 

Actual

 

2,371

 

 

2,355

 

 

3,645

 

 

3,773

 

Normal

 

2,444

 

 

2,456

 

 

3,994

 

 

4,031

 

Percent of Normal

 

97.0

%

 

95.9

%

 

91.3

%

 

93.6

%

 

 

 

 

 

 

Three Months Ended

Six Months Ended

(Unaudited)

March 31,

March 31,

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

 

2022

 

 

2021

 

 

2022

 

 

2021

 

CLEAN ENERGY VENTURES

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

SREC sales

$

3,962

 

$

777

 

$

6,829

 

$

2,069

 

TREC sales

 

1,019

 

 

817

 

 

1,865

 

 

1,507

 

Solar electricity sales and other

 

4,057

 

 

2,268

 

 

7,711

 

 

3,988

 

Sunlight Advantage

 

2,789

 

 

2,614

 

 

5,605

 

 

5,282

 

Total Operating Revenues

$

11,827

 

$

6,476

 

$

22,010

 

$

12,846

 

 

 

 

 

 

Depreciation and Amortization

$

5,311

 

$

4,685

 

$

10,544

 

$

10,118

 

 

 

 

 

 

Operating (Loss)

$

(2,696

)

$

(6,469

)

$

(6,668

)

$

(14,733

)

 

 

 

 

 

Income Tax (Benefit)

$

(1,952

)

$

(2,714

)

$

(3,998

)

$

(5,800

)

 

 

 

 

 

Net (Loss)

$

(6,491

)

$

(8,872

)

$

(13,312

)

$

(19,146

)

 

 

 

 

 

Net Financial (Loss)

$

(6,491

)

$

(8,872

)

$

(13,312

)

$

(19,146

)

 

 

 

 

 

Solar Renewable Energy Certificates Generated

 

65,730

 

 

53,863

 

 

157,902

 

 

141,071

 

 

 

 

 

 

Solar Renewable Energy Certificates Sold

 

20,000

 

 

3,400

 

 

32,200

 

 

9,495

 

 

 

 

 

 

Transition Renewable Energy Certificates Generated

 

7,176

 

 

5,627

 

 

13,261

 

 

10,310

 

 

 

 

 

 

Solar Megawatts Under Construction

 

67.7

 

 

12.4

 

 

67.7

 

 

12.4

 

 

 

 

 

 

ENERGY SERVICES

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

Operating revenues

$

412,645

 

$

462,569

 

$

781,889

 

$

692,046

 

Less:

 

 

 

 

Gas purchases

 

411,146

 

 

330,280

 

 

689,833

 

 

504,117

 

Operation and maintenance expense

 

4,599

 

 

32,998

 

 

8,350

 

 

37,014

 

Depreciation and amortization

 

32

 

 

13

 

 

60

 

 

55

 

Total Operating (Loss) Income

$

(3,132

)

$

99,278

 

$

83,646

 

$

150,860

 

 

 

 

 

 

Net (Loss) Income

$

(3,031

)

$

75,662

 

$

62,713

 

$

114,534

 

 

 

 

 

 

Financial Margin

$

43,100

 

$

154,428

 

$

71,587

 

$

163,755

 

 

 

 

 

 

Net Financial Earnings

$

29,940

 

$

96,528

 

$

47,507

 

$

98,028

 

 

 

 

 

 

Gas Sold and Managed (Bcf)

 

76.7

 

 

112.7

 

 

140.2

 

 

217.5

 

 

 

 

 

 

STORAGE AND TRANSPORTATION

 

 

 

 

 

 

 

 

 

Operating Revenues

$

13,342

 

$

13,926

 

$

25,485

 

$

27,030

 

 

 

 

 

 

Equity in Earnings of Affiliates

$

1,256

 

$

3,386

 

$

2,312

 

$

6,579

 

 

 

 

 

 

Operation and Maintenance Expense

$

7,254

 

$

7,139

 

$

14,684

 

$

13,681

 

 

 

 

 

 

Other Income, Net

$

2,750

 

$

1,591

 

$

5,259

 

$

2,845

 

 

 

 

 

 

Interest Expense

$

1,847

 

$

3,578

 

$

3,983

 

$

7,560

 

 

 

 

 

 

Income Tax Provision

$

714

 

$

873

 

$

1,057

 

$

1,519

 

 

 

 

 

 

Net Income

$

4,625

 

$

4,711

 

$

7,587

 

$

8,219

 

 

 

 

 

 

Net Financial Earnings

$

4,625

 

$

4,711

 

$

7,587

 

$

8,219

 

 

 

 

 

 

HOME SERVICES AND OTHER

 

 

 

 

 

 

 

 

 

Operating Revenues

$

13,222

 

$

12,773

 

$

27,173

 

$

25,350

 

 

 

 

 

 

Operating Income

$

901

 

$

3,292

 

$

1,763

 

$

5,288

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

451

 

$

747

 

$

898

 

$

685

 

 

 

 

 

 

Net Financial Earnings

$

451

 

$

747

 

$

898

 

$

685

 

 

 

 

 

 

Total Service Contract Customers at March 31

 

105,022

 

 

106,471

 

 

105,022

 

 

106,471

 

 

 

 

 

 

 

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