New Jersey Resources (NYSE:NJR) today reported results for the
first quarter of fiscal 2017 and reaffirmed net financial earnings
(NFE) guidance for fiscal 2017 of $1.65 to $1.75 per share.
Net income for the first quarter of fiscal 2017 totaled $34.9
million, or $.41 per share, compared with $50.3 million, or $.59
per share, during the same period in fiscal 2016. First-quarter
fiscal 2017 NFE totaled $40.4 million, or $.47 per share, compared
with $51.3 million, or $.60 per share, during the first quarter of
fiscal 2016.
“Our results for the first quarter were consistent with our
expectations, and we are confident in our ability to achieve our
fiscal 2017 earnings guidance,” said Laurence M. Downes, chairman
and CEO of New Jersey Resources. “Our outlook is supported by our
new base rates, continued customer growth and our growing portfolio
of clean energy assets that will allow us to deliver expected
performance this year.”
A reconciliation of net income to NFE for the first quarter of
fiscal years 2017 and 2016 is provided below.
Three Months Ended December 31, (Thousands)
2016 2015
Net income $ 34,929
$ 50,282 Add: Unrealized loss (gain) on derivative
instruments and related transactions
28,302 (1,135 )
Tax effect
(9,757 ) 413 Effects of economic hedging related to
natural gas inventory
(17,939 ) 3,813 Tax effect
6,204 (1,385 ) Net income to NFE tax adjustment
(1,356 ) (721 )
Net financial earnings
$ 40,383 $ 51,267
Weighted
Average Shares Outstanding Basic
86,084 85,675 Diluted
86,855 86,676
Basic earnings per
share $ 0.41 $ 0.59 Add: Unrealized loss (gain)
on derivative instruments and related transactions
0.33
(0.01 )
Tax effect
(0.11 ) 0.01 Effects of economic hedging related to
natural gas inventory
(0.21 ) 0.04 Tax effect
0.07 (0.02 ) Net income to NFE tax adjustment
(0.02
) (0.01 )
Basic NFE per share $ 0.47
$ 0.60
NFE is a financial measure not calculated in accordance with
generally accepted accounting principles (GAAP) of the United
States as it excludes all unrealized, and certain realized, gains
and losses associated with derivative instruments, net of
applicable tax adjustments. For further discussion of this
financial measure, please see the explanation below under “Non-GAAP
Financial Information.”
A table detailing NFE for the three months ended December 31 of
fiscal years 2017 and 2016 is provided below.
Three Months Ended
December 31, (Thousands)
2016 2015
Net Financial Earnings New
Jersey Natural Gas
$ 30,348 $ 30,926 NJR Energy
Services
3,487 10,304 NJR Clean Energy Ventures
2,842
7,652 NJR Midstream
2,387 2,344 NJR Home Services and Other
1,542 259
Sub-total 40,606
51,485 Eliminations
(223 ) (218 )
Total
$ 40,383 $ 51,267
- NJR Reaffirms Fiscal 2017 NFE
Guidance
NJR reaffirmed fiscal 2017 NFE guidance of $1.65 to $1.75 per
share, subject to the risks and uncertainties identified below
under “Forward-Looking Statements.” In providing fiscal 2017 NFE
guidance, management is aware there could be differences between
reported GAAP earnings and NFE due to matters such as, but not
limited to, the positions of our energy-related derivatives.
Management is not able to reasonably estimate the aggregate impact
of these items on reported earnings and, therefore, is not able to
provide a reconciliation to the corresponding GAAP equivalent for
its operating earnings guidance without unreasonable efforts.
NJR expects its regulated businesses to generate between 60 to
75 percent of total NFE, with New Jersey Natural Gas (NJNG)
continuing to be the largest contributor. The following chart
represents NJR’s current expected contributions from its
subsidiaries for fiscal 2017:
Company Expected Fiscal
2017Net Financial Earnings Contribution New Jersey
Natural Gas 55 to 65 percent NJR Midstream
5 to 10 percent
Total Regulated 60
to 75 percent NJR Clean Energy Ventures 15 to 25
percent NJR Energy Services 5 to 15 percent NJR Home
Services 1 to 3 percent
- New Jersey Natural Gas Reports
Steady Performance; Expects Solid Year-Over-Year Growth
NJNG, the company’s regulated utility, reported first-quarter
fiscal 2017 NFE of $30.3 million, compared with $30.9 million
during the same period in fiscal 2016. The modestly lower results
were driven primarily by lower Basic Gas Service Supply (BGSS)
incentive margin and higher operating and maintenance expenses,
which were mostly offset by increases in utility gross margin from
higher base rates and customer growth.
Through our Conservation Incentive Program (CIP) rate mechanism,
which insulates the company from declines in utility gross margin
related to weather and customer usage, NJNG earns gross margin on
the basis of throughput. As such, approximately 65 percent of
utility firm gross margin is earned during the heating season of
November through March. NJNG generated 28 percent of its utility
gross margin during the first quarter. NJNG typically earns
approximately 42 percent of its utility gross margin during the
second fiscal quarter. As a result, the majority of the benefit of
the base rate case will be realized in the second fiscal
quarter.
For fiscal 2017, using the midpoint of our guidance range for
NJNG, compared with the prior year’s financial results, we expect
to achieve year-over-year NFE growth of approximately 10 to 15
percent.
During the first quarter of fiscal 2017, NJNG added 1,866 new
customers compared with 2,046 during the same period of fiscal
2016. The slightly lower customer additions, compared with the
prior year, reflects timing associated with adding planned
residential conversion customers. For fiscal 2017, NJNG plans to
invest $33.3 million to add 8,300 new and conversion customers, who
are expected to contribute approximately $5 million annually to
utility gross margin.
NJNG expects to invest between $100 million to $110 million to
add a total of 24,000 to 27,000 new customers between fiscal 2017
and 2019, representing an annual new customer growth rate of
approximately 1.6 percent and an increase in utility gross margin
of approximately $15 million. For more information on utility gross
margin, please see “Non-GAAP Financial Information” below.
Safety Acceleration and Facilities Enhancement (SAFE) Program
II
During the first quarter of fiscal 2017, NJNG invested $8.6
million in SAFE II, a five-year program designed to replace the
remaining 276 miles of unprotected steel main and associated
services in its distribution system. As part of this program, NJNG
will earn an Allowance for Funds Used During Construction rate on
its invested capital during construction, and request rate
increases for the approved $157.5 million of SAFE II spending in
annual filings, which is consistent with the company’s other
regulatory programs. As a condition of the New Jersey Board of
Public Utilities’ (BPU) approval, NJNG is required to file a base
rate case no later than November 2019.
New Jersey Reinvestment in System Enhancement (NJ RISE)
Program
NJ RISE, a five-year, $102.5 million investment, consists of six
capital projects that will strengthen the overall safety,
reliability and resiliency of NJNG’s natural gas distribution
systems and improve its service disruption response. Since the
inception of NJ RISE in 2014, NJNG has invested $19 million in the
program, including those expenditures made during the first quarter
of fiscal 2017. These system enhancements are designed to help
reduce the impact of future major weather events and align with New
Jersey’s directive for improved energy resiliency and
preparedness.
As part of the six capital projects, NJNG has installed nearly
7,600 of an expected 35,000 excess flow valves in storm-prone areas
of its service territory to date. These valves restrict the flow of
natural gas when there is a change in pressure on the service line.
In addition, construction of a secondary feed into Sea Bright is
expected to be completed in fiscal 2017. The remaining four
projects are in the design and/or permitting phases with all
projects scheduled for completion by fiscal 2019.
Southern Reliability Link (SRL)
The SRL, approved by the BPU in Board Orders issued in January
and March 2016, continues to progress through the permitting
process. The 30-mile transmission pipeline project will serve as a
second major feed into NJNG’s system to support the safe, reliable
delivery of natural gas to our customers. The SRL will diversify
NJNG’s supplier base and strengthen overall system resiliency,
benefiting over one million people in Ocean, Monmouth and
Burlington counties.
- The SAVEGREEN Project®
(SAVEGREEN) Saves Customers Energy and Money
In the first quarter of fiscal 2017, SAVEGREEN, NJNG’s
energy-efficiency program, invested $3.7 million in grants and
financing options to help customers make affordable upgrades to
high-efficiency natural gas equipment. Since its inception in 2009,
NJNG has invested $140.3 million in SAVEGREEN, helping more than
46,000 NJNG customers reduce energy consumption and lower their
bills. The program runs through December 31, 2018 and directly
supports New Jersey’s Energy Master Plan. In addition, SAVEGREEN
has generated over $345 million in economic activity by working
with the more than 2,500 contractors who have participated in the
project.
Over the life of the program, NJNG has approval to invest nearly
$220 million in SAVEGREEN and is authorized to earn an overall
return on its investments, ranging from 6.69 to 7.76 percent, with
a return on equity (ROE) that ranges from 9.75 to 10.3 percent. The
recovery period varies from two to 10 years, depending on the type
of investment.
- Basic Gas Supply Service Incentive
Programs Contribute to Earnings
In the first quarter of fiscal 2017, NJNG’s gross margin-sharing
BGSS incentive programs, which include off-system sales, capacity
release and storage incentives, contributed $3.8 million to utility
gross margin, compared with $4.5 million during the same period in
fiscal 2016. The lower results were due to a decrease in the value
of capacity and lower volumes associated with the capacity release
program, compared with the previous year.
NJNG shares the utility gross margin earned from these incentive
programs with customers and shareowners, following formula
authorized by the BPU. Since their inception in 1992, these
incentive programs have saved customers approximately $894 million
and added an average of $.05 per share annually.
- NJR Energy Services Annual Results
Expected Within Guidance Range
NJR Energy Services (NJRES), NJR’s wholesale energy services
provider, reported first-quarter fiscal 2017 NFE of $3.5 million,
compared with $10.3 million during the same period in fiscal 2016.
The weather in the first quarter of fiscal 2017 was approximately 6
percent warmer than normal, which combined with the timing of
hedges, led to the quarter-over-quarter decline.
We remain confident that NJRES will contribute to NFE within its
fiscal 2017 guidance range.
- NJR Clean Energy Ventures
Contributes to Earnings; Strong Demand for Residential Solar
Continues
NJR Clean Energy Ventures (NJRCEV), the unregulated clean energy
subsidiary of NJR, reported NFE of $2.8 million in the first
quarter of fiscal 2017 compared with $7.7 million during the same
period in fiscal 2016. The results for the quarter reflect higher
depreciation and interest expense, as well as the timing of tax
credits recognized compared with the same period last year. A
further discussion of tax credits, which is the largest contributor
to the decline, and NJR’s effective tax rate are provided
below.
NJRCEV expects solar-related capital expenditures for investment
tax credit (ITC) eligible projects during fiscal 2017 to be between
$90 million and $110 million, compared with $85.6 million
ITC-eligible projects during fiscal 2016. The higher level of solar
capital investment will deliver increased ITCs for fiscal 2017.
Importantly, nearly all of the solar renewable energy credit
(SREC) sales in fiscal 2017 from our in-service solar facilities
are hedged. NJRCEV expects fiscal 2017 revenue from SREC sales to
be 17 percent higher, compared with fiscal 2016.
Taken together, our increasing number of SRECs, tax credits,
hedging strategy and earnings from wind investments, support our
belief that NJRCEV will perform within the expected guidance range
for fiscal 2017, representing year-over-year growth of
approximately 5 to 10 percent.
NJRCEV’s commercial solar capital expenditures for fiscal 2017
are fully committed and construction has begun on a series of new
commercial solar projects for the Brick Township Board of Education
in Ocean County, New Jersey. In total, the $6.6 million investment
represents 2.5 megawatts (MWs) of capacity and is expected to be
completed in the summer of 2017. Additionally, three new commercial
projects, totaling 24.4 MW, are planned for completion during
fiscal 2017.
Demand remains strong for NJRCEV’s residential solar program.
The Sunlight Advantage® added 314 residential customers during the
first three months of fiscal 2017, totaling 2.8 MWs of capacity,
compared with 84 customers and 0.7 MWs of capacity during the same
period in fiscal 2016. The Sunlight Advantage currently provides
savings to approximately 5,400 eligible homeowners through both
roof- and ground-mounted solar systems, with no upfront
installation or maintenance costs. NJRCEV plans to invest $35.4
million in residential solar systems in fiscal 2017, compared with
$34.3 million in fiscal 2016.
- Ringer Hill Wind Farm
Completed
Construction was completed at the Ringer Hill Wind Farm in
December 2016. NJRCEV invested $88.9 million to construct, own and
operate the Somerset County, Pennsylvania wind farm, which consists
of 14 General Electric turbines, with a total capacity of 39.9 MWs.
The majority of the energy produced is hedged under a 15-year
agreement. We expect to earn a total return of approximately 15
percent on this investment. NJRCEV’s onshore wind capacity now
totals 126.6 MWs.
- Steady NJR Midstream
Results
NJR Midstream, the company’s natural gas midstream asset
segment, reported NFE of $2.4 million in the first quarter of
fiscal 2017, compared with $2.3 million during the same period in
fiscal 2016. These results were due primarily to slightly higher
dividend income from its investment in Dominion Midstream Partners,
LP (NYSE: DM), a master limited partnership that owns several
Federal Energy Regulatory Commission (FERC)-regulated assets.
NJR Midstream’s investments include its 50 percent equity
ownership in Steckman Ridge, jointly owned with Spectra Energy, as
well as a 20 percent interest in the proposed PennEast Pipeline.
This 120-mile pipeline is designed to bring lower cost natural gas
produced in the Marcellus Shale region to homes and businesses in
Pennsylvania and New Jersey, and provide greater system reliability
for local utilities. PennEast filed a formal application with FERC
in the fourth quarter of fiscal 2015 and currently estimates the
system will be in service by the first quarter of fiscal 2019.
Based on FERC’s most recent schedule for the completion of the
final Environmental Impact Statement (EIS) for PennEast, FERC has
scheduled the Notice of Availability of the final EIS for April 7,
2017, and the 90-day Federal Authorization Decision Deadline for
July 7, 2017.
- NJR Home Services Reports
Results
NJR Home Services (NJRHS), the company’s unregulated retail and
appliance service subsidiary, reported a net financial loss of
$848,000 in the first quarter of fiscal 2017, compared with a net
financial loss of $443,000 during the same period in fiscal 2016.
Net financial losses are typical for NJRHS during the first six
months of the fiscal year due to the timing of service contract
revenue recognition.
NJRHS offers home comfort solutions including service contracts
for heating and cooling systems, HVAC installations, plumbing and
electrical services, standby generators and solar lease and
purchase plans. NJRHS’ service territory includes Monmouth, Ocean,
Middlesex, Morris, Sussex, Warren and Hunterdon counties in New
Jersey.
- Tax Credits and NJR’s Effective Tax
Rate
NJR’s effective tax rate is significantly impacted by the amount
of tax credits that are forecasted to be earned during the fiscal
year. GAAP requires NJR to estimate its annual effective tax rate
and use this rate to calculate its year-to-date tax provision.
Based on projects completed in the first quarter, NJRCEV’s forecast
of projects to be completed for the balance of the fiscal year and
related ITCs, as well as projected GAAP pre-tax income for the
year, NJR’s estimated annual effective tax rate is 8.7 percent,
compared with 14.7 percent during the same period the previous
year. Accordingly, $7.4 million related to tax credits, net of
deferred taxes, were recognized in the first quarter of fiscal
2017, compared with $10.1 million, net of deferred taxes, in the
same period last year.
For NFE purposes, the effective tax rate for fiscal 2017 is
estimated at 14.7 percent and $7.1 million of tax credits were
recognized in the first fiscal quarter, compared with $9.6 million
last year. For a further discussion of this tax adjustment and
reconciliation to the most comparable GAAP measure, please see the
explanation below under “Non-GAAP Financial Information.”
The estimated effective tax rate is based on information and
assumptions that are subject to change, and may have a material
impact on quarterly and annual NFE. Factors considered by
management in estimating completion of projects during the fiscal
year include, but are not limited to, board of directors’ approval,
regulatory approval, execution of various contracts, including
power purchase agreements, construction logistics, permitting and
interconnection completion. See the “Forward-Looking Statements”
section of this news release for further information regarding the
inherent risks associated with solar investments.
Webcast Information
NJR will host a live webcast to discuss its financial results
today at 10 a.m. EST. A few minutes prior to the webcast, go to
njresources.com and select “Investor Relations,” then scroll down
to the “Events & Presentations” section and click on the
webcast link.
Forward-Looking
Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
Section 21E of the Securities Exchange Act of 1934, as amended, and
the Private Securities Litigation Reform Act of 1995. New
Jersey Resources (NJR or the Company) cautions readers that the
assumptions forming the basis for forward-looking statements
include many factors that are beyond NJR’s ability to control or
estimate precisely, such as estimates of future market conditions
and the behavior of other market participants. Words such as
“anticipates,” “estimates,” “expects,” “projects,” “may,” “will,”
“intends,” “plans,” “believes,” “should” and similar expressions
may identify forward-looking statements and such forward-looking
statements are made based upon management’s current expectations,
assumptions and beliefs as of this date concerning future
developments and their potential effect upon NJR. There can be no
assurance that future developments will be in accordance with
management’s expectations, assumptions and beliefs or that the
effect of future developments on NJR will be those anticipated by
management. Forward-looking statements in this release include, but
are not limited to, certain statements regarding NJR’s NFE guidance
for fiscal 2017, forecasted contribution of business segments to
fiscal 2017 NFE, future NJNG customer growth, future NJNG capital
expenditures and infrastructure investments, NJRCEV’s onshore wind
and solar investments, the results of future base rate cases,
earnings growth, and the PennEast Pipeline project.
The factors that could cause actual results to differ materially
from NJR’s expectations include, but are not limited to, weather
and economic conditions; demographic changes in NJR’s service
territory and their effect on NJR’s customer growth; volatility of
natural gas and other commodity prices and their impact on NJNG
customer usage, NJNG’s BGSS incentive programs, NJRES operations
and on our risk management efforts; changes in rating agency
requirements and/or credit ratings and their effect on availability
and cost of capital to our Company; the impact of volatility in the
credit markets on our access to capital; the ability to comply with
debt covenants; the impact to the asset values and resulting higher
costs and funding obligations of our pension and postemployment
benefit plans as a result of potential downturns in the financial
markets, lower discount rates, revised actuarial assumptions or
impacts associated with the Patient Protection and Affordable Care
Act; accounting effects and other risks associated with hedging
activities and use of derivatives contracts; commercial and
wholesale credit risks, including the availability of creditworthy
customers and counterparties, and liquidity in the wholesale energy
trading market; the ability to obtain governmental and regulatory
approvals such as the PennEast Pipeline project, land-use rights,
electric grid connection (in the case of clean energy projects)
and/or financing for the construction, development and operation of
our unregulated energy investments and NJNG’s infrastructure
projects in a timely manner; risks associated with the management
of our joint ventures and partnerships, and investment in a master
limited partnership; risks associated with our investments in clean
energy projects, including the availability of regulatory and tax
incentives, the availability of viable projects, our eligibility
for ITCs and PTCs, the future market for Solar Renewable Energy
Credits (SRECs) and electricity prices, and operational risks
related to projects in service; timing of qualifying for ITCs and
PTCs due to delays or failures to complete planned solar and wind
energy projects and the resulting effect on our effective tax rate
and earnings; the level and rate at which NJNG’s costs and expenses
are incurred and the extent to which they are allowed to be
recovered from customers through the regulatory process, including
through future base rate case filings; access to adequate supplies
of natural gas and dependence on third-party storage and
transportation facilities for natural gas supply; operating risks
incidental to handling, storing, transporting and providing
customers with natural gas; risks related to our employee
workforce; the regulatory and pricing policies of federal and state
regulatory agencies; the costs of compliance with present and
future environmental laws, including potential climate
change-related legislation; the impact of a disallowance of
recovery of environmental-related expenditures and other regulatory
changes; environmental-related and other litigation and other
uncertainties; risks related to cyber-attack or failure of
information technology systems; and the impact of natural
disasters, terrorist activities and other extreme events on our
operations and customers. The aforementioned factors are detailed
in the “Risk Factors” sections of our Form 10-K that we filed
with the Securities and Exchange Commission (SEC) on November 22,
2016, which is available on the SEC’s website at sec.gov.
Information included in this release is representative as of today
only, and while NJR periodically reassesses material trends and
uncertainties affecting NJR’s results of operations and financial
condition in connection with its preparation of management’s
discussion and analysis of results of operations and financial
condition contained in its Quarterly and Annual Reports filed with
the SEC, NJR does not, by including this statement, assume any
obligation to review or revise any particular forward-looking
statement referenced herein in light of future events.
Non-GAAP Financial
Information
This news release includes the non-GAAP financial measures NFE
(losses), financial margin and utility gross margin. A
reconciliation of these non-GAAP financial measures to the most
directly comparable financial measures calculated and reported in
accordance with GAAP can be found below. As an indicator of the
NJR’s operating performance, these measures should not be
considered an alternative to, or more meaningful than, net income
or operating revenues as determined in accordance with GAAP. This
information has been provided pursuant to the requirements of SEC
Regulation G.
NFE (losses) and financial margin exclude unrealized gains or
losses on derivative instruments related to the company’s
unregulated subsidiaries and certain realized gains and losses on
derivative instruments related to natural gas that has been placed
into storage at NJRES, net of applicable tax adjustments as
described below. Volatility associated with the change in value of
these financial instruments and physical commodity contracts is
reported on the income statement in the current period. In order to
manage its business, NJR views its results without the impacts of
the unrealized gains and losses, and certain realized gains and
losses, caused by changes in value of these financial instruments
and physical commodity contracts prior to the completion of the
planned transaction because it shows changes in value currently
instead of when the planned transaction ultimately is settled. An
annual estimated effective tax rate is calculated for NFE purposes
and any necessary quarterly tax adjustment is applied to NJRCEV, as
such adjustment is related to tax credits generated by NJRCEV.
NJNG’s utility gross margin represents the results of revenues
less natural gas costs, sales, expenses and other taxes and
regulatory rider expenses, which are key components of NJR’s
operations that move in relation to each other. Natural gas costs,
sales, expenses and other taxes and regulatory rider expenses are
passed through to customers and, therefore, have no effect on gross
margin. Management uses these non-GAAP financial measures as
supplemental measures to other GAAP results to provide a more
complete understanding of NJR’s performance. Management believes
these non-GAAP financial measures are more reflective of NJR’s
business model, provide transparency to investors and enable
period-to-period comparability of financial performance. A
reconciliation of all non-GAAP financial measures to the most
directly comparable financial measures calculated and reported in
accordance with GAAP, can be found below. For a full discussion of
NJR’s non-GAAP financial measures, please see NJR’s 2016 Form 10-K,
Item 7.
About New Jersey
Resources
New Jersey Resources (NYSE: NJR) is a Fortune 1000
company that, through its subsidiaries, provides safe and reliable
natural gas and clean energy services, including transportation,
distribution, asset management and home services. NJR is comprised
of five primary businesses:
- New Jersey Natural Gas, NJR’s
principal subsidiary, operates and maintains over 7,300 miles of
natural gas transportation and distribution infrastructure to serve
over half a million customers in New Jersey’s Monmouth, Ocean and
parts of Burlington, Morris and Middlesex counties.
- NJR Energy Services manages a
diversified portfolio of natural gas transportation and storage
assets and provides physical natural gas services and customized
energy solutions to its customers across North America.
- NJR Clean Energy Ventures
invests in, owns and operates solar and onshore wind projects with
a total capacity of nearly 280 megawatts, providing residential and
commercial customers with low-carbon solutions.
- NJR Midstream serves customers
from local distributors and producers to electric generators and
wholesale marketers through its 50 percent equity ownership in the
Steckman Ridge natural gas storage facility and its stake in
Dominion Midstream Partners, L.P., as well as its 20 percent equity
interest in the PennEast Pipeline Project.
- NJR Home Services provides
service contracts as well as heating, central air conditioning,
water heaters, standby generators, solar and other indoor and
outdoor comfort products to residential homes throughout New
Jersey.
NJR and its more than 1,000 employees are committed to helping
customers save energy and money by promoting conservation and
encouraging efficiency through Conserve to Preserve® and
initiatives such as The SAVEGREEN Project® and The Sunlight
Advantage®.
For more information about NJR:
Visit www.njresources.com.
Follow us on Twitter @NJNaturalGas.
“Like” us on
facebook.com/NewJerseyNaturalGas.
Download our free NJR investor relations app
for iPad, iPhone and Android.
NJR-E
NEW JERSEY RESOURCES
CONSOLIDATED STATEMENTS OF OPERATIONS Three
Months Ended December 31, (Thousands, except per share
data)
2016 2015
OPERATING REVENUES Utility
$
185,556 $ 151,606 Nonutility
355,472 292,652
Total operating revenues
541,028 444,258
OPERATING
EXPENSES Gas purchases Utility
61,320 46,665 Nonutility
337,932 254,088 Related parties
2,111 2,074 Operation
and maintenance
52,228 46,233 Regulatory rider expenses
12,601 9,628 Depreciation and amortization
19,260
16,482 Energy and other taxes
14,101 9,637 Total
operating expenses
499,553 384,807
OPERATING
INCOME 41,475 59,451 Other income, net
3,776
1,924 Interest expense, net
10,615 6,777
INCOME
BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES
34,636 54,598 Income tax provision
2,018 6,722 Equity
in earnings of affiliates
2,311 2,406
NET
INCOME $ 34,929 $ 50,282
EARNINGS PER COMMON SHARE Basic
$ 0.41 $ 0.59
Diluted
$ 0.40 $ 0.58
DIVIDENDS
DECLARED PER COMMON SHARE $ 0.255 $ 0.240
AVERAGE SHARES OUTSTANDING Basic
86,084 85,675
Diluted
86,855 86,676
RECONCILIATION
OF NON-GAAP PERFORMANCE MEASURES Three Months
Ended December 31, (Thousands)
2016
2015
NEW JERSEY RESOURCES
A reconciliation of net income, the
closest GAAP financial measurement,
to net financial earnings, is as
follows:
Net income
$ 34,929 $ 50,282 Add: Unrealized
loss (gain) on derivative instruments and related transactions
28,302 (1,135 ) Tax effect
(9,757 ) 413
Effects of economic hedging related to natural gas inventory
(17,939 ) 3,813 Tax effect
6,204 (1,385 ) Net
income to NFE tax adjustment
(1,356 ) (721 )
Net
financial earnings $ 40,383 $ 51,267
Weighted Average Shares Outstanding Basic
86,084 85,675 Diluted
86,855 86,676
A reconciliation of basic earnings per
share, the closest GAAP financial measurement,
to basic net financial earnings per
share, is as follows:
Basic earnings per share $ 0.41 $ 0.59
Add: Unrealized loss (gain) on derivative instruments and related
transactions
$ 0.33 $ (0.01 ) Tax effect
$
(0.11 ) $ 0.01 Effects of economic hedging related to
natural gas inventory
$ (0.21 ) $ 0.04 Tax
effect
$ 0.07 $ (0.02 ) Net income to NFE tax
adjustment
$ (0.02 ) $ (0.01 )
Basic NFE
per share $ 0.47 $ 0.60
NATURAL GAS DISTRIBUTION
A reconciliation of operating revenue,
the closest GAAP financial measurement,
to utility gross margin is as
follows:
Operating revenues
$ 185,556 $ 151,606 Less:
Gas purchases
64,186 45,243 Energy and other taxes
10,882 6,908 Regulatory rider expense
12,601
9,628
Utility gross margin $ 97,887
$ 89,827
Three Months Ended
December 31, (Thousands)
2016 2015
NJR ENERGY SERVICES
The following table is a computation of financial margin:
Operating revenues
$ 337,181 $ 278,693 Less:
Gas purchases
339,087 260,239 Add: Unrealized loss (gain) on
derivative instruments and related transactions
30,592
(2,387 ) Effects of economic hedging related to natural gas
inventory
(17,939 ) 3,813
Financial
margin $ 10,747 $ 19,880
A reconciliation of operating income,
the closest GAAP financial measurement,
to financial margin is as
follows:
Operating (loss) income
$ (7,395 ) $
14,437 Add: Operation and maintenance expense
5,018 3,757
Depreciation and amortization
16 23 Other taxes
455
237 Subtotal
(1,906 ) 18,454 Add:
Unrealized loss (gain) on derivative instruments and related
transactions
30,592 (2,387 ) Effects of economic hedging
related to natural gas inventory
(17,939 ) 3,813
Financial margin $ 10,747 $
19,880
A reconciliation of net income to net
financial earnings,
is as follows:
Net (loss) income
$ (4,790 ) $ 9,396
Add: Unrealized loss (gain) on derivative instruments and related
transactions
30,592 (2,387 ) Tax effect
(10,580
) 867 Effects of economic hedging related to natural gas,
net of taxes
(17,939 ) 3,813 Tax effect
6,204
(1,385 )
Net financial earnings $ 3,487
$ 10,304
CLEAN
ENERGY VENTURES
A reconciliation of net income to net
financial earnings,
is as follows:
Net income
$ 4,198 $ 8,373 Add: Net income to
NFE tax adjustment
(1,356 ) (721 )
Net financial
earnings $ 2,842 $ 7,652
Three Months
Ended
December 31, (Thousands, except per share data)
2016 2015
NEW
JERSEY RESOURCES
Operating Revenues Natural Gas
Distribution
$ 185,556 $ 151,606 Energy Services
337,181 278,693 Clean Energy Ventures
7,567 7,794
Midstream
— — Home Services and Other
10,006
9,573
Sub-total 540,310 447,666 Eliminations
718 (3,408 )
Total $ 541,028
$ 444,258
Operating Income (Loss)
Natural Gas Distribution
$ 51,372 $ 47,707 Energy
Services
(7,395 ) 14,437 Clean Energy Ventures
(4,293 ) (1,426 ) Midstream
(156 ) (151
) Home Services and Other
(1,456 ) (1,030 )
Sub-total 38,072 59,537 Eliminations
3,403
(86 )
Total $ 41,475 $ 59,451
Equity in Earnings of Affiliates
Midstream
$ 3,331 $ 3,545 Eliminations
(1,020
) (1,139 )
Total $ 2,311 $ 2,406
Net Income (Loss) Natural Gas
Distribution
$ 30,348 $ 30,926 Energy Services
(4,790 ) 9,396 Clean Energy Ventures
4,198
8,373 Midstream
2,387 2,344 Home Services and Other
1,542 259
Sub-total 33,685
51,298 Eliminations
1,244 (1,016 )
Total
$ 34,929 $ 50,282
Net
Financial Earnings Natural Gas Distribution
$
30,348 $ 30,926 Energy Services
3,487 10,304 Clean
Energy Ventures
2,842 7,652 Midstream
2,387 2,344
Home Services and Other
1,542 259
Sub-total 40,606 51,485 Eliminations
(223
) (218 )
Total $ 40,383 $ 51,267
Throughput (Bcf) NJNG, Core Customers
32.8 30.0 NJNG, Off System/Capacity Management
43.6
55.9 NJRES Fuel Mgmt. and Wholesale Sales
126.2 132.7
Total 202.6 218.6
Common Stock Data Yield at December 31
2.9 %
2.9 % Market Price High
$ 37.30 $ 34.07 Low
$
30.46 $ 28.02 Close at December 31
$ 35.50 $
32.96 Shares Out. at December 31
86,196 85,809 Market Cap.
at December 31
$ 3,059,966 $ 2,828,268
Three Months Ended (Unaudited)
December 31,
(Thousands, except customer & weather data)
2016
2015
NATURAL GAS DISTRIBUTION
Utility Gross Margin Operating revenues
$ 185,556 $ 151,606 Less: Gas purchases
64,186
45,243 Energy and other taxes
10,882 6,908 Regulatory rider
expense
12,601 9,628
Total Utility Gross
Margin $ 97,887 $ 89,827
Utility Gross Margin, Operating
Income and Net Income Residential
$ 62,498 $
55,076 Commercial, Industrial & Other
13,696 13,279 Firm
Transportation
16,285 15,547
Total Firm
Margin 92,479 83,902 Interruptible
1,624
1,390
Total System Margin 94,103 85,292 Off
System/Capacity Management/FRM/Storage Incentive
3,784
4,535
Total Utility Gross Margin 97,887
89,827 Operation and maintenance expense
33,218 29,628
Depreciation and amortization
12,030 11,238 Other taxes not
reflected in gross margin
1,267 1,254
Operating Income $ 51,372 $ 47,707
Net Income $ 30,348 $
30,926
Throughput
(Bcf) Residential
12.6 8.9 Commercial, Industrial &
Other
2.4 1.7 Firm Transportation
4.5 3.4
Total Firm Throughput 19.5 14.0 Interruptible
13.3 16.0
Total System Throughput
32.8 30.0 Off System/Capacity Management
43.6
55.9
Total Throughput 76.4 85.9
Customers Residential
451,587 441,464 Commercial, Industrial & Other
27,995 27,240 Firm Transportation
45,847
47,536
Total Firm Customers 525,429 516,240
Interruptible
34 35
Total System
Customers 525,463 516,275 Off System/Capacity
Management*
30 27
Total Customers
525,493 516,302
*The number of customers represents those
active
during the last month of the period.
Degree Days Actual
1,494 1,082
Normal
1,589 1,629 Percent of Normal
94.0 % 66.4 %
Three Months Ended (Unaudited)
December
31, (Thousands, except customer, SREC and megawatt)
2016 2015
ENERGY SERVICES
Operating Income Operating
revenues
$ 337,181 $ 278,693 Less: Gas purchases
339,087 260,239 Operation and maintenance expense
5,018 3,757 Depreciation and amortization
16 23
Energy and other taxes
455 237
Operating
(Loss) Income $ (7,395 ) $ 14,437
Net (Loss) Income $ (4,790 ) $
9,396
Financial Margin $ 10,747
$ 19,880
Net Financial Earnings
$ 3,487 $ 10,304
Gas Sold and
Managed (Bcf) 126.2 132.7
CLEAN
ENERGY VENTURES
Operating Revenues SREC sales
$ 2,486 $ 4,604 Electricity sales
3,789 2,133
Other
1,292 1,057
Total Operating
Revenues $ 7,567 $ 7,794
Depreciation and Amortization $ 7,041 $
5,110
Operating (Loss) $ (4,293
) $ (1,426 )
Income Tax Benefit $
11,887 $ 11,734
Net Income
$ 4,198 $ 8,373
Net Financial
Earnings $ 2,842 $ 7,652
Solar Renewable Energy Certificates Generated 41,443
35,014
Solar Renewable Energy Certificates
Sold 10,319 21,182
Solar
Megawatts Eligible for ITCs 2.8 0.7
Solar Megawatts Under Construction 3.9 18.8
Wind Megawatts Installed/Acquired 39.9
50.7
Wind Megawatts Under Construction
— 39.9
MIDSTREAM
Equity
in Earnings of Affiliates $ 3,331 $ 3,545
Other Income $ 917 $ 632
Income tax provision $ 1,649
$ 1,640
Net Income $
2,387 $ 2,344
HOME SERVICES AND
OTHER
Operating Revenues $ 10,006
$ 9,573
Operating (Loss) $
(1,456 ) $ (1,030 )
Other income, net
$ 2,827 $ 159
Net Income
$ 1,542 $ 259
Total Service
Contract Customers at December 31 113,285 116,099
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170208005365/en/
New Jersey ResourcesMedia:Michael Kinney,
732-938-1031mkinney@njresources.comorInvestor:Joanne
Fairechio, 732-378-4967jfairechio@njresources.com orDennis Puma,
732-938-1229dpuma@njresources.com
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