Business Wire | Nov 30, 2020 07:36AM EST

New Jersey Resources Reports Fourth-quarter and Fiscal 2020 Results

Nov. 30, 2020

WALL, N.J.--(BUSINESS WIRE)--Nov. 30, 2020--Today, New Jersey Resources (NYSE: NJR) reported results for the fourth quarter and fiscal 2020. Highlights included:

* Consolidated net income of $193.9 million for fiscal 2020, compared with $169.5 million in fiscal 2019 * Consolidated net financial earnings (NFE), a non-GAAP financial measure, of $196.2 million for fiscal 2020, or $2.07 per share, compared with $175.0 million, or $1.96 per share, in fiscal 2019 * Increased annual dividend by 6.4 percent to $1.33 per share * NJNG filed a proposal with the BPU to significantly expand its energy efficiency offerings * NJR Clean Energy Ventures (CEV) placed eight commercial solar installations into service and acquired one operating asset, adding 60 megawatts (MW) of total installed capacity in fiscal 2020

Fiscal 2020 net income totaled $193.9 million, or $2.05 per share, compared with $169.5 million, or $1.90 per share, in fiscal 2019. Fourth-quarter net income totaled $43.3 million, or $0.45 per share, compared with $18.1 million, or $0.20 per share, during the same period last year.

Fiscal 2020 NFE totaled $196.2 million, or $2.07 per share, in-line with the previously announced guidance range, compared with $175.0 million, or $1.96 per share, in fiscal 2019. Fourth-quarter NFE totaled $54.7 million, or $0.57 per share, compared with $26.0 million, or $0.29 per share, during the same period last year.

"Thanks to the performance of our talented and dedicated team through an unprecedented global pandemic, we were able to deliver solid results and achieve NFE in-line with our guidance range for fiscal 2020," said Steve Westhoven, President and CEO of New Jersey Resources. "As reflected in our results, we are committed to serving our customers with safe, reliable, clean energy and reaching our sustainability goals through our diversified portfolio of energy infrastructure investments. With the new financial growth targets that we announced in connection with our Analyst Day today, including raising long-term NFEPS and dividend growth rates, our outlook for the future is strong."

Key Performance Metrics

Three Months Ended Twelve Months Ended

September 30, September 30,

($ in Thousands) 2020 2019 2020 2019

Net income $ 43,272 $ 18,086 $ 193,919 $ 169,505

Basic EPS $ 0.45 $ 0.20 $ 2.05 $ 1.90

Net financial earnings $ 54,721 $ 25,956 $ 196,245 $ 174,960

Basic net financial earnings $ 0.57 $ 0.29 $ 2.07 $ 1.96 per share

A reconciliation of net income to NFE for the three and twelve months ended September 30, 2020, and 2019, is provided below.

Three Months Ended Twelve Months Ended

September 30, September 30,

(Thousands) 2020 2019 2020 2019

Net income $ 43,272 $ 18,086 $ 193,919 $ 169,505

Add:

Unrealized loss (gain) onderivative instruments and 12,183 28,234 (9,644) 2,881 related transactions

Tax effect (2,893) (6,745) 2,296 (711)

Effects of economic hedgingrelated to natural gas 2,216 (7,764) 12,690 4,309 inventory

Tax effect (527) 1,845 (3,016) (1,024)

Net income to NFE tax 470 (7,700) - - adjustment

Net financial earnings $ 54,721 $ 25,956 $ 196,245 $ 174,960



Weighted Average Shares Outstanding

Basic 95,933 89,983 94,798 89,242

Diluted 96,259 90,366 95,107 89,616



Basic earnings per share $ 0.45 $ 0.20 $ 2.05 $ 1.90

Add:

Unrealized loss (gain) onderivative instruments and 0.13 0.31 (0.10) 0.03 related transactions

Tax effect (0.02) (0.06) 0.02 (0.01)

Effects of economic hedgingrelated to natural gas 0.02 (0.09) 0.13 0.05 inventory

Tax effect (0.01) 0.02 (0.03) (0.01)

Net income to NFE tax - (0.09) - - adjustment

Basic net financial $ 0.57 $ 0.29 $ 2.07 $ 1.96 earnings per share

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

GAAP requires us, during the interim periods, to estimate our annual effective tax rate and use this rate to calculate the year-to-date tax provision. We also determine an annual estimated effective tax rate for NFE purposes and calculate a quarterly tax adjustment based on the differences between our forecasted net income and our forecasted NFE for the fiscal year.

A table detailing net financial (loss) earnings for the three and twelve months ended September 30, 2020, and 2019, is provided below.

Net Financial (Loss) Earnings by Business Unit

Three Months Ended Twelve Months Ended

September 30, September 30,

(Thousands) 2020 2019 2020 2019

New Jersey Natural Gas $ (15,258) $ (18,402) $ 126,902 $ 78,062

Clean Energy Ventures 55,840 52,676 53,023 77,473

Storage and 7,434 3,488 18,311 14,689 Transportation

Energy Services 1,638 (10,726) (7,873) 2,918

Home Services and Other 5,109 (1,021) 5,784 1,911

Subtotal 54,763 26,015 196,147 175,053

Eliminations (42) (59) 98 (93)

Total $ 54,721 $ 25,956 $ 196,245 $ 174,960

COVID-19 Impact Update:

NJR has not made any significant changes to capital programs due to COVID-19. NJNG operations and delivery of natural gas to its approximately 558,000 customers has largely been unaffected by the ongoing pandemic. NJR will continue to closely monitor the potential impacts of the pandemic and will adjust its plan accordingly to ensure the delivery of essential services to customers, while maintaining the safety and health of its employees, customers and communities.

Analyst Day Information:

In a separate announcement, the Company today provided its fiscal 2021 guidance and long-term financial targets. NJR will host a virtual Analyst Day today at 8:30 a.m. ET and the senior leadership team will discuss the Company's strategic value proposition and long-term financial growth targets, as well as its year-end fiscal 2020 earnings results. The video webcast of the virtual Analyst Day, including a copy of the presentation, and a question and answer session, will be broadcast over the internet and can be accessed at https://investor.njresources.com/events-and-presentations/default.aspx. For those unable to listen to the webcast, an archived version will be available at the same location.

Regulated Business Update:

New Jersey Natural Gas (NJNG)

NJNG reported fiscal 2020 NFE of $126.9 million, compared to NFE of $78.1 million during fiscal 2019. Fourth-quarter net financial loss was $15.3 million, compared with net financial loss of $18.4 million during the same period in fiscal 2019. The increase in both periods was due primarily to increased base rates from NJNG's rate case settlement in November 2019 and lower operating and maintenance (O&M) expenses.

Customer Growth:

* NJNG added 8,349 new customers during fiscal 2020, compared with 9,711 in fiscal 2019. The lower customer growth was due to the effects of the COVID-19 pandemic.

Infrastructure Update:

* NJNG's Infrastructure Investment Program (IIP) is a five-year, $150 million program approved by the New Jersey Board of Public Utilities (BPU) on October 28, 2020. The IIP consists of a series of infrastructure projects designed to support the enhanced safety and reliability of NJNG's natural gas distribution system. The original filing included an information technology (IT) upgrade component, which NJNG voluntarily withdrew and will seek to recover associated costs in future rate case proceedings.

* The Southern Reliability Link (SRL) will diversify supply to our customers by providing a new intrastate feed into the southern end of NJNG's distribution system. SRL began construction in the first quarter of fiscal 2019 and is projected to be placed in service in 2021. The total cost of SRL is expected to be in the range of $250 million to $270 million. Construction continues on SRL with over 80 percent of the project complete. NJNG has submitted its response to the New Jersey Department of Environmental Protection (DEP) regarding the suspension of permits for certain sections of SRL's construction. Following a comprehensive review process of our drilling plans for the remainder of the project, the DEP reinstated our permits, allowing us to fully proceed with our construction plans.

* Safety Acceleration and Facilities Enhancement (SAFE) II is the five-year, $158 million program approved by the BPU in September 2016 to replace the remaining unprotected bare steel main and associated services in NJNG's distribution system. In fiscal 2020, NJNG invested $56.5 million to replace 70 miles of unprotected bare steel main and services.

* The New Jersey Reinvestment in System Enhancement (NJ RISE) program is a $102.5 million investment program comprised of six projects related to storm hardening and mitigation. During the fourth-quarter of fiscal 2020, construction began on a new regulator station, the final portion of the North Seaside Reinforcement project. Construction is expected to be completed by the end of calendar year 2020.

* The SAFE II and NJ RISE programs are eligible for annual rate increases. On March 31, 2020, NJNG filed its annual petition with the BPU, requesting a rate increase of approximately $7.4 million for the recovery of the related capital costs through June 30, 2020. NJNG updated the filing in July 2020 to reflect the actual results through June 30, 2020, reducing the rate increase to $7.1 million. The BPU approved the filing and the new rates became effective on October 1, 2020.

BGSS Incentive Programs:

BGSS incentive programs contributed $9.5 million to utility gross margin in fiscal 2020, compared with $8.4 million during the same period in fiscal 2019. The higher results were due to improved margins in off-system sales and storage incentive programs, which were partially offset by a decrease in capacity release volume.

Energy-Efficiency Programs:

The SAVEGREEN Project(r), NJNG's energy-efficiency program, invested $30.8 million during fiscal 2020 to help customers with energy-efficiency upgrades for their homes and businesses. NJNG recovered $10.3 million of its SAVEGREEN investment in fiscal 2020.

* On September 25, 2020, NJNG filed a petition with the BPU for an additional three-year SAVEGREEN program consisting of approximately $127 million of direct investment, $113 million in financing options, and $23 million in O&M expenses, effective July 1, 2021.

Storage and Transportation

Storage and Transportation, formerly known as the Midstream reporting segment, reported fiscal 2020 NFE of $18.3 million, compared with $14.7 million during fiscal 2019. Fourth-quarter NFE were $7.4 million, compared with $3.5 million during the same period in fiscal 2019. The increase in NFE for both periods was due to incremental operating income from Leaf River and Adelphia Gateway, partially offset by increased O&M and interest expense related to the acquisition and operations of those assets.

Infrastructure Updates:

* Adelphia Gateway - On October 5, 2020, Adelphia Gateway received a Partial Notice to Proceed from the Federal Energy Regulatory Commission (FERC) to begin construction. The construction includes the conversion of 50 miles of the existing 84-mile pipeline from oil to natural gas to bring much-needed supply to constrained markets in the Philadelphia region.

* PennEast - On January 30, 2020, PennEast filed with FERC an abbreviated application for amendment of its Certificate of Public Convenience and Necessity, requesting a phased-in approach to the PennEast project. The first phase of the project would include construction of the pipeline in Pennsylvania with interconnections within the state. Also, on January 30, 2020, FERC issued a declaratory order related to the ruling by the Third Circuit, supporting PennEast. On February 18, 2020, PennEast filed a petition for writ of certiorari with the U.S. Supreme Court seeking to overturn the September 10, 2019 Third Circuit decision vacating the New Jersey Federal District Court's December 13, 2018 condemnation order blocking pipeline construction. On June 29, 2020, the U.S. Supreme Court invited the U.S. Solicitor General to express his views regarding the issues presented in the petition for writ of certiorari. On August 3, 2020, FERC issued a positive environmental assessment for Phase I of the project, finding no significant environmental impact.

Unregulated Businesses Update:

Clean Energy Ventures (CEV)

CEV reported fiscal 2020 NFE of $53.0 million, compared with NFE of $77.5 million in fiscal 2019. The decrease in NFE was due to fewer Investment Tax Credits (ITCs) recognized on projects placed in service and the absence of contributions from the wind portfolio, which was sold during fiscal 2019. Fourth-quarter NFE were $55.8 million, compared with NFE of $52.7 million during the same period in fiscal 2019. The increase in NFE was due to higher SREC sales.

Solar Investment Update:

* In fiscal 2020, CEV placed eight commercial solar projects into service and acquired one operational asset, adding 60 MWs, increasing CEV's total installed capacity to over 350 MW.

* The Sunlight Advantage(r), CEV's residential solar leasing program, added 481 customers in fiscal 2020 and now serves over 8,600 residential and small-midsize commercial customers in New Jersey.

Energy Services

Energy Services reported fiscal 2020 net financial loss of $(7.9) million, compared to NFE of $2.9 million for the same period last fiscal year. The decrease in NFE for fiscal 2020 was due primarily to challenging market conditions created by unusually warm weather on the U.S. east coast last winter compounded by operational issues on a key interstate pipeline. Fourth-quarter NFE was $1.6 million, compared with a net financial loss of $(10.7) million during the same period last year. The increase in NFE for the fourth quarter was due to lower demand charges and increased natural gas pricing volatility leading to more market opportunities compared to the same period last year.

Home Services and Other Operations

Home Services and Other Operations reported fiscal 2020 NFE of $5.8 million compared to NFE of $1.9 million for the same period in fiscal 2019. Fourth-quarter NFE were $5.1 million, compared with net financial loss of $1.0 million during the same period in fiscal 2019. The increase in both periods was due to lower O&M expenses and an income tax benefit associated with the revaluation of certain deferred state tax liabilities.

Effective Tax Rate:

NJR's annual effective tax rate increased to (3.7) percent in fiscal 2020 from (28.7) percent in fiscal 2019. In the fourth quarter of fiscal 2020, NJR recognized $37.1 million related to tax credits, net of deferred taxes, compared with $56.8 million during the same period last year.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile, while continuing to invest capital in regulated and unregulated energy projects.

* During fiscal 2020, capital expenditures were $499.1 million, of which $333.9 million were related to NJNG, compared with capital expenditures of $531.4 million, of which $372.1 million were related to NJNG, during the same period of fiscal 2019.

* During fiscal 2020, cash flows from operations were $213.5 million, compared with $194.1 million during the same period of fiscal 2019. The increase was primarily due to increased margin at NJNG from increased base rates.

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. New Jersey Resources Corporation (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 NFE guidance for fiscal 2021 through fiscal 2024, as well as NJR's long-term NFEPS growth rate, dividend growth, forecasted contribution of business segments to NJR's NFE from fiscal 2021 through fiscal 2024, customer growth at NJNG, future NJR and NJNG capital expenditures, infrastructure programs and investments such as SRL, NJ RISE II and SAFE II, CEV's future capital investment target, NJR's environmental sustainability and clean energy goals, emissions reduction strategies, initiatives and targets and our investments in infrastructure, renewables and emerging technologies, the ability to construct and operate the Adelphia Gateway Pipeline project, and construct SRL and the PennEast pipeline project, as well as the ongoing COVID-19 pandemic and its impact on NJR's liquidity, business operations, financial condition, results of operations or cash flows.

Additional information and factors that could cause actual results to differ materially from NJR's expectations are contained in NJR's filings with the U.S. Securities and Exchange Commission (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/net financial loss and financial margin exclude unrealized gains or losses on derivative instruments related to the company's unregulated subsidiaries and certain realized gains and losses on derivative instruments related to natural gas that has been placed into storage at Energy Services, net of applicable tax adjustments as described below. Volatility associated with the change in value of these financial instruments and physical commodity 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 CEV, as such the adjustment is related to tax credits generated by CEV.

NJNG's utility gross margin represents the results of revenues less natural gas costs, sales, expenses and other taxes and regulatory rider expenses, which are key components of NJR's operations. Natural gas costs, sales, expenses and other taxes and regulatory rider expenses are passed through to customers and, therefore, have no effect on utility gross margin. Management uses these non-GAAP financial measures as supplemental measures to other GAAP results to provide a more complete understanding of NJR's performance. Management believes these non-GAAP financial measures are more reflective of NJR's business model, provide transparency to investors and enable period-to-period comparability of financial performance. A reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. For a full discussion of NJR's non-GAAP financial measures, please see NJR's 2020 Form 10-K, Item 7.

About New Jersey Resources

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

* New Jersey Natural Gas, NJR's principal subsidiary, operates and maintains over 7,500 miles of natural gas transportation and distribution infrastructure to serve over half a million customers in New Jersey's Monmouth, Ocean, Morris, Middlesex and Burlington counties.

* Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of over 350 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 percent equity ownership in the Steckman Ridge natural gas storage facility, and our 20 percent equity interest in the PennEast Pipeline Project.

* 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 1,100 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve(r) and initiatives such as The SAVEGREEN Project(r) and The Sunlight Advantage(r).

For more information about NJR: www.njresources.com. Follow us on Twitter @NJNaturalGas. "Like" us on facebook.com/NewJerseyNaturalGas. Download our free NJR investor relations app for iPad, iPhone and Android. NJR-E

NEW JERSEY RESOURCES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended Twelve Months Ended

September 30, September 30,

(Thousands, except per 2020 2019 2020 2019share data)

OPERATING REVENUES

Utility $ 84,548 $ 88,626 $ 729,923 $ 710,793

Nonutility 315,496 390,455 1,223,745 1,881,252

Total operating revenues 400,044 479,081 1,953,668 2,592,045

OPERATING EXPENSES

Gas purchases

Utility 26,789 39,629 275,831 320,256

Nonutility 220,304 345,690 1,022,805 1,716,098

Related parties 1,535 1,493 6,083 7,948

Operation and maintenance 79,425 73,843 278,143 268,141

Regulatory rider expenses 1,993 1,778 34,529 33,937

Depreciation and 30,136 24,438 119,894 91,730 amortization

Total operating expenses 360,182 486,871 1,737,285 2,438,110

OPERATING INCOME 39,862 (7,790) 216,383 153,935

Other income (expense), 13,618 5,817 23,878 11,273 net

Interest expense, net of 17,180 9,439 67,597 47,082 capitalized interest

INCOME (LOSS) BEFOREINCOME TAXES AND EQUITY 36,300 (11,412) 172,664 118,126 IN EARNINGS OF AFFILIATES

Income tax benefit (2,852) (25,897) (6,944) (37,751)

Equity in earnings of 4,120 3,601 14,311 13,628 affiliates

NET INCOME $ 43,272 $ 18,086 $ 193,919 $ 169,505



EARNINGS PER COMMON SHARE

Basic $ 0.45 $ 0.20 $ 2.05 $ 1.90

Diluted $ 0.45 $ 0.20 $ 2.04 $ 1.89







WEIGHTED AVERAGE SHARES OUTSTANDING

Basic 95,933 89,599 94,798 89,242

Diluted 96,259 89,600 95,107 89,616



RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES

Three Months Ended

Twelve Months Ended

September 30,

September 30,

(Thousands)

2020

2019

2020

2019

NEW JERSEY RESOURCES

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

Net income

$

43,272

$

18,086

$

193,919

$

169,505

Add:

Unrealized loss (gain) on derivative instruments and related transactions

12,183

28,234

(9,644)

2,881

Tax effect

(2,893)

(6,745)

2,296

(711)

Effects of economic hedging related to natural gas inventory

2,216

(7,764)

12,690

4,309

Tax effect

(527)

1,845

(3,016)

(1,024)

Net income to NFE tax adjustment

470

(7,700)

-

-

Net financial earnings

$

54,721

$

25,956

$

196,245

$

174,960

Weighted Average Shares Outstanding

Basic

95,933

89,599

94,798

89,242

Diluted

96,259

89,600

95,107

89,616

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

$

0.45

$

0.20

$

2.05

$

1.90

Add:

Unrealized loss (gain) on derivative instruments and related transactions

$

0.13

$

0.31

$

(0.10)

$

0.03

Tax effect

$

(0.02)

$

(0.06)

$

0.02

$

(0.01)

Effects of economic hedging related to natural gas inventory

$

0.02

$

(0.09)

$

0.13

$

0.05

Tax effect

$

(0.01)

$

0.02

$

(0.03)

$

(0.01)

Net income to NFE tax adjustment

$

-

$

(0.09)

$

-

$

-

Basic NFE per share

$

0.57

$

0.29

$

2.07

$

1.96

NATURAL GAS DISTRIBUTION

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

Operating revenues

$

84,548

$

88,626

$

729,923

$

710,793

Less:

Gas purchases

29,113

41,953

287,307

336,489

Regulatory rider expense

1,993

1,778

34,529

33,937

Utility gross margin

$

53,442

$

44,895

$

408,087

$

340,367

CLEAN ENERGY VENTURES

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

Net income

$

55,370

$

60,376

$

53,023

$

77,473

Add:

Net income to NFE tax adjustment

470

(7,700)

-

-

Net financial earnings

$

55,840

$

52,676

$

53,023

$

77,473

Three Months Ended

Twelve Months Ended

(Unaudited)

September 30,

September 30,

(Thousands)

2020

2019

2020

2019

ENERGY SERVICES

The following table is a computation of financial margin:

Operating revenues

$

212,760

$

317,678

$

1,030,419

$

1,742,791

Less: Gas purchases

220,882

345,735

1,024,579

1,719,519

Add:

Unrealized loss (gain) on derivative instruments and related transactions

12,723

28,251

(8,583)

1,195

Effects of economic hedging related to natural gas inventory

2,216

(7,764)

12,690

4,309

Financial margin

$

6,817

$

(7,570)

$

9,947

$

28,776

A reconciliation of operating income, the closest GAAP financial measurement, to financial margin is as follows:

Operating (loss) income

$

(12,216)

$

(34,074)

$

(11,651)

$

2,211

Add:

Operation and maintenance expense

4,055

5,974

17,368

20,943

Depreciation and amortization

39

43

123

118

Subtotal

(8,122)

(28,057)

5,840

23,272

Add:

Unrealized loss (gain) on derivative instruments and related transactions

12,723

28,251

(8,583)

1,195

Effects of economic hedging related to natural gas inventory

2,216

(7,764)

12,690

4,309

Financial margin

$

6,817

$

(7,570)

$

9,947

$

28,776

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

Net (loss) income

$

(9,753)

$

(26,309)

$

(11,008)

$

(1,268)

Add:

Unrealized loss (gain) on derivative instruments and related transactions

12,723

28,251

(8,583)

1,195

Tax effect

(3,021)

(6,749)

2,044

(294)

Effects of economic hedging related to natural gas

2,216

(7,764)

12,690

4,309

Tax effect

(527)

1,845

(3,016)

(1,024)

Net financial earnings (loss)

$

1,638

$

(10,726)

$

(7,873)

$

2,918

HOME SERVICES AND OTHER

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

Net income (loss)

$

5,109

$

(1,035)

$

5,784

$

1,637

Add:

Unrealized loss on derivative instruments and related transactions

-

20

-

381

Tax effect

-

(6)

-

(107)

Net financial earnings (loss)

$

5,109

$

(1,021)

$

5,784

$

1,911

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES



Three Months Ended Twelve Months Ended

September 30, September 30,

(Thousands) 2020 2019 2020 2019

NEW JERSEY RESOURCES



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



Net income $ 43,272 $ 18,086 $ 193,919 $ 169,505

Add:

Unrealized loss(gain) onderivative 12,183 28,234 (9,644) 2,881 instruments andrelatedtransactions

Tax effect (2,893) (6,745) 2,296 (711)

Effects ofeconomic hedgingrelated to 2,216 (7,764) 12,690 4,309 natural gasinventory

Tax effect (527) 1,845 (3,016) (1,024)

Net income to NFE 470 (7,700) - - tax adjustment

Net financial $ 54,721 $ 25,956 $ 196,245 $ 174,960 earnings



Weighted AverageShares Outstanding

Basic 95,933 89,599 94,798 89,242

Diluted 96,259 89,600 95,107 89,616



A reconciliation of basic earnings per share, the closest GAAP financialmeasurement, to basic net financial earnings per share is as follows:



Basic earnings $ 0.45 $ 0.20 $ 2.05 $ 1.90 per share

Add:

Unrealized loss(gain) onderivative $ 0.13 $ 0.31 $ (0.10) $ 0.03 instruments andrelatedtransactions

Tax effect $ (0.02) $ (0.06) $ 0.02 $ (0.01)

Effects ofeconomic hedgingrelated to $ 0.02 $ (0.09) $ 0.13 $ 0.05 natural gasinventory

Tax effect $ (0.01) $ 0.02 $ (0.03) $ (0.01)

Net income to NFE $ - $ (0.09) $ - $ - tax adjustment

Basic NFE per $ 0.57 $ 0.29 $ 2.07 $ 1.96 share



NATURAL GAS DISTRIBUTION



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



Operating $ 84,548 $ 88,626 $ 729,923 $ 710,793 revenues

Less:

Gas purchases 29,113 41,953 287,307 336,489

Regulatory rider 1,993 1,778 34,529 33,937 expense

Utility gross $ 53,442 $ 44,895 $ 408,087 $ 340,367 margin



CLEAN ENERGY VENTURES



A reconciliation of net incometo net financial earnings is as follows:



Net income $ 55,370 $ 60,376 $ 53,023 $ 77,473

Add:

Net income to NFE 470 (7,700) - - tax adjustment

Net financial $ 55,840 $ 52,676 $ 53,023 $ 77,473 earnings







Three Months Ended Twelve Months Ended

(Unaudited) September 30, September 30,

(Thousands) 2020 2019 2020 2019

ENERGY SERVICES



The followingtable is a computation offinancial margin:



Operating $ 212,760 $ 317,678 $ 1,030,419 $ 1,742,791 revenues

Less: Gas 220,882 345,735 1,024,579 1,719,519 purchases

Add:

Unrealized loss(gain) onderivative 12,723 28,251 (8,583) 1,195 instruments andrelatedtransactions

Effects ofeconomic hedgingrelated to 2,216 (7,764) 12,690 4,309 natural gasinventory

Financial margin $ 6,817 $ (7,570) $ 9,947 $ 28,776



A reconciliation of operating income, the closest GAAP financial measurement,to financial margin is as follows:



Operating (loss) $ (12,216) $ (34,074) $ (11,651) $ 2,211 income

Add:

Operation andmaintenance 4,055 5,974 17,368 20,943 expense

Depreciation and 39 43 123 118 amortization

Subtotal (8,122) (28,057) 5,840 23,272

Add:

Unrealized loss(gain) onderivative 12,723 28,251 (8,583) 1,195 instruments andrelatedtransactions

Effects ofeconomic hedgingrelated to 2,216 (7,764) 12,690 4,309 natural gasinventory

Financial margin $ 6,817 $ (7,570) $ 9,947 $ 28,776



A reconciliation of net incometo net financial earnings is as follows:



Net (loss) income $ (9,753) $ (26,309) $ (11,008) $ (1,268)

Add:

Unrealized loss(gain) onderivative 12,723 28,251 (8,583) 1,195 instruments andrelatedtransactions

Tax effect (3,021) (6,749) 2,044 (294)

Effects ofeconomic hedging 2,216 (7,764) 12,690 4,309 related tonatural gas

Tax effect (527) 1,845 (3,016) (1,024)

Net financial $ 1,638 $ (10,726) $ (7,873) $ 2,918 earnings (loss)





HOME SERVICES AND OTHER



A reconciliation of net incometo net financial earnings is as follows:



Net income (loss) $ 5,109 $ (1,035) $ 5,784 $ 1,637

Add:

Unrealized losson derivativeinstruments and - 20 - 381 relatedtransactions

Tax effect - (6) - (107)

Net financial $ 5,109 $ (1,021) $ 5,784 $ 1,911 earnings (loss)







FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)

Three Months Ended

Twelve Months Ended

September 30,

September 30,

(Thousands, except per share data)

2020

2019

2020

2019

NEW JERSEY RESOURCES

Operating Revenues

Natural Gas Distribution

$

84,548

$

88,626

$

729,923

$

710,793

Clean Energy Ventures

77,014

60,392

102,617

98,099

Energy Services

212,760

317,678

1,030,419

1,742,791

Storage and Transportation

12,717

-

44,728

-

Home Services and Other

13,376

12,997

51,017

50,902

Sub-total

400,415

479,693

1,958,704

2,602,585

Eliminations

(371)

(612)

(5,036)

(10,540)

Total

$

400,044

$

479,081

$

1,953,668

$

2,592,045

Operating (Loss) Income

Natural Gas Distribution

$

(12,703)

$

(17,255)

$

173,412

$

111,189

Clean Energy Ventures

60,633

44,513

34,452

36,488

Energy Services

(12,216)

(34,074)

(11,651)

2,211

Storage and Transportation

5,436

(1,390)

12,451

(4,049)

Home Services and Other

(2,673)

(408)

3,062

4,785

Sub-total

38,477

(8,614)

211,726

150,624

Eliminations

1,385

824

4,656

3,311

Total

$

39,862

$

(7,790)

$

216,383

$

153,935

Equity in Earnings of Affiliates

Storage and Transportation

$

4,703

$

3,866

$

15,903

$

15,832

Eliminations

(583)

(265)

(1,592)

(2,204)

Total

$

4,120

$

3,601

$

14,311

$

13,628

Net (Loss) Income

Natural Gas Distribution

$

(15,258)

$

(18,402)

$

126,902

$

78,062

Clean Energy Ventures

55,370

60,376

53,023

77,473

Energy Services

(9,753)

(26,309)

(11,008)

(1,268)

Storage and Transportation

7,434

3,488

18,311

14,689

Home Services and Other

5,109

(1,035)

5,784

1,637

Sub-total

42,902

18,118

193,012

170,593

Eliminations

370

(32)

907

(1,088)

Total

$

43,272

$

18,086

$

193,919

$

169,505

Net Financial (Loss) Earnings

Natural Gas Distribution

$

(15,258)

$

(18,402)

$

126,902

$

78,062

Clean Energy Ventures

55,840

52,676

53,023

77,473

Energy Services

1,638

(10,726)

(7,873)

2,918

Storage and Transportation

7,434

3,488

18,311

14,689

Home Services and Other

5,109

(1,021)

5,784

1,911

Sub-total

54,763

26,015

196,147

175,053

Eliminations

(42)

(59)

98

(93)

Total

$

54,721

$

25,956

$

196,245

$

174,960

Throughput (Bcf)

NJNG, Core Customers

17.6

19.5

97.0

108.4

NJNG, Off System/Capacity Management

34.1

34.8

118.4

123.8

Energy Services Fuel Mgmt. and Wholesale Sales

121.6

148.4

526.7

584.9

Total

173.3

202.7

742.1

817.1

Common Stock Data

Yield at September 30

4.9

%

2.8

%

4.9

%

2.8

%

Market Price at September 30

$

27.02

$

45.22

$

27.02

$

45.22

Shares Out. at September 30

95,949

89,999

95,949

89,999

Market Cap. at September 30

$

2,592,547

$

4,069,755

$

2,592,547

$

4,069,755

FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)



Three Months Ended Twelve Months Ended

September 30, September 30,

(Thousands,except per 2020 2019 2020 2019share data)

NEW JERSEY RESOURCES



Operating Revenues

Natural Gas $ 84,548 $ 88,626 $ 729,923 $ 710,793 Distribution

Clean Energy 77,014 60,392 102,617 98,099 Ventures

Energy Services 212,760 317,678 1,030,419 1,742,791

Storage and 12,717 - 44,728 - Transportation

Home Services 13,376 12,997 51,017 50,902 and Other

Sub-total 400,415 479,693 1,958,704 2,602,585

Eliminations (371) (612) (5,036) (10,540)

Total $ 400,044 $ 479,081 $ 1,953,668 $ 2,592,045





Operating (Loss) Income

Natural Gas $ (12,703) $ (17,255) $ 173,412 $ 111,189 Distribution

Clean Energy 60,633 44,513 34,452 36,488 Ventures

Energy Services (12,216) (34,074) (11,651) 2,211

Storage and 5,436 (1,390) 12,451 (4,049) Transportation

Home Services (2,673) (408) 3,062 4,785 and Other

Sub-total 38,477 (8,614) 211,726 150,624

Eliminations 1,385 824 4,656 3,311

Total $ 39,862 $ (7,790) $ 216,383 $ 153,935





Equity inEarnings of Affiliates

Storage and $ 4,703 $ 3,866 $ 15,903 $ 15,832 Transportation

Eliminations (583) (265) (1,592) (2,204)

Total $ 4,120 $ 3,601 $ 14,311 $ 13,628





Net (Loss) Income

Natural Gas $ (15,258) $ (18,402) $ 126,902 $ 78,062 Distribution

Clean Energy 55,370 60,376 53,023 77,473 Ventures

Energy Services (9,753) (26,309) (11,008) (1,268)

Storage and 7,434 3,488 18,311 14,689 Transportation

Home Services 5,109 (1,035) 5,784 1,637 and Other

Sub-total 42,902 18,118 193,012 170,593

Eliminations 370 (32) 907 (1,088)

Total $ 43,272 $ 18,086 $ 193,919 $ 169,505





Net Financial (Loss) Earnings

Natural Gas $ (15,258) $ (18,402) $ 126,902 $ 78,062 Distribution

Clean Energy 55,840 52,676 53,023 77,473 Ventures

Energy Services 1,638 (10,726) (7,873) 2,918

Storage and 7,434 3,488 18,311 14,689 Transportation

Home Services 5,109 (1,021) 5,784 1,911 and Other

Sub-total 54,763 26,015 196,147 175,053

Eliminations (42) (59) 98 (93)

Total $ 54,721 $ 25,956 $ 196,245 $ 174,960





Throughput (Bcf)

NJNG, Core 17.6 19.5 97.0 108.4 Customers

NJNG, OffSystem/Capacity 34.1 34.8 118.4 123.8 Management

Energy ServicesFuel Mgmt. and 121.6 148.4 526.7 584.9 Wholesale Sales

Total 173.3 202.7 742.1 817.1





Common Stock Data

Yield at 4.9 % 2.8 % 4.9 % 2.8 %September 30

Market Price at $ 27.02 $ 45.22 $ 27.02 $ 45.22 September 30

Shares Out. at 95,949 89,999 95,949 89,999 September 30

Market Cap. at $ 2,592,547 $ 4,069,755 $ 2,592,547 $ 4,069,755 September 30



Three Months Ended

Twelve Months Ended

(Unaudited)

September 30,

September 30,

(Thousands, except customer and weather data)

2020

2019

2020

2019

NATURAL GAS DISTRIBUTION

Utility Gross Margin

Operating revenues

$

84,548

$

88,626

$

729,923

$

710,793

Less:

Gas purchases

29,113

41,953

287,307

336,489

Regulatory rider expense

1,993

1,778

34,529

33,937

Total Utility Gross Margin

$

53,442

$

44,895

$

408,087

$

340,367

Utility Gross Margin, Operating Income and Net Income

Residential

$

30,408

$

24,899

$

275,033

$

224,597

Commercial, Industrial & Other

8,190

7,330

57,929

50,553

Firm Transportation

10,416

8,549

60,199

51,069

Total Firm Margin

49,014

40,778

393,161

326,219

Interruptible

1,675

1,620

5,455

5,750

Total System Margin

50,689

42,398

398,616

331,969

Off System/Capacity Management/FRM/Storage Incentive

2,753

2,497

9,471

8,398

Total Utility Gross Margin

53,442

44,895

408,087

340,367

Operation and maintenance expense

47,448

46,727

162,792

171,198

Depreciation and amortization

18,697

15,423

71,883

57,980

Operating (Loss) Income

$

(12,703)

$

(17,255)

$

173,412

$

111,189

Net (Loss) Income

$

(15,258)

$

(18,402)

$

126,902

$

78,062

Net Financial (Loss) Earnings

$

(15,258)

$

(18,402)

$

126,902

$

78,062

Throughput (Bcf)

Residential

3.4

3.0

44.6

46.0

Commercial, Industrial & Other

0.6

0.7

8.2

9.7

Firm Transportation

1.6

1.6

13.3

13.7

Total Firm Throughput

5.6

5.3

66.1

69.4

Interruptible

12.0

14.2

30.9

39.0

Total System Throughput

17.6

19.5

97.0

108.4

Off System/Capacity Management

34.1

34.8

118.4

123.8

Total Throughput

51.7

54.3

215.4

232.2

Customers

Residential

497,779

486,474

497,779

486,474

Commercial, Industrial & Other

28,735

28,992

28,735

28,992

Firm Transportation

31,604

32,107

31,604

32,107

Total Firm Customers

558,118

547,573

558,118

547,573

Interruptible

29

32

29

32

Total System Customers

558,147

547,605

558,147

547,605

Off System/Capacity Management*

19

21

19

21

Total Customers

558,166

547,626

558,166

547,626

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

Degree Days

Actual

46

11

4,254

4,506

Normal

30

30

4,586

4,552

Percent of Normal

153.3

%

36.7

%

92.8

%

99.0

%

Three Months Ended Twelve Months Ended

(Unaudited) September 30, September 30,

(Thousands, exceptcustomer and weather 2020 2019 2020 2019data)

NATURAL GAS DISTRIBUTION



Utility Gross Margin

Operating revenues $ 84,548 $ 88,626 $ 729,923 $ 710,793

Less:

Gas purchases 29,113 41,953 287,307 336,489

Regulatory rider 1,993 1,778 34,529 33,937 expense

Total Utility Gross $ 53,442 $ 44,895 $ 408,087 $ 340,367 Margin



Utility Gross Margin,Operating Income and Net Income

Residential $ 30,408 $ 24,899 $ 275,033 $ 224,597

Commercial, 8,190 7,330 57,929 50,553 Industrial & Other

Firm Transportation 10,416 8,549 60,199 51,069

Total Firm Margin 49,014 40,778 393,161 326,219

Interruptible 1,675 1,620 5,455 5,750

Total System Margin 50,689 42,398 398,616 331,969

Off System/CapacityManagement/FRM/ 2,753 2,497 9,471 8,398 Storage Incentive

Total Utility Gross 53,442 44,895 408,087 340,367 Margin

Operation and 47,448 46,727 162,792 171,198 maintenance expense

Depreciation and 18,697 15,423 71,883 57,980 amortization

Operating (Loss) $ (12,703) $ (17,255) $ 173,412 $ 111,189 Income



Net (Loss) Income $ (15,258) $ (18,402) $ 126,902 $ 78,062



Net Financial (Loss) $ (15,258) $ (18,402) $ 126,902 $ 78,062 Earnings



Throughput (Bcf)

Residential 3.4 3.0 44.6 46.0

Commercial, 0.6 0.7 8.2 9.7 Industrial & Other

Firm Transportation 1.6 1.6 13.3 13.7

Total Firm Throughput 5.6 5.3 66.1 69.4

Interruptible 12.0 14.2 30.9 39.0

Total System 17.6 19.5 97.0 108.4 Throughput

Off System/Capacity 34.1 34.8 118.4 123.8 Management

Total Throughput 51.7 54.3 215.4 232.2



Customers

Residential 497,779 486,474 497,779 486,474

Commercial, 28,735 28,992 28,735 28,992 Industrial & Other

Firm Transportation 31,604 32,107 31,604 32,107

Total Firm Customers 558,118 547,573 558,118 547,573

Interruptible 29 32 29 32

Total System 558,147 547,605 558,147 547,605 Customers

Off System/Capacity 19 21 19 21 Management*

Total Customers 558,166 547,626 558,166 547,626

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

Degree Days

Actual 46 11 4,254 4,506

Normal 30 30 4,586 4,552

Percent of Normal 153.3 % 36.7 % 92.8 % 99.0 %



Three Months Ended

Twelve Months Ended

(Unaudited)

September 30,

September 30,

(Thousands, except customer, SREC and megawatt)

2020

2019

2020

2019

CLEAN ENERGY VENTURES

Operating Revenues

SREC sales

$

69,301

$

55,215

$

81,134

$

75,101

TREC sales

1,384

-

1,384

-

Wind electricity sales and other

-

-

-

5,177

Solar electricity sales and other

3,676

2,800

9,930

8,818

Sunlight Advantage

2,653

2,377

10,169

9,003

Total Operating Revenues

$

77,014

$

60,392

$

102,617

$

98,099

Depreciation and Amortization

$

8,426

$

8,744

$

37,855

$

32,997

Operating Income

$

60,633

$

44,513

$

34,452

$

36,488

Income Tax Provision (Benefit)

$

6,028

$

(9,888)

$

(32,404)

$

(48,921)

Net Income

$

55,370

$

60,376

$

53,023

$

77,473

Net Financial Earnings

$

55,840

$

52,676

$

53,023

$

77,473

Solar Renewable Energy Certificates Generated

251,016

211,352

389,716

311,803

Solar Renewable Energy Certificates Sold

388,407

294,780

408,100

363,600

Transition Renewable Energy Certificates Generated and Transferred

9,270

-

9,270

-

Solar Megawatts Eligible for ITCs

6.9

25.4

53.5

60.1

Solar Megawatts Under Construction

8.1

8.1

8.1

8.1

ENERGY SERVICES

Operating Income

Operating revenues

$

212,760

$

317,678

$

1,030,419

$

1,742,791

Less:

Gas purchases

220,882

345,735

1,024,579

1,719,519

Operation and maintenance expense

4,055

5,974

17,368

20,943

Depreciation and amortization

39

43

123

118

Operating (Loss) Income

$

(12,216)

$

(34,074)

$

(11,651)

$

2,211

Net (Loss) Income

$

(9,753)

$

(26,309)

$

(11,008)

$

(1,268)

Financial Margin

$

6,817

$

(7,570)

$

9,947

$

28,776

Net Financial Earnings (Loss)

$

1,638

$

(10,726)

$

(7,873)

$

2,918

Gas Sold and Managed (Bcf)

121.6

148.4

526.7

584.9

STORAGE AND TRANSPORTATION

Operating Revenues

$

12,717

$

-

$

44,728

$

-

Equity in Earnings of Affiliates

$

4,703

$

3,866

$

15,903

$

15,832

Operation and Maintenance Expense

$

4,460

$

1,388

$

21,862

$

4,043

Other Income, Net

$

927

$

911

$

7,328

$

7,345

Interest Expense

$

2,838

$

555

$

13,124

$

2,185

Income Tax Provision (Benefit)

$

794

$

(656)

$

4,247

$

2,254

Net Income

$

7,434

$

3,488

$

18,311

$

14,689

HOME SERVICES AND OTHER

Operating Revenues

$

13,376

$

12,997

$

51,017

$

50,902

Operating (Loss) Income

$

(2,673)

$

(408)

$

3,062

$

4,785

Other Income (Expense), Net

$

6,929

$

(296)

$

5,177

$

(542)

Net Income (Loss)

$

5,109

$

(1,035)

$

5,784

$

1,637

Net Financial Earnings (Loss)

$

5,109

$

(1,021)

$

5,784

$

1,911

Total Service Contract Customers at September 30

107,224

108,980

107,224

108,980

View source version on businesswire.com: https://www.businesswire.com/news/home/20201130005295/en/

CONTACT: Media: Michael Kinney 732-938-1031 mkinney@njresources.com

CONTACT: Investor: Dennis Puma 732-938-1229 dpuma@njresources.com