Business Wire | Aug 5, 2021 07:01AM EDT

New Jersey Resources Reports Third-Quarter Fiscal 2021 Results

Aug. 05, 2021

WALL, N.J.--(BUSINESS WIRE)--Aug. 05, 2021--Today, New Jersey Resources (NYSE: NJR) reported results for the third-quarter of fiscal 2021. Highlights include:

* Consolidated net loss of $(111.8) million, including a $72.7 million after-tax impairment charge related to NJR's investment in the PennEast Project, compared with $(19.3) million in the third quarter of fiscal 2020 * Consolidated net financial loss, a non-GAAP financial measure which excludes the PennEast impairment, of $(14.1) million, or $(0.15) per share, compared with net financial earnings (NFE) of $2.7 million, or $0.03 per share, in the same period last year * Increased NFE per share (NFEPS) guidance for fiscal 2021 to a range of $2.10 to $2.20 * The Southern Reliability Link (SRL) is expected to be placed in service in August 2021 * On March 30th, New Jersey Natural Gas (NJNG) filed a rate case with the New Jersey Board of Public Utilities (BPU), and in July, updated the filing seeking a $163.9 million increase in base rates * Adelphia Gateway received a Notice to Proceed from FERC for the construction of laterals and interconnects in the South Zone of the project

Third-quarter fiscal 2021 net loss totaled $(111.8) million, or $(1.16) per share, compared with $(19.3) million, or $(0.20) per share, during the same period in fiscal 2020. Fiscal 2021 year-to-date net income totaled $119.0 million, or $1.24 per share, compared with $130.3 million, or $1.38 per share, for the same period in fiscal 2020.

Third-quarter fiscal 2021 net financial loss totaled $(14.1) million, or $(0.15) per share, compared to NFE of $2.7 million, or $0.03 per share, during the same period in fiscal 2020. Fiscal 2021 year-to-date NFE totaled $201.1 million, or $2.09 per share, compared with $121.9 million, or $1.29 per share, for the same period in fiscal 2020. The difference between GAAP earnings and NFE is due primarily to a $92.0 million impairment charge ($72.7 million after considering the tax effect) related to NJR's investment in the PennEast Project, which is excluded from NFE.

"NJR's performance this fiscal year, led by the impressive results from Energy Services, has allowed us to outperform our expectations and we are increasing our fiscal 2021 NFEPS guidance to a range of $2.10 to $2.20 per share," said Steve Westhoven, President and CEO of New Jersey Resources. "We remain committed to executing on our long-term strategy and delivering value to our shareowners."

Key Performance Metrics

Three Months Ended Nine Months Ended

June 30, June 30,

($ in Thousands) 2021 2020 2021 2020

Net income (loss) $ (111,831 ) $ (19,298 ) $ 119,023 $ 130,300

Basic EPS $ (1.16 ) $ (0.20 ) $ 1.24 $ 1.38

Net financial earnings $ (14,148 ) $ 2,682 $ 201,113 $ 121,904 (loss)

Basic net financialearnings (loss) per $ (0.15 ) $ 0.03 $ 2.09 $ 1.29 share

Effective October 1, 2020, NJR changed its method of accounting for Investment Tax Credits (ITCs) from the flow through method to the deferral method. The change is applied retrospectively to all periods presented in our third-quarter fiscal 2021 Form 10-Q (Form 10-Q) that will be filed with the U.S. Securities and Exchange Commission (SEC). Our historical financial reporting presented herein has been retrospectively revised to apply this change. For additional details, please refer to our Form 10-Q.

A reconciliation of net income to NFE for the three and nine months ended June 30, 2021, and 2020, is provided below.

Three Months Ended Nine Months Ended

June 30, June 30,

(Thousands) 2021 2020 2021 2020

Net income (loss) $ (111,831 ) $ (19,298 ) $ 119,023 $ 130,300

Add:

Unrealized loss (gain)on derivative 21,862 23,712 13,627 (21,827 )instruments and related transactions

Tax effect (5,198 ) (5,639 ) (3,240 ) 5,189

Effects of economichedging related to 2,486 4,739 (12,255 ) 10,474 natural gas inventory

Tax effect (591 ) (1,126 ) 2,912 (2,489 )

Impairment of equity 92,000 - 92,000 - method investment

Tax effect (includestax effects related to (11,934 ) - (11,934 ) - valuation allowance of $7.3 million)

Net income to NFE tax (942 ) 294 980 257 adjustment

Net financial earnings $ (14,148 ) $ 2,682 $ 201,113 $ 121,904 (loss)



Weighted Average Shares Outstanding

Basic 96,348 95,764 96,237 94,420

Diluted 96,348 95,764 96,629 94,718

Diluted (NFE basis) 89,600 87,888 89,402 87,884



Basic earnings (loss) $ (1.16 ) $ (0.20 ) $ 1.24 $ 1.38 per share

Add:

Unrealized loss (gain)on derivative 0.22 0.25 0.14 (0.23 )instruments and related transactions

Tax effect (0.05 ) (0.06 ) (0.03 ) 0.06

Effects of economichedging related to 0.03 0.05 (0.13 ) 0.11 natural gas inventory

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

Impairment of equity 0.95 - 0.95 - method investment

Tax effect (includestax effects related to (0.12 ) - (0.12 ) - valuation allowance of $7.3 million)

Net income to NFE tax (0.01 ) - 0.01 - adjustment

Basic net financialearnings (loss) per $ (0.15 ) $ 0.03 $ 2.09 $ 1.29 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 eliminates the impact of volatility to GAAP earnings associated with unrealized gains and losses on derivative instruments in the current period and excludes the impairment of NJR's investment in the PennEast Project. For further discussion of this financial measure, please see the explanation below under "Non-GAAP Financial Information."

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

A table detailing NFE for the three and nine months ended June 30, 2021, and 2020, is provided below.

Net Financial Earnings (Loss) by Business Unit

Three Months Ended Nine Months Ended

June 30, June 30,

(Thousands) 2021 2020 2021 2020

New Jersey Natural Gas $ 1,581 $ 11,968 $ 131,589 $ 142,160

Clean Energy Ventures (4,926 ) (5,686 ) (24,072 ) (22,694 )

Storage and 2,387 3,615 10,606 10,877 Transportation

Energy Services (12,527 ) (6,619 ) 85,501 (9,254 )

Home Services and Other (384 ) (582 ) 301 675

Subtotal (13,869 ) 2,696 203,925 121,764

Eliminations (279 ) (14 ) (2,812 ) 140

Total $ (14,148 ) $ 2,682 $ 201,113 $ 121,904

Fiscal 2021 NFE Guidance Increase:

NJR increased fiscal 2021 NFE guidance to a range of $2.10 to $2.20, due primarily to better than expected performance by Energy Services and higher BGSS incentives at NJNG. The following chart represents NJR's current expected contributions from its subsidiaries for fiscal 2021:

Expected Fiscal 2021

Company Net Financial Earnings

Contribution

New Jersey Natural Gas 50 to 55 percent

Clean Energy Ventures 9 to 14 percent

Storage and Transportation 5 to 10 percent

Energy Services 30 to 35 percent

Home Services and Other 0 to 2 percent

In providing fiscal 2021 NFE guidance, management is aware there could be differences between reported GAAP earnings and NFE due to matters such as, but not limited to, the positions of our energy-related derivatives. Management is not able to reasonably estimate the aggregate impact or significance of these items on reported earnings and, therefore, is not able to provide a reconciliation to the corresponding GAAP equivalent for its operating earnings guidance without unreasonable efforts.

New Jersey Natural Gas

NJNG reported third-quarter fiscal 2021 NFE of $1.6 million, compared to NFE of $12.0 million during the same period in fiscal 2020. The decrease in NFE for the quarter was due primarily to higher O&M expenses related to increased bad debt and compensation expense. Fiscal 2021 year-to-date NFE was $131.6 million, compared to NFE of $142.2 million during the same period in fiscal 2020. The year-to-date decrease in NFE was due primarily to higher O&M expenses related to increased compensation, technology and bad debt expense.

Customer Growth:

* NJNG added 5,448 new customers during the first nine months of fiscal 2021, compared with 5,879 during the same period in fiscal 2020. The lower customer growth was due primarily to the effects of the COVID-19 pandemic.

Base Rate Filing:

* On March 30, 2021, NJNG filed a base rate case with the BPU, seeking a $165.7 million increase to its base rates. On July 9, 2021, the Company filed an update to its financial schedules in the base rate filing which reflects a proposed increase of $163.9 million based on an overall return of 7.47 percent with a return on equity of 10.5 percent and a 56.2 percent common equity component.

Infrastructure Update:

* 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. NJNG completed construction of SRL in July 2021 and it is expected to be placed in service in August 2021.

* NJNG's Infrastructure Investment Program (IIP) is a five-year, $150 million program approved by the BPU on October 28, 2020. The IIP consists of a series of infrastructure projects designed to enhance the safety and reliability of NJNG's natural gas distribution system. In the third quarter of fiscal 2021, NJNG began work on various distribution system reinforcement projects.

* Safety Acceleration and Facilities Enhancement (SAFE) II is a 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 the first nine months of fiscal 2021, NJNG invested $27.5 million to replace 21 miles of unprotected bare steel main and services, finalizing the authorized investments under the program.

* 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 third quarter of fiscal 2021, construction was completed on the final portion of the North Seaside Reinforcement Project. This concludes the accelerated cost recoveries under the NJ RISE program.

BGSS Incentive Programs:

BGSS incentive programs contributed $3.3 million to utility gross margin in the third quarter of fiscal 2021, compared with $2.4 million during the same period in fiscal 2020. The higher results for the third quarter were due primarily to improved margins in storage incentives compared to the same period last year.

Fiscal 2021 year-to-date, these programs contributed $10.0 million to utility gross margin, compared with $6.7 million during the same period in fiscal 2020. The higher results for fiscal 2021 year-to-date were due primarily to improved margins in off-system sales and storage incentives compared to the same period last year.

For more information on utility gross margin, please see "Non-GAAP Financial Information" at the end of the press release.

Energy-Efficiency Programs:

SAVEGREEN invested $14.5 million during the first nine months of fiscal 2021 to help customers with energy-efficiency upgrades for their homes and businesses. NJNG recovered $10.2 million of its outstanding investments during the first nine months of fiscal 2021.

Clean Energy Ventures (CEV)

CEV reported a net financial loss of $(4.9) million during the third quarter of fiscal 2021, compared with a net financial loss of $(5.7) million during the same period in fiscal 2020. The increase in NFE for the quarter is primarily due to decreased depreciation expense partially offset by increased O&M related to higher leasing expenses.

Fiscal 2021 year-to-date net financial loss was $(24.1) million, compared with a net financial loss of $(22.7) million during the same period in fiscal 2020. The year-to-date decrease in NFE was due primarily to higher O&M related to increased project maintenance, leasing and information technology expenses, partially offset by decreased depreciation expense.

Storage and Transportation

Storage and Transportation, formerly known as our Midstream reporting segment, reported third-quarter fiscal 2021 NFE of $2.4 million, compared with NFE of $3.6 million during the same period in fiscal 2020. The decrease in NFE for the quarter is primarily due to increased interest expense related to the acquisitions of Adelphia Gateway and Leaf River. Fiscal 2021 year-to-date NFE was $10.6 million, compared with NFE of $10.9 million during the same period in fiscal 2020.

The NFE results for the three and nine months periods of fiscal 2021 exclude a $72.7 million after-tax impairment charge related to NJR's investment in the PennEast Project.

Infrastructure Updates:

* Adelphia Gateway - During the third quarter of fiscal 2021, Adelphia Gateway received a FERC Notice to Proceed for the second phase of construction on the South Zone. The second phase includes construction of laterals and interconnects.

* Leaf River - During the third quarter of fiscal 2021, Leaf River entered into new and extended existing contracts with creditworthy counterparties, further enhancing the stable, fee-based revenue profile of the asset.

* PennEast - On June 29, 2021, the U.S. Supreme Court overturned the September 10, 2019 Third Circuit decision vacating the New Jersey Federal District Court's December 13, 2018 condemnation order. Despite the favorable outcome, PennEast continues to see regulatory and legal challenges that result in the continued delay of construction and commercial operation. As a result, the impairment of NJR's investment is due to management's estimates and assumptions regarding the timing uncertainty of regulatory and legal matters, construction and in-service dates, and NJR's evaluation of the environmental and political climate as it relates to interstate pipeline development.

Energy Services

Energy Services reported third-quarter fiscal 2021 net financial loss of $(12.5) million, compared with a net financial loss of $(5.9) million for the same period last fiscal year. The decrease in NFE for the quarter was due primarily to the timing of settlement of certain transportation and storage options. Fiscal 2021 year-to-date NFE was $85.5 million, compared with a net financial loss of $(9.3) million during the same period in fiscal 2020. The year-to-date increase 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.

Home Services and Other Operations

Home Services and Other Operations reported third-quarter fiscal 2021 net financial loss of $(0.4) million compared with a net financial loss of $(0.6) million for the same period in fiscal 2020. Fiscal 2021 year-to-date NFE was $0.3 million, compared with NFE of $0.7 million during the same period in fiscal 2020.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile.

* During the first nine months of fiscal 2021, capital expenditures spent and accrued were $463.5 million, of which $349.4 million were related to NJNG, compared with $536.8 million, of which $241.9 million were related to NJNG, during the same period in fiscal 2020. Fiscal 2020 capital expenditures include the $167.5 million acquisition cost of Adelphia Gateway.

* During the first nine months of fiscal 2021, cash flows from operations were $341.8 million, compared with $182.8 million during the same period of fiscal 2020. The increase was due primarily to increased NFE at Energy Services.

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 NFEPS guidance for fiscal 2021, results of ongoing and future rate cases, forecasted contribution of business segments to NJR's NFE for fiscal 2021, future NJR and NJNG capital expenditures, infrastructure programs and investments such as SRL, IIP, SAFE II and energy efficiency programs, the ability to construct and operate the Adelphia Gateway Pipeline project, and the ability to construct PennEast, 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 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 and the impairment on NJR's investments in the PennEast Project, 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 NJRES.

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 more than 360 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 nearly 1,200 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.

NEW JERSEY RESOURCES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended Nine Months Ended

June 30, June 30,

(Thousands, except per 2021 2020 2021 2020share data)

OPERATING REVENUES

Utility $ 127,626 $ 128,532 $ 633,522 $ 645,375

Nonutility 239,967 170,442 990,563 908,249

Total operating 367,593 298,974 1,624,085 1,553,624 revenues

OPERATING EXPENSES

Gas purchases

Utility 41,785 45,665 211,165 249,042

Nonutility 236,464 166,761 740,199 802,501

Related parties 1,699 1,518 5,163 4,548

Operation and 81,878 68,541 265,779 198,718 maintenance

Regulatory rider 5,456 5,464 34,570 32,536 expenses

Depreciation and 27,767 27,872 81,977 80,025 amortization

Total operating 395,049 315,821 1,338,853 1,367,370 expenses

OPERATING (LOSS) (27,456 ) (16,847 ) 285,232 186,254 INCOME

Other income, net 4,817 2,713 13,941 10,260

Interest expense, netof capitalized 18,744 15,144 58,683 50,417 interest

(LOSS) INCOME BEFOREINCOME TAXES AND (41,383 ) (29,278 ) 240,490 146,097 EQUITY IN EARNINGS OFAFFILIATES

Income tax (benefit) (18,785 ) (6,767 ) 37,713 25,988 provision

Equity in earnings of (89,233 ) 3,213 (83,754 ) 10,191 affiliates

NET (LOSS) INCOME $ (111,831 ) $ (19,298 ) $ 119,023 $ 130,300



(LOSS) EARNINGS PER COMMON SHARE

Basic $ (1.16 ) $ (0.20 ) $ 1.24 $ 1.38

Diluted $ (1.16 ) $ (0.20 ) $ 1.23 $ 1.38







WEIGHTED AVERAGE SHARES OUTSTANDING

Basic 96,348 95,764 96,237 94,420

Diluted 96,348 95,764 96,629 94,718



RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES

Three Months Ended

Nine Months Ended

June 30,

June 30,

(Thousands)

2021

2020

2021

2020

NEW JERSEY RESOURCES

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

Net (loss) income

$

(111,831

)

$

(19,298

)

$

119,023

$

130,300

Add:

Unrealized loss (gain) on derivative instruments and related transactions

21,862

23,712

13,627

(21,827

)

Tax effect

(5,198

)

(5,639

)

(3,240

)

5,189

Effects of economic hedging related to natural gas inventory

2,486

4,739

(12,255

)

10,474

Tax effect

(591

)

(1,126

)

2,912

(2,489

)

Impairment of equity method investment

92,000

-

92,000

-

Tax effect

(11,934

)

-

(11,934

)

-

Net income to NFE tax adjustment

(942

)

294

980

257

Net financial (loss) earnings

$

(14,148

)

$

2,682

$

201,113

$

121,904

Weighted Average Shares Outstanding

Basic

96,348

95,764

96,237

94,420

Diluted

96,348

95,764

96,629

94,718

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

Basic (loss) earnings per share

$

(1.16

)

$

(0.20

)

$

1.24

$

1.38

Add:

Unrealized loss (gain) on derivative instruments and related transactions

$

0.22

$

0.25

$

0.14

$

(0.23

)

Tax effect

$

(0.05

)

$

(0.06

)

$

(0.03

)

$

0.06

Effects of economic hedging related to natural gas inventory

$

0.03

$

0.05

$

(0.13

)

$

0.11

Tax effect

$

(0.01

)

$

(0.01

)

$

0.03

$

(0.03

)

Impairment of equity method investment

$

0.95

$

-

$

0.95

$

-

Tax effect

$

(0.12

)

$

-

$

(0.12

)

$

-

Net income to NFE tax adjustment

$

(0.01

)

$

-

$

0.01

$

-

Basic NFE per share

$

(0.15

)

$

0.03

$

2.09

$

1.29

NATURAL GAS DISTRIBUTION

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

Operating revenues

$

127,626

$

128,532

$

633,522

$

645,375

Less:

Gas purchases

44,111

48,116

221,872

258,194

Regulatory rider expense

5,456

5,464

34,570

32,536

Utility gross margin

$

78,059

$

74,952

$

377,080

$

354,645

Three Months Ended

Nine Months Ended

(Unaudited)

June 30,

June 30,

(Thousands)

2021

2020

2021

2020

ENERGY SERVICES

The following table is a computation of financial margin:

Operating revenues

$

201,594

$

133,543

$

893,640

$

817,659

Less: Gas purchases

237,011

167,061

741,128

803,697

Add:

Unrealized loss (gain) on derivative instruments and related transactions

22,784

24,034

13,351

(21,306

)

Effects of economic hedging related to natural gas inventory

2,486

4,739

(12,255

)

10,474

Financial margin

$

(10,147

)

$

(4,745

)

$

153,608

$

3,130

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

Operating (loss) income

$

(39,511

)

$

(37,299

)

$

111,349

$

565

Add:

Operation and maintenance expense

4,066

3,753

41,080

13,313

Depreciation and amortization

28

28

83

84

Subtotal

(35,417

)

(33,518

)

152,512

13,962

Add:

Unrealized loss (gain) on derivative instruments and related transactions

22,784

24,034

13,351

(21,306

)

Effects of economic hedging related to natural gas inventory

2,486

4,739

(12,255

)

10,474

Financial margin

$

(10,147

)

$

(4,745

)

$

153,608

$

3,130

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

Net (loss) income

$

(30,846

)

$

(28,845

)

$

83,688

$

(1,255

)

Add:

Unrealized loss (gain) on derivative instruments and related transactions

22,784

24,034

13,351

(21,306

)

Tax effect

(5,418

)

(5,715

)

(3,175

)

5,065

Effects of economic hedging related to natural gas

2,486

4,739

(12,255

)

10,474

Tax effect

(591

)

(1,126

)

2,912

(2,489

)

Net income to NFE tax adjustment

(942

)

294

980

257

Net financial (loss) earnings

$

(12,527

)

$

(6,619

)

$

85,501

$

(9,254

)

STORAGE AND TRANSPORTATION

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

Net (loss) income

$

(77,679

)

$

3,615

$

(69,460

)

$

10,877

Add:

Impairment of equity method investment

92,000

-

92,000

-

Tax effect

(11,934

)

-

(11,934

)

-

Net financial earnings

$

2,387

$

3,615

$

10,606

$

10,877

RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES



Three Months Ended Nine Months Ended

June 30, June 30,

(Thousands) 2021 2020 2021 2020

NEW JERSEY RESOURCES



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



Net (loss) income $ (111,831 ) $ (19,298 ) $ 119,023 $ 130,300

Add:

Unrealized loss (gain)on derivative 21,862 23,712 13,627 (21,827 )instruments andrelated transactions

Tax effect (5,198 ) (5,639 ) (3,240 ) 5,189

Effects of economichedging related to 2,486 4,739 (12,255 ) 10,474 natural gas inventory

Tax effect (591 ) (1,126 ) 2,912 (2,489 )

Impairment of equity 92,000 - 92,000 - method investment

Tax effect (11,934 ) - (11,934 ) -

Net income to NFE tax (942 ) 294 980 257 adjustment

Net financial (loss) $ (14,148 ) $ 2,682 $ 201,113 $ 121,904 earnings



Weighted Average Shares Outstanding

Basic 96,348 95,764 96,237 94,420

Diluted 96,348 95,764 96,629 94,718



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



Basic (loss) earnings $ (1.16 ) $ (0.20 ) $ 1.24 $ 1.38 per share

Add:

Unrealized loss (gain)on derivative $ 0.22 $ 0.25 $ 0.14 $ (0.23 )instruments andrelated transactions

Tax effect $ (0.05 ) $ (0.06 ) $ (0.03 ) $ 0.06

Effects of economichedging related to $ 0.03 $ 0.05 $ (0.13 ) $ 0.11 natural gas inventory

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

Impairment of equity $ 0.95 $ - $ 0.95 $ - method investment

Tax effect $ (0.12 ) $ - $ (0.12 ) $ -

Net income to NFE tax $ (0.01 ) $ - $ 0.01 $ - adjustment

Basic NFE per share $ (0.15 ) $ 0.03 $ 2.09 $ 1.29



NATURAL GAS DISTRIBUTION



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



Operating revenues $ 127,626 $ 128,532 $ 633,522 $ 645,375

Less:

Gas purchases 44,111 48,116 221,872 258,194

Regulatory rider 5,456 5,464 34,570 32,536 expense

Utility gross margin $ 78,059 $ 74,952 $ 377,080 $ 354,645







Three Months Ended Nine Months Ended

(Unaudited) June 30, June 30,

(Thousands) 2021 2020 2021 2020

ENERGY SERVICES



The following table isa computation of financial margin:



Operating revenues $ 201,594 $ 133,543 $ 893,640 $ 817,659

Less: Gas purchases 237,011 167,061 741,128 803,697

Add:

Unrealized loss (gain)on derivative 22,784 24,034 13,351 (21,306 )instruments andrelated transactions

Effects of economichedging related to 2,486 4,739 (12,255 ) 10,474 natural gas inventory

Financial margin $ (10,147 ) $ (4,745 ) $ 153,608 $ 3,130



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



Operating (loss) $ (39,511 ) $ (37,299 ) $ 111,349 $ 565 income

Add:

Operation and 4,066 3,753 41,080 13,313 maintenance expense

Depreciation and 28 28 83 84 amortization

Subtotal (35,417 ) (33,518 ) 152,512 13,962

Add:

Unrealized loss (gain)on derivative 22,784 24,034 13,351 (21,306 )instruments andrelated transactions

Effects of economichedging related to 2,486 4,739 (12,255 ) 10,474 natural gas inventory

Financial margin $ (10,147 ) $ (4,745 ) $ 153,608 $ 3,130



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



Net (loss) income $ (30,846 ) $ (28,845 ) $ 83,688 $ (1,255 )

Add:

Unrealized loss (gain)on derivative 22,784 24,034 13,351 (21,306 )instruments andrelated transactions

Tax effect (5,418 ) (5,715 ) (3,175 ) 5,065

Effects of economichedging related to 2,486 4,739 (12,255 ) 10,474 natural gas

Tax effect (591 ) (1,126 ) 2,912 (2,489 )

Net income to NFE tax (942 ) 294 980 257 adjustment

Net financial (loss) $ (12,527 ) $ (6,619 ) $ 85,501 $ (9,254 )earnings





STORAGE AND TRANSPORTATION



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



Net (loss) income $ (77,679 ) $ 3,615 $ (69,460 ) $ 10,877

Add:

Impairment of equity 92,000 - 92,000 - method investment

Tax effect (11,934 ) - (11,934 ) -

Net financial earnings $ 2,387 $ 3,615 $ 10,606 $ 10,877







FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)

Three Months Ended

Nine Months Ended

June 30,

June 30,

(Thousands, except per share data)

2021

2020

2021

2020

NEW JERSEY RESOURCES

Operating Revenues

Natural Gas Distribution

$

127,626

$

128,532

$

633,522

$

645,375

Clean Energy Ventures

13,381

13,396

26,227

25,603

Energy Services

201,594

133,543

893,640

817,659

Storage and Transportation

11,649

11,863

38,679

32,011

Home Services and Other

13,312

12,369

38,662

37,641

Sub-total

367,562

299,703

1,630,730

1,558,289

Eliminations

31

(729

)

(6,645

)

(4,665

)

Total

$

367,593

$

298,974

$

1,624,085

$

1,553,624

Operating Income (Loss)

Natural Gas Distribution

$

6,486

$

17,339

$

170,274

$

186,115

Clean Energy Ventures

(1,288

)

(923

)

(16,021

)

(16,448

)

Energy Services

(39,511

)

(37,299

)

111,349

565

Storage and Transportation

2,190

2,456

10,064

7,015

Home Services and Other

2,836

425

8,124

5,735

Sub-total

(29,287

)

(18,002

)

283,790

182,982

Eliminations

1,831

1,155

1,442

3,272

Total

$

(27,456

)

$

(16,847

)

$

285,232

$

186,254

Equity in Earnings of Affiliates

Storage and Transportation

$

(88,615

)

$

3,615

$

(82,036

)

$

11,200

Eliminations

(618

)

(402

)

(1,718

)

(1,009

)

Total

$

(89,233

)

$

3,213

$

(83,754

)

$

10,191

Net Income (Loss)

Natural Gas Distribution

$

1,581

$

11,968

$

131,589

$

142,160

Clean Energy Ventures

(4,926

)

(5,686

)

(24,072

)

(22,694

)

Energy Services

(30,846

)

(28,845

)

83,688

(1,255

)

Storage and Transportation

(77,679

)

3,615

(69,460

)

10,877

Home Services and Other

(384

)

(582

)

301

675

Sub-total

(112,254

)

(19,530

)

122,046

129,763

Eliminations

423

232

(3,023

)

537

Total

$

(111,831

)

$

(19,298

)

$

119,023

$

130,300

Net Financial Earnings (Loss)

Natural Gas Distribution

$

1,581

$

11,968

$

131,589

$

142,160

Clean Energy Ventures

(4,926

)

(5,686

)

(24,072

)

(22,694

)

Energy Services

(12,527

)

(6,619

)

85,501

(9,254

)

Storage and Transportation

2,387

3,615

10,606

10,877

Home Services and Other

(384

)

(582

)

301

675

Sub-total

(13,869

)

2,696

203,925

121,764

Eliminations

(279

)

(14

)

(2,812

)

140

Total

$

(14,148

)

$

2,682

$

201,113

$

121,904

Throughput (Bcf)

NJNG, Core Customers

15.7

16.4

73.6

79.4

NJNG, Off System/Capacity Management

24.9

28.2

74.4

84.3

Energy Services Fuel Mgmt. and Wholesale Sales

75.0

96.9

292.5

405.1

Total

115.6

141.5

440.5

568.8

Common Stock Data

Yield at June 30

3.4

%

3.8

%

3.4

%

3.8

%

Market Price at June 30

$

39.57

$

32.65

$

39.57

$

32.65

Shares Out. at June 30

96,361

95,643

96,361

95,643

Market Cap. at June 30

$

3,813,022

$

3,122,750

$

3,813,022

$

3,122,750

FINANCIAL STATISTICS BY BUSINESS UNIT

(Unaudited)



Three Months Ended Nine Months Ended

June 30, June 30,

(Thousands,except per 2021 2020 2021 2020share data)

NEW JERSEY RESOURCES



Operating Revenues

Natural Gas $ 127,626 $ 128,532 $ 633,522 $ 645,375 Distribution

Clean Energy 13,381 13,396 26,227 25,603 Ventures

Energy Services 201,594 133,543 893,640 817,659

Storage and 11,649 11,863 38,679 32,011 Transportation

Home Services 13,312 12,369 38,662 37,641 and Other

Sub-total 367,562 299,703 1,630,730 1,558,289

Eliminations 31 (729 ) (6,645 ) (4,665 )

Total $ 367,593 $ 298,974 $ 1,624,085 $ 1,553,624





Operating Income (Loss)

Natural Gas $ 6,486 $ 17,339 $ 170,274 $ 186,115 Distribution

Clean Energy (1,288 ) (923 ) (16,021 ) (16,448 )Ventures

Energy Services (39,511 ) (37,299 ) 111,349 565

Storage and 2,190 2,456 10,064 7,015 Transportation

Home Services 2,836 425 8,124 5,735 and Other

Sub-total (29,287 ) (18,002 ) 283,790 182,982

Eliminations 1,831 1,155 1,442 3,272

Total $ (27,456 ) $ (16,847 ) $ 285,232 $ 186,254





Equity inEarnings of Affiliates

Storage and $ (88,615 ) $ 3,615 $ (82,036 ) $ 11,200 Transportation

Eliminations (618 ) (402 ) (1,718 ) (1,009 )

Total $ (89,233 ) $ 3,213 $ (83,754 ) $ 10,191





Net Income (Loss)

Natural Gas $ 1,581 $ 11,968 $ 131,589 $ 142,160 Distribution

Clean Energy (4,926 ) (5,686 ) (24,072 ) (22,694 )Ventures

Energy Services (30,846 ) (28,845 ) 83,688 (1,255 )

Storage and (77,679 ) 3,615 (69,460 ) 10,877 Transportation

Home Services (384 ) (582 ) 301 675 and Other

Sub-total (112,254 ) (19,530 ) 122,046 129,763

Eliminations 423 232 (3,023 ) 537

Total $ (111,831 ) $ (19,298 ) $ 119,023 $ 130,300





Net Financial Earnings (Loss)

Natural Gas $ 1,581 $ 11,968 $ 131,589 $ 142,160 Distribution

Clean Energy (4,926 ) (5,686 ) (24,072 ) (22,694 )Ventures

Energy Services (12,527 ) (6,619 ) 85,501 (9,254 )

Storage and 2,387 3,615 10,606 10,877 Transportation

Home Services (384 ) (582 ) 301 675 and Other

Sub-total (13,869 ) 2,696 203,925 121,764

Eliminations (279 ) (14 ) (2,812 ) 140

Total $ (14,148 ) $ 2,682 $ 201,113 $ 121,904





Throughput (Bcf)

NJNG, Core 15.7 16.4 73.6 79.4 Customers

NJNG, OffSystem/Capacity 24.9 28.2 74.4 84.3 Management

Energy ServicesFuel Mgmt. and 75.0 96.9 292.5 405.1 Wholesale Sales

Total 115.6 141.5 440.5 568.8





Common Stock Data

Yield at June 3.4 % 3.8 % 3.4 % 3.8 %30

Market Price at $ 39.57 $ 32.65 $ 39.57 $ 32.65 June 30

Shares Out. at 96,361 95,643 96,361 95,643 June 30

Market Cap. at $ 3,813,022 $ 3,122,750 $ 3,813,022 $ 3,122,750 June 30



Three Months Ended

Nine Months Ended

(Unaudited)

June 30,

June 30,

(Thousands, except customer and weather data)

2021

2020

2021

2020

NATURAL GAS DISTRIBUTION

Utility Gross Margin

Operating revenues

$

127,626

$

128,532

$

633,522

$

645,375

Less:

Gas purchases

44,111

48,116

221,872

258,194

Regulatory rider expense

5,456

5,464

34,570

32,536

Total Utility Gross Margin

$

78,059

$

74,952

$

377,080

$

354,645

Utility Gross Margin, Operating Income and Net Income

Residential

$

48,333

$

47,002

$

258,776

$

244,625

Commercial, Industrial & Other

14,282

11,668

54,372

49,739

Firm Transportation

11,186

12,655

51,352

49,783

Total Firm Margin

73,801

71,325

364,500

344,147

Interruptible

998

1,225

2,628

3,780

Total System Margin

74,799

72,550

367,128

347,927

Off System/Capacity Management/FRM/Storage Incentive

3,260

2,402

9,952

6,718

Total Utility Gross Margin

78,059

74,952

377,080

354,645

Operation and maintenance expense

51,679

39,344

148,268

115,344

Depreciation and amortization

19,894

18,269

58,538

53,186

Operating Income

$

6,486

$

17,339

$

170,274

$

186,115

Net Income

$

1,581

$

11,968

$

131,589

$

142,160

Net Financial Earnings

$

1,581

$

11,968

$

131,589

$

142,160

Throughput (Bcf)

Residential

6.6

7.7

42.9

41.2

Commercial, Industrial & Other

1.2

1.2

7.9

7.6

Firm Transportation

2.5

2.3

12.1

11.7

Total Firm Throughput

10.3

11.2

62.9

60.5

Interruptible

5.4

5.2

10.7

18.9

Total System Throughput

15.7

16.4

73.6

79.4

Off System/Capacity Management

24.9

28.2

74.4

84.3

Total Throughput

40.6

44.6

148.0

163.7

Customers

Residential

500,923

493,322

500,923

493,322

Commercial, Industrial & Other

30,789

29,810

30,789

29,810

Firm Transportation

30,925

32,080

30,925

32,080

Total Firm Customers

562,637

555,212

562,637

555,212

Interruptible

27

32

27

32

Total System Customers

562,664

555,244

562,664

555,244

Off System/Capacity Management*

79

19

79

19

Total Customers

562,743

555,263

562,743

555,263

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

Degree Days

Actual

466

595

4,239

4,208

Normal

481

488

4,512

4,556

Percent of Normal

96.9

%

121.9

%

93.9

%

92.4

%

Three Months Ended Nine Months Ended

(Unaudited) June 30, June 30,

(Thousands, exceptcustomer and weather 2021 2020 2021 2020data)

NATURAL GAS DISTRIBUTION



Utility Gross Margin

Operating revenues $ 127,626 $ 128,532 $ 633,522 $ 645,375

Less:

Gas purchases 44,111 48,116 221,872 258,194

Regulatory rider 5,456 5,464 34,570 32,536 expense

Total Utility Gross $ 78,059 $ 74,952 $ 377,080 $ 354,645 Margin



Utility Gross Margin,Operating Income and Net Income

Residential $ 48,333 $ 47,002 $ 258,776 $ 244,625

Commercial, Industrial 14,282 11,668 54,372 49,739 & Other

Firm Transportation 11,186 12,655 51,352 49,783

Total Firm Margin 73,801 71,325 364,500 344,147

Interruptible 998 1,225 2,628 3,780

Total System Margin 74,799 72,550 367,128 347,927

Off System/CapacityManagement/FRM/Storage 3,260 2,402 9,952 6,718 Incentive

Total Utility Gross 78,059 74,952 377,080 354,645 Margin

Operation and 51,679 39,344 148,268 115,344 maintenance expense

Depreciation and 19,894 18,269 58,538 53,186 amortization

Operating Income $ 6,486 $ 17,339 $ 170,274 $ 186,115



Net Income $ 1,581 $ 11,968 $ 131,589 $ 142,160



Net Financial Earnings $ 1,581 $ 11,968 $ 131,589 $ 142,160



Throughput (Bcf)

Residential 6.6 7.7 42.9 41.2

Commercial, Industrial 1.2 1.2 7.9 7.6 & Other

Firm Transportation 2.5 2.3 12.1 11.7

Total Firm Throughput 10.3 11.2 62.9 60.5

Interruptible 5.4 5.2 10.7 18.9

Total System Throughput 15.7 16.4 73.6 79.4

Off System/Capacity 24.9 28.2 74.4 84.3 Management

Total Throughput 40.6 44.6 148.0 163.7



Customers

Residential 500,923 493,322 500,923 493,322

Commercial, Industrial 30,789 29,810 30,789 29,810 & Other

Firm Transportation 30,925 32,080 30,925 32,080

Total Firm Customers 562,637 555,212 562,637 555,212

Interruptible 27 32 27 32

Total System Customers 562,664 555,244 562,664 555,244

Off System/Capacity 79 19 79 19 Management*

Total Customers 562,743 555,263 562,743 555,263

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

Degree Days

Actual 466 595 4,239 4,208

Normal 481 488 4,512 4,556

Percent of Normal 96.9 % 121.9 % 93.9 % 92.4 %



Three Months Ended

Nine Months Ended

(Unaudited)

June 30,

June 30,

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

2021

2020

2021

2020

CLEAN ENERGY VENTURES

Operating Revenues

SREC sales

$

4,467

$

8,102

$

6,536

$

11,833

TREC sales

1,568

-

3,075

-

Solar electricity sales and other

4,625

2,707

8,613

6,254

Sunlight Advantage

2,721

2,587

8,003

7,516

Total Operating Revenues

$

13,381

$

13,396

$

26,227

$

25,603

Depreciation and Amortization

$

5,200

$

6,777

$

15,318

$

19,696

Operating (Loss)

$

(1,288

)

$

(923

)

$

(16,021

)

$

(16,448

)

Income Tax (Benefit)

$

(1,448

)

$

(384

)

$

(7,248

)

$

(8,352

)

Net (Loss)

$

(4,926

)

$

(5,686

)

$

(24,072

)

$

(22,694

)

Net Financial (Loss)

$

(4,926

)

$

(5,686

)

$

(24,072

)

$

(22,694

)

Solar Renewable Energy Certificates Generated

134,200

114,949

275,271

253,649

Solar Renewable Energy Certificates Sold

23,000

42,987

32,495

62,680

Transition Renewable Energy Certificates Generated

10,896

-

21,206

-

Solar Megawatts Under Construction

12.6

32.5

12.6

32.5

ENERGY SERVICES

Operating Income

Operating revenues

$

201,594

$

133,543

$

893,640

$

817,659

Less:

Gas purchases

237,011

167,061

741,128

803,697

Operation and maintenance expense

4,066

3,753

41,080

13,313

Depreciation and amortization

28

28

83

84

Operating (Loss) Income

$

(39,511

)

$

(37,299

)

$

111,349

$

565

Net (Loss) Income

$

(30,846

)

$

(28,845

)

$

83,688

$

(1,255

)

Financial Margin

$

(10,147

)

$

(4,745

)

$

153,608

$

3,130

Net Financial (Loss) Earnings

$

(12,527

)

$

(6,619

)

$

85,501

$

(9,254

)

Gas Sold and Managed (Bcf)

75.0

96.9

292.5

405.1

STORAGE AND TRANSPORTATION

Operating Revenues

$

11,649

$

11,863

$

38,679

$

32,011

Equity in Earnings of Affiliates

$

(88,615

)

$

3,615

$

(82,036

)

$

11,200

Operation and Maintenance Expense

$

6,689

$

6,430

$

20,370

$

17,402

Other Income, Net

$

1,290

$

1,033

$

4,135

$

6,401

Interest Expense

$

2,937

$

1,843

$

10,497

$

10,286

Income Tax (Benefit) Provision

$

(10,393

)

$

1,646

$

(8,874

)

$

3,453

Net (Loss) Income

$

(77,679

)

$

3,615

$

(69,460

)

$

10,877

Net Financial Earnings

$

2,387

$

3,615

$

10,606

$

10,877

HOME SERVICES AND OTHER

Operating Revenues

$

13,312

$

12,369

$

38,662

$

37,641

Operating Income

$

2,836

$

425

$

8,124

$

5,735

Other Expense, Net

$

(903

)

$

(704

)

$

(2,603

)

$

(1,752

)

Net (Loss) Income

$

(384

)

$

(582

)

$

301

$

675

Net Financial (Loss) Earnings

$

(384

)

$

(582

)

$

301

$

675

Total Service Contract Customers at June 30

106,131

107,441

106,131

107,441

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005249/en/

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

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