New Jersey Resources Reports Second-Quarter Fiscal 2019 Results

Today, New Jersey Resources (NYSE:NJR) reported results for the second-quarter of fiscal 2019. Highlights include:

  • Consolidated net income of $73.6 million, compared with $140.3 million in the second-quarter of fiscal 2018
  • Consolidated net financial earnings (NFE), a non-GAAP financial measure, were $112.4 million, compared with NFE of $142.1 million in the second-quarter of fiscal 2018
  • Reaffirmed NFE guidance for fiscal 2019 of $1.95 to $2.05 per share
  • New Jersey Natural Gas (NJNG) filed a rate case with the New Jersey Board of Public Utilities (BPU), seeking a $128.2 million increase in delivery rates
  • NJNG submitted a filing to the BPU to invest $507 million over five years to upgrade its natural gas delivery and information technology systems
  • NJR Clean Energy Ventures (CEV) closed the sale of the remaining assets in its wind portfolio for total proceeds of $208.6 million

Second-quarter fiscal 2019 net income totaled $73.6 million, or $0.83 per share, compared with net income of $140.3 million, or $1.60 per share, during the same period in fiscal 2018. Fiscal 2019 year-to-date net income totaled $159.8 million, or $1.80 per share, compared with $264 million, or $3.02 per share, during the same period in fiscal 2018.

Second-quarter fiscal 2019 NFE totaled $112.4 million, or $1.27 per share, compared with NFE of $142.1 million, or $1.62 per share, during the same period last year. Fiscal 2019 year-to-date NFE totaled $166.5 million, or $1.88 per share, compared with $277.4 million, or $3.18 per share, during the same period in fiscal 2018.

Results during the first six months of fiscal 2018 included an income tax benefit of $58.5 million, or $0.67 per share, due to the revaluation of deferred taxes resulting from the reduction in the federal corporate tax rate.

“While our strong second-quarter results were lower than the same period last year, due to the outsized performance of NJR Energy Services in fiscal 2018, the quarter’s results put us on track to meet our fiscal 2019 NFE guidance target,” said Steve Westhoven, president and COO of New Jersey Resources. “Results were driven by higher utility gross margin, new customer growth and our regulated infrastructure investments.”

A reconciliation of net income to NFE for the three and six months ended March 31, 2019 and 2018, is provided below.

       
Three Months Ended Six Months Ended
March 31, March 31,
(Thousands)     2019     2018 2019     2018
Net income* $ 73,573     $ 140,266 $ 159,821     $ 263,965
Add:
Unrealized loss (gain) on derivative instruments and related transactions 10,226 (11,608 ) (707 ) 23,246
Tax effect (2,435 ) 4,716 149 (3,343 )
Effects of economic hedging related to natural gas inventory 22,367 6,125 756 (19,262 )
Tax effect (5,316 ) (1,715 ) (180 ) 6,529
Net income to NFE tax adjustment 14,002   4,278   6,671   6,260  
Net financial earnings $ 112,417   $ 142,062   $ 166,510   $ 277,395  
 
Weighted Average Shares Outstanding
Basic 88,836 87,595 88,692 87,295
Diluted 89,228 87,989 89,093 87,690
 
Basic earnings per share $ 0.83 $ 1.60 $ 1.80 $ 3.02
Add:
Unrealized loss (gain) on derivative instruments and related transactions 0.12 (0.13 ) (0.01 ) 0.27
Tax effect (0.03 ) 0.05 (0.04 )
Effects of economic hedging related to natural gas inventory 0.25 0.07 0.01 (0.22 )

Tax effect

(0.06 ) (0.02 ) 0.08
Net income to NFE tax adjustment 0.16   0.05   0.08   0.07  
Basic net financial earnings per share $1.27 $ 1.62   $ 1.88   $ 3.18  
 

*Results during the first six months of fiscal 2018 include an estimated income tax benefit of $58.5 million, or $0.67 per share, due to the revaluation of deferred income taxes resulting from the reduction in the federal corporate tax rate that did not reoccur in fiscal 2019.

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 Credits (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. For further discussion of this financial measure, please see the explanation below under Non-GAAP Financial Information.

A table summarizing our key performance metrics for the three and six months ended March 31, 2019 and 2018, is provided below.

       
Three Months Ended Six Months Ended
March 31, March 31,
($ in Thousands)     2019     2018 2019     2018
Net income $ 73,573     $ 140,266 $ 159,821     $ 263,965
Basic EPS $ 0.83 $ 1.60 $ 1.80 $ 3.02
NFE $ 112,417 $ 142,062 $ 166,510 $ 277,395
Basic NFE per share $ 1.27 $ 1.62 $ 1.88 $ 3.18
 

A table detailing NFE for the three and six months ended March 31, 2019, and 2018, is provided below.

       
Three Months Ended Six Months Ended
March 31, March 31,
(Thousands)     2019     2018 2019     2018
Net financial earnings (loss)        
New Jersey Natural Gas $ 68,546 $ 60,442 $ 100,259 $ 94,551
Midstream 4,498   1,315   8,149   18,826  
Subtotal Regulated 73,044 61,757 108,408 113,377
Clean Energy Ventures 21,730 10,051 31,935 81,301
Energy Services 19,304 72,832 27,674 93,106
Home Services and Other (1,581 ) (2,488 ) (1,505 ) (10,204 )
Subtotal Non-Regulated 39,453   80,395   58,104   164,203  
Subtotal 112,497 142,152 166,512 277,580
Eliminations (80 ) (90 ) (2 ) (185 )
Total $ 112,417   $ 142,062   $ 166,510   $ 277,395  
 

NJR Reaffirms Fiscal 2019 NFE Guidance:

NJR reaffirmed fiscal 2019 NFE guidance of $1.95 to $2.05 per share, subject to the risks and uncertainties identified below under Forward-Looking Statements. NJR expects its regulated businesses to generate between 50 to 65 percent of total NFE, with NJNG continuing to be the largest contributor. The following chart represents NJRs current expected contributions from its subsidiaries for fiscal 2019 and beyond:

                 
Company      

Expected Fiscal 2019 Net Financial Earnings Contribution

      Expected Fiscal 2020 and Beyond Net Financial Earnings Contribution
New Jersey Natural Gas       45 to 50 percent       50 to 60 percent
Midstream       5 to 15 percent       10 to 25 percent
Total Regulated       50 to 65 percent       60 to 85 percent
Clean Energy Ventures       25 to 35 percent       10 to 20 percent
Energy Services       5 to 10 percent       5 to 15 percent
Home Services and Other       0 to 2 percent       0 to 2 percent
Total Non-Regulated       30 to 47 percent       15 to 37 percent
           

In providing fiscal 2019 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.

Regulated Business Update:

New Jersey Natural Gas

NJNG reported second-quarter fiscal 2019 NFE of $68.5 million, compared with $60.4 million during the same period in fiscal 2018. Fiscal 2019 year-to-date NFE at NJNG were $100.3 million, compared with $94.6 million during the same period last year. The increase in both periods was due primarily to new customer growth and return on capital expenditures related to BPU-approved infrastructure projects.

Customer Growth:

  • NJNG added 5,030 new customers during the first six months of fiscal 2019, compared with 4,656 during the same period in fiscal 2018, primarily driven by the residential new construction market. In addition, 153 existing NJNG customers expanded their natural gas service during the first six months of fiscal 2019.
  • NJNG expects to add between 28,000 and 30,000 new customers through fiscal 2021, representing an average annual growth rate of 1.8 percent and a cumulative increase in utility gross margin of approximately $16 million. For more information on utility gross margin, please see Non-GAAP Financial Information on page 8 of this release.

Base Rate Filing:

  • On March 29, 2019, NJNG filed a base rate case with the BPU, seeking a $128.2 million increase to its base rates. The filing is based on an overall return of 7.87 percent with a return on equity of 10.875 percent. The proposed increase reflects a 56.5 percent common equity component.
  • NJNG is also seeking permission for a Phase II proceeding to request rate recovery for the Southern Reliability Link (SRL) upon completion of the project. If approved, NJNG currently estimates an increase of approximately $28.6 million in base rates associated with the completion of SRL.

NJNG Infrastructure Update:

  • NJNG’s Infrastructure Investment Program (IIP) was filed on February 28, 2019, with the BPU seeking approval to implement a five-year Infrastructure Investment Program (IIP) of $507 million. The IIP consists of two components, transmission and distribution investments and information technology replacement and enhancements. Pending BPU approval, these investments will be recovered through annual filings to adjust rates with recovery estimated to begin on October 1, 2020.
  • The Southern Reliability Link, which is designed to provide a secondary interstate feed into the southern end of NJNGs delivery system, began construction in the first-quarter of fiscal 2019. NJNG expects SRL to be in service during 2020, and has requested a Phase II proceeding in its current base rate case to recover its capital costs.
  • Safety Acceleration and Facilities Enhancement (SAFE) II is the five-year program approved by the BPU in September 2016 to replace the remaining 276 miles of unprotected steel main and associated services in NJNGs distribution system. During the second-quarter of fiscal 2019, NJNG invested $22.8 million to replace 15 miles of unprotected steel main and services.
  • The New Jersey Reinvestment in System Enhancement (NJ RISE) program is the five-year, $102.5 million investment that began in 2014. During the second-quarter of fiscal 2019, NJNG began construction on the installation of a new distribution main into Long Beach Island.
  • The SAFE II and NJ RISE programs are eligible for annual base rate increases. On March 29, 2019, NJNG filed its annual petition with the BPU, requesting a base rate increase of approximately $8.7 million for the recovery of the related capital costs through June 30, 2019. The filing will be updated in July 2019 to reflect the actual results through June 30, 2019, with changes to base rates effective October 1, 2019.

BGSS Incentive Programs:

BGSS incentive programs contributed $1.4 million to utility gross margin in the second-quarter of fiscal 2019, compared with $2.4 million during the same period in fiscal 2018. Fiscal 2019 year-to-date, these programs contributed $3.4 million, compared with $6.8 million during the same period in fiscal 2018. The lower results were due primarily to lower volumes in the capacity release program, lower values and fewer opportunities for off-system sales and storage incentives. Total savings for NJNG customers through the BGSS incentive programs for the six months ended March 31, 2019, were approximately $17.8 million.

Energy Efficiency Programs:

The SAVEGREEN Project, NJNGs energy-efficiency program, invested $6 million during the second-quarter of fiscal 2019 in grants and financing options designed to help customers with energy-efficiency upgrades for their homes and businesses.

Midstream

Midstream reported second-quarter fiscal 2019 NFE of $4.5 million, compared with $1.3 million during the same period in fiscal 2018, and fiscal year-to-date NFE of $8.1 million, compared with $18.8 million during the same period last year. The increase in second-quarter NFE compared to last year is due primarily to the gains associated with the sale of equity securities and certain tax effects recognized in fiscal 2018 that did not reoccur in fiscal 2019. The year-to-date decrease in NFE was due primarily to the effects of tax reform, which resulted in a tax benefit of $13.8 million recognized in the first-quarter of fiscal 2018 that did not reoccur in fiscal 2019.

Non-Regulated Businesses Update:

Energy Services

Energy Services reported second-quarter fiscal 2019 NFE of $19.3 million, compared with $72.8 million during fiscal 2018. Fiscal 2019 year-to-date NFE were $27.7 million, compared with $93.1 million during the same period in fiscal 2018. The decrease in NFE was primarily due to the lack of sustained cold weather and related pricing volatility this year compared to fiscal 2018.

Clean Energy Ventures

CEV reported second-quarter fiscal 2019 NFE of $21.7 million, compared with NFE of $10.1 million in the same period last year. The increase in NFE during the quarter was due primarily to an increase in Investment Tax Credits (ITCs) recognized and lower O&M expenses compared to last year. Fiscal 2019 year-to-date NFE were $31.9 million, compared with $81.3 million during the same period in fiscal 2018. The decrease in NFE was due primarily to the effects of tax reform, which resulted in a tax benefit of $62.7 million recognized in the first-quarter of fiscal 2018.

Second-quarter highlights:

  • Completed the sale of the remaining assets in the wind portfolio for total proceeds of $208.6 million.
  • The Sunlight Advantage, CEV’s residential solar leasing program, added 189 residential customers and now serves over 7,600 residential customers, representing an investment of $228.1 million.

Home Services and Other Operations

In the second-quarter of fiscal 2019, Home Services and Other Operations reported net financial losses of $1.6 million, compared with net financial losses of $2.5 million in fiscal 2018. Fiscal 2019 year-to-date net financial losses were $1.5 million, compared with net financial losses of $10.2 million in fiscal 2018. The decrease in net financial loss for both periods was due primarily to the revaluation of deferred income taxes resulting from tax reform that did not repeat in 2019.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile while continuing to invest capital in regulated and non-regulated projects.

  • During the second-quarter of fiscal 2019, NJR used operating cash flows of $171.8 million, compared with $312.5 million during the same period in fiscal 2018.
  • Second-quarter fiscal 2019 capital expenditures were $200.1 million, of which $148.8 million were related to regulated assets, compared with capital expenditures of $148.8 million, of which $95.1 million were related to regulated assets, during the same period in fiscal 2018.

Webcast Information:

NJR will host a live webcast to discuss its financial results today at 10 a.m. ET. A few minutes prior to the webcast, go to njresources.com and select Investor Relations, then scroll down to the Events & Presentations section and click on the webcast link.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. NJR cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJRs 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 managements 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 managements expectations, assumptions and beliefs or that the effect of future developments on NJR will be those anticipated by management. Forward-looking statements in this release include, but are not limited to, certain statements regarding NJRs NFE guidance for fiscal 2019, forecasted contribution of business segments to fiscal 2019 NFE and beyond, future NJNG customer and utility gross margin growth, future NJR capital expenditures, infrastructure investments, CEV’s ITC-eligible projects and demand for residential solar, earnings and dividend growth, NJNG’s base rate case, as well as the ability to close and successfully implement the Adelphia Gateway acquisition, and construct the SRL and PennEast Pipeline projects.

The factors that could cause actual results to differ materially from NJRs expectations include, but are not limited to, risks associated with our investments in clean energy projects, including the availability of regulatory and tax incentives, the availability of viable projects, our eligibility for ITCs, the future market for SRECs and electricity prices, and operational risks related to projects in service; the ability to obtain governmental and regulatory approvals, land-use rights, electric grid connection (in the case of clean energy projects) and/or financing for the construction, development and operation of our unregulated energy investments, pipeline transportation systems and NJNG and Midstream infrastructure projects, including NJ RISE, SRL, PennEast and Adelphia Gateway, in a timely manner; risks associated with acquisitions and the related integration of acquired assets with our current operations, including our planned Adelphia Gateway acquisition; volatility of natural gas and other commodity prices and their impact on NJNG customer usage, NJNGs BGSS incentive programs, our Energy Services segment operations and our risk management efforts; the ability to comply with current and future regulatory requirements; the level and rate at which NJNGs costs and expenses are incurred and the extent to which they are approved for recovery from customers through the regulatory process, including through future base rate case filings; the impact of a disallowance of recovery of environmental-related expenditures and other regulatory changes; the performance of our subsidiaries; operating risks incidental to handling, storing, transporting and providing customers with natural gas; access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply; the regulatory and pricing policies of federal and state regulatory agencies; timing of qualifying for ITCs due to delays or failures to complete planned solar projects and the resulting effect on our effective tax rate and earnings; the results of legal or administrative proceedings with respect to claims, rates, environmental issues, natural gas cost prudence reviews and other matters; changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to our company; risks related to cyber attack or failure of information technology systems; the impact of volatility in the equity and credit markets on our access to capital; the impact to the asset values and resulting higher costs and funding obligations of our pension and post-employment benefit plans as a result of potential downturns in the financial markets, lower discount rates, revised actuarial assumptions or impacts associated with the Patient Protection and Affordable Care Act; commercial and wholesale credit risks, including the availability of creditworthy customers and counterparties, and liquidity in the wholesale energy trading market; accounting effects and other risks associated with hedging activities and use of derivatives contracts; the ability to optimize our physical assets; weather and economic conditions; changes to tax laws and regulations; any potential need to record a valuation allowance for our deferred tax assets; the ability to comply with debt covenants; demographic changes in NJRs service territory and their effect on NJRs customer growth; the impact of natural disasters, terrorist activities and other extreme events on our operations and customers; the costs of compliance with present and future environmental laws, including potential climate change-related legislation; environmental-related and other uncertainties related to litigation or administrative proceedings; risks related to our employee workforce; and risks associated with the management of our joint ventures and partnerships. The aforementioned factors are detailed in the Risk Factors sections of our Form 10-K that we filed with the Securities and Exchange Commission (SEC) on November 20, 2018, which is available on the SECs Web site at sec.gov. Information included in this release is representative as of today only, and while NJR periodically reassesses material trends and uncertainties affecting NJRs results of operations and financial condition in connection with its preparation of managements 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 release includes the non-GAAP financial measures NFE/net financial losses, financial margin and utility gross margin. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. As an indicator of NJRs 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 companys 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 contracts is reported on the income statement in the current period. In order to manage its business, NJR views its results without the impacts of the unrealized gains and losses, and certain realized gains and losses, caused by changes in value of these financial instruments and physical commodity contracts prior to the completion of the planned transaction because it shows changes in value currently instead of when the planned transaction ultimately is settled. An annual estimated effective tax rate is calculated for NFE purposes and any necessary quarterly tax adjustment is applied to Clean Energy Ventures, as such the adjustment is related to tax credits generated by CEV.

NJNGs 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 NJRs 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 NJRs performance. Management believes these non-GAAP financial measures are more reflective of NJRs 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 NJRs non-GAAP financial measures, please see NJRs 2019 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, NJRs 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 Jerseys Monmouth, Ocean and parts of Morris, Middlesex and Burlington counties.
  • NJR Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of more than 250 megawatts, providing residential and commercial customers with low-carbon solutions.
  • NJR Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.
  • NJR Midstream serves customers from local distributors and producers to electric generators and wholesale marketers through its 50 percent equity ownership in the Steckman Ridge natural gas storage facility, as well as its 20 percent equity interest in the PennEast Pipeline Project.
  • NJR Home Services provides service contracts as well as heating, central air conditioning, water heaters, standby generators, solar and other indoor and outdoor comfort products to residential homes throughout New Jersey.

NJR and its more than 1,000 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve and initiatives such as The SAVEGREEN Project and The Sunlight Advantage.

For more information about NJR:

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                
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended Six Months Ended
March 31, March 31,
(Thousands, except per share data) 2019 2018 2019 2018
OPERATING REVENUES
Utility $ 301,420 $ 317,064 $ 501,385 $ 526,851
Nonutility 564,835   701,979   1,176,637   1,197,497  
Total operating revenues 866,255   1,019,043   1,678,022   1,724,348  
OPERATING EXPENSES
Gas purchases
Utility 138,117 96,586 225,766 174,188
Nonutility 545,268 621,223 1,080,651 1,066,307
Related parties 2,144 2,087 4,329 4,236
Operation and maintenance 62,959 56,797 123,061 110,957
Regulatory rider expenses 15,391 19,604 28,023 31,373
Depreciation and amortization 22,311 22,460 44,143 44,314
Energy and other taxes 3,064   21,542   6,305   38,033  
Total operating expenses 789,254   840,299   1,512,278   1,469,408  
OPERATING INCOME 77,001 178,744 165,744 254,940
Other income, net 2,758 1,028 3,627 7,004
Interest expense, net of capitalized interest 12,509   11,798   25,995   23,703  
INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES 67,250 167,974 143,376 238,241
Income tax (benefit) provision (2,952 ) 30,901 (9,913 ) (19,267 )
Equity in earnings of affiliates 3,371   3,193   6,532   6,457  
NET INCOME $ 73,573   $ 140,266   $ 159,821   $ 263,965  
 
EARNINGS PER COMMON SHARE
Basic $ 0.83 $ 1.60 $ 1.80 $ 3.02
Diluted $ 0.82   $ 1.59   $ 1.79   $ 3.01  
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 88,836 87,595 88,692 87,295
Diluted 89,228   87,989   89,093   87,690  
 
 
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
     
Three Months Ended Six Months Ended
March 31, March 31,
(Thousands)   2019   2018   2019   2018
NEW JERSEY RESOURCES        
 
A reconciliation of net income, the closest GAAP financial measurement, to net financial earnings is as follows:
 
Net income $ 73,573 $ 140,266 $ 159,821 $ 263,965
Add:
Unrealized loss (gain) on derivative instruments and related transactions 10,226 (11,608 ) (707 ) 23,246
Tax effect (2,435 ) 4,716 149 (3,343 )
Effects of economic hedging related to natural gas inventory 22,367 6,125 756 (19,262 )
Tax effect (5,316 ) (1,715 ) (180 ) 6,529
Net income to NFE tax adjustment 14,002   4,278   6,671   6,260  
Net financial earnings $ 112,417   $ 142,062   $ 166,510   $ 277,395  
 
Weighted Average Shares Outstanding
Basic 88,836 87,595 88,692 87,295
Diluted 89,228   87,989   89,093   87,690  
 
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 $ 0.83 $ 1.60 $ 1.80 $ 3.02
Add:
Unrealized loss (gain) on derivative instruments and related transactions $ 0.12 $ (0.13 ) $ (0.01 ) $ 0.27
Tax effect $ (0.03 ) $ 0.05 $ $ (0.04 )
Effects of economic hedging related to natural gas inventory $ 0.25 $ 0.07 $ 0.01 $ (0.22 )
Tax effect $ (0.06 ) $ (0.02 ) $ $ 0.08
Net income to NFE tax adjustment $ 0.16   $ 0.05   $ 0.08   $ 0.07  
Basic NFE per share $ 1.27   $ 1.62   $ 1.88   $ 3.18  
                 
NATURAL GAS DISTRIBUTION        
 
A reconciliation of operating revenue, the closest GAAP financial measurement, to utility gross margin is as follows:
 
Operating revenues $ 301,420 $ 317,064 $ 501,385 $ 526,851
Less:
Gas purchases 145,171 141,988 237,349 226,743
Energy and other taxes 17,873 30,277
Regulatory rider expense 15,391   19,604   28,023   31,373  
Utility gross margin $ 140,858   $ 137,599   $ 236,013   $ 238,458  
                 
CLEAN ENERGY VENTURES                
 
A reconciliation of net income to net financial earnings is as follows:
 
Net income $ 7,728 $ 5,773 $ 25,264 $ 75,042
Add:
Net income to NFE tax adjustment 14,002   4,278   6,671   6,259  
Net financial earnings $ 21,730   $ 10,051   $ 31,935   $ 81,301  
                 
 
Three Months Ended Six Months Ended
(Unaudited) March 31, March 31,
(Thousands)   2019   2018   2019   2018
ENERGY SERVICES                
 
The following table is a computation of financial margin:
 
Operating revenues $ 547,825 $ 725,313 $ 1,135,092 $ 1,203,294
Less: Gas purchases 546,395 622,347 1,082,903 1,068,557
Add:
Unrealized loss (gain) on derivative instruments and related transactions 8,805 (12,249 ) (2,372 ) 21,624
Effects of economic hedging related to natural gas inventory 22,367   6,125   756   (19,262 )
Financial margin $ 32,602   $ 96,842   $ 50,573   $ 137,099  
 
A reconciliation of operating income, the closest GAAP financial measurement, to financial margin is as follows:
 
Operating (loss) income $ (4,256 ) $ 100,856 $ 40,630 $ 126,960
Add:
Operation and maintenance expense 5,367 1,076 10,640 5,512
Depreciation and amortization 25 15 52 29
Other taxes 294   1,019   867   2,236  
Subtotal 1,430 102,966 52,189 134,737
Add:
Unrealized loss (gain) on derivative instruments and related transactions 8,805 (12,249 ) (2,372 ) 21,624
Effects of economic hedging related to natural gas inventory 22,367   6,125   756   (19,262 )
Financial margin $ 32,602   $ 96,842   $ 50,573   $ 137,099  
 
A reconciliation of net income to net financial earnings is as follows:
 
Net income $ (4,460 ) $ 75,810 $ 28,914 $ 86,930
Add:
Unrealized loss (gain) on derivative instruments and related transactions 8,805 (12,249 ) (2,372 ) 21,624
Tax effect (2,092 ) 4,861 556 (2,715 )
Effects of economic hedging related to natural gas 22,367 6,125 756 (19,262 )
Tax effect (5,316 ) (1,715 ) (180 ) 6,529  
Net financial earnings $ 19,304   $ 72,832   $ 27,674   $ 93,106  
 
                 
Home Services and Other                
 
A reconciliation of net income to net financial earnings is as follows:
 
Net loss $ (1,668 ) $ (2,394 ) $ (1,693 ) $ (10,110 )
Add:
Unrealized loss (gain) on derivative instruments and related transactions 120 (121 ) 261 (121 )
Tax effect (33 ) 27   (73 ) 27  
Net financial loss $ (1,581 ) $ (2,488 ) $ (1,505 ) $ (10,204 )
 
   
Three Months Ended Six Months Ended
March 31, March 31,
(Thousands, except per share data)   2019   2018   2019   2018
NEW JERSEY RESOURCES                
   
Operating Revenues
Natural Gas Distribution $ 301,420 $ 317,064 $ 501,385 $ 526,851
Clean Energy Ventures 11,360 12,866 26,257 26,862
Energy Services 547,825 725,313 1,135,092 1,203,294
Midstream
Home Services and Other 12,333   8,261   24,823   18,218  
Sub-total 872,938 1,063,504 1,687,557 1,775,225
Eliminations (6,683 ) (44,461 ) (9,535 ) (50,877 )
Total $ 866,255   $ 1,019,043   $ 1,678,022   $ 1,724,348  
                 
 
Operating Income (Loss)
Natural Gas Distribution $ 85,780 $ 84,167 $ 128,812 $ 136,076
Clean Energy Ventures (1,574 ) (2,533 ) (1,748 ) (2,974 )
Energy Services (4,256 ) 100,856 40,630 126,960
Midstream (1,070 ) (593 ) (1,707 ) (966 )
Home Services and Other (1,766 ) (3,655 ) (1,393 ) (4,882 )
Sub-total 77,114 178,242 164,594 254,214
Eliminations (113 ) 502   1,150   726  
Total $ 77,001   $ 178,744   $ 165,744   $ 254,940  
                 
 
Equity in Earnings of Affiliates
Midstream $ 3,998 $ 4,068 $ 7,799 $ 8,197
Eliminations (627 ) (875 ) (1,267 ) (1,740 )
Total $ 3,371   $ 3,193   $ 6,532   $ 6,457  
                 
 
Net Income (Loss)
Natural Gas Distribution $ 68,546 $ 60,442 $ 100,259 $ 94,551
Clean Energy Ventures 7,728 5,773 25,264 75,042
Energy Services (4,460 ) 75,810 28,914 86,930
Midstream 4,498 1,315 8,149 18,826
Home Services and Other (1,668 ) (2,394 ) (1,693 ) (10,110 )
Sub-total 74,644 140,946 160,893 265,239
Eliminations (1,071 ) (680 ) (1,072 ) (1,274 )
Total $ 73,573   $ 140,266   $ 159,821   $ 263,965  
                 
 
Net Financial Earnings (Loss)
Natural Gas Distribution $ 68,546 $ 60,442 $ 100,259 $ 94,551
Clean Energy Ventures 21,730 10,051 31,935 81,301
Energy Services 19,304 72,832 27,674 93,106
Midstream 4,498 1,315 8,149 18,826
Home Services and Other (1,581 ) (2,488 ) (1,505 ) (10,204 )
Sub-total 112,497 142,152 166,512 277,580
Eliminations (80 ) (90 ) (2 ) (185 )
Total $ 112,417   $ 142,062   $ 166,510   $ 277,395  
                 
 
Throughput (Bcf)
NJNG, Core Customers 40.6 41.8 67.3 72.5
NJNG, Off System/Capacity Management 28.4 36.7 55.8 75.4
Energy Services Fuel Mgmt. and Wholesale Sales 160.5   168.4   317.2   331.5  
Total 229.5   246.9   440.3   479.4  
                 
 
Common Stock Data
Yield at March 31 2.3 % 2.7 % 2.3 % 2.7 %
Market Price
High $ 50.54 $ 40.40 $ 51.83 $ 45.45
Low $ 43.92 $ 35.55 $ 43.51 $ 35.55
Close at March 31 $ 49.79 $ 40.10 $ 49.79 $ 40.10
Shares Out. at March 31 89,164 87,656 89,164 87,656
Market Cap. at March 31 $ 4,439,470   $ 3,515,006   $ 4,439,470   $ 3,515,006  
 
   
Three Months Ended Six Months Ended
(Unaudited) March 31, March 31,
(Thousands, except customer and weather data)   2019   2018   2019   2018
NATURAL GAS DISTRIBUTION                
   
Utility Gross Margin
Operating revenues $ 301,420 $ 317,064 $ 501,385 $ 526,851
Less:
Gas purchases 145,171 141,988 237,349 226,743
Energy and other taxes 17,873 30,277
Regulatory rider expense 15,391   19,604   28,023   31,373  
Total Utility Gross Margin $ 140,858   $ 137,599   $ 236,013   $ 238,458  
                 
Utility Gross Margin, Operating Income and Net Income
Residential $ 99,645 $ 94,555 $ 163,784 $ 159,290
Commercial, Industrial & Other 20,673 19,230 34,019 33,148
Firm Transportation 17,871   20,177   32,267   36,437  
Total Firm Margin 138,189 133,962 230,070 228,875
Interruptible 1,267   1,277   2,586   2,788  
Total System Margin 139,456 135,239 232,656 231,663
Off System/Capacity Management/FRM/Storage Incentive 1,402   2,360   3,357   6,795  
Total Utility Gross Margin 140,858 137,599 236,013 238,458
Operation and maintenance expense 39,507 38,689 76,390 73,510
Depreciation and amortization 13,972 13,353 27,868 26,136
Other taxes not reflected in gross margin 1,599   1,390   2,943   2,736  
Operating Income $ 85,780   $ 84,167   $ 128,812   $ 136,076  
 
Net Income $ 68,546   $ 60,442   $ 100,259   $ 94,551  
 
Net Financial Earnings $ 68,546   $ 60,442   $ 100,259   $ 94,551  
                 
Throughput (Bcf)
Residential 22.6 22.5 37.1 36.1
Commercial, Industrial & Other 5.0 4.2 7.8 6.8
Firm Transportation 5.2   6.6   9.6   11.2  
Total Firm Throughput 32.8 33.3 54.5 54.1
Interruptible 7.8   8.5   12.8   18.4  
Total System Throughput 40.6 41.8 67.3 72.5
Off System/Capacity Management 28.4   36.7   55.8   75.4  
Total Throughput 69.0   78.5   123.1   147.9  
                 
Customers
Residential 482,126 467,014 482,126 467,014
Commercial, Industrial & Other 30,562 28,926 30,562 28,926
Firm Transportation 33,371   40,873   33,371   40,873  
Total Firm Customers 546,059 536,813 546,059 536,813
Interruptible 31   30   31   30  
Total System Customers 546,090 536,843 546,090 536,843
Off System/Capacity Management* 28   28   28   28  
Total Customers 546,118   536,871   546,118   536,871  
*The number of customers represents those active during the last month of the period.        
Degree Days
Actual 2,495 2,417 4,133 3,994
Normal 2,471   2,454   4,036   4,030  
Percent of Normal 101.0 % 98.5 % 102.4 % 99.1 %
 
   
Three Months Ended Six Months Ended
(Unaudited) March 31, March 31,
(Thousands, except customer, SREC and megawatt)   2019   2018   2019   2018
CLEAN ENERGY VENTURES                
   
Operating Revenues
SREC sales $ 6,034 $ 5,438 $ 13,181 $ 12,294
Wind electricity sales and other 1,441 4,103 5,177 8,288
Solar electricity sales and other 1,695 1,418 3,577 2,543
Sunlight Advantage 2,190   1,907   4,322   3,737  
Total Operating Revenues $ 11,360   $ 12,866   $ 26,257   $ 26,862  
 
Depreciation and Amortization $ 8,091   $ 8,928   $ 16,014   $ 17,863  
 
Operating Loss $ (1,574 ) $ (2,533 ) $ (1,748 ) $ (2,974 )
 
Income Tax Benefit $ (14,042 ) $ (12,722 ) $ (37,246 ) $ (86,710 )
 
Net Income $ 7,728   $ 5,773   $ 25,264   $ 75,042  
 
Net Financial Earnings $ 21,730   $ 10,051   $ 31,935   $ 81,301  
 
Solar Renewable Energy Certificates Generated 46,552   34,488   100,451   88,056  
 
Solar Renewable Energy Certificates Sold 31,000   26,000   68,820   55,680  
 
Solar Megawatts Eligible for ITCs 1.9   1.8   22.8   3.6  
 
Solar Megawatts Under Construction 31.3   43.5   31.3   43.5  
 
                 
ENERGY SERVICES                
 
Operating Income
Operating revenues $ 547,825 $ 725,313 $ 1,135,092 $ 1,203,294
Less:
Gas purchases 546,395 622,347 1,082,903 1,068,557
Operation and maintenance expense 5,367 1,076 10,640 5,512
Depreciation and amortization 25 15 52 29
Energy and other taxes, net 294   1,019   867   2,236  
Operating (Loss) Income $ (4,256 ) $ 100,856   $ 40,630   $ 126,960  
 
Net (Loss) Income $ (4,460 ) $ 75,810   $ 28,914   $ 86,930  
 
Financial Margin $ 32,602   $ 96,842   $ 50,573   $ 137,099  
 
Net Financial Earnings $ 19,304   $ 72,832   $ 27,674   $ 93,106  
 
Gas Sold and Managed (Bcf) 160.5   168.4   317.2   331.5  
                 
MIDSTREAM                
 
Equity in Earnings of Affiliates $ 3,998   $ 4,068   $ 7,799   $ 8,197  
 
Other Income, Net $ 3,354   $ 1,356   $ 5,346   $ 2,577  
 
Income Tax Provision (Benefit) $ 1,219   $ 3,131   $ 2,181   $ (9,712 )
 
Net Income $ 4,498   $ 1,315   $ 8,149   $ 18,826  
                 
HOME SERVICES AND OTHER                
 
Operating Revenues $ 12,333   $ 8,261   $ 24,823   $ 18,218  
 
Operating Loss $ (1,766 ) $ (3,655 ) $ (1,393 ) $ (4,882 )
 
Other Income (Expense), Net $ 50   $   $ (148 ) $ 5,301  
 
Net Loss $ (1,668 ) $ (2,394 ) $ (1,693 ) $ (10,110 )
       
Net Financial Loss $ (1,581 ) $ (2,488 ) $ (1,505 ) $ (10,204 )
 
Total Service Contract Customers at March 31 109,372   110,883   109,372   110,883  
 

Media:
Michael Kinney
732-938-1031
[email protected]

Investors:
Dennis
Puma
732-938-1229
[email protected]