WALL, N.J.–(BUSINESS WIRE)–Today, New Jersey Resources Corporation (NYSE: NJR) reported results for the fourth quarter and year ended fiscal 2023. Highlights include:
- Consolidated net income of $264.7 million for fiscal 2023, compared with net income of $274.9 million in fiscal 2022
- Consolidated net financial earnings (NFE), a non-GAAP financial measure, of $261.8 million, or $2.70 per share, compared to NFE of $240.3 million, or $2.50 per share, in fiscal 2022
- Increased fiscal 2024 dividend by 7.7% to $1.68 per share
Outlook for Fiscal 2024
- Introduces fiscal 2024 net financial earnings per share (NFEPS) guidance range of $2.70 to $2.85
- Maintains long-term projected NFEPS growth rate of 7 to 9 percent(1)
Fourth-quarter fiscal 2023 net income totaled $37.0 million, or $0.38 per share, compared with net income of $54.5 million, or $0.57 per share, during the same period in fiscal 2022. Fiscal 2023 net income totaled $264.7 million, or $2.73 per share, compared with $274.9 million, or $2.86 per share, for the same period in fiscal 2022.
Fourth-quarter fiscal 2023 NFE totaled $29.6 million, or $0.30 per share, compared to NFE of $47.9 million, or $0.50 per share, during the same period in fiscal 2022. Fiscal 2023 NFE totaled $261.8 million, or $2.70 per share, compared with $240.3 million, or $2.50 per share, for the same period in fiscal 2022.
Management Commentary
Steve Westhoven, President and CEO, stated, “NJR reported an excellent year in fiscal 2023 supported by solid contributions from our complementary portfolio of businesses. We achieved NFEPS at the higher end of our guidance range, which was increased by $0.20 earlier this year as a result of the strong performance of our business units during Winter Storm Elliott, particularly Energy Services. Our performance this past year speaks to the strength of our diversified business model, and our ability to adapt to challenges in ways that benefit our customers and investors.”
Key Performance Metrics
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
($ in Thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net income |
$ |
37,024 |
|
|
$ |
54,522 |
|
|
$ |
264,724 |
|
|
$ |
274,922 |
|
|
Basic EPS |
$ |
0.38 |
|
|
$ |
0.57 |
|
|
$ |
2.73 |
|
|
$ |
2.86 |
|
|
Net financial earnings |
$ |
29,563 |
|
|
$ |
47,896 |
|
|
$ |
261,827 |
|
|
$ |
240,321 |
|
|
Basic net financial earnings per share |
$ |
0.30 |
|
|
$ |
0.50 |
|
|
$ |
2.70 |
|
|
$ |
2.50 |
|
|
(1) NFEPS long-term annual growth projections are based on the midpoint of the $2.20 – $2.30 initial guidance range for fiscal 2022, provided on February 1, 2021 |
|||||||||||||||
A reconciliation of net income to NFE for the three and twelve months ended September 30, 2023 and 2022, is provided below.
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
(Thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
Net income |
$ |
37,024 |
|
|
$ |
54,522 |
|
|
$ |
264,724 |
|
|
$ |
274,922 |
|
|
Add: |
|
|
|
|
|
|
|
||||||||
|
Unrealized gain on derivative instruments and related transactions |
|
(7,579 |
) |
|
|
(1,846 |
) |
|
|
(38,081 |
) |
|
|
(59,906 |
) |
|
Tax effect |
|
1,800 |
|
|
|
439 |
|
|
|
9,050 |
|
|
|
14,248 |
|
|
Effects of economic hedging related to natural gas inventory |
|
(2,186 |
) |
|
|
(5,221 |
) |
|
|
34,699 |
|
|
|
19,939 |
|
|
Tax effect |
|
520 |
|
|
|
1,241 |
|
|
|
(8,246 |
) |
|
|
(4,738 |
) |
|
Gain on equity method investment |
|
— |
|
|
|
(1,500 |
) |
|
|
(300 |
) |
|
|
(5,521 |
) |
|
Tax effect |
|
(93 |
) |
|
|
374 |
|
|
|
(19 |
) |
|
|
1,377 |
|
|
NFE tax adjustment |
|
77 |
|
|
|
(113 |
) |
|
|
— |
|
|
|
— |
|
|
Net financial earnings |
$ |
29,563 |
|
|
$ |
47,896 |
|
|
$ |
261,827 |
|
|
$ |
240,321 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted Average Shares Outstanding |
|
|
|
|
|
|
|
||||||||
|
Basic |
|
97,568 |
|
|
|
96,235 |
|
|
|
97,028 |
|
|
|
96,100 |
|
|
Diluted |
|
98,192 |
|
|
|
96,630 |
|
|
|
97,627 |
|
|
|
96,488 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per share |
$ |
0.38 |
|
|
$ |
0.57 |
|
|
$ |
2.73 |
|
|
$ |
2.86 |
|
|
Add: |
|
|
|
|
|
|
|
||||||||
|
Unrealized gain on derivative instruments and related transactions |
|
(0.08 |
) |
|
|
(0.02 |
) |
|
|
(0.39 |
) |
|
|
(0.62 |
) |
|
Tax effect |
|
0.02 |
|
|
|
0.01 |
|
|
|
0.09 |
|
|
|
0.15 |
|
|
Effects of economic hedging related to natural gas inventory |
|
(0.02 |
) |
|
|
(0.05 |
) |
|
|
0.36 |
|
|
|
0.21 |
|
|
Tax effect |
|
— |
|
|
|
0.01 |
|
|
|
(0.09 |
) |
|
|
(0.05 |
) |
|
Gain on equity method investment |
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
|
|
(0.06 |
) |
|
Tax effect |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
Basic net financial earnings per share |
$ |
0.30 |
|
|
$ |
0.50 |
|
|
$ |
2.70 |
|
|
$ |
2.50 |
|
NFE is a measure of earnings based on the elimination of timing differences to effectively match the earnings effects of the economic hedges with the physical sale of natural gas, Solar Renewable Energy Certificates (SRECs) and foreign currency contracts. Consequently, to reconcile net income and NFE, current-period unrealized gains and losses on the derivatives are excluded from NFE as a reconciling item. Realized derivative gains and losses are also included in current-period net income. However, NFE includes only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the derivatives with realized margins on physical natural gas flows. NFE also excludes certain transactions associated with equity method investments, including impairment charges, which are non-cash charges, and return of capital in excess of the carrying value of our investment. These are not indicative of the Company’s performance for its ongoing operations. Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.
A table detailing NFE for the three and twelve months ended September 30, 2023 and 2022, is provided below.
Net financial (loss) earnings by business unit
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
(Thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
New Jersey Natural Gas |
$ |
(24,838 |
) |
|
$ |
(16,387 |
) |
|
$ |
131,414 |
|
|
$ |
140,124 |
|
|
Clean Energy Ventures |
|
50,152 |
|
|
|
57,813 |
|
|
|
44,458 |
|
|
|
39,403 |
|
|
Storage and Transportation |
|
1,784 |
|
|
|
11,341 |
|
|
|
12,835 |
|
|
|
22,454 |
|
|
Energy Services |
|
(3,537 |
) |
|
|
(3,383 |
) |
|
|
68,517 |
|
|
|
39,121 |
|
|
Home Services and Other |
|
3,451 |
|
|
|
(1,894 |
) |
|
|
4,758 |
|
|
|
(781 |
) |
|
Subtotal |
|
27,012 |
|
|
|
47,490 |
|
|
|
261,982 |
|
|
|
240,321 |
|
|
Eliminations |
|
2,551 |
|
|
|
406 |
|
|
|
(155 |
) |
|
|
— |
|
|
Total |
$ |
29,563 |
|
|
$ |
47,896 |
|
|
$ |
261,827 |
|
|
$ |
240,321 |
|
Fiscal 2024 NFE Guidance:
NJR is introducing its fiscal 2024 NFEPS guidance range of $2.70 to $2.85, which represents 12.3% percent year-over-year growth over the midpoint of the originally provided fiscal 2023 guidance range of $2.42 – $2.52, subject to the risks and uncertainties identified below under “Forward-Looking Statements.”
In fiscal 2024, NJR expects Energy Services will represent a higher percentage of NFEPS than in prior years due to contributions from the Asset Management Agreements signed in 2020. The following chart represents NJR’s current expected contributions from its business segments for fiscal 2024:
|
Company |
Expected Fiscal 2024 Net Financial Earnings Contribution |
|
New Jersey Natural Gas |
40 to 45 percent |
|
Clean Energy Ventures |
13 to 18 percent |
|
Storage and Transportation |
4 to 8 percent |
|
Energy Services |
35 to 40 percent |
|
Home Services and Other |
0 to 1 percent |
In providing fiscal 2024 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”)
NJNG reported fiscal 2023 NFE of $131.4 million, compared to NFE of $140.1 million during fiscal 2022. NJNG reported fourth-quarter fiscal 2023 net financial loss of $(24.8) million, compared to a net financial loss of $(16.4) million during the same period in fiscal 2022. The decrease in NFE for the year was due primarily to higher depreciation and operating expenses, including the deferral of bad debt costs in accordance with the July 2, 2020 BPU deferral order in fiscal 2022 that did not reoccur, partially offset by higher utility gross margin.
Customer Growth:
- NJNG added 8,800 new customers during fiscal 2023, compared with 7,808 during fiscal 2022. NJNG expects these new customers to contribute approximately $7.4 million of incremental utility gross margin on an annualized basis.
Infrastructure Update:
- NJNG’s Infrastructure Investment Program (IIP) is a five-year, $150 million accelerated recovery program that began in fiscal 2021. IIP consists of a series of infrastructure projects designed to enhance the safety and reliability of NJNG’s natural gas distribution system. During fiscal 2023, NJNG spent $43.1 million under the program on various distribution system reinforcement projects. On March 30, 2023, NJNG submitted its annual IIP filing to the BPU requesting a rate increase for capital expenditures of $31.4 million through June 30, 2023, resulting in a $3.2 million revenue increase, with an effective date of October 1, 2023.
Basic Gas Supply Service (BGSS) Incentive Programs:
BGSS incentive programs contributed $20.0 million to utility gross margin in fiscal 2023, compared with $19.6 million during fiscal 2022. Increases in storage incentive margin and capacity release volumes in fiscal 2023, were partially offset by lower off-system sales.
For more information on utility gross margin, please see “Non-GAAP Financial Information” below.
Energy-Efficiency Programs:
SAVEGREEN invested $59.8 million in fiscal 2023 in energy-efficiency upgrades for customers’ homes and businesses. NJNG recovered $26.3 million of its outstanding investments during fiscal 2023 through its energy efficiency rate.
Clean Energy Ventures (CEV)
CEV reported fiscal 2023 NFE of $44.5 million, compared with NFE of $39.4 million during fiscal 2022. Fourth-quarter fiscal 2023 NFE were $50.2 million, compared with NFE of $57.8 million during the same period in fiscal 2022. The increase in NFE for fiscal 2023 was due primarily to a reversal of a valuation allowance on certain deferred tax assets during June 2023, which was determined to be no longer required. The decrease in NFE for the fourth quarter of fiscal 2023 was largely due to lower SREC and electricity revenue for the period, partially offset by higher TREC revenue.
Solar Investment Update:
- During fiscal 2023, CEV placed 10 commercial projects into service, adding approximately 78MW to total installed capacity, including two operational assets acquired in July 2023 totaling approximately 21MW.
- As of September 30, 2023, CEV had approximately 469MW of solar capacity (including residential) in service in New Jersey, New York, Connecticut, Rhode Island, Indiana, and Michigan.
Storage and Transportation
Storage and Transportation reported fiscal 2023 NFE of $12.8 million, compared with NFE of $22.5 million during fiscal 2022. Fourth-quarter fiscal 2023 NFE were $1.8 million, compared with NFE of $11.3 million during the same period in fiscal 2022. NFE for both periods decreased due to increased depreciation and interest expense; resulting primarily from the southern portion of the Adelphia Gateway project, which was placed in service in September 2022.
Energy Services
Energy Services reported fiscal 2023 NFE of $68.5 million, compared with NFE of $39.1 million during fiscal 2022. Fourth-quarter fiscal 2023 net financial loss was $(3.5) million compared with net financial loss of $(3.4) million for the same period in fiscal 2022. The increase in fiscal 2023 NFE was due to higher natural gas price volatility during periods of colder than expected weather in December 2022 and February 2023 as compared to the prior year, allowing Energy Services to capture additional financial margin.
Home Services and Other Operations
Home Services and Other Operations reported fiscal 2023 NFE of $4.8 million, compared with a net financial loss of $(0.8) million during fiscal 2022. Fourth-quarter fiscal 2023 NFE were $3.5 million compared with a net financial loss of $(1.9) million for the same period in fiscal 2022. The increase in NFE for the quarter and year was due primarily to increased installation and service contract revenue.
Capital Expenditures and Cash Flows:
NJR is committed to maintaining a strong financial profile:
- During fiscal 2023, capital expenditures were $537.3 million, including accruals, compared with $569.2 million, during fiscal 2022. The decrease in capital expenditures was primarily due to the completion of the southern portion of the Adelphia Gateway Pipeline project, which was placed into service in September 2022, as well as lower solar capital expenditures during the fiscal year. This was partially offset by an increase in capital expenditures at NJNG of $112.4 million, largely due to investments in customer growth and system integrity.
- During fiscal 2023, cash flows from operations were $479.0 million, compared with cash flows from operations of $323.5 million during the same period of fiscal 2022. The increase in operating cash flows was due to increased earnings and decreased working capital requirements as a result of a lower gas prices when compared to the prior fiscal year.
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 natural gas transportation and distribution infrastructure to serve approximately 576,000 customers in New Jersey’s Monmouth, Ocean, Morris, Middlesex, Sussex and Burlington counties.
- Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of approximately 469 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, as well as our 50% equity ownership in the Steckman Ridge natural gas storage facility.
- Home Services provides service contracts as well as heating, central air conditioning, water heaters, standby generators, solar and other indoor and outdoor comfort products to residential homes throughout New Jersey.
NJR and its over 1,300 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.
