NEW JERSEY RESOURCES REPORTS FISCAL 2024

Regulatory and Operating Highlights

Fiscal 2025 Outlook

Management Commentary

Steve Westhoven, President and CEO of New Jersey Resources, stated, “Fiscal 2024 was an excellent year for NJR, with solid financial performance across all business segments. We achieved NFEPS at the higher end of our guidance, which was raised in February. This marks the fourth consecutive year of exceeding our 7 to 9 percent stated NFEPS growth rate. We advanced our strategic objectives by settling our base rate case and the largest energy efficiency program in NJNG’s history, while making key investments to position us for continued long-term success.”

Performance Metrics

A reconciliation of net income to NFE for the three and twelve months ended September 30, 2024 and 2023, is provided below.

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 by business segment for the three and twelve months ended September 30, 2024 and 2023, is provided below.

 

Fiscal 2025 NFE Guidance:

NJR is introducing its fiscal 2025 NFEPS guidance range of $3.05 to $3.20, subject to the risks and uncertainties identified below under “Forward-Looking Statements.” Fiscal 2025 NFEPS guidance is higher than the range implied by our 7 to 9 percent long-term NFEPS growth target as a result of the one-time gain from the sale of NJR’s residential solar portfolio.

The following chart represents NJR’s current expected contributions from its business segments for fiscal 2025 (which takes into account the impact of the one-time gain from the sale of NJR’s residential solar portfolio):

 

In providing fiscal 2025 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)

Customer Growth:

Base Rate Case Settlement:

Infrastructure Update:

Basic Gas Supply Service (BGSS) Incentive Programs:

BGSS incentive programs contributed $17.9 million to utility gross margin in fiscal 2024, compared with $20.0 million in fiscal 2023. This decline was largely due to decreased margins from storage incentive along with lower off-system sales margin due to less market volatility and lower capacity release volumes.

For more information on utility gross margin, please see “Non-GAAP Financial Information” below.

Energy-Efficiency Programs:

SAVEGREEN^® invested $71.3 million in fiscal 2024 in energy-efficiency upgrades for customers’ homes and businesses. NJNG recovered $28.6 million of its outstanding investments during fiscal 2024 through its energy efficiency rate.

Clean Energy Ventures (CEV)

CEV reported fiscal 2024 NFE of $33.7 million, compared with NFE of $44.5 million during fiscal 2023. Fiscal 2024 fourth-quarter NFE were $35.5 million, compared with NFE of $50.2 million during the same period in fiscal 2023. The decrease in NFE for fiscal 2024 was largely due to a reversal of a valuation allowance on certain deferred tax assets in fiscal 2023 that did not reoccur in fiscal 2024. The decrease in NFE for the fiscal 2024 fourth quarter was largely due to lower SREC and Transition Renewable Energy Certificate (TREC) revenue for the period.

Solar Investment Update:

Storage and Transportation

Storage and Transportation reported fiscal 2024 NFE of $12.2 million, compared with NFE of $12.8 million in fiscal 2023. Fiscal 2024 fourth-quarter NFE were $2.5 million, compared with NFE of $1.8 million during the same period in fiscal 2023. Fiscal 2024 NFE decreased slightly due to higher operating and maintenance expenses, partially offset by higher revenues during the year.

Energy Services

Energy Services reported fiscal 2024 NFE of $111.5 million, compared with NFE of $68.5 million in fiscal 2023. Fiscal 2024 fourth-quarter NFE were $68.3 million compared with a net financial loss of $(3.5) million for the same period in fiscal 2023. The increase in NFE for both periods was due primarily to higher contributions from the AMAs signed in December 2020.

Home Services and Other Operations

Home Services and Other Operations reported fiscal 2024 NFE of $0.03 million, compared with NFE of $4.8 million in fiscal 2023. Fiscal 2024 fourth-quarter net financial loss was $(0.6) million, compared to NFE of $3.5 million for the same period in fiscal 2023. The decrease in NFE for both periods was largely due to higher operations and maintenance expenses.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile:

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. 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, statements regarding NJR’s NFEPS guidance for fiscal 2025, projected NFEPS growth rates and our guidance range, forecasted contributions of business segments to NJR’s NFE for fiscal 2025, forecasted increase in the fiscal 2025 dividend, customer growth at NJNG and their expected contributions, expected impact of the sale of NJR’s residential solar portfolio and expected use of proceeds from the sale, infrastructure programs and investments, future decarbonization opportunities including IIP, Energy Efficiency programs, including BGSS, the financial impact of the outcome of base rate cases with the BPU, the outcome or timing of Adelphia’s rate case with FERC, and other legal and regulatory expectations, and statements that include other projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact.

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 website, 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 new information, future events or otherwise, except as required by law.

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.

NJNG’s utility gross margin is defined as operating revenues less natural gas purchases, sales tax, and regulatory rider expense. This measure differs from gross margin as presented on a GAAP basis as it excludes certain operations and maintenance expense and depreciation and amortization. Utility gross margin may also not be comparable to the definition of gross margin used by others in the natural gas distribution business and other industries. Management believes that utility gross margin provides a meaningful basis for evaluating utility operations since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and 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 most recent Report on Form 10-K, Item 7.

About New Jersey Resources

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 SAVEGREEN^®.

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