8-K
New Jersey Resources Corp (NJR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 2, 2022
NEW JERSEY RESOURCES CORPORATION
(Exact Name of registrant as specified in its charter)
| New Jersey | 001-08359 | 22-2376465 |
|---|---|---|
| (State or Other | (Commission | (IRS Employer |
| Jurisdiction | File Number) | Identification No.) |
| of Incorporation) | ||
| 1415 Wyckoff Road | ||
| --- | --- | |
| Wall, New Jersey | 07719 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(732) 938-1480
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on<br><br> <br>which registered |
|---|---|---|
| Common Stock - $2.50 par value | NJR | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On February 3, 2022, New Jersey Resources Corporation (“NJR”) issued a press release reporting financial results for the first fiscal quarter ended December 31, 2021 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
|---|
NJR will deliver a presentation via live public webcast on February 3, 2022, at 10 a.m. ET. The slides to be used for the presentation are furnished herewith as Exhibit 99.2 and are incorporated by reference into Item 7.01 of this Current Report on Form 8-K.
The information in Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed to be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit Number | Exhibit |
|---|---|
| 99.1 | Press Release dated February 3, 2022 (furnished, not filed) |
| 99.2 | Presentation dated February 3, 2022 (furnished, not filed) |
| 104 | Cover page in Inline XBRL format |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NEW JERSEY RESOURCES CORPORATION | ||
|---|---|---|
| Date: February 3, 2022 | By: | /s/ Roberto F. Bel |
| Roberto F. Bel | ||
| Senior Vice President and Chief Financial | ||
| Officer |
Exhibit 99.1
NEW JERSEY RESOURCES REPORTS FIRST-QUARTER FISCAL 2022 RESULTS
WALL, N.J., February 3, 2022 — Today, New Jersey Resources Corporation (NYSE: NJR) reported results for the first-quarter of fiscal 2022. Highlights include:
| • | Consolidated net income of $111.3 million for the three months ended December 31, 2021, compared with $81.0 million for the same period last year |
|---|---|
| • | Consolidated net financial earnings (NFE), a non-GAAP financial measure, of $65.8 million, or $0.69 per share for the three months ended December 31, 2021, compared with NFE of $44.7 million, or $0.46 per share, for the same period last<br> year |
| --- | --- |
| • | Re-affirmed fiscal 2022 net financial earnings per share (NFEPS) guidance range of $2.20 to $2.30 |
| --- | --- |
| • | New Jersey Natural Gas (NJNG) received approval from the New Jersey Board of Public Utilities (BPU) on the settlement of its rate case, authorizing a $79.3 million increase to its base rates with new rates effective on December 1, 2021 |
| --- | --- |
| • | NJNG's Hydrogen project was completed and began producing green hydrogen in October 2021 and was included in the settlement of the base rate case |
| --- | --- |
| • | A new North Zone delivery point for Adelphia Gateway began operations in January 2022 |
| --- | --- |
| • | Asset Management Agreements (AMAs)* at Energy Services became effective during the first-quarter |
| --- | --- |
First-quarter fiscal 2022 net income totaled $111.3 million, or $1.16 per share, compared with $81.0 million, or $0.84 per share, during the same period in fiscal 2021. First-quarter fiscal 2022 NFE totaled $65.8 million, or $0.69 per share, compared to NFE of $44.7 million, or $0.46 per share, during the same period in fiscal 2021.
"NJR is off to good start in fiscal 2022 with new base rates at NJNG and more stable fee-based revenue at Energy Services,” said Steve Westhoven, President and CEO of NJR. “We are confident in our ability to achieve our fiscal 2022 net financial earnings guidance."
Key Performance Metrics
| Three Months Ended<br><br> <br>December 31, | ||||
|---|---|---|---|---|
| ($ in Thousands) | 2021 | 2020 | ||
| Net income | $ | 111,312 | $ | 81,045 |
| Basic EPS | $ | 1.16 | $ | 0.84 |
| Net financial earnings | $ | 65,770 | $ | 44,657 |
| Basic net financial earnings per share | $ | 0.69 | $ | 0.46 |
*On December 16, 2020, Energy Services entered into a series of Asset Management Agreements (AMAs) with an investment grade public utility, under which the utility is obligated to purchase and Energy Services may deliver natural gas in exchange for aggregate contracted fees of approximately $500.0 million payable in cash to Energy Services over 10 years. The AMAs include a series of initial and permanent releases that commenced in November 2021.
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 2 of 13 |
A reconciliation of net income to NFE for the three months ended December 31, 2021 and 2020, is provided below.
| Three Months Ended<br><br> <br>December 31, | ||||||
|---|---|---|---|---|---|---|
| (Thousands) | 2021 | 2020 | ||||
| Net income | $ | 111,312 | $ | 81,045 | ||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | (82,191 | ) | (37,491 | ) | ||
| Tax effect | 19,536 | 8,913 | ||||
| Effects of economic hedging related to natural gas inventory | 23,577 | (7,532 | ) | |||
| Tax effect | (5,603 | ) | 1,790 | |||
| Net income to NFE tax adjustment | (861 | ) | (2,068 | ) | ||
| Net financial earnings | $ | 65,770 | $ | 44,657 | ||
| Weighted Average Shares Outstanding | ||||||
| Basic | 95,944 | 96,114 | ||||
| Diluted | 96,356 | 96,415 | ||||
| Basic earnings per share | $ | 1.16 | $ | 0.84 | ||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | (0.86 | ) | (0.39 | ) | ||
| Tax effect | 0.21 | 0.09 | ||||
| Effects of economic hedging related to natural gas inventory | 0.25 | (0.08 | ) | |||
| Tax effect | (0.06 | ) | 0.02 | |||
| Net income to NFE tax adjustment | (0.01 | ) | (0.02 | ) | ||
| Basic net financial earnings per share | $ | 0.69 | $ | 0.46 |
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, 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 may exclude impairment charges associated with equity method investments, which are non-cash charges considered unusual in nature that occur infrequently and are not indicative of the Company's performance for its ongoing operations. For the three months ended December 31, 2021 and 2020, there were no impairments of equity method investments recorded to earnings. Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 3 of 13 |
A table detailing NFE for the three months ended December 31, 2021 and 2020, is provided below.
Net Financial Earnings (Loss) by Business Unit
| Three Months Ended<br><br> <br>December 31, | ||||||
|---|---|---|---|---|---|---|
| (Thousands) | 2021 | 2020 | ||||
| New Jersey Natural Gas | $ | 51,080 | $ | 49,467 | ||
| Clean Energy Ventures | (6,821 | ) | (10,274 | ) | ||
| Storage and Transportation | 2,962 | 3,508 | ||||
| Energy Services | 17,567 | 1,500 | ||||
| Home Services and Other | 447 | (62 | ) | |||
| Subtotal | 65,235 | 44,139 | ||||
| Eliminations | 535 | 518 | ||||
| Total | $ | 65,770 | $ | 44,657 |
Fiscal 2022 NFE Guidance:
NJR reaffirmed fiscal 2022 NFE guidance of $2.20 to $2.30 per share, subject to the risk and uncertainties identified below under "Forward-Looking Statements." The following chart represents NJR’s current expected contributions from its subsidiaries for fiscal 2022:
| Company | Expected Fiscal 2022<br><br> <br>Net Financial Earnings<br><br> <br>Contribution |
|---|---|
| New Jersey Natural Gas | 60 to 65 percent |
| Clean Energy Ventures | 20 to 23 percent |
| Storage and Transportation | 5 to 10 percent |
| Energy Services | 9 to 11 percent |
| Home Services and Other | 0 to 1 percent |
In providing fiscal 2022 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 first-quarter fiscal 2022 NFE of $51.1 million, compared to NFE of $49.5 million during the same period in fiscal 2021. The increase in the first-quarter was due primarily to the deferral of a portion of pandemic related bad debt costs incurred of $10.7 million through the July 2, 2020 BPU deferral order, and the base rate increase resulting from NJNG's recent rate case settlement, partially offset by lower other income, higher depreciation and interest expense.
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 4 of 13 |
Customer Growth:
| • | NJNG added 1,730 new customers during the first-quarter of fiscal 2022, compared with 1,948 in fiscal 2021. The decrease in customer additions was due primarily to slower growth in the new construction market during the first quarter of<br> fiscal 2022. |
|---|
Base Rate Settlement:
| • | On November 17, 2021, NJNG received approval from the BPU on its rate case settlement agreement and new<br> rates were effective on December 1, 2021. Under the approved rate case agreement, NJNG's total annual revenue is expected to increase by $79.0 million and includes a return on equity of 9.60% with a 54.0% common equity ratio and reflects<br> a rate base of $2.52 billion with an overall rate of return of 6.84%. |
|---|
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<br> distribution system. In the first quarter, NJNG spent $5.7 million under the program to begin work on various distribution system reinforcement projects. |
|---|---|
| • | The Howell Green Hydrogen Project delivers hydrogen through NJNG's utility distribution pipeline to heat customers' homes and businesses and began commercial operation in October 2021. The recovery of the investment in this project was included<br> in the recently completed rate case. |
| --- | --- |
BGSS Incentive Programs:
BGSS incentive programs contributed $3.8 million to utility gross margin in the first quarter, compared with $4.6 million during the same period last year. The decrease for the first-quarter was due primarily to timing differences in the storage incentive program and lower capacity release volumes, partially offset by increased margin from off-system sales.
For more information on utility gross margin, please see "Non-GAAP Financial Information" below.
Energy-Efficiency Programs:
SAVEGREEN invested $12.9 million during the first-quarter of fiscal 2022 to help customers with energy-efficiency upgrades for their homes and businesses. NJNG recovered $6.8 million of its outstanding investments during the first quarter.
Clean Energy Ventures (CEV)
CEV reported first-quarter fiscal 2022 net financial losses of $(6.8) million, compared with net financial loss of $(10.3) million during the same period in fiscal 2021. The improvement was due primarily to increased revenue from the sale of SRECs and higher electric prices in the first-quarter of fiscal 2022.
Solar Investment Update:
| • | Placed a solar project into service, adding 1.0 megawatt (MW) to CEV's total installed capacity. |
|---|
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 5 of 13 |
Storage and Transportation
Storage and Transportation reported first-quarter fiscal 2022 NFE of $3.0 million, compared with NFE of $3.5 million during the same period in fiscal 2021. The decrease in NFE was due primarily to lower earnings from equity affiliates.
Infrastructure Updates:
| • | Adelphia Gateway - In January 2022, Adelphia Gateway placed into service a new delivery point and the associated facilities in its North Zone. |
|---|
Energy Services
Energy Services reported first-quarter fiscal 2022 NFE of $17.6 million, compared with NFE of $1.5 million for the same period last fiscal year. The improved performance was due primarily to the recognition of revenues from the Asset Management Agreements entered into during fiscal 2021 that became effective during the first-quarter.
Home Services and Other Operations
Home Services and Other Operations reported first-quarter fiscal 2022 NFE of $0.4 million compared with a net financial loss of $(0.1) million for the same period in fiscal 2021. The increase was due primarily to higher operating income related to an increase in installation revenue.
Expenditures and Cash Flows:
NJR is committed to maintaining a strong financial profile.
| • | During the first-quarter of fiscal 2022, capital expenditures were $152.7 million, including accruals, of which $59.7 million were related to NJNG, compared with $119.3 million, of which $83.9 million were related to NJNG, during the<br> same period in fiscal 2021. |
|---|---|
| • | During the first-quarter of fiscal 2022, cash flows used in operations were $37.4 million, compared<br> with cash flows from operations of $31.7 million during the same period of<br> fiscal 2021. The decrease in operating cash flows was due primarily to changes in working capital. |
| --- | --- |
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, certain statements regarding NJR’s NFEPS guidance for fiscal 2022, cash proceeds from the AMAs, projected NFEPS growth rate, results of future rate cases, forecasted contribution of business segments to NJR’s NFE for fiscal 2022, customer growth at NJNG, future NJR and NJNG capital expenditures, infrastructure programs and investments such as SRL, IIP, the Howell Green Hydrogen Project and energy efficiency programs, the ability to operate the Adelphia Gateway Pipeline project, and other legal and regulatory expectations.
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 6 of 13 |
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 NJR’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 NJR Energy Services Company.
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 most recent Report on Form 10-K, Item 7.
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 7 of 13 |
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<br> serve over half a million customers in New Jersey’s Monmouth, Ocean and parts of Morris, Middlesex and Burlington counties. |
|---|---|
| • | Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of more than 365 megawatts, providing residential and commercial customers with low-carbon solutions. |
| --- | --- |
| • | Energy Services<br> 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% equity ownership in<br> the Steckman Ridge natural gas storage facility. |
| --- | --- |
| • | Home Services<br> 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 1,200 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.
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 8 of 13 |
NEW JERSEY RESOURCES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended<br><br> <br>December 31, | ||||
|---|---|---|---|---|
| (Thousands, except per share data) | 2021 | 2020 | ||
| OPERATING REVENUES | ||||
| Utility | $ | 274,435 | $ | 195,729 |
| Nonutility | 401,407 | 258,576 | ||
| Total operating revenues | 675,842 | 454,305 | ||
| OPERATING EXPENSES | ||||
| Gas purchases | ||||
| Utility | 122,269 | 56,145 | ||
| Nonutility | 278,794 | 173,247 | ||
| Related parties | 1,846 | 1,734 | ||
| Operation and maintenance | 68,984 | 73,636 | ||
| Regulatory rider expenses | 16,671 | 10,701 | ||
| Depreciation and amortization | 30,393 | 27,362 | ||
| Total operating expenses | 518,957 | 342,825 | ||
| OPERATING INCOME | 156,885 | 111,480 | ||
| Other income, net | 4,136 | 4,117 | ||
| Interest expense, net of capitalized interest | 19,477 | 19,786 | ||
| INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES | 141,544 | 95,811 | ||
| Income tax provision | 30,807 | 17,441 | ||
| Equity in earnings of affiliates | 575 | 2,675 | ||
| NET INCOME | $ | 111,312 | $ | 81,045 |
| EARNINGS PER COMMON SHARE | ||||
| Basic | $ | 1.16 | $ | 0.84 |
| Diluted | $ | 1.16 | $ | 0.84 |
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
| Basic | 95,944 | 96,114 | ||
| Diluted | 96,356 | 96,415 |
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 9 of 13 |
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
(Unaudited)
| Three Months Ended<br><br> <br>December 31, | ||||||
|---|---|---|---|---|---|---|
| (Thousands) | 2021 | 2020 | ||||
| NEW JERSEY RESOURCES | ||||||
| A reconciliation of net income, the closest GAAP financial measurement, to net financial earnings is as follows: | ||||||
| Net income | $ | 111,312 | $ | 81,045 | ||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | (82,191 | ) | (37,491 | ) | ||
| Tax effect | 19,536 | 8,913 | ||||
| Effects of economic hedging related to natural gas inventory | 23,577 | (7,532 | ) | |||
| Tax effect | (5,603 | ) | 1,790 | |||
| Net income to NFE tax adjustment | (861 | ) | (2,068 | ) | ||
| Net financial earnings | $ | 65,770 | $ | 44,657 | ||
| Weighted Average Shares Outstanding | ||||||
| Basic | 95,944 | 96,114 | ||||
| Diluted | 96,356 | 96,415 | ||||
| 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 | $ | 1.16 | $ | 0.84 | ||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | $ | (0.86 | ) | $ | (0.39 | ) |
| Tax effect | $ | 0.21 | $ | 0.09 | ||
| Effects of economic hedging related to natural gas inventory | $ | 0.25 | $ | (0.08 | ) | |
| Tax effect | $ | (0.06 | ) | $ | 0.02 | |
| Net income to NFE tax adjustment | $ | (0.01 | ) | $ | (0.02 | ) |
| Basic NFE per share | $ | 0.69 | $ | 0.46 | ||
| NATURAL GAS DISTRIBUTION | ||||||
| A reconciliation of operating revenue, the closest GAAP financial measurement, to utility gross margin is as follows: | ||||||
| Operating revenues | $ | 274,772 | $ | 195,729 | ||
| Less: | ||||||
| Gas purchases | 124,594 | 59,309 | ||||
| Regulatory rider expense | 16,671 | 10,701 | ||||
| Utility gross margin | $ | 133,507 | $ | 125,719 |
| NJR Reports First Quarter Fiscal 2022 Results | ||||||
|---|---|---|---|---|---|---|
| Page 10 of 13 | ||||||
| Three Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (Unaudited) | December 31, | |||||
| (Thousands) | 2021 | 2020 | ||||
| ENERGY SERVICES | ||||||
| The following table is a computation of financial margin: | ||||||
| Operating revenues | $ | 369,244 | $ | 229,477 | ||
| Less: Gas purchases | 278,687 | 173,837 | ||||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | (85,647 | ) | (38,781 | ) | ||
| Effects of economic hedging related to natural gas inventory | 23,577 | (7,532 | ) | |||
| Financial margin | $ | 28,487 | $ | 9,327 | ||
| A reconciliation of operating income, the closest GAAP financial measurement, to financial margin is as follows: | ||||||
| Operating income | $ | 86,778 | $ | 51,582 | ||
| Add: | ||||||
| Operation and maintenance expense | 3,751 | 4,016 | ||||
| Depreciation and amortization | 28 | 42 | ||||
| Subtotal | 90,557 | 55,640 | ||||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | (85,647 | ) | (38,781 | ) | ||
| Effects of economic hedging related to natural gas inventory | 23,577 | (7,532 | ) | |||
| Financial margin | $ | 28,487 | $ | 9,327 | ||
| A reconciliation of net income to net financial earnings is as follows: | ||||||
| Net income | $ | 65,744 | $ | 38,872 | ||
| Add: | ||||||
| Unrealized (gain) on derivative instruments and related transactions | (85,647 | ) | (38,781 | ) | ||
| Tax effect | 20,357 | 9,219 | ||||
| Effects of economic hedging related to natural gas | 23,577 | (7,532 | ) | |||
| Tax effect | (5,603 | ) | 1,790 | |||
| Net income to NFE tax adjustment | (861 | ) | (2,068 | ) | ||
| Net financial earnings | $ | 17,567 | $ | 1,500 |
| NJR Reports First Quarter Fiscal 2022 Results |
|---|
| Page 11 of 13 |
FINANCIAL STATISTICS BY BUSINESS UNIT
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | ||||||
| (Thousands, except per share data) | 2021 | 2020 | ||||
| NEW JERSEY RESOURCES | ||||||
| Operating Revenues | ||||||
| Natural Gas Distribution | $ | 274,772 | $ | 195,729 | ||
| Clean Energy Ventures | 10,183 | 6,370 | ||||
| Energy Services | 369,244 | 229,477 | ||||
| Storage and Transportation | 12,143 | 13,104 | ||||
| Home Services and Other | 13,951 | 12,577 | ||||
| Sub-total | 680,293 | 457,257 | ||||
| Eliminations | (4,451 | ) | (2,952 | ) | ||
| Total | $ | 675,842 | $ | 454,305 | ||
| Operating Income (Loss) | ||||||
| Natural Gas Distribution | $ | 74,183 | $ | 62,912 | ||
| Clean Energy Ventures | (3,972 | ) | (8,264 | ) | ||
| Energy Services | 86,778 | 51,582 | ||||
| Storage and Transportation | 1,876 | 3,689 | ||||
| Home Services and Other | 862 | 1,996 | ||||
| Sub-total | 159,727 | 111,915 | ||||
| Eliminations | (2,842 | ) | (435 | ) | ||
| Total | $ | 156,885 | $ | 111,480 | ||
| Equity in Earnings of Affiliates | ||||||
| Storage and Transportation | $ | 1,056 | $ | 3,193 | ||
| Eliminations | (481 | ) | (518 | ) | ||
| Total | $ | 575 | $ | 2,675 | ||
| Net Income (Loss) | ||||||
| Natural Gas Distribution | $ | 51,080 | $ | 49,467 | ||
| Clean Energy Ventures | (6,821 | ) | (10,274 | ) | ||
| Energy Services | 65,744 | 38,872 | ||||
| Storage and Transportation | 2,962 | 3,508 | ||||
| Home Services and Other | 447 | (62 | ) | |||
| Sub-total | 113,412 | 81,511 | ||||
| Eliminations | (2,100 | ) | (466 | ) | ||
| Total | $ | 111,312 | $ | 81,045 | ||
| Net Financial Earnings (Loss) | ||||||
| Natural Gas Distribution | $ | 51,080 | $ | 49,467 | ||
| Clean Energy Ventures | (6,821 | ) | (10,274 | ) | ||
| Energy Services | 17,567 | 1,500 | ||||
| Storage and Transportation | 2,962 | 3,508 | ||||
| Home Services and Other | 447 | (62 | ) | |||
| Sub-total | 65,235 | 44,139 | ||||
| Eliminations | 535 | 518 | ||||
| Total | $ | 65,770 | $ | 44,657 | ||
| Throughput (Bcf) | ||||||
| NJNG, Core Customers | 24.6 | 24.4 | ||||
| NJNG, Off System/Capacity Management | 25.1 | 25.9 | ||||
| Energy Services Fuel Mgmt. and Wholesale Sales | 63.5 | 104.8 | ||||
| Total | 113.2 | 155.1 | ||||
| Common Stock Data | ||||||
| Yield at December 31 | 3.5 | % | 3.7 | % | ||
| Market Price at December 31 | $ | 41.06 | $ | 35.55 | ||
| Shares Out. at December 31 | 95,962 | 96,139 | ||||
| Market Cap. at December 31 | $ | 3,940,188 | $ | 3,417,741 |
| NJR Reports First Quarter Fiscal 2022 Results | ||||||
|---|---|---|---|---|---|---|
| Page 12 of 13 | ||||||
| Three Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (Unaudited) | December 31, | |||||
| (Thousands, except customer and weather data) | 2021 | 2020 | ||||
| NATURAL GAS DISTRIBUTION | ||||||
| Utility Gross Margin | ||||||
| Operating revenues | $ | 274,772 | $ | 195,729 | ||
| Less: | ||||||
| Gas purchases | 124,594 | 59,309 | ||||
| Regulatory rider expense | 16,671 | 10,701 | ||||
| Total Utility Gross Margin | $ | 133,507 | $ | 125,719 | ||
| Utility Gross Margin, Operating Income and Net Income | ||||||
| Residential | $ | 92,605 | $ | 85,975 | ||
| Commercial, Industrial & Other | 19,102 | 17,040 | ||||
| Firm Transportation | 17,282 | 17,288 | ||||
| Total Firm Margin | 128,989 | 120,303 | ||||
| Interruptible | 754 | 838 | ||||
| Total System Margin | 129,743 | 121,141 | ||||
| Off System/Capacity Management/FRM/Storage Incentive | 3,764 | 4,578 | ||||
| Total Utility Gross Margin | 133,507 | 125,719 | ||||
| Operation and maintenance expense | 36,431 | 43,638 | ||||
| Depreciation and amortization | 22,893 | 19,169 | ||||
| Operating Income | $ | 74,183 | $ | 62,912 | ||
| Net Income | $ | 51,080 | $ | 49,467 | ||
| Net Financial Earnings | $ | 51,080 | $ | 49,467 | ||
| Throughput (Bcf) | ||||||
| Residential | 12.6 | 13.6 | ||||
| Commercial, Industrial & Other | 2.3 | 2.4 | ||||
| Firm Transportation | 3.6 | 3.9 | ||||
| Total Firm Throughput | 18.5 | 19.9 | ||||
| Interruptible | 6.1 | 4.5 | ||||
| Total System Throughput | 24.6 | 24.4 | ||||
| Off System/Capacity Management | 25.1 | 25.9 | ||||
| Total Throughput | 49.7 | 50.3 | ||||
| Customers | ||||||
| Residential | 506,677 | 497,203 | ||||
| Commercial, Industrial & Other | 31,756 | 30,912 | ||||
| Firm Transportation | 28,073 | 31,398 | ||||
| Total Firm Customers | 566,506 | 559,513 | ||||
| Interruptible | 31 | 88 | ||||
| Total System Customers | 566,537 | 559,601 | ||||
| Off System/Capacity Management* | 24 | 30 | ||||
| Total Customers | 566,561 | 559,631 | ||||
| *The number of customers represents those active during the last month of the period. | ||||||
| Degree Days | ||||||
| Actual | 1,274 | 1,418 | ||||
| Normal | 1,550 | 1,575 | ||||
| Percent of Normal | 82.2 | % | 90.0 | % |
| NJR Reports First Quarter Fiscal 2022 Results | ||||||
|---|---|---|---|---|---|---|
| Page 13 of 13 | ||||||
| Three Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (Unaudited) | December 31, | |||||
| (Thousands, except customer, SREC, TREC and megawatt) | 2021 | 2020 | ||||
| CLEAN ENERGY VENTURES | ||||||
| Operating Revenues | ||||||
| SREC sales | $ | 2,867 | $ | 1,292 | ||
| TREC sales | 846 | 690 | ||||
| Solar electricity sales and other | 3,654 | 1,720 | ||||
| Sunlight Advantage | 2,816 | 2,668 | ||||
| Total Operating Revenues | $ | 10,183 | $ | 6,370 | ||
| Depreciation and Amortization | $ | 5,233 | $ | 5,433 | ||
| Operating (Loss) | $ | (3,972 | ) | $ | (8,264 | ) |
| Income Tax (Benefit) | $ | (2,046 | ) | $ | (3,086 | ) |
| Net (Loss) | $ | (6,821 | ) | $ | (10,274 | ) |
| Net Financial (Loss) | $ | (6,821 | ) | $ | (10,274 | ) |
| Solar Renewable Energy Certificates Generated | 92,172 | 87,208 | ||||
| Solar Renewable Energy Certificates Sold | 12,200 | 6,095 | ||||
| Transition Renewable Energy Certificates Generated | 6,085 | 4,683.0 | ||||
| Solar Megawatts Under Construction | 77.1 | 8.3 | ||||
| ENERGY SERVICES | ||||||
| Operating Income | ||||||
| Operating revenues | $ | 369,244 | $ | 229,477 | ||
| Less: | ||||||
| Gas purchases | 278,687 | 173,837 | ||||
| Operation and maintenance expense | 3,751 | 4,016 | ||||
| Depreciation and amortization | 28 | 42 | ||||
| Operating Income | $ | 86,778 | $ | 51,582 | ||
| Net Income | $ | 65,744 | $ | 38,872 | ||
| Financial Margin | $ | 28,487 | $ | 9,327 | ||
| Net Financial Earnings | $ | 17,567 | $ | 1,500 | ||
| Gas Sold and Managed (Bcf) | 63.5 | 104.8 | ||||
| STORAGE AND TRANSPORTATION | ||||||
| Operating Revenues | $ | 12,143 | $ | 13,104 | ||
| Equity in Earnings of Affiliates | $ | 1,056 | $ | 3,193 | ||
| Operation and Maintenance Expense | $ | 7,430 | $ | 6,542 | ||
| Other Income, Net | $ | 2,509 | $ | 1,254 | ||
| Interest Expense | $ | 2,136 | $ | 3,982 | ||
| Income Tax Provision | $ | 343 | $ | 646 | ||
| Net Income | $ | 2,962 | $ | 3,508 | ||
| Net Financial Earnings | $ | 2,962 | $ | 3,508 | ||
| HOME SERVICES AND OTHER | ||||||
| Operating Revenues | $ | 13,951 | $ | 12,577 | ||
| Operating Income | $ | 862 | $ | 1,996 | ||
| Other Expense, Net | $ | 75 | $ | (824 | ) | |
| Net Income (Loss) | $ | 447 | $ | (62 | ) | |
| Net Financial Earnings (Loss) | $ | 447 | $ | (62 | ) | |
| Total Service Contract Customers at December 31 | 105,373 | 106,857 |
Exhibit 99.2
s February 3, 2022 First-Quarter 2022 Results
Forward-Looking Statements and Non-GAAP Measures 1 Forward-Looking StatementsThis presentation 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”, or the “Company”) 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 presentation include, but are not limited to, certain statements regarding NJR’s net financial earnings (“NFE”) per share guidance for fiscal 2022 and beyond, dividend growth goals, capital plans, planned capital expenditures, projected cash flows, impacts of hedging strategies, customer growth rate and timetable and results of future base rates, schedule for completion of infrastructure projects, including but not limited to, New Jersey Natural Gas’s Southern Reliability Link and the Howell Green Hydrogen Project, NJR's environmental sustainability and clean energy goals, emissions reduction strategies, initiatives and targets as well as our related investments in infrastructure, renewables and emerging technologies such as renewable natural gas and hydrogen gas, NJR Clean Energy Ventures’ future capital investment target, projected installed solar capacity, revenue growth, project returns, impacts of Asset Management Agreements, including revenue recognition for fiscal 2022 and beyond, demand for residential and commercial solar energy, and our ability to profitably operate and expand the Adelphia Gateway pipeline and the impairment of NJR’s investment in PennEast.Additional information and factors that could cause actual results to differ materially from NJR’s expectations are contained in NJR’s filings with the U.S. Securities and Exchange Commission (SEC), including NJR’s Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC’s web site, https://www.sec.gov. Information included in this presentation 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 MeasuresThis presentation includes the non-GAAP measures, including, NFE/net financial loss, utility gross margin and financial margin. As an indicator of the Company’s operating performance, these measures should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flows, net income(loss), operating income or earnings per share.NFE/net financial loss and financial margin exclude unrealized gains or losses on derivative instruments related to the Company’s unregulated subsidiaries and certain realized gains and losses on derivative instruments related to natural gas that has been placed into storage at Energy Services, and the impairment of NJR’s investment in the PennEast project, net of applicable tax adjustments, as described below. Volatility associated with the change in value of these financial and physical commodity contracts is reported in 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 as opposed to 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 “NJCEV”, as such adjustment is related to tax credits generated by CEV.NJNG’s utility gross margin represents the results of revenues less natural gas costs, sales and other taxes and regulatory rider expenses, which are key components of the Company’s operations that move in relation to each other. Natural gas costs, sales and other taxes and regulatory rider expenses are passed through to customers and therefore, have no effect on gross margin.Management uses NFE/net financial loss, utility gross margin and financial margin, as supplemental measures to other GAAP results to provide a more complete understanding of the Company’s performance. Management believes these non-GAAP measures are more reflective of the Company’s business model, provide transparency to investors and enable period-to-period comparability of financial performance. In providing NFE guidance, management is aware that there could be differences between reported GAAP earnings and NFE/net financial loss 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. NFE/net financial loss, utility gross margin and financial margin are discussed more fully in Item 7 of our Report on Form 10-K and, we have provided presentations of the most directly comparable GAAP financial measure and a reconciliation of our non-GAAP financial measure, NFE/net financial loss, to the most directly comparable GAAP financial measure, in the appendix to this presentation. This information has been provided pursuant to the requirements of SEC Regulation G.
Agenda 1 First-Quarter FY 2022 HighlightsSteve Westhoven | President & CEO 2 Financial HighlightsRoberto Bel | SVP and CFO 3 Q&A Session 2
2021 Sustainability ReportHighlighting our accomplishments: Initiated reporting in line with the recommendations of the Task Force for Climate-Related Financial Disclosure (TCFD) framework2021 Sustainability Report 3 Announced Net Zero by 2050 goal for New Jersey operationsFirst utility on the East Coast to blend green hydrogen into its fuel streamLaunched largest energy efficiency program in NJNG’s history 7th consecutive J.D. Power Award to NJNG for Highest Customer Satisfaction* NJRCEV is one of the largest owner-operators of solar assets in New Jersey Launched NJR’s Coastal Climate Initiative, an initiative to preserve vital coastal saltmarshes and reduce emissions Named a Most Responsible Company by Newsweek for 2022 This system – the first of its kind on the East Coast – will offset 180 US tons of carbon emissions per year, the equivalent of eliminating 90 tons of coal, or over 400,000 miles driven * For J.D. Power 2021 award information, visit jdpower.com/awards.
4 First-Quarter 2022 Summary * A reconciliation from NFE to net income can be found in the Appendix. $0.38 $0.46 $0.69* 1Q20 1Q21 1Q22 Moving forward with our Strategic Plan Fiscal 2022 off to a good start:Significant increase in fiscal Q1 net financial earningsBase rate case settled and new rates in place at NJNGCEV placed one project into service and continued to develop its pipeline of projectsAdelphia Gateway placed two new projects in service in its Northern Zone in JanuaryNJRES Asset Management Agreements became effective
Fiscal 2022 Guidance Reaffirmed 5 Net Financial Earnings per Share Fiscal 2022 NFEPS Guidance by Segment0%-1% $1.74 $2.16 $2.20 - $2.30 FY 2020A FY 2021A FY 2022E 60% - 65% 20%-23% 5%10% 9%-11% NJNG CEV S&T Home Services & Other ES** Long-term growth NFEPS rate of 7-9%* **Only considers margin contributions from fee-based revenue streams *Based on the midpoint of fiscal 2022 guidance
$12 $13 $6 $27 $10 $4$1 New Customer SAVEGREEN IIPMaintenanceCost of Removal/Other ITRNG H2 project in service Placed in service in first quarter fiscal 2022Successfully blending green hydrogen into distribution systemIncluded in new base rates Focus for Fiscal 2022 Evaluate RNG and additional H2 investmentsAchieve SAVEGREEN investment targetsContinue to advance IT enhancements New Jersey Natural Gas 6 Fiscal YTD Capital Expenditures*~43% of capital expenditures earning a near real-time return New Customer Additions1,948 1,730 1Q 2021 1Q 2022 * Total change in PP&E (cash spent, capex accrued and AFUDC). For GAAP purposes, SAVEGREEN investments are included as part of cash flows from operations ~$73M
Clean Energy Ventures FY 2022 Capital Expenditures* FY 2022E CEV Revenue ($ in millions) $203 - $269 FY 2022E:$235 - $301MM$2$30 FYTD Commercial Capex FYTD Residential Capex Q2 – Q4 Capex * Total change in PP&E (cash spent and capex accrued) $12 $150 $104 $49 $315Million Completed Under Construction Under Contract Under Evaluation Fiscal 2021-2022 In-service Capex Target by Project Status($ in millions) 28% 8% 36% 28% SREC TREC Electricity SalesSunlight Advantage $10.2MM 73%-78% 7 2%-6% 13% 10% -15% $129 - $133MM8% -
Adelphia GatewaySouth Zone Conversion and Expansion Project Project Facilities Scope Marcus Hook Compressor Station Martin’s Creek Booster Compression Parkway Lateral & Columbia Interconnect Tilghman Lateral & Transco, PECO Interconnects Mainline North (currently in service) Mainline South(oil to natural gas conversion) Quakertown Compressor Station & TETCO Interconnect UGI Lateral & Interconnect Texas Eastern Project Overview North zone operational at acquisition serving Talen Energy and adding the new UGI interconnect (in service) – 600,000 Dth/dSouth zone oil conversion and expansion; adding compression, laterals and interconnects – 250,000 Dth/dSouth zone planned to connect to Transco, Columbia and PECO. Serving Philadelphia and N.J. markets Project Status Placed into service in the Northern zone:New delivery point with associated lateral lineDelivery point compressor 85% of total required construction completed Source: Internal Phase I Construction - Ongoing Phase II Construction - Ongoing New construction in-service 8
Financial Review 9 Roberto BelSVP & Chief Financial Officer
Review of Fiscal 1Q22 NFE Changes $44.7 11 $1.6 $3.5 $0.5 $16.1 $0.5 $65.8 1Q 2021 NJNG CEV S&T ES HS & Other 1Q 2022 Fiscal 1Q21 – Consolidated NFE ($ in millions) $44.7 NJNG $1.6 Utility Gross Margin* $7.8 O&M $7.2 Depreciation & Amortization (D&A) ($3.7) Interest expense, AFUDC, Income Tax ($9.7) Clean Energy Ventures $3.5 Revenue $3.8 O&M $0.3 D&A, Interest Expense and Other ($0.6) Storage & Transportation ($0.5) Operating Income ($1.8) Equity in Earnings of Affiliates ($2.1) Other $3.4 Energy Services $16.1 Financial Margin* $19.2 Interest Expense, Income Tax and Other ($3.1) Home Services and Other $0.5 Revenues $1.4 Other ($0.9) Fiscal 1Q22 – Consolidated NFE ($ in millions) $65.8 * A reconciliation of these non-GAAP measures can be found in the Appendix ($ in Millions)
106 196 379 398 398 291 203 22 5 5 EY 2026 EY 2025 EY 2024 EY 2023 EY 2022 Thousands Hedged UnhedgedNote: Energy Years run from June 1 of the prior year to May 31 of the respective year; for example, Energy Year 2022 begins on June 1, 2021, and ends on May 31, 2022 12 NJR CEV – SREC Hedging Strategy Stabilizes RevenueBased on Energy Year, as of January 19, 2022 Percent Hedged Average Price Current Price (EY) 99% $201 $237 Percent Hedged Average Price Current Price (EY) 99% $203 $226 Percent Hedged Average Price Current Price (EY) 95% $197 $207 Percent Hedged Average Price Current Price (EY) 49% $185 $190 Percent Hedged Average Price Current Price (EY) 27% $172 $180
NJR Capital Plan1($ in Millions) 1-Total change in PP&E (cash spent, capex accrued and AFUDC). For GAAP purposes, SAVEGREEN investments are included as part of cash flows from operations New Jersey Natural Gas New Customer 1Q FY2022A$12 FY2021A$65 FY2022E$52 - $56 FY2023E$55 - $59 Near Real Time Return?Yes Maintenance & Integrity $27 $100 $142 - $148 $100 - $104 SAFE II/ NJ RISE $42 Yes IIP $6 $9 $24 - $28 $32 - $36 Yes SRL $110 IT $4 $9 $50 - $54 $54 - $58 RNG & P2G $1 $5 $12 - $16 $21 - $25 Cost of Removal/Other $9 $66 $34 - $38 $36 - $40 Facilities $1 $63 $20 - $24 $13 - $17 SAVEGREEN $13 $31 $48 - $52 $48 - $52 Yes $73 $499 $382 - $416 $359 - $391 Clean Energy Ventures Sunlight Advantage $2 $11 $15 - $21 $16 - $22 Commercial Solar $30 $78 $220 - $280 $190 - $250 $32 $89 $235 - $301 $206 - $272 Storage and Transportation Adelphia Gateway $51 $113 $90 - $110 $5 - $10 Leaf River $6 $11 $6 - $10 $3 - $7 $57 $124 $96 - $120 $8 - $17 Grand Total $162 $712 $713 - $837 $573 - $680 13
NJR Projected Cash Flows($ in Millions) 14 1- Excludes accrual for AFUDC and SAVEGREEN investments (for GAAP purposes, SAVEGREEN investments are included in Cash Flow from Operations) FY2021A FY2022E FY2023E Cash Flow from Operations $391 $365 - $385 $450 - $470 Uses of Funds Capital Expenditures1 $625 $641 - $761 $513 - $616 Dividends $117 $127 - $132 $135 - $140 Total Uses of Funds $742 $768 - $893 $648 - $756 Financing Activities Common Stock Proceeds – DRIP $15 Debt Proceeds/Other $336 $403 - $508 $198 - $286 Total Financing Activities $351 $403 - $508 $198 - $286
Key TakeawaysFirst Quarter 2022 On track to meet guidance for FY 2022CEV’s asset base continues to grow Construction continues at Adelphia Strong cash flows supporting future dividend growth Upside remains for NJRES post-AMA through the long option strategyDelivering on our commitment to de-risk our business to produce predictable results 15
Q&A 16
Appendix 17
First Quarter Fiscal 2022 NFE by Business Unit (Thousands) Three Months Ended December 31,2021 2020 Change New Jersey Natural Gas $51,080 $49,467 $1,613 Clean Energy Ventures (6,821) (10,274) 3,453 Storage and Transportation 2,962 3,508 (546) Energy Services 17,567 1,500 16,067 Home Services & Other 982 456 526 Total $65,770 $44,657 $21,113 NFEPS $0.69 $0.46 $0.23 18
Reconciliation of NFE and NFEPS to Net Income for Fiscal 2022 NFE is a measure of earnings based on eliminating timing differences surrounding the recognition of certain gains and losses and the impairment of NJR’s investment in the PennEast project, net of applicable tax adjustments, to effectively match the earnings effects of the economic hedges with the physical sale of natural gas, SRECs and foreign currency contracts NFE eliminates the impact of volatility to GAAP earnings associated with unrealized gains and losses on derivative instruments in the current period Net Financial Earnings, Fiscal 1Q22 19
Reconciliation of Non-GAAP Measures NJNG Utility Gross MarginNJNG utility gross margin is defined as natural gas revenues less natural gas purchases, sales tax and regulatory rider expenses, and may not be comparable to the definition of gross margin used by others in the natural gas distribution business and other industries Energy Services Financial MarginRepresents revenues earned from the sale of natural gas less costs of natural gas sold including any transportation and storage costs, and excludes any accounting impact from the change in the fair value of certain derivative instruments 20
New Base Rates 20 Overall Cost of Capital and Weighted Return Percent Approved Return Weighted Cost Long-Term Debt 46.0% 3.60% 1.66% Common Equity 54.0% 9.60% 5.18% Total 100.0% 6.84% Settlement ($ in millions) Rate Base $2,523 Rate of Return x 6.84% Operating Income Requirement $172.61 Test Year Operating Income ($116.50) Operating Income Deficiency $56.10 Revenue Factor x 1.4081 Settlement Amount1 $79.00 Rate base of $2.5 billiono Southern Reliability Link and Howell green hydrogen facility included in rate baseWACC of 6.84%ROE of 9.60%New rates effective December 1, 20212021-rate-case-settlement- FINAL.pdf (q4cdn.com) 1. Excludes $269,000 associated with SAFE II and NJ Rise rate increases
Reaffirming FY 2022 NFE Guidance of $2.20 to $2.30 Per Share FY2022E NJNG 60%-65% CEV 20%-23% S&T 5%-10% ES (AMA only) 9%-11% HS & Other 0%-1% FY2022 Expected NJNG Utility Gross Margin Distribution FY2022 Expected CEV Revenue Distribution NFE Expected Segment Contributions Q1E~27% Q2E~43% Q3E~17% Q4E~13% Q1E~7%Q2E~9% 21 Q3E~7% Q4E~77% Q1E~65% Q2E~57% FY2022 Expected ES Financial Margin DistributionQ4EQ3E (~2%) (~20%)
106 146 324 395 464 152 252 76 7 FY 2026 FY 2025 FY 2024 FY 2023 FY 2022 Thousands Hedged Unhedged 22 NJR CEV – SREC Hedging by Fiscal YearAs of January 19, 2022 Percent Hedged Average Price Current Price (FY) 100% $203 $234 Percent Hedged Average Price Current Price (FY) 98% $201 $220 Percent Hedged Average Price Current Price (FY) 81% $193 $202 Percent Hedged Average Price Current Price (FY) 37% $186 $187 Percent Hedged Average Price Current Price (EY) 41% $172 $180
Revenue Recognition for AMAs The Transaction:AMAs feature initial and permanent capacity releases with cash payments throughout 23 The Accounting:ASC 606 revenue recognition standard requires that revenue be allocated to both the initial and permanent releases The Result:Disproportionate value is allocated to the permanent release periods in FY 2024 and FY 2032 Revenue Recognition* ($ millions) Cash($ millions) Fiscal Years 2022 – 2024 $239 $261 Fiscal Years 2025 – 2031 $138 $240 Fiscal Year 2032 $124 $0 $262 $240 Total $501 $501 * Revenue recognition for FY2022 is expected to be $53.1 million, of which $22.1 million was recognized in fiscal Q1 2022. Additionally, in fiscal Q1 2022, NJR received this year’s cash payment of $86.8 million.