EX-96.1 2 brhc10039935_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1


NEW JERSEY RESOURCES REPORTS THIRD-QUARTER FISCAL 2022 RESULTS AND
INCREASES EARNINGS GUIDANCE FOR FISCAL 2022

WALL, N.J., August 4, 2022 — Today, New Jersey Resources Corporation (NYSE: NJR) reported results for the third quarter of fiscal 2022. Highlights include:

Consolidated net income of $13.1 million, compared with a net loss of $(111.8) million in the third quarter of fiscal 2021.
Consolidated net financial loss, a non-GAAP financial measure, of $(3.6) million, or $(0.04) per share, compared to a net financial loss of $(14.1) million, or $(0.15) per share, in the third quarter of fiscal 2021.
Increased fiscal 2022 net financial earnings per share (NFEPS) guidance range to $2.40 to $2.50 from the previously announced range of $2.30 to $2.40.

Third-quarter fiscal 2022 net income totaled $13.1 million, or $0.14 per share, compared with a net loss of $(111.8) million, or $(1.16) per share, during the same period in fiscal 2021. Fiscal 2022 year-to-date net income totaled $220.4 million, or $2.29 per share, compared with $119.0 million, or $1.24 per share, for the same period in fiscal 2021.

Third-quarter fiscal 2022 net financial loss totaled $(3.6) million, or $(0.04) per share, compared to a net financial loss of $(14.1) million, or $(0.15) per share, during the same period in fiscal 2021, which included a $72.7 million after-tax impairment charge related to NJR's investment in the PennEast Project. Fiscal 2022 year-to-date net financial earnings (NFE) totaled $192.4 million, or $2.00 per share, compared with $201.1 million, or $2.09 per share, for the same period in fiscal 2021.

Steve Westhoven, President and CEO, stated, "We are pleased to raise our fiscal 2022 NFEPS guidance for the second time in fiscal 2022, driven by strong performance at New Jersey Natural Gas Company (NJNG), greater than anticipated financial margin at our Energy Services’ business, and increased wholesale electricity revenue at Clean Energy Ventures (CEV). Our year-to-date financial results, as well as increased guidance throughout the year, reflect the strength of our complementary portfolio of businesses."

Key Performance Metrics

   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
($ in Thousands)
 
2022
   
2021
   
2022
   
2021
 
Net income (loss)
 
$
13,053
   
$
(111,831
)
 
$
220,400
   
$
119,023
 
Basic EPS
 
$
0.14
   
$
(1.16
)
 
$
2.29
   
$
1.24
 
Net financial (loss) earnings
 
$
(3,551
)
 
$
(14,148
)
 
$
192,425
   
$
201,113
 
Basic net financial (loss) earnings per share
 
$
(0.04
)
 
$
(0.15
)
 
$
2.00
   
$
2.09
 


NJR Reports Third Quarter Fiscal 2022 Results
Page 2 of 13
A reconciliation of net income to NFE for the three and nin2e months ended June 30, 2022 and 2021, is provided below.

   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
(Thousands)
 
2022
   
2021
   
2022
   
2021
 
Net income (loss)
 
$
13,053
   
$
(111,831
)
 
$
220,400
   
$
119,023
 
Add:
                               
Unrealized (gain) loss on derivative instruments and related transactions
   
(17,891
)
   
21,862
     
(58,060
)
   
13,627
 
Tax effect
   
4,253
     
(5,198
)
   
13,809
     
(3,240
)
Effects of economic hedging related to natural gas inventory
   
428
     
2,486
     
25,160
     
(12,255
)
Tax effect
   
(102
)
   
(591
)
   
(5,979
)
   
2,912
 
(Gain on) impairment of equity method investment
   
(4,021
)
   
92,000
     
(4,021
)
   
92,000
 
Tax effect
   
1,003
     
(11,934
)
   
1,003
     
(11,934
)
NFE tax adjustment
   
(274
)
   
(942
)
   
113
     
980
 
Net financial (loss) earnings
 
$
(3,551
)
 
$
(14,148
)
 
$
192,425
   
$
201,113
 
                                 
Weighted Average Shares Outstanding
                               
Basic
   
96,154
     
96,348
     
96,055
     
96,237
 
Diluted
   
96,620
     
96,348
     
96,527
     
96,629
 
                                 
Basic earnings (loss) per share
 
$
0.14
   
$
(1.16
)
 
$
2.29
   
$
1.24
 
Add:
                               
Unrealized (gain) loss on derivative instruments and related transactions
   
(0.19
)
   
0.22
     
(0.60
)
   
0.14
 
Tax effect
   
0.04
     
(0.05
)
   
0.14
     
(0.03
)
Effects of economic hedging related to natural gas inventory
   
     
0.03
     
0.26
     
(0.13
)
Tax effect
   
     
(0.01
)
   
(0.06
)
   
0.03
 
(Gain on) impairment of equity method investment
   
(0.04
)
   
0.95
     
(0.04
)
   
0.95
 
Tax effect
   
0.01
     
(0.12
)
   
0.01
     
(0.12
)
NFE tax adjustment
   
     
(0.01
)
   
     
0.01
 
Basic net financial (loss) earnings per share
 
$
(0.04
)
 
$
(0.15
)
 
$
2.00
   
$
2.09
 

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.


NJR Reports Third Quarter Fiscal 2022 Results
Page 3 of 13
A table detailing NFE for the three and nine months ended June 30, 2022 and 2021, is provided below.

Net financial earnings (loss) by Business Unit
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
(Thousands)
 
2022
   
2021
   
2022
   
2021
 
New Jersey Natural Gas
 
$
2,648
   
$
1,581
   
$
156,511
   
$
131,589
 
Clean Energy Ventures
   
(5,098
)
   
(4,926
)
   
(18,410
)
   
(24,072
)
Storage and Transportation
   
3,526
     
2,387
     
11,113
     
10,606
 
Energy Services
   
(5,003
)
   
(12,527
)
   
42,504
     
85,501
 
Home Services and Other
   
215
     
(384
)
   
1,113
     
301
 
Subtotal
   
(3,712
)
   
(13,869
)
   
192,831
     
203,925
 
Eliminations
   
161
     
(279
)
   
(406
)
   
(2,812
)
Total
 
$
(3,551
)
 
$
(14,148
)
 
$
192,425
   
$
201,113
 

Fiscal 2022 NFE Guidance:

NJR increased its fiscal 2022 NFE guidance to $2.40 to $2.50 compared to the previously announced range of $2.30 to $2.40, 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
Net Financial Earnings
Contribution
New Jersey Natural Gas
59 to 61 percent
Clean Energy Ventures
16 to 18 percent
Storage and Transportation
6 to 8 percent
Energy Services
15 to 20 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 third-quarter fiscal 2022 NFE of $2.6 million, compared to NFE of $1.6 million during the same period in fiscal 2021. Fiscal 2022 year-to-date NFE were $156.5 million, compared to NFE of $131.6 million during the same period in fiscal 2021. The increase for both periods was due primarily to higher base rates, which became effective on December 1, 2021.

Customer Growth:

NJNG added 5,274 new customers during the first nine months of fiscal 2022, compared with 5,448 during the same period in fiscal 2021. NJNG expects these new customers to contribute approximately $4.4 million of incremental utility gross margin on an annualized basis.


NJR Reports Third Quarter Fiscal 2022 Results
Page 4 of 13
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. Fiscal 2022 year-to-date NJNG spent $23.5 million under the program on various distribution system reinforcement projects. On March 31, 2022, the Company filed its first rate recovery request with the BPU. On July 13, 2022, NJNG updated the filing with actual information through June 30, 2022, seeking recovery for $28.9 million of investments, including AFUDC, from November 30, 2020 through June 30, 2022.

Basic Gas Supply Service (BGSS) Incentive Programs:

BGSS incentive programs contributed $1.9 million to utility gross margin in the third-quarter of fiscal 2022, compared with $3.3 million during the same period in fiscal 2021.

Fiscal 2022 year-to-date, these programs contributed $12.1 million to utility gross margin, compared with $10.0 million during the same period in fiscal 2021. The increase year-to-date was due primarily to increased margins from off-system sales, partially offset by the timing differences for storage incentives and lower capacity release volumes.

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

Energy-Efficiency Programs:

SAVEGREEN invested $35.7 million during the first nine months of fiscal 2022 in energy-efficiency upgrades for their customers' homes and businesses. NJNG recovered $23.5 million of its outstanding investments during the first nine months of fiscal 2022. On January 26, 2022, the BPU approved the annual SAVEGREEN filing, which will increase annual recoveries by $2.2 million, effective February 1, 2022. On June 1, 2022, NJNG submitted its annual cost recovery filing for the SAVEGREEN programs established from 2010 through Present. If approved, the proposed rate increase will increase annual recoveries by $0.5 million, effective October 1, 2022.

Clean Energy Ventures

CEV reported third-quarter fiscal 2022 net financial loss of $(5.1) million, compared to a net financial loss of $(4.9) million during the same period in fiscal 2021.

Fiscal 2022 year-to-date net financial loss was $(18.4) million, compared with a net financial loss of $(24.1) million during the same period in fiscal 2021. The improvement was due primarily to the increased operating revenues, partially offset by higher operating expenses and lower income tax benefit.

CEV now has approximately 675 megawatts (MW) of potential capital projects under construction, under exclusivity or under contract, which can be developed through fiscal 2027.


NJR Reports Third Quarter Fiscal 2022 Results
Page 5 of 13
Storage and Transportation

Storage and Transportation reported third-quarter fiscal 2022 NFE of $3.5 million, compared with NFE of $2.4 million during the same period in fiscal 2021.

Fiscal 2022 year-to-date NFE was $11.1 million, compared with NFE of $10.6 million during the same period in fiscal 2021. The increase in both periods was due primarily to increased operating revenue and AFUDC equity at Adelphia Gateway, partially offset by lower equity in earnings of affiliates and increased O&M and depreciation expense.

Adelphia Gateway - Adelphia Gateway is an 84-mile pipeline running from Marcus Hook to Martins Creek, Pennsylvania originally built as an oil pipeline, which is now being repurposed to deliver natural gas to the Philadelphia and New Jersey markets. Adelphia Gateway recently completed construction at the Marcus Hook and Quakertown compressor stations, and the project remains on track to be completed by the end of the calendar year.

Energy Services

Energy Services reported third-quarter fiscal 2022 net financial loss of $(5.0) million, compared with a net financial loss of $(12.5) million for the same period last fiscal year. The higher NFE for the third quarter of fiscal 2022 were due primarily to the recognition of revenues from the Asset Management Agreements (AMAs), which became effective during the first quarter of fiscal 2022.

Fiscal 2022 year-to-date NFE were $42.5 million, compared with NFE of $85.5 million during the same period in fiscal 2021. The prior year period's NFE included price volatility related to the extreme weather in the mid-continent and southern regions of the U.S. during February 2021, which did not reoccur during 2022, partially offset by financial margin generated from the AMAs in fiscal 2022.

Home Services and Other Operations

Home Services and Other Operations reported third-quarter fiscal 2022 NFE of $0.2 million compared to a net financial loss of $(0.4) million for the same period in fiscal 2021.

Fiscal 2022 year-to-date NFE were $1.1 million, compared with NFE of $0.3 million during the same period in fiscal 2021. The increases were due primarily to higher operating income driven by an increase in installation revenues during the respective periods.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile.

During the first nine months of fiscal 2022, capital expenditures were $419.4 million, including accruals, of which $194.8 million were related to NJNG, compared with $462.7 million, of which $349.4 million were related to NJNG, during the same period in fiscal 2021. The decrease in capital expenditures was primarily due to the completion of the Southern Reliability Link (SRL) project, which was placed into service in August 2021.

During the first nine months of fiscal 2022, cash flows from operations were $235.9 million, compared with cash flows from operations of $341.8 million during the same period of fiscal 2021. The decrease in operating cash flows was due to higher working capital requirements as a result of rising energy prices and outsized performance at Energy Services during February 2021 that did not reoccur at similar levels during fiscal 2022.


NJR Reports Third Quarter Fiscal 2022 Results
Page 6 of 13
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, long term annual growth projections, projections of dividend and financing activities, forecasted contribution of business segments to NJR’s NFE for fiscal 2022, customer growth at NJNG, future NJR and NJNG capital expenditures, potential CEV capital projects, CEV revenue projections,  infrastructure programs and investments future decarbonization opportunities, Asset Management Agreements, the ability to complete the Adelphia Gateway Pipeline project, and other legal and regulatory expectations.

Additional information and factors that could cause actual results to differ materially from NJR’s expectations are contained in NJR’s filings with the SEC, including NJR’s Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC’s web site, http://www.sec.gov. Information included in this earnings release is representative as of today only and while NJR periodically reassesses material trends and uncertainties affecting NJR's results of operations and financial condition in connection with its preparation of management's discussion and analysis of results of operations and financial condition contained in its Quarterly and Annual Reports filed with the SEC, NJR does not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.

Non-GAAP Financial Information:

This earnings release includes the non-GAAP financial measures NFE/net financial loss, NFE per basic share, financial margin and utility gross margin. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. As an indicator of NJR’s operating performance, these measures should not be considered an alternative to, or more meaningful than, net income or operating revenues as determined in accordance with GAAP. This information has been provided pursuant to the requirements of SEC Regulation G.

NFE and financial margin exclude unrealized gains or losses on derivative instruments related to 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 certain transactions related to NJR's investments in the PennEast Project, net of applicable tax adjustments as described below. Financial margin also differs from gross margin as defined on a GAAP basis as it excludes certain operations and maintenance expense and depreciation and amortization as well as the effects of derivatives as discussed above. 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 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 and NJR’s Form 10-Q filed on August 4, 2022.


NJR Reports Third 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 7,600 miles of natural gas transportation and distribution infrastructure to serve over 560,000 customers in New Jersey’s Monmouth, Ocean and parts of Morris, Middlesex, Sussex and Burlington counties.

Clean Energy Ventures invests in, owns and operates solar projects with a total capacity of more than 370 megawatts, providing residential and commercial customers with low-carbon solutions.

Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America.

Storage and Transportation serves customers from local distributors and producers to electric generators and wholesale marketers through its ownership of Leaf River and the Adelphia Gateway Pipeline Project, as well as our 50% 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 1,200 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 Third Quarter Fiscal 2022 Results
Page 8 of 13
 NEW JERSEY RESOURCES
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
(Thousands, except per share data)
 
2022
   
2021
   
2022
   
2021
 
OPERATING REVENUES
                       
Utility
 
$
199,357
   
$
127,626
   
$
937,266
   
$
633,522
 
Nonutility
   
352,978
     
239,967
     
1,203,227
     
990,563
 
Total operating revenues
   
552,335
     
367,593
     
2,140,493
     
1,624,085
 
OPERATING EXPENSES
                               
Gas purchases
                               
Utility
   
100,277
     
41,785
     
435,438
     
211,165
 
Nonutility
   
290,806
     
236,464
     
980,135
     
740,199
 
Related parties
   
1,838
     
1,699
     
5,567
     
5,163
 
Operation and maintenance
   
88,373
     
81,878
     
243,143
     
265,779
 
Regulatory rider expenses
   
8,360
     
5,456
     
55,941
     
34,570
 
Depreciation and amortization
   
32,872
     
27,767
     
94,700
     
81,977
 
Total operating expenses
   
522,526
     
395,049
     
1,814,924
     
1,338,853
 
OPERATING INCOME (LOSS)
   
29,809
     
(27,456
)
   
325,569
     
285,232
 
Other income, net
   
4,288
     
4,817
     
12,551
     
13,941
 
Interest expense, net of capitalized interest
   
21,411
     
18,744
     
59,814
     
58,683
 
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES
   
12,686
     
(41,383
)
   
278,306
     
240,490
 
Income tax provision (benefit)
   
4,434
     
(18,785
)
   
64,051
     
37,713
 
Equity in earnings (loss) of affiliates
   
4,801
     
(89,233
)
   
6,145
     
(83,754
)
NET INCOME (LOSS)
 
$
13,053
   
$
(111,831
)
 
$
220,400
   
$
119,023
 
                                 
EARNINGS (LOSS) PER COMMON SHARE
                               
Basic
 
$
0.14
   
$
(1.16
)
 
$
2.29
   
$
1.24
 
Diluted
 
$
0.14
   
$
(1.16
)
 
$
2.28
   
$
1.23
 
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING
                               
Basic
   
96,154
     
96,348
     
96,055
     
96,237
 
Diluted
   
96,620
     
96,348
     
96,527
     
96,629
 
                                 


NJR Reports Third Quarter Fiscal 2022 Results
Page 9 of 13
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
 (Unaudited)
 
 
 
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
(Thousands)
 
2022
   
2021
   
2022
   
2021
 
NEW JERSEY RESOURCES
             
   
A reconciliation of net income, the closest GAAP financial measure, to net financial earnings is as follows:
 
                         
Net income (loss)
 
$
13,053
   
$
(111,831
)
 
$
220,400
   
$
119,023
 
Add:
                               
Unrealized (gain) loss on derivative instruments and related transactions
   
(17,891
)
   
21,862
     
(58,060
)
   
13,627
 
Tax effect
   
4,253
     
(5,198
)
   
13,809
     
(3,240
)
Effects of economic hedging related to natural gas inventory
   
428
     
2,486
     
25,160
     
(12,255
)
Tax effect
   
(102
)
   
(591
)
   
(5,979
)
   
2,912
 
(Gain on) impairment of equity method investment
   
(4,021
)
   
92,000
     
(4,021
)
   
92,000
 
Tax effect
   
1,003
     
(11,934
)
   
1,003
     
(11,934
)
NFE tax adjustment
   
(274
)
   
(942
)
   
113
     
980
 
Net financial (loss) earnings
 
$
(3,551
)
 
$
(14,148
)
 
$
192,425
   
$
201,113
 
                                 
Weighted Average Shares Outstanding
                               
Basic
   
96,154
     
96,348
     
96,055
     
96,237
 
Diluted
   
96,620
     
96,348
     
96,527
     
96,629
 
                                 
A reconciliation of basic earnings per share, the closest GAAP financial measure, to basic net financial earnings per share is as follows:
 
                                 
Basic earnings (loss) per share
 
$
0.14
   
$
(1.16
)
 
$
2.29
   
$
1.24
 
Add:
                               
Unrealized (gain) loss on derivative instruments and related transactions
 
$
(0.19
)
 
$
0.22
   
$
(0.60
)
 
$
0.14
 
Tax effect
 
$
0.04
   
$
(0.05
)
 
$
0.14
   
$
(0.03
)
Effects of economic hedging related to natural gas inventory
 
$
   
$
0.03
   
$
0.26
   
$
(0.13
)
Tax effect
 
$
   
$
(0.01
)
 
$
(0.06
)
 
$
0.03
 
(Gain on) impairment of equity method investment
 
$
(0.04
)
 
$
0.95
   
$
(0.04
)
 
$
0.95
 
Tax effect
 
$
0.01
   
$
(0.12
)
 
$
0.01
   
$
(0.12
)
NFE tax adjustment
 
$
   
$
(0.01
)
 
$
   
$
0.01
 
Basic NFE per share
 
$
(0.04
)
 
$
(0.15
)
 
$
2.00
   
$
2.09
 
                                 
NATURAL GAS DISTRIBUTION
                 
                                 
A reconciliation of gross margin, the closest GAAP financial measure, to utility gross margin is as follows:
 
                                 
Operating revenues
 
$
199,695
   
$
127,626
   
$
938,279
   
$
633,522
 
Less:
                               
Natural gas purchases
   
102,624
     
44,111
     
442,441
     
221,872
 
Operating and maintenance (1)
   
25,034
     
29,437
     
64,924
     
80,544
 
Regulatory rider expense
   
8,360
     
5,456
     
55,941
     
34,570
 
Depreciation and amortization
   
23,951
     
19,894
     
70,188
     
58,538
 
Gross margin
   
39,726
     
28,728
     
304,785
     
237,998
 
Add:
                               
Operating and maintenance (1)
   
25,034
     
29,437
     
64,924
     
80,544
 
Depreciation and amortization
   
23,951
     
19,894
     
70,188
     
58,538
 
Utility gross margin
 
$
88,711
   
$
78,059
   
$
439,897
   
$
377,080
 

(1) Excludes selling, general and administrative expenses of $26.5 million and $22.2 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $76.1 million and $67.7 million for the nine months ended June 30, 2022 and 2021, respectively


NJR Reports Third Quarter Fiscal 2022 Results
Page 10 of 13
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES (continued)
 (Unaudited)
 
   
Three Months Ended
   
Nine Months Ended
 
(Unaudited)
 
June 30,
   
June 30,
 
(Thousands)
 
2022
   
2021
   
2022
   
2021
 
ENERGY SERVICES
                       
                         
A reconciliation of gross margin, the closest GAAP financial measure, to Energy Services' financial margin is as follows:
 
                         
Operating revenues
 
$
307,815
   
$
201,594
   
$
1,089,704
   
$
893,640
 
Less:
                               
Natural Gas purchases
   
290,767
     
237,011
     
980,600
     
741,128
 
Operation and maintenance (1)
   
5,617
     
3,663
     
12,864
     
28,271
 
Depreciation and amortization
   
34
     
28
     
94
     
83
 
Gross margin
   
11,397
     
(39,108
)
   
96,146
     
124,158
 
Add:
                               
Operation and maintenance (1)
   
5,617
     
3,663
     
12,864
     
28,271
 
Depreciation and amortization
   
34
     
28
     
94
     
83
 
Unrealized (gain) loss on derivative instruments and related transactions
   
(16,470
)
   
22,784
     
(61,671
)
   
13,351
 
Effects of economic hedging related to natural gas inventory
   
428
     
2,486
     
25,160
     
(12,255
)
Financial margin
 
$
1,006
   
$
(10,147
)
 
$
72,593
   
$
153,608
 

(1) Excludes selling, general and administrative expenses of $0.6 million and $0.4 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $1.7 million and $12.8 million for the nine months ended June 30, 2022 and 2021, respectively.

A reconciliation of net income (loss) to net financial (loss) earnings is as follows:
                   
                         
Net income (loss)
 
$
7,501
   
$
(30,846
)
 
$
70,214
   
$
83,688
 
Add:
                               
Unrealized (gain) loss on derivative instruments and related transactions
   
(16,470
)
   
22,784
     
(61,671
)
   
13,351
 
Tax effect
   
3,914
     
(5,418
)
   
14,667
     
(3,175
)
Effects of economic hedging related to natural gas
   
428
     
2,486
     
25,160
     
(12,255
)
Tax effect
   
(102
)
   
(591
)
   
(5,979
)
   
2,912
 
NFE tax adjustment
   
(274
)
   
(942
)
   
113
     
980
 
Net financial (loss) earnings
 
$
(5,003
)
 
$
(12,527
)
 
$
42,504
   
$
85,501
 
                                 


NJR Reports Third Quarter Fiscal 2022 Results
Page 11 of 13
FINANCIAL STATISTICS BY BUSINESS UNIT
 (Unaudited)
 
   
Three Months Ended
   
Nine Months Ended
 
   
June 30,
   
June 30,
 
(Thousands, except per share data)
 
2022
   
2021
   
2022
   
2021
 
NEW JERSEY RESOURCES
                       
                         
Operating Revenues
                       
Natural Gas Distribution
 
$
199,695
   
$
127,626
   
$
938,279
   
$
633,522
 
Clean Energy Ventures
   
13,795
     
13,381
     
35,805
     
26,227
 
Energy Services
   
307,815
     
201,594
     
1,089,704
     
893,640
 
Storage and Transportation
   
16,390
     
11,649
     
41,875
     
38,679
 
Home Services and Other
   
14,220
     
13,312
     
41,393
     
38,662
 
Sub-total
   
551,915
     
367,562
     
2,147,056
     
1,630,730
 
Eliminations
   
420
     
31
     
(6,563
)
   
(6,645
)
Total
 
$
552,335
   
$
367,593
   
$
2,140,493
   
$
1,624,085
 
                                 
                                 
Operating Income (Loss)
                               
Natural Gas Distribution
 
$
13,200
   
$
6,486
   
$
228,694
   
$
170,274
 
Clean Energy Ventures
   
(1,209
)
   
(1,288
)
   
(7,877
)
   
(16,021
)
Energy Services
   
10,833
     
(39,511
)
   
94,479
     
111,349
 
Storage and Transportation
   
4,240
     
2,190
     
9,296
     
10,064
 
Home Services and Other
   
477
     
2,836
     
2,240
     
8,124
 
Sub-total
   
27,541
     
(29,287
)
   
326,832
     
283,790
 
Eliminations
   
2,268
     
1,831
     
(1,263
)
   
1,442
 
Total
 
$
29,809
   
$
(27,456
)
 
$
325,569
   
$
285,232
 
                                 
                                 
Equity in Earnings of Affiliates
                               
Storage and Transportation
 
$
5,274
   
$
(88,615
)
 
$
7,586
   
$
(82,036
)
Eliminations
   
(473
)
   
(618
)
   
(1,441
)
   
(1,718
)
Total
 
$
4,801
   
$
(89,233
)
 
$
6,145
   
$
(83,754
)
                                 
                                 
Net Income (Loss)
                               
Natural Gas Distribution
 
$
2,648
   
$
1,581
   
$
156,511
   
$
131,589
 
Clean Energy Ventures
   
(5,098
)
   
(4,926
)
   
(18,410
)
   
(24,072
)
Energy Services
   
7,501
     
(30,846
)
   
70,214
     
83,688
 
Storage and Transportation
   
6,544
     
(77,679
)
   
14,131
     
(69,460
)
Home Services and Other
   
215
     
(384
)
   
1,113
     
301
 
Sub-total
   
11,810
     
(112,254
)
   
223,559
     
122,046
 
Eliminations
   
1,243
     
423
     
(3,159
)
   
(3,023
)
Total
 
$
13,053
   
$
(111,831
)
 
$
220,400
   
$
119,023
 
                                 
                                 
Net Financial Earnings (Loss)
                               
Natural Gas Distribution
 
$
2,648
   
$
1,581
   
$
156,511
   
$
131,589
 
Clean Energy Ventures
   
(5,098
)
   
(4,926
)
   
(18,410
)
   
(24,072
)
Energy Services
   
(5,003
)
   
(12,527
)
   
42,504
     
85,501
 
Storage and Transportation
   
3,526
     
2,387
     
11,113
     
10,606
 
Home Services and Other
   
215
     
(384
)
   
1,113
     
301
 
Sub-total
   
(3,712
)
   
(13,869
)
   
192,831
     
203,925
 
Eliminations
   
161
     
(279
)
   
(406
)
   
(2,812
)
Total
 
$
(3,551
)
 
$
(14,148
)
 
$
192,425
   
$
201,113
 
                                 
                                 
Throughput (Bcf)
                               
NJNG, Core Customers
   
20.0
     
15.7
     
78.6
     
73.6
 
NJNG, Off System/Capacity Management
   
20.3
     
24.9
     
69.4
     
74.4
 
Energy Services Fuel Mgmt. and Wholesale Sales
   
40.7
     
75.0
     
180.9
     
292.5
 
Total
   
81.0
     
115.6
     
328.9
     
440.5
 
                                 
                                 
Common Stock Data
                               
Yield at June 30,
   
3.3
%
   
3.4
%
   
3.3
%
   
3.4
%
Market Price at June 30,
 
$
44.53
   
$
39.57
   
$
44.53
   
$
39.57
 
Shares Out. at June 30,
   
96,160
     
96,361
     
96,160
     
96,361
 
Market Cap. at June 30,
 
$
4,282,015
   
$
3,813,022
   
$
4,282,015
   
$
3,813,022
 
                                 


NJR Reports Third Quarter Fiscal 2022 Results
Page 12 of 13
   
Three Months Ended
   
Nine Months Ended
 
(Unaudited)
 
June 30,
   
June 30,
 
(Thousands, except customer and weather data)
 
2022
   
2021
   
2022
   
2021
 
NATURAL GAS DISTRIBUTION
                       
                         
Utility Gross Margin
                       
Operating revenues
 
$
199,695
   
$
127,626
   
$
938,279
   
$
633,522
 
Less:
                               
Natural gas purchases
   
102,624
     
44,111
     
442,441
     
221,872
 
Operating and maintenance (1)
   
25,034
     
29,437
     
64,924
     
80,544
 
Regulatory rider expense
   
8,360
     
5,456
     
55,941
     
34,570
 
Depreciation and amortization
   
23,951
     
19,894
     
70,188
     
58,538
 
Gross margin
   
39,726
     
28,728
     
304,785
     
237,998
 
Add:
                               
Operating and maintenance (1)
   
25,034
     
29,437
     
64,924
     
80,544
 
Depreciation and amortization
   
23,951
     
19,894
     
70,188
     
58,538
 
Total Utility Gross Margin
 
$
88,711
   
$
78,059
   
$
439,897
   
$
377,080
 
(1) Excludes selling, general and administrative expenses of $26.5 million and $22.2 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $76.1 million and $67.7 million for the nine months ended June 30, 2022 and 2021, respectively

Utility Gross Margin, Operating Income and Net Income
                       
Residential
 
$
55,597
   
$
48,333
   
$
303,716
   
$
258,776
 
Commercial, Industrial & Other
   
15,387
     
14,282
     
64,609
     
54,372
 
Firm Transportation
   
14,729
     
11,186
     
57,101
     
51,352
 
Total Firm Margin
   
85,713
     
73,801
     
425,426
     
364,500
 
Interruptible
   
1,060
     
998
     
2,420
     
2,628
 
Total System Margin
   
86,773
     
74,799
     
427,846
     
367,128
 
Off System/Capacity Management/FRM/Storage Incentive
   
1,938
     
3,260
     
12,051
     
9,952
 
Total Utility Gross Margin
   
88,711
     
78,059
     
439,897
     
377,080
 
Operation and maintenance expense
   
51,560
     
51,679
     
141,015
     
148,268
 
Depreciation and amortization
   
23,951
     
19,894
     
70,188
     
58,538
 
Operating Income
 
$
13,200
   
$
6,486
   
$
228,694
   
$
170,274
 
                                 
Net Income
 
$
2,648
   
$
1,581
   
$
156,511
   
$
131,589
 
                                 
Net Financial Earnings
 
$
2,648
   
$
1,581
   
$
156,511
   
$
131,589
 
                                 
Throughput (Bcf)
                               
Residential
   
6.7
     
6.6
     
42.3
     
42.9
 
Commercial, Industrial & Other
   
1.3
     
1.2
     
7.9
     
7.9
 
Firm Transportation
   
2.3
     
2.5
     
11.5
     
12.1
 
Total Firm Throughput
   
10.3
     
10.3
     
61.7
     
62.9
 
Interruptible
   
9.7
     
5.4
     
16.9
     
10.7
 
Total System Throughput
   
20.0
     
15.7
     
78.6
     
73.6
 
Off System/Capacity Management
   
20.3
     
24.9
     
69.4
     
74.4
 
Total Throughput
   
40.3
     
40.6
     
148.0
     
148.0
 
                                 
Customers
                               
Residential
   
510,931
     
500,923
     
510,931
     
500,923
 
Commercial, Industrial & Other
   
31,469
     
30,789
     
31,469
     
30,789
 
Firm Transportation
   
26,152
     
30,925
     
26,152
     
30,925
 
Total Firm Customers
   
568,552
     
562,637
     
568,552
     
562,637
 
Interruptible
   
29
     
27
     
29
     
27
 
Total System Customers
   
568,581
     
562,664
     
568,581
     
562,664
 
Off System/Capacity Management*
   
19
     
79
     
19
     
79
 
Total Customers
   
568,600
     
562,743
     
568,600
     
562,743
 
*The number of customers represents those active during the last month of the period.
                 
Degree Days
                               
Actual
   
452
     
466
     
4,097
     
4,239
 
Normal
   
483
     
481
     
4,477
     
4,512
 
Percent of Normal
   
93.6
%
   
96.9
%
   
91.5
%
   
93.9
%
                                 
 

NJR Reports Third Quarter Fiscal 2022 Results
Page 13 of 13
   
Three Months Ended
   
Nine Months Ended
 
(Unaudited)
 
June 30,
   
June 30,
 
(Thousands, except customer, SREC, TREC and megawatt)
 
2022
   
2021
   
2022
   
2021
 
CLEAN ENERGY VENTURES
                       
                         
Operating Revenues
                       
SREC sales
 
$
1,010
   
$
4,467
   
$
7,839
   
$
6,536
 
TREC sales
   
1,709
     
1,568
     
3,574
     
3,075
 
Solar electricity sales and other
   
8,128
     
4,625
     
15,839
     
8,613
 
Sunlight Advantage
   
2,948
     
2,721
     
8,553
     
8,003
 
Total Operating Revenues
 
$
13,795
   
$
13,381
   
$
35,805
   
$
26,227
 
                                 
Depreciation and Amortization
 
$
5,358
   
$
5,200
   
$
15,902
   
$
15,318
 
                                 
Operating (Loss)
 
$
(1,209
)
 
$
(1,288
)
 
$
(7,877
)
 
$
(16,021
)
                                 
Income Tax (Benefit)
 
$
(1,526
)
 
$
(1,448
)
 
$
(5,524
)
 
$
(7,248
)
                                 
Net (Loss)
 
$
(5,098
)
 
$
(4,926
)
 
$
(18,410
)
 
$
(24,072
)
                                 
Net Financial (Loss)
 
$
(5,098
)
 
$
(4,926
)
 
$
(18,410
)
 
$
(24,072
)
                                 
Solar Renewable Energy Certificates Generated
   
120,779
     
134,200
     
278,681
     
275,271
 
                                 
Solar Renewable Energy Certificates Sold
   
6,573
     
23,000
     
38,773
     
32,495
 
                                 
Transition Renewable Energy Certificates Generated
   
12,210
     
10,896
     
25,471
     
21,206
 
                                 
Solar Megawatts Under Construction
   
75.5
     
12.6
     
75.5
     
12.6
 
                                 
ENERGY SERVICES
                               
                                 
Operating Income
                               
Operating revenues
 
$
307,815
   
$
201,594
   
$
1,089,704
   
$
893,640
 
Less:
                               
Gas purchases
   
290,767
     
237,011
     
980,600
     
741,128
 
Operation and maintenance expense
   
6,181
     
4,066
     
14,531
     
41,080
 
Depreciation and amortization
   
34
     
28
     
94
     
83
 
Total Operating Income (Loss)
 
$
10,833
   
$
(39,511
)
 
$
94,479
   
$
111,349
 
                                 
Net Income (Loss)
 
$
7,501
   
$
(30,846
)
 
$
70,214
   
$
83,688
 
                                 
Financial Margin
 
$
1,006
   
$
(10,147
)
 
$
72,593
   
$
153,608
 
                                 
Net Financial (Loss) Earnings
 
$
(5,003
)
 
$
(12,527
)
 
$
42,504
   
$
85,501
 
                                 
Gas Sold and Managed (Bcf)
   
40.7
     
75.0
     
180.9
     
292.5
 
                                 
STORAGE AND TRANSPORTATION
                               
                                 
Operating Revenues
 
$
16,390
   
$
11,649
   
$
41,875
   
$
38,679
 
                                 
Equity in Earnings of Affiliates
 
$
5,274
   
$
(88,615
)
 
$
7,586
   
$
(82,036
)
                                 
Operation and Maintenance Expense
 
$
7,840
   
$
6,689
   
$
22,524
   
$
20,370
 
                                 
Other Income, Net
 
$
1,882
   
$
1,290
   
$
7,141
   
$
4,135
 
                                 
Interest Expense
 
$
3,177
   
$
2,937
   
$
7,160
   
$
10,497
 
                                 
Income Tax Provision (Benefit)
 
$
1,675
   
$
(10,393
)
 
$
2,732
   
$
(8,874
)
                                 
Net Income (Loss)
 
$
6,544
   
$
(77,679
)
 
$
14,131
   
$
(69,460
)
                                 
Net Financial Earnings
 
$
3,526
   
$
2,387
   
$
11,113
   
$
10,606
 
                                 
HOME SERVICES AND OTHER
                               
                                 
Operating Revenues
 
$
14,220
   
$
13,312
   
$
41,393
   
$
38,662
 
                                 
Operating Income
 
$
477
   
$
2,836
   
$
2,240
   
$
8,124
 
                                 
Net Income (Loss)
 
$
215
   
$
(384
)
 
$
1,113
   
$
301
 
                                 
Net Financial Earnings (Loss)
 
$
215
   
$
(384
)
 
$
1,113
   
$
301
 
                                 
Total Service Contract Customers at June 30
   
103,819
     
106,131
     
103,819
     
106,131