Market Overview

New Jersey Resources Reports Third-Quarter Fiscal 2018 Results

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Today, New Jersey Resources (NYSE:NJR) reported results for the third
quarter of fiscal 2018:

  • Consolidated net loss of $14.3 million for the third quarter of fiscal
    2018, compared with consolidated net income of $19 million for the
    same period in fiscal 2017.
  • Consolidated net financial earnings (NFE), a non-GAAP financial
    measure, were a loss of $8 million for the third quarter of fiscal
    2018, compared with NFE of $17.4 million during the same period in
    fiscal 2017.
  • Fiscal 2018 NFE guidance increased to a range of $2.60 to $2.70 per
    share.
  • Utility customer growth for fiscal 2018 to 2020 increased to 27,000
    and 29,000 from 26,000 and 28,000.
  • New Jersey Natural Gas (NJNG) received an easement from the Joint Base
    McGuire-Dix-Lakehurst for the Southern Reliability Link (SRL).
  • Clean Energy Ventures (CEV) completed two commercial solar
    installations with a total capacity of 23 megawatts (MW); two
    additional commercial solar installations are expected to be completed
    in the fourth quarter of fiscal 2018.

Third-quarter fiscal 2018 net loss totaled $14.3 million, or a loss of
$0.16 per share, compared with net income of $19 million, or $0.22 per
share, during the same period in fiscal 2017. Fiscal 2018 year-to-date
net income totaled $249.7 million, or $2.85 per share, compared with
$168.6 million, or $1.95 per share, during the same period in fiscal
2017.

In the third quarter of fiscal 2018, net financial loss was $8 million,
or a loss of $0.09 per share, compared with NFE of $17.4 million, or
$0.20 per share, during the same period last year. Fiscal 2018
year-to-date NFE totaled $269.4 million, or $3.08 per share, compared
with NFE of $161.9 million, or $1.88 per share, during the same period
in fiscal 2017.

"NJR's performance this year allowed us to increase earnings guidance,
led by Energy Services, " said Laurence M. Downes, chairman and CEO of
New Jersey Resources. "Our portfolio of businesses performed in-line
with our expectations due to the dedication of our team. We remain
focused on executing our strategy to meet our customer's expectations
and deliver strong results for our shareowners."

A reconciliation of net income to NFE for the three and nine months
ended June 30 of fiscal years 2018 and 2017 is provided below.

  Three Months Ended   Nine Months Ended
June 30, June 30,
(Thousands)   2018   2017 2018   2017
Net (loss) income* $ (14,274 )   $ 18,957 $ 249,691   $ 168,588
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
2,657 (15,981 ) 25,904 (42,534 )
Tax effect (577 ) 5,985 (3,920 ) 15,907
Effects of economic hedging related to natural gas inventory 4,474 13,203 (14,788 ) 29,592
Tax effect (1,011 ) (4,947 ) 5,518 (11,077 )
Net income to NFE tax adjustment 728   178   6,987   1,408  
Net financial (loss) earnings $ (8,003 ) $ 17,395   $ 269,392   $ 161,884  
 
Weighted Average Shares Outstanding
Basic 87,888 86,408 87,493 86,257
Diluted 87,888 87,267 87,884 87,088
 
Basic (loss) earnings per share $ (0.16 ) $ 0.22 $ 2.85 $ 1.95
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
0.03 (0.18 ) 0.30 (0.49 )
Tax effect (0.01 ) 0.07 (0.04 ) 0.19
Effects of economic hedging related to natural gas inventory 0.05 0.15 (0.17 ) 0.34
Tax effect (0.01 ) (0.06 ) 0.06 (0.13 )
Net income to NFE tax adjustment 0.01     0.08   0.02  
Basic net financial (loss) earnings per share $(0.09) $ 0.20   $ 3.08   $ 1.88  

*Results during the first nine months of fiscal 2018 include an
estimated income tax benefit of $57.7 million, or $0.66 per share, due
to the revaluation of deferred taxes resulting from the reduction in the
corporate tax rate.

NFE is a financial measure not calculated in accordance with generally
accepted accounting principles (GAAP) of the United States. It is a
measure of earnings based on eliminating timing differences surrounding
the recognition of certain gains or losses, net of applicable tax
adjustments, to effectively match the earnings effects of the economic
hedges with the physical sale of natural gas, Solar Renewable Energy
Credits (SRECs) and foreign currency contracts. NFE eliminates the
impact of volatility to GAAP earnings associated with unrealized gains
and losses on derivative instruments in the current period. For further
discussion of this financial measure, please see the explanation below
under "Non-GAAP Financial Information."

A table summarizing our key performance metrics for the three and nine
months ended June 30 of fiscal years 2018 and 2017 is provided below.

  Three Months Ended   Nine Months Ended
June 30, June 30,
($ in Thousands)   2018   2017 2018   2017
Net (loss) income $ (14,274 )   $ 18,957 $ 249,691   $ 168,588
Basic EPS $ (0.16 ) $ 0.22 $ 2.85 $ 1.95
NFE $ (8,003 ) $ 17,395 $ 269,392 $ 161,884
Basic NFE per share $ (0.09 ) $ 0.20 $ 3.08 $ 1.88
 

A table detailing NFE for the three and nine months ended June 30 of
fiscal years 2018 and 2017 is provided below.

  Three Months Ended   Nine Months Ended
June 30, June 30,
(Thousands)   2018   2017 2018   2017
Net financial earnings (loss)    
New Jersey Natural Gas $ 2,440 $ 5,951 $ 96,991 $ 96,532
Midstream 3,489   2,959   22,315   10,294  
Subtotal Regulated 5,929 8,910 119,306 106,826
Clean Energy Ventures (829 ) 6,276 80,472 31,861
Energy Services (15,079 ) 933 78,027 20,166
Home Services and Other 1,993   1,295   (8,211 ) 3,545  
Subtotal Non-Regulated (13,915 ) 8,504   150,288   55,572  
Subtotal (7,986 ) 17,414 269,594 162,398
Eliminations (17 ) (19 ) (202 ) (514 )
Total $ (8,003 ) $ 17,395   $ 269,392   $ 161,884  
 

NJR Increases Fiscal 2018 NFE Guidance:

NJR increased fiscal 2018 NFE guidance from $2.55 to $2.65 per share to
$2.60 to $2.70, subject to the risks and uncertainties identified below
under "Forward-Looking Statements." NJR expects its regulated businesses
to generate between 40 to 47 percent of total NFE, with NJNG continuing
to be the largest contributor, excluding the impacts of tax reform. The
following chart represents NJR's current expected contributions from its
subsidiaries, and the estimated benefits as a result of the revaluation
of deferred taxes, due to tax reform for fiscal 2018:

Company   Expected Fiscal 2018
Net Financial Earnings
Contribution
New Jersey Natural Gas   35 to 40 percent
Midstream   5 to 7 percent
Total Regulated   40 to 47 percent
Clean Energy Ventures   5 to 10 percent
Energy Services   25 to 30 percent
Home Services and Other   1 to 3 percent
Total Non-Regulated   31 to 43 percent
NFE contribution from the revaluation of deferred taxes due to tax
reform
  20 to 25 percent
 

In providing fiscal 2018 NFE guidance, management is aware there could
be differences between reported GAAP earnings and NFE due to matters
such as, but not limited to, the positions of our energy-related
derivatives. Management is not able to reasonably estimate the aggregate
impact or significance of these items on reported earnings and,
therefore, is not able to provide a reconciliation to the corresponding
GAAP equivalent for its operating earnings guidance without unreasonable
efforts.

Regulated Business Update:

New Jersey Natural Gas

NJNG reported third-quarter fiscal 2018 NFE of $2.4 million, compared
with $6 million, during the same period in fiscal 2017. Fiscal 2018
year-to-date NFE at NJNG were $97 million, compared with $96.5 million
during the same period last year. The decrease in NFE for the quarter
was due primarily to higher O&M expenses.

NJNG Infrastructure Update:

  • The Southern Reliability Link, which is designed to
    provide a secondary interstate feed into the southern end of NJNG's
    delivery system, received an easement from the Joint Base
    McGuire-Dix-Lakehurst during the third quarter. NJNG continues to make
    progress on gaining road opening permits to begin construction. NJNG
    expects the SRL to be in service during 2019, and plans to recover its
    capital costs through a future base rate case.
  • Safety Acceleration and Facilities Enhancement (SAFE) II is the
    five-year program approved by the New Jersey Board of Public Utilities
    (BPU) in September 2016 designed to replace the remaining 276 miles of
    unprotected steel main and associated services in NJNG's distribution
    system. During the first nine months of fiscal 2018, NJNG invested
    $27.8 million to replace 39 miles of unprotected steel main and
    services.
  • New Jersey Reinvestment in System Enhancement (NJ RISE) program
    is the five-year, $102.5 million investment that began in
    2014. During the third quarter, NJNG installed a distribution main
    under the Barnegat Bay, from Berkeley Township to the Borough of
    Seaside Park, to improve service resiliency into the southern portion
    of the Seaside Barrier Island.
  • The SAFE II and NJ RISE programs are eligible for annual base rate
    increases. On March 29, 2018, NJNG filed its annual petition with the
    BPU, requesting a base rate increase for the recovery of these related
    capital costs through June 30, 2018. The filing was updated in July
    2018 to reflect actual results through June 30, 2018, with an updated
    base rate change of $6.8 million expected to be effective October 1,
    2018.

Customer Growth:

  • NJNG added 6,936 new customers during the first nine months of fiscal
    2018, compared with 6,231 during the same period last year, primarily
    driven by the residential new construction market. In addition, 539
    existing NJNG customers expanded their natural gas services.
  • NJNG expects to add between 27,000 and 29,000 new customers through
    fiscal 2020, representing an average annual growth rate of 1.7 percent
    and a cumulative increase in utility gross margin of approximately $16
    million. For more information on utility gross margin, please see
    "Non-GAAP Financial Information" below.

Basic Gas Supply Service (BGSS) Incentive Programs:

  • BGSS incentive programs contributed $3 million to utility gross margin
    in the third quarter of fiscal 2018, compared with $3.4 million during
    the same period in fiscal 2017. Fiscal year-to-date, these programs
    contributed $9.8 million, compared with $10.1 million during the same
    period in fiscal 2017. The lower results for both periods were due
    primarily to a decrease in capacity release volumes. Total savings for
    NJNG customers through the BGSS incentive programs for the first nine
    months of fiscal 2018 were approximately $55 million.

Energy Efficiency:

  • The SAVEGREEN Project®, NJNG's energy-efficiency program,
    invested $9.3 million during the first nine months of fiscal 2018 in
    grants and financing options designed to help customers with
    energy-efficiency upgrades for their homes and businesses.
  • On March 28, 2018, NJNG filed a petition with the BPU requesting
    continuation of existing SAVEGREEN programs and the addition of new
    programs through December 2024, with investments of approximately $341
    million.

Tax Reform Benefits Customers:

  • On March 26, 2018, the BPU approved NJNG's filing to pass through the
    benefits of federal tax reform and reduce customers' rates by $21
    million, inclusive of sales tax, effective April 1, 2018, resulting in
    a $31, or a 3 percent, annual decrease for the typical customer.
  • On May 22, 2018, the BPU approved NJNG's request to provide a one-time
    refund to customers of approximately $31 million, which customers
    received in June 2018.
  • Customers using approximately 1,000 therms per year will see an
    estimated overall reduction of $78, or 7.4 percent, on their bill this
    year.

Midstream

Midstream reported third-quarter fiscal 2018 NFE of $3.5 million,
compared with $3 million during the same period in fiscal 2017. The
quarterly increase is due to an increase in Allowance for Funds Used
During Construction (AFUDC) from the PennEast project. Fiscal 2018
year-to-date NFE were $22.3 million, compared with $10.3 million during
the same period last year. The higher fiscal year-to-date results
reflect the benefits of tax reform.

Infrastructure Projects:

  • PennEast Pipeline - On January 19, 2018, the Federal Energy
    Regulatory Commission (FERC) issued a Certificate of Public
    Convenience and Necessity for the PennEast Pipeline. PennEast is
    working through the details of gaining access to land to complete
    surveys in order to submit certain permit applications. PennEast has
    advised that it currently expects construction on the pipeline to
    begin in 2019. However, any delays in the permitting process may
    result in construction commencing later than currently expected.
  • Adelphia Gateway - On January 15, 2018, NJR filed with FERC
    seeking a Certificate of Public Convenience and Necessity for the
    Adelphia Gateway natural gas pipeline. On January 23, 2018, FERC
    formally noticed the application. This re-purposed pipeline will
    deliver natural gas to under-served areas in the greater Philadelphia
    market, and NJR expects it to be in service in fiscal 2019 and
    contribute materially to earnings in fiscal 2020.

Non-Regulated Businesses Update:

Energy Services

Energy Services reported third-quarter fiscal 2018 net financial losses
of $15.1 million, compared with NFE of $933,000 during the same period
in fiscal 2017. The quarterly decrease in NFE was due primarily to
increased demand fees and O&M expenses during the quarter compared to
the same period last year. The higher fees were partially offset by
additional gross margin from favorable price spreads due to temperatures
deviating from normal during April and June of this year. Fiscal 2018
year-to-date NFE were $78 million, compared with $20.2 million during
the same period in fiscal 2017. The fiscal 2018 year-to-date increase
was primarily due to colder weather that resulted in increased storage
withdrawals to meet higher demand coupled with higher volatility, which
allowed Energy Services to capture additional financial margin.

Clean Energy Ventures

CEV reported a net financial loss of $829,000 in the third quarter of
fiscal 2018, compared with $6.3 million in the same period in fiscal
2017. The lower quarterly results were due primarily to an expectation
of fewer Investment Tax Credits (ITC), compared with the same period in
fiscal 2017, as a result of the planned sale leaseback financings for
all fiscal 2018 commercial solar projects. Fiscal 2018 year-to-date NFE
were $80.5 million, compared with $31.9 million during the same period
in fiscal 2017. The improved fiscal year-to-date results were due
primarily to an estimated benefit of $63.8 million related to the
revaluation of deferred income taxes associated with tax reform.

CEV expects total solar-related capital expenditures during fiscal 2018
to be between $130 million and $144 million, of which $96.4 million will
utilize sale leaseback financing. This compares with total solar-related
capital expenditures of $120.3 million in fiscal 2017, which included
$33 million of sale leaseback financing.

Quarterly highlights:

  • Two commercial solar projects were placed into service during the
    third fiscal quarter. The two projects, located in Raritan and South
    Brunswick, NJ, total 23 MW of capacity. CEV expects two additional
    commercial solar projects located in Old Bridge and Springfield
    Township, N.J. to be placed into service in the fourth quarter of
    fiscal 2018. The four projects will add a total of 42.9 MW of capacity
    and represent an investment of $96.4 million.
  • The Sunlight Advantage®, CEV's residential solar leasing
    program, added 221 residential customers during the third quarter of
    fiscal 2018 and now serves approximately 7,000 residential customers,
    representing an investment of $207.7 million.
  • On March 2, 2018, CEV entered into a purchase and sale agreement for
    its 9.7 MW wind farm in Two Dot, Montana for a total sale price of
    $18.5 million. The sale closed on June 1, 2018, and CEV realized a
    pre-tax gain of approximately $965,000.
  • In March 2018, CEV announced a plan to sell its remaining wind assets.
    CEV expects a potential sale to close in the first quarter of fiscal
    2019.

Home Services and Other Operations

In the third quarter of fiscal 2018, Home Services, NJR's non-regulated
retail and appliance service subsidiary, and Other Operations reported
NFE of $2 million, compared with $1.3 million during the same period
last year. The increase was due primarily to a lower effective tax rate.
Fiscal 2018 year-to-date net financial losses were $8.2 million,
compared with NFE of $3.5 million during the same period last year. The
fiscal 2018 year-to-date decrease was due to an estimated $10.8 million
charge primarily attributed to other operations resulting from the
revaluation of deferred income taxes due to tax reform.

Capital Expenditures and Cash Flows:

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

  • During the first nine months of fiscal 2018, NJR generated operating
    cash flows of $392.6 million, compared with $223.1 million during the
    same period in fiscal 2017.
  • Fiscal year-to-date capital expenditures were $284.4 million, of which
    $188.5 million were related to regulated assets, compared with $246.5
    million, of which $142.5 million were related to regulated assets,
    during the same period in fiscal 2017.

Effective Tax Rate:

NJR's estimated annual effective tax rate increased to 14.3 percent in
fiscal 2018 from 13.1 percent in fiscal 2017. The increase is due to
fewer expected investment tax credits, offset by a reduction in the
federal tax rate.

For NFE purposes, NJR expects the annual effective tax rate to increase
to 12.5 percent from 10.6 percent. NJR recognized $18.7 million in tax
credits, net of deferred taxes, during the first nine months of fiscal
2018, compared with $37.3 million during the same period in fiscal 2017.
Further detail can be found in Note 11 "Income Taxes" within our 10-Q
filing.

Webcast Information:

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

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of
the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. NJR cautions readers that the
assumptions forming the basis for forward-looking statements include
many factors that are beyond 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 release include, but
are not limited to, certain statements regarding NJR's NFE guidance for
fiscal 2018, forecasted contribution of business segments to fiscal 2018
NFE, future NJNG customer and utility gross margin growth, future NJR
capital expenditures, infrastructure investments and solar sale
leaseback transactions, Clean Energy Ventures' ITC-eligible projects and
demand for residential solar, the impact of the Tax Act, earnings and
dividend growth, as well as the ability to close and successfully
implement the Adelphia Gateway acquisition, sell our wind farms and
construct the SRL and PennEast Pipeline projects.

The factors that could cause actual results to differ materially from
NJR's expectations include, but are not limited to, risks associated
with our investments in clean energy projects, including the
availability of regulatory and tax incentives, the availability of
viable projects, our eligibility for ITCs and PTCs, the future market
for SRECs and electricity prices and operational risks related to
projects in service; the ability to obtain governmental and regulatory
approvals, land-use rights, electric grid connection (in the case of
clean energy projects) and/or financing for the construction,
development and operation of our unregulated energy investments,
pipeline transportation systems and NJR's infrastructure projects,
including SRL and NJ RISE as well as PennEast and Adelphia Gateway, in a
timely manner; risks associated with acquisitions and the related
integration of acquired assets with our current operations; volatility
of natural gas and other commodity prices and their impact on NJNG
customer usage, NJNG's BGSS incentive programs, our Energy Services
segment operations and our risk management efforts; the level and rate
at which NJNG's costs and expenses are incurred and the extent to which
they are approved for recovery from customers through the regulatory
process, including through future base rate case filings; the impact of
a disallowance of recovery of environmental-related expenditures and
other regulatory changes; the performance of our subsidiaries; operating
risks incidental to handling, storing, transporting and providing
customers with natural gas; access to adequate supplies of natural gas
and dependence on third-party storage and transportation facilities for
natural gas supply; the regulatory and pricing policies of federal and
state regulatory agencies; timing of qualifying for ITCs due to delays
or failures to complete planned solar projects and the resulting effect
on our effective tax rate and earnings; the results of legal or
administrative proceedings with respect to claims, rates, environmental
issues, natural gas cost prudence reviews and other matters; risks
related to cyberattack or failure of information technology systems;
changes in rating agency requirements and/or credit ratings and their
effect on availability and cost of capital to our company; the ability
to comply with current and future regulatory requirements; the impact of
volatility in the equity and credit markets on our access to capital;
the impact to the asset values and resulting higher costs and funding
obligations of our pension and post-employment benefit plans as a result
of potential downturns in the financial markets, lower discount rates,
revised actuarial assumptions or impacts associated with the Patient
Protection and Affordable Care Act; commercial and wholesale credit
risks, including the availability of creditworthy customers and
counterparties, and liquidity in the wholesale energy trading market;
accounting effects and other risks associated with hedging activities
and use of derivatives contracts; the ability to optimize our physical
assets; any potential need to record a valuation allowance for our
deferred tax assets; changes to tax laws and regulations; weather and
economic conditions; the ability to comply with debt covenants;
demographic changes in NJR's service territory and their effect on NJR's
customer growth; the impact of natural disasters, terrorist activities
and other extreme events on our operations and customers; the costs of
compliance with present and future environmental laws, including
potential climate change-related legislation; environmental-related and
other uncertainties related to litigation or administrative proceedings;
risks related to our employee workforce; and risks associated with the
management of our joint ventures and partnerships, and investment in a
master limited partnership. The aforementioned factors are detailed in
the "Risk Factors" sections of our Form 10-K that we filed with the
Securities and Exchange Commission (SEC) on November 21, 2017, which is
available on the SEC's Web site at sec.gov. Information included in this
release is representative as of today only, and while NJR periodically
reassesses material trends and uncertainties affecting 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 release includes the non-GAAP financial measures NFE/net financial
losses, financial margin and utility gross margin. A reconciliation of
these non-GAAP financial measures to the most directly comparable
financial measures calculated and reported in accordance with GAAP can
be found below. As an indicator of 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/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, net of applicable tax adjustments as described below.
Volatility associated with the change in value of these financial
instruments and physical commodity contracts is reported on the income
statement in the current period. In order to manage its business, NJR
views its results without the impacts of the unrealized gains and
losses, and certain realized gains and losses, caused by changes in
value of these financial instruments and physical commodity contracts
prior to the completion of the planned transaction because it shows
changes in value currently instead of when the planned transaction
ultimately is settled. An annual estimated effective tax rate is
calculated for NFE purposes and any necessary quarterly tax adjustment
is applied to Clean Energy Ventures, as such the adjustment is related
to tax credits generated by Clean Energy Ventures.

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 2017
Form 10-K, Item 7.

About New Jersey Resources

New Jersey Resources (NYSE:NJR) is a Fortune 1000 company that,
through its subsidiaries, provides safe and reliable natural gas and
clean energy services, including transportation, distribution, asset
management and home services. NJR is composed of five primary businesses:

  • New Jersey Natural Gas, NJR's principal subsidiary, operates
    and maintains over 7,400 miles of natural gas transportation and
    distribution infrastructure to 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 and
    onshore wind projects with a total capacity of more than 335
    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.
  • Midstream serves customers from local distributors and
    producers to electric generators and wholesale marketers through its
    50 percent equity ownership in the Steckman Ridge natural gas storage
    facility, as well as its 20 percent equity interest in the PennEast
    Pipeline Project.
  • NJR Home Services provides service contracts as well as
    heating, central air conditioning, water heaters, standby generators,
    solar and other indoor and outdoor comfort products to residential
    homes throughout New Jersey.

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

For more information about NJR:

www.njresources.com.
Follow
us on Twitter @NJNaturalGas.
"Like" us on
facebook.com/NewJerseyNaturalGas.
Download our free NJR investor
relations app for iPad, iPhone and Android.

NJR-E

                 
NEW JERSEY RESOURCES                
(Unaudited)        
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended Nine Months Ended
June 30, June 30,
(Thousands, except per share data) 2018 2017 2018 2017
OPERATING REVENUES
Utility $ 104,538 $ 121,362 $ 631,389 $ 602,464
Nonutility 438,897   336,161   1,636,394   1,129,633
Total operating revenues 543,435   457,523   2,267,783   1,732,097
OPERATING EXPENSES
Gas purchases
Utility 53,080 47,124 227,268 220,889
Nonutility 422,734 299,971 1,489,041 1,005,231
Related parties 2,156 2,076 6,392 6,259
Operation and maintenance 69,447 55,613 182,307 160,183
Regulatory rider expenses 5,542 5,216 36,915 37,710
Depreciation and amortization 20,320 20,760 64,634 60,348
Energy and other taxes 7,822   8,796   45,855   42,382
Total operating expenses 581,101   439,556   2,052,412   1,533,002
OPERATING (LOSS) INCOME (37,666 ) 17,967 215,371 199,095
Other income, net 2,682 3,273 11,589 12,387
Interest expense, net of capitalized interest 11,037   11,164   34,740   33,215
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF
AFFILIATES
(46,021 ) 10,076 192,220 178,267
Income tax (benefit) provision (28,534 ) (5,816 ) (47,801 ) 20,134
Equity in earnings of affiliates 3,213   3,065   9,670   10,455
NET (LOSS) INCOME $ (14,274 ) $ 18,957   $ 249,691   $ 168,588
 
(LOSS) EARNINGS PER COMMON SHARE
Basic $ (0.16 ) $ 0.22 $ 2.85 $ 1.95
Diluted $ (0.16 ) $ 0.22   $ 2.84   $ 1.94
 
DIVIDENDS DECLARED PER COMMON SHARE $ 0.2725   $ 0.255   $ 0.818   $ 0.765
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 87,888 86,408 87,493 86,257
Diluted 87,888   87,267   87,884   87,088
                       
 
 
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
     
Three Months Ended Nine Months Ended
June 30, June 30,
(Thousands)   2018   2017   2018   2017
NEW JERSEY RESOURCES        
 
A reconciliation of net income, the closest GAAP financial
measurement, to net financial earnings is as follows:
 
Net (loss) income $ (14,274 ) $ 18,957 $ 249,691 $ 168,588
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
2,657 (15,981 ) 25,904 (42,534 )

Tax effect

(577 ) 5,985 (3,920 ) 15,907
Effects of economic hedging related to natural gas inventory 4,474 13,203 (14,788 ) 29,592
Tax effect (1,011 ) (4,947 ) 5,518 (11,077 )
Net income to NFE tax adjustment 728   178   6,987   1,408  
Net financial (loss) earnings $ (8,003 ) $ 17,395   $ 269,392   $ 161,884  
 
Weighted Average Shares Outstanding
Basic 87,888 86,408 87,493 86,257
Diluted 87,888   87,267   87,884   87,088  
 
A reconciliation of basic earnings per share, the closest GAAP
financial measurement, to basic net financial earnings per share is
as follows:
 
Basic (loss) earnings per share $ (0.16 ) $ 0.22 $ 2.85 $ 1.95
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
$ 0.03 $ (0.18 ) $ 0.30 $ (0.49 )
Tax effect $ (0.01 ) $ 0.07 $ (0.04 ) $ 0.19
Effects of economic hedging related to natural gas inventory $ 0.05 $ 0.15 $ (0.17 ) $ 0.34
Tax effect $ (0.01 ) $ (0.06 ) $ 0.06 $ (0.13 )
Net income to NFE tax adjustment $ 0.01   $   $ 0.08   $ 0.02  
Basic NFE per share $ (0.09 ) $ 0.20   $ 3.08   $ 1.88  
                 
NATURAL GAS DISTRIBUTION        
 
A reconciliation of operating revenue, the closest GAAP financial
measurement, to utility gross margin is as follows:
 
Operating revenues $ 104,538 $ 121,362 $ 631,389 $ 602,464
Less:
Gas purchases 55,404 49,448 282,147 229,357
Energy and other taxes 5,493 6,208 35,770 33,796
Regulatory rider expense 5,542   5,216   36,915   37,710  
Utility gross margin $ 38,099   $ 60,490   $ 276,557   $ 301,601  
                 
CLEAN ENERGY VENTURES                
 
A reconciliation of net income to net financial earnings is as
follows:
 
Net (loss) income $ (1,557 ) $ 6,098 $ 73,485 $ 30,453
Add:
Net income to NFE tax adjustment 728   178   6,987   1,408  
Net (loss) financial earnings $ (829 ) $ 6,276   $ 80,472   $ 31,861  
                 
 
Three Months Ended Nine Months Ended
(Unaudited) June 30, June 30,
(Thousands)   2018   2017   2018   2017
ENERGY SERVICES                
 
The following table is a computation of financial margin:
 
Operating revenues $ 409,405 $ 307,139 $ 1,612,699 $ 1,064,607
Less: Gas purchases 423,861 301,106 1,492,418 1,008,675
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
2,874 (15,672 ) 24,498 (41,661 )
Effects of economic hedging related to natural gas inventory 4,474   13,203   (14,788 ) 29,592  
Financial margin $ (7,108 ) $ 3,564   $ 129,991   $ 43,863  
 
A reconciliation of operating income, the closest GAAP financial
measurement, to financial margin is as follows:
 
Operating (loss) income $ (25,106 ) $ 1,288 $ 101,886 $ 40,918
Add:
Operation and maintenance expense 10,312 4,359 15,792 13,828
Depreciation and amortization 21 16 50 49
Other taxes 317   370   2,553   1,137  
Subtotal (14,456 ) 6,033 120,281 55,932
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
2,874 (15,672 ) 24,498 (41,661 )
Effects of economic hedging related to natural gas inventory 4,474   13,203   (14,788 ) 29,592  
Financial margin $ (7,108 ) $ 3,564   $ 129,991   $ 43,863  
 
A reconciliation of net income to net financial earnings is as
follows:
 
Net (loss) income $ (20,767 ) $ 2,475 $ 66,163 $ 27,717
Add:
Unrealized loss (gain) on derivative instruments and related
transactions
2,874 (15,672 ) 24,498 (41,661 )
Tax effect (649 ) 5,874 (3,364 ) 15,595
Effects of economic hedging related to natural gas, net of taxes 4,474 13,203 (14,788 ) 29,592
Tax effect (1,011 ) (4,947 ) 5,518   (11,077 )
Net financial (loss) earnings $ (15,079 ) $ 933   $ 78,027   $ 20,166  
 
                 
Home Services and Other                
 
A reconciliation of net income to net financial earnings is as
follows:
 
Net income (loss) $ 2,128 $ 1,295 $ (7,982 ) $ 3,545
Add:
Unrealized loss on derivative instruments and related transactions (204 ) (325 )
Tax effect 69     96    
Net financial earnings (loss) $ 1,993   $ 1,295   $ (8,211 ) $ 3,545  
 
   
Three Months Ended Nine Months Ended
June 30, June 30,
(Thousands, except per share data)   2018   2017   2018   2017
NEW JERSEY RESOURCES                
   
Operating Revenues
Natural Gas Distribution $ 104,538 $ 121,362 $ 631,389 $ 602,464
Clean Energy Ventures 15,348 14,915 42,210 35,425
Energy Services 409,405 307,139 1,612,699 1,064,607
Midstream
Home Services and Other 14,759   14,408   32,977   32,918  
Sub-total 544,050 457,824 2,319,275 1,735,414
Eliminations (615 ) (301 ) (51,492 ) (3,317 )
Total $ 543,435   $ 457,523   $ 2,267,783   $ 1,732,097  
                 
 
Operating Income (loss)
Natural Gas Distribution $ (18,576 ) $ 12,351 $ 116,360 $ 159,684
Clean Energy Ventures 2,456 1,016 (707 ) (4,636 )
Energy Services (25,106 ) 1,288 101,886 40,918
Midstream (516 ) (355 ) (1,482 ) (757 )
Home Services and Other 2,768   1,991   (2,720 ) (568 )
Sub-total (38,974 ) 16,291 213,337 194,641
Eliminations 1,308   1,676   2,034   4,454  
Total $ (37,666 ) $ 17,967   $ 215,371   $ 199,095  
                 
 
Equity in Earnings of Affiliates
Midstream $ 3,907 $ 4,049 $ 12,104 $ 13,499
Eliminations (694 ) (984 ) (2,434 ) (3,044 )
Total $ 3,213   $ 3,065   $ 9,670   $ 10,455  
                 
 
Net income (loss)
Natural Gas Distribution $ 2,440 $ 5,951 $ 96,991 $ 96,532
Clean Energy Ventures (1,557 ) 6,098 73,485 30,453
Energy Services (20,767 ) 2,475 66,163 27,717
Midstream 3,489 2,959 22,315 10,294
Home Services and Other 2,128   1,295   (7,982 ) 3,545  
Sub-total (14,267 ) 18,778 250,972 168,541
Eliminations (7 ) 179   (1,281 ) 47  
Total $ (14,274 ) $ 18,957   $ 249,691   $ 168,588  
                 
 
Net financial earnings (loss)
Natural Gas Distribution $ 2,440 $ 5,951 $ 96,991 $ 96,532
Clean Energy Ventures (829 ) 6,276 80,472 31,861
Energy Services (15,079 ) 933 78,027 20,166
Midstream 3,489 2,959 22,315 10,294
Home Services and Other 1,993   1,295   (8,211 ) 3,545  
Sub-total (7,986 ) 17,414 269,594 162,398
Eliminations (17 ) (19 ) (202 ) (514 )
Total $ (8,003 ) $ 17,395   $ 269,392   $ 161,884  
                 
 
Throughput (Bcf)
NJNG, Core Customers 22.0 20.6 94.5 94.7
NJNG, Off System/Capacity Management 34.1 43.7 109.5 129.8
Energy Services Fuel Mgmt. and Wholesale Sales 153.6   103.0   485.1   360.8  
Total 209.7   167.3   689.1   585.3  
                 
 
Common Stock Data
Yield at June 30 2.4 % 2.6 % 2.4 % 2.6 %
Market Price
High $ 45.20 $ 43.50 $ 45.45 $ 43.50
Low $ 39.15 $ 38.95 $ 35.55 $ 30.46
Close at June 30 $ 44.75 $ 39.70 $ 44.75 $ 39.70
Shares Out. at June 30 88,212 86,466 88,212 86,466
Market Cap. at June 30 $ 3,947,476   $ 3,432,695   $ 3,947,476   $ 3,432,695  
 
   
Three Months Ended Nine Months Ended
(Unaudited) June 30, June 30,
(Thousands, except customer and weather data)   2018   2017   2018   2017
NATURAL GAS DISTRIBUTION                
   
Utility Gross Margin
Operating revenues $ 104,538 $ 121,362 $ 631,389 $ 602,464
Less:
Gas purchases 55,404 49,448 282,147 229,357
Energy and other taxes 5,493 6,208 35,770 33,796
Regulatory rider expense 5,542   5,216   36,915   37,710  
Total Utility Gross Margin $ 38,099   $ 60,490   $ 276,557   $ 301,601  
                 
Utility Gross Margin, Operating Income and Net Income
Residential $ 20,155 $ 34,837 $ 179,445 $ 193,934
Commercial, Industrial & Other 6,610 9,342 39,758 44,157
Firm Transportation 6,857   11,408   43,294   48,858  

Total Firm Margin

33,622 55,587 262,497 286,949
Interruptible 1,503   1,503   4,291   4,544  
Total System Margin 35,125 57,090 266,788 291,493
Off System/Capacity Management/FRM/Storage Incentive 2,974   3,400   9,769   10,108  
Total Utility Gross Margin 38,099 60,490 276,557 301,601
Operation and maintenance expense 42,412 34,807 117,062 101,793
Depreciation and amortization 13,473 12,425 39,609 36,718
Other taxes not reflected in gross margin 791   907   3,526   3,406  
Operating Income $ (18,576 ) $ 12,351   $ 116,360   $ 159,684  
 
Net Income $ 2,440   $ 5,951   $ 96,991   $ 96,532  
 
Net Financial Earnings $ 2,440   $ 5,951   $ 96,991   $ 96,532  
                 
Throughput (Bcf)
Residential 6.6 5.4 42.7 37.7
Commercial, Industrial & Other 1.4 1.1 8.2 7.9
Firm Transportation 2.7   2.6   13.9   12.7  
Total Firm Throughput 10.7 9.1 64.8 58.3
Interruptible 11.3   11.5   29.7   36.4  
Total System Throughput 22.0 20.6 94.5 94.7
Off System/Capacity Management 34.1   43.7   109.5   129.8  
Total Throughput 56.1   64.3   204.0   224.5  
                 
Customers
Residential 472,382 457,542 472,382 457,542
Commercial, Industrial & Other 28,321 27,245 28,321 27,245
Firm Transportation 36,929   43,796   36,929   43,796  
Total Firm Customers 537,632 528,583 537,632 528,583
Interruptible 32   34   32   34  
Total System Customers 537,664 528,617 537,664 528,617
Off System/Capacity Management* 28   24   28   24  
Total Customers 537,692   528,641   537,692   528,641  
*The number of customers represents those active during the last
month of the period.
       
Degree Days
Actual 529 420 4,523 4,105
Normal 499   502   4,529   4,556  
Percent of Normal 106.0 % 83.7 % 99.9 % 90.1 %
 
   
Three Months Ended Nine Months Ended
(Unaudited) June 30, June 30,
(Thousands, except customer, SREC and megawatt)   2018   2017   2018   2017
CLEAN ENERGY VENTURES                
   
Operating Revenues
SREC sales $ 7,756 $ 8,312 $ 20,050 $ 17,809
Wind electricity sales and other 3,675 3,513 11,963 10,231
Solar electricity sales and other 1,934 1,450 4,477 2,984
Sunlight Advantage 1,983   1,640   5,720   4,401  
Total Operating Revenues $ 15,348   $ 14,915   $ 42,210   $ 35,425  
 
Depreciation and Amortization $ 6,702   $ 8,154   $ 24,565   $ 23,118  
 
Operating Income (Loss) $ 2,456   $ 1,016   $ (707 ) $ (4,636 )
 
Income Tax Benefit $ 565   $ 8,122   $ 87,275   $ 44,765  
 
Net (Loss) Income $ (1,557 ) $ 6,098   $ 73,485   $ 30,453  
 
Net Financial (Loss) Earnings $ (829 ) $ 6,276   $ 80,472   $ 31,861  
 
Solar Renewable Energy Certificates Generated 83,779   56,294   153,215   125,730  
 
Solar Renewable Energy Certificates Sold 45,893   34,000   88,562   76,669  
 
Solar Megawatts Eligible for ITCs 25.1   25.6   28.7   31.9  
 
Solar Megawatts Under Construction 30.7   5.6   30.7   5.6  
 
Wind Megawatts Installed/Acquired       39.9  
                 
ENERGY SERVICES                
 
Operating Income
Operating revenues $ 409,405 $ 307,139 $ 1,612,699 $ 1,064,607
Less:
Gas purchases 423,861 301,106 1,492,418 1,008,675
Operation and maintenance expense 10,312 4,359 15,792 13,828
Depreciation and amortization 21 16 50 49
Energy and other taxes 317   370   2,553   1,137  
Operating (Loss) Income $ (25,106 ) $ 1,288   $ 101,886   $ 40,918  
 
Net (Loss) Income $ (20,767 ) $ 2,475   $ 66,163   $ 27,717  
 
Financial Margin $ (7,108 ) $ 3,564   $ 129,991   $ 43,863  
 
Net Financial (Loss) Earnings $ (15,079 ) $ 933   $ 78,027   $ 20,166  
 
Gas Sold and Managed (Bcf) 153.6   103.0   485.1   360.8  
                 
MIDSTREAM                
 
Equity in Earnings of Affiliates $ 3,907   $ 4,049   $ 12,104   $ 13,499  
 
Other Income, Net $ 1,558   $ 1,085   $ 4,135   $ 2,993  
 
Income Tax Provision (Benefit) $ 989   $ 1,609   $ (8,723 ) $ 4,760  
 
Net Income $ 3,489   $ 2,959   $ 22,315   $ 10,294  
                 
HOME SERVICES AND OTHER                
 
Operating Revenues $ 14,759   $ 14,408   $ 32,977   $ 32,918  
 
Operating Income (Loss) $ 2,768   $ 1,991   $ (2,720 ) $ (568 )
 
Other Income, Net $ 351   $ 273   $ 6,259   $ 6,101  
 
Net Income (Loss) $ 2,128   $ 1,295   $ (7,982 ) $ 3,545  
       
Net Financial Earnings (Loss) $ 1,993   $ 1,295   $ (8,211 ) $ 3,545  
 
Total Service Contract Customers at June 30 110,314   112,289   110,314   112,289  
 

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