8-K: New Jersey Resources Raises FY25 Earnings Guidance

New Jersey Resources Corporation reported improved fiscal 2025 third-quarter net financial earnings and raised the lower end of its full-year NFEPS guidance, driven by strong diversified business performance.

Summary

• Consolidated net loss for the third fiscal quarter ended June 30, 2025, was $(15.1) million, or $(0.15) per share, compared with a net loss of $(11.6) million, or $(0.12) per share, in the third quarter of fiscal 2024.
• Consolidated net financial earnings (NFE), a non-GAAP measure, for the third fiscal quarter of 2025 were $6.2 million, or $0.06 per share, a significant improvement from a net financial loss of $(8.9) million, or $(0.09) per share, in the third quarter of fiscal 2024.
• Fiscal 2025 year-to-date net income totaled $320.6 million, or $3.20 per share, compared with $198.6 million, or $2.02 per share, for the same period in fiscal 2024.
• Fiscal 2025 year-to-date NFE totaled $313.4 million, or $3.13 per share, compared with $202.1 million, or $2.05 per share, for the same period in fiscal 2024.
• The lower end of fiscal 2025 NFEPS guidance was raised by $0.05, from a prior range of $3.15 $3.30 to a new range of $3.20 to $3.30.
• The company maintains its 7% to 9% long-term NFEPS growth target, based off of a target of $2.83 per share for fiscal 2025.
• New Jersey Natural Gas (NJNG) reported a significant increase in NFE to $10.1 million in Q3 fiscal 2025 from a loss of $(6.1) million in Q3 fiscal 2024, primarily due to higher utility gross margin from a recent base rate case settlement.
• Clean Energy Ventures (CEV) year-to-date NFE increased to $37.3 million from a loss of $(1.8) million, largely due to the gain on sale of its residential solar portfolio.
• Capital expenditures for the first nine months of fiscal 2025 were $456.8 million, up from $396.5 million during the same period of fiscal 2024.
• Cash flows from operations for the first nine months of fiscal 2025 were $385.2 million, compared to $362.9 million during the same period of fiscal 2024.

Sentiment

Score: 8

Explanation: The company reported strong year-to-date financial performance, significantly improved Q3 NFE, and raised its full-year NFEPS guidance, indicating robust operational strength and confidence in future growth, despite a GAAP net loss in the quarter.

Positives

• Significant improvement in Q3 fiscal 2025 consolidated net financial earnings to $6.2 million ($0.06/share) from a loss of $(8.9) million ($(0.09)/share) in Q3 fiscal 2024.
• Strong year-to-date fiscal 2025 net income of $320.6 million ($3.20/share) and NFE of $313.4 million ($3.13/share), significantly up from $198.6 million ($2.02/share) and $202.1 million ($2.05/share) respectively in the prior year.
• Raised the lower end of fiscal 2025 NFEPS guidance by $0.05 to a range of $3.20 to $3.30, indicating confidence in future performance.
• New Jersey Natural Gas (NJNG) segment reported a substantial increase in NFE to $10.1 million in Q3 fiscal 2025 from a loss of $(6.1) million in Q3 fiscal 2024, driven by higher utility gross margin from a recent base rate case settlement.
• Clean Energy Ventures (CEV) year-to-date NFE significantly improved to $37.3 million from a loss of $(1.8) million, primarily due to the gain on sale of its residential solar portfolio.
• Storage and Transportation NFE increased to $5.9 million in Q3 fiscal 2025 from $4.1 million in Q3 fiscal 2024, due to increased operating revenues at Leaf River Energy Center.
• Cash flows from operations increased to $385.2 million for the first nine months of fiscal 2025, up from $362.9 million in the same period of fiscal 2024.
• Maintains a strong long-term NFEPS growth target of 7% to 9%.
• Adelphia Gateway pipeline reached a settlement in principle for its Section 4 rate case, with a plan to file an offer of settlement with FERC in Q4 fiscal 2025.
• No significant debt maturities remaining in fiscal year 2025, and a well-staggered debt maturity schedule.
• No need for block equity issuances to achieve growth targets.
• NJNG's SAVEGREEN program investments are incremental to rate base and earn near-real time returns.
• CEV placed approximately 63MW into service in FY2025, with 131MW expected in service over the next two years, representing over $350 million in investment.

Negatives

• Consolidated net loss widened in Q3 fiscal 2025 to $(15.1) million from $(11.6) million in Q3 fiscal 2024.
• Clean Energy Ventures (CEV) reported a net financial loss of $(6.9) million in Q3 fiscal 2025, consistent with the $(6.7) million loss in Q3 fiscal 2024.
• Energy Services reported a wider net financial loss of $(3.7) million in Q3 fiscal 2025 compared to $(2.2) million in Q3 fiscal 2024, and a decrease in year-to-date NFE to $39.4 million from $43.2 million, due to lower contribution from Asset Management Agreements.
• Home Services and Other Operations NFE decreased in Q3 fiscal 2025 to $0.5 million from $0.9 million, and year-to-date NFE decreased to $0.4 million from $0.7 million, due to higher operating and maintenance expenses.
• Basic Gas Supply Service (BGSS) incentive programs contributed less to utility gross margin in the first nine months of fiscal 2025 ($14.5 million) compared to the same period in fiscal 2024 ($16.2 million), largely due to decreased margins from storage incentives.

Risks

• Forward-looking statements are subject to factors beyond control or precise estimation, such as estimates of future market conditions and the behavior of other market participants.
• There could be differences between reported GAAP net income and NFE due to matters such as the positions of energy-related derivatives.
• Management is not able to reasonably estimate the aggregate impact or significance of certain items on reported earnings, such as unrealized gains/losses on derivatives, without unreasonable efforts.
• The unpredictability and variability of future earnings, working capital, and cash positions could impact forecasts for Adjusted EBITDA and adjusted funds from operations.
• Changes to tax laws and regulations, including those brought about by the passage of the Inflation Reduction Act of 2022, could affect financial results.
• Changing interest rates pose a risk to financial performance.
• The normalized contribution from the 'Long-Option' strategy does not consider potential positive impacts from significant weather events, implying variability.

Future Outlook

New Jersey Resources raised the lower end of its fiscal 2025 net financial earnings per share (NFEPS) guidance to a range of $3.20 to $3.30, while maintaining its long-term NFEPS growth target of 7% to 9% based on a $2.83 per share target for fiscal 2025. The company anticipates continued stable growth through its diversified business model, with New Jersey Natural Gas expected to contribute 64% to 67% of fiscal 2025 NFE, Clean Energy Ventures 20% to 22%, Storage and Transportation 4% to 6%, and Energy Services 10% to 12%. Future capital expenditures are projected to be between $650 million and $770 million for FY2025 and $655 million and $835 million for FY2026, supporting the long-term growth targets without the need for block equity. Adelphia plans to file an offer of settlement with FERC during the fourth quarter of fiscal 2025 regarding its rate case.

Management Comments

• We continued to execute on our strategy to drive stable growth through a diversified business model.
• Our third-quarter results underscore the power of our complementary portfolio and reaffirm the critical role of our physical infrastructure in delivering sustained value.
• The improvement in net financial earnings and our decision to raise the lower end of our fiscal 2025 NFEPS guidance reflect the strength and resilience of our operations.
• We remain confident in our long-term growth targets and our ability to deliver consistent performance for shareowners.

Industry Context

The company operates within the regulated natural gas utility sector and the evolving clean energy market. Its diversified portfolio, including natural gas distribution, clean energy ventures (solar), storage and transportation, and energy services, positions it to navigate energy transition trends. The focus on infrastructure investments (IIP) and energy efficiency programs (SAVEGREEN) aligns with broader utility industry trends towards modernization, safety, and sustainability. The company's solar investments and SREC hedging strategy reflect the growing importance of renewable energy and associated market mechanisms. The Adelphia rate case settlement highlights ongoing regulatory processes common in the pipeline and transportation sector.

Comparison to Industry Standards

• NJR's stated 7-9% long-term annual NFEPS growth rate is at the highest end of the utility industry, and the company has exceeded this rate in each of the last 5 years.
• New Jersey Natural Gas (NJNG) is ranked highest in overall residential and business customer satisfaction among large utilities in the East according to JD Power and was named a Customer Champion, Most Trusted Brand, and Easiest to Do Business with by Escalent.
• The company's superior credit metrics, including an estimated NJR Adjusted FFO / Adjusted Debt ratio of 19% 21%, indicate a strong financial profile compared to peers.
• NJR's commitment to no block equity needs for growth targets differentiates it from some peers who may rely on equity issuances.
• The company's dividend growth history and current dividend yield of 3.93% contribute to an expected shareholder return of 11-13%, which is competitive within the utility sector.

Legal Proceedings

• Adelphia filed a Section 4 rate case with FERC on September 30, 2024, seeking approval to revise its transportation cost-of-service rates. On June 26, 2025, Adelphia reached a settlement in principle with customers, and plans to file an offer of settlement with FERC during the fourth quarter of fiscal 2025.

Stakeholder Impact

• Shareholders: Positive impact due to increased NFEPS guidance, strong year-to-date financial performance, maintained long-term growth targets (7-9% NFEPS), consistent dividend growth ($1.80 FY25 dividend), and no anticipated need for block equity issuances.
• Customers (NJNG): Benefits from continued infrastructure investments (IIP) enhancing safety and reliability, and energy-efficiency programs (SAVEGREEN) providing upgrades and cost recovery mechanisms. NJNG's recent base rate case settlement contributes to higher utility gross margin.
• Employees: Continued execution on strategic plan and diversified business model suggests stable employment and growth opportunities.

Next Steps

• NJR will deliver a presentation via live public webcast on August 5, 2025, at 10 a.m. ET.
• Adelphia plans to file an offer of settlement with FERC during the fourth quarter of fiscal 2025 regarding its rate case.
• Leaf River Energy Center is currently examining design optimization throughout its facility for existing or new cavern capacity expansion.
• Clean Energy Ventures expects to place 131MW of new solar projects into service over the next two years, representing over $350 million in investment.
• Energy Services expects to recognize approximately $19.7 million annually in revenues from Asset Management Agreements between FY 2025 FY 2031.

Key Dates

Recommendation

The company demonstrates robust financial health with significantly improved year-to-date net financial earnings and a raised full-year NFEPS guidance, indicating strong operational performance across its diversified portfolio. The utility segment (NJNG) shows stable growth driven by rate case settlements and customer expansion, while Clean Energy Ventures benefits from strategic asset sales and a strong project pipeline. The company maintains an industry-leading long-term NFEPS growth target of 7-9% and projects substantial cash flows without the need for dilutive equity raises. Its superior credit metrics, well-staggered debt maturities, and consistent dividend growth further enhance its investment appeal, positioning it as a compelling opportunity for long-term value creation.

Keywords

Natural Gas, Clean Energy, Solar, Utility, Energy Infrastructure, Financial Results, Earnings Guidance, New Jersey Resources, NJR, NFEPS, Renewable Energy Certificates, Capital Expenditures, Corporate Governance, Risk Management