8-K: New Jersey Resources Reports Fiscal 2024 Third-Quarter Loss, Reaffirms Earnings Guidance

New Jersey Resources reported a net loss for the third quarter of fiscal 2024, but reaffirmed its full-year earnings guidance.

Summary

• New Jersey Resources (NJR) reported a consolidated net loss of $(11.6) million for the third quarter of fiscal 2024, compared to a net income of $1.5 million in the same period last year.
• The company's net financial loss, a non-GAAP measure, was $(8.9) million, or $(0.09) per share, compared to net financial earnings of $9.7 million, or $0.10 per share, in the third quarter of fiscal 2023.
• NJR reaffirmed its fiscal 2024 net financial earnings per share (NFEPS) guidance range of $2.85 to $3.00, which was increased by $0.15 in February 2024.
• The company maintained its long-term projected NFEPS growth rate of 7 to 9 percent.
• New Jersey Natural Gas (NJNG) filed a rate case with the New Jersey Board of Public Utilities (BPU) in January 2024, seeking a $219.6 million increase in base rates.
• NJNG added 5,939 new customers during the first nine months of fiscal 2024, expected to contribute approximately $5.1 million of incremental utility gross margin on an annualized basis.
• Clean Energy Ventures (CEV) had approximately 477MW of solar capacity in service as of June 30, 2024.
• Capital expenditures for the first nine months of fiscal 2024 were $396.5 million, compared to $370.0 million in the same period of fiscal 2023.
• Cash flows from operations were $362.9 million for the first nine months of fiscal 2024, compared to $387.9 million in the same period of fiscal 2023.

Sentiment

Score: 4

Explanation: The document presents mixed results with a net loss for the quarter but reaffirmed guidance. The negative financial results are concerning, but the reaffirmation of guidance and long-term growth targets provide some positive sentiment. The overall sentiment is slightly negative due to the loss.

Positives

• NJR reaffirmed its fiscal 2024 NFEPS guidance range, indicating confidence in meeting its financial targets.
• The company maintained its long-term projected NFEPS growth rate of 7 to 9 percent, suggesting a positive outlook for future earnings.
• NJNG added a significant number of new customers, which are expected to contribute to future revenue.
• CEV has a substantial amount of solar capacity in service, contributing to clean energy generation.
• NJR is committed to maintaining a strong financial profile.

Negatives

• NJR reported a consolidated net loss of $(11.6) million for the third quarter of fiscal 2024, a significant decrease from the net income of $1.5 million in the same period last year.
• The company's net financial loss was $(8.9) million, or $(0.09) per share, for the third quarter of fiscal 2024, compared to net financial earnings of $9.7 million, or $0.10 per share, in the third quarter of fiscal 2023.
• NJNG experienced a decrease in NFE due to higher employee-related expenses, information technology costs, and increased depreciation expenses.
• CEV reported a net financial loss for the third quarter of fiscal 2024, primarily due to a reversal of a valuation allowance on certain deferred tax assets in the prior year period.
• Energy Services reported a net financial loss for the third quarter of fiscal 2024.

Risks

• The company's financial results are subject to market conditions and the behavior of other market participants.
• There could be differences between reported GAAP earnings and NFE due to the positions of energy-related derivatives.
• The outcome and timing of the base rate case with the BPU are uncertain.
• The company's performance is subject to regulatory and legal expectations.
• The company is exposed to natural gas price volatility.

Future Outlook

NJR reaffirmed its fiscal 2024 NFEPS guidance range of $2.85 to $3.00 and maintained its long-term projected NFEPS growth rate of 7 to 9 percent. The company expects Energy Services to represent a higher percentage of NFEPS in fiscal 2024 due to contributions from Asset Management Agreements.

Management Comments

• Steve Westhoven, President and CEO of New Jersey Resources, stated, 'We are on track to achieve NFEPS within our fiscal 2024 guidance range for the year, which was raised by $0.15 in February 2024.'
• Steve Westhoven also stated, 'Our portfolio of businesses performed in line with our expectations. We remain focused on executing our strategy to meet our customers' expectations and deliver strong results for our shareowners.'

Industry Context

The announcement reflects the challenges and opportunities in the energy sector, with a focus on both traditional natural gas distribution and renewable energy investments. The company's performance is influenced by regulatory proceedings, customer growth, and market conditions.

Comparison to Industry Standards

• The company's long-term NFEPS growth target of 7-9% is at the higher end of the range for regulated utilities, which typically target 4-7% growth.
• The company's investment in solar projects is in line with the industry trend towards renewable energy, but the profitability of these projects can be volatile.
• The company's rate case filing is a common practice for regulated utilities, but the outcome and timing are uncertain.
• The company's reliance on natural gas is similar to many other utilities in the Northeast, but the company is also investing in renewable energy to diversify its portfolio.
• The company's financial performance is impacted by weather patterns, which is a common risk for natural gas utilities.

Stakeholder Impact

• Shareholders may be concerned about the reported net loss, but reassured by the reaffirmed earnings guidance.
• Customers will be impacted by the proposed rate increase, but may benefit from the company's investments in infrastructure and clean energy.
• Employees may be affected by the company's cost-cutting measures.
• Suppliers and creditors will be impacted by the company's financial performance.

Next Steps

• The company will continue to execute its strategy to meet customer expectations and deliver results for shareholders.
• The company will continue to work through the rate case process with the BPU.
• The company will continue to invest in infrastructure and clean energy projects.

Key Dates

Keywords

Net Financial Earnings, NFEPS, New Jersey Resources, NJR, Natural Gas, Solar Energy, Rate Case, Clean Energy Ventures, Energy Services, Infrastructure Investment Program