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New Jersey Resources Reports Fourth-Quarter and Fiscal 2018 Results

November 20, 2018

WALL, N.J.--(BUSINESS WIRE)--Nov 20, 2018--Today, New Jersey Resources (NYSE: NJR) reported results for fiscal 2018. Highlights for the fiscal year include:

Consolidated net income of $233.4 million, compared with $132.1 million in fiscal 2017 Consolidated net financial earnings (NFE), a non-GAAP financial measure, were $240.5 million, compared with NFE of $149.4 million in fiscal 2017 Announced fiscal 2019 NFE per-share guidance of $1.95 to $2.05 per share Increased annual dividend rate by 7.3 percent to $1.17 per share NJNG added 9,596 new customers; a five percent increase over fiscal 2017 Clean Energy Ventures (CEV) completed three commercial solar installations, adding 33.7 megawatts (MW) to total capacity

Fiscal 2018 net income totaled $233.4 million, or $2.66 per share, compared with $132.1 million, or $1.53 per share, in fiscal 2017. Fiscal 2018 NFE totaled $240.5 million, or $2.74 per share, compared with $149.4 million, or $1.73 per share, in fiscal 2017.

Fourth-quarter fiscal 2018 net loss totaled $16.3 million, or a loss of $0.18 per share, compared with a net loss of $36.5 million, or a loss of $0.42 per share, during the same period in fiscal 2017. Fourth-quarter fiscal 2018 net financial loss totaled $28.9 million, or a loss of $0.33 per share, compared with a net financial loss of $12.5 million, or a loss of $0.14 per share, during the same period last year.

“Thanks to the talent of our team of more than 1,000 women and men, New Jersey Resources delivered another strong year in fiscal 2018,” said Laurence M. Downes, chairman and CEO of New Jersey Resources. “As our results reflect, we are dedicated to meeting our customers’ expectations for safe and reliable service, advancing sustainability through our infrastructure and clean energy investments and rewarding the confidence of our shareowners - as evidenced this year with a 7.3 percent dividend increase. We look forward to executing our strategic plan and leading the way to a stronger energy future.”

“Our strong fiscal 2018 results were largely driven by the out-performance of our Energy Services segment,” said Steve Westhoven, president and COO of New Jersey Resources. “With our focus on regulated infrastructure investments and complementary non-regulated energy investments, we are committed to delivering results for our customers and shareowners in fiscal 2019.”

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

*Results during fiscal 2018 included an income tax benefit of $59.6 million, or $0.68 per share, due to the revaluation of deferred taxes resulting from the reduction in the federal corporate tax rate.

NFE/net financial loss 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/net financial loss 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 twelve months ended September 30 of fiscal years 2018 and 2017 is provided below.

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

NJR Announces Fiscal 2019 NFE Guidance:

NJR announced fiscal 2019 NFE guidance of $1.95 to $2.05 per share, subject to the risks and uncertainties identified below under “Forward-Looking Statements.” NJR expects its regulated businesses to generate between 50 to 65 percent of total NFE, with NJNG continuing to be the largest contributor. The following chart represents NJR’s current expected contributions from its subsidiaries for fiscal 2019 and beyond:

In providing fiscal 2019 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 fiscal 2018 NFE of $84 million, compared with $86.9 million in fiscal 2017. The decrease in fiscal 2018 was due primarily to higher O&M expenses and lower Basic Gas Supply Service (BGSS) incentives. Net financial losses for the fourth quarter of fiscal 2018 and 2017 were $12.9 million and $9.6 million, respectively, and reflect the seasonal nature of the business.

Customer Growth:

NJNG added 9,596 new customers during fiscal 2018, compared with 9,126 during fiscal 2017, primarily driven by the residential new construction market. In addition, 613 existing NJNG customers expanded their natural gas service during fiscal 2018. NJNG expects to add between 28,000 and 30,000 new customers through fiscal 2021, representing an average annual growth rate of 1.8 percent and a cumulative increase in utility gross margin of approximately $16.5 million. For more information on utility gross margin, please see “Non-GAAP Financial Information” below.

NJNG Infrastructure Update:

The Southern Reliability Link (SRL), which is designed to provide a secondary interstate feed into the southern end of NJNG’s delivery system, is expected to begin construction in the first quarter of fiscal 2019. NJNG expects SRL to be in service during 2019, and plans to recover its capital costs through a future 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 to replace the remaining 276 miles of unprotected steel main and associated services in NJNG’s distribution system. During fiscal 2018, NJNG invested $45.7 million to replace 60 miles of unprotected steel main and services. The New Jersey Reinvestment in System Enhancement (NJ RISE) program is the five-year, $102.5 million investment that began in 2014. During fiscal 2018, NJNG installed two new distribution mains under the Barnegat Bay to improve service resiliency into the northern and southern portions of the Seaside Barrier Island. In addition, NJNG completed the reinforcement of a regulator station in Long Beach 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 effective October 1, 2018.

BGSS Incentive Programs:

BGSS incentive programs contributed $12.5 million to utility gross margin in fiscal 2018, compared with $13.7 million during the same period in fiscal 2017. The lower result was due primarily to a decrease in margin in NJNG’s storage incentive program and lower volumes associated with the capacity release program.

Energy Efficiency Programs:

The SAVEGREEN Project ®, NJNG’s energy-efficiency program, invested $12.3 million during fiscal 2018 in grants and financing options designed to help customers with energy-efficiency upgrades for their homes and businesses. NJNG received approval from the BPU to expand its energy-efficiency programs through The SAVEGREEN Project ® to help customers better understand and manage their energy usage, reduce emissions and save money. NJNG is authorized to invest $135 million through December 31, 2021 to provide assistance to customers.

Midstream

Midstream reported fiscal 2018 NFE of $24.4 million, compared with $12.9 million during fiscal 2017. The higher results reflect the benefits of tax reform. For the three months ended September 30, 2018, NFE were $2.1 million, compared with $2.6 million during the same period in fiscal 2017. The quarterly decrease is due to a decrease in Allowance for Funds Used During Construction (AFUDC) related to the PennEast project.

Infrastructure Projects:

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