New Jersey Resources (NJR) Q4 2018 earnings summary

Executive summary

• FY18 net financial earnings (NFE) rose to $240.5M, or $2.74/share, from $149.4M, or $1.73/share; GAAP net income was $233.4M vs. $132.1M, with Tax Act benefits and stronger Energy Services results driving the increase.

• Closing share price increased 9.4% to $46.10; the annual dividend rate rose 7.3% to $1.17/share, marking the 25th increase since 1995.

Financial highlights

• Operating revenue rose to $2.915B from $2.269B; operating income increased to $196.1M from $167.0M, while diluted EPS advanced to $2.64 from $1.52.

• Operating cash flow was $398.3M vs. $248.0M; investing cash use was $373.1M, and financing cash use was $26.0M vs. $107.3M of financing cash inflow in FY17.

• Tax Act-related net income benefit was $59.6M across unregulated operations; adjusted to exclude the Tax Act impact, the disclosed FY18 effective tax rate was 12.4%, vs. a reported rate of (29.9%).

Outlook and guidance

• Planned investment is approximately $2B over the next three years for solar, energy efficiency and natural-gas reliability projects.

• NJNG expects 28,000–30,000 customer additions in FY19–FY21, with customer growth around 1.8% annually; projected annual utility gross margin contribution is $5.5M.

• NJNG capital expenditures are projected at $475.2M in FY19 and $343.2M in FY20; Clean Energy Ventures plans $134.4M of FY19 solar investment.

• SRL construction was expected to begin in FY19, with service expected in 2019; PennEast was also expected to enter service in 2019, subject to approvals, land rights and construction timing.