New Jersey Resources (NJR) Q4 2020 earnings summary

Executive summary

• FY2020 consolidated net income rose to $193.9M from $169.5M; adjusted NFE was $196.2M, or $2.07/share, versus $175.0M, or $1.96/share.

• Utility rate increases and expanded infrastructure assets supported results, while warmer weather and lower wholesale gas-market volatility weighed on Energy Services and lower tax credits reduced Clean Energy Ventures earnings.

• Dividend increased 6.4% for FY2021, marking the 25th consecutive annual increase.

Financial highlights

• Operating revenue was $1.954B, down from $2.592B; net income was $193.9M, up from $169.5M, and diluted EPS was $2.04 versus $1.89.

• Operating income increased to $216.4M from $153.9M; adjusted NFE rose to $196.2M from $175.0M.

• Operating cash flow was $213.5M versus $194.1M; investing cash outflow was $994.0M versus $287.4M, largely reflecting acquisitions.

• Dividends declared were $1.27/share for FY2020; the FY2021 annual rate increased 6.4% to $1.33/share.

Outlook and guidance

• Over four years, planned capital deployment is ~$2.6B, with ~60% allocated to Natural Gas Distribution and ~30% to Clean Energy Ventures.

• Solar investment accounting and financing changes are expected to weigh on FY2021 NFE/share; growth is expected to rebound in FY2022 and run 6%–10% annually through FY2024.

• Dividend growth outlook increased from 6%–8% to 6%–10%; long-term payout ratio is expected to remain reasonable.

• Natural Gas Distribution rate base is projected to grow at a double-digit CAGR through FY2024, with a 60%–70% long-term NFE contribution.

• Expected additions of 28,000–30,000 utility customers over FY2021–FY2023; Clean Energy Ventures plans $155M–$175M of solar projects placed in service during FY2021.