New Jersey Resources Corporation (NYSE: NJR) — FY2023 Form 10-K
Reporting period: Fiscal year ended September 30, 2023. This is an annual report, not a standalone fourth-quarter filing; the supplied filing text does not provide clear standalone Q4 results.
Business context
NJR is a diversified energy holding company with four reporting segments: regulated natural gas distribution (NJNG), clean energy (CEV), energy services (ES), and storage and transportation (S&T). NJNG served approximately 576,000 customers; CEV had 468.8 MW of solar capacity in service.
Key financial results
| Metric | FY2023 | FY2022 |
|---|---|---|
| Operating revenue | $1.963B | $2.906B |
| Operating income | $407.0M | $406.5M |
| Net income | $264.7M | $274.9M |
| Diluted EPS | $2.71 | $2.85 |
| Net financial earnings (NFE, non-GAAP) | $261.8M | $240.3M |
| Cash from operations | $479.0M | $323.5M |
| Cash used in investing | $538.6M | $590.6M |
| Cash from financing | $59.7M | $262.5M |
Revenue fell 32.4%, primarily reflecting lower natural gas prices and reduced ES trading volumes; operating income was essentially unchanged. Net income declined 3.7%, while NFE rose 9.0%, partly because NFE adjusts for derivative and inventory-hedging timing differences. Operating cash flow improved as lower natural gas prices reduced working-capital needs. Operating cash flow less investing cash outflow was approximately negative $59.6M.
NJNG’s Utility Gross Margin, a non-GAAP measure, increased to $536.6M from $512.1M. Segment net income was NJNG $131.4M (down from $140.1M), CEV $44.5M (up from $39.4M), ES $78.8M (up from $69.7M), and S&T $13.2M (down from $26.6M). CEV’s increase included a tax benefit from reversing a valuation allowance; S&T’s decline reflected higher depreciation and interest expense and lower equity-method earnings.
Debt, liquidity, and capital
- At September 30, 2023, long-term debt was $2.768B, current maturities of long-term debt were $116.2M, and short-term debt was $252.1M. The company’s reported capital structure was 54% long-term debt, 7% short-term debt, and 39% common equity.
- Available capacity was approximately $427.0M under NJR’s $650M revolving facility and $214.5M under NJNG’s $250M facility; both mature in September 2027. Cash and cash equivalents were $1.0M.
- Management said borrowing availability, equity proceeds, and operating cash flow should cover working capital, capital expenditures, and dividends for at least 12 months, and reported compliance with debt covenants. NJNG’s Moody’s and Fitch debt ratings were investment grade with stable outlooks.
- Cash dividends paid were $151.0M. The Board declared a $0.42-per-share dividend payable October 2, 2023.
Changes, outlook, risks, and unusual items
- FY2024 capital expenditure estimates: NJNG $387M–$440M; CEV solar projects $140M–$204M; S&T $33M–$47M across Adelphia and Leaf River. ES anticipated no significant capital expenditures in FY2024 or FY2025. Estimates may change.
- NJNG expects customer growth of approximately 1.9%. The filing estimates growth-related annual Utility Gross Margin at approximately $8.5M; it also cites approximately $7.4M of annualized margin from FY2023 additions and additional services.
- ES Financial Margin, a non-GAAP measure, increased to $119.1M from $94.8M, benefiting from natural gas price volatility during cold-weather periods. ES revenue and natural gas purchases both fell sharply as prices declined.
- CEV received $167.8M from solar sale-leaseback transactions in FY2023, recorded as financing obligations. The long-term asset investment supports growth but adds financing commitments.
- NJNG recorded a $169.4M MGP remediation liability with a corresponding regulatory asset; its estimated total future remediation costs range from $137.3M to $201.5M. Recovery depends on regulatory approval, and disallowed costs could be charged to earnings. Pending litigation, taken together, was not expected by management to have a material adverse effect, though actual outcomes could exceed accruals.
- Key risks include regulatory decisions on rates and cost recovery, New Jersey climate and natural-gas policy changes, solar incentive and REC economics, project permitting and grid interconnection, commodity-price and weather volatility, third-party pipeline or supply disruptions, interest rates and access to capital, counterparty credit, cyber risk, and environmental liabilities.
- Management reported effective internal controls; Deloitte issued unqualified opinions on the financial statements and internal controls. The auditor identified rate-regulation accounting as a critical audit matter because recovery and refund conclusions depend on regulatory judgments.
Important facts for investors to verify
- Whether NJNG’s and Adelphia’s regulatory assets, especially MGP remediation and other deferred costs, remain probable of recovery and on what timing.
- FY2024 delivery against the stated capital expenditure ranges, including project completion, financing needs, and cost recovery.
- Whether NFE and ES Financial Margin trends translate into sustained GAAP earnings and cash flow, given derivative timing and volatile market conditions.
- Solar project returns, REC prices, tax-credit eligibility, and the financing and repayment terms of sale-leaseback obligations.
- Debt maturities, borrowing costs, available facility capacity, covenant headroom, and the effect of seasonal gas purchasing on liquidity.