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NJ

NEW JERSEY RESOURCES CORP (NJR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY25 delivered strong YoY growth: revenue $488.4M, GAAP EPS $1.32, and NFEPS $1.29; upside drivers were NJNG’s new base rates (effective Nov 21, 2024) and a ~$54.9M pre-tax gain on CEV’s residential solar sale .
  • Fiscal 2025 guidance maintained: NFEPS $3.05–$3.20, above the 7–9% long-term growth trajectory due to the one-time CEV gain; segment contribution ranges slightly tightened (NJNG 67–73%; CEV 20–25%; S&T 3–7%; ES 4–7%; HS 0–1%) .
  • Segment performance was broad-based: NJNG NFE $66.9M, CEV $48.1M (gain on asset sale), S&T $5.7M, ES $7.8M; BGSS incentive margin declined YoY to $3.2M .
  • Capital deployment accelerated: Q1 capex $149.6M (vs $118.1M prior year); cash flows used in operations were -$9.0M due to working-capital mix shifts, consistent with seasonal utility cash flow patterns .
  • Regulatory framework supportive: BPU-approved base rate settlement (+$157.0M) with 9.60% ROE and 54% equity ratio; SAVEGREEN approval ($385.6M) provides near real-time returns via rider recovery .

What Went Well and What Went Wrong

What Went Well

  • NJNG rate case benefits flowing through: utility gross margin rose to $181.3M (from $155.8M), supporting NJNG NFE of $66.9M; CEO: “NJR is off to a good start…with new base rates at NJNG and solid performance” .
  • Strategic portfolio repositioning at CEV: completed sale of 91MW residential solar portfolio for $132.5M, generating a ~$54.9M pre-tax gain; pipeline remains robust (~1GW) with 10.5MW placed in service in Q1 .
  • Guidance intact and confidence reiterated: maintained FY25 NFEPS $3.05–$3.20; management expects majority of NFEPS from utility operations and highlighted balanced growth across segments .

What Went Wrong

  • BGSS incentive margin declined: $3.2M vs $5.4M in prior-year quarter due to less market volatility and lower capacity release volumes .
  • Cash flow softness: cash flows used in operations (-$9.0M) vs +$46.4M prior year, driven by working-capital changes; capex outlays increased to $149.6M (supportive long-term, near-term cash consumption) .
  • Energy Services margin normalization: ES NFE was flat YoY ($7.8M); management deferred specifics on January cold-snap impact until next quarter, suggesting limited immediate upside disclosure .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$275.6 $395.8 $488.4
GAAP EPS (Basic, $)$(0.12) $0.92 $1.32
GAAP EPS (Diluted, $)$(0.12) $0.91 $1.31
NFEPS (Basic, $)$(0.09) $0.89 $1.29
Operating Income ($USD Millions)$5.9 $146.1 $189.6

Segment breakdown – Net Income and NFE ($USD Millions):

SegmentQ3 2024 Net IncQ4 2024 Net IncQ1 2025 Net IncQ3 2024 NFEQ4 2024 NFEQ1 2025 NFE
NJNG$(6.1) $(19.0) $66.9 $(6.1) $(19.0) $66.9
Clean Energy Ventures$(6.7) $35.5 $48.1 $(6.7) $35.5 $48.1
Energy Services$(4.9) $70.7 $10.3 $(2.2) $68.3 $7.8
Storage & Transportation$4.1 $2.5 $5.7 $4.1 $2.5 $5.7
Home Services & Other$0.9 $(0.6) $0.6 $0.9 $(0.6) $0.6
Total$(11.6) $91.1 $131.3 $(8.9) $88.7 $128.9

KPIs (NJNG and consolidated operating metrics):

KPIQ3 2024Q4 2024Q1 2025
NJNG Utility Gross Margin ($M)$94.1 $67.7 $181.3
BGSS Incentive ($M)$2.919 $1.690 $3.247
NJNG Total Customers582,100 582,916 586,092
Total Throughput (Bcf, NJNG + Off-System)31.4 23.5 41.6
Degree Days (% of Normal)87.4% (quarter detail) 32.0% (quarter detail) 91.9%

Non-GAAP notes: NFE and margins exclude unrealized derivative impacts and certain realized hedge effects to align economic hedges with physical flows; reconciliations provided in filings .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NFEPSFY 2025$3.05–$3.20 introduced (Nov 25, 2024) $3.05–$3.20 maintained (Feb 3, 2025) Maintained
Long-term NFEPS growthMulti-year7–9% (base of $2.83 for FY25) 7–9% reaffirmed Maintained
Segment NFE contribution (FY25)FY 2025NJNG 65–75%; CEV 20–25%; S&T 3–7%; ES 3–7%; HS 0–1% NJNG 67–73%; CEV 20–25%; S&T 3–7%; ES 4–7%; HS 0–1% Tightened ranges
DividendFY 2025Annual dividend increased to $1.80 (Sept 2024) Quarterly dividend $0.45 payable Apr 1, 2025 Maintained payout cadence
RegulatoryNJNGBase rate +$157.0M; ROE 9.60%; equity 54%; effective Nov 21, 2024 No change; continuing SAVEGREEN recovery rider Effective/maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
NJNG base rate caseFiled Jan 31, 2024; update May 15; requested ~$219.6M increase Settlement approved; +$157.0M; ROE 9.60%; effective Nov 21, 2024 Positive regulatory resolution
SAVEGREEN energy efficiencyProgram expansion filed/approved; record $385.6M approval (Oct 30, 2024) Implementation begins Jan 1, 2025; near real-time rider recovery Execution ramping
CEV portfolio & pipeline386MW in-service at FY24; sale planned; pipeline active 396MW in-service; 10.5MW added; ~1GW pipeline; $132.5M sale closed; ~$54.9M gain Capacity growth; balance sheet strengthened
Energy Services AMAsMajority FY24 AMA revenues Q4; ES NFE surged in Q4 ES $7.8M NFE; Jan cold snap commentary deferred; fixed AMA revenue continues Normalized; fixed payments steady
Adelphia Gateway FERC rate caseFiled Sep 30, 2024; resolution expected in 2H25 Expect conclusion in 2025; rates subject to refund Proceeding on track
Tariffs/supply chainNot highlighted previouslyNo expected near-term impact due to safe harbor and business mix; utility primarily labor Stable; monitored
Decarbonization & sustainabilityOngoing initiatives; corporate sustainability reports New sustainability report; carbon capture at HQ; renewable diesel use Advancing initiatives

Management Commentary

  • Strategic posture: “Fiscal 2025 is off to a strong start…driving growth across our business segments” (CEO) .
  • Guidance confidence: “Our fiscal 2025 NFEPS guidance is $3.05 to $3.20 per share…which exceeds our long-term growth rate…and incorporates the one-time gain” (CEO) .
  • Balance sheet and liquidity: “Adjusted FFO/adjusted debt projected 18–20%…cash flow from operations between $460–$500M in fiscal 2025” (CFO) .
  • Regulatory recovery mechanics: SAVEGREEN is recovered via annual rider and not embedded in base rates (NJNG President/COO) .
  • CEV diversification and IRA impacts: Portfolio diversified across friendly jurisdictions; safe harbor provisions support near-term pipeline (CEO) .

Q&A Highlights

  • Estimates/guidance positioning: Analysts probed trend within FY25 range; management said “We’re well in our range” without changing guidance .
  • CEV mix and IRA: Expect continued diversification outside NJ; IRA safe harbor mitigates near-term uncertainty .
  • Winter cold snap upside: Weather constructive across businesses; specifics deferred to next quarter .
  • Adelphia procedural timeline: Typical Section 4 process; settlement expected in 2025 .
  • IIP successor: Current IIP runs through FY25 with rates effective in 2026; successor program will be evaluated .
  • SAVEGREEN recovery: Annual rider provides near real-time recovery; separate from base case filing .
  • Tariffs/supply chain: No expected material impact; utility work is primarily labor .

Estimates Context

  • S&P Global consensus estimates for EPS and revenue could not be retrieved at the time of analysis due to a data access limit. As a result, explicit “vs. consensus” comparisons are unavailable for Q1 FY25 and prior two quarters [GetEstimates error].
  • Given maintained FY25 guidance ($3.05–$3.20) and strong Q1 NFEPS ($1.29), we expect Street models to reflect the one-time CEV gain and higher NJNG margins from base rates, while normalizing Energy Services volatility across winter months .

Key Takeaways for Investors

  • Regulatory tailwinds: NJNG’s base-rate settlement (+$157.0M) and approved ROE (9.60%) support higher utility margins and predictable earnings contribution in FY25–FY26 .
  • One-time boost: CEV’s residential solar sale produced a ~$54.9M pre-tax gain, lifting FY25 NFEPS above long-term growth trajectory; future focus is commercial solar with ~1GW pipeline .
  • Guidance intact: FY25 NFEPS $3.05–$3.20 maintained; segment ranges slightly tightened, with NJNG driving ~67–73% of NFE .
  • Cash and capex: Q1 capex $149.6M and CFO outlook for FY25 cash from operations $460–$500M provide capacity for planned investments without block equity needs .
  • Energy Services steady state: Fixed AMA revenues recognized ratably and positive winter backdrop; near-term upside from volatility will be updated next quarter .
  • Dividend continuity: Quarterly dividend of $0.45 declared (payable Apr 1, 2025); dividend rate increased to $1.80 annually in FY25 .
  • Watch items: Adelphia rate case timing (2025 resolution), BGSS incentive margin sensitivity to market volatility, and CEV execution on commercial solar build-out .