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NJ

NEW JERSEY RESOURCES CORP (NJR)·Q2 2025 Earnings Summary

Executive Summary

  • Beat and raise quarter: NFEPS of $1.78, GAAP EPS of $2.04 and revenue of $0.913B all exceeded expectations; FY2025 NFEPS guidance raised to $3.15–$3.30 from $3.05–$3.20 on Energy Services’ winter outperformance and the residential solar sale gain .
  • Utility strength: NJNG’s utility gross margin and earnings improved on new base rates; NJNG contributed $144.5M NFE in Q2 vs $107.1M YoY, with total customers reaching ~588K .
  • Balance sheet and cash flows: CFO reiterated adjusted FFO/adjusted debt of 19%–21% and FY2025 cash from operations of $460–$500M, supporting $1.3–$1.6B capex over FY2025–FY2026 without block equity .
  • Catalysts: “Beat-and-raise” and visible utility-led growth, optionality on Leaf River fourth cavern (indicative $175–$200M) and tariff insulation in domestic operations; management emphasized strong execution and disciplined capital deployment .

What Went Well and What Went Wrong

What Went Well

  • NJR raised FY2025 NFEPS guidance to $3.15–$3.30, exceeding its 7%–9% long-term growth target; CEO: “Our second-quarter performance exceeded expectations… [we] are raising our fiscal 2025 NFEPS guidance by $0.10” .
  • Utility momentum: NJNG delivered higher NFE on new rates; CFO: “higher utility gross margin as a result of our recent base rate case settlement” .
  • Energy Services: Strong winter performance leveraging long option strategy; CEO: “capitalizing on periods of pricing volatility” .

What Went Wrong

  • Energy Services NFE declined YoY for the quarter due to lower AMA revenues despite strong financial margin (Q2 NFE $35.3M vs $37.6M YoY) .
  • BGSS incentives contributed less YTD ($10.6M vs $13.3M YoY), mainly from decreased storage margins, tempering utility gross margin upside .
  • Clean Energy Ventures posted a Q2 net financial loss of $(4.0)M on lower residential revenue post-portfolio sale, partially offset by higher solar electricity sales and lower D&A .

Financial Results

Headline results vs prior periods and consensus

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$0.396 $0.488 $0.913
GAAP EPS ($USD)$0.92 $1.32 $2.04
NFEPS (non-GAAP, $USD)$0.89 $1.29 $1.78
Operating Income ($USD Billions)$0.146 $0.190 $0.280
Net Income ($USD Billions)$0.091 $0.131 $0.204
Estimates vs Actual (Q2 2025)ConsensusActual
Primary EPS ($USD)1.622*1.78
Revenue ($USD Billions)$0.732*$0.913
Primary EPS - # of Estimates6*—
Revenue - # of Estimates1*—

Values retrieved from S&P Global.*

Margins

MarginQ4 2024Q1 2025Q2 2025
Operating Income Margin %36.9% (0.146/0.396) 38.8% (0.190/0.488) 30.7% (0.280/0.913)
Net Income Margin %23.0% (0.091/0.396) 26.9% (0.131/0.488) 22.4% (0.204/0.913)

Segment breakdown (Operating Revenues)

Segment ($USD Billions)Q4 2024Q1 2025Q2 2025
Natural Gas Distribution$0.105 $0.334 $0.619
Clean Energy Ventures$0.071 $0.026 $0.008
Energy Services$0.178 $0.086 $0.246
Storage & Transportation$0.025 $0.027 $0.025
Home Services & Other$0.017 $0.016 $0.015
Total$0.396 $0.488 $0.913

KPIs

KPIQ4 2024Q1 2025Q2 2025
NJNG Total Customers582,916 586,092 588,164
NJNG Total Throughput (Bcf)23.5 41.6 57.8
Degree Days – Percent of Normal32.0% 91.9% 99.6%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NFEPSFY2025$3.05–$3.20 $3.15–$3.30 Raised
Segment NFE Contribution – NJNGFY202567%–73% 65%–68% Narrowed
Segment NFE Contribution – CEVFY202520%–25% 19%–22% Narrowed
Segment NFE Contribution – ESFY20254%–7% 9%–11% Raised
Segment NFE Contribution – S&TFY20253%–7% 4%–6% Maintained
Cash from OperationsFY2025—$460–$500M Introduced
Adjusted FFO/Adjusted DebtFY2025—19%–21% Introduced
Capital ExpendituresFY2025—$610–$790M Maintained
2-Year CapexFY2025–26—$1.3–$1.6B Maintained
DividendNext Pay Date$0.45/share declared Nov 2024 $0.45/share payable July 1, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Energy Services strategyAMAs drove higher Q4 revenue/margin ES NFE flat YoY; continued AMA revenue Long option strategy outperformed in winter; ES contribution range raised Positive momentum
Regulatory environmentNJNG base rate settlement; SAVEGREEN approval New base rates effective; SAVEGREEN $385.6M approved First full quarter under new rates; SAVEGREEN investments commenced Supportive
Tariffs/macroNot emphasizedNot emphasizedManagement sees minimal tariff exposure given domestic sourcing; contracts protect returns (CEV) Watchful but benign
Storage & Transport (Leaf River, Adelphia)Adelphia S4 rate case filed; resolution expected 2025 Adelphia new rates expected H2 2025 (subject to refund) Leaf River capacity recovery ongoing; evaluating 4th cavern; Adelphia settlement process ongoing Advancing
Solar portfolio strategyResidential portfolio sale announced Sale completed; gain recognized; CEV capacity 396MW CEV >417MW in service post-quarter; diversified pipeline ~1GW Scaling/diversifying
Customer growth583K customers FY-end 586K at Q1 close ~588K at Q2 close; steady growth in residential Consistent growth

Management Commentary

  • “We delivered solid results across all business segments… raising our fiscal 2025 NFEPS guidance by $0.10 to $3.15–$3.30 per share” — CEO Steve Westhoven .
  • “We reported NFEPS of $1.78 per share compared with $1.41 last year… higher utility gross margin as a result of our recent base rate case settlement” — CFO Roberto Bel .
  • “We are largely insulated from the impact of imported goods… NJNG’s capital program uses domestically sourced materials” — CEO Steve Westhoven (tariffs) .
  • “Our balanced mix of regulated and nonregulated investments continues to support peer-leading performance” — CEO Steve Westhoven .

Q&A Highlights

  • Leaf River 4th cavern optionality: indicative capex $175–$200M; will only proceed with appropriate returns and contracts; brownfield mitigates supply risk .
  • Tariff exposure and development pace: CEV protected by safe harboring and contractual provisions; no expected impact over 12–24 months given pipeline planning .
  • Regulatory tone and affordability: Post-rate case, clear runway 12–36 months; focus on affordability via BGSS, hedging; natural gas remains cheapest heat source in NJ .
  • NJNG customer growth drivers: Predominantly residential (~93%–92% mix), demographically attractive counties, SAVEGREEN programs aiding efficiency .

Estimates Context

  • Q2 2025 beat vs S&P Global consensus: EPS $1.78 vs $1.62*, Revenue $0.913B vs $0.732B*; 6 EPS estimates and 1 revenue estimate contributed to consensus [functions.GetEstimates].
  • Implication: Consensus likely revises upward FY2025 NFEPS and utility segment contribution assumptions given beat-and-raise and winter outperformance .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Beat-and-raise quarter anchored by NJNG new rates and ES winter execution; FY2025 NFEPS guidance now $3.15–$3.30, exceeding long-term growth target .
  • Utility-led mix (~65%–68% of FY NFE) provides stability; SAVEGREEN real-time returns and decoupling mechanisms support margin durability .
  • ES optionality remains a lever via volatility and potential Leaf River expansion; watch for contract milestones and capex clarity ($175–$200M indicative) .
  • Cash generation ($460–$500M FY2025 CFO) and 19%–21% adjusted FFO/debt enable capex without block equity; dividend sustained at $0.45/share (next payable July 1) .
  • Regulatory cadence favorable: Adelphia S4 case settlement ongoing with resolution expected 2025; NJNG base rates in place support near-term earnings .
  • Near-term trading: Positive sentiment from beat-and-raise; monitor energy price volatility and AMA revenue trajectory into summer shoulder season .
  • Medium-term thesis: Utility growth, diversified solar pipeline (>417MW in service; ~1GW pipeline), storage optimization and disciplined capital deployment underpin 7%–9% NFEPS CAGR .