WALL, N.J. – New Jersey Resources (NYSE: NJR) today reported that earnings per share for the fiscal year ended September 30, 2005 increased to a record $2.77 per basic share, compared with $2.60 per basic share for the prior year. On a diluted basis, earnings per share for the fiscal year increased to $2.71 compared with $2.55 last year. Fiscal 2005 earnings included a $.22 per basic share gain on the sale of a commercial office building, a charge of $.05 per basic share associated with an early retirement program for officers and an impairment charge of $.09 per basic share due to a change in strategy in its real estate subsidiary, Commercial Realty and Resources (CR&R). Net of these items, NJR's basic earnings per share were $2.70 in fiscal 2005, compared with $2.60 last year. Diluted earnings per share, net of these items, were $2.65 and $2.55 in fiscal 2005 and 2004, respectively.
"Our consistent performance this year, including an industry-record 14th consecutive year of earnings growth, is a tribute to the hard work of our employees," said Laurence M. Downes, chairman and CEO of NJR. "Our team accomplished this despite the challenges of higher natural gas prices and short-term interest rates."
NJR also reported a loss of $.27 per basic share for the fiscal fourth quarter, which included the impairment charge of $.09 per basic share due to the change in strategy at CR&R. Net of this item, NJR had a loss of $.18 per basic share compared with a loss of $.19 per basic share for the same period last year. A loss is typical in July, August and September when natural gas consumption at New Jersey Natural Gas (NJNG) is at its lowest levels of the year and the value of capacity contracts at NJR Energy Services (NJRES) is generally at the lowest point of the year.
Dividend Increased 5.9 Percent
NJR also announced that its board of directors approved a 5.9 percent increase in the quarterly dividend rate to $.36 per share from $.34 per share. The new quarterly rate is effective with the dividend payable January 2, 2006, to shareowners of record on December 15, 2005. The new indicated annual dividend rate is $1.44 per share. NJR has now increased its dividend in each of the last 11 years and has paid quarterly dividends since 1952.
"The increase in the dividend demonstrates our commitment to provide an attractive current return to our shareowners and the benefit of a strong financial profile. We believe our dividend growth rate of 5.9 percent will be above average for our industry," Downes said.
Natural Gas Prices
The company also reiterated that it is making every effort to minimize the effect of historically high natural gas prices being experienced throughout the industry. NJNG earns no gross margin on the commodity portion of its natural gas sales. Downes commented, "NJNG remains committed to working with our stakeholders to minimize the impact of market volatility and higher prices on our customers. For example, through our hedging program we had secured the price of nearly 80 percent of the natural gas supply needed to keep our customers' homes warm this winter prior to the increases caused by the hurricanes. We remain committed to providing our customers with safe, reliable service at the lowest possible price and will continue to work diligently to meet their needs each and every day."
Financial and operating highlights included:
NJNG earned $53.4 million in fiscal 2005, compared with $55.5 million last year. The decrease was due primarily to NJNG's share of the early retirement charge and the impact of lower customer usage per degree day. The company believes that the lower usage per degree day was due primarily to the impact of higher wholesale natural gas prices and inconsistent weather patterns, which offset strong customer growth. NJRES reported a 21 percent increase in earnings to $16.5 million, compared with $13.6 million last year. The increase was due primarily to higher gross margin from its portfolio of storage and transportation capacity assets. Gross margin for NJRES is defined as natural gas revenues and management fees less natural gas costs.
For the three months ended September 30, 2005, NJR posted a consolidated loss of $7.4 million, or $.27 per basic share, which included the impairment charge at CR&R of $2.5 million, or $.09 per basic share. Net of this item, the loss for the three months was $4.8 million or $.18 per basic share, compared with a loss of $5.4 million, or $.19 per basic share, for the same period last year. The improvement in the quarter was due primarily to better results at NJRES, which reported a loss of $2.2 million, compared with a loss of $4.3 million last year. This was due primarily to higher gross margin from increased market volatility. NJNG lost $3.6 million in the quarter versus a loss of $2.6 million last year. The increased loss was due primarily to reduced interest income as fiscal 2004 results included a positive adjustment from a regulatory settlement with the New Jersey Board of Public Utilities (BPU) regarding gas remediation costs.
NJNG's gross margin is defined as natural gas revenues less natural gas costs; sales tax; a Transitional Energy Facilities Assessment (TEFA), which is included in Energy and other taxes on the Consolidated Statements of Income; and regulatory rider expenses. Management believes that gross margin provides a more meaningful basis for evaluating utility operations than revenue since natural gas costs, sales tax, TEFA and regulatory rider expenses are passed through to customers, and therefore have no effect on gross margin. Natural gas costs are charged to operating expenses on the basis of therm sales at the prices approved by the BPU through NJNG's Basic Gas Supply Service (BGSS) tariff. The BGSS allows NJNG to recover natural gas costs. Sales tax is calculated at 6 percent of revenue and excludes sales to cogeneration facilities, other utilities, off-system sales and federal accounts. TEFA is calculated on a per-therm basis and excludes sales to cogeneration facilities, other utilities and off-system sales. Regulatory rider expenses are calculated on a per-therm basis. NJNG's gross margin also includes benefits received by shareowners under its incentive programs.
For the three months ended September 30, 2005, these programs totaled 13.7 Bcf and generated $1.3 million of gross margin, compared with 10.2 Bcf and $1 million of gross margin during the same period last year.
NJRES had a net loss of $2.2 million for the three months ended September 30, 2005, compared with a loss of $4.3 million last year. The improvement in the quarter was due primarily to higher gross margin from increased market volatility.
NJRHS and Other reported a net loss for the three months ended September 30, 2005 of $1.6 million, compared with earnings $1.5 million last year. Excluding the impairment charge, earnings for the three months were $1 million, compared with $1.5 million last year.
For the quarter, O&M expenses were $30.2 million versus $24.5 million last year. The increase was due primarily to the impairment charge.
Fiscal 2006 Earnings Guidance
Assuming normal weather and customer usage, stable economic conditions, continued customer growth at NJNG and continued volatility in the wholesale natural gas markets at NJRES, and subject to the factors discussed below under "Forward-Looking Statements," NJR initially estimates that earnings for fiscal 2006 will be in the $2.75–$2.85 per basic share range.
This news release contains estimates, earnings guidance and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. NJR cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJR's ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants. Other factors that could cause actual results, including gross margin, earnings and customer growth, to differ materially from the company's expectations include, but are not limited to, weather, economic conditions and demographic changes in NJNG's service territory, rate of customer growth, volatility of natural gas commodity prices and its impact on customer usage, the impact of the company's risk management efforts, including commercial and wholesale credit risks, the impact of regulation (including the regulation of rates), fluctuations in energy-related commodity prices, conversion activity, other marketing efforts, actual energy usage patterns of NJNG's customers, the pace of deregulation of retail gas markets, access to adequate supplies of natural gas, the regulatory and pricing policies of federal and state regulatory agencies, changes due to legislation at the federal and state level, the disallowance of recovery of environmental related expenditures and other regulatory changes, environmental and other litigation and other uncertainties. More detailed information about these factors is set forth in NJR's filings with the Securities and Exchange Commission, including NJR's Quarterly Report on Form 10-Q filed on August 5, 2005. NJR's Form 10-Q is available at www.sec.gov. NJR does not, by including this paragraph, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.
NJR will host a live webcast to discuss its financial results today at 2 p.m. EDT. To listen to the call, logon to NJR's Web site, njliving.com, and select "Investor Relations," then click just below the microphone on the right side of the Investor Relations home page.
About New Jersey Resources
New Jersey Resources (NYSE:NJR), a Fortune 1000 company and a member of the Forbes Platinum 400, provides reliable retail and wholesale energy services to customers in New Jersey and in states from the Gulf Coast to New England, and Canada. Its principal subsidiary, New Jersey Natural Gas, is one of the fastest-growing local distribution companies in the United States, serving more than 462,000 customers in central and northern New Jersey. Other major NJR subsidiaries include NJR Energy Services and NJR Home Services. NJR Energy Services is a leader in the unregulated energy services market, providing customer service and management of natural gas storage and capacity assets. NJR Home Services offers retail customers heating, air conditioning and appliance services. NJR's progress is a tribute to the more than 5,000 dedicated employees who have shared their expertise and focus on quality through more than 50 years of serving customers and the community to make NJR a leader in the competitive energy marketplace. For more information, visit NJR's Web site at njliving.com.
Michael Kinney (media)
Dennis Puma (investors)