New Jersey Resources Reports First-Quarter Fiscal 2018 Results and Raises Earnings Guidance for the Year

Today, New Jersey Resources (NYSE: NJR) reported results for the
first-quarter of fiscal 2018. Highlights include:

• Consolidated net income was $123.7 million for the first quarter of
  fiscal 2018, compared with $34.9 million for the same period in fiscal
  2017. This includes an estimated benefit from tax reform of $57.6
  million due to revaluation of deferred taxes recognized during this
  quarter.
• Consolidated net financial earnings (NFE), a non-GAAP financial
  measure, were $135.3 million for the first quarter of fiscal 2018,
  compared with $40.4 million during the same period in fiscal 2017.
• NJR raised its fiscal 2018 NFE guidance to $2.55 to $2.65 from $1.75
  to $1.85 per share.
• Long-term annual NFE per share growth rate range adjusted to 6 to 8
  percent.
• Energy Services reported first-quarter fiscal 2018 NFE of $20.3
  million, compared with $3.5 million during the same period in fiscal
  2017, driven by strong market demand due to colder weather in December
  2017.

“Our strong performance this quarter was led by Energy Services,
benefits from tax reform and solid contributions from our regulated
businesses," Laurence M. Downes, chairman and CEO of New Jersey
Resources, said. "We remain focused on executing our natural gas, clean
energy and energy efficiency strategy to best serve our customers, and
generate returns for our shareowners."

First-quarter fiscal 2018 net income totaled $123.7 million, or $1.42
per share, compared with $34.9 million, or $.41 per share, during the
same period in fiscal 2017.

In the first quarter of fiscal 2018, NFE totaled $135.3 million, or
$1.56 per share, compared with NFE of $40.4 million, or $.47 per share,
during the same period last year.

A reconciliation of net income to NFE for the three months ended
December 31 of fiscal years 2018 and 2017 is provided below.

NFE is a financial measure not calculated in accordance with generally
accepted accounting principles (GAAP) of the United States. It is a
measure of earnings based on eliminating timing differences surrounding
the recognition of certain gains or losses, net of applicable tax
adjustments, to effectively match the earnings effects of the economic
hedges with the physical sale of natural gas, Solar Renewable Energy
Credits (SRECs) and foreign currency contracts. NFE eliminates the
impact of volatility to GAAP earnings associated with unrealized gains
and losses on derivative instruments in the current period. For further
discussion of this financial measure, please see the explanation below
under “Non-GAAP Financial Information.”

A table summarizing our key performance metrics for the three months
ended December 31 of fiscal years 2018 and 2017 is provided below.

A table detailing NFE for the three months ended December 31 of fiscal
years 2018 and 2017 is provided below.

NJR Increases Fiscal 2018 NFE Guidance:

NJR increased fiscal 2018 NFE guidance to $2.55 to $2.65 from a
previously announced range of $1.75 to $1.85 per share, subject to the
risks and uncertainties identified below under “Forward-Looking
Statements.” NJR expects its regulated businesses to generate between 40
to 55 percent of total NFE, with New Jersey Natural Gas (NJNG)
continuing to be the largest contributor, excluding the impacts of tax
reform. The following chart represents NJR’s current expected
contributions from its subsidiaries, and the estimated benefits as a
result of the revaluation of deferred taxes due to tax reform for fiscal
2018:

In providing fiscal 2018 NFE guidance, management is aware there could
be differences between reported GAAP earnings and NFE due to matters
such as, but not limited to, the positions of our energy-related
derivatives. Management is not able to reasonably estimate the aggregate
impact or significance of these items on reported earnings and,
therefore, is not able to provide a reconciliation to the corresponding
GAAP equivalent for its operating earnings guidance without unreasonable
efforts.

Tax Reform Update:

On December 22, 2017, the President signed into law the "Tax Act,"
formerly known as "The Tax Cuts and Jobs Act of 2017." The law includes
several changes to the Internal Revenue Code of 1986, as amended, with
the reduction in the federal corporate income tax rate from 35 percent
to 21 percent that became effective January 1, 2018 being the most
impactful to NJR.

As a result of the changes associated with the Tax Act, NJR revalued its
deferred tax assets and liabilities as of the date of the enactment. The
primary impact to deferred tax attributes was associated with
depreciation timing differences for its utility plant and equipment, as
well as property-related items in its non-regulated entities.

NJNG recorded a regulatory liability of $228 million, which includes
$164.3 million for the revaluation of its deferred income taxes and
$63.7 million for the accounting of the income tax effects on the
revaluation. Due to IRS normalization rules, the excess deferred tax
attributes for property-related items are amortized over the remaining
life of the utility plant. The net decrease of the deferred tax
liability for the remaining entities resulted in an income tax benefit,
estimated to be $57.6 million, for the three months ended December 31,
2017.

A table summarizing the decrease of our net deferred tax liability
recognized during the three months ended December 31, 2017 is provided
below:

Effective Tax Rate:

Due to recently enacted tax reform legislation, NJR’s estimated annual
effective tax rate increased from 8.7 percent in fiscal 2017 to 13.9
percent in fiscal 2018. In the first quarter of fiscal 2018, $11.6
million related to tax credits, net of deferred taxes, were recognized,
compared with $7.5 million during the same period last year.

For NFE purposes, the effective tax rate also increased from 14.7
percent to 16.3 percent, and NJR recognized $11.6 million in tax
credits, net of deferred taxes. Further detail can be found in Note 11
“Income Taxes” within our 10-Q filing.

Regulated Business Update:

New Jersey Natural Gas

Reported first-quarter fiscal 2018 NFE of $34.1 million, compared with
$30.3 million, during the same period in fiscal 2017. Results for the
quarter were driven by increased utility gross margin from new customer
additions, primarily in the new residential construction market, and a
higher basic gas supply service (BGSS) incentive margin.

On January 31, 2018, the New Jersey Board of Public Utilities (BPU)
issued an Order directing NJNG to submit a filing by March 2, 2018,
proposing the prospective change in rates as a result of the Tax Act.
Included in the filing will be the amount, as well as the method, by
which the rate difference collected from January 1, 2018 through March
31, 2018 will be returned to customers. Also, the filing will address
how excess deferred taxes collected will be returned to customers.

Customer Growth:

• Added 2,637 new customers during the first quarter of fiscal 2018
  compared with 1,866 last year. These new customer additions, and those
  customers who added additional natural gas services to their premises,
  are expected to contribute $1.5 million annually to utility gross
  margin.
• NJNG expects to invest approximately $40 million annually in capital
  expenditures to support new customer growth through fiscal 2020. NJNG
  expects to add between 26,000 to 28,000 new customers through fiscal
  2020, representing an annual growth rate of 1.7 percent and a
  cumulative increase in utility gross margin of approximately $16
  million. For more information on utility gross margin, please see
  “Non-GAAP Financial Information” below.

Infrastructure Update:

The Southern Reliability Link (SRL) will provide a
secondary interstate feed into the southern end of NJNG’s delivery
system. Once the remaining easement and road-opening permits are
obtained, construction will begin. NJNG expects the SRL to be in service
in the first quarter of fiscal 2019.

New Jersey Reinvestment in System Enhancement (NJ RISE) program
is a five-year, $102.5 million investment that began in 2014.
Work to install a secondary natural gas distribution main in the
northern section of the Seaside barrier island in Ocean County, New
Jersey has begun, along with improving associated regulator stations.

Safety Acceleration and Facilities Enhancement (SAFE) II is a
five-year program designed to replace the remaining 276 miles of
unprotected steel main and associated services in NJNG’s distribution
system. In the first quarter of fiscal 2018, $8.9 million was invested
to replace 10 miles of unprotected steel main and services.

Basic Gas Supply Service Incentive Programs:

• Contributed $4.4 million in the first quarter of fiscal 2018 to
  utility gross margin, compared with $3.8 million during the same
  period in fiscal 2017. The higher results were attributed to improved
  margins in off-system sales and storage incentive programs.

Energy Efficiency:

• The SAVEGREEN Project^®, NJNG’s energy efficiency program,
  invested $3.4 million during the first quarter of fiscal 2018 in
  grants and financing options designed to help customers with energy
  efficiency upgrades for their homes and businesses.

Midstream

Reported first-quarter 2018 NFE of $17.5 million, compared with $2.4
million during the same period in fiscal 2017. Improved performance was
primarily due to an estimated benefit of $14 million based on the
revaluation of deferred income taxes recognized during the first quarter
of fiscal 2018 due to tax reform. Other factors included an increase in
Allowance for Funds Used During Construction (AFUDC) from the PennEast
project, an increase in the equity in earnings of affiliates, and a
lower tax rate in fiscal 2018.

Infrastructure projects continue to move forward to benefit our
customers and shareowners. Highlights include:

• On January 19, 2018, PennEast received final approval of its
  Certificate of Public Convenience and Necessity from the Federal
  Energy Regulatory Commission (FERC). PennEast expects the project to
  be in service in 2019.
• On October 27, 2017, Adelphia Gateway, LLC, a subsidiary of NJR,
  entered into an agreement to acquire an existing 84-mile pipeline in
  southeastern Pennsylvania, pending receipt of all of the necessary
  permits and regulatory actions. Recent milestones include the
  successful conclusion of its binding open season in December, and the
  January filing of an application with FERC for a Certificate of Public
  Convenience and Necessity. Adelphia Gateway expects the project to be
  in service in 2019.

Non-Regulated Business Update:

Energy Services

Reported first-quarter 2018 NFE of $20.3 million, compared with $3.5
million during the same period in fiscal 2017. The increase in NFE was
due primarily to colder weather in December 2017, resulting in increased
storage withdrawals due to higher demand coupled with higher volatility
allowing Energy Services to capture additional margin from natural gas
price spreads. Results include an estimated charge of $9.1 million based
on the revaluation of deferred income taxes recognized during the first
quarter of fiscal 2018 due to tax reform.

Clean Energy Ventures

Reported NFE of $71.3 million in the first quarter of fiscal 2018,
compared with $2.8 million in the same period in fiscal 2017. The
improved results were due primarily to an estimated benefit of $62.7
million based on the revaluation of deferred income taxes recognized
during the first quarter of fiscal 2018 due to tax reform. Highlights
include:

• Two commercial solar projects are currently under construction and
  expected to be placed into service during fiscal 2018. The projects,
  Old Bridge Solar and Raritan Solar, represent 20.7 megawatts (MWs) of
  capacity and an approximate investment of $43.9 million.
• Solar-related capital expenditures for projects eligible for
  Investment Tax Credits (ITCs) during the first quarter of fiscal 2018
  were $5.9 million, compared with $8.9 million during the same period
  in fiscal 2017. The decrease was due primarily to the timing of
  commercial projects placed into service.

Home Services and Other Operations

In the first quarter of fiscal 2018, Home Services, the company’s
non-regulated retail and appliance service subsidiary, and other
operations reported a net financial loss of $7.7 million, compared with
NFE of $1.5 million during the same period last year. The decrease was
due to an estimated $10 million charge primarily attributed to other
operations based on the revaluation of deferred income taxes recognized
during the first quarter of fiscal 2018 due to tax reform.

Home Services reported a net financial loss of $3.8 million in the first
quarter of fiscal 2018, compared with a net financial loss of $848,000
during the same period last year. Decreased results were due primarily
to an estimated $2.8 million charge based on the revaluation of deferred
taxes recognized during the first quarter of fiscal 2018 due to tax
reform.

Commercial Realty and Resources (CR&R), the commercial real estate
subsidiary of NJR, includes undeveloped land, as well as investments in
other energy-related ventures that were fully divested during the first
quarter. In the first three months of fiscal 2018, CR&R recorded a
pretax gain of $5.3 million from the sale of available-for-sale
securities, compared with $2.6 million during the same period in fiscal
2017.

Capital Expenditures and Cash Flows:

NJR is committed to maintaining a strong financial profile while
continuing to invest capital in regulated and non-regulated projects.

• NJR used operating cash flows of $23.5 million in the first quarter of
  fiscal 2018, compared with $46.1 million during the same period in
  fiscal 2017.
• First-quarter fiscal 2018 capital expenditures were $73 million, of
  which $47.1 million were related to regulated assets, compared with
  $126.2 million, of which $42 million were related to regulated assets
  during the same period in fiscal 2017.
• NJR reported aggregate capital expenditures of $84.3 million and
  dividend payments of $23.6 million, and used $32 million in operating
  and other activities for the first quarter of fiscal 2018, of which
  $113.3 million was funded from other proceeds from debt and $26.5
  million from equity issuances.

Webcast Information:

NJR will host a live webcast to discuss its financial results today at
10 a.m. EST. A few minutes prior to the webcast, go to njresources.com
and select “Investor Relations,” then scroll down to the “Events &
Presentations” section and click on the webcast link.

Forward-Looking Statements:

This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of
the Securities Exchange Act of 1934, as amended, and 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. Words such as “anticipates,”
“estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans,”
“believes,” “should” and similar expressions may identify
forward-looking statements and such forward-looking statements are made
based upon management’s current expectations, assumptions and beliefs as
of this date concerning future developments and their potential effect
upon NJR. There can be no assurance that future developments will be in
accordance with management’s expectations, assumptions and beliefs or
that the effect of future developments on NJR will be those anticipated
by management. Forward-looking statements in this release include, but
are not limited to, certain statements regarding NJR’s NFE guidance for
fiscal 2018, forecasted contribution of business segments to fiscal 2018
NFE, future NJNG customer and utility gross margin growth, future NJR
capital expenditures and infrastructure investments, Clean Energy
Ventures’ ITC-eligible projects and demand for residential solar, the
impact of the Tax Act, earnings and dividend growth, the ability to
close and successfully implement the Adelphia Gateway acquisition, as
well as the SRL and PennEast Pipeline projects.

The factors that could cause actual results to differ materially from
NJR’s expectations include, but are not limited to, risks associated
with our investments in clean energy projects, including the
availability of regulatory and tax incentives, the availability of
viable projects, our eligibility for ITCs and PTCs, the future market
for SRECs and electricity prices, and operational risks related to
projects in service; the ability to obtain governmental and regulatory
approvals, land-use rights, electric grid connection (in the case of
clean energy projects) and/or financing for the construction,
development and operation of our unregulated energy investments and
NJNG’s infrastructure projects in a timely manner; risks associated with
acquisitions and the related integration of acquired assets with our
current operations; volatility of natural gas and other commodity prices
and their impact on NJNG customer usage, NJNG’s BGSS incentive programs,
our Energy Services segment operations and on our risk management
efforts; the level and rate at which NJNG’s costs and expenses are
incurred and the extent to which they are approved for recovery from
customers through the regulatory process, including through future base
rate case filings; the impact of a disallowance of recovery of
environmental-related expenditures and other regulatory changes; the
performance of our subsidiaries; operating risks incidental to handling,
storing, transporting and providing customers with natural gas; access
to adequate supplies of natural gas and dependence on third-party
storage and transportation facilities for natural gas supply; the
regulatory and pricing policies of federal and state regulatory
agencies; timing of qualifying for ITCs and PTCs due to delays or
failures to complete planned solar and wind energy projects and the
resulting effect on our effective tax rate and earnings; the results of
legal or administrative proceedings with respect to claims, rates,
environmental issues, natural gas cost prudence reviews and other
matters; risks related to cyberattack or failure of information
technology systems; changes in rating agency requirements and/or credit
ratings and their effect on availability and cost of capital to our
company; the ability to comply with current and future regulatory
requirements; the impact of volatility in the equity and credit markets
on our access to capital; the impact to the asset values and resulting
higher costs and funding obligations of our pension and postemployment
benefit plans as a result of potential downturns in the financial
markets, lower discount rates, revised actuarial assumptions or impacts
associated with the Patient Protection and Affordable Care Act;
commercial and wholesale credit risks, including the availability of
creditworthy customers and counterparties, and liquidity in the
wholesale energy trading market; accounting effects and other risks
associated with hedging activities and use of derivatives contracts; the
ability to optimize our physical assets; any potential need to record a
valuation allowance for our deferred tax assets; changes to tax laws and
regulations; weather and economic conditions; the ability to comply with
debt covenants; demographic changes in NJR’s service territory and their
effect on NJR’s customer growth; the impact of natural disasters,
terrorist activities and other extreme events on our operations and
customers; the costs of compliance with present and future environmental
laws, including potential climate change-related legislation;
environmental-related and other uncertainties related to litigation or
administrative proceedings; risks related to our employee workforce; and
risks associated with the management of our joint ventures and
partnerships, and investment in a master limited partnership. The
aforementioned factors are detailed in the “Risk Factors” sections of
our Form 10-K that we filed with the Securities and Exchange Commission
(SEC) on November 21, 2017, which is available on the SEC’s Web site at sec.gov.
Information included in this release is representative as of today only,
and while NJR periodically reassesses material trends and uncertainties
affecting NJR’s results of operations and financial condition in
connection with its preparation of management’s discussion and analysis
of results of operations and financial condition contained in its
Quarterly and Annual Reports filed with the SEC, NJR does not, by
including this statement, assume any obligation to review or revise any
particular forward-looking statement referenced herein in light of
future events.

Non-GAAP Financial Information:

This release includes the non-GAAP financial measures NFE (losses) and
utility gross margin. A reconciliation of these non-GAAP financial
measures to the most directly comparable financial measures calculated
and reported in accordance with GAAP can be found below. As an indicator
of NJR’s operating performance, these measures should not be considered
an alternative to, or more meaningful than, net income or operating
revenues as determined in accordance with GAAP. This information has
been provided pursuant to the requirements of SEC Regulation G.

NFE (losses) excludes unrealized gains or losses on derivative
instruments related to the company’s unregulated subsidiaries and
certain realized gains and losses on derivative instruments related to
natural gas that has been placed into storage at Energy Services, net of
applicable tax adjustments as described below. Volatility associated
with the change in value of these financial instruments and physical
commodity contracts is reported on the income statement in the current
period. In order to manage its business, NJR views its results without
the impacts of the unrealized gains and losses, and certain realized
gains and losses, caused by changes in value of these financial
instruments and physical commodity contracts prior to the completion of
the planned transaction because it shows changes in value currently
instead of when the planned transaction ultimately is settled. An annual
estimated effective tax rate is calculated for NFE purposes and any
necessary quarterly tax adjustment is applied to Clean Energy Ventures,
as such adjustment is related to tax credits generated by Clean Energy
Ventures.

NJNG’s utility gross margin represents the results of revenues less
natural gas costs, sales, expenses and other taxes and regulatory rider
expenses, which are key components of NJR’s operations that move in
relation to each other. Natural gas costs, sales, expenses and other
taxes and regulatory rider expenses are passed through to customers and,
therefore, have no effect on gross margin. Management uses these
non-GAAP financial measures as supplemental measures to other GAAP
results to provide a more complete understanding of NJR’s performance.
Management believes these non-GAAP financial measures are more
reflective of NJR’s business model, provide transparency to investors
and enable period-to-period comparability of financial performance. A
reconciliation of all non-GAAP financial measures to the most directly
comparable financial measures calculated and reported in accordance with
GAAP can be found below. For a full discussion of NJR’s non-GAAP
financial measures, please see NJR’s 2017 Form 10-K, Item 7.

About New Jersey Resources

New Jersey Resources (NYSE: NJR) is a Fortune 1000 company that,
through its subsidiaries, provides safe and reliable natural gas and
clean energy services, including transportation, distribution, asset
management and home services. NJR is composed of five primary businesses:

• New Jersey Natural Gas, NJR’s principal subsidiary, operates
  and maintains over 7,400 miles of natural gas transportation and
  distribution infrastructure to serve over half a million customers in
  New Jersey’s Monmouth, Ocean and parts of Morris, Middlesex and
  Burlington counties.
• Clean Energy Ventures invests in, owns and operates solar and
  onshore wind projects with a total capacity of more than 317
  megawatts, providing residential and commercial customers with
  low-carbon solutions.
• Energy Services manages a diversified portfolio of natural gas
  transportation and storage assets and provides physical natural gas
  services and customized energy solutions to its customers across North
  America.
• Midstream serves customers from local distributors and
  producers to electric generators and wholesale marketers through its
  50 percent equity ownership in the Steckman Ridge natural gas storage
  facility and its stake in Dominion Midstream Partners, L.P., as well
  as its 20 percent equity interest in the PennEast Pipeline Project.
• NJR Home Services provides service contracts as well as
  heating, central air conditioning, water heaters, standby generators,
  solar and other indoor and outdoor comfort products to residential
  homes throughout New Jersey.

NJR and its more than 1,000 employees are committed to helping customers
save energy and money by promoting conservation and encouraging
efficiency through Conserve to Preserve® and initiatives such as The
SAVEGREEN Project® and The Sunlight Advantage®.

For more information about NJR:

www.njresources.com.
Follow
us on Twitter @NJNaturalGas.
“Like” us on facebook.com/NewJerseyNaturalGas.
Download
our free NJR investor relations app for iPad, iPhone and Android.

NJR-E

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