New Jersey Resources(NJR) - 2025 Q4 - Annual Report

Financial Performance - Net income for fiscal year 2025 was $335.6 million, an increase of 15.9% from $289.8 million in 2024[38] - NFE (Non-GAAP financial measure) for fiscal year 2025 was $329.6 million, up 13.3% from $290.8 million in 2024[38] - Total operating revenue for NJNG in fiscal year 2025 reached $1.3 billion, a 27.8% increase from $1.02 billion in 2024[44] - Residential operating revenue increased to $781.3 million in 2025, up 21.7% from $642.4 million in 2024[44] Customer Base and Service Delivery - NJNG's service territory covers 1,538 square miles and serves an estimated population of 1.7 million people[42] - As of September 30, 2025, NJNG had 13,121 residential and 7,846 commercial and industrial customers utilizing transportation services[63] - NJNG maintains firm transportation and storage capacity agreements totaling 914,163 Dths for reliable service delivery[51] Natural Gas Supply and Management - NJNG purchased natural gas from approximately 63 suppliers in fiscal 2025, with over 10% sourced from two suppliers[49] - The company utilizes financial derivative instruments to mitigate the impact of volatile wholesale natural gas prices on customers[58] - NJNG expects to meet natural gas requirements for existing and projected firm customers and plans to renegotiate contracts as needed[59] Environmental and Remediation Efforts - NJNG estimates future expenditures for environmental remediation of former MGP sites will range from approximately $144.3 million to $200.2 million[88] - As of September 30, 2025, NJNG recorded an MGP remediation liability of $167.0 million on the Consolidated Balance Sheets[89] - NJNG is involved in administrative proceedings with the NJDEP for the remedial cleanup of former MGP sites dating back to the late 1800s[200] Employee and Workforce Management - As of September 30, 2025, the Company employed 1,376 employees, a slight increase from 1,372 employees as of September 30, 2024[91] - NJNG and NJRHS have collective bargaining agreements with the Union, with contracts ratified on August 6, 2025, and July 29, 2025, respectively, covering wage increases and benefits[91] - The Company offers competitive compensation packages and periodically reviews employee compensation to ensure competitiveness within the industry[93] Risks and Challenges - The company faces risks related to attracting and retaining a qualified workforce, which is essential for implementing its business strategy and maintaining operations[114] - Weather patterns significantly influence demand for natural gas, with milder winters or cooler summers potentially leading to decreased revenues and cash flows[116] - Climate change poses risks that could affect the cost of providing natural gas and the demand for it, impacting the company's financial performance[119] Regulatory and Compliance Issues - Regulatory changes and compliance costs may significantly affect the company's operations and profitability, particularly regarding natural gas pricing and supply[125] - NJNG's ability to obtain rate increases and maintain authorized rates of return may be impacted by regulatory actions and the transition to new information technology systems[133] - Regulatory decisions by the BPU will impact the recovery of costs and the rate of return on invested capital for NJNG[217] Cybersecurity and Technology Risks - The company continues to face risks from cyberattacks, which could adversely affect business operations and financial results[136] - The reliance on information technology for managing natural gas distribution and trading operations exposes the company to potential disruptions and data breaches[137] - The Audit Committee oversees the company's cybersecurity risk management practices and receives updates at least quarterly from senior leadership[185] Market and Economic Factors - Economic and political instability could create uncertainty, increasing the cost of capital and impairing access to financial markets[161] - Inflation and rising natural gas costs may increase customer debt levels and adversely affect collections[149] - Changes in customer growth, particularly in the housing market, could negatively impact the company's Utility Gross Margin and cash flows[145] Investments and Acquisitions - Acquisitions involve risks, including the potential failure to realize anticipated synergies and growth opportunities[160] - The company is exposed to market risks that could impact the value of its transportation and storage contracts[148] Solar Energy Initiatives - CEV operates approximately 479 MW of solar capacity across seven states as of September 30, 2025[65] - CEV sold its residential solar portfolio on November 25, 2024, to a third party[66] - NJR's investments in solar energy projects face risks related to construction, permitting, and regulatory approvals, which could impact project viability[106]