NJR: New Jersey Resources Reports - Who Knew Utility Earnings Were So Volatile?
Small Cap Watch List (Track at Marketocracy) and Mid Cap Watch List (Track at Marketocracy) member New Jersey Resources (NJR) Reported Fiscal Second-Quarter Earnings and Increased Earnings Guidance:
New Jersey Resources (NYSE:NJR) today reported its second-quarter earnings and announced it would increase its fiscal 2007 earnings guidance by $.05 per basic share for a second time due to the performance of its two major subsidiaries, New Jersey Natural Gas (NJNG) and NJR Energy Services (NJRES).The new guidance is set at a range of $2.95 to $3.05 per basic share and comes as NJR reports a 14.7 percent increase in earnings for the first half of its fiscal year.
Analysts had been expecting the company to earn $2.92 per share. For the current quarter consensus was at $2.19, and the company reported:
NJR earned $80.5 million, or $2.89 per basic share, for the three months ended March 31, 2007, compared with $60.2 million, or $2.16 per share, for the same period last year. Diluted earnings per share for the quarter increased 34 percent to $2.87, compared with $2.14 last year.
Apparently the earnings stream is quite volatile, likely impacted by seasonal utility usage. As the company explains:
“Normal” weather is based on 20-year average temperatures. Weather during the six months ended March 31, 2007 was 7 percent warmer than normal and 1 percent warmer than last year. Weather during the three months ended March 31, 2007 was 1 percent colder than normal and 12 percent colder than last year. As with the weather normalization clause which preceded it, the impact of weather is significantly offset by the recently approved CIP, which is designed to normalize year-to-year fluctuations on both NJNG’s gross margin and customers’ bills that may result from changing weather and usage patterns. Included in the CIP accrual was $8.4 million associated with the warmer-than-normal weather and $5.9 million associated with lower customer usage. Through the CIP, customers will realize annual savings of $10.6 million in fixed cost reductions. Additionally, the lower level of gas usage through March represents another estimated $27 million in commodity cost savings achieved by customers.
Funny we hadn’t thought about it before, but we never knew there was so much seasonal fluctuation for utilities.
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