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REPORTING SEGMENT AND OTHER OPERATIONS DATA
 12 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
REPORTING SEGMENT AND OTHER OPERATIONS DATA
15. REPORTING SEGMENT AND OTHER OPERATIONS DATA

The Company organizes its businesses based on a combination of factors, including its products and its regulatory environment. As a result, the Company manages its businesses through the following reporting segments and other business operations: NJNG consists of regulated energy and off-system, capacity and storage management operations; CEV consists of capital investments in clean energy projects; ES consists of unregulated wholesale and retail energy operations; S&T consists of the Company’s investments in natural gas transportation and storage facilities; the HSO business operations consist of heating, cooling and water appliance sales, installations and services, other investments and general corporate activities. Information related to the Company’s various reporting segments and other business operations, as of September 30, is detailed below:
Segments
(Thousands)NJNGCEVESS&TSubtotalHSOElimsTotal
2023
Operating revenues
External customers$1,011,284 124,131 681,446 (1)88,700 $1,905,561 57,433 — $1,962,994 
Intercompany$1,349 — 10,170 4,159 $15,678 205 (15,883)$— 
Depreciation and amortization$102,326 25,320 221 (2)24,185 $152,052 889 — $152,941 
Interest income (3)
$1,713 — 1,119 6,957 $9,789 2,977 (3,847)$8,919 
Interest expense, net of capitalized interest$56,595 28,569 11,400 25,803 $122,367 647 — $123,014 
Income tax provision (benefit)$33,065 (7,683)24,343 3,444 $53,169 (1,477)(2,417)$49,275 
Equity in earnings of affiliates$— — — 3,126 $3,126 — 804 $3,930 
Net financial earnings$131,414 44,458 68,517 12,835 $257,224 4,758 (155)$261,827 
Capital expenditures$390,394 107,303 — 40,916 $538,613 2,306 — $540,919 
2022
Operating revenues
External customers$1,127,417 128,280 1,529,178 (1)65,286 $2,850,161 55,818 — $2,905,979 
Intercompany$1,350 — 94 2,449 $3,893 364 (4,257)$— 
Depreciation and amortization$94,579 21,396 148 (2)12,302 $128,425 824 — $129,249 
Interest income (3)
$895 — 16 2,110 $3,021 944 (1,249)$2,716 
Interest expense, net of capitalized interest$46,394 21,968 4,725 12,097 $85,184 646 — $85,830 
Income tax provision$40,141 11,361 21,776 1,879 $75,157 1,059 (21)$76,195 
Equity in earnings of affiliates$— — — 9,865 $9,865 — (1,688)$8,177 
Net financial earnings (loss)$140,124 39,403 39,121 22,454 $241,102 (781)— $240,321 
Capital expenditures$298,374 146,676 — 151,988 $597,038 1,390 — $598,428 
Return of capital from equity investees$— — — (5,479)$(5,479)— — $(5,479)
2021
Operating revenues
External customers$731,796 95,275 1,228,846 (1)49,252 $2,105,169 51,444 — $2,156,613 
Intercompany$— — (426)1,768 $1,342 785 (2,127)$— 
Depreciation and amortization$80,045 20,567 111 (2)9,960 $110,683 980 (276)$111,387 
Interest income (3)
$85 241 11 2,243 $2,580 522 (935)$2,167 
Interest expense, net of capitalized interest$36,405 22,548 2,204 13,348 $74,505 4,054 — $78,559 
Income tax provision (benefit)$19,054 5,048 18,371 (10,043)$32,430 (196)1,052 $33,286 
Equity in loss of affiliates$— — — (81,072)$(81,072)— (2,140)$(83,212)
Net financial earnings (loss)$107,375 16,789 71,117 13,046 $208,327 (826)211 $207,712 
Capital expenditures$426,628 87,852 — 107,500 $621,980 2,630 — $624,610 
Investments in equity investees$— — — 690 $690 — — $690 
(1)Includes sales to Canada for ES, which are $8.4M, $2.4M and $0.1M in the fiscal years ended September 30, 2023, 2022 and 2021, respectively.
(2)The amortization of acquired wholesale energy contracts is excluded above and is included in natural gas purchases - nonutility on the Consolidated Statements of Operations.
(3)Included in other income, net on the Consolidated Statements of Operations.
The Company’s assets at end of period for the various reporting segments and other business operations, as of September 30, are detailed below:
SegmentsIntercompany
(Thousands)NJNGCEVESS&TSubtotalHSO
Assets (1)
Total
2023$4,414,829 1,128,577 123,775 1,011,959 $6,679,140 171,275 (312,919)$6,537,496 
2022$4,030,686 1,015,065 333,064 999,520 $6,378,335 159,068 (275,987)$6,261,416 
2021$3,707,461 914,788 365,423 862,407 $5,850,079 162,134 (289,935)$5,722,278 
(1)Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.

The Chief Executive Officer, who uses NFE as a measure of profit or loss in measuring the results of the Company’s reporting segments and other business operations, is the chief operating decision maker of the Company. A reconciliation of consolidated NFE to consolidated net income, as of September 30, is as follows:
(Thousands)202320222021
Net financial earnings$261,827 $240,321 $207,712 
Less:
Unrealized (gain) loss on derivative instruments and related transactions(38,081)(59,906)54,203 
Tax effect9,050 14,248 (12,887)
Effects of economic hedging related to natural gas inventory34,699 19,939 (42,405)
Tax effect(8,246)(4,738)10,078 
(Gain on) impairment of equity method investment(300)(5,521)92,000 
Tax effect(19)1,377 (11,167)
Net income$264,724 $274,922 $117,890 

The Company uses derivative instruments as economic hedges of purchases and sales of physical natural gas inventory. For GAAP purposes, these derivatives are recorded at fair value and related changes in fair value are included in reported earnings. Revenues and cost of natural gas related to physical natural gas flow are recognized when the natural gas is delivered to customers. Consequently, there is a mismatch in the timing of earnings recognition between the economic hedges and physical natural gas flows. Timing differences occur in two ways:

•unrealized gains and losses on derivatives are recognized in reported earnings in periods prior to physical natural gas inventory flows; and

•unrealized gains and losses of prior periods are reclassified as realized gains and losses when derivatives are settled in the same period as physical natural gas inventory movements occur.

NFE is a measure of the earnings based on eliminating these timing differences, to effectively match the earnings effects of the economic hedges with the physical sale of natural gas, SRECs and foreign currency contracts. Consequently, to reconcile between net income and NFE, current-period unrealized gains and losses on the derivatives are excluded from NFE as a reconciling item. Realized derivative gains and losses are also included in current-period net income. However, NFE includes only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the derivatives with realized margins on physical natural gas flows. NFE also excludes certain transactions associated with equity method investments, including impairment charges, which are non-cash charges, and return of capital in excess of the carrying value of our investment. These are considered unusual in nature and occur infrequently such that they are not indicative of the Company’s performance for its ongoing operations. Included in the tax effects are current and deferred income tax expense corresponding with the components of NFE.