Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — New York Financial Community Luncheon (January 2012)
33 slides from Newjersey Resources's conference presentation, Jan 11, 2012
Slide 1: New Jersey Resources New York Financial Community Luncheon
New Jersey Resources New York Financial Community Luncheon January 12, 2012 Exhibit 99.1
Slide 2: Regarding Forward-Looking Statements
Regarding Forward-Looking Statements Certain statements contained in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can also be identified by the use of forward-looking terminology such as “may,”
Slide 3: Disclaimer Regarding Non-GAAP Financial Measures
Disclaimer Regarding Non-GAAP Financial Measures This presentation includes the non-GAAP measures net financial earnings (losses) and utility gross margin. As an indicator of the company’s operating performance, these measures should not be considered an alternative to, or more meaningful than, GAAP
Slide 4: Key Industry Issues
Key Industry Issues Desire for Yield Macro Economic Environment Interest Rates Supply Commodity Prices Organic Customer Growth Financial Profile Environmental Policy
Slide 5: U.S. Natural Gas Reserves
U.S. Natural Gas Reserves Unproved shale gas Unproved other gas Proved reserves Tcf 1,481 2,552 1,000 1,500 2,000 2,500 3,000 Source: EIA, Annual Energy Outlook 2011
Slide 6: Sources of Supply
Sources of Supply Alaska Non-associated offshore Projections History Associated with oil Coalbed methane Net imports Non-associated onshore Shale gas 11% 1% 9% 7% 9% 8% 20% 14% 8% 2% 8% 7% 46% 1% Tight gas 28% 22% Source: EIA, Annual Energy Outlook 2011
Slide 7: Our Business Model
Our Business Model Steady customer growth Rate base investment opportunities Regulatory incentives Safety and reliability Competitive pricing Natural Gas Distribution Clean Energy and Retail Services Residential solar programs Commercial rooftop solar and ground-mounted projects Service contracts, i
Slide 8: Highlights
Highlights • Achieved our 20th consecutive year of net financial earnings (NFE) per share growth in fiscal 2011 – $2.58 compared with $2.46 last year, a 4.9 percent increase • Implemented a 5.6 percent dividend increase effective January 3, – New annual rate of $1.52 per share – 17th consecutive ann
Slide 9: Our Core Business
Our Core Business Favorable demographics to support customer growth • Approximately 496,000 customers • $943 million of rate base • 100 percent residential and commercial customers • Solid customer growth
Slide 10: Customer Growth
Customer Growth Steady customer growth of 1.4 percent • 6,783 new customers in fiscal 2011, a 10 percent increase over fiscal 2010 • 641 additional existing customer heat conversions • New customers and existing customer conversions are expected to contribute approximately $3.5 million of new NJNG u
Slide 11: Fuel Price Comparison
Fuel Price Comparison NJNG enjoys a distinct price advantage in its service area $1.15 $3.03 $4.52 $4.98 $0.00 $1.25 $2.50 $3.75 $5.00 NJNG Fuel Oil Propane Electricity Source: EIA Data as of December 2011. Based on 100,000 comparable BTUs
Slide 12: Future Customer Growth
Future Customer Growth Long-term customer growth outlook is strong 2017-Build Out Potential New Customers = 90,000 2012-2016 Near Main Potential Conversions = 127,800 Non Heat On Main Off Main Sources: Arthur D. Little , Harte Hanks and NJNG 38,723 7,555 29,445 52,077 75,500 14,500
Slide 13: Slide 13
Slide 14: 2011 Energy Master Plan
2011 Energy Master Plan • For NJNG, overall positive for natural gas: – Supports natural gas electric generation – Supports renewable fuel vehicles (NGVs) – Supports natural gas over oil in conversion markets
Slide 15: Pending Regulatory Initiatives
Pending Regulatory Initiatives New regulatory opportunities that benefit both NJNG and customers Natural Gas Refueling Stations • Filing submitted to the BPU on June 16, 2011 • Potential investment of up to $15 million to fund seven to 10 stations in service area – $1.60 per gallon of gasoline equiv
Slide 16: BGSS Incentives
BGSS Incentives Incentive programs in place through October 2015 • Off-system sales and capacity release – In place since 1992 – Optimization of capacity and supply contracts – Sharing formula of 85 percent customer; 15 percent NJNG • Storage Incentive (SI) – In place since 2004 – Promotes long-term
Slide 17: Clean Energy Strategic Rationale
Clean Energy Strategic Rationale Clean energy investments contributed $6.8 million to NFE in its first year of operations • Consistent with our core energy strategy • Reduced energy usage and lower prices for customers • Promotes economic development and job creation • Supports New Jersey’s environm
Slide 18: Declining Solar Material Costs
Declining Solar Material Costs Source: Lawrence Berkeley National Laboratory (Behind the meter weighted average installed cost) $11.00 $10.80 $9.70 $10.00 $9.90 $8.70 $8.40 $7.90 $7.90 $7.90 $7.60 $7.50 $6.20 $4.00 $6.00 $8.00 $10.00 $12.00 National Average - Installed Cost by Year
Slide 19: Legislative Renewable Portfolio Standard
Legislative Renewable Portfolio Standard Robust Renewable Portfolio Standard (RPS) provides for long-term solar project opportunities 1,150 1,357 1,591 1,858 2,164 2,518 2,928 3,433 3,989 4,610 5,316 1,200 1,500 1,800 2,100 2,400 2,700 3,000 3,300 3,600 3,900 4,200 4,500 4,800 5,100 5,400 RPS Instal
Slide 20: The Sunlight Advantage Program
The Sunlight Advantage™ Program Strong residential solar demand • Fiscal 2011 results: – Over 700 leases signed – 349 operational in FY 2011 – Average size: 6.9 kilowatts – $9.7 million of capital deployed in FY 2011 • Supply chain cost efficiency – Construction cost reductions – Equipment cost redu
Slide 21: Commercial Solar Project Update
Commercial Solar Project Update In Service - Fiscal 2011 In Service - Fiscal 2012 3 Seeking additional opportunities in fiscal 2012 and beyond Project Map Ref. Type Capital (mm) MW Adler 1-4 Rooftop $18.0 3.9 75% Vineland Ground 15.1 3.5 Sub Total $33.1 7.4 Adler 5-6 Rooftop $6.4 1.3 25% Vineland Gr
Slide 22: Solar Project Update - SREC Pricing
Solar Project Update - SREC Pricing • New Jersey’s commercial solar market surpassed California last year to become the largest in the United States • Tax credits, cash grants and bonus depreciation incentives create an attractive solar market • Energy year 2012 SREC prices have been volatile • The
Slide 23: Solar Program Update – Legislative Update
Solar Program Update – Legislative Update • Administration’s Energy Master Plan supports a sustainable solar business model that will create jobs, economic growth and environmental mandates in New Jersey • Pending legislation supports the needs of the solar industry while balancing the cost to custo
Slide 24: Clean Energy Summary
Clean Energy Summary • Energy Master Plan and pending legislation provides clear direction that solar will play an important role in New Jersey’s energy future – Provides clean energy – Reduces costs to customers – Stimulates economic development – Uses new technologies • The solar industry is aggre
Slide 25: NJRES and Midstream Investment Updates
NJRES and Midstream Investment Updates Midstream Investments • Overall, Midstream Assets contributed $6.8 million to FY 2011 NFE vs. $6.4 million last year – Iroquois contributed $2.7 million • Approximately 30 percent of Steckman Ridge capacity under long-term contracts NJRES • Value of capacity an
Slide 26: NJR Home Services
NJR Home Services Consistently delivers high-quality products and service levels • Serves nearly 150,000 customers with Premier Service Plans and equipment installations • Fiscal 2011 revenue of more than $36 million, an 18 percent increase over last year • Contributed over 2 percent of fiscal 2011
Slide 27: Financial Performance
Financial Performance Infrastructure-based businesses provided 83 percent of fiscal 2011 NFE September 30 $1.88 $2.11 $2.24 $2.40 $2.46 $2.58 $1.00 $1.30 $1.60 $1.90 $2.20 $2.50 $2.80 Net Financial Earnings
Slide 28: Dividend Growth
17 consecutive year of dividend growth; Five-year CAGR: 8.5% vs. 3.5%** for peers Dividend Growth th * Effective January 3, 2012 ** Based on current indicated dividend rates $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 2012* $1.01 $1.12 $1.24 $1.36 $1.44 $1.52
Slide 29: Payout Ratio
Payout Ratio Relatively low payout ratio provides continued dividend growth opportunities Based on Net Financial Earnings * Peer group average based on 2011 earnings estimates and indicated dividend from Bloomberg. Peer group: ATO, GAS, LG, NWN, PNY, SJI, SWX, VVC and WGL 0% 16% 33% 49% 65% Peer Gro
Slide 30: Cash Flow Summary
Cash Flow Summary Strong cash flow supports future capital expenditure plans Strong cash flow supports future capital expenditure plans ($ millions) September 30, September 30, Cash Flow from Operations $250.1 $139.4 Capital Expenditures: Utility Plant (93.6) (86.6) Solar Equipment and Other (75.5)
Slide 31: Key Fiscal 2012 Assumptions
Key Fiscal 2012 Assumptions Fiscal 2012 guidance will be issued on February 7 • NJNG capital expenditures totaling $121.2 million – Includes $49.9 million for AIP • Continued steady customer growth – About 6,500 new customers – Gross margin of $3.5 million annually • ITC-eligible clean energy capita
Slide 32: Why NJR?
Why NJR? A record of consistent performance; positioned for long-term growth • We have: – A track record of growth and consistent results – The fundamentals in place to deliver consistent long-term NFE growth • Solid customer growth • Progressive regulation • Disciplined solar investments – A collab
Slide 33: New Jersey Resources New York Financial Community Luncheon
New Jersey Resources New York Financial Community Luncheon January 12, 2012
New Jersey Resources — New York Financial Community Luncheon (January 2012) on 6ix