Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q4 2019 Earnings Presentation
33 slides from Newjersey Resources's earnings presentation, Nov 19, 2019
Slide 1: Fourth Quarter & Fiscal Year 2019 Results
Fourth Quarter & Fiscal Year 2019 Results November 19, 2019
Slide 2: Forward-Looking Statements & Non-GAAP Measures
Forward-Looking Statements & Non-GAAP Measures Forward Looking Statements Non-GAAP Measures This presentation contains forward-looking statements within the meaning of Section 27A of the This presentation includes the non-GAAP measures, NFE and utility gross margin. As an Securities Act of 1933, as
Slide 3: Agenda
Agenda ▪ Fiscal 2019 Highlights and 2020 Outlook Steve Westhoven ▪ Financial Review Pat Migliaccio ▪ Q&A
Slide 4: Fiscal 2019 Highlights & 2020 Outlook
Fiscal 2019 Highlights & 2020 Outlook Steve Westhoven President & Chief Executive Officer
Slide 5: Fiscal 2019 Financial Highlights
Fiscal 2019 Financial Highlights $2.74 NFEPS* for fiscal 2019 – met $0.68 $1.96 guidance range; $1.96 CAGR of 6.4% $1.73 $1.61 Net Financial from 2017 to 2019 Earnings $2.06 $1.96 Expected long-term $1.61 $1.73 6-8% NFEPS growth rate FY 16 FY 17 FY 18 FY 19 NFE Per Share Tax Reform Expected long-ter
Slide 6: New Jersey Natural Gas
New Jersey Natural Gas ▪ Reached settlement of $62.2 million increase in rates effective November 15, 2019 Rate Case ▪ Since our last rate case settlement, our rate base has grown at a CAGR of 8.7% Customer ▪ Added 9,711 new customers during fiscal 2019, a 1.8% annual customer growth rate Growth ▪ E
Slide 7: New Jersey Natural Gas
New Jersey Natural Gas New Customer Additions Rate Base ($Billions) Annual Total Customer Growth Rate: 1.8% in FY 2019 and FY 2020E +34% 9,596 9,711 9,800 3,359 3,221 3,430 +28% $2.4 $1.8 6,237 6,490 6,370 $1.4 FY 18 FY 19 FY 20E New Construction Conversions FY 16 Rate Base FY 19 Rate Base FY 22E Ra
Slide 8: NJNG Environmental Record
NJNG Environmental Record 4,000 Leaks/Mile & Pending Leaks 0.9 0.8 3,500 Lowest number of leaks per mile of any natural gas utility 0.7 3,000 in New Jersey 0.6 2,500 Leaks Per Mile Pending Leaks 0.5 2,000 ▪ First natural gas utility in the U.S. to source 0.4 supply from TrustWell™ Responsible Gas Pr
Slide 9: NJR Midstream
NJR Midstream ▪ Closed acquisition on October 11, 2019, for a purchase price of $367.5 million ▪ Adds 32.2 MMDth of working natural gas storage capacity to portfolio Leaf River ▪ Nominally accretive to NFE in fiscal 2020 after dilutive impact of new equity issuance ▪ Supports NJR’s long-term NFE gro
Slide 10: Strategic Fit of Leaf River Energy Center
Strategic Fit of Leaf River Energy Center Investment Rationale ▪ High-turn natural gas storage asset with stable, contracted revenue ▪ NJR has 10+ year track record of maintaining a natural gas storage portfolio between 35 – 80 Bcf across multiple regions of the United States, including markets serv
Slide 11: Clean Energy Ventures
Clean Energy Ventures Total MW in Service 52 Incremental installed capacity from +17% MW seven commercial projects in FY19 +27% 340 - 345 47-52 Expected incremental capacity from 293 MW commercial projects in FY20 231 Over The Sunlight Advantage residential 8,100 solar customers at the end of FY19 F
Slide 12: NJR Energy Services
NJR Energy Services Net Financial Earnings ($MM) Consistent contributor with no NFE $60.4 permanent capital requirements Fiscal NFE contribution per fiscal year 2020 $42.1 NFE expected to return to ~ 5% – 15% 5-Year Avg. - $29.2 Opportunity for additional earnings Upside based on market opportunitie
Slide 13: Fiscal 2020 NFE Guidance: $2.05 – $2.15
Fiscal 2020 NFE Guidance Fiscal 2020 NFE Guidance: $2.05 – $2.15 65% – 75% of NFE from Regulated Businesses Midstream 10% – 15% NJRES 5% – 15% Home Services 1% – 2% Regulated Unregulated NJNG 65% – 75% 25% – 42% 55% – 60% CEV 20% – 25% 12
Slide 14: Financial Review
Financial Review Patrick Migliaccio Senior Vice President & Chief Financial Officer
Slide 15: Changes in Net Financial Earnings – Fiscal 2019
Changes in Net Financial Earnings – Fiscal 2019 Changes in NFE – Fiscal 2019 ($MM) Fiscal 2018 – Consolidated NFE ($MM) $240.5 Tax Reform ($59.6) $240.5 $63.0 NJNG ($6.0) Utility Gross Margin* $10.1 BGSS Incentives ($4.4) O&M Expenses ($11.1) $4.2 $175.0 Other ($0.6) $59.6 $63.6 $6.0 $3.6 NJR Midstr
Slide 16: NJNG Rate Case Settlement
NJNG Rate Case Settlement ▪ $62.2 million rate increase approved by New Jersey Board of Public Utilities on November 13, 2019; new base rates effective November 15, 2019 ▪ Rate base of $1.76 billion and WACC of 6.95% Overall Cost of Capital and Weighted Return Approved Weighted Percent Return Cost L
Slide 17: CEV – SREC Hedging Strategy Stabilizes Revenue
CEV – SREC Hedging Strategy Stabilizes Revenue Energy Year 2020 Energy Year 2021 Energy Year 2022 35 57 202 203 340 349 Hedged Unhedged Hedged Unhedged Hedged Unhedged Percent Average Current Percent Average Current Percent Average Current Hedged Price Price (EY) Hedged Price Price (EY) Hedged Price
Slide 18: Balance Sheet Details
Balance Sheet Details Available Liquidity as of September 30, 2019 ($MM) Debt Maturity Schedule ($MM) Total debt: $1.6 billion $160 Average maturity of term debt: 17.2 yrs. $678 $678 Weighted average interest rate: < 4% $3 $140 $120 $678.5 $425 $100 $642 $80 $60 $250 $40 $36 Liquidity Uses $20 Liqui
Slide 19: NJR Capital Plan
NJR Capital Plan ▪ Capital expenditures expected to grow by more than 60% in FY 2020 vs. FY 2019 primarily due to higher Midstream investments (Adelphia Gateway) ▪ Over the next three years more than 50% of total Capex is expected to be allocated to NJNG and approximately 80% to regulated investment
Slide 20: NJR Projected Cash Flows
NJR Projected Cash Flows ▪ FY 2020 financing activities include permanent funding for Leaf River acquisition ▪ Leaf River funded through 364-day bridge facility; NJR expects to access the equity and debt markets during the remainder of the 2020 fiscal year – Fiscal 2020 equity issuances address plan
Slide 21: Fiscal 2020 Guidance: $2.05 - $2.15 NFEPS
Fiscal 2020 Guidance: $2.05 - $2.15 NFEPS ▪ $62.2 million increase to rates; $37 million annualized increase to NFE NJNG ▪ 1.8% customer growth 1% 1% - 2% ▪ 10% growth in rate base 20% - 25% 44% 5% - 15% ▪ Leaf River accretive even after dilution 10% - 15% 2% Midstream ▪ No contribution from Adelphi
Slide 22: Investor Value Proposition
Investor Value Proposition 2% – 3% 6% - 8% Dividend Long–Term Yield(1) 8% – 11% NFE Growth Total Shareholder Return (1) As of November 15, 2019, dividend yield was 3.0%; based on a closing price of $41.48 per common share and assumes a constant P/E ratio. 21
Slide 23: New Jersey Resources
New Jersey Resources Q
Slide 24: Appendix
New Jersey \\ Resources Zs 1e. c oD) for for =e
Slide 25: Fiscal 2019 Net Financial Earnings (Loss) by Business Unit
Fiscal 2019 Net Financial Earnings (Loss) by Business Unit Three Months Ending September 30, Twelve Months Ending September 30, ($ thousands) 2019 2018 Change 2019 2018 Change New Jersey Natural Gas ($18,402) ($12,943) $5,459 $78,062 $84,048 ($5,986) NJR Midstream 3,488 2,052 1,436 14,689 24,367 (9,
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three and twelve months ended September 30, 2019 and 2018 to net income is provided below: Three Months Ended Twelve Months Ended September 30, September 30, (thousands) 2019 2018 2019 2018 Net Income (Loss) $18,086 ($16,255) $169,5
Slide 27: NJNG – Infrastructure Investment Program (IIP)
NJNG – Infrastructure Investment Program (IIP) ▪ Five year, $507 million investment to strengthen infrastructure ▪ Natural gas transmission and distribution system enhancements ▪ Information technology system replacement Natural Gas Delivery Technology Enhancements Replacement ▪ Natural gas system e
Slide 28: NJNG - Factors Supporting Future Customer Growth
NJNG - Factors Supporting Future Customer Growth New Construction Conversions 2019 Building Permits Issued1 Equivalent Customer Cost2 $4.17 1,240 $3.93 $2.36 666 327 $0.93 247 NJNG Ocean Monmouth Morris NJNG Fuel Oil Propane Electricity Residential New Construction3 = 63,900 Residential Conversions4
Slide 29: NJNG – Southern Reliability Link (SRL)
NJNG – Southern Reliability Link (SRL) Current ▪ Received all necessary permits and approvals Status ▪ Construction began in fiscal 1Q19 ▪ Received an easement from Joint Base Approvals McGuire-Dix-Lakehurst in June 2018 ▪ NJ Pinelands Commission, NJDEP, NJBPU ▪ 30-mile pipeline designed to improve
Slide 30: NJR Midstream – PennEast Pipeline
NJR Midstream – PennEast Pipeline Project Overview ▪ 20 percent ownership in 120-mile transmission pipeline to Northeast connecting Marcellus Shale region supply ▪ Access to the lowest cost supply point in North America; expected to benefit customers and local economies ▪ Approved by FERC – January
Slide 31: NJR Midstream – Adelphia
NJR Midstream – Adelphia Project Overview ▪ Converts existing oil pipeline to natural gas ▪ Leverages existing infrastructure, brownfield locations and rights of way ▪ Provides new natural gas supply to constrained markets through increased delivery connections ▪ Successful open season completed ▪ R
Slide 32: SREC Hedging Strategy – Fiscal Year
SREC Hedging Strategy – Fiscal Year Fiscal Year 2020 Fiscal Year 2021 Fiscal Year 2021 79 64 270 135 369 327 Hedged Hedged Unhedged Hedged Unhedged Percent Average Current Percent Average Current Percent Average Current Hedged Price Price (FY) Hedged Price Price (FY) Hedged Price Price (FY) 85% $195
Slide 33: NJR Capital Plan
NJR Capital Plan Accelerated ($MM) FY 2019A FY 2020E FY 2021E FY 2022E Return? New Jersey Natural Gas* New Customer $50 $42 $38 - $48 $39 - $49 Yes Maintenance $77 $97 90 - 100 85 - 95 Cost of Removal/Other $64 $57 66 - 72 58 - 68 SAFE II $53 $51 - - - - - - Yes NJ RISE $26 $27 - - - - - - Yes SRL $