Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — AGA Financial Forum 2001
29 slides from Newjersey Resources's conference presentation, May 7, 2001
Slide 1: Consistency Driving Value
Consistency Driving Value AGA Financial Forum Orlando, Florida May 8, 2001 NJR (\\ New Jersey Resources
Slide 2: Regarding Forward Looking Statements
Regarding Forward Looking Statements This presentation contains forward-looking statements. NIR wishes to caution persons reading or hearing this presentation that the assumptions which form the basis for forward-looking statements such as earnings goals include many factors that are estimates of fu
Slide 3: New Markets Create New Opportunities
New Markets Create New Opportunities Total Energy Deliveries Core Customers off. system Sales ‘Capacity Release Retail Marketing Energy Management Billion Cubic Feet, 1992 1994 1996 1998 2000 NJR has consistently profited from new market opportunities NJR a
Slide 4: Strong Earnings Growth
Strong Earnings Growth $3.60 CAGR: 7.05% + Working toward our 10th consecutive year of EPS growth $3.00 $2.90" $2.60 + Forecast EPS growth of 7 to9 $2.00 percent annually 1997 "1998 1998 | 2000 | 2001E "20028 2000 * 2001 September 30 March 31 Based on continuing operations. * Wall Street consensus e
Slide 5: Return on Equity
Return on Equity + Highest ROE in gas industry 2000 + Our highest level in 16 years + Allowed ROE 1995 1996 1997 1998 1999 2000 of 11.5 percent Based on continuing operations 6 NJR (MY so Secescccs
Slide 6: Dividend Rate and Payout Ratio
Dividend Rate and Payout Ratio $1.30 $1.75 $1.70 $1.65 $1.60 $1.55 $1.50 $1.45 $1.40 1995 1995 1997 1998 1999 2000 2001 1995 1995 1997 1993-1999 2000 * Effective January 2, 2001 + Six increases in five years + Lowest payout ratio since 1984 NJR Now dorsoy Rosco 6
Slide 7: What's Behind the Numbers?
What’s Behind the Numbers? + Strong customer growth + Excellent Regulatory relationships + Corporate commitments to profitable growth v Productive use of resources v¥ Taking advantage of emerging opportunities + Profitable unregulated businesses + Responsible financial management 7
Slide 8: Our Service Area
Our Service Area + 3 percent annual customer growth rate; nearly double the national average + Population growing faster than state average + Largest independent LDC in New Jersey
Slide 9: 2000 Census Data
2000 Census Data In New Jersey | Nationally (21 Counties) {3.141 Counties Population | % County_| Change _| Change | Rank Rank (Ocean. 73000 | 179 | 2 7. Monmouth | 62,000 | 112 | 8 109 [Morris 49000 | 116 [7 154 + Over 188,000 new residents + 19 percent of total State population live in our service
Slide 10: Customer Growth
Customer Growth + New customers 14,000 contribute 12,000 approximately $6.0 million of — 19,000 new 8,000 margin annually 6,000 NJNG captures 4,000 95 percent of 2,000 new construction 4 Profitable mix of conversion and 7 12465 11819 11,890 1997 1998 1999 2000 2000 2001 September 30 March 31 hew cus
Slide 11: Customer Growth Targets
Customer Growth Targets 15,000 + 40 percent conversion target each 19.008 year + Another 950 customers adding natural 0 gas heating to existing service September 30 each year 2001 2002E 2003E @ New Construction HB Conversions 4 NJR (\ Se
Slide 12: The Potential of our Markets
The Potential of our Markets Pending Conceptual 3,224 9,889 Preliminary 23,332 - Conversions = 169,119 Non-heat Customer 11,300 Non-gas off main 25,291 78,640 Final New Customers = 61,736 eae an main Sources: Local Planning Boards and NJNG Harte Hanks Study, February 2004 NJR Now dorsoy Rosco 12
Slide 13: Regulatory Partnerships
Regulatory Partnerships By partnering with our regulators, NJNG has been able to: + Optimize assets through margin-sharing formulas on off-system and capacity release sales for the benefit of customers and shareowners + Open new markets and offer customers choices + Settle several proceedings requir
Slide 14: Regulatory Partnerships
Regulatory Partnerships A Two-Way Street + Several agreements give regulators what they need in exchange for shareowner value. Some examples: Regulators Company + Unbundling + New incentive to reduce capacity with 60/40 sharing + 80/20 reduced + 3-year LGA settlement - lowered customer increase + In
Slide 15: Natural Gas Prices
Natural Gas Prices + Over the past winter, wholesale costs more than doubled + NJNG prices ¥16 percent increase in November v2 percent increases granted for December through July + BPU-approved mechanism ¥ Allows NJNG to recover gas cost underrecoveries with 5.5 percent interest rate NJNG Residentia
Slide 16: Off-System & Capacity Management Programs
Off-System & Capacity Management Programs $30 $28 927 gor $25 $20 $15 Millions 310 $5 0 ya92 1993-1994 1995 1996 1997 1998 1999 2000 2000 2001 mw Customer Credits Shareowner Margin Since 1992, off-system sales/capacity management have generated over $154 million of credits to customers and total EPS
Slide 17: Customer Satisfaction
Customer Satisfaction BPU Complaints per 1,000 Customers 0.00 Sul NUI cv GPU PEG NUR, NJNG has achieved the best customer complaint record in NJ for eight straight years 17 NJR (\ frets
Slide 18: Improved Productivity
Improved Productivity + The cost of adding anew customer has declined nearly 23 percent, while O&M productivity has improved by 10 percent since 1992. Primary drivers have been: ¥ Balanced marketing strategy ¥ Changes in work processes New Customer Cost O&M as a Percent of Margin 000 3 aa ora i, $2,
Slide 19: Productivity & Incentives
Productivity & Incentives +++ + Virtually every employee is a shareowner $2.5 million of incentive pay at risk; 5 percent of total payroll Incentives paid in cash and stock Bargaining Unit participates in the incentive plan Customers per Employee 563 at [ENR mPeer Group Margin per Employee 0 [ENIR w
Slide 20: Excellence in Operations Program
Excellence in Operations Program + Builds on successful 1999 ElO program +8 active process improvement teams J Appliance Parts ¥ Construction Restoration ¥ Distribution Leak Repair ¥ IBS Support ¥ Service Company Financial v PMT ¥ Service to Low Income Customers ¥ Utility Services Redesign + Diverse
Slide 21: Fiscal YTD 2001 Capital Expenditures
Fiscal YTD 2001 Capital Expenditures + Economic Value Added Process Total: $23.0 + Margin from new $11.4 + System integrity customers must cover associated capital costs spending up to depreciation level $3.1 + Other project evaluated on EVA basis $0.5 Millions i New Customer System Integri @ Other
Slide 22: Share Repurchase & DRP Programs
Share Repurchase & DRP Programs Plan implemented Shares authorized Shares purchased on open market Total cash investment ($MM) Average investment per share April 30, 2001 Share Repurchase] Dividend Program Reinvestment 9196 1196 1,500,000 WA 1,253,270 422,813 $44.7 $12.8 $35.75 $30.31 Since beginnin
Slide 23: Capital Structure
Capital Structure 1995 2000 56% 47% MN 3% 53% Common Equity 0 Preferred BLT Debt Credit Rating: Moody’s A-2 S&P A 7) NJR (\\ ete
Slide 24: Diversified Growth Drivers
Diversified Growth Drivers Additional growth drivers + Wholesale Services v¥ Storage and marketing v Fuel management v¥ Basis and Day Trading + Home Services - Heating & air conditioning repair + Iroquois pipeline v¥ Recently increased equity interest to 3.28 percent + Distributed Generation (Future
Slide 25: Wholesale Energy Services
Wholesale Energy Services + Wholesale Energy Services are a growing contributor of total earnings EPS Contributions 20 $0.19 $0.17 = 0. + Early player in wholesale * energy services $0.15 + Diverse product line v¥ Storage and marketing v Fuel management v¥ Basis and Day Trading $0.10 $0.05 $0.00 199
Slide 26: NJR Home Services
NJR Home Services + Transfers NJNG successful appliance service business to a non-regulated subsidiary + Current services offered include: ¥ Repair and servicing of all types of natural gas appliances ¥ Air conditioning repair ¥ Residential Duct cleaning + NJNG provides billing and customer inquiry
Slide 27: Profitable New Opportunities for NJR
Profitable New Opportunities for NJR Combined Load Profile es & C S&S SS SF HPL Natural Gas Load Fuel Cell Load When combined, NJNG can increase throughput and more efficiently utilize their distribution system and human resources. NJR Now dorsoy Rosco a7
Slide 28: Key Points
Key Points + NJR’s goal of 7 to 9 percent earnings growth is based on: v¥ Strong customer growth v¥ Productivity Improvements ¥ Complementary unregulated services + Our goal is supported by: Jv A proven track record v¥ Excellent regulatory relations + Unregulated services do not require large amount
Slide 29: Visit our Web site www.njliving.com
Visit our Web site www.njliving.com srs.) | 231 STE) Be eee eae LBs eo esores confer Ainstant Message |) WebMail (Contact [3 People |B) YellowPages i Download chem @ ReolPtayer IN DDR Lonel Fintan Frances a ‘Events CalndareEaming Estimates & Analyet CovrageeAnalyst | ae Fonvard Reloed Investor Relat