Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q2 2019 Earnings Presentation
28 slides from Newjersey Resources's earnings presentation, May 3, 2019
Slide 1: Second Quarter 2019 Update
Second Quarter 2019 Update May 3, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. NJR cautions readers
Slide 3: Non-GAAP Measures
Non-GAAP Measures 2 This presentation includes the non-GAAP measures, NFE 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 measures, such as cash flows, net income, operating inc
Slide 4: Agenda
AGENDA Second-Quarter 2019 Highlights Steve Westhoven Financial Review Pat Migliaccio Q&A 3
Slide 5: Second-Quarter Highlights
SECOND-QUARTER HIGHLIGHTS Steve Westhoven President & Chief Operating Officer President & Chief Operating Officer 4
Slide 6: Second-Quarter Fiscal 2019 Highlights
Second-Quarter Fiscal 2019 Highlights Financial Results ▪ Net financial earnings (NFE) per share of $1.27* ▪ Reaffirmed fiscal 2019 NFE guidance of $1.95 - $2.05 per share Infrastructure Investments ▪ Filed rate case and submitted a filing for a five-year infrastructure investment program with the B
Slide 7: NJNG - Rate Case Filing
NJNG - Rate Case Filing ▪ Requested an increase of $128.2 million ▪ Proposed rate base of $1.8 billion ▪ Overall Cost of Capital and Weighted Return: ($ millions) Amount Percent Embedded Cost Weighted Cost Long-Term Debt $885 43.5% 4.0% 1.7% Common Equity $1,150 56.5% 10.9% 6.2% Total $2,035 100.0%
Slide 8: 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 Enhancements Technology Replacement ▪ Natural gas system e
Slide 9: NJR Clean Energy Ventures
NJR Clean Energy Ventures Commercial ▪ 37 commercial solar projects placed into service since inception ▪ Total of 184 megawatts (MW) of capacity ▪ FY2019 target of 50 MWs installed ▪ 2 projects complete ▪ 4 projects under construction Residential ▪ The Sunlight Advantage® added 189 new customers in
Slide 10: Financial Review
FINANCIAL REVIEW Pat Migliaccio Senior Vice President & Chief Financial Officer 9
Slide 11: Changes in Net Financial Earnings – FY 2Q19
Changes in Net Financial Earnings – FY 2Q19 $11.7 $8.1 $3.2 $150.0 $142.1 Three $0.9 $112.4 Months $100.0 Millions -$53.5 Ended March 31, $50.0 2019 $0.0 March 31, 2018 NJNG Midstream CEV Energy Services HS/Other March 31, 2019 $300.0 $277.4 $5.7 -$10.7 $250.0 Six Months $200.0 -$49.4 $8.9 $166.5 Mi
Slide 12: NJRCEV - SREC Hedging Strategy Stabilizes Revenue
NJRCEV - SREC Hedging Strategy Stabilizes Revenue Percent Hedged Average Price Current Price (EY) EY20 336 336 100% $198 $230 Percent Hedged Average Price Current Price (EY) EY21 343 345 99% $195 $216 Percent Hedged Average Price Current Price (EY) EY22 148 345 43% $196 $182 0 50 100 150 200 250 300
Slide 13: NJR Capital Plan
NJR Capital Plan ($MM) FYTD 2019A* 2019E 2020E 2021E New Customer $19.5 $43.4 $47.3 $51.4 Maintenance 36.5 78.9 72.3 57.0 Cost of Removal/Other 24.0 57.0 66.2 46.5 SAFE II 22.8 49.8 42.6 34.8 NJ RISE 12.6 31.7 24.5 0.0 SRL 27.3 72.6 112.5 0.0 Infrastructure Investment Program 0.0 5.5 83.2 107.2 Tota
Slide 14: NJR Sources and Uses of Capital
NJR Sources and Uses of Capital 2019E 2020E 2021E $1,000 $800 Millions $600 $400 $200 $0 Sources Uses Sources Uses Sources Uses LT Debt/Asset Sales Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Balance Sheet 13
Slide 15: New Jersey Resources
New Jersey (\\ Resources
Slide 16: Appendix
New Jersey (\\ Resources APPENDIX
Slide 17: Projected Sources of NFE
Projected Sources of NFE Fiscal 2019 Fiscal 2020 and Beyond NJR Home Services 0%-2% NJR Energy Midstream Midstream Services NJR Home 5%-15% 10%-25% 5%-10% Services NJR Energy NJR Home Services Services 5% - 15% 0% - 2% Unregulated Regulated Unregulated 35%-50% Regulated Unregulated Regulated Regulat
Slide 18: Fiscal 2019 Second Quarter NFE
Fiscal 2019 Second Quarter NFE Three Months Ending March 31, Six Months Ending March 31, 2019 2018 Change 2019 2018 Change New Jersey Natural Gas $68.5 $60.4 $8.1 $100.3 $94.6 $5.7 NJR Midstream 4.5 1.3 3.2 8.1 18.8 (10.7) Regulated Businesses 73.0 61.8 11.2 108.4 113.4 (5.0) NJR Clean Energy Ventur
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three and six months ended March 31, 2019 and 2018 to net income is provided below: 18
Slide 20: NJNG – Strong Customer Growth
NJNG – Strong Customer Growth Second Quarter Fiscal 2019 Second Quarter Fiscal 2019 • 2,096 new customers added 10,000 9,667 9,596 – 1,457 new construction – 639 conversions 2019 New Customer Additions Forecast 7,500 Customers 5,030 5,000 4,656 65% 35% 2,500 0 YTD 2018 YTD 2019 FY18A FY19E* New Cons
Slide 21: NJR - Factors Supporting Future Customer Growth
NJR - Factors Supporting Future Customer Growth New Construction Conversions 2018 Building Permits Issued1 Equivalent Customer Cost2 4,500 $4.50 $4.18 3,901 $3.93 4,000 $4.00 3,500 $3.50 3,000 $3.00 2,500 $2.50 $2.28 2,000 $2.00 1,575 1,450 1,500 $1.50 876 $0.89 1,000 $1.00 500 $0.50 0 $0.00 NJNG Mo
Slide 22: NJNG - Southern Reliability Link (SRL)
NJNG - Southern Reliability Link (SRL) Current Status • Construction began in fiscal 1Q19 • Received an easement from Joint Base McGuire- Dix-Lakehurst in June 2018 • Approvals received from: – New Jersey Pinelands Commission – New Jersey Department of Environmental Protection – New Jersey Board of
Slide 23: Midstream - PennEast Pipeline Project
Midstream - PennEast Pipeline Project Project Description • 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; benefits customers and local economies • Approved by FERC - January 19,
Slide 24: Midstream - Adelphia Gateway Project Update
Midstream - Adelphia Gateway Project Update 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 s
Slide 25: Clean Energy Ventures Recent Developments
Clean Energy Ventures Recent Developments • Completed the sale of the remaining assets in the wind portfolio – Total proceeds of $208.6 million • Six projects expected to be placed into service in fiscal 2019, totaling over 50 MW of capacity • The Sunlight Advantage® added 189 new customers in fisca
Slide 26: Dividend Per Share
Dividend Growth Rate of 6 – 8 Percent Annually Dividends Per Share 100% $1.20 $1.17 $1.09 90% $1.02 $1.00 $0.96 80% 70% $0.80 Dividend Per Share 60% Payout Ratio 50% $0.60 40% $0.40 30% 20% $0.20 10% $0.00 0% 2016 2017 2018** 2019 Fiscal Year Ind. Div Rate Payout * * 2019 payout based on midpoint of
Slide 27: NJRCEV - SREC Hedging Strategy Stabilizes Revenue
NJRCEV - SREC Hedging Strategy Stabilizes Revenue Percent Hedged Average Price Current Price FY20 355 355 100% $194 $233 Percent Hedged Average Price Current Price FY21 321 345 93% $196 $217 Percent Hedged Average Price Current Price FY22 80 345 23% $194 $133 0 50 100 150 200 250 300 350 400 Thousan
Slide 28: NJR Projected Cash Flows
NJR Projected Cash Flows ($ millions) 2018A 2019E 2020E 2021E Cash Flow From Operations $398.3 $272.7 $326.6 $391.4 Uses of Funds Capital Expenditures - NJNG/Other ($254.5) ($338.9) ($448.6) ($296.9) Capital Expenditures - PennEast (16.2) (4.6) (168.7) (18.2) Capital Expenditures - CEV (123.4) (158.