Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q3 2020 Earnings Presentation
26 slides from Newjersey Resources's earnings presentation, Aug 7, 2020
Slide 1: Third-Quarter Results
Third-Quarter Results August 7, 2020
Slide 2: Forward-Looking Statements & Non-GAAP Measures
Forward-Looking Statements & Non-GAAP Measures Non-GAAP Measures Forward-Looking Statements This presentation includes the non-GAAP measures, NFE/net financial loss and utility gross This presentation contains forward-looking statements within the meaning of Section 27A of the margin. As an indicato
Slide 3: Agenda
Table of Contents ▪ New Jersey Resources Overview ▪ New Jersey Natural Gas Overview ▪ Non-Utility Businesses Overview Agenda ▪ Third-Quarter FY 2020 Highlights ▪ Sustainability Review Steve Westhoven ▪ Financial & Liquidity Update ▪ Financial Review Pat Migliaccio ▪ Transaction Overview ▪ Q&A 2
Slide 4: COVID-19 Update
COVID-19 Update • Non-essential employees continue to work remotely Our Team • Essential employees in the field or office are following CDC and state guidelines Our Customers • Continue to voluntarily suspend customer disconnects and late fees and Communities • Energy assistance available for custom
Slide 5: Fiscal 2020E NFE Guidance
Fiscal 2020E NFE Guidance Reaffirming Fiscal 2020 NFE Guidance Range of $2.05 – $2.15* per share Expect to be toward the lower-end of the range 8% - 10% 28% - 31% 64% - 67% $2.05 - $2.15 2% - 3% (5%) – (3%) NJNG NJR Midstream NJR CEV NJRHS NJRES * A reconciliation from NFE to net income can be found
Slide 6: New Jersey Natural Gas
New Jersey Natural Gas New Customer Additions Capital Expenditures ($MM) 9,711 8,500 $388 $349 $97 $241 $79 6,800 $62 5,878 $6 $64 $47 $84 $77 $77 $18 2019A 2020E $68 $79 $75 FYTD 2020A FY 2020E $44 $50 $52 FY 18 FY 19 FY 20E Goal of adding 28,000 – 30,000 new customers from 2020 to New Customer SAF
Slide 7: Clean Energy Ventures
Clean Energy Ventures Fiscal 2020 Commercial MW in Service Incremental installed capacity from three 32.0 commercial projects in 3Q20; acquired Expect to add a MW first operational solar asset (NJ Oak); 1st total of ~60 MW in fiscal 2020 TREC project placed into service ~60 Expected incremental capa
Slide 8: NJR Midstream and Energy Services
NJR Midstream and Energy Services Leaf River ▪ Continues to perform as expected Adelphia Gateway ▪ Working through PA DEP permits prior to requesting FERC Notice to Proceed PennEast ▪ FERC issued the Environmental Assessment for Phase I of the project, finding no significant environmental impact ▪ A
Slide 9: Financial Review
Financial Review Patrick Migliaccio Senior Vice President & Chief Financial Officer
Slide 10: Changes in Net Financial Earnings/Loss – Fiscal 3Q20
Changes in Net Financial Earnings/Loss – Fiscal 3Q20 Fiscal 3Q19 – Consolidated Net Financial ($17.5) Loss ($MM) Changes in NFE/Net Financial Loss – Fiscal 3Q20 ($MM) NJNG $15.8 Utility Gross Margin $15.5 Increase in D&A ($3.6) Increase in Income Taxes ($2.3) O&M and Other $6.2 NJR Midstream $0.6 Op
Slide 11: NJR Capital Plan
NJR Capital Plan ($ millions) New Jersey Natural Gas FYTD 2020 FY 2020E FY 2021E FY 2022E Near Real-Tim e Return? New Customer $42 $52 $38 - $48 $39 - $49 Yes Maintenance $47 $84 $90 - $100 $85 - $95 Cost of Removal/Other $32 $62 $84 - $94 $38 - $48 SAFE II $45 $66 Yes NJ RISE $7 $9 $8 - $12 Yes SRL
Slide 12: Liquidity
Liquidity ▪ Total available liquidity of $590 million at the end of June 2020 ▪ Additionally, NJR received a total of $335 million in July for the issuance of unsecured NJR notes and NJNG mortgage bonds. ▪ Funds were used to payoff $137 million outstanding Leaf River bridge loan and short-term debt
Slide 13: NJR Projected Cash Flows
NJR Projected Cash Flows ($ millions) FYTD 2020A FY 2020E FY 2021E Cash Flow From Operations $183 $240 $360 Uses of Funds (1) Capex (367) (560) (596) Acquisition – Leaf River (368) (368) - Acquisition – Adelphia Gateway (156) (156) - Dividends (87) (119) (130) Total Uses of Funds (978) (1,203) (726)
Slide 14: NJR CEV – SREC Hedging Strategy Stabilizes Revenue
NJR CEV – SREC Hedging Strategy Stabilizes Revenue Energy Year 2021 Energy Year 2022 Energy Year 2023 23 32 178 380 367 220 Hedged Unhedged Hedged Unhedged Hedged Unhedged Percent Average Current Percent Average Current Percent Average Current Hedged Price Price (EY) Hedged Price Price (EY) Hedged P
Slide 15: New Jersey Resources
New Jersey (\\ Resources
Slide 16: Appendix
New Jersey (\\ Resources Appendix
Slide 17: Third Quarter Fiscal 2020 NFE by Business Unit
Third Quarter Fiscal 2020 NFE by Business Unit Three Months Ending June 30, Nine Months Ending June 30, ($ thousands) 2020 2019 Change 2020 2019 Change New Jersey Natural Gas $11,968 ($3,795) $15,763 $142,160 $96,464 45,696 NJR Midstream 3,615 3,052 563 10,877 11,201 (324) Regulated Businesses 15,58
Slide 18: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three and nine months ended June 30, 2020 and 2019 to net income is provided below: 17
Slide 19: Factors Supporting Future Customer Growth
Factors Supporting Future Customer Growth ▪ Customer growth supported by strong new construction and conversion markets New Construction Conversions 1,065 2020 Building Permits Issued1 Equivalent Customer Cost2 $4.03 $3.08 480 394 $1.82 191 $1.05 NJNG Ocean Monmouth Morris NJNG Fuel Oil Propane Elec
Slide 20: Infrastructure Investment Program (IIP)
Infrastructure Investment Program (IIP) ▪ Five year, $507 million investment to strengthen infrastructure ▪ Natural gas transmission and distribution system enhancements ▪ Information technology system replacement Exploring potential for recovery through annual rate increases (similar to SAFE II & N
Slide 21: Southern Reliability Link (SRL)
Southern Reliability Link (SRL) ▪ 30-mile high-pressure pipeline designed to What? diversify natural gas supply in Ocean County ▪ Delivery of 180,000 Dths/day ▪ Total investment of $250 - $270 million ▪ Reliability, Redundancy, Resiliency ▪ Currently 95% of gas supply for Monmouth Why? and Ocean Cou
Slide 22: NJR Midstream – Adelphia Gateway
NJR Midstream – Adelphia Gateway Recent Developments ▪ Received FERC Certificate on December 20, 2019 ▪ Closed acquisition in January 2020 ▪ Northern portion in-service Next Steps ▪ Actively working with Pennsylvania DEP to obtain final permits to file for FERC Notice to Proceed ▪ Add compression, n
Slide 23: 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 24: NJR CEV – New Jersey Transitional Solar Market
NJR CEV – New Jersey Transitional Solar Market ▪ New Jersey closed the SREC market on April 30, 2020 ▪ Projects that by April 30th were ready to interconnect and had applied for interconnection remained part of the SREC market and will continue to earn SRECs; all other projects will be part of the T
Slide 25: NJR CEV – SREC Hedging Strategy Stabilizes Revenue
NJR CEV – SREC Hedging Strategy Stabilizes Revenue Fiscal Year 2021 Fiscal Year 2022 Fiscal Year 2023 99 205 23 377 299 192 Hedged Unhedged Hedged Unhedged Hedged Unhedged Percent Average Current Percent Average Current Percent Average Current Hedged Price Price (EY) Hedged Price Price (EY) Hedged P
Slide 26: Additional Quarterly Financial Drivers
Additional Quarterly Financial Drivers Fiscal 2020E NJNG Utility Fiscal 2020E REC Fiscal 2020E ITCs Gross Margin Revenue Generated (1) 3% 2% 13% 9% 10% 27% 19% 27% 54% 85% 10% 41% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (1) Based on value of solar projects placed in-service 25