Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — New York Financial Community Meeting 2006
40 slides from Newjersey Resources's conference presentation, Jun 21, 2006
Slide 1: New York Financial Community Meeting June 21, 2006
New York Financial Community Meeting June 21, 2006
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: A Quality Company
A Quality Company Leadership Growth A strong financial profile Capital discipline and operating efficiency Consistent performance Our fundamental strategy is based upon ...
Slide 4: Consistent Performance
Consistent Performance New Jersey Resources is a company with ... 14 consecutive years of growth, an industry record A 5-year average annual return of 14 percent An above average dividend growth rate of 5.9 percent NJNG 1525 NJRES 401 Retail and Other 211 NJNG 90.9 NJRES 75.2 Retail and Other 0.5 NJ
Slide 5: March FYTD Earnings
March FYTD Earnings $3.41 per share vs. $2.96 per share - 15 percent increase Lower usage at NJNG due to the pass-through of higher wholesale natural gas prices Offset continued strong customer growth NJRES major contributor to earnings Future longer-term earnings contribution 20 to 30 percent of to
Slide 6: Our Service Area
Our Service Area Largest independent LDC in New Jersey Growing customer base Primarily residential and small commercial Consistent growth forecast NYC Phila. Atlantic City Excellent service area demographics
Slide 7: Today's Issues
Today's Issues Mild winter has mitigated the need for price increases Prices down approximately 28 percent from pre-heating season highs Most Gulf production back online, but... NYMEX remains high for next winter and summer High prices are affecting usage, so... We need to align our regulatory strat
Slide 8: What Are We Doing About High Prices?
What Are We Doing About High Prices? Hedging our portfolio (63 percent hedged for 2006- 07 winter) Using incentive programs to moderate volatility Ensuring access to cost-effective supply Restructuring portfolio to access the emerging Appalachia supply hub Providing credits to customers Providing cr
Slide 9: Incentive Programs
Incentive Programs Programs extended through October 2007 Customer bills reduced by about $294 million, or 4 percent, annually since program inception 2001 2002 2003 2004 2005 FYTD 2006 Customer Savings 25 24 19 28 31 28 Shareowner Margin 5 5 5 6 6 6 $29 $30 $24 $34 $37 $37 $34
Slide 10: Fiscal 2006 Firm Sales
Fiscal 2006 Firm Sales Firm sales are down 11.7 percent About one-half is attributed to weather Covered by WNC $7 million to be collected from customers Balance is not covered by WNC Lower usage due to higher prices Total Usage Temperature East 0.117 0.061 0.056 MSGraph.Chart.8 MSGraph.Chart.8 MSGra
Slide 11: Components of NJNG Bill
Components of NJNG Bill BGSS 1259.72 SBC 48.91 Delivery 367.38 BGSS 419.31 SBC 7.51 Delivery 414.99 Based on annual sales of 1,000 therms
Slide 12: Conservation and Usage Adjustment
Conservation and Usage Adjustment Filed with the BPU on December 5, 2005 Encourages conservation and efficiency Will replace weather-normalization clause Separates throughput from margin Supports New Jersey's environmental policy objectives Proposal will promote conservation and efficiency for custo
Slide 13: Conservation and Usage Adjustment: Status
Conservation and Usage Adjustment Discussions on the proposal are continuing with the BPU and the Ratepayer Advocate PSEG/Exelon merger has slowed BPU staff review The Company is hopeful of a successful resolution to the case in effect for fiscal 2007 If NJNG is not successful in receiving approval
Slide 14: BGSS Filing
BGSS Filing Filed proposal with the BPU to reduce prices effective September 1 and issue refunds $20 million for residential and small commercial sales customers For the average customer, 6.6 percent decrease on their total bill The refund will be based on usage from February through August The comb
Slide 15: Strong Customer Growth
Strong Customer Growth 1999 397 2000 410 2001 423 2002 434 2003 444 2004 455 2005 462 2QFY06 468 Customer growth still critical for future performance New Conversions 3831 1973
Slide 16: Future Growth Potential
Preliminary 30899 Final 19736 Conceptual 3724 Pending 479 Pending Preliminary Final Conceptual Non Heat 9751 On Main 39880 Off main 81334 New Customers = 54,838 Non-heat customers Non-gas off main Non-gas on/near main Conversions = 130,965 Future Growth Potential Sources: Local Planning Boards and N
Slide 17: Fuel Price Comparison
Fuel Price Comparison Comparison based on April 2006 prices based on 100,000 comparable btus NJNG Oil Electric Propane 1.6 1.88 2.97 3.65 MSGraph.Chart.8
Slide 18: Key Drivers at NJRES
Key Drivers at NJRES Clear business focus Our assets are linked with our strategy We market and optimize physical assets Diversified market areas Eastern half of United States and Canada Strong access to capital $325 million of committed credit facilities at NJR Risk management Only natural gas; no
Slide 19: NJR Energy Services
NJR Energy Services
Slide 20: Portfolio Strategy
Portfolio Strategy Integrated physical assets provide the opportunity for profitability across different regions Diverse portfolio captures additional value when prices change between locations Interstate pipeline grid bottlenecks and supply/demand imbalances create value opportunities opportunities
Slide 21: Transportation portfolio is dynamic
Transportation portfolio is dynamic Increased about 30 percent over the first 6-months of fiscal 2005 10/1/2003 11/1/2003 12/1/2003 1/1/2004 2/1/2004 3/1/2004 4/1/2004 5/1/2004 6/1/2004 7/1/2004 8/1/2004 9/1/2004 10/1/2004 11/1/2004 12/1/2004 1/1/2005 2/1/2005 3/1/2005 4/1/2005 5/1/2005 6/1/2005 7/1
Slide 22: Storage portfolio is also dynamic
Storage portfolio is also dynamic Increased about 45 percent over the first 6-months of fiscal 2005 10/1/2003 11/1/2003 12/1/2003 1/1/2004 2/1/2004 3/1/2004 4/1/2004 5/1/2004 6/1/2004 7/1/2004 8/1/2004 9/1/2004 10/1/2004 11/1/2004 12/1/2004 1/1/2005 2/1/2005 3/1/2005 4/1/2005 5/1/2005 6/1/2005 7/1/2
Slide 23: Storage Value - Summer/Winter Spread
Storage Value - Summer/Winter Spread 1.37 MSGraph.Chart.8 Summer 2004 to Winter 2005 Summer 2005 to Winter 2006 Summer 2006 to Winter 2007 Oct 04 Oct 05 Oct 03 Apr 06
Slide 24: Working Capital Volatility
Working Capital Volatility 9/1/2000 12/1/2000 3/1/2001 6/1/2001 9/1/2001 12/1/2001 3/1/2002 6/1/2002 9/1/2002 12/1/2002 3/1/2003 6/1/2003 9/1/2003 12/1/2003 3/1/2004 6/1/2004 9/1/2004 12/1/2004 3/1/2005 6/1/2005 9/1/2005 12/1/2005 3/1/2006 -43.6 23 -99.1 -56.7 -20.5 17.8 55.3 75.2 48.5 67.8 -37.8 -2
Slide 25: Counterparty Credit Ratings
Counterparty Credit Ratings Publicly-Rated Investment Grade Internally-Rated Investment Grade Non-Investment Grade * East 84 9 7 * Credit exposure to non-investment grade companies is mitigated through the use of prepayments or Letters of Credit. 93 percent of net sales with investment grade compani
Slide 26: Capital Expenditures
Capital Expenditures Customer Growth 23.1 System Integrity 24.6 Technology & Other 3.6 Cost of Removal 5.6 MGP, net 16.7 Pipeline Integrity 5.6 New Customer 11.4 System Integrity 8.3 Technology & Other 1 Cost of Removal 3 MGP, net 4 Pipeline Intregrity 2.2 2006 Forecast: $79.2 million FYTD 2006 Actu
Slide 27: Consistent Earnings Growth
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 2006 1.28 1.37 1.48 1.56 1.67 1.81 1.97 2.12 2.41 2.6 2.7 2.79 3.41 Consistent Earnings Growth NJR estimates $2.75 to $2.85 per basic share in fiscal 2006 * Net of certain items * * September 30 March 31
Slide 28: Dividend Growth and Payout Ratio
1995 1996 1997 1998 1999 2000 East 1.52 1.56 1.6 1.64 1.68 1.72 2000 2001 2002 2003 2004 2005 2006 1.15 1.17 1.2 1.24 1.3 1.36 1.44 * Effective January 3, 2006 * Dividends per Share Payout Ratio Dividend Growth and Payout Ratio 2000 2001 2002 2003 2004 2005 0.64 0.59 0.57 0.51 0.5 0.49 1-year divide
Slide 29: Capital Structure
Capital Structure Common Equity 617.5 LT Debt 334.5 ST Debt 91.9 Common Equity 480.6 LT Debt 309.5 ST Debt 18.4 March 31, 2006
Slide 30: Share Repurchase Program
Share Repurchase Program Shares Authorized (millions): 3.5 Shares Repurchased (millions): 2.5 Split-adjusted average cost: $29.01 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2QFY06 East 33 241 249 320 378 126 185 47 31 547 305 March 31, 2006 Plan expanded to 3.5 million shares in January 2006
Slide 31: NJR: Quality Performance
Growing natural gas distribution business Disciplined wholesale energy services strategy Strong regulatory relations Excellent financial profile Consistent financial performance NJR Peer Group S&P 500 5 Years 0.135 0.082 0.036 NJR: Quality Performance March 31, 2006
Slide 32: Appendix A: Gross Margin
Appendix A: Gross Margin Gross margin is a non-GAAP measure. NJNG's gross margin is defined as gas revenues less gas purchases, sales tax and a Transitional Energy Facilities Assessment (TEFA), which is included in Energy and other taxes on the Consolidated Statements of Income. Management believes
Slide 33: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Laurence M. Downes Chairman & Chief Executive Officer New Jersey Resources Mr. Downes is Chairman of the Board and Chief Executive Officer of New Jersey Resources (NJR) and its principal subsidiary, New Jersey Natural Gas (NJNG). Mr. Downes joined NJR in March 1985 an
Slide 34: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Glenn C. Lockwood Senior Vice President & Chief Financial Officer New Jersey Resources Mr. Lockwood joined New Jersey Resources (NJR) in May 1988 and is responsible for the company's overall financial management. Areas that report to him include: financial, tax, treas
Slide 35: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Rhonda M. Figueroa Corporate Secretary New Jersey Resources Ms. Figueroa joined New Jersey Resources (NJR) in 1981. Her responsibilities include serving as the secretary to the Board of Directors of NJR and its subsidiaries as well as various internal committees. She
Slide 36: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Thomas J. Massaro Vice President - Corporate Strategy NJR Service Mr. Massaro is responsible for the company's strategic planning process, quality initiative and coordination of the Commitment to Stakeholders. He joined New Jersey Natural Gas in June 1989 as a Managem
Slide 37: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Deborah G. Zilai Vice President - Corporate Services NJR Service Mrs. Zilai is the vice president of corporate services for New Jersey Resources. She joined New Jersey Resources in June 1996. Her current responsibilities include technology, human resources and supply
Slide 38: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Craig Lynch Vice President - Energy Delivery New Jersey Natural Gas Mr. Lynch joined New Jersey Natural Gas (NJNG) in 1984 and is responsible for the maintenance and expansion of NJNG's distribution system, engineering, transmission system maintenance, regular design
Slide 39: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Joseph P. Shields Senior Vice President - Energy Services New Jersey Natural Gas NJR Energy Services Mr. Shields joined New Jersey Natural Gas (NJNG) in 1983. As head of the energy services business unit, he is responsible for natural gas supply acquisitions, negotiat
Slide 40: Appendix B: Our Leadership Team
Appendix B: Our Leadership Team Ginger P. Richman Vice President NJR Energy Services Ms. Richman joined NJR Energy Services (NJRES) in 2003. She is responsible for maintaining optimum performance of all portfolios that are managed by NJRES, overseeing the Transportation and Exchange group, business
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