Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — New York Financial Community Presentation 2002
32 slides from Newjersey Resources's conference presentation, Dec 9, 2002
Slide 1: New York Financial Community Presentation
Consistency... Reliability.... Integrity New York Financial Community Presentation December 5, 2002 New Jersey Resources Corporation
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. NJR wishes to caution persons reading or hearing this presentation that the assumptions that form the basi
Slide 3: A lot has changed
A lot has changed ... The aftermath of September 11 Reordering of Priorities Economic downturn Corporate Scandals Enron, World Com, etc. Loss of investor confidence
Slide 4: .... and a lot of it is close to home
.... and a lot of it is close to home
Slide 5: Business Model Strengths
Business Model Strengths Dedicated employees Earnings growth prospects Healthy financial profile Strong, sustainable customer growth Realistic business model
Slide 6: Corporate Responsibility at NJR
Corporate Responsibility at NJR No SPEs or non-disclosed liabilities Independent Board of Directors Independent Corporate Governance Committee in place since 1996 Complete compliance with SEC certification process New internal committee to assist in process Active and engaged Audit Committee
Slide 7: Things will never be the same
Things will never be the same It all starts with integrity Know what you are - more importantly, know what you're not Focus on the fundamentals People make the difference Looking to The Future The ultimate test is sustained performance
Slide 8: Commitment to Stakeholders
Commitment to Stakeholders Safe, reliable and affordable service Customer satisfaction Growth Quality Valuing employees Corporate citizenship Superior return
Slide 9: Safe, Reliable & Affordable Service
Safe, Reliable & Affordable Service New Customer 21.2 System Integrity 18.2 Other Utility 2.9 Non-Utility 0.9 Economic Value Added Process Margin from new customers must cover associated capital costs System integrity spending up to depreciation level Other projects evaluated on EVA basis Winner - A
Slide 10: Total Residential Bill $/100 Therms
NJNG E-TOWN PSE&G SJG Jan. 1992 79.06 73.79 63.92 66.17 Jan. 1993 77.48 74.57 61.8 64.47 Jan. 1994 80.41 79.29 65.83 66.58 Jan. 1995 79.95 75.5 65.83 72.79 Jan. 1996 79.48 71.08 65.83 77.31 Jan. 1997 80.73 78.12 70.83 77.31 Jan. 1998 83.43 80.48 70.75 81.28 Jan. 1999 86.2 83.69 74.65 82.46 Jan. 2000
Slide 11: 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 NJNG New Jersey Natural Gas NYC Phila. Atlantic City
Slide 12: Growth - Core Markets
1996 363 1997 374 1998 385 1999 397 2000 410 2001 423 2002 434 Residential 140865 IT 912 Trans. 22498 OSS/CM 4708 Commercial 26832 Sources of Margins Customer Base Customer growth generates approximately $6.6 million of new margin annually Profitable mix of conversion and new customers enhance profi
Slide 13: Growth - Core Markets: Market Potential
Growth - Core Markets Sources: Local Planning Boards and NJNG Harte Hanks & A.D. Little Studies Preliminary 20980 Final 26004 Conceptual 9753 Pending 3541 Pending Preliminary Final Conceptual Non Heat 11300 On Main 77618 Off main 77089 New Customers = 60,193 Non-heat Customers Non-gas off main Non-g
Slide 14: Growth - OSS/CM Markets
Since 1992, off- system sales/capacity management margins have generated over $186 million in savings for customers and $1.11 per share for shareowners 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Customer Savings 0 4.4 12.6 15.9 18.3 22.3 21 22.3 22 25 24 Shareowner Margin 1.6 1.8 3.5 4 4
Slide 15: Growth - Energy Services
Growth - Energy Services Energy Services is a growing contributor of total earnings Early player in energy services Diverse product line Storage and marketing Fuel management Basis and Day Trading Asset backed Wholesale 2000 0.11 2001 0.15 2002 0.24 September 30
Slide 16: NJRES Strategic Focus
NJRES Strategic Focus Maintains relationships with pipelines Creates "win-win" opportunities Do not focus on discount transportation Focus on sharing of opportunities Hold or manage over 40 Bcf in storage Active in "Market Area" Business represents 11 percent of total earnings
Slide 17: Why is NJRES Different?
Why is NJRES Different? Strictly natural gas operation - no electric exposure - no California trading Not a speculative trader Manage assets for primarily hedged positions Selected fee-based services Trade around "assets" "Assets" consist of capacity/storage contracts vs. power plants, etc. Physical
Slide 18: Why is NJRES Different? Risk management guidelines
Risk management guidelines Limited open positions = low VAR ($145,000 - $650,000) Provides internal controls Credit procedures in place Daily compliance monitoring by financial department Minimal mark-to-market income (less than 1 percent) Trader compensation not based on sales volumes or revenues N
Slide 19: Stagecoach Storage Summary
Located in Owego, NY 11.9 Bcf high- deliverability storage capacity Connects to Tennessee Gas Pipeline Received full commercial operational authority from FERC in summer 2002 NJRES is the exclusive marketing agent for Stagecoach 10-year term - began April 1, 2002 NJRES compensation - Management fees
Slide 20: Growth - New Markets: NJR Home Services
Appliance service contracts Duct cleaning HVAC equipment replacement Plumbing services Service contract enhancements Growth - New Markets NJR Home Services
Slide 21: Malcolm Baldrige Focus Areas
Malcolm Baldrige Focus Areas
Slide 22: Improved Productivity
Improved Productivity The cost of adding a new customer has declined over 23 percent, while O&M productivity has improved by 16 percent since 1992. Primary drivers have been: Balanced marketing strategy Changes in work processes New Customer Cost O&M as a Percent of Margin
Slide 23: Productivity & Incentives
Productivity & Incentives Virtually every employee is a shareowner $2.7 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 Margin per Employee
Slide 24: Customer Satisfaction Fiscal 2002
SJI NUI CIV GPU/FE PEG NJR 3.22 2.73 2.29 1.81 1.09 0.64 BPU Inquiries per 1,000 Customers NJNG has achieved the best customer satisfaction rate in NJ for nine straight years. Customer Satisfaction Fiscal 2002
Slide 25: Customer Satisfaction Best in the Eastern Region
Customer Satisfaction Best in the Eastern Region NJNG scored particularly well in: Field Service Billing and Payment Study based on more than 9,000 telephone interviews across the U.S. J.D Power and Associates 2002 Gas Utility Residential Customer Satisfaction Study
Slide 26: Superior Return: Earnings Per Share
7.6 percent increase 11th consecutive year of EPS growth Weather 17 percent warmer- than-normal; 22 percent warmer than last year Expect to meet street estimates for 1st fiscal quarter 2003 1999 2000 2001 2002 1.67 1.81 1.97 2.12 Superior Return Earnings Per Share
Slide 27: Superior Return: Return on Equity
Our highest level in 18 years Allowed ROE of 11.5 percent Balance from OSS/CM programs and unregulated activities 1997 1998 1999 2000 2001 2002 0.139 0.142 0.145 0.148 0.153 0.153 Superior Return Return on Equity
Slide 28: Dividend Rate and Payout Ratio
1995 1996 1997 1998 1999 2000 East 1.52 1.56 1.6 1.64 1.68 1.72 1997 1998 1999 2000 2001 2002 2003 1.07 1.09 1.12 1.15 1.17 1.2 1.24 Eight increases in seven years Lowest payout ratio since 1984 1996 1997 1998 1999 2000 2001 2002 0.75 0.72 0.7 0.67 0.63 0.6 0.57 * Effective January 2, 2003 * Dividen
Slide 29: NJR Capital Structure
NJR Capital Structure Common Equity 258919 Preferred 21004 LT Debt 352227 ST Debt 18764 Common Equity 360457 LT Debt 370628 ST Debt 86842 1995 2002 Credit Rating: Moody's A-2 S&P A Superior Return
Slide 30: Share Repurchase & DRP Programs
Share Repurchase & DRP Programs Share Repurchase Program Dividend Reinvestment Plan implemented Shares authorized * Shares purchased on open market Total cash investment ($MM) Average investment per share 9/96 7/96 2,000,000 1,531,153 $52.4 $24.64 N/A 422,813 $12.8 $30.31 September 30, 2002 * Increa
Slide 31: New Markets Create New Opportunities
New Markets Create New Opportunities Core Customers Off-System Sales Capacity Release Retail Marketing Energy Management Core Customers Off-System Sales Capacity Release Retail Marketing Energy Management 1991 51 1992 52 12 1993 55 21 1994 58 27 20 1995 57 25 38 5 7 1996 64 24 38 9 29 1997 62 45 38
Slide 32: Summary
Summary Excellent market opportunities Strong earnings growth prospects Healthy financial profile Demonstrated consistent performance Lowest prices to customers Highest customer satisfaction rating NJR Peer Group Energy Distribution Electric Utilities S&P 500 0.13 0.065 0.065 0.048 0.002 Annualized
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