Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — North Carolina Financial Community meetings, November 9-10, 2005
37 slides from Newjersey Resources's conference presentation, Nov 9, 2005
Slide 1: North Carolina Financial Community November 9-10, 2005
North Carolina Financial Community November 9-10, 2005 Exhibit 99.01
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: NJR at a Glance
NJR at a Glance Ticker Symbol (NYSE): NJR Price Range (52 Weeks) $40.54 - $49.34 Common Shares Outstanding: 27.6 million Market Capitalization: $1.3 billion Annual Dividend Rate: $1.44 Dividend Yield: 3.4 percent Total Assets: $2.2 billion September 30, 2005 September 30, 2005
Slide 4: Our Business Philosophy
We know what we are ... A regulated, natural gas distribution company A provider of wholesale energy services .... More importantly, we know what we're not A telecom company, an electric company, an international investor Delivering consistent results is what we're all about Our Business Philosophy
Slide 5: Key NJNG Drivers
Key NJNG Drivers Safe and reliable service Customer growth Strong financial profile Regulatory partnerships Efficient operations
Slide 6: Our Service Area
Our Service Area Growing customer base Primarily residential and small commercial Consistent growth forecast NYC Phila. Atlantic City Excellent service area demographics
Slide 7: Total Customers
Total Customers 1999 397 2000 410 2001 423 2002 434 2003 444 2004 455 2005 462 Nearly 3 percent annual customer growth over the past 10 years New Conversions 6890 3545
Slide 8: Future Market 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 Market Potential Sources: Local Planning Boards and N
Slide 9: Fuel Price Comparison
Natural Gas Oil Propane Electric East 1.28 1.99 2.44 2.97 October 2005 Fuel Price Comparison Comparison based on October 2005 prices based on 100,000 comparable btu's 100,000 comparable btu's 100,000 comparable btu's
Slide 10: NJNG Capital Expenditures
NJNG Capital Expenditures Customer Growth 21.9 System Integrity 35.1 Technology & Other 3.6 Cost of Removal 5.6 MGP, net 16.7 New Customer 24.7 System Integrity 26.6 Technology & Other 2.3 Cost of Removal 6.7 MGP, net 7.8 2006 Plan: $82.9 million NJNG reinvests over half its earnings back into the s
Slide 11: NJNG Capital Structure
NJNG Capital Structure LT Debt 292204 Total Equity 448286 ST Debt 3253 Credit ratings: S&P: A+ Moody's: Aa3 Only natural gas utility to be upgraded by Moody's in 2003 One of only two utilities upgraded by S&P in 2003 Strong financial profile
Slide 12: Regulatory Philosophy
Regulatory Philosophy Foster productive relationships with regulators Benefit all stakeholders Support the state's energy policies Be proactively involved in current regulatory initiatives Use incentives to benefit both customers and shareowners Manage our business without relying on base rate cases
Slide 13: Incentive Programs
Incentive Programs 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Customer Savings 0 4.4 12.6 15.9 18.3 22.3 21 22.3 22 25 24 19 28 31 Shareowner Margin 1.6 1.8 3.5 4 4.6 5.6 5.2 5 4.9 5 5 5 6 6 $2 $6 $16 $27 $23 $28 $26 $20 $27 $30 $29 $24 $34 Customer bills reduced by about
Slide 14: Improved Productivity
Improved Productivity New Customer Cost O&M as a Percentage of Gross Margin Improving productivity while maintaining high customer satisfaction
Slide 15: Customer Satisfaction
ATG/NUI SJG FE CIV PEG NJR 4 1.89 1.82 1.55 1.31 0.8 BPU Inquiries per 1,000 Customers NJNG achieved its 13th consecutive year of having the best customer satisfaction rate of any major utility in New Jersey Customer Satisfaction September 30, 2005
Slide 16: Key Wholesale Energy Services Drivers
Key Wholesale Energy Services Drivers People working with physical assets Customer relationships Leveraging volatility Access to capital Managing risk
Slide 17: People and Physical Assets
People and Physical Assets We market physical assets Financial tools enhance profitability Our people have a proven track record Direct management of storage contracts Direct management of transportation contracts Our assets are linked with our strategy New assets bring synergies
Slide 18: NJR Energy Services
NJR Energy Services
Slide 19: NJRES Operating Statistics
NJRES Operating Statistics 2001 2002 2003 2004 2005 Gross Margin 8.8 17.1 26.1 32.2 39.3 Net Income 4.1 6.4 11.4 13.6 16.6 Wholesale energy services are expected to contribute about 20 percent of total earnings
Slide 20: Access to Capital
Access to Capital Strong financial profile is required by counterparties Working capital needs of this business are significant Committed credit lines total $275 million
Slide 21: 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 -43.6 23 -99.1 -56.7 -20.5 17.8 55.3 75.2 48.5 67.8 -37.8 -25 -18.1 72.6 -34 18
Slide 22: Managing Risk
Managing Risk Strictly natural gas operation - no electric exposure Not a speculative trader Manage assets for primarily hedged positions Disciplined risk management guidelines Limited open positions = low VAR ($3.0 million) Strict internal controls and credit procedures Daily compliance monitoring
Slide 23: Counterparty Credit Ratings
Counterparty Credit Ratings Publicly-Rated Investment Grade Internally-Rated Investment Grade Non-Investment Grade * East 84 13 3 * Credit exposure to non-investment grade companies is mitigated through the use of prepayments or Letters of Credit. 95 percent of net sales with investment grade compan
Slide 24: NJR Home Services
NJR Home Services Appliance service contracts, sales and installations Profitable operations Excellent customer satisfaction Limited capital requirements 2003 2004 2005 East 135 139 146
Slide 25: Earnings Per Basic Share
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1.13 1.24 1.28 1.37 1.48 1.56 1.67 1.81 1.97 2.12 2.41 2.6 2.7 Earnings Per Basic Share NJR estimates $2.75 to $2.85 per basic share in fiscal 2006 * Net of certain items *
Slide 26: Dividend Rate 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 Rate and Payout Ratio 2000 2001 2002 2003 2004 2005 0.64 0.59 0.57 0.51 0.5 0.49 1-year dividend
Slide 27: Return on Equity
Allowed ROE of 11.5 percent Incentive programs provide 1 to 1.5 percent of incremental return Balance primarily from unregulated wholesale energy services 1998 1999 2000 2001 2002 2003 2004 2005 0.142 0.145 0.148 0.153 0.153 0.159 0.156 0.153 Return on Equity
Slide 28: NJR: Reliable 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 0.14 0.102 -0.0017 NJR: Reliable Performance September 30, 2005
Slide 29: Food for Thought
Food for Thought "Standard and Poor's screened the broad-market S&P 1500 universe, looking for companies with at least a 10-year history of long-term earnings growth, continual dividend payments and low volatility. Just one name popped up: New Jersey Resources Corp., the parent of the utility New Je
Slide 30: 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 31: Appendix B: Our Management Team
Appendix B: Our Management 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). He joined NJR in March 1985 and was ap
Slide 32: Appendix B: Our Management Team
Appendix B: Our Management Team Kathleen T. Ellis Senior Vice President - Corporate Affairs New Jersey Resources Ms. Ellis is responsible for communications, government relations, regulatory and environmental affairs. Before joining NJR in December 2004, Ms. Ellis was Director of Communications for
Slide 33: Appendix B: Our Management Team
Appendix B: Our Management Team Glenn C. Lockwood Senior Vice President & Chief Financial Officer New Jersey Resources President NJR Home Services Mr. Lockwood joined New Jersey Resources (NJR) in 1988 and is responsible for NJR's overall financial management. Areas that report to him include: finan
Slide 34: Appendix B: Our Management Team
Appendix B: Our Management Team George C. Smith Jr. Vice President - Internal Audit NJR Service Mr. Smith joined New Jersey Resources in 1984 as an Associate Auditor, and in his most recent role as Director - Internal Audit, has systematically redefined the internal audit function at NJR. He is cert
Slide 35: Appendix B: Our Management Team
Appendix B: Our Management Team Kathleen F. Kerr Vice President - Marketing and Customer Services New Jersey Natural Gas Mrs. Kerr is responsible for marketing and customer services at New Jersey Natural Gas (NJNG). Prior to joining NJNG in 2005, Mrs. Kerr was Director - Customer Services for Newark
Slide 36: Appendix B: Our Management Team
Appendix B: Our Management Team Joseph P. Shields Senior Vice President - Energy Services New Jersey Natural Gas NJR Energy Services As head of the energy services business unit, Mr. Shields is responsible for natural gas supply acquisitions, negotiating transportation agreements and monitoring natu
Slide 37: Appendix B: Our Management Team
Appendix B: Our Management Team Deborah G. Zilai Vice President - Corporate Services NJR Service After a 20-year career with IBM, Mrs. Zilai joined New Jersey Resources (NJR) in 1996. Her current responsibilities include implementation of NJR's Commitment to Stakeholders and the management of all bu
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