Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — AGA Financial Forum 2003
28 slides from Newjersey Resources's conference presentation, May 5, 2003
Slide 1: Presentation to the AGA Financial Forum May 5, 2003
Presentation to the AGA Financial Forum May 5, 2003
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: 2002 - A Year of Achievement
2002 - A Year of Achievement Fiscal 2002 was a very good year for NJR. We were honored and pleased to have received various awards noted above. You may recall that we began 2002 with NJNG celebrating its 50th anniversary. 2002 was also the year NJR entered the Fortune 1000. In October NJR celebrated
Slide 4: Things will never be the same: New Priorities
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 New Priorities Defining our Industry The ultimate test is sustained performance
Slide 5: Commitment to Stakeholders
Commitment to Stakeholders Safe, reliable and affordable service Customer satisfaction Growth Quality Valuing employees Corporate citizenship Superior return • Framework for everything we do • Theme of Annual Report and Meeting • Reflects our core strengths and drives our activities at all levels of
Slide 6: Safe, Reliable & Affordable Service
Safe, Reliable & Affordable Service New Customer 10.2 System Integrity 6.2 Other Utility 1.1 Non-Utility 1 Approximately 6,000 miles of pipeline Nearly half a billion dollars invested for system maintenance and expansion without a traditional base rate increase in nearly 10 years About 300 miles of
Slide 7: Safe, Reliable & Affordable Service: Total Residential Bill
NJNG E-TOWN PSE&G SJG 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 82.87 80.95 71.89 83.81 Jan. 2001
Slide 8: 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 9: Customer Satisfaction Fiscal 2002: BPU Inquiries
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 ten straight years. Customer Satisfaction Fiscal 2002
Slide 10: Growth - Our Service Area
Growth - Our Service Area Rapidly growing customer base Primarily residential and small commercial customers One of the nation's fastest-growing local distribution companies
Slide 11: Customer Growth
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1998 385 1999 397 2000 410 2001 423 2002 434 2003E 445 Customer Growth NJNG captures 95 percent of new construction Profitable mix of conversion and new customers enhance profitability Almost 1,00
Slide 12: Growth - Market Potential
Growth - Market Potential Independent research firms have reviewed longer-term potential of new construction and conversion markets Demographic, economic and regulatory data confirm expectation of approximate 3 percent annual firm sales growth rate for foreseeable future Potential for growth in uses
Slide 13: Growth - Wholesale Markets
Growth - Wholesale Markets Using Out Expertise to Grow in New Markets Since 1992, off-system sales/capacity management margins have generated over $198 million in savings for customers and $1.17 per share for shareowners 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 3/1/2003 Customer Saving
Slide 14: 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 FY 2000 0.11 FY2001 0.15 FY2002 0.24 Mar. 2003 0.41 Use our expertise to create
Slide 15: 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 16: Why is NJRES Different? Risk management guidelines
Risk management guidelines Limited open positions = low VAR (less than $1 million) 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
Slide 17: 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 marketing agent for Stagecoach 10-year term - began April 1, 2002 NJRES compensation - Management fees and incen
Slide 18: 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 19: Quality - Improved Productivity
Quality - 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 20: Quality - Productivity & Incentives
Quality - Productivity & Incentives Virtually every employee is a shareowner Incentives paid in cash and stock Bargaining Unit participates in the incentive plan Customers per Employee Margin per Employee
Slide 21: Regulatory Relationships
Regulatory Relationships By partnering with our regulators, NJNG has been able to: Avoid filing for base-rate increases Use the competitive energy marketplace to benefit both customers and shareowners Open new markets and offer customers new choices Focus on Governor's new energy policies Incentives
Slide 22: Smart Growth
Smart Growth State initiative to plan for future growth by limiting sprawl and promoting redevelopment Asbury Park & Long Branch are the 1st communities in service area selected for the program NJNG will invest over $7 million in Asbury Park Plan proposes recovering costs through limited changes to
Slide 23: Superior Return: Earnings Per Share
FY2002 represented the 11th consecutive year of EPS growth Fiscal 2003 off to a good start: 16 percent increase in EPS Weather 12 percent colder-than-normal 35 percent colder than last year 1999 2000 2001 2002 2002 2003 1.67 1.81 1.97 2.12 2.04 2.39 Superior Return September 30, March 31, Earnings P
Slide 24: Superior Return: Return on Equity
Our highest level in 18 years Allowed ROE of 11.5 percent Balance from regulated and unregulated wholesale activities 1997 1998 1999 2000 2001 2002 0.139 0.142 0.145 0.148 0.153 0.153 Superior Return Return on Equity
Slide 25: Dividend Rate and Payout Ratio
1995 1996 1997 1998 1999 2000 East 1.52 1.56 1.6 1.64 1.68 1.72 1997 1998 1999 2000 2001 2002 2003 1.07 1.09 1.12 1.15 1.17 1.2 1.24 Eight increases in seven years Lowest payout ratio since 1984 1996 1997 1998 1999 2000 2001 2002 0.75 0.72 0.7 0.67 0.63 0.6 0.57 * Effective January 2, 2003 * Dividen
Slide 26: NJR Capital Structure
NJR Capital Structure Common Equity 258919 Preferred 21004 LT Debt 352227 Common Equity 361453 LT Debt 370628 1995 2002 Credit Rating: Moody's A-2 S&P A Superior Return
Slide 27: Share Repurchase & DRP Programs
Share Repurchase & DRP Programs Share Repurchase Program Dividend Reinvestment Plan implemented Shares authorized Shares purchased on open market Total cash investment ($MM) Average investment per share 9/96 7/96 2,000,000 1,560,253 $55.3 $24.72 1,650,000 422,813 $12.8 $20.21 March 31, 2003 Superior
Slide 28: Summary
Summary 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 0.08 0.019 0.018 0.003 -0.033 Annualized 5 Year Total Return $1,000 inv