Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q1 2022 Earnings Presentation
24 slides from Newjersey Resources's earnings presentation, Feb 3, 2022
Slide 1: First-Quarter 2022 Results
CONFIDENTIAL DRAFT First-Quarter 2022 Results s February 3, 2022
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Li
Slide 3: Agenda
Agenda 1 First-Quarter FY 2022 Highlights Steve Westhoven | President & CEO 2 Financial Highlights Roberto Bel | SVP and CFO 3 Q&A Session 2
Slide 4: 2021 Sustainability Report
2021 Sustainability Report Highlighting our accomplishments: • Announced Net Zero by 2050 goal for New Jersey operations • First utility on the East Coast to blend green hydrogen into its fuel stream • Launched largest energy efficiency program in NJNG’s history • 7th consecutive J.D. Power Award to
Slide 5: First-Quarter 2022 Summary
First-Quarter 2022 Summary $0.69* Fiscal 2022 off to a good start: • Significant increase in fiscal Q1 net financial earnings $0.46 • Base rate case settled and new rates in place at NJNG $0.38 • CEV placed one project into service and continued to develop its pipeline of projects • Adelphia Gateway
Slide 6: Fiscal 2022 Guidance Reaffirmed
Fiscal 2022 Guidance Reaffirmed Net Financial Earnings per Share Fiscal 2022 NFEPS Guidance by Segment 0%-1% $2.20 - $2.30 $2.16 5%10% 9%-11% Long-term 20%-23% growth $1.74 NFEPS rate of 7-9%* 60% - 65% FY 2020A FY 2021A FY 2022E NJNG CEV S&T Home Services & Other ES** **Only considers margin contri
Slide 7: New Jersey Natural Gas
New Jersey Natural Gas Fiscal YTD Capital Expenditures* New Customer Additions ~43% of capital expenditures earning a near real-time return 1,948 1,730 New Customer $6 $27 SAVEGREEN IIP $13 ~$73M Maintenance Cost of Removal/Other $10 IT $12 RNG $4 $1 1Q 2021 1Q 2022 • Placed in service in first quar
Slide 8: Clean Energy Ventures
Clean Energy Ventures FY 2022E CEV Revenue ($ in millions) Fiscal 2021-2022 In-service Capex 1Q Fiscal 2022 Fiscal 2022E Target by Project Status ($ in millions) SREC 73%- 8% 78% 28% TREC $10.2 36% $129 - $133 $150 MM Electricity MM Sales 8% - 13% 28% Sunlight 10% - 15% 2%- Advantage 6% $315 Million
Slide 9: Adelphia Gateway
Adelphia Gateway South Zone Conversion and Expansion Project Project Facilities Scope Martin’s Creek Booster Project Status UGI Lateral & Interconnect Compression • Placed into service in the Northern zone: Mainline North (currently in service) • New delivery point with associated lateral line Texas
Slide 10: Financial Review
Financial Review Roberto Bel SVP & Chief Financial Officer 9
Slide 11: Review of Fiscal 1Q22 NFE Changes
Review of Fiscal 1Q22 NFE Changes ($ in Millions) Fiscal 1Q21 – Consolidated NFE ($ in millions) $44.7 NJNG $1.6 Utility Gross Margin* $7.8 $0.5 $65.8 O&M $7.2 $16.1 Depreciation & Amortization (D&A) ($3.7) Interest expense, AFUDC, Income Tax ($9.7) Clean Energy Ventures $3.5 Revenue $3.8 O&M $0.3 D
Slide 12: NJR CEV – SREC Hedging Strategy Stabilizes Revenue
NJR CEV – SREC Hedging Strategy Stabilizes Revenue Based on Energy Year, as of January 19, 2022 Percent Hedged Average Price Current Price (EY) EY 2022 398 5 99% $201 $237 Percent Hedged Average Price Current Price (EY) EY 2023 398 5 99% $203 $226 Thousands EY 2024 379 22 Percent Hedged Average Pric
Slide 13: NJR Capital Plan
NJR Capital Plan1 ($ in Millions) Near Real 1Q FY2022A FY2021A FY2022E FY2023E Time Return? New Customer $12 $65 $52 - $56 $55 - $59 Yes New Jersey Natural Gas Maintenance & Integrity $27 $100 $142 - $148 $100 - $104 SAFE II/ NJ RISE $42 Yes IIP $6 $9 $24 - $28 $32 - $36 Yes SRL $110 IT $4 $9 $50 -
Slide 14: NJR Projected Cash Flows
NJR Projected Cash Flows ($ in Millions) FY2021A FY2022E FY2023E Cash Flow from Operations $391 $365 - $385 $450 - $470 Uses of Funds Capital Expenditures1 $625 $641 - $761 $513 - $616 Dividends $117 $127 - $132 $135 - $140 Total Uses of Funds $742 $768 - $893 $648 - $756 Financing Activities Common
Slide 15: First Quarter 2022 Key Takeaways
On track to meet guidance for FY 2022 CEV’s asset base continues to grow Construction continues at Adelphia Key Takeaways First Quarter 2022 Strong cash flows supporting future dividend growth Upside remains for NJRES post-AMA through the long option strategy Delivering on our commitment to de-risk
Slide 16: Q&A
Q&A 15
Slide 17: Appendix
Appendix 16
Slide 18: First Quarter Fiscal 2022 NFE by Business Unit
First Quarter Fiscal 2022 NFE by Business Unit (Thousands) Three Months Ended December 31, 2021 2020 Change New Jersey Natural Gas $51,080 $49,467 $1,613 Clean Energy Ventures (6,821) (10,274) 3,453 Storage and Transportation 2,962 3,508 (546) Energy Services 17,567 1,500 16,067 Home Services & Othe
Slide 19: Reconciliation of NFE and NFEPS to Net Income for Fiscal 2022
Reconciliation of NFE and NFEPS to Net Income for Fiscal 2022 Net Financial Earnings, Fiscal 1Q22 • NFE is a measure of earnings based on eliminating timing differences surrounding the recognition of certain gains and losses and the impairment of NJR’s investment in the PennEast project, net of appl
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures NJNG Utility Gross Margin • NJNG utility gross margin is defined as natural gas revenues less natural gas purchases, sales tax and regulatory rider expenses, and may not be comparable to the definition of gross margin used by others in the natural gas distribution
Slide 21: New Base Rates
New Base Rates Overall Cost of Capital and Weighted Return Approved Weighted Percent Return Cost • Rate base of $2.5 billion Long-Term Debt 46.0% 3.60% 1.66% o Southern Reliability Link and Howell green hydrogen Common Equity 54.0% 9.60% 5.18% facility included in rate base Total 100.0% 6.84% • WACC
Slide 22: Reaffirming FY 2022 NFE Guidance of $2.20 to $2.30 Per Share
Reaffirming FY 2022 NFE Guidance of $2.20 to $2.30 Per Share NFE Expected Segment FY2022 Expected NJNG FY2022 Expected FY2022 Expected ES Contributions Utility Gross Margin CEV Revenue Financial Margin Distribution Distribution Distribution Q4E Q4E Q3E (~2%) FY2022E Q3E (~20%) ~17% ~13% Q1E NJNG 60%
Slide 23: NJR CEV – SREC Hedging by Fiscal Year
NJR CEV – SREC Hedging by Fiscal Year As of January 19, 2022 Percent Hedged Average Price Current Price (FY) FY 2022 464 100% $203 $234 FY 2023 395 7 Percent Hedged Average Price Current Price (FY) 98% $201 $220 Thousands FY 2024 324 76 Percent Hedged Average Price Current Price (FY) 81% $193 $202 F
Slide 24: Revenue Recognition for AMAs
Revenue Recognition for AMAs The Transaction: The Accounting: The Result: AMAs feature initial and ASC 606 revenue recognition Disproportionate value is permanent capacity standard requires that allocated to the permanent releases with cash revenue be allocated to both release periods in FY 2024 pay