Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q1 FY2019 Earnings Presentation
25 slides from Newjersey Resources's earnings presentation, Feb 6, 2019
Slide 1: First Quarter 2019 Update
First Quarter 2019 Update February 6, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements 1 This release 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 Litigation Reform Act of 1995. NJR cautions readers th
Slide 3: Forward-Looking Statements
Forward-Looking Statements 2 This presentation includes the non-GAAP measures, NFE and utility gross margin. As an indicator of the Company’s operating performance, these measures should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flows, net income, oper
Slide 4: NJR Strategic Outlook
NJR Strategic Outlook 3 Safety and Reliability • SAFE II • NJ RISE • Southern Reliability Link Infrastructure Investments Ensure safe and reliable service to • Southern Reliability Link customers • PennEast Provide growth through investments • Adelphia Gateway in regulated and non-regulated infrastr
Slide 5: Fiscal First Quarter 2019 Highlights
Fiscal First Quarter 2019 Highlights 4 Superior Return • Net financial earnings (NFE) per share of $0.61 compared to $1.56 last year* • Affirmed fiscal 2019 NFE guidance of $1.95 - $2.05 per share Infrastructure Investments • Began construction on the Southern Reliability Link • Added 2,934 new cust
Slide 6: Guidance Range for Fiscal 2019E of $1.95 - $2.05
Guidance Range for Fiscal 2019E of $1.95 - $2.05 5 Projected Sources of NFE for Fiscal 2020 and Projected Sources of NFE for Fiscal 2019 Beyond NJR Home Services/ Other Midstream NJR Home NJR Energy 0-2% 5-15% Midstream Services/ Other Services 0-2% 5-15% 10-25% NJR Energy Services 5-15% New Jersey
Slide 7: Changes in Net Financial Earnings – FY 1Q19
Changes in Net Financial Earnings – FY 1Q19 6 Three Months Ended December 31, 2018 $150.0 $135.3 -$2.4 Lower BGSS Incentives and Higher O&M -$13.9 Expenses 2017 Tax Act $100.0 Millions $8.0 $54.1 -$61.0 $50.0 2017 Tax Act -$11.9 2017 Tax Act Lack of sustained volatility $0.0 December 31, 2017 NJNG M
Slide 8: Tetco M-3 Daily Prices vs. Degree Days
Tetco M-3 Daily Prices vs. Degree Days 7 $20.00 60 $18.00 50 $16.00 $14.00 40 $12.00 $10.00 30 $8.00 20 $6.00 $4.00 10 $2.00 $0.00 0 Fiscal 2018 Tetco M3 Prices Fiscal 2019 Tetco M3 Prices Fiscal 2018 Degrees Days Fiscal 2019 Degree Days
Slide 9: SREC Hedging Strategy Stabilizes Revenue
SREC Hedging Strategy Stabilizes Revenue 8 350 311 313 300 278 250 Thousands of SRECs 200 150 310 257 100 203 50 0 EY19 EY20 EY21 Hedged Unhedged Operational and Under Construction Pct. Hedged: 92% 100% 65% Average Price: $192 $196 $192 Current Price (EY): $230 $227 $198 As of December 31, 2018; Sou
Slide 10: NJNG Capital Investment – December 31, 2018
NJNG Capital Investment – December 31, 2018 9 CAPITAL INVESTMENT ($MM) 1Q 2019E STATUS NJNG 11 Customer Growth $9.4 $42.0 Added 2,934 new customers in FY1Q19 and on target to add 9,667 annually for FY2019 Maintenance 20.0 68.6 Capital spending on track to enhance system safety and reliability Cost o
Slide 11: CEV & Midstream Capital Investment – December 31, 2018
CEV & Midstream Capital Investment – December 31, 2018 10 CAPITAL INVESTMENT ($MM) 1Q 2019E STATUS CEV* 11 Residential Solar $4.9 $30.2 Added 166 new customers during fiscal 1Q19; now serve over 7,400 customers Commercial Solar 47.2 138.5 Placed two commercial solar projects into service during fisc
Slide 12: NJR Sources and Uses of Capital
NJR Sources and Uses of Capital 11 2019E 2020E 2021E $1,000 $800 Millions $600 $400 $200 $0 Sources Uses Sources Uses Sources Uses LT Debt/Asset Sales Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Balance Sheet
Slide 13: New Jersey Resources
New Jersey Resources
Slide 14: Appendix
New Jersey Resources Appendix
Slide 15: Strong NJNG Customer Growth
Strong NJNG Customer Growth 14 First Quarter Fiscal 2019 New Customer Additions • 2,934 new customers added 10,000 9,667 9,596 – 2,076 new construction – 858 conversions 2019 New Customer Additions Forecast 7,500 Customers 5,000 65% 2,934 35% 2,637 2,500 0 FY 1Q18 FY 1Q19 FY18A FY19E* New Constructi
Slide 16: Southern Reliability Link (SRL)
Southern Reliability Link (SRL) 15 Current Status • Construction began in fiscal 1Q19 • Received an easement from Joint Base McGuire- Dix-Lakehurst in June 2018 • Approvals received from: – New Jersey Pinelands Commission – New Jersey Department of Environmental Protection – New Jersey Board of Publ
Slide 17: PennEast Pipeline Project
PennEast Pipeline Project 16 Project Description • 20 percent ownership in 120-mile transmission pipeline to Northeast connecting Marcellus Shale region supply • Access to the lowest cost supply point in North America; benefits customers and local economies • Approved by FERC - January 19, 2018 Curr
Slide 18: Adelphia Gateway Project Update
Adelphia Gateway Project Update 17 Project Overview • Converts existing oil pipeline to natural gas • Leverages existing infrastructure, brownfield locations and rights of way • Provides new natural gas supply to constrained markets through increased delivery connections • Successful open season com
Slide 19: Clean Energy Ventures
Clean Energy Ventures 18 Recent Developments • Two commercial solar projects were placed into service – Located in Franklin Township and Springfield Township, N.J. – Total of 19.2 megawatts (MW) of capacity • Six projects expected to be placed into service in fiscal 2019, totaling over 50 MW of capa
Slide 20: Fiscal 2019 First Quarter NFE
Fiscal 2019 First Quarter NFE 19 Three Months Ended Net Financial Earnings ($MM) December 31, Company 2018 2017 Variance New Jersey Natural Gas $31.7 $34.1 ($2.4) NJR Midstream 3.7 17.5 (13.8) Subtotal 35.4 51.6 (16.2) NJR Clean Energy Ventures 10.2 71.2 (61.0) NJR Energy Services 8.4 20.3 (11.9) NJ
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 20 A reconciliation of NFE for the three months ended December 31, 2018 and 2017 to net income is provided below:
Slide 22: Dividend Per Share
Dividend Growth Rate of 6 – 8 Percent Annually 21 Dividends Per Share 100% $1.20 $1.17 $1.09 90% $1.02 $1.00 $0.96 80% 70% $0.80 Dividend Per Share 60% Payout Ratio 50% $0.60 40% $0.40 30% 20% $0.20 10% $0.00 0% 2016 2017 2018** 2019 Fiscal Year Ind. Div Rate Payout * * 2019 payout based on midpoint
Slide 23: Factors Supporting Future Customer Growth
Factors Supporting Future Customer Growth 22 New Construction Conversions 2018 Building Permits Issued1 Equivalent Customer Cost2 4,500 $4.50 $4.18 3,901 $3.93 4,000 $4.00 3,500 $3.50 3,000 $3.00 2,500 $2.50 $2.28 2,000 $2.00 1,575 1,450 1,500 $1.50 876 $0.89 1,000 $1.00 500 $0.50 0 $0.00 NJNG Monmo
Slide 24: SREC Hedging Strategy Stabilizes Income
SREC Hedging Strategy Stabilizes Income 23 Hedged Unhedged Operational and Under Construction 350 296 312 313 300 Thousands of SRECs 250 200 150 296 265 100 203 50 0 FY19 FY20 FY21 Pct. Hedged: 100% 85% 65% Average Price: $200 $191 $191 Current Price: $229 $217 $182 As of December 31, 2018; Source:
Slide 25: NJR Projected Cash Flows
NJR Projected Cash Flows 24 ($ millions) 2018A 2019E 2020E 2021E Cash Flow From Operations $398.3 $272.7 $326.6 $391.4 Uses of Funds Capital Expenditures - NJNG/Other ($254.5) ($475.2) ($343.2) ($302.8) Capital Expenditures - PennEast (16.2) (5.1) (195.0) (30.0) Capital Expenditures - CEV (123.4) (1
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