Slide 1: First Quarter Fiscal 2018 Update
First Quarter Fiscal 2018 Update February 8, 2018
Slide 2: Forward-Looking Statements
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 Litigation Reform Act of 1995. NJR cautions readers
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes the non-GAAP measure, NFE and utility gross margin. As an indicator of the Company’s operating performance, this measure should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flow, net income, operating
Slide 4: Fiscal 2018 Off To A Strong Start
Fiscal 2018 Off To A Strong Start • Reported net financial earnings (NFE) of $1.56 per share; $0.47 per share in the first quarter of fiscal 2017 • Tax reform is positive for New Jersey Resources and our customers • Fiscal 2018 NFE guidance raised to $2.55 to $2.65; from $1.75 to $1.85 per share • L
Slide 5: Pattern of Consistent, Long-Term NFE Growth
Pattern of Consistent, Long-Term NFE Growth $3.00 Increase attributed to tax $2.50 reform and Energy Services 6–8 percent $2.00 compound annual growth $1.50 $1.00 $0.50 $0.00 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E Previous Lower Corporate Tax Rate Change to FY2018 Guidance 4
Slide 6: Raising Fiscal 2018 NFE Guidance: $2.55-$2.65 Per Share
Raising Fiscal 2018 NFE Guidance: $2.55- $2.65 Per Share Initial Guidance by Revised Guidance by Business Business Segment Segment and Tax Impact 35-45% 55-65% 15-25% 20-25% 5-10% 1-3% 5-15% 5-10% 5-10% 20-30% 1-3% Energy Clean Home Deferred Tax NJNG Midstream Services Energy Ventures Services Reval
Slide 7: Dividends
Annual Dividend Growth Goal of 6 to 8 Percent • 6.9 percent increase to current $1.09 annual rate approved on September 12, 2017 • 24th dividend increase in last 22 years • Dividend payout ratio goal of 60 to 65 percent Dividends and Payout $1.20 70% $1.09* 60% $1.00 $1.02 $0.96 50% $0.80 $0.86 $0.9
Slide 8: Cold Weather Drives Natural Gas Delivery Record for NJNG
Cold Weather Drives Natural Gas Delivery Record for NJNG 760,000 58 740,000 4 of Top 10 delivery days for 56 NJNG in fiscal 2018 720,000 54 700,000 52 680,000 Load (Dth) NOAA Degree Days 660,000 50 640,000 48 620,000 46 600,000 580,000 44 1/6/2018 2/15/2015 1/5/2018 1/7/2014 12/31/2017 1/20/2015 2/1
Slide 9: Price Volatility Drives Energy Services Results
Price Volatility Drives Energy Services Results Northeast Market Appalachian CA Market Market MidContinent Chicago Market Market Southwest Market Southeast Market Gulf Market Three days in top ten coldest of all 2000’s. US Population Weighted Heating Degree Days Source: CommodityWx.com 8
Slide 10: Bringing Clean, Affordable Natural Gas to the Marketplace
Bringing Clean, Affordable Natural Gas to the Marketplace PennEast Pipeline • 20 percent ownership in 120-mile transmission pipeline connecting Marcellus supply to the Northeast • Access to the lowest cost supply point in North America – benefits customers and local economies Lack of NatGas Pipeline
Slide 11: Adelphia Gateway Project Update
Adelphia Gateway Project Update Recent Developments • FERC filing made on January 15 seeking a Certificate of Public Convenience and Necessity Project Overview • Converts existing oil pipeline to natural gas • Utilizes existing infrastructure, brownfield locations and rights of way • Provides new na
Slide 12: SREC Hedging Strategy Stabilizes Income
SREC Hedging Strategy Stabilizes Income Energy Year Production – Operational and Under Construction Facilities 300 265 267 250 226 Thousands of SRECs 200 150 213 230 100 129 50 0 EY18 EY19 EY20 Hedged Unhedged Operational and Under Construction Pct. Hedged: 93% 74% 48% Average Price: $215 $190 $184
Slide 13: Impacts of Tax Reform on NJR
Impacts of Tax Reform on NJR Income Statement Earnings Impact NFEPS Impact NJNG net income + $.01-$.02 (BGSS) Annual Non-regulated net income + $.04-$.08 Revaluation of net deferred tax liabilities, + $.60 - $.65 non-regulated Balance Sheet Balance Sheet Impact Impact Utility deferred tax liability
Slide 14: Changes to Fiscal 2018 Guidance
Changes to Fiscal 2018 Guidance $3.50 $3.00 $0.30 - $0.40 ($0.20 - $0.30) $0.05 - $0.10 $2.55 - $2.65 $2.50 $0.60 - $0.65 $2.00 $1.75 - $1.85 $1.50 $1.00 $0.50 $0.00 Prior Fiscal 2018 Estimate of Deferred Tax Energy Services Opportunistic Tax Lower Corporate Tax New Fiscal 2018 Guidance Revaluation
Slide 15: Changes in NFE
Changes in NFE Segment Reporting $150.0 $57.6 $135.3 $125.0 $100.0 Millions $0.7 $25.9 $75.0 $5.8 $50.0 $3.8 $1.1 Increased Market $40.4 SREC Sales and Tax Opportunities due AFUDC from to weather PennEast Adjustments Gross Margin Growth from New Customers $25.0 and ITCs $0.0 December 31, NJNG Midstr
Slide 16: NJR Sources and Uses of Capital
NJR Sources and Uses of Capital Cash Flows $1,000.0 2018 2019E 2020E $900.0 $800.0 $700.0 Millions $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $0.0 Sources Uses Sources Uses Sources Uses LT Debt Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Bala
Slide 17: Positive Outlook for Fiscal 2018
Positive Outlook for Fiscal 2018 • Fiscal 2018 NFE guidance range of $2.55 to $2.65 per share; long-term annual growth rate of 6-8 percent • Tax reform will positively impact earnings and our customers who will save on their energy bills • Higher expected NFE contribution from Energy Services of 20-
Slide 18: Appendix
New Jersey (\\ Resources FOCUSED ON THE ENERGY FUTURE Appendix
Slide 19: Fiscal First Quarter 2018 Results
Fiscal First Quarter 2018 Results NFE ($MM) Three Months Ended December 31, Company 2017 2016 Variance New Jersey Natural Gas $34.1 $30.3 $3.8 Midstream 17.5 2.4 15.1 Subtotal $51.6 $32.7 $18.9 Clean Energy Ventures 71.3 2.8 68.5 Energy Services 20.3 3.5 16.8 Home Services/Other (7.9) 1.4 (9.3) Tota
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three months ended December 31, 2017 and 2016 to net income is provided below: 19
Slide 21: Customer Growth Continues
Customer Growth Continues Customer Additions • FY1Q 2018: 10,000 9,126* 9,000 2,637 new customers added 9,000 — 1,794 new construction 8,000 — 843 conversions 7,000 • FY2018-2020: 60/40 new 6,000 Customers construction and conversion mix 5,000 • Margin impact: Residential 4,000 customers contribute
Slide 22: Current Infrastructure Investment Programs
Current Infrastructure Investment Programs Safety Acceleration and Facilities New Jersey Reinvestment in System Enhancement Program (SAFE) Enhancement (NJ RISE) SAFEII Bare Steel Replacement Program 600 552 552 552 552 552 552 500 503 455 400 400 300 345 276 200 100 0 2015A 2016A 2017A 2018E 2019E 2
Slide 23: Changes in NFE
Changes in NFE NFE Segment Showing with Impacts of Tax Reform $150.0 $16.8 $135.3 $68.4 -$9.2 $125.0 $100.0 Millions $75.0 $15.1 $50.0 $3.8 $40.4 $25.0 $0.0 December 31, NJNG Midstream CEV Energy Services HS/Other December 31, 2016 2017 22
Slide 24: NJNG Capital Investment December 31, 2017 Update
NJNG Capital Investment December 31, 2017 Update CAPITAL INVESTMENT ($MM) 1Q 2018E STATUS NJNG 11 Customer Growth $9.8 $38.5 Added 2,637 customers in FY1Q2018; on target to add approximately 9,000 customers in FY2018 Maintenance 9.4 99.5 Capital spending on track to enhance system safety and reliabi
Slide 25: CEV and Midstream Capital Investment December 31, 2017 Update
CEV and Midstream Capital Investment December 31, 2017 Update CAPITAL INVESTMENT ($MM) 1Q 2018E STATUS CEV 11 Residential Solar $5.9 $41.5 Due to colder weather in Q1, CEV added 191 new customers, compared with 314 during the same period in fiscal 2017 Commercial Solar - 95.8 Two projects under cons
Slide 26: NJR Projected Cash Flows
NJR Projected Cash Flows $MM 2018E 2019E 2020E Cash Flow from Operations $368.5 $309.4 $320.5 Uses of Funds Capital expenditures - NJNG/other ($391.2) ($236.9) ($197.9) Capital expenditures - PennEast (36.9) (177.6) (7.4) Capital expenditures - CEV (137.2) (135.2) (90.1) Capital expenditures - Adelp
Slide 27: SREC Hedging Strategy Stabilizes Income
SREC Hedging Strategy Stabilizes Income Fiscal Year – Operational and Under Construction Facilities 300 268 267 250 241 Thousands of SRECs 200 150 100 224 197 129 50 0 FY18E FY19E FY20E Hedged Forecasted Sales Percent Hedged: 93% 74% 48% Average Price: $215 $190 $184 Current Price (FY): $231 $224 $2