Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q1 2021 Earnings Presentation
27 slides from Newjersey Resources's earnings presentation, Feb 4, 2021
Slide 1: First-Quarter 2021 Results
CONFIDENTIAL DRAFT First-Quarter 2021 Results s February 4, 2021
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 2021 Highlights Steve Westhoven | President & CEO 2 Financial Highlights Pat Migliaccio | SVP and CFO 3 Q&A Session 2
Slide 4: First-Quarter 2021 Summary
Quarterly Review First-Quarter 2021 Summary NJR reported NFEPS of $0.46*, EPS of $0.84 CEV added 2.9 MWs of commercial solar for Fiscal 1Q21 capacity through the acquisition of the Mt. Laurel Solar Facility Reaffirming FY 2021 NFEPS guidance of $1.55 - $1.65; increasing FY 2022 NFEPS Construction co
Slide 5: AMAs with Utility De-Risks Business and Drives Value
AMAs with Utility De-Risks Business and Drives Value 10-Year Asset Management Agreements (AMAs) • Entered into AMAs to release certain natural gas transportation contracts of Energy Services for aggregate cash proceeds of approximately $500 million payable over 10 years (~$260 million through FY2024
Slide 6: FY 2022 NFE Guidance
FY 2022 NFE Guidance Increasing NFE Guidance to $2.20 to $2.30 Per Share Net Financial Earnings Per Share ~ $0.02 $2.20 - $2.30 $0.13 Base for 6% - 10% Long- Term Annual Growth $2.05 - $2.15 FY 2022 Prior Guidance Net NJRES (including AMAs) Cash Settlement of Equity Forward* FY 2022 Updated Guidance
Slide 7: New Jersey Natural Gas
New Jersey Natural Gas Fiscal 1Q21 Capital Expenditures* New Customer Additions ~29% of capital expenditures earning a near real-time return 2,282 $5 New Customer 1,948 $10 $22 SAFE/NJ RISE SAVEGREEN $11 ~$89M Maintenance $19 Cost of Removal/Other $22 SRL Fiscal 1Q20A Fiscal 1Q21E • Construction con
Slide 8: Clean Energy Ventures
Clean Energy Ventures NJR’s Solar Capacity Installed Capacity (MW) 600 • Incremental capacity from the acquisition of one operational 2.9 MW commercial project in fiscal 1Q21 500 400 • Value of projects under contract or under exclusivity for fiscal 300 $260 MM years 2021 and 2022 200 425 - 445 520
Slide 9: Putting Sustainability into Action
Putting Sustainability into Action NJR’s Emissions Reduction Strategies to 2030 Potential for Additional 10% Reduction Transition NJR’s New Jersey fleet to low- and no-emissions alternatives including electric 5.0-5.5% vehicles and hydrogen Continue enhancements to NJNG’s distribution system by elim
Slide 10: Financial Review
Financial Review Pat Migliaccio SVP & Chief Financial Officer 9
Slide 11: Review of Fiscal 1Q21 NFE Changes
Review of Fiscal 1Q21 NFE Changes Fiscal 1Q20 – Consolidated NFE (millions) $34.9 Millions NJNG $5.6 Utility Gross Margin* $13.7 Increase in D&A ($2.4) O&M and Other ($5.7) $6.6 $44.7 Storage & Transportation $0.5 ($0.9) Operating Income from Leaf River and Adelphia $1.5 Equity in Earnings of Affili
Slide 12: Reaffirming FY 2021 NFE Guidance of $1.55 to $1.65 Per Share
Reaffirming FY 2021 NFE Guidance of $1.55 to $1.65 Per Share NFE Segment Contributions FY2021E NJNG Utility Gross Margin FY2021E CEV Revenue ~18% ~12% FY2021E ~6% Q1A NJNG 65%-72% ~1% CEV 15%-20% Q2 ~30% ~81% ~12% S&T 8%-10% Q3 ES 3%-4% ~40% Q4 HS & Other 0%-2% 11
Slide 13: NJR CEV – SREC Hedging Strategy Stabilizes Revenue
NJR CEV – SREC Hedging Strategy Stabilizes Revenue As of February 2, 2021 Energy Year 2022 Energy Year 2023 Energy Year 2024 99 32 202 197 301 371 Hedged Unhedged Hedged Unhedged Hedged Unhedged Percent Hedged Average Price Current Price (EY) Percent Hedged Average Price Current Price (EY) Percent H
Slide 14: 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
Slide 15: Strong Cash Flows Supporting Dividend
Strong Cash Flows Supporting Dividend 25% Annual Growth in Cash Flow from Operations Through Fiscal 2024 Cash Flow from Operations Dividend as Percentage of CFFO Millions $600.0 ~25% $600.0 60.0% CAGR FY2020 – FY2024 $500-$530 55% $500.0 $500.0 50.0% $385-$410 $400.0 $400.0 40.0% 36%-46% $300-$320 $
Slide 16: AMAs Strengthen Balance Sheet & Credit Metrics
AMAs Strengthen Balance Sheet & Credit Metrics NJR Improving Investment Grade Profile with No Block Equity Needs in the Foreseeable Future NJR Adjusted FFO/ Adjusted Debt* ~20.0% ~17.0% 14.3% ~14.0% FY2020A FY2021E FY2022E FY2024E FFO/ Debt Impact of ES AMAs * Internal estimates based on Fitch Ratin
Slide 17: Key Takeaways
On track to meet guidance for FY 2021 NJRES AMAs allow for increase to FY 2022 guidance Strong cash flows supporting dividend growth Key Takeaways First Quarter 2021 Continued construction of SRL and Adelphia Gateway Improved credit metrics allow for cash settlement of equity forward Delivering on c
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Slide 20: First Quarter Fiscal 2021 NFE by Business Unit
First Quarter Fiscal 2021 NFE by Business Unit (Thousands) Three Months Ended December 31 2020 2019 Change New Jersey Natural Gas $49,467 $43,856 $5,611 Clean Energy Ventures* (10,274) (8,179) (2,095) Storage and Transportation 3,508 3,004 504 Energy Services 1,500 (5,122) 6,622 Home Services & Othe
Slide 21: Reconciliation of NFE and NFEPS to Net Income for Fiscal 1Q21
Reconciliation of NFE and NFEPS to Net Income for Fiscal 1Q21 Net Financial Earnings, Fiscal 1Q21 • NFE is a measure of earnings (Millions) based on eliminating timing Net Income $81.0 differences surrounding the Add Back recognition of certain gains and Unrealized loss (gain) on derivative instrume
Slide 22: Fiscal 2021 and 2022 NFE Guidance
Fiscal 2021 and 2022 NFE Guidance Net Financial Earnings Per Share $2.20-$2.30 (w/ NJRES) FY 2021E FY 2022E $2.05-$2.15 (w/o NJRES) $0.15 * NJNG 65%-72% 60%-65% CEV 15%-20% 20%-25% 6%-10% LONG-TERM ANNUAL GROWTH S&T 8%-10% 8%-10% EXCLUDING Energy Services ES 3%-4% 4%-9% HS & Other 0%-2% 0%-2% NFEPS
Slide 23: NJR Capital Plan
NJR Capital Plan* (Millions) FY2021E FY2022E FY2023E & FY2024E Near Real Time Return? New Customer $52 - $54 $56 - $59 $98 - $109 Yes New Jersey Natural Gas Maintenance & Integrity $92 - $95 $142 - $150 $218 - $241 SAFE II/ NJ RISE $36 - $38 $3 - $3 Yes IIP $6 - $7 $10 - $11 $82 - $90 Yes SRL $63 -
Slide 24: NJR Projected Cash Flows
NJR Projected Cash Flows (Millions) FY2020A FY2021E FY2022E FY2023E & FY2024E Cash Flow from Operations $213 $300 - $320 $385 - $410 $915 - $965 Uses of Funds Capital Expenditures* $470 $761 - $792 $555 - $589 $1,055 - $1,166 Acquisition - S&T Assets $534 Dividends $118 $127 - $132 $135 - $140 $308
Slide 25: Dividend Payout Ratio
Dividend Payout Ratio Dividend as Percentage of NFE $2.5 160% 140% $2.0 120% 100% $1.5 80% 80%-85% $1.0 71% 60% 60%-65% 40% $0.5 20% $0.0 0% FY2020A FY2021E FY2022E NFE Dividend Payout 24
Slide 26: Projected ITC Earnings Impact
Projected ITC Earnings Impact For solar projects placed in-service before September 30, 2020 The earnings impact of the investment tax credits (ITCs) generated by projects placed in-service is reflected as follows*: • For projects that were financed using sale leasebacks: For 5 years, on the date th
Slide 27: Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations for FY2020
Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations for FY2020 Adjusted Funds from Operations, Adjusted Debt, FY2020 • Adjusted funds from operations is cash FY2020 (Millions) (Millions) flows from operating activities, plus components of working capital, cash paid Cash Flo