Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q2 2017 Earnings Presentation
24 slides from Newjersey Resources's earnings presentation, May 5, 2017
Slide 1: Second Quarter Fiscal 2017 Update
Second Quarter Fiscal 2017 Update May 5, 2017
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Certain statements contained in this presentation are 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
Slide 3: Non-GAAP Financial Measures
3 Non-GAAP Financial Measures This presentation includes the non-GAAP measure, NFE. 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 income or earnings per
Slide 4: Fiscal 2017 Second Quarter Highlights
4 Fiscal 2017 Second Quarter Highlights Financial Performance •2Q 2017 Net Financial Earnings (NFE)* per share grew 33 percent year-over-year, led by NJNG •Reaffirmed 2017 NFE guidance of $1.65-$1.75 per share Diversified infrastructure opportunities •Customer and utility gross margin growth continu
Slide 5: Long-Term NFE Growth Target and Projected Sources of Fiscal 2017 NFE
5 Our Long-Term Average Annual NFE Growth Target is 5 to 9 Percent Projected Sources of Fiscal 2017 NFE New Jersey Natural Gas 55-65% NJR Midstream 5-10% NJR Energy Services 5-15% NJR Home Services/ Other 1-3% NJR Clean Energy Ventures 15-25% 60-75% of 2017 NFE expected from regulated businesses
Slide 6: Annual Dividend Growth Goal
6 Annual Dividend Growth Goal of 6 to 8 Percent • 6.3 percent increase to current $1.02 annual rate; approved on September 13, 2016 • 23 dividend increases over the last 21 years • Dividend payout ratio goal of 60 to 65 percent $.72 $.77 $.81 $.86 $.92 $.96 $1.02* 0% 10% 20% 30% 40% 50% 60% 70% $0.0
Slide 7: Fiscal 2017 Second Quarter and Year To Date NFE
7 Fiscal 2017 Second Quarter and Year To Date NFE Net Financial Earnings ($MM) Company 2017 2016 Variance 2017 2016 Variance New Jersey Natural Gas $60.2 $49.0 $11.2 $90.6 $79.9 $10.7 NJR Midstream 4.9 2.2 2.7 7.3 4.6 2.7 Subtotal $65.1 $51.2 $13.9 $97.9 $84.5 $13.4 NJR Clean Energy Ventures 22.7 11
Slide 8: Fiscal 2017 Second Quarter and Year-to-Date Variances
8 Fiscal 2017 Second Quarter and Year-to-Date Variances $104.1 -$1.3 $77.9 $11.2 $10.9 $2.4 $3.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 $110.0 March 31, 2016 NJNG New Base Rates & Customer Growth Tax Credits Recognized & SREC Revenue Lower NJRES Financial Margin Impact of PennEast AFUDC Assets Sales/O
Slide 9: Our Path to Achieving Fiscal 2017 Guidance
9 Our Path to Achieving Fiscal 2017 Guidance New Jersey Resources NFE Per Share September 30, 2016 $1.61 NJNG Utility Gross Margin $.25 BGSS Margin (.02) Depreciation/O&M/Interest (.11) .12 NJRCEV Revenue $.09 Depreciation/O&M/Interest (.14) ITC .03 PTC .04 .02 NJRES (.13) NJR Midstream (Includes AF
Slide 10: NJNG Capital Investment March 31, 2017 Update
10 NJNG Capital Investment March 31, 2017 Update CAPITAL INVESTMENT ($MM) 2Q FYTD 2017 2017E ACTIONS STATUS NJNG 11 Customer Growth $9.9 $18.8 $33.3 Added 2,264 customers in FY2Q2017 On target to add 9,000 customers in FY2017 Maintenance 11.3 18.7 41.4 Capital spending to enhance system safety and r
Slide 11: Strong Customer Growth Continues
11 Strong Customer Growth Continues • FY2Q 2017: 2,264 new customers added • 1,612 new construction • 652 conversions • 6 Months: 4,130 new customers added; up 13 percent • 2,703 new construction • 1,427 conversions • FY2017-2019: 55/45 percent new construction and conversion mix • Margin impact: Re
Slide 12: NJRCEV Assets Placed Into Service
12 NJRCEV Assets Placed Into Service* CAPITAL INVESTMENT ($MM) 2Q FYTD 2017 2017E ACTIONS STATUS NJRCEV 11 Commercial Solar - - $65.0 2.5 MW project for Brick Board of Education (BOE) and 20 MW Pemberton projects under construction BOE and Pemberton projects to be completed summer 2017 Residential S
Slide 13: SREC Pricing and Hedging Strategy
13 SREC Pricing and Hedging Strategy Pct. Hedged: 97% 95% 78% Average Price: $229 $225 $190 Current Price (EY): $229 $202 $168 As of April 19, 2017. Source: InterContinental Exchange (ICE) 178 195 169 - 30 60 90 120 150 180 210 240 EY17 EY18 EY19 Th o u sa n d s o f SR EC s Energy Year - Operational
Slide 14: NJR Capital Plan
14 NJR Capital Plan ($MM) 2Q F2017A FYTD 2017A 2017E 2018E 2019E 2017-2019 Total New Customer $9.9 $18.8 $33.3 $34.7 $37.0 $105.0 Maintenance 11.3 18.7 41.4 45.4 53.6 140.4 Cost of Removal/Other 7.0 18.4 46.1 42.2 34.4 122.7 SAFE II 6.7 15.3 35.0 37.6 41.0 113.6 NJ RISE 0.9 1.1 15.8 27.4 22.6 65.8 S
Slide 15: NJR Sources and Uses of Capital
15 NJR Sources and Uses of Capital $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 Sources Uses Sources Uses Sources Uses M ill io n s Cash Flows LT Debt Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Balance Sheet 2017E 201
Slide 16: Creating Long-Term Value
16 Creating Long-Term Value • Growing customer base generates utility gross margin of approximately $5 million annually • Annual rate base growth of approximately 6 percent • Continued investment in accelerated infrastructure projects totaling over $600 million Diversified infrastructure opportuniti
Slide 17: Our Growth Strategy
17 Our Growth Strategy Strong industry fundamentals drive infrastructure projects and business opportunities in energy services Provides new investment opportunities and benefits the environment while supporting public policy Efficiencies from technology and innovation drive opportunities to lower c
Slide 18: Appendix
18 APPENDIX
Slide 19: Reconciliation to Non-GAAP Measures
19 Reconciliation to Non-GAAP Measures A reconciliation of NFE for the three and six months ended March 31, 2017 and 2016 to net income is provided below:
Slide 20: Key Trends Support Future Customer Growth
20 Key Trends Support Future Customer Growth On Main, 32,100 Near Main, 28,300 Off Main, 42,200 Non Heat, 5,600 Residential Conversions4 = 108,200 4. Source: NJNG $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 NJNG Fuel Oil Propane Electricity $0.97 $1.91 $4.10 $4.10 Equivalent Customer Cost2 2. Source: US Ene
Slide 21: NJR Projected Cash Flows
21 NJR Projected Cash Flows $MM 2016A 2017E 2018E 2019E Cash Flow from Operations $142.6 $239.4 $276.1 $258.1 Uses of Funds Capital expenditures - NJNG ($203.0) ($177.6) ($337.2) ($188.6) Capital expenditures - PennEast (11.2) (32.6) (138.8) (37.7) Capital expenditures - NJRCEV (149.1) (135.8) (223.
Slide 22: NJRCEV – Commercial Solar Portfolio
22 NJRCEV – Commercial Solar Portfolio Capital Net In-Service Cost Total Metered Wholesale Facility Location Date ($MM) MW MW MW FY2011 Fieldcrest Edison Township Feb-11 $2.3 0.5 0.5 Blair Road II Woodbridge Township Mar-11 6.9 1.3 0.3 1.0 Herrod Solar Facility South Brunswick Township Jul-11 4.7 1.
Slide 23: Effects of Hypothetical Corporate Tax Rate Reduction on NJR
23 Effects of Hypothetical Corporate Tax Rate Reduction on NJR Income Statement EPS Impact NJNG net income* Flat Non-regulated net income Annual Increase Revaluation of net deferred tax liabilities, non-regulated One-Time Increase Balance Sheet Balance Sheet Impact Equity (Impact of one-time revalua
Slide 24: we are ALL TOGETHER
we are ALL TOGETHER