Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — New York Financial Community Meeting (December 2004)
31 slides from Newjersey Resources's conference presentation, Dec 7, 2004
Slide 1: New York Financial Community Meeting
New Jersey ;\ Resources New York Financial Community Meeting December 7, 2004 IN
Slide 2: Regarding Forward-Looking Statements
Regarding Forward-Looking Statements Certain statements contained in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. NJR wishes to caution persons reading or hearing this presentation that the assumptions that form the basi
Slide 3: Four Guiding Principles
Four Guiding Principles ¢ Integrity ¢ Leadership ¢ Focus on the Fundamentals ¢ Stakeholder Commitments New Jersey AMY Resources
Slide 4: Our Business Philosophy
Our Business Philosophy - We know what we are ... ~ Aregulated, natural gas distribution company ~ Aprovider of wholesale energy services » ... More importantly, we know what we’re not — Atelecom company, an electric company, an international investor - Delivering consistent results is what we're al
Slide 5: Key NJNG Drivers
Key NJNG Drivers ¢ Safe and reliable service ¢ Customer growth * Strong financial profile ¢ Regulatory partnerships ¢ Efficient operations NJNG will continue to represent the vast majority of investment, resources and earnings New Jersey AMY Resources
Slide 6: 2004 Actual and 2005 Plan capital investment
2004 Actual: 2005 Plan: $67.3 million $69.8 million $43 $6.0 3 32.8 $5.3 $21.0 § $3.8 $31.2 $21.8 Customer Growth System Integrity Technology & Other Cost of Removal mMGP, net NJNG reinvests over half its earnings back into the system annually New Jersey
Slide 7: Growing customer base NJNG
Growing customer base NING Excellent service area demographics + + . . “, NYC Primarily residential and small commercial ~ 4 New Jersey 7 Natur: Consistent growth forecast = Phils. J x Atlantic ~. me city a y - New Jersey
Slide 8: Annual customer growth
Thousands 1999 2000 2001 2002 2003 2004 2005E Ps percent annual customer growth over the past 10 years New Jersey
Slide 9: Conversions and new customers inventory
Conversions = 133,051 Pending 479 Non-heat customers Conceptual 9028 3,724 Preliminary 30,899 41,524 Non-gas aninear main 19,736 81,599 Final Non-gas off main New Customers = 54,838 Sousces: Local Planning Boards and NJNG Harte Hanks & A.D. Little Studies lealthy “inventory” for continued customer g
Slide 10: NJNG Capital Structure
ING Capital Structure September 30, 2004 16% 34% 50% G@LT Debt mTotal Equity o ST Debt Strong financial profile * Credit ratings: — S&P: A+ — Moody's: Aa3 * Only natural gas utility to be upgraded by Moody’s in 2003 One of only two utilities upgraded by S&P in 2003 Business profile improved to “1” i
Slide 11: Regulatory Strategy
Regulatory Strategy Foster productive relationships with regulators Benefit all stakeholders Support the state’s energy policies Be proactively involved in current regulatory initiatives Use incentives to benefit both customers and shareowners Manage our business without relying on base tate cases I
Slide 12: Incentive Programs
Incentive Prog $35 $4 $30 $28 606 $27 $27; $25 $30 1082 1983 1004 1005 1905 1007 1082 tm 200 OI AMP AME 2004 Fiscal Year WCustomer Savings H Shareowner Margin Customer bills reduced by about $234 million or 4 percent annually since program inception New Jersey AMY Resources
Slide 13: Improved Productivity
Improved Productivity New Customer Cost O&M as a Percentage of Gross Margin 60% $3,000 $2,456 45.3% $2,260 $1,984 40% 37.2% $1,600 20% $750 $0 O% 01992 2004 mige2 2004 Improving productivity while maintaining high customer satisfaction IN: New Jersey Resources
Slide 14: Customer Satisfaction
Customer Satisfaction BPU Inquiries per 7,000 Customers 7.00 6.00 Fiscal 2004 5.00 4.00 2.00 2.00 1.00 0.00 NUI SUG cw PEG FE NUR NJNG achieved its 12th consecutive year of having the best customer satisfaction rate of any major utility in New Jersey New Jersey AMY Resources
Slide 15: Key Wholesale Energy Services Drivers
Key Wholesale Energy Services Drivers ¢ People working with physical assets ¢ Customer relationships ¢ Leveraging volatility ¢ Access to capital ¢ Managing risk New Jersey AMY Resources
Slide 16: People and Physical Assets
People and Physical Assets ¢ We market physical assets — Financial tools enhance profitability ¢ Our people have a proven track record — Direct management of storage contracts — Direct management of transportation contracts ¢ Our assets are linked with our strategy — New assets bring synergies New J
Slide 17: NJRES Asset Base
NJURES Asset Base al ral at New Jersey AMY Resources
Slide 18: NJRES Operating Statistics
NJRES Operating Statistics 2001 2002 2003 2004 Gross Margin mNet Income Wholesale energy services are expected to contribute 15-20 percent of total earnings New Jersey AMY Resources
Slide 19: NJRES 2004 Gross Margin
NJRES 2004 Gross Margin Total: $32.2 million storage & Pipeline Capacity Asset 48% Management 26% Parkand Loan Daily Asset 8% Optimization 23% Gross margin generated from a variety of services IN: Jersey Resources
Slide 20: Access to Capital
Access to Capital ¢ Strong financial profile is required by counterparties ¢ Working capital needs of this business are significant « Committed credit lines total $250 million Will expand and extend credit facilities in December 2004 Mocs
Slide 21: Working Capital Volatility
Working Capital Volatility undommom $0 a4 20) ($40) ($60) 80) 100) Dec- Max Tum. Sep-_Deo- Tt 2 2 w @ OnHamd Ze Working capital requirements remain volatile New Jersey Resources
Slide 22: Managing Risk
naging Risk ° Strictly natural gas operation — no electric exposure » Nota speculative trader — Manage assets for primarily hedged positions - Disciplined risk management guidelines — Limited open positions = low VAR — Strict internal controls — Credit procedures in place ~ Daily compliance monitori
Slide 23: Credit quality of counterparties
BBB 71% 18% Internally rated * 14% 86 percent of net sales with investment grade companies * Credit exposure is mitigated through the use of prepayments or Letters of Credit. New Jersey
Slide 24: Sustainable Growth Opportunities
stainable Growth Opportunities ¢ Asset management — LDCs that previously relied on “mega- marketers” to manage assets — Banks and investment funds are acquiring assets that need both management and physical counter parties ¢ Natural Gas Sales — Leverage the breadth of NJRES'’s assets * Small retail
Slide 25: Sustainable Growth Opportunities
Sustainable Growth Opportunities ¢ Transportation and Storage — Expand transportation and storage assets to find additional value -— Chicago market — Mid-continent storage such as Michigan and ANR — Pipeline projects present growth opportunities ¢ Park and Loan — Exploring the opportunity to expand
Slide 26: Appliance service contracts
Appliance service contracts Duct cleaning Sales and installations Service contract enhancements New Jersey
Slide 27: Earnings Per Basic Share
Earnings Per Basic Share 1992 "1004 "1006 "1000 1007 "1003 "te00 "2000" 2001” 2002 "2009 "2004 September 30 NJR estimates $2.65 to $2.75 per basic share in fiscal 2005 iN: New Jersey Resources
Slide 28: Dividend Rate and Payout Ratio
Dividend Rate and Payout Ratio Dividends per Share $1.40 $1.36" Payout Ratio 45%. ‘998 20m moma am ame 200s tee” 2000” zoo 2002” 2003 2004 1-year dividend growih rate of 4.8 percent versus peer group average of 3.5 percent * Effective January 2, 2005 New Jersey AMY Resources
Slide 29: NJR: Reliable Performance
NJR: Reliable Perfor ce Growing natural gas Annualized Total Retum distribution business Disciplined wholesale energy services strategy Strong regulatory relations Excellent financial profile Consistent financial performance 3 Years HNJR @ Peer Group OS&P 500 September 30, 2004 New Jersey AMY Resour
Slide 30: Appendix: Gross margin definition
Appendix: Gross rellal Gross margin is a non-GAAP measure. NJNG’s gross margin is defined as gas revenues less gas purchases, sales tax and a Transitional Energy Facilities Assessment (TEFA), which is included in Energy and other taxes on the Consolidated Statements of Income. Management believes th
Slide 31: New York Financial Community Meeting
(\ New Jersey Resources New York Financial Community Meeting December 7, 2004 IN
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