Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — AGA Financial Forum 2023
37 slides from Newjersey Resources's conference presentation, May 19, 2023
Slide 1: AGA Financial Forum
AGA Financial Forum Fort Lauderdale, FL May 20 – 23, 2023
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: Contents
Contents 1 Forward-Looking Statements and Non-GAAP Measures 2 Contents 3 FY 2023 Second Quarter and First Half Review 4 Fiscal 2023 Second Quarter and Year-to-Date Summary 5 Fiscal 2023 NFEPS Guidance of $2.62 to $2.72 1 6 Capital Plan 7 Capital Plan Table 8 Fiscal 2023 Q2 and YTD NFE by Business Un
Slide 4: FY 2023 Second Quarter and First Half Review
FY 2023 Second Quarter and First Half Review 3 FY 2023 Second Quarter and First Half Review 4 Fiscal 2023 Second Quarter and Year-to-Date Summary 5 Fiscal 2023 NFEPS Guidance of $2.62 to $2.72 6 Capital Plan 7 Capital Plan Table 8 Fiscal 2023 Q2 and YTD NFE by Business Unit 9 Review of Fiscal 2023 Q
Slide 5: Fiscal 2023 Second Quarter and Year-to-Date Summary
Fiscal 2023 Second Quarter and Year-to-Date Summary Consistent Performance throughout Winter Period Second Quarter Continued Execution Throughout Unique Period NFEPS1,2 of Historically Warm Weather Conditions $1.77 $1.36 $1.16 $0.88 NJNG CEV S&T Energy Services 2Q20 2Q21 2Q22 2Q23 Higher utility gro
Slide 6: Fiscal 2023 NFEPS Guidance of $2.62 to $2.72
Fiscal 2023 NFEPS Guidance of $2.62 to $2.721 Guidance Raised by $0.20 in Q1 FY2023; Represents 8.1% Increase from Midpoint of FY 2023 Initial Guidance Range Net Financial Earnings per Share Fiscal 2023 NFEPS Guidance by Segment $2.62 - $2.72 7-9% LONG-TERM CEV $2.50 ANNUAL GROWTH1 18% - 20% $2.472
Slide 7: Capital Plan
Capital Plan1 ($ in Millions) Capital plan supports long-term NFEPS growth targets of 7 – 9% $529 $712 $622 $520 - $658 $542 - $728 $124 $2 - $8 $20 - $28 $89 $142 $43 $140 - $280 $100 - $200 $124 $145 $499 $400 - $430 $400 - $440 $362 $335 FY2020A FY2021A FY2022A FY2023E FY2024E NJNG CEV S&T 1) Tot
Slide 8: Capital Plan Table
Capital Plan Table1,2 ($ in Millions) 1Q 2Q YTD Near Real Time FY2023A FY2023A FY2023A FY2022A FY2023E FY2024E Return? New Jersey Natural Gas New Customer $13 $18 $31 $54 $54 - $58 $56 - $60 Yes Maintenance & Integrity $27 $28 $55 $104 $109 - $113 $161 - $176 Cost of Removal / Other $9 $10 $19 $42 $
Slide 9: Fiscal 2023 Q2 and YTD NFE by Business Unit
Fiscal 2023 Q2 and YTD NFE by Business Unit ($ in 000s) (Thousands) Three Months Ended March 31, Six Months Ended March 31, 2023 2022 Change 2023 2022 Change New Jersey Natural Gas $100,697 $102,783 $(2,086) $155,361 $153,863 $1,498 Clean Energy Ventures $(9,379) $(6,491) $(2,888) $(12,961) $(13,312
Slide 10: Review of Fiscal 2023 Q2 and YTD NFE Changes
Review of Fiscal 2023 Q2 and YTD NFE Changes ($ in Millions) Fiscal 2023 Q2 Fiscal 2023 YTD Fiscal 2Q22 – Consolidated NFE ($ in millions) $ 130.2 Fiscal 2022 YTD – Consolidated NFE ($ in millions) $ 196.0 NJNG $ (2.1) NJNG $ 1.5 Utility Gross Margin1 $ 1.3 Utility Gross Margin1 $ 22.5 O&M $ (5.5) O
Slide 11: Projected Cash Flows
Projected Cash Flows ($ in Millions) FY2022A FY2023E FY2024E Cash Flow from Operations $324 $320 - $360 $450 - $490 Uses of Funds Capital Expenditures1 $590 $466 - $600 $489 - $671 Dividends2 $128 $132 - $137 $143 - $148 Total Uses of Funds $718 $598 - $737 $632 - $819 Financing Activities Common St
Slide 12: Investment Grade Profile
Investment Grade Profile Strong Credit Ratings Supported by Stable Cash Flows Current Credit Ratings NJR Adjusted FFO / Adjusted Debt1 20% NJNG NJR (Secured (Unsecured 18.1% 18% 17.4% 17-18% 17-18% Rating) Rating) NAIC NAIC-1.E NAIC-2.A Moody's A1 (Stable) 16% Fitch A+ (Stable) 14.3% 14% 12% 10% 8%
Slide 13: Well Positioned in a Rising Interest Rate Environment
Well Positioned in a Rising Interest Rate Environment ($ in Millions) Term Debt1 Maturity Schedule Impact of high interest rate as of March 31, 2023 environment included in FY2023 and $160 long-term NFEPS guidance $100 $100 $150 Weighted Average of Maturity ~15.8 $140 $130 $130 $130 • Interest rate
Slide 14: General Business Overview
General Business Overview 13 General Business Overview 14 NJR’s Business Portfolio 15 New Jersey Natural Gas (NJNG): Attractive Service Territory 16 NJNG: Capital Expenditures and Customer Growth 17 NJNG: Supportive Regulatory Construct 18 NJNG: SAVEGREEN 19 NJNG: Most Environmentally Sound Natural
Slide 15: NJR's Business Portfolio
NJR’s Business Portfolio Natural Gas and Renewable Fuel Distribution; Solar Investments, Wholesale Energy Markets; Storage & Transportation Infrastructure; Retail Operations Operates and maintains approximately 7,700 miles of Natural Gas New Jersey Natural Gas transportation and distribution infrast
Slide 16: New Jersey Natural Gas (NJNG): Attractive Service Territory
New Jersey Natural Gas (NJNG): Attractive Service Territory Affluent Customer Base Strategically Located between New York and Philadelphia Strategic Value Population1 thousands ▪ Attractive service territory MORRIS • Parsippany ▪ Constructive regulation 1,790 1,835 ▪ Regulatory incentives 1,700 ▪ In
Slide 17: NJNG: Capital Expenditures and Customer Growth
NJNG: Capital Expenditures and Customer Growth Strong Trend of Favorable Customer Growth Added 4,064 new YTD Fiscal 2023 Capital Expenditures1,2 NJNG Customers customers YTD in fiscal (in thousands) 2023 compared to 3,579 ~37% of capital expenditures 580 in YTD fiscal 2022 earning a near real-time r
Slide 18: NJNG: Supportive Regulatory Construct
NJNG: Supportive Regulatory Construct Stable Rate Case Results Decoupled Rates for majority of customers • Rate case results are stable • Volume risk due to weather or energy conservation mitigated through the Conservation Incentive Program • Current ROE of 9.60% with a common (CIP). This decoupling
Slide 19: NJNG: SAVEGREEN Provides Energy Efficiency and Earns Return
NJNG: SAVEGREEN Provides Energy Efficiency and Earns Return One of the most successful residential energy-efficiency Current Program: SAVEGREEN 2020 programs in N.J. During the current three-year SAVEGREEN program, NJNG expects to invest up to $259 million in energy efficiency alongside Conducts hom
Slide 20: NJNG: Most Environmentally Sound Natural Gas Delivery System in New Jersey
NJNG: Most Environmentally Sound Natural Gas Delivery System in New Jersey1 $2.3 Billion 1st Invested in natural gas delivery system NJ natural gas utility to have completely removed infrastructure in last decade 100% of all unprotected steel and cast iron from its system by December 2022 Continuous
Slide 21: Clean Energy Ventures (CEV): Milestone Projects
Clean Energy Ventures (CEV): Milestone Projects CEV has developed the two largest floating solar arrays in the United States Largest Floating Solar Array in the U.S. First in the State of New Jersey Sayreville Floating Solar 4.4-MW floating solar system in Sayreville, New Jersey (Middlesex County),
Slide 22: CEV: Profitable Operations Since 2009 Driven by Stable Revenue Model
CEV: Profitable Operations Since 2009 Driven by Stable Revenue Model Majority of CEV revenue contracted through FY 2025; Merchant Power upside CEV Revenue Breakout CEV Cumulative NFE (5-year Average FY2018-FY2022) (in millions) Sunlight $200 $186 Million in NFE $186 Advantage ~10% $180 Over the Sola
Slide 23: CEV: SREC Hedging Strategy Stabilizes Revenue
CEV: SREC Hedging Strategy Stabilizes Revenue Based on Energy Year1, as of March 31, 2023 Percent Average Current Price Hedged Unhedged Hedged Price (EY) EY 2023 400 22 95% $203 $228 Over 95% hedged EY 2024 395 6 98% $197 $215 through Thousands Energy Year 2024 EY 2025 353 46 89% $190 $205 71% hedge
Slide 24: CEV: Growing Capacity with a Robust Pipeline
CEV: Growing Capacity with a Robust Pipeline CEV owns and operates solar projects in New Jersey, Rhode Island, New York and Connecticut with approximately 440MW of capacity MWs Total 1200 ~1.2 GW In Service Under Construction Under Contract or Exclusivity 268 1000 Pipeline of ~740MW 800 including pr
Slide 25: Storage and Transportation (S&T): Overview
Storage and Transportation (S&T): Overview Stable Contribution from Leaf River (storage), Steckman Ridge (storage), and Adelphia Gateway (transportation) Portfolio of assets with • 0.9 mmdth/d interstate pipeline from NE “utility-like” stable earnings contribution PA to greater Philadelphia area • A
Slide 26: Energy Services: Overview
Energy Services: Overview Managing a Diversified Portfolio of Physical Natural Gas Transportation and Storage Assets to Serve Customers Across North America; Secured Fee-based Revenue through Asset Management Agreements Asset Management Long Option Strategy Agreements • Proven track record of succes
Slide 27: Energy Services Long Option Strategy: Proven Track Record of Success
Energy Services Long Option Strategy: Proven Track Record of Success Consistent Profitability(1) Since 1995 with Strong Financial Margins and NFE $ in Millions Average Financial Margin of ~$78M $172.4 and NFE of ~$33M over the last 10 years Financial Margin NFE $146.1 $121.6 $94.8 $91.0 $79.7 $71.1
Slide 28: Energy Services: Asset Management Agreements (AMAs)
Energy Services: Asset Management Agreements1 (AMAs) In December 2020, NJR announced its entry into a series of Asset Management Agreements (AMAs) with an investment grade public utility to release certain natural gas transportation contracts of Energy Services in exchange for fees of approximately
Slide 29: NJR: Aligned with New Jersey's Clean Energy Policy
NJR: Aligned with New Jersey’s Clean Energy Policy 2019 The Energy Master Plan (EMP) established priorities for the use, NJR Environmental Initiatives management and development of energy in New Jersey Maximize energy efficiency and conservation SAVEGREEN Accelerate the use of renewable CEV expansio
Slide 30: NJR: Environmental, Social and Governance Efforts
Environmental, Social and Governance Efforts Focus on Definable Accomplishments • Achieved NJ operational emissions reductions over 55% since 2006 with goal of 60% by 2030 and net zero by 2050 • One of the largest owner-operators of solar assets in New Jersey, we have invested over $1 billion over t
Slide 31: NJR: Committed to Building Shareholder Value Through Dividends
NJR: Committed to Building Shareholder Value Through Dividends Strong Track Record of Dividend Growth Dividends per Share $1.56 FY 2023 Dividend 7.3% (up 7.6%) DPS CAGR $1.45 $1.33 $1.25 $1.17 $1.09 $1.02 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 1) A reconciliation from NFE to net income can
Slide 32: NJR: Total Expected Shareholder Return
NJR: Total Expected Shareholder Return Delivering Value to Shareholders Through Growth and Income NJR is a Premier Energy Infrastructure Company The Clean Energy Future Solid Long Term Growth Growing Dividend Starts at NJR Outlook Net Zero by 2050 goal for New Expect 7% - 9% Annualized dividend yiel
Slide 33: Appendix: Financial Statements and Additional Information
Appendix: Financial Statements and Additional Information 32 Appendix 33 Reconciliation of NFE and NFEPS to Net Income 34 Other Reconciliation of Non-GAAP Measures Reconciliation of Adjusted Funds from Operations to Cash Flow 35 from Operations for FY2022 36 Shareholder and Contact Information 32
Slide 34: Reconciliation of NFE and NFEPS to Net Income
Reconciliation of NFE and NFEPS to Net Income ($ in 000s) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, • NFE is a measure of earnings based on the 2023 2022 2023 2022 elimination of timing differences to effectively NEW JERSEY RESOURCES match the earnings effects of the econom
Slide 35: Other Reconciliation of Non-GAAP Measures
Other Reconciliation of Non-GAAP Measures ($ in 000s) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, 2023 2022 2023 2022 A reconciliation of gross margin, the closest GAAP financial measurement, to utility gross margin is as follows: NJNG Utility Gross Margin Operating revenues
Slide 36: Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations for FY2022
Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations for FY2022 Adjusted Funds from Operations, Adjusted Debt, FY2022 FY2022 (Millions) • Adjusted funds from operations is cash (Millions) flows from operating activities, plus components of working capital, cash paid Cash Flo
Slide 37: Shareholder and Contact Information
Shareholder and Contact Information Stock Transfer Agent and Registrar Corporate Headquarters The Transfer Agent and Registrar for the company’s common stock is Broadridge Corporate Issuer Solutions, Inc. (Broadridge). 1415 Wyckoff Road Wall, NJ 07719 Shareowners with questions about account activit