Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q3 FY2018 Earnings Presentation
24 slides from Newjersey Resources's earnings presentation, Aug 7, 2018
Slide 1: Third-Quarter Fiscal 2018 Update
Third-Quarter Fiscal 2018 Update August 7, 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 measures, NFE and utility gross margin. As an indicator of the Company’s operating performance, these measures should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flows, net income, opera
Slide 4: Third Quarter Highlights
Third Quarter Highlights Financial • Reported a net financial loss* of $8.0 million compared with net financial earnings Results (NFE) of $17.4 million in the third quarter of fiscal 2017 Guidance • Increased fiscal 2018 earnings guidance range to $2.60 - $2.70 • Southern Reliability Link received a
Slide 5: Increased Guidance Range to $2.60 - $2.70
Increased Guidance Range to $2.60 - $2.70 Projected Sources of Fiscal 2018 NFE New Jersey Tax Reform* Natural Gas 20-25% 35-40% NJR Clean Energy Ventures 5-10% NJR Home Services/ Other 1-3% Midstream 5-7% NJR Energy Services 25-30% * Represents the impact of the revaluation of deferred tax liabiliti
Slide 6: Strong NJNG Customer Growth
Strong NJNG Customer Growth Recent Developments New Customer Additions • Increased long-term customer growth 10,000 9,126* 9,333 estimate to 27,000 – 29,000 from 9,000 26,000 – 28,000 8,000 FYTD 2018A 6,936 7,000 6,231 • 6,936 new customers added Customers 6,000 • 4,729 new construction 5,000 • 2,20
Slide 7: Southern Reliability Link (SRL)
Southern Reliability Link (SRL) Current Status • Received an easement from Joint Base McGuire-Dix- Lakehurst in June 2018 • Approvals received from: – New Jersey Pinelands Commission (September 2017) – New Jersey Department of Environmental Protection (March 2017) – New Jersey Board of Public Utilit
Slide 8: Clean Energy Ventures
Clean Energy Ventures Wind – Recent Developments • On June 1, 2018, CEV closed the sale of Two Dot Wind Farm for $18.5 million – Pre-tax gain of approximately $1 million • CEV plans to sell its remaining wind assets – Expect to close this potential sale in FY1Q19 Solar – Recent Developments • Two co
Slide 9: New Jersey's Clean Energy Economy
New Jersey’s Clean Energy Economy On May 23, 2018, Governor Murphy signed legislation to make New Jersey a clean energy leader • Drives job growth and creates investment opportunities • Creates new, aggressive renewable energy standards • Strengthens the state’s solar market • Requires utilities to
Slide 10: SREC Hedging Strategy Stabilizes Revenue
SREC Hedging Strategy Stabilizes Revenue 350 287 287 300 278 250 Thousands of SRECs 200 150 254 258 100 165 50 0 EY19 EY20 EY21 Hedged Unhedged Operational and Under Construction Pct. Hedged: 91% 90% 58% Average Price: $192 $191 $192 Current Price (EY): $216 $202 $173 As of July 31, 2018; Source: In
Slide 11: NJNG Capital Investment Update - June 30, 2018
NJNG Capital Investment Update - June 30, 2018 Capital Investment ($ millions) FYTD 3Q 2018 2018E 2019E Status Update Added 2,280 new customers in FY3Q18 and on target to add 9,400 Customer Growth $12.2 $33.6 $38.5 $40.0 customers in FY2018 Maintenance $21.8 $42.7 $73.1 $81.9 Capital spending on tra
Slide 12: CEV/Midstream Capital Investment Update - June 30, 2018
CEV/Midstream Capital Investment Update - June 30, 2018 Capital Investment ($ millions) FYTD 3Q 2018 2018E Status Update CEV Placed two projects into service in FY3Q18; two other projects expected to Commercial Solar $48.0 $78.1 $100.3 be placed into service in FY4Q18 221 new customers added in FY3Q
Slide 13: Changes in Net Financial Earnings
Changes in Net Financial Earnings Three Months Ended June 30, 2018 $20.0 $17.4 $0.5 $15.0 -$3.5 $10.0 Millions $5.0 -$7.1 $0.0 -$5.0 $0.7 -$10.0 -$8.0 -16.0 -$15.0 June 30, 2017 NJNG Midstream CEV Energy Services HS/Other June 30, 2018 Nine Months Ended June 30, 2018 $300.0 $57.8 $269.4 $250.0 -$11.
Slide 14: NJR Sources and Uses of Capital
NJR Sources and Uses of Capital 2018E 2019E 2020E $1,000 $900 $800 $700 Millions $600 $500 $400 $300 $200 $100 $0 Sources Uses Sources Uses Sources Uses LT Debt/Asset Sales Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Balance Sheet 13
Slide 15: Third-Quarter Fiscal 2018 Update
Third-Quarter Fiscal 2018 Update August 7, 2018
Slide 16: Appendix
New Jersey \\ Resources FOCUSED ON THE ENERGY FUTURE Appendix
Slide 17: Fiscal 2018 Third Quarter and Year-to-Date NFE
Fiscal 2018 Third Quarter and Year-to-Date NFE Three Months Ended Nine Months Ended Net Financial Earnings June 30, June 30, Company 2018 2017 Variance 2018 2017 Variance New Jersey Natural Gas $2.4 $6.0 ($3.6) $97.0 $96.5 $0.5 NJR Midstream 3.5 3.0 0.5 22.3 10.3 12.0 Subtotal 5.9 9.0 (3.1) 119.3 10
Slide 18: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three and nine months ended June 30, 2018 and 2017 to net income is provided below: 17
Slide 19: Annual Dividend and NFE Growth Rate of 6% - 8% Annually
Annual Dividend and NFE Growth Rate of 6% - 8% Annually Dividends Per Share $1.20 $1.09 $1.02 $1.00 $0.96 $0.92 $0.81 $0.86 $0.80 $0.60 $0.40 $0.20 $0.00 2013A 2014A 2015A 2016A 2017A 2018E NFE Per Share $3.00 $2.60 - $2.70 $2.50 $2.10 $2.00 $1.78 $1.73 $1.61 $1.37 $1.50 $1.00 $0.50 $0.00 2013A 2014
Slide 20: SAFE II
SAFE II Miles Replaced: 2016A – 2021E Capital Investment 600 $50.0 552** 552 552 552 552 552 $45.0 $44.0 500 $39.8 $39.1 498 $40.0 $38.0 $35.9 444 $34.7*** 400 $35.0 390 ($ millions) $30.0 345 300 $25.0 276* $20.0 200 $15.0 100 $10.0 $5.0 0 2016A 2017A 2018E 2019E 2020E 2021E $0.0 Miles Replaced Amo
Slide 21: NJ RISE
NJ RISE New Jersey Reinvestment in System Enhancement (NJ RISE) Capital Investment $30.0 $28.2 $24.8 $25.0 $20.0 ($ millions) $15.0 $11.4 $10.0 $8.7 $5.0 $0.0 2016A 2017A 2018E 2019E Five-Year, $102.5 Million Program Consisting of Six System Hardening Projects within NJNG’s Coastal Communities Appro
Slide 22: Factors Supporting Future Customer Growth
Factors Supporting Future Customer Growth New Construction Conversions 2017 Building Permits Issued1 Equivalent Customer Cost2 7,000 $4.50 $4.17 $4.10 6,000 5,747 $4.00 $3.50 5,000 $3.00 4,000 $2.30 $2.50 3,147 3,000 $2.00 $1.50 2,000 1,560 $0.95 1,010 $1.00 1,000 $0.50 0 $0.00 NJNG Monmouth Ocean M
Slide 23: SREC Hedging Strategy Stabilizes Income
SREC Hedging Strategy Stabilizes Income Hedged Unhedged Operational and Under Construction 350 300 241 287 287 Thousands of SRECs 250 200 150 264 258 100 165 50 0 FY19 FY20 FY21 Pct. Hedged: 92% 90% 58% Average Price: $196 $191 $192 Current Price: $211 $192 $169 As of July 31, 2018; Source: InterCon
Slide 24: NJR Projected Cash Flows
NJR Projected Cash Flows ($ millions) 2018E 2019E 2020E Cash Flow From Operations $311.7 $282.1 $312.3 Uses of Funds Capital Expenditures – NJNG/Other ($226.6) ($414.2) ($207.0) Capital Expenditures – PennEast (18.2) (44.4) (164.7) Capital Expenditures – CEV (138.8) (129.8) (113.9) Capital Expenditu
New Jersey Resources — Q3 FY2018 Earnings Presentation on 6ix