Middlesex Water Company · NASDAQ:MSEX
Middlesex Water — Shareholder Meeting (May 2019)
49 slides from Middlesex Water's shareholder meeting presentation, May 22, 2019
Slide 1: Welcome to Our 2019 Annual Meeting of Shareholders
1 Welcome to Our 2019 Annual Meeting of Shareholders
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT As an introduction to the information we will be discussing, please be aware that some of our comments can be considered forward - looking statements as defined by the federal securities laws and as outlined in the Company’s SEC filings. As such, any forward - looking state
Slide 3: Passionate About the Mission
PASSIONATE About the Mission “Delivering on our mission requires a solid strategy, talented employees and a keen focus on executing the plan.” Dennis W. Doll Chairman 3
Slide 4: Incorporated 1897 Market Cap Dividend Yield
Incorporated 1897 Market Cap $1.001Billion 52 Week Range $40.08 - $63.68 4 Dividend Yield: 1.66% Annual Dividend:$0.96 Incorporated 1897
Slide 5: New Headquarters
NEW HEADQUARTERS ▪ Relocated offices to nearby office complex New Address: 485C Route One South Suite 400 Iselin, NJ ▪ JRT complex, constructed in 1984, under renovations to meet changing business needs
Slide 6: Our Services
Water Production, Treatment & Distribution Full Service Municipal Contract Operations Design/Build/Own Operate System Assets Water & Wastewater System Maintenance OUR SERVICES Public Private Partnerships Wastewater Collection & Treatment Water & Sewer Line Maintenance (Third Party)
Slide 7: Our Strategy For Profitability and Growth
SERVICE 5 Continue our COMMITMENT as a TRUSTED BRAND providing quality and life - sustaining water service, wastewater and related utility services to thousands of individual homes and businesses in New Jersey and Delaware . INVESTMENT 3 INVESTMENT in projects, products and services that complement
Slide 8: The MWC Advantage
THE MWC ADVANTAGE Stable, well run NJ, DE and PA utility with a regulated and non - regulated revenue base Regulated Utility Business Demonstrated Earnings Power Well Positioned Acquisition Opportunities Dividend Achiever Peer ROE Leadership Experienced Management Team Strong Financial Performance
Slide 9: Our Mission and Strong Culture
Our Mission: To provide service in the water, wastewater and related fields in a safe, reliable and efficient manner. RESPECT INTEGRITY GROWTH HONESTY TEAMWORK Our Strong Culture
Slide 10: Our Workforce
OUR WORKFORCE Employees: 330 Training Hours: 3,800 New Personnel: 59 Professional Operating Licenses: NJ: 90 DE: 33 We provide a work environment that encourages employee engagement, accountability and personal and professional development.
Slide 11: Engaging Our Customers
ENGAGING OUR CUSTOMERS Boil Water Recommendations & Traffic Advisories Water Saving Ideas Water Quality Reports Social Media Updates
Slide 12: Giving Back To Our Communities
12 “ We make a living by what we get, but we make a life by what we give. ” Winston Churchill FUTURE CITY Science, Technology, Engineering & Math (STEM) Events We believe our efforts help build stronger communities and promote interest in water careers and wise water use, the environment, education
Slide 13: Environment, Social & Governance (ESG)
Environmental Stewardship We work to minimize impacts of our operations on the environment and reduce our carbon footprint. Protectors of Public Health We safeguard our customers through early detection and warning of potential water contaminants. Responsible Business Policy Code of business conduct
Slide 14: Board of Directors
BOARD OF DIRECTORS James F. Cosgrove Jr., P.E. Vice President and Principal of Kleinfelder Jeffries Shein Managing P artner , JGT Management Company, LLC Steven M. Klein, CPA . President Financial Consultant & Chief Executive Officer of Northfield Bancorp, Inc. Amy B. Mansue Executive Vice President
Slide 15: Succession Planning
G. Chris Andreasen Assistant Vice President – Enterprise Engineering Georgia Simpson Assistant Vice President – Information Technology Robert Fullagar Assistant Vice President – Operations SUCCESSION PLANNING
Slide 16: Experienced Executive Team
EXPERIENCED EXECUTIVE TEAM
Slide 17: In Thanks and Recognition
IN THANKS AND RECOGNITION Jerry Esposito retired as President of Tidewater Utilities on January 1, 2019. Gerard L. Esposito Bruce O’Connor named President of Tidewater. Bruce O’Connor Senior Vice President, Chief Financial Officer and Treasurer
Slide 18: Our Profile of Performance
OUR PROFILE OF PERFORMANCE x Objective Regulatory Environment x Stable Residential Customer Base x Strong Financial and Balance Sheet x Corporate Credit Rating “A” Stable x Established Reputation for Technical & Operational Excellence x 46 Years of Consecutive Dividend Increases x Driving Shareholde
Slide 19: Financial 2018 Highlights
FINANCIAL 2018 HIGHLIGHTS 5.6% Operating Revenues Net Income Earnings Per Share $138.1 million 42.3% 42% $32.5 million $1.96
Slide 20: Revenues ($Millions)
$117.1 $126.0 $132.9 $130.8 $138.1 $1.05 $1.10 $1.15 $1.20 $1.25 $1.30 $1.35 $1.40 2014 2015 2016 2017 2018 REVENUES ($Millions)
Slide 21: Total Revenues Regulated and Non-Regulated
TOTAL REVENUES REGULATED AND NON - REGULATED • We own and operate regulated water and wastewater utility systems in New Jersey and Delaware. • We operate water and wastewater utility systems under contract for municipal and private clients. Non Regulated 12% Regulated 88%
Slide 22: Revenue Sources
Residential 48% Comm/Ind. 18% Fire Protection 9% Contract Sales 10% Contract Ops 12% Other 3% REVENUE SOURCES
Slide 23: Net Income ($Millions)
18.4 20.0 22.7 22.8 32.5 0 5 10 15 20 25 30 35 2014 2015 2016 2017 2018 NET INCOME ($Millions)
Slide 24: 2018 O&M Expense
Labor 31% Employee Benefits 14% Production 20% Other 14% Contract Ops. 12% Insurance 3% Pipe Repairs 3% IT 3% 2018 O & M EXPENSE
Slide 25: Earnings Per Share
$1.13 $1.22 $1.38 $1.38 $1.96 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 2014 2015 2016 2017 2018 EARNINGS PER SHARE
Slide 26: Dividend Payout Ratio
68% 64% 59% 62% 46% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2014 2015 2016 2017 2018 DIVIDEND PAYOUT RATIO
Slide 27: Dividends Paid
$0.76 $0.78 $ 0.81 $ 0.86 $ 0.91 $0.65 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 2014 2015 2016 2017 2018 DIVIDENDS PAID
Slide 28: 5% Discount Investment Plan
5% Discount to participants in the Company’s Investment Plan. Good until 200,000 shares are purchased or December 30, 2019, whichever occurs first. Discount Currently in Effect!
Slide 29: First Quarter 2019 Results
FIRST QUARTER 2019 RESULTS (In Millions) 2019 $30.7 $23.7 $6.6 $0.39 2018 $31.2 $24.8 $4.5 $0.27 Operating Revenues O & M Expenses Net Income Diluted Earnings Per Share
Slide 30: Factors Affecting Earnings
Timely Rate Recovery Decisions by regulators on rate increase requests Customer Growth Effects of general economic conditions, competition for growth in non - franchised markets. Weather Weather variations and natural phenomena impact. Cost Management Ability to control operating expenses without sa
Slide 31: Rate Matters
RATE MATTERS Company Effective Date Annual Revenues Middlesex (Base Rates) April1, 2018 $5.5 Million Middlesex (PWAC) January 1, 2019 $0.1 Million Tidewater (DSIC) (DSIC) January 1, 2019 $0.2 Million Tidewater (Rate Reduction) March 1, 2019 $(1.0) Million
Slide 32: Capital Expenditures Outlook
Company Timeline Sample 32 2019 2020 2019 - 2021 $295 CAPITAL EXPENDITURES OUTLOOK o Large & small mains, service lines and hydrants o New & upgraded water & wastewater treatment plants o ERP system - hardware and software o Transportation equipment, tools, lab equipment, security systems, etc. Your
Slide 33: Utility Plant ($Millions)
$461 $519 $617 $701 $764 $243 $257 $278 $295 $308 $0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 2017 2018 2019 2020 2021 New Jersey Delaware UTILITY PLANT ($Millions)
Slide 34: Capital Program Funding
CAPITAL PROGRAM FUNDING ▪ Dividend Reinvestment ▪ 5% Discount ▪ Stock Sale . ▪ NJEDA ▪ NJSRF ▪ DESRF ▪ S/T Lines ▪ Customer Growth ▪ Favorable Weather ▪ Rates x Cash Flow from Operations x Lines of Credit x Investment Plan Proceeds x Long - term Bonds x Common Stock Offering CASH FLOW EQUITY DEBT
Slide 35: Operations 2018 Highlights
OPERATIONS 2018 HIGHLIGHTS $1.96 ( Diluted)
Slide 36: Projects
PROJECTS
Slide 37: Western Transmission Main
WESTERN TRANSMISSION MAIN x 4.5 Miles of 42 - inch Diameter Ductile Iron Pipe x Through Metuchen and Edison x Being installed 10 feet underground, pipe is wrapped to prevent corrosion x Project is 60 % Complete x Slated for completion in 2020 www.waterfortomorrowmwc.com
Slide 38: RENEW 2019
RENEW 2019 x 4 Miles of Main To Be Replaced x Carteret, New Jersey x Mains, service lines, valves and fire hydrants x Work will improve fire flows and overall service quality x Installing exterior meter pits x Funded through New Jersey Economic Development Authority www.waterfortomorrowmwc.com/renew
Slide 39: Protecting Against Lead
PROTECTING AGAINST LEAD x In compliance with the current Lead and Copper Regulation x Creating lead service line inventories for both the utility and customer portion of the line x Member of the National Lead Service Line Replacement Collaborative x Providing customer education via our website on ho
Slide 40: American Water Infrastructure Act
AMERICAN WATER INFRASTRUCTURE ACT Requirements: x Complete risk and resilience assessment x Develop an emergency response plan x Submit certification of completion to U.S. EPA by March 2020 Risk & Resilience Assessment ▪ All hazards, natural and other ▪ Resilience of water facility infrastructure (p
Slide 41: Upgrading Our Treatment Process
UPGRADING OUR TREATMENT PROCESS Preliminary plans have been completed to convert the treatment process in NJ to ozone disinfection to ensure compliance with increasingly stringent drinking water quality regulations and to mitigate the occurrence of disinfection by - products.
Slide 42: Emerging Contaminants
EMERGING CONTAMINANTS ▪ USEPA has introduced draft interim recommendations to address groundwater containing PFOA and PFOS. ▪ PFAS are used in a wide range of products and exposure comes from multiple sources. They are a group of more than 4,000 very stable synthetic chemicals. ▪ Exposure has been l
Slide 43: Pennsylvania Awarded Contract
USA - PA AWARDED 10 - YEAR CONTRACT
Slide 44: Pinelands Wastewater Plant RBC Upgrade Project
PINELANDS WASTEWATER PLANT ROTATING BIOLOGICAL CONTACTOR UPGRADE PROJECT $1.3 M x Completed RBC and RBC Buildings
Slide 45: Secondary Treatment Process Unit Upgrade
SECONDARY TREATMENT PROCESS UNIT UPGRADE Before After $0.4 Million Project Includes New Bridge and Scraper System Aging Influent Piping
Slide 46: Project Completed
PROJECT COMPLETED
Slide 47: Mobile Workforce Management
MOBILE WORKFORCE MANAGEMENT Field Activity (FA) Created in Customer Care System FA Simultaneously Appears in Mobile Workforce System System automatically prioritizes work and dispatches field personnel As field activity is completed, customer records are automatically updated Reports are generated i
Slide 48: Mobile Workforce Management Benefits
Immediate dispatch for Emergencies Accurate Records mean less repeat appointments Consistent level of service Meets customers’ increasing expectations System ensures lone worker safety Work is assigned equitably Travel routes are optimized based on their location Work completed to standards building
Slide 49: Questions?
Questions? This presentation will be available on www.middlesexwater.com under the tab “Investors.” Thank you for your ongoing support!