Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q2 2020 Earnings Presentation
30 slides from Newjersey Resources's earnings presentation, May 8, 2020
Slide 1: Second-Quarter Results
Second-Quarter Results May 8, 2020
Slide 2: Forward-Looking Statements & Non-GAAP Measures
Forward-Looking Statements & Non-GAAP Measures Forward-Looking Statements Non-GAAP Measures This presentation contains forward-looking statements within the meaning of Section 27A of the This presentation includes the non-GAAP measures, NFE and utility gross margin. As an Securities Act of 1933, as
Slide 3: Agenda
Table of Contents ▪ New Jersey Resources Overview ▪ New Jersey Natural Gas Overview ▪ Non-Utility Businesses Overview Agenda ▪ Second-Quarter FY 2020 Highlights ▪ Sustainability Review Steve Westhoven ▪ Financial & Liquidity Update ▪ Financial Review Pat Migliaccio ▪ Transaction Overview ▪ Q&A 2
Slide 4: COVID-19 Impacts
COVID-19 Impacts • Business continuity plans implemented in early March • Approximately 500 employees working remotely Our Team • Only essential workers in the field or office • Following CDC and State guidelines Our • Customer disconnects temporarily suspended and Customers late fees waived and • E
Slide 5: Fiscal 2020E Guidance
Fiscal 2020E Guidance Reaffirming Fiscal 2020 NFE Guidance Range of $2.05 – $2.15* per share 10% - 15% 27% - 32% 61% - 65% $2.05 - $2.15 1% - 2% -5% - 0% NJNG NJR Midstream NJR CEV NJRHS NJRES * A reconciliation from NFE to net income can be found in the Appendix on Slide 21. 4
Slide 6: NJR Energy Services Results – Challenging Conditions
NJR Energy Services Results – Challenging Conditions Total Degree Days* in Northeast – December – March (2018 – 2020) 2500 2000 1500 1000 500 Dec Jan Feb Mar Fiscal 2018 Fiscal 2019 Fiscal 2020 Geographic Spreads - TETCO M3 vs. M2** $12 $10 $8 $6 $4 $2 $0 Dec Jan Feb Mar Fiscal 2018 Fiscal 2019 Fisc
Slide 7: Additional Guidance Detail
Additional Guidance Detail ($ NFE Per Share) -5% - 0% of NFE $2.15 $2.15 Energy -$0.14 ▪ Decrease due to unusually warm $0.05 Services weather and lack of price volatility $2.05 $0.09 $2.05 -$0.14 61% - 65% of NFE NJNG +$0.09 ▪ O&M savings and OPEB 27% - 32% of NFE CEV +$0.05 ▪ Additional ITC safe-h
Slide 8: Recent Results – Regulated Business
Recent Results – Regulated Business Added 4,430 new customers in the first Natural Gas Storage six months of FY2020 ▪ Leaf River operations performing in- ▪ On track to meet annual growth rate line with expectations of 1.8% ▪ Steckman Ridge contribution to earnings in-line with historical trends ~38
Slide 9: NJR CEV – New Jersey Transitional Solar Market
NJR CEV – New Jersey Transitional Solar Market ▪ New Jersey closed the SREC market on April 30, 2020 ▪ Projects that by April 30th were ready to interconnect and had applied for interconnection remained part of the SREC market and will continue to earn SRECs; all other projects will be part of the T
Slide 10: Recent Results – Unregulated Business
Recent Results – Unregulated Business New Jersey SREC market closed on NFE decreased due to challenging April 30, 2020 market conditions ▪ New installations will earn TRECs and ▪ Created by unusually warm weather the legacy SREC market will not be on the U.S. east coast during the affected January t
Slide 11: Financial Review
Financial Review Patrick Migliaccio Senior Vice President & Chief Financial Officer
Slide 12: Liquidity
Liquidity ▪ Improved liquidity position and debt maturity schedule as a result of: ▪ New $250 million 364-day credit facility and repayment of $150M NJR Seasonal Facility ▪ Pricing of $260 million in unsecured notes at NJR and $125 million in mortgage bonds at NJNG o Funding expected in FY 2020 o Pr
Slide 13: Debt Maturity Schedule
Debt Maturity Schedule ▪ No significant debt maturities until FY 2022, assuming signing and closing of our recently priced notes Debt Maturity Schedule as of March 31, 2020 ($MM) Pro-Forma Debt Maturity Schedule as of March 31, 2020 Actuals ($MM) Consolidated: Total debt as of 03/31/2020: $2.1 billi
Slide 14: Changes in Net Financial Earnings – Fiscal 2Q20
Changes in Net Financial Earnings – Fiscal 2Q20 Fiscal 2Q19 – Consolidated NFE ($MM) $112.4 Changes in NFE – Fiscal 2Q20 ($MM) NJNG $17.8 Utility Gross Margin $26.8 Increase in D&A ($4.1) Increase Income Taxes ($7.4) $0.2 $17.8 $5.7 O&M and Other $2.6 $19.0 $1.7 NJR Midstream ($0.2) Operating income
Slide 15: NJR Capital Plan
NJR Capital Plan FYTD N e a r R e a l- ($MM) FY 2020E FY 2021E FY 2022E 2020 T im e R e t urn? New Jersey Natural Gas* New Customer $26 $42 $38 - $48 $39 - $49 Yes Maintenance $25 $97 $90 - $100 $85 - $95 Cost of Removal/Other $24 $73 $84 - $94 $38 - $48 SAFE II $29 $50 - - - - - - Yes NJ RISE $6 $9
Slide 16: NJR Projected Cash Flows
NJR Projected Cash Flows ($ millions) FYTD 2020A FY 2020E FY 2021E Cash Flow From Operations $179 $290 $360 Uses of Funds Capex(1) ($227) ($605) ($583) Acquisition – Leaf River ($368) ($368) - Acquisition – Adelphia Gateway ($156) ($156) - Dividends ($57) ($119) ($130) Total Uses of Funds ($808) ($1
Slide 17: NJR CEV – SREC Hedging Strategy Stabilizes Revenue
NJR CEV – SREC Hedging Strategy Stabilizes Revenue Energy Year 2020 Energy Year 2021 Energy Year 2022 9 36 16 369 348 356 Hedged Unhedged Hedged Unhedged Hedged Unhedged Percent Average Current Percent Average Current Percent Average Current Hedged Price Price (EY) Hedged Price Price (EY) Hedged Pri
Slide 18: Additional Quarterly Financial Drivers
Additional Quarterly Financial Drivers Fiscal 2020E NJNG Utility Fiscal 2020E SREC Fiscal 2020E ITCs Gross Margin Revenue Generated (1) 3% 2% 13% 9% 10% 27% 19% 27% 54% 85% 10% 41% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (1) Based on value of solar projects placed in-service 17
Slide 19: New Jersey Resources
New Jersey (\\ Resources
Slide 20: Appendix
New Jersey (\\ Resources Appendix
Slide 21: Second Quarter Fiscal 2020 NFE by Business Unit
Second Quarter Fiscal 2020 NFE by Business Unit Three Months Ending March 31, Six Months Ending March 31, ($ thousands) 2020 2019 Change 2020 2019 Change New Jersey Natural Gas $86,336 $68,546 $17,790 $130,192 $100,259 $29,933 NJR Midstream 4,258 4,498 (240) 7,262 8,149 (887) Regulated Businesses 90
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three and six months ended March 31, 2020 and 2019 to net income is provided below: 21
Slide 23: Supporting Growth at New Jersey Natural Gas
Supporting Growth at New Jersey Natural Gas New Customer Additions Fiscal YTD Capital Expenditures ($MM) Annual Total Customer Growth Rate: ~1.8% in FY 2020E 3% 9,711 9,800 27% 17% ~39% of capex in first six $155 months of 2020 15% earned near 22% real-time return 5,030 4,339 16% New Customer SAFE/N
Slide 24: Factors Supporting Future Customer Growth
Factors Supporting Future Customer Growth ▪ Customer growth supported by strong new construction and conversion markets New Construction Conversions 1,240 2019 Building Permits Issued1 Equivalent Customer Cost2 $4.03 $3.15 666 $2.25 327 247 $1.05 NJNG Ocean Monmouth Morris NJNG Fuel Oil Propane Elec
Slide 25: Infrastructure Investment Program (IIP)
Infrastructure Investment Program (IIP) ▪ Five year, $507 million investment to strengthen infrastructure ▪ Natural gas transmission and distribution system enhancements ▪ Information technology system replacement Exploring potential for recovery through annual rate increases (similar to SAFE II & N
Slide 26: Southern Reliability Link (SRL)
Southern Reliability Link (SRL) ▪ 30-mile high-pressure pipeline designed to What? diversify natural gas supply in Ocean County ▪ Delivery of 180,000 Dths/day ▪ Total investment of $180 -$220 million ▪ Reliability, Redundancy, Resiliency ▪ Currently 95% of gas supply for Monmouth Why? and Ocean Coun
Slide 27: NJR Midstream – Adelphia Gateway
NJR Midstream – Adelphia Gateway Recent Developments ▪ Received FERC Certificate on December 20, 2019 ▪ Closed acquisition in January 2020 ▪ Northern portion in-service Next Steps ▪ Actively working with Pennsylvania DEP to obtain final permits to file for FERC Notice to Proceed ▪ Add compression, n
Slide 28: NJR Midstream – PennEast Pipeline
NJR Midstream – PennEast Pipeline Project Overview ▪ 20 percent ownership in 120-mile transmission pipeline to Northeast connecting Marcellus Shale region supply ▪ Access to the lowest cost supply point in North America; expected to benefit customers and local economies ▪ Approved by FERC – January
Slide 29: Clean Energy Ventures
Clean Energy Ventures Fiscal 2020 Commercial MW in Service 22.9 Incremental installed capacity from three Expect to add a MW commercial projects in FY20 22.9 total of 52 – 57 MW in fiscal 2020 52-57 Expected incremental capacity from MW commercial projects in FY20 29 - 34 Over Sunlight Advantage res
Slide 30: NJR CEV – SREC Hedging Strategy Stabilizes Revenue
NJR CEV – SREC Hedging Strategy Stabilizes Revenue Fiscal Year 2020 Fiscal Year 2021 Fiscal Year 2022 104 18 367 280 397 Hedged Unhedged Hedged Unhedged Hedged Unhedged Percent Average Current Percent Average Current Percent Average Current Hedged Price Price (EY) Hedged Price Price (EY) Hedged Pric