Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — New York Financial Community Meeting (February 2013)
40 slides from Newjersey Resources's conference presentation, Feb 7, 2013
Slide 1: New York Financial Community Meeting
New York Financial Community Meeting February 7, 2013 Exhibit 99.2
Slide 2: Regarding Forward-Looking Statements
2 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. Forward-looking statements can also be identified by the use of forward-looking terminology such as “may
Slide 3: Disclaimer Regarding Non-GAAP Financial Measures
3 Disclaimer Regarding Non-GAAP Financial Measures This presentation includes the non-GAAP measures net financial earnings (losses), financial margin and utility gross margin. As an indicator of the Company’s operating performance, these measures should not be considered an alternative to, or more m
Slide 4: The NJR Story
The NJR Story 21 consecutive years of Net Financial Earnings (NFE) growth 17 consecutive years of dividend growth Low payout ratio compared to peer group Strong financial profile and liquidity – senior secured rating of A+ (S&P) and Aa3 (Moody’s) 10-year average annual total return to shareowners of
Slide 5: Financial Goals
Financial Goals Long-Term NFE growth of 4 to 6 percent Earnings from NJNG of 60 to 70 percent Annual dividend growth of 5 percent Maintain a payout ratio at or lower than peer average Maintain a strong financial profile with a minimum equity ratio of 50 percent
Slide 6: Superstorm Sandy – Impact
Recovery of both capital and O&M will be sought in a future base rate case to be filed before November 2015 Impact lower than original post-storm estimates Total storm-related capital expenditures currently estimated at $30 to $40 million over the next three years Capital will be treated as rate bas
Slide 7: Benefits of Lower Natural Gas Prices
Benefits of Lower Natural Gas Prices New Jersey Natural Gas (NJNG): • Lower customer bills – no impact on margin • Lower bad debt • Lower working capital requirements • Supports customer growth • Higher customer satisfaction • Supports NJ’s Energy Master Plan NJR Energy Services (NJRES): • Lower wor
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Slide 9: Fiscal 2013 Outlook
Strong results from NJNG • Annual customer growth estimate increased • Accelerated infrastructure opportunities • Results over the balance of the year expected to increase over fiscal 2012 Continued progress on clean energy and retail energy strategies • Solar Renewable Energy Certificates (SREC) pr
Slide 10: Fiscal 2013 Earnings Guidance
Infrastructure-based businesses expected to contribute about 90 percent of fiscal 2013 NFE Fiscal 2013 Earnings Guidance
Slide 11: Net Financial Earnings
Solid financial performance expected in fiscal 2013 Net Financial Earnings
Slide 12: Growing Dividends
19 dividend increases in 17 years * Current annual rate Growing Dividends
Slide 13: Payout Ratio
Goal of 60 to 65 percent payout ratio * Based on NJR Net Financial Earnings ** Peer group average based on 2012 earnings estimates and indicated dividend from Bloomberg. Peer group: ATO, GAS, LG, NWN, PNY, SJI, SWX, VVC and WGL Payout Ratio
Slide 14: Our Business Model
Natural Gas Distribution • Strong customer growth • Infrastructure investments • Regulatory incentives Clean Energy • Residential and commercial solar programs • Onshore wind • Combined heat and power Retail Energy Services • Service contracts • Installation of heating, cooling and natural gas gener
Slide 15: Capital Budget Fiscal 2013
Strong capital investment to support future earnings growth Capital Budget Fiscal 2013: $211Million
Slide 16: Fiscal 2013 Cash Flow Forecast
($ millions) September 30, Cash flow from operations $243.4 Capital expenditures: Utility plant (48.2) AIP/SAFE (33.8) Sandy (24.7) Cost of removal (24.7) CEV (80.0) Total capital expenditures (211.4) Financing activities Common stock issued 7.5 Dividends (66.6) Debt proceeds, net 27.1 Total financi
Slide 17: Our Core Distribution Business
NJNG provides majority of earnings Growing customer base – primarily residential and commercial Net plant, property and equipment of nearly $1.2 billion Collaborative regulatory relations High customer satisfaction Our Core Distribution Business
Slide 18: Strong Customer Growth
Demographics and customer service support future customer growth 1,959 new customers in added in Q1 fiscal 62 existing customer heat conversions Solid conversion market: • 65 percent oil • 23 percent electric • 12 percent propane Customer growth expected to add $3.5 million of gross margin annually
Slide 19: A Growing Service Area
Our service territory is among the fastest growing in the state with Ocean County accounting for half our growth A Growing Service Area * Source: US Census data
Slide 20: Value for Customers
NJNG enjoys a distinct price advantage in its service area Source: US Energy Information Administration Data as of December 2012. Based on 100,000 comparable BTUs Value for Customers
Slide 21: Future Potential Customer Growth
With our new construction and conversion outlook, we see a total potential of over 204,000 new customers Future Potential Customer Growth
Slide 22: Regulatory Collaboration
Constructive regulatory environment and support of public policy objectives create growth opportunities for NJNG In place through September 30, 2013 Protects NJNG from declining usage and weather; encourages customer conservation Customers have reduced usage and saved over $248 million since incepti
Slide 23: NJNG must file a base rate case no later than November 2015
NJNG must file a base rate case no later than November 2015 Approved by the BPU on October 23, 2012 4-year program includes $130 million of investment Replace approximately 276 miles of unprotected steel and cast iron distribution main Cost recovery at a weighted average cost of capital of 6.9 perce
Slide 24: System Reliability
Infrastructure investment improves system performance System Reliability
Slide 25: Current BPU Filings
Current BPU Filings The SAVEGREEN Project® Through December 2012, a total of $31.2 million in incentives and rebates have been provided through SAVEGREEN programs Over 1,375 contractors have participated in The SAVEGREEN Project and the program has resulted in approximately $144 million in economic
Slide 26: Our NGV Advantage: Fueling the Future
Supports New Jersey’s Energy Master Plan Approved on June 18, 2012 Investment of up to $10 million on CNG infrastructure NJNG will install, own and maintain the CNG infrastructure Designed to grow the market for clean, affordable and energy-efficient natural gas vehicles Have received interest from
Slide 27: BGSS Incentives
Incentive programs in place through October 2015 Off-system sales and capacity release • Optimization of capacity and supply contracts • Sharing formula of 85 percent customers; 15 percent shareowners Storage Incentive • Promotes long-term price stability • Promotes efficient contract utilization •
Slide 28: NJR Clean Energy Ventures
Enhancing shareowner value while saving customers money Total commercial and residential programs through December 31, 2012: • 45.5 MW of installed capacity • Approximately 50,000 SRECs generated annually Competitively priced electricity for customers Strong legislative commitment to solar in New Je
Slide 29: Improving SREC Prices
SREC values have increased over 75 percent during fiscal 2013 Improving SREC Prices Tax credits, federal grants, bonus depreciation and high SREC prices resulted in an overbuilt market • Put downward pressure on SREC prices New state legislation • Signed in July 2012 to bring long-term stability to
Slide 30: New Jersey's Clean Energy Commitment
Supporting a sustainable solar industry in New Jersey *New RPS utilizes retail electricity sales forecast provided by Rutgers Bloustein School - Center for Energy, Economic and Environmental Policy (R/ECON, spring 2012) New Jersey’s Clean Energy Commitment
Slide 31: Construction activity has slowed; increasing SREC prices
Construction activity has slowed; increasing SREC prices New Jersey Monthly Installations Source: Karbone Renewables Research
Slide 32: Declining Solar Costs
Making solar more competitive Source: Lawrence Berkeley National Laboratory (Behind the meter weighted average installed cost) * Analyst estimate for Declining Solar Costs
Slide 33: The Sunlight Advantage: Residential Program
Residential customer electric bills lowered by over $630,000 Residential Program Fiscal 2013 results: • 103 homes added • Average size: 8 kilowatts • $2.8 million of capital deployed About 1,300 customers added since inception Partnering with contractors to support local business The Sunlight Advant
Slide 34: The Sunlight Advantage: Commercial Program
Approximately $130 million in commercial project pipeline Commercial Program Fiscal 2013 projects: • Medford Ground-mounted system $20 million; 6.7 MW project In service as of October 15, 2012 • Wakefern Rooftop system $6.9 million; 2.4 MW project In service as of December 31, 2012 Medford Township
Slide 35: Investing in Onshore Wind
Diversifies CEV’s renewable energy portfolio $8.8 million investment to acquire approximately 18 percent equity interest OwnEnergy manages onshore wind project development process CEV receives “shovel ready” investment opportunities for consideration Reduce reliance on SRECs and investment tax credi
Slide 36: NJR Energy Services
NFE forecast for balance of fiscal year expected to exceed fiscal 2012 Contributed $3.0 million to NFE in Q1 fiscal 2013 Focusing on long-option strategy and disciplined risk management • Limits downside • Transactions have upside potential NJR Energy Services Providing customized energy solutions f
Slide 37: NJR Energy Holdings
Contract services provide steady margins Contributed $1.8 million to NFE in Q1 fiscal 2013 Steckman Ridge • 50 percent joint venture with Spectra Energy Iroquois • 5.53 percent ownership in pipeline from Canada to the northeast Expected to contribute 5-10 percent to fiscal 2013 NFE NJR Energy Holdin
Slide 38: NJR Home Services
Home energy solutions for customer comfort Serves approximately 128,000 customers Expanded services now offered • Whole house electric and plumbing contracts • Standby generator contracts • Air conditioning • Generators sales and installation Pursuing geographic expansion • Currently marketing in Su
Slide 39: Summary
Fundamentals remain in place to achieve continued consistent performance and long-term growth Summary Solid earnings performance expected in fiscal 2013 Increasing dividend while maintaining strong financial profile Core utility continues to provide majority of earnings • Strong customer growth of 1
Slide 40: New York Financial Community Meeting
New York Financial Community Meeting February 7, 2013
New Jersey Resources — New York Financial Community Meeting (February 2013) on 6ix