Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — New York Financial Community presentation, June 18, 2003
30 slides from Newjersey Resources's conference presentation, Jun 18, 2003
Slide 1: Focusing On The Fundamentals
Focusing On The Fundamentals New York Financial Community June 18, 2003
Slide 2: Regarding Forward-Looking Statements
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. NJR wishes to caution persons reading or hearing this presentation that the assumptions that form the basi
Slide 3: Corporate Responsibility at NJR
Corporate Responsibility at NJR No SPEs or non-disclosed liabilities Independent Board of Directors Independent Corporate Governance Committee in place since 1996 Complete compliance with SEC certification process New internal committee to assist in process Active and engaged Audit Committee Highly
Slide 4: How We Run Our Business
It all starts with integrity We know what we are and more importantly, what we're not We focus on the fundamentals People make the difference How We Run Our Business The ultimate test is sustained performance. NJR has produced an EPS CAGR of 7.1 percent over the last 10 years
Slide 5: The Building Blocks of Consistency
The Building Blocks of Consistency Maximize the Value of the Core Business Service Area Profitable Growth No Base Rate Cases Regulatory Partnerships Enhance Returns by Leveraging Core Skills and Assets Home Services Off-System Sales/Capacity Management Energy Services Productivity/Quality Customer S
Slide 6: The Building Blocks of Consistency: Maximize the Value of the Core Business
The Building Blocks of Consistency Maximize the Value of the Core Business Service Area Profitable Growth No Base Rate Cases Regulatory Partnerships Productivity/Quality Customer Satisfaction
Slide 7: Maximizing Value: Margin and Customer Growth
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1998 385 1999 397 2000 410 2001 423 2002 434 2003E 445 Maximizing Value: Margin and Customer Growth Customer growth generates approximately $6.6 million of new margin annually NJNG captures 95 per
Slide 8: Disciplined Capital Allocation
Disciplined Capital Allocation New Customer 21.7 System Integrity 24.2 Other Utility 1.1 Non-Utility 7.4 Economic value-added process Margin from new customers must cover associated capital costs System integrity spending up to depreciation level Other projects evaluated on EVA basis Fiscal 2003 Est
Slide 9: Maximizing Value: Improved Productivity
Maximizing Value: Improved Productivity The cost of adding a new customer has declined over 23 percent, while O&M productivity has improved by 16 percent since 1992. Primary drivers have been: Balanced marketing strategy Changes in work processes New Customer Cost O&M as a Percent of Margin
Slide 10: Maximizing Value: Productivity & Incentives
Maximizing Value: Productivity & Incentives Virtually every employee is a shareowner Incentives paid in cash and stock Bargaining Unit participates in the incentive plan Customers per Employee Margin per Employee
Slide 11: Maximizing Value: Regulatory Partnerships
Maximizing Value: Regulatory Partnerships By partnering with our regulators, NJNG has been able to: Avoid filing for base-rate increases Use the competitive energy marketplace to benefit both customers and shareowners Open new markets and offer customers new choices Focus on Governor's energy polici
Slide 12: Maximizing Value: Smart Growth
Maximizing Value: Smart Growth State initiative to plan for future growth by limiting sprawl and promoting redevelopment Asbury Park & Long Branch are the first communities in service area selected for the program NJNG expects to invest over $7 million in Asbury Park and Long Branch
Slide 13: Maximizing Value: Customer Satisfaction
SJI NUI CIV GPU/FE PEG NJR 3.22 2.73 2.29 1.81 1.09 0.64 BPU Inquiries per 1,000 Customers NJNG is working toward its 11th consecutive year of having the best customer satisfaction rate in New Jersey Maximizing Value: Customer Satisfaction March 2003 FYTD
Slide 14: The Building Blocks of Consistency: Enhance Returns by Leveraging Core Skills and Assets
The Building Blocks of Consistency Enhance Returns by Leveraging Core Skills and Assets Home Services Off-system Sales/Capacity Management Energy Services
Slide 15: Enhancing Returns: OSS/CM Markets
Since 1992, off-system sales/capacity management margins have generated over $198 million in savings for customers and $48.5 million ($1.17 per share) for shareowners Enhancing Returns: OSS/CM Markets 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 3/1/2003 Customer Savings 0 4.4 12.6 15.9 18
Slide 16: Enhancing Returns: Energy Services
Enhancing Returns: Energy Services Energy Services is a growing contributor of total earnings Asset-based business activity Storage and marketing Fuel management Portfolio optimization Wholesale FY00 0.11 FY01 0.15 FY02 0.24 Mar. 2003 0.41 We use our knowledge of markets and in-house capabilities to
Slide 17: Enhancing Returns: Managing Risk
Enhancing Returns: Managing Risk Strictly natural gas operation - no electric exposure Not a speculative trader Manage assets for primarily hedged positions Selected fee-based services Trade around assets Assets consist of transportation and storage capacity Physical assets reduce risk Our assets re
Slide 18: Enhancing Returns: Managing Risk
Disciplined risk management guidelines Limited open positions = low VAR Strict internal controls Credit procedures in place Daily compliance monitoring by financial department Minimal mark-to-market income (Less than 1 percent) Trader compensation not based on sales volumes or revenues Netting agree
Slide 19: Enhancing Returns: Energy Services Portfolio Strengths
Manage over 40 Bcf of storage and transport in excess of 1 Bcf per day Major positions Columbia Gas Transmission Columbia Gulf ANR Pipeline Dominion Transmission Iroquois Tennessee Gas Pipeline Texas Eastern Transmission Corporation Union Storage - Dawn (Canada) Enhancing Returns: Energy Services Po
Slide 20: Enhancing Returns: Stagecoach Storage
Located in Owego, NY 11.9 Bcf high- deliverability storage capacity Connects to Tennessee Gas Pipeline NJRES is the marketing agent for Stagecoach 10-year term - began April 1, 2002 NJRES compensation - management fees and incentives Enhancing Returns: Stagecoach Storage
Slide 21: Enhancing Returns: Stagecoach Storage
Enhancing Returns: Stagecoach Storage Stagecoach is strategically located for Northeast markets
Slide 22: Enhancing Returns: Home Services
Appliance service contracts Duct cleaning Sales and installations Service contract enhancements Enhancing Returns: Home Services NJR is consistently developing new, low-risk opportunities
Slide 23: Enhancing Returns: Our Assets and Skills Create New Opportunities
Enhancing Returns: Our Assets and Skills Create New Opportunities Core Customers Off-System Sales Capacity Release Retail Marketing Energy Management Core Customers Off-System Sales Capacity Release Retail Marketing Energy Management 1991 51 1992 52 12 1993 55 21 1994 58 27 20 1995 57 25 38 5 7 1996
Slide 24: Fiscal 2003: Customer and margin growth
Fiscal 2003: Customer and margin growth Weather colder-than- normal Profitable wholesale markets 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2002 2003 1.07 1.13 1.24 1.28 1.37 1.48 1.56 1.67 1.81 1.97 2.12 2.04 2.39 Consistent Earnings Growth September 30, March 31, Earnings Per Share NJR
Slide 25: Superior Return on Equity
Allowed ROE of 11.5 percent OSS/CM provides 1 to 1.5 percent of incremental return Balance from unregulated activities 1997 1998 1999 2000 2001 2002 0.139 0.142 0.145 0.148 0.153 0.153 Superior Return on Equity
Slide 26: Rewarding Shareowners
1995 1996 1997 1998 1999 2000 East 1.52 1.56 1.6 1.64 1.68 1.72 1997 1998 1999 2000 2001 2002 2003 1.07 1.09 1.12 1.15 1.17 1.2 1.24 Eight increases in seven years NJR's dividend growth rate for 2002 was 3.3 percent vs. 1.4 percent for the peer group 1996 1997 1998 1999 2000 2001 2002 0.75 0.72 0.7
Slide 27: Share Repurchases
Share Repurchases Program implemented in September 1996 One of the first in the utility industry to implement a program 2 million shares authorized; 1.6 million repurchased since inception 36,900 shares repurchased in fiscal 2003 A strong financial profile has allowed for open market repurchase of s
Slide 28: NJR Capital Structure
NJR Capital Structure Common Equity 258919 Preferred 21004 LT Debt 352227 Common Equity 361453 LT Debt 370628 1995 2002 Credit Rating: Moody's A-2 S&P A Strong Financial Profile Our financial profile has improved significantly
Slide 29: Summary: Strong Fundamentals
Focused strategy Excellent core business Profitable customer growth High customer satisfaction Excellent regulatory relations Disciplined wholesale strategy Strong financial profile Consistent financial results NJR Peer Group Energy Distribution Electric Utilities 1 year 0.119 -0.106 -0.126 -0.211 5
Slide 30: Appendix: Gross Margin
Appendix: Gross Margin Gross margin is a non-GAAP measure. Gross margin is defined as gas revenues less gas purchases, sales tax and a Transitional Energy Facilities Assessment (TEFA), which is included in Energy and other taxes on the Consolidated Statements of Income. NJNG believes that gross marg
New Jersey Resources — New York Financial Community presentation, June 18, 2003 on 6ix