Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q4 2022 Earnings Presentation
34 slides from Newjersey Resources's earnings presentation, Nov 17, 2022
Slide 1: Year End 2022 Financial Results
Year End 2022 Financial Results November 17, 2022
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures 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 Li
Slide 3: Agenda
Agenda 1 FY 2022 Highlights Steve Westhoven | President and CEO 2 Financial Highlights Roberto Bel | SVP and CFO 3 Q&A Session 2
Slide 4: Fiscal 2022 Highlights
Fiscal 2022 Highlights Executing on our Strategic Plan to Drive Continued, Organic Growth Raised NFEPS Guidance Twice During Fiscal 2022; Achieved Highest End of Revised Range NJNG CEV S&T Energy Services $2.50 FY 2022 NFEPS1 (up 16% YoY) NJNG had a strong year driven by Grew project pipeline to ~69
Slide 5: Introducing Fiscal 2023 NFEPS Guidance of $2.42 - $2.52
Introducing Fiscal 2023 NFEPS Guidance of $2.42 - $2.52 Represents 9.8% Year-over-Year Growth from Midpoint of FY 2022 Initial Guidance Range Net Financial Earnings per Share 7-9% Fiscal 2023 NFEPS Guidance $2.50 $2.42 - $2.52 LONG-TERM by Segment ANNUAL GROWTH1 $2.25 $2.16 CEV 12.4% FY2024 EXPECTED
Slide 6: Committed to Building Shareholder Value
Committed to Building Shareholder Value Strong Track Record of Dividend Growth $1.56 Dividends per Share FY 2023 Dividend (up 7.6%) 7-9% LONG-TERM $1.45 ANNUAL GROWTH $1.33 (CONSISTENT WITH $1.25 NFEPS LONG-TERM PROJECTED GROWTH RATE) 72% 62% 58% 62% - 65% FY2020 FY2021 FY2022 FY2023 Dividend Payout
Slide 7: New Jersey Natural Gas
New Jersey Natural Gas Solid Performance Due to Higher Base Rates Fiscal 2022 Capital Expenditures1 NJNG Customers (in thousands) 569.3 ~42% of capital 570 expenditures earned a near 560 Added real-time return 7,808 new Maintenance customers 550 $104 in fiscal IIP 2022 $32 540 530 Furthers our commi
Slide 8: Clean Energy Ventures (CEV)
Clean Energy Ventures (CEV) CEV owns and operates solar projects in New Jersey, Rhode Island, New York and Connecticut with approximately 387 MW of capacity New Project in Service: Airport Road (Placed in Service: Q4 FY 2022) 18.9 MW1 • Incremental capacity added in Fiscal 2022 4.9MW Airport Road Gr
Slide 9: CEV: Robust and Diversified Solar Pipeline
CEV: Robust and Diversified Solar Pipeline Taking Advantage of a Considerable Decarbonization Opportunity MWs Total 1200 1.1 GW1 Breakdown of 699MW Pipeline Under Contract or Exclusivity In Service 238 1000 Under Construction Pipeline by Location Under Contract or Exclusivity Pipeline of over 760MW
Slide 10: Adelphia Gateway
ADELPHIA GATEWAY NJR Midstream Company Martin's Creek Booster on Sherry Lane Lateral UGI Easton Road Interconnect North Mainline [a TETCO Quakertown interconnect Quakertown Compressor Station Tilghman Lateral ‘and PECO Interconnect Parkway Lateral & Columbia Interconnect, | Marcus Hook Compressor St
Slide 11: Energy Services: Predictable Fee-based Revenues + Upside Potential
Energy Services: Predictable Fee-based Revenues + Upside Potential ($ in Millions) Asset Management Agreements1 Predictable fee-based revenues better ensure Long Option Strategy coverage of fixed costs Significant upside potential with • De-risked Energy Services business by securing 10 years of lim
Slide 12: Financial Review
Financial Review Roberto Bel SVP and Chief Financial Officer 11
Slide 13: NJR Review of Fiscal 2022 NFE Changes
NJR Review of Fiscal 2022 NFE Changes ($ in Millions) Fiscal 2021 – Consolidated NFE ($ in millions) $ 207.7 NJNG $ 32.7 Utility Gross Margin* $ 79.3 O&M $ 5.2 Depreciation & Amortization (D&A) $ (14.5) (0.1) Interest expense, AFUDC, Income Tax $ (37.3) Clean Energy Ventures $ 22.6 Revenue $ 33.0 O&
Slide 14: Mitigating the Impact of Higher Gas Prices for our Customers
Mitigating the Impact of Higher Gas Prices for our Customers Hedged Portion of NJNG’s Winter Sales1 • Cost of natural gas supply is a pass through to customers 10% • By policy, at least 75% of our estimated winter send-out for residential and small commercial sales customers must be hedged prior to
Slide 15: CEV – SREC Hedging Strategy Stabilizes Revenue
CEV – SREC Hedging Strategy Stabilizes Revenue Based on Energy Year1, as of September 30, 2022 Percent Hedged Average Price Current Price (EY) EY 2023 399 9 98% $203 $229 Percent Hedged Average Price Current Price (EY) EY 2024 395 6 98% $197 $215 Thousands Percent Hedged Average Price Current Price
Slide 16: NJR Capital Plan
NJR Capital Plan1 ($ in Millions) Capital plan supports long-term NFEPS growth targets of 7 – 9% $529 $712 $622 $520 - $658 $542 - $728 $124 $2 - $8 $20 - $28 $89 $142 $43 $140 - $280 $100 - $200 $124 $145 $499 $400 - $430 $400 - $440 $362 $335 FY2020A FY2021A FY2022A FY2023E FY2024E NJNG CEV S&T 1)
Slide 17: NJR Cash Flow From Operations and Investment Grade Profile
NJR Cash Flow From Operations and Investment Grade Profile NJR Cash Flow from Operations NJR Adjusted FFO/ Adjusted Debt1 Current Credit Ratings NJNG NJR (Secured (Unsecured ($ in Millions) $500.0 ~22% 60.0% NAIC Rating) NAIC-1.E Rating) NAIC-2.A CFFO CAGR $450 - $490 Moody's A1 (Stable) $450.0 55%
Slide 18: Well Positioned in a Rising Interest Rate Environment
Well Positioned in a Rising Interest Rate Environment ($ in Millions) Term Debt Maturity Schedule Impact of high interest rate as of September 30, 20221 environment included in FY2023 and long-term NFEPS guidance $160 $100 $100 $150 Weighted Average of Maturity ~16.2 years $140 • Interest rate impac
Slide 19: Conclusion
Conclusion Steve Westhoven President and CEO 18 18
Slide 20: NJR's Path To Decarbonization
NJR’s Path To Decarbonization Growing Core Businesses While Investing in the Clean Energy Future 60% emissions reduction from NJ operations from 2006 levels Net-Zero NJ by 2030 Operations Achieved 50% reduction in NJ operational emissions 2050 since 2006 NJNG CEV S&T Leverage and Improve Execute on
Slide 21: Inflation Reduction Act: Key Strategic Elements for NJR
Inflation Reduction Act: Key Strategic Elements for NJR The IRA aligns with NJR’s “all of the above” approach on energy transition Promotes investment and innovation across clean energy technologies that can help reach 2050 climate goals in the fastest, most affordable and most reliable way possible
Slide 22: Delivering Value to Shareholders Through Growth and Income
Delivering Value to Shareholders Through Growth and Income Implementing Strategic Plan to Drive Continued Organic Growth Across Portfolio NJR is a Premier Energy Infrastructure Company The Clean Energy Future Solid Long Term Growth Growing Dividend Starts at NJR Outlook Net Zero by 2050 goal for New
Slide 23: Appendix
Appendix Slide 23 NJR’s Business Portfolio 24 Fourth Quarter and Fiscal 2022 NFE by Business Unit 25 Review of Q4 FY 2022 NFE Changes 26 Reconciliation of NFE and NFEPS to Net Income 27 Other Reconciliation of Non-GAAP Measures 28 Reconciliation of Adjusted Funds from Operations to Cash Flow from Op
Slide 24: NJR's Business Portfolio
NJR’s Business Portfolio Natural Gas and Renewable Fuel Distribution; Solar Investments, Wholesale Energy Markets; Storage & Transportation Infrastructure; Retail Operations Operates and maintains approximately 7,700 miles of Natural Gas New Jersey Natural Gas transportation and distribution infrast
Slide 25: Fiscal 2022 Fourth Quarter and Year End NFE by Business Unit
Fiscal 2022 Fourth Quarter and Year End NFE by Business Unit ($ in 000s) (Thousands) Three Months Ended September 30, Twelve Months Ended September 30, 2022 2021 Change 2022 2021 Change New Jersey Natural Gas $(16,387) $(24,214) $7,827 $140,124 $107,375 $32,749 Clean Energy Ventures $57,813 $40,861
Slide 26: NJR Review of Fiscal Q422 NFE Changes
NJR Review of Fiscal Q422 NFE Changes ($ in Millions) Fiscal 4Q21 – Consolidated NFE ($ in millions) $ 6.6 NJNG $ 7.8 Utility Gross Margin* $ 16.5 O&M $ (2.1) Depreciation & Amortization (D&A) $ (2.9) Interest expense, AFUDC, Income Tax $ (3.7) Clean Energy Ventures $ 17.0 Revenue $ 23.4 O&M $ (3.1)
Slide 27: Reconciliation of NFE and NFEPS to Net Income
Reconciliation of NFE and NFEPS to Net Income ($ in 000s) (Unaudited) Three Months Ended Twelve Months Ended September 30, September 30, 2022 2021 2022 2021 NEW JERSEY RESOURCES • NFE is a measure of earnings based on the A reconciliation of net income, the closest GAAP financial measure, to net fin
Slide 28: Other Reconciliation of Non-GAAP Measures
Other Reconciliation of Non-GAAP Measures ($ in 000s) (Unaudited) Three Months Ended Twelve Months Ended September 30, September 30, 2022 2021 2022 2021 A reconciliation of gross margin, the closest GAAP financial measurement, to utility gross margin is as follows: NJNG Utility Gross Margin Operatin
Slide 29: Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations for FY2022
Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations for FY2022 Adjusted Funds from Operations, Adjusted Debt, FY2022 FY2022 (Millions) • Adjusted funds from operations is cash (Millions) flows from operating activities, plus components of working capital, cash paid Cash Flo
Slide 30: NJR CEV – SREC Hedging by Fiscal Year
NJR CEV – SREC Hedging by Fiscal Year As of September 30, 2022 Percent Hedged Average Price Current Price (FY) FY 2023 406 0 100% $204 $224 Percent Hedged Average Price Current Price (FY) FY 2024 380 21 95% $194 $210 Thousands Percent Hedged Average Price Current Price (FY) FY 2025 263 135 66% $190
Slide 31: NJR Capital Plan
NJR Capital Plan1 ($ in Millions) Near Real Time FY2022A FY2023E FY2024E Return? New Jersey Natural Gas New Customer $54 $54 - $58 $56 - $60 Yes Maintenance & Integrity $104 $109 - $113 $161 - $176 Cost of Removal / Other $42 $36 - $40 $36 - $40 Facilities $7 $31 - $34 $2 - $4 IT $42 $65 - $69 $46 -
Slide 32: NJR Projected Cash Flows
NJR Projected Cash Flows ($ in Millions) FY2022A FY2023E FY2024E Cash Flow from Operations $324 $320 - $360 $450 - $490 Uses of Funds Capital Expenditures1 $590 $466 - $600 $489 - $671 Dividends2 $128 $132 - $137 $143 - $148 Total Uses of Funds $718 $598 - $737 $632 - $819 Financing Activities Commo
Slide 33: Environmental, Social and Governance Efforts
Environmental, Social and Governance Efforts Focus on Definable Accomplishments • 13 consecutive sustainability reports • Reduced operational emissions in New Jersey by over 50% from 2006 levels and have set an even higher goal of achieving net-zero emissions by 2050 Environmental • One of the large
Slide 34: Shareholder and Contact Information
Shareholder and Contact Information Stock Transfer Agent and Registrar Corporate Headquarters The Transfer Agent and Registrar for the company’s common stock is Broadridge Corporate Issuer Solutions, Inc. (Broadridge). 1415 Wyckoff Road Wall, NJ 07719 Shareowners with questions about account activit