Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q3 2017 Earnings Presentation
23 slides from Newjersey Resources's earnings presentation, Aug 2, 2017
Slide 1: Third Quarter Fiscal 2017 Update
Third Quarter Fiscal 2017 Update August 2, 2017
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Certain statements contained in this presentation are 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 Litigation Reform Act
Slide 3: Non-GAAP Financial Measures
3 Non-GAAP Financial Measures This presentation includes the non-GAAP measure, NFE. As an indicator of the Company’s operating performance, this measure should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flow, net income, operating income or earnings per
Slide 4: Highlights
4 Highlights Financial Performance • 3Q 2017 Net Financial Earnings (NFE)* per share of $.20, an increase of 54 percent; fiscal year-to-date NFE per share of $1.88 compared with $1.63 last year • Reaffirmed 2017 NFE guidance of $1.65-$1.75 per share Diversified infrastructure opportunities • Custome
Slide 5: 60-75 percent of 2017 NFE Expected from Regulated Businesses
5 60-75 percent of 2017 NFE Expected from Regulated Businesses Projected Diversified Sources of Fiscal 2017 NFE New Jersey Natural Gas 55-65% NJR Midstream 5-10% NJR Energy Services 5-15% NJR Home Services/ Other 1-3% NJR Clean Energy Ventures 15-25% Regulated businesses
Slide 6: Annual Dividend Growth Goal
6 Annual Dividend Growth Goal of 6 to 8 Percent • 6.3 percent increase to current $1.02 annual rate; approved on September 13, 2016 • 23 dividend increases over the last 21 years • Dividend payout ratio goal of 60 to 65 percent $.72 $.77 $.81 $.86 $.92 $.96 $1.02* 0% 10% 20% 30% 40% 50% 60% 70% $0.0
Slide 7: Fiscal 2017 Third Quarter and Year-To-Date NFE
7 Fiscal 2017 Third Quarter and Year-To-Date NFE Net Financial Earnings ($MM) Company 2017 2016 Variance 2017 2016 Variance New Jersey Natural Gas $6.0 $3.6 $2.4 $96.5 $83.5 $13.0 NJR Midstream 3.0 2.3 0.7 10.3 6.9 3.4 Subtotal $9.0 $5.9 $3.1 $106.8 $90.4 $16.4 NJR Clean Energy Ventures 6.3 2.4 3.9
Slide 8: Fiscal 2017 Third Quarter and Year-to-Date Bridge
8 Fiscal 2017 Third Quarter and Year-to-Date Bridge $.6 -$1.2 $11.0 $2.4 $0.7 $3.9 $17.4 $5.0 $7.5 $10.0 $12.5 $15.0 $17.5 $20.0 June 30, 2016 NJNG NJR Midstream NJRCEV NJRES HS/Other June 30, 2017 M ill io n s Three Months Ended June 30, 2017 New Base Rates and customer growth Higher utility gross
Slide 9: NJNG Capital Investment Update - June 30, 2017
9 NJNG Capital Investment Update - June 30, 2017 CAPITAL INVESTMENT ($MM) 3Q FYTD 2017 2017E ACTIONS STATUS NJNG 11 Customer Growth $9.0 $27.8 $34.9 Added 2,101 customers in FY3Q2017 On target to add 9,000 customers in FY2017 Maintenance 11.3 30.0 41.4 Capital spending to enhance system safety and r
Slide 10: Strong Customer Growth Continues
10 Strong Customer Growth Continues • FY3Q 2017: 2,101 new customers added • 1,291 new construction • 810 conversions • 9 Months: 6,231 new customers added; up nearly 18 percent over last year • 3,994 new construction • 2,237 conversions • FY2017-2019: 60/40 percent new construction and conversion m
Slide 11: NJRCEV Assets Placed Into Service
11 NJRCEV Assets Placed Into Service* CAPITAL INVESTMENT ($MM) 3Q FYTD 2017 2017E ACTIONS STATUS NJRCEV 11 Commercial Solar $51.8 $52.7 $63.9 2.5 MW project for Brick Board of Education (BOE) and 20 MW Pemberton projects completed and in service Two other projects under construction Residential Sola
Slide 12: SREC Pricing and Hedging Strategy
12 SREC Pricing and Hedging Strategy Pct. Hedged: 98% 89% 75% Average Price: $229 $225 $190 Current Price (EY): $248 $190 $175 As of June 30, 2017. Source: InterContinental Exchange (ICE) 179 195 169 - 20 40 60 80 100 120 140 160 180 200 220 240 260 EY17 EY18 EY19 Th o u sa n d s o f SR EC s Energy
Slide 13: NJR Capital Plan
13 NJR Capital Plan ($MM) 3Q F2017A FYTD 2017A 2017E 2018E 2019E 2017-2019 Total New Customer $9.0 $27.8 $34.9 $34.7 $37.0 $106.6 Maintenance 11.3 30.0 41.4 45.4 53.6 140.4 Cost of Removal/Other 8.4 26.8 48.6 42.2 34.4 125.2 SAFE II 9.4 24.7 35.0 37.6 41.0 113.6 NJ RISE 5.0 6.1 15.8 27.4 22.6 65.8 S
Slide 14: NJR Sources and Uses of Capital
14 NJR Sources and Uses of Capital $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 Sources Uses Sources Uses Sources Uses M ill io n s Cash Flows LT Debt Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Balance Sheet 2017E 201
Slide 15: Creating Long-Term Value
15 Creating Long-Term Value • Growing customer base generates incremental utility gross margin of approximately $5 million annually • Projected annual rate base growth of approximately 6 percent • Collaborative regulatory relations Diversified infrastructure opportunities • Continued investment in i
Slide 16: Appendix
16 APPENDIX
Slide 17: Reconciliation to Non-GAAP Measures
17 Reconciliation to Non-GAAP Measures A reconciliation of NFE for the three and nine months ended June 30, 2017 and 2016 to net income is provided below:
Slide 18: Key Trends Support Future Customer Growth
18 Key Trends Support Future Customer Growth On Main, 32,100 Near Main, 28,300 Off Main, 42,200 Non Heat, 5,600 Residential Conversions4 = 108,200 4. Source: NJNG $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 NJNG Fuel Oil Propane Electricity $0.97 $1.91 $4.10 $4.10 Equivalent Customer Cost2 2. Source: US Ene
Slide 19: NJR Projected Cash Flows
19 NJR Projected Cash Flows $MM 2017E 2018E 2019E Cash Flow from Operations $228.5 $276.1 $258.1 Uses of Funds Capital expenditures - NJNG ($181.7) ($337.2) ($188.6) Capital expenditures - PennEast (38.0) (138.8) (37.7) Capital expenditures - NJRCEV (132.3) (223.4) (202.0) Dividends (86.5) (91.2) (9
Slide 20: NJRCEV – Commercial Solar Portfolio
20 NJRCEV – Commercial Solar Portfolio Net In-Service Capital Cost Total Metered Wholesale Facility Location Date ($MM) MW MW MW FY2011 Fieldcrest Edison Township Feb-11 $2.3 0.5 0.5 Blair Road II Woodbridge Township Mar-11 6.9 1.3 0.3 1.0 Herrod Solar Facility South Brunswick Township Jul-11 4.7 1.
Slide 21: NJRCEV: Onshore Wind Farm Portfolio
21 NJRCEV: Onshore Wind Farm Portfolio Capital In-Service Cost Total Capacity Hedge Wind Farm Location Date ($MM) MW Factor Percentage FY2014 Two Dot Two Dot, Montana Jun-14 $20.7 9.7 42.8 100.0 $20.7 9.7 FY2015 Carroll Area Carroll, Iowa Jan-15 $42.0 20.0 49.7 100.0 $42.0 20.0 FY2016 Alexander Rush
Slide 22: Effects of Hypothetical Corporate Tax Rate Reduction on NJR
22 Effects of Hypothetical Corporate Tax Rate Reduction on NJR Income Statement EPS Impact NJNG net income* Flat Non-regulated net income Annual Increase Revaluation of net deferred tax liabilities, non-regulated One-Time Increase Balance Sheet Balance Sheet Impact Equity (Impact of one-time revalua
Slide 23: Third Quarter Fiscal 2017 Update
Third Quarter Fiscal 2017 Update August 2, 2017