Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Q4 2018 Earnings Presentation
25 slides from Newjersey Resources's earnings presentation, Nov 20, 2018
Slide 1: Fourth-Quarter and Fiscal Year 2018 Update
Fourth-Quarter and Fiscal Year 2018 Update November 20, 2018
Slide 2: Forward-Looking Statements
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 Litigation Reform Act of 1995. NJR cautions readers
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes the non-GAAP measures, NFE and utility gross margin. As an indicator of the Company’s operating performance, these measures should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flows, net income, opera
Slide 4: Fiscal 2018 Highlights
Fiscal 2018 Highlights • Net Financial Earnings (NFE) per share of $2.741 compared with $1.73 last Financial year, an increase of 58 percent Results • Exceeded guidance of $2.60 - $2.70 per share • Strong customer growth at New Jersey Natural Gas (NJNG), exceeding Customer customer growth estimate G
Slide 5: NFE Growth Rate of 6 – 8 Percent Annually
NFE Growth Rate of 6 – 8 Percent Annually NFE Per Share $3.00 $2.74 $2.50 $1.95 - $2.05 $2.00 $1.73 $1.61 $1.50 $1.00 Appropriate comparison for FY 2019 is FY 2017 $0.50 $0.00 2016A 2017A 2018A* 2019E • Includes out-performance of Energy Services and tax reform vs. expectations ** CAGR based on midp
Slide 6: Guidance Range for Fiscal 2019E of $1.95 - $2.05
Guidance Range for Fiscal 2019E of $1.95 - $2.05 Projected Sources of NFE for Fiscal 2020 Projected Sources of NFE for Fiscal 2019 and Beyond NJR Home Services/ Other Midstream NJR Energy 0-2% 5-15% Services 5-15% New Jersey Natural Gas 50-60% New Jersey Natural Gas NJR Clean 45-50% Energy NJR Clean
Slide 7: Dividend Per Share
Dividend Growth Rate of 6 – 8 Percent Annually Dividends Per Share 100% $1.20 $1.17 $1.09 90% $1.02 $1.00 $0.96 80% 70% $0.80 Dividend Per Share 60% Payout Ratio 50% $0.60 40% $0.40 30% 20% $0.20 10% $0.00 0% 2016 2017 2018** 2019 Fiscal Year Ind. Div Rate Payout * * 2019 payout based on midpoint of
Slide 8: Strong NJNG Customer Growth
Strong NJNG Customer Growth Recent Developments New Customer Additions • Increased long-term customer growth 12,000 estimate to 28,000 – 30,000 from 27,000 – 29,000 10,000 9,596 9,667 9,126 Fiscal 2018 8,000 • 9,596 new customers added Customers – 6,237 new construction – 3,359 conversions 6,000 New
Slide 9: Southern Reliability Link (SRL)
Southern Reliability Link (SRL) Current Status • Construction beginning in fiscal 1Q 2019 • Received an easement from Joint Base McGuire-Dix-Lakehurst in June 2018 • Approvals received from: – New Jersey Pinelands Commission – New Jersey Department of Environmental Protection – New Jersey Board of P
Slide 10: Adelphia Gateway Project Update
Adelphia Gateway Project Update Project Overview • Converts existing oil pipeline to natural gas • Leverages existing infrastructure, brownfield locations and rights of way • Provides new natural gas supply to constrained markets through increased delivery connections • Successful open season comple
Slide 11: Energy Services
Energy Services $90 • Consistent contributor to NFE • Energy Services NFE contribution per year expected to return to normalized level of $60.4 $60 approximately 5 – 15 percent – Opportunity for additional $MM earnings due to market volatility – Our long-call option strategy protects against down-si
Slide 12: Clean Energy Ventures Solar – Recent Developments
Clean Energy Ventures Solar – Recent Developments • Three commercial solar projects were placed into service – Located in Raritan, South Brunswick, and Old Bridge, NJ – Total of 33.7 megawatts (MW) of capacity • Six projects expected to be placed into service in fiscal 2019, totaling over 50 MW of c
Slide 13: SREC Hedging Strategy Stabilizes Revenue
SREC Hedging Strategy Stabilizes Revenue 350 305 305 300 277 250 Thousands of SRECs 200 150 275 254 100 177 50 0 EY19 EY20 EY21 Hedged Unhedged Operational and Under Construction Pct. Hedged: 91% 90% 58% Average Price: $192 $192 $192 Current Price (EY): $223 $217 $184 As of October 22, 2018; Source:
Slide 14: Changes in Net Financial Earnings – Fiscal 2018
Changes in Net Financial Earnings – Fiscal 2018 Twelve Months Ended September 30, 2018 $300.0 $41.8 $250.0 $240.5 -$10.3 $51.0 $200.0 Increased market opportunities Millions $11.5 $149.4 $150.0 Tax reform -$2.9 benefit Tax reform Increased benefit O&M $100.0 expenses $50.0 $0.0 September 30, NJNG Mi
Slide 15: NJR Capital Plan
NJR Capital Plan 2019E-2021E 2018A 2019E 2020E 2021E ($MM) Total New Customer $44.0 $42.0 $47.3 $51.4 $140.7 Maintenance 76.8 68.6 72.3 60.7 $201.6 Cost of Removal/Other 46.5 140.3 127.5 120.7 $388.5 SAFE II 45.7 38.1 42.6 46.5 $127.2 NJ RISE 22.5 31.7 24.5 24.0 $80.2 SRL 5.8 154.5 29.0 0.0 $183.5 T
Slide 16: NJR Sources and Uses of Capital
NJR Sources and Uses of Capital 2018A 2019E 2020E 2021E $1,000 $800 Millions $600 $400 $200 $0 Sources Uses Sources Uses Sources Uses Sources Uses LT Debt/Asset Sales Equity CFFO Capex Dividends Capital Plan Supports Infrastructure Investments, While Maintaining Strong Balance Sheet 15
Slide 17: What is Ahead for Fiscal 2019?
What is Ahead for Fiscal 2019? • Guidance of $1.95 - $2.05 per share • Rate case (required November 2019) and infrastructure filings • SRL in-service in 2019 • 9,600 new customers expected •Adelphia Gateway expected to be in-service in 2019 •Continued progress on PennEast •Expect to place six commer
Slide 18: Fourth-Quarter and Fiscal Year 2018 Update
Fourth-Quarter and Fiscal Year 2018 Update November 20, 2018
Slide 19: Appendix
New Jersey \\ Resources FOCUSED ON THE ENERGY FUTURE Appendix
Slide 20: Fiscal 2018 Fourth Quarter and Year-to-Date NFE
Fiscal 2018 Fourth Quarter and Year-to-Date NFE Three Months Ended Twelve Months Ended Net Financial Earnings September 30, September 30, ($MM) Company 2018 2017 Variance 2018 2017 Variance New Jersey Natural Gas ($12.9) ($9.6) ($3.3) $84.0 $86.9 ($2.9) NJR Midstream 2.1 2.6 (0.5) 24.4 12.9 11.5 Sub
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures A reconciliation of NFE for the three and twelve months ended September 30, 2018 and 2017 to net income is provided below: 20
Slide 22: Factors Supporting Future Customer Growth
Factors Supporting Future Customer Growth New Construction Conversions 2018 Building Permits Issued1 Equivalent Customer Cost2 3,500 $4.50 $4.18 $3.93 2,898 $4.00 3,000 $3.50 2,500 $3.00 2,000 $2.45 $2.50 1,500 1,252 $2.00 1,120 $1.50 1,000 $0.89 526 $1.00 500 $0.50 0 $0.00 NJNG Monmouth Ocean Morri
Slide 23: Bringing Clean, Affordable Natural Gas to the Marketplace: PennEast Pipeline
Bringing Clean, Affordable Natural Gas to the Marketplace PennEast Pipeline • 20 percent ownership in 120-mile transmission pipeline connecting Marcellus supply to the Northeast • Access to the lowest cost supply point in North America – benefits customers and local economies Lack of NatGas Pipeline
Slide 24: SREC Hedging Strategy Stabilizes Income
SREC Hedging Strategy Stabilizes Income Hedged Unhedged Operational and Under Construction 350 304 304 300 292 Thousands of SRECs 250 200 150 281 265 100 177 50 0 FY19 FY20 FY21 Pct. Hedged: 96% 87% 58% Average Price: $197 $191 $192 Current Price: $221 $206 $169 As of October 22, 2018; Source: Inter
Slide 25: NJR Projected Cash Flows
NJR Projected Cash Flows ($ millions) 2018A 2019E 2020E 2021E Cash Flow From Operations $398.3 $272.7 $326.6 $391.4 Uses of Funds Capital Expenditures - NJNG/Other ($254.5) ($475.2) ($343.2) ($303.3) Capital Expenditures - PennEast (16.2) (14.1) (186.0) (30.0) Capital Expenditures - CEV (123.4) (134