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| 8-K - 8-K - NEW JERSEY RESOURCES CORP | d655998d8k.htm |
 New York Financial Community Meetings
January 9, 2014
Exhibit 99.1 |
 Regarding Forward-Looking Statements
1
1
Certain statements contained in this presentation are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Words such as
“anticipates,” “estimates,” “expects,” “projects,” “may,” "will," “intends,” “expects,” "believes," or “should” and similar expressions may
identify forward-looking information and such forward-looking statements are made based upon
management’s current expectations and beliefs as of this date concerning future
developments and their potential effect upon New Jersey Resources (NJR or the Company). There can be no assurance that future
developments will be in accordance with management’s expectations or that the effect of future
developments on NJR will be those anticipated by management. NJR cautions persons reading or
hearing this presentation that the assumptions that form the basis for forward-looking statements regarding
NJR’s dividend growth goal, NJR's net financial earnings (NFE) for fiscal 2014, forecasted
contribution of business segments to fiscal 2014, long-term financial goals, growth
initiatives and NFE forecasts of NJR, expected contribution by new customers of New Jersey Natural Gas Company (NJNG) to utility
gross margin, expected number of new customers of NJNG, new sources of utility gross margin at NJNG
for 2014 through 2017, Solar Renewable Energy Certificate (SREC) prices, NJR’s effective
tax rate, estimated capital expenditures in fiscal 2014 and beyond by NJNG and NJRCEV, planned natural gas
vehicle (NGV) stations, the diversification of NJRCEV’s strategy, the impact of the Two Dot Wind
farm on earnings, and NJRES’ growth opportunities include many factors that are beyond the
Company’s ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other
market participants.
The factors that could cause actual results to differ materially from NJR’s expectations include,
but are not limited to, weather and economic conditions; demographic changes in the NJNG
service territory and their effect on NJNG's customer growth; volatility of natural gas and other commodity prices and
their impact on NJNG customer usage, NJNG's Basic Gas Supply Service incentive programs, NJRES'
operations and on the Company's risk management efforts; changes in rating agency requirements
and/or credit ratings and their effect on availability and cost of capital to the Company; the impact of volatility
in the credit markets; the ability to comply with debt covenants; the impact to the asset values and
resulting higher costs and funding obligations of NJR's pension and postemployment benefit
plans as a result of downturns in the financial markets, a lower discount rate, and impacts associated with the Patient
Protection and Affordable Care Act; accounting effects and other risks associated with hedging
activities and use of derivatives contracts; commercial and wholesale credit risks, including
the availability of creditworthy customers and counterparties and liquidity in the wholesale energy trading market; the ability
to obtain governmental approvals and/or financing for the construction, development and operation of
certain non-regulated energy investments; risks associated with the management of the
Company's joint ventures and partnerships; risks associated with our investments in renewable energy projects and
our investment in an on-shore wind developer, including the availability of regulatory and tax
incentives, logistical risks and potential delays related to construction, permitting,
regulatory approvals and electric grid interconnection, the availability of viable projects and NJR's eligibility for federal investment
tax credits (ITC), and production tax credits (PTC), the future market for SRECs and operational risks
related to projects in service; timing of qualifying for ITCs due to delays or failures to
complete planned solar energy projects and the resulting effect on our effective tax rate and earnings; the level and rate at
which NJNG's costs and expenses (including those related to restoration efforts resulting from
Superstorm Sandy) are incurred and the extent to which they are allowed to be recovered from
customers through the regulatory process; access to adequate supplies of natural gas and dependence on third-party
storage and transportation facilities for natural gas supply; operating risks incidental to handling,
storing, transporting and providing customers with natural gas; risks related to our employee
workforce, including a work stoppage; the regulatory and pricing policies of federal and state regulatory agencies; the
possible expiration of the NJNG Conservation Incentive Program (CIP); the costs of compliance with
present and future environmental laws, including potential climate change-related
legislation; risks related to changes in accounting standards; the disallowance of recovery of environmental-related
expenditures and other regulatory changes; environmental-related and other litigation and other
uncertainties; risks related to cyber-attack of failure of information technology systems;
and the impact of natural disasters, terrorist activities, and other extreme events on our operations and customers, including
any impacts to utility gross margin, and restoration costs resulting from Superstorm Sandy. The
aforementioned factors are detailed in the “Risk Factors” section our Annual Report
on Form 10-K filed on November 26, 2013 with the Securities and Exchange Commission (SEC), which is available on the SEC’s
website at sec.gov. Information included in this presentation is representative as of
today only and while NJR periodically reassesses material trends and uncertainties affecting
NJR's results of operations and financial condition in connection with its preparation of management's discussion and analysis of
results of operations and financial condition contained in its Quarterly and Annual Reports filed with
the SEC, NJR does not, by including this statement, assume any obligation to review or revise
any particular forward-looking statement referenced herein in light of future events. |
 Disclaimer Regarding Non-GAAP Financial Measures
2
2
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
meaningful
than,
GAAP
measures,
such
as
cash
flow, net income, operating income or earnings per share. Net financial earnings
(losses) and financial margin exclude unrealized gains or losses on
derivative
instruments
related
to
the
Company’s
unregulated
subsidiaries
and
certain
realized
gains
and
losses
on
derivative
instruments
related
to
natural
gas that has been placed into storage at NJRES. Volatility associated with the
change in value of these financial and physical commodity contracts is
reported in the income statement in the current period. In order
to manage its business, NJR views its results without the impacts of the
unrealized gains and losses,
and
certain
realized
gains
and
losses,
caused
by
changes
in
value
of
these
financial
instruments
and
physical
commodity
contracts
prior
to
the
completion of the planned transaction because it shows changes in value currently
as opposed to when the planned transaction ultimately is settled. NJNG’s
utility gross margin represents the results of revenues less natural gas costs,
sales and other taxes and regulatory rider expenses, which are key
components of the Company’s operations that move in relation to each other.
Management uses net financial earnings (NFE), financial margin and utility
gross margin as supplemental measures to other GAAP results to provide a more
complete understanding of the Company’s performance. Management believes
these non-GAAP measures are more reflective of the Company’s business model,
provide transparency to investors and enable period-to-period
comparability
of
financial
performance.
For
a
full
discussion
of
our
non-GAAP
financial
measures, please see Item 7 of our Annual Report on Form 10-K for the fiscal year
ended September 30, 2013, filed on November 26, 2013. This information has
been provided pursuant to the requirements of SEC Regulation G. |
 Fiscal 2013 -
Highlights of a Challenging Year
Achieved our 22
nd
consecutive year of higher NFE; increased
dividend for the 18
th
consecutive year
Despite Superstorm Sandy, added 11 percent more new utility
customers than fiscal 2012
Invested $60 million in solar and recently announced first wind
project
NJRES nearly doubled its NFE from fiscal 2012
Generator sales and equipment installations led to improved Home
Services results
Established a platform to support long-term growth
3 |
  NJR
Delivered Improved Performance in the Quarter and Fiscal Year
4
Company
2013
2012
2013
2012
New Jersey Natural Gas
$(3.1)
$(5.2)
$73.8
$73.2
NJR Energy Services
(2.2)
(7.3)
19.3
10.8
NJR Clean Energy
1.0
(1.4)
10.1
19.5
NJR Midstream
1.6
1.3
7.2
6.8
NJR Home Services/Other
2.5
1.5
3.3
2.1
Total
$(0.2)
$(11.1)
$113.7
$112.4
Per basic share
$(.01)
$(.27)
$2.73
$2.71
September 30,
September 30, |
  Despite Superstorm Sandy, NJNG Delivered Improved
Results
5
Approximately 75 percent of Sandy customers back
$26.1 million invested in system restoration
Will seek recovery in November 2015 base rate case
$14.8 million in deferred O&M costs
(Thousands)
2013 vs. 2012
Customer Impact
$3,221
AIP
821
SAVEGREEN
1,018
Superstorm Sandy
(3,362)
Total
$1,698
Change in NJNG Gross Margin |
 Fiscal 2013 Segment Results
6
NJR Energy Services --
Benefited from pockets of cold winter and
hot summer weather
NJR Midstream --
Improvement from lower expenses and
improved performance at Iroquois Pipeline
NJR Clean Energy Ventures --
Lower capital spending due to
grid-connected approval process
NJR Home Services --
Higher results from increased generator
sales and equipment installations |
 7
Fiscal 2013 Net Financial Earnings
7
Net Financial Earnings Per Share |
 Goal is to grow dividend 5 percent annually
Growing and Sustainable Dividend
* Current annual rate
** Based on NJR net financial earnings
*** Peer group average based on 2013 earnings estimates and indicated dividend
from Bloomberg. Peer group: ATO, GAS, LG, NWN, PNY,
SJI, SWX, VVC and WGL 8
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
2007
2008
2009
2010
2011
2012
2013
2014*
$1.01
$1.12
$1.24
$1.36
$1.44
$1.54
$1.62
$1.68
Dividend Growth
0%
16%
33%
49%
65%
2007
2008
2009
2010
2011
2012
2013
Peer Group***
48%
50%
52%
55%
56%
57%
59%
63%
Payout Ratio** |
 Fiscal
2014
NFE
Per
Share
Guidance
-
$2.75
to
$2.95
9
Regulated businesses expected to
contribute
65-80
percent
of
total
NFE
New Jersey
Natural Gas
60-70%
NJR Midstream
5-10%
NJR Clean Energy
Ventures
10-20%
NJR Home
Services
2-5%
NJR Energy
Services
5-15% |
 4 to 7 Percent Average Long-Term Annual NFE
Growth Strategies
Regulated Businesses
Significant increase in NJNG
regulated infrastructure
investments
Diversified sources of NJNG
gross margin
November 2015 base
rate filing
Targeted growth from
NJR Midstream
Non-Regulated Businesses
Diversify clean energy
portfolio
Expand onshore wind
investments
Steady contributions from
NJR Energy Services
Expanded products and
markets at NJR Home Services
10 |
 7,456 new customers in fiscal
2013,
year; highest number since 2008
3,627 new construction
customers;
up 27 percent over
last year
3,829 conversions from other
fuels;
51 percent of total
11
NJNG Customer Growth Estimated to Add $3.9 Million of
Utility Gross Margin Annually
Over next two fiscal years, NJNG expects to
add
14,000-16,000 new customers
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY08
FY09
FY10
FY11
FY12
FY13
7,175
5,841
6,189
6,783
6,704
7,456
New Construction
Conversions
619 existing customer heat
conversions
in fiscal 2013
up
11
percent
over
last |
 12
Key Trends Support Future Customer Growth
Sources for new construction: Arthur D. Little, Harte Hanks and
NJNG Source for Population change: US Census Bureau
Source
for
Fuel
Pricing:
US
Energy
Information
Administration.
*
Data
as
of
November
2013. Based on 100,000 comparable BTUs
Demographics
Fuel Pricing
0.0%
5.0%
10.0%
15.0%
NJ
Morris
Monmouth
Ocean
4.5%
4.7%
2.5%
12.8%
Population Change 2000-2010
$0.00
$0.75
$1.50
$2.25
$3.00
$3.75
$4.50
$5.25
$6.00
NJNG
Fuel Oil
Propane
Electricity
$1.08
$2.99
$4.21
$4.40
Equivalent Cost Value for Customers *
Non Heat
6,900
On Main
37,749
Near Main
28,974
Off Main
47,840
Future Conversions
2014-
2017
17,350
2019-
Buildout
66,993
Future New Construction |
 Capital of Over $1 Billion Drives Long-Term Growth
NJNG Expects Base Rate Case Resolution by Fiscal 2017
13
NJNG Capital Investment Estimates
($mm)
2009-
2012
Actual
2013A
2014E
2015E
2016E
2017E
Total
Customer Growth
$79.4
$24.5
$24.7
$25.6
$25.5
$25.5
$205.2
Maintenance/Other
177.4
42.5
63.3
55.9
48.1
40.6
427.8
AIP/SAFE
136.7
45.3
31.6
33.7
39.1
-
286.4
Superstorm Sandy
-
26.1
5.3
5.2
-
-
36.6
NGV Advantage
-
1.0
9.0
-
-
-
10.0
NJ RISE
-
-
4.6
13.0
12.0
12.0
41.6
Liquefaction/LNG
-
-
16.0
16.3
3.4
-
35.7
Southern Reliability
-
-
2.3
12.3
80.6
34.8
130.0
SAVEGREEN
36.5
24.0
42.5
42.5
-
-
145.5
Total
$430.0
$163.4
$199.3
$204.5
$208.7
$112.9
$1,318.8 |
 Current NJNG Infrastructure Investments
14
SAFE
(Safety
Acceleration
and
Facility
Enhancement
Program)
-
$130
million
over
four years to replace 276 miles of cast iron and unprotected steel main
FISCAL
2014
GOAL:
Invest
$32
million,
complete
79
miles
of
replacement
pipe
Superstorm Sandy -
Range of $35 to $40 million over three years
FISCAL
2014
GOAL:
Deploy
$5
million
for
continuing
system
restoration
NGV Advantage –
Invest $6 -
$8 million already committed to three refueling
stations
FISCAL
2014
GOAL:
Open
CNG
stations
to
public
SAVEGREEN –
Promotes customer investment in high-efficiency heating
equipment; invest up to $85 million over the next two years
FISCAL
2014
GOAL:
Implement
and
expand
program
offerings
to
residential and commercial customers |
 Planned NJNG Infrastructure Capital Projects
NJ
RISE
(Reinvestment
in
System
Enhancement)
-
$102
million
NJNG storm response plan filed with NJ BPU on September 3, 2013
Additional pipe to barrier islands and excess flow valves
FISCAL
2014
GOAL:
Develop
regulatory
review
process;
establishes
timetable
for
NJ
BPU
decision
Liquefaction
Facility/LNG
Upgrades
-
$35.7
million
Reduces LNG transportation costs and creates customer savings
FISCAL 2014 GOAL:
Invest
$16
million
in
equipment;
completion
by
fiscal
2016
Southern
Reliability
Link
(SRL)
-
$130
million
Adding high-pressure natural gas pipeline to support reliability, diversify
supplier base and support growth in Ocean County
FISCAL
2014
GOAL:
Finalize
route
selection
and
engineering
design;
submit
engineering
studies
to
NJ
BPU
15 |
 Diversified and Growing NJNG Gross Margin
Incremental utility gross margin expected to more than double
by fiscal 2017
16 |
 Targeted Growth from Regulated NJR Midstream
Current investments provide 5 to 10 percent of NFE
Strategic Marcellus location supports value
Leverage customer contacts to identify new opportunities
17
Iroquois Pipeline
5.53 percent interest in gas pipeline
to serve the Northeast market
Steckman Ridge
50/50 joint venture with Spectra Energy
12 Bcf natural gas storage facility in SW PA |
 Clean Energy Portfolio Strategy
Renewable Portfolio Standard (RPS) provides a growing source
of demand
62 MW inventory of grid-connected projects over next three years
Sunlight Advantage residential solar program
Eliminate reliance on solar ITC by January 2017
Currently estimate approximately 174,000 SRECs by fiscal 2017
Solar investments beyond 2017 depend on market conditions
FISCAL 2014 GOALS:
Solar spending of $60-$95 million
One or two onshore wind projects in the 20-70 MW range
18
Continue to diversify into onshore wind projects and other clean
energy investments |
 Clean Energy Portfolio Diversification: Onshore Wind
Why are we doing this?
Supports NJR’s electric strategy
Earnings growth opportunities supported by long-term Power Purchase
Agreements (PPAs) with annuity-like returns
29 states and the District of Columbia have RPS
Tax credits are production based
How will growth continue?
Increase SREC revenue; higher prices and volume
Invest in onshore wind projects and other clean energy investments
Regulated earnings growth
19 |
 Clean Energy Portfolio Diversification: Two Dot Wind Farm
Announced on October 23, 2013
9.7 MW utility scale wind farm
project
located in Montana, east of Helena
Approximately $22 million
investment;
PTC eligible
25-year PPA in place to sell power
to NorthWestern Energy to support their
RPS requirement
Strong partners -
GE,
Mortenson
Construction, etc.
Current Status:
Construction work underway
All turbines to be on site in December
Commercial operations on track for
summer 2014
20
NJR expects Two Dot to contribute to earnings in
fiscal fourth quarter 2014 |
 NJRES: Growth Opportunities in a Changing Market
Portfolio restructured to succeed in current market
Growth opportunities from physical natural gas and producer services
Providing energy solutions for diverse customers in the Marcellus Shale
and other natural gas regions
Producers, Utilities, Power
Generators,
Pipelines and Industrials
Holds 1.1 Bcf/day of firm transportation
and more than 33 Bcf of storage
throughout the U.S. and Canada
5 to 15 percent of total
NFE
fiscal 2014
21 |
 NJR Home Services: Retail Solutions for Customer Comfort
Majority of earnings derived from service contracts
Approximately 121,000 service contract customers
Expanded array of services now offered
Whole-house electric and plumbing contracts
Standby generator contracts
Air conditioning
Generators
Brand recognition
provides
confidence
2 to 5 percent of total
NFE
in fiscal 2014
22 |
 NJR Affirms Long-Term Financial Goals
Achieve average long-term NFE growth of 4 to 7 percent
Significant capital investment in regulated business to support customer
growth and maintain safe, reliable and resilient service
New customers and regulatory initiatives generate significant NJNG utility
gross margin growth
Provide annual dividend growth of at least 5 percent
Targeted payout ratio of 60 to 65 percent
Expect at least 65 to 80 percent of earnings from Regulated Businesses
Supported by constructive and collaborative regulatory relationships
23 |
 Delivering consistent net financial
earnings and dividend growth
Investing significantly in NJNG’s
infrastructure to enhance system reliability
Diversifying and growing NJNG’s gross
margin
Committing capital to clean energy
portfolio
Growing other energy-related, non-utility
businesses
NJR Will Continue to Meet Customer and Investor
Expectations
24 |
 New York Financial Community Meetings
January 9, 2014 |