Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NEW JERSEY RESOURCES CORP | d722555d8k.htm |
| EX-99.1 - EX-99.1 - NEW JERSEY RESOURCES CORP | d722555dex991.htm |
 Fiscal 2014 Second Quarter Update
May 7, 2014
Exhibit 99.2 |
 Regarding Forward-Looking Statements
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/or
beliefs
as
of
this
date
or
a
prior
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
including,
but
not
limited
to,
certain
statements
regarding
NJR's
NFE
for
fiscal
2014,
forecasted
contribution
of
business
segments
to
fiscal
2014
NFE
and
to
NFE
beyond
fiscal
2014,
NJR’s
long-term
NFE
per
share
growth
rate
goal,
and
earnings
guidance,
NJR’s
future
dividend
growth
rate
and
payout
ratio,
long-term
benefits
of
increased
NFE,
future
NJNG
customer
growth,
future
NJNG
capital
expenditures,
NJNG
incremental
utility
gross
margin,
the
long-term
outlook
for
NJRCEV,
diversification
of
NJRCEV’s
strategy,
and
NJR’s
long-term
NFE
per
share
growth
rate
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
on
our
access
to
capital;
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;
regulatory
approval
of
NJNG’s
planned
infrastructure
programs;
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
or
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.
The
aforementioned
factors
are
detailed
in
the
“Risk
Factors”
sections
of
our
Annual
Report
on
Form
10-K
filed
on
November
26,
2013,
as
filed
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.
1 |
 Disclaimer Regarding Non-GAAP Financial
Measures
This
presentation
includes
the
non-GAAP
measure
Net
Financial
Earnings
(NFE).
As
an
indicator
of
the
company’s
operating
performance,
this
measure
should
not
be
considered
an
alternative
to,
or
more
meaningful
than,
operating
income
as
determined
in
accordance
with
GAAP.
This
information
has
been
provided
pursuant
to
the
requirements
of
SEC
Regulation
G.
NFE
excludes
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
instead
of
when
the
planned
transaction
ultimately
is
settled.
An
annual
estimated
effective
tax
rate
is
calculated
for
NFE
purposes
and
any
necessary
quarterly
tax
adjustment
is
applied
to
NJRCEV,
as
such
adjustment
is
related
to
tax
credits
generated
by
NJRCEV.
Management
uses
non-GAAP
financial
measures
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
NJR’s
non-
GAAP
financial
measures,
please
see
NJR’s
most
recent
Form
10-K,
Item
7
and
most
recent
Form
10-Q,
Part
I,
Item
2.
2
2 |
  Net
Financial Earnings (NFE) 3
($MM)
Company
2014
2013
2014
2013
New Jersey Natural Gas
$47.0
$45.9
$74.7
$71.4
NJR Energy Services
91.4
16.4
98.8
19.4
NJR Clean Energy
12.8
5.2
16.4
10.5
NJR Midstream
2.3
2.3
3.7
4.1
NJR Home Services/Other
(1.6)
(1.1)
(1.8)
(1.2)
Total
$151.9
$68.7
$191.8
$104.2
Per basic share
$3.61
$1.64
$4.56
$2.50
Six Months Ended
March 31,
Three Months Ended
March 31, |
 NJR Affirms Fiscal 2014 NFE Per Share
Guidance $3.90 to $4.10
4
NJR expects NJRES to contribute 35-40 percent of Fiscal 2014 Earnings
New Jersey Natural Gas
NJR Clean Energy Ventures
NJR Energy Services
NJR Midstream
NJR Home Services |
 Improved Earnings Growth And Financial
Profile
Earnings retention further strengthens our balance sheet and
reduces the need for new equity issuances
Supports our future capital expenditures
Significant capital investment in regulated business to support customer
growth and maintain safe, reliable and resilient service
Additional flexibility to utilize our Share Repurchase Program
Results in higher projected earnings and dividend growth
rates
Average long-term NFE growth of 5 to 9 percent
Annual dividend growth of 6 to 8 percent
Targeted payout ratio of 60 to 65 percent
5 |
 Increased Long-Term NFEPS Guidance
6
NJR
expects
an
average
long-term
growth
rate
of
5
to
9
percent
annually |
 Goal is to grow dividend 6 to 8 percent annually
Dividend Outlook Strengthened
* Current annual rate
** Assumes 6-8 percent average annual dividend growth
*** Based on NJR net financial earnings
7 |
 New Jersey Natural Gas –
Our Core Business
Customer growth rate of 1.5 percent exceeds industry average
Profitable balance in the new construction market
Natural gas installed at 95 percent of new construction projects
Healthy mix of new construction and conversions
History of constructive regulatory relationships
Sharing of customer and investor benefits
21 consecutive years with fewest customer complaints with the New
Jersey Board of Public Utilities of electric and gas companies
Infrastructure growth initiatives designed to strengthen
distribution and transmission system are supported by
regulatory riders
Rate case to be filed by mid-November 2015
8 |
 3,658 new customers added in
the first half of fiscal 2014
1,769 new construction customers
1,889 conversions from other fuels
348 existing customer heat
conversions
9
Strong Customer Growth Continues
Over next two fiscal years, NJNG expects to add a total
of 14,000-16,000 new customers
|
 10
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 March 2014.
Based on 100,000 comparable BTUs
Demographics
Fuel Pricing |
 Capital of Over $1 Billion Drives Long-Term
Growth
NJNG Expects Base Rate Case Resolution by Fiscal 2017
11
NJNG Capital Investment Estimates
($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
64.2
55.7
48.1
40.6
428.5
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
$200.2
$204.3
$208.7
$112.9
$1,319.5 |
 12
NJRES: Strong Performance in Changing Markets
Provides physical natural gas services for Utility, Power
Generator, Pipeline, and Industrial customers across North
America including the Marcellus Shale
NJRES’
Asset Portfolio includes:
Storage capacity –
Approximately 40 Bcf in the United States and Canada
Pipeline transportation capacity –
Approximately 1.5 Bcf/day
NJRES’
services include:
Transport natural gas to customers
Gas in storage available to serve customers when demand is high
Manage other companies’
assets –
Producer Services
Long
option strategy:
Commodity hedges limit downside
Creates upside when market conditions are volatile
|
 NJR Clean Energy Ventures -
Distributed
Power Portfolio Strategy
13
Long-term goal to maintain NJRCEV at 10 to 20 percent of NFE
Solar
Demand driven by growing RPS in NJ
Improving SREC Fundamentals
Reduce reliance on solar ITC by January 2017
Wind
29 states and the District of Columbia have Renewable Portfolio
Standards (RPS)
Production-based tax credits (PTC)
Long-term Power Purchase Agreements (PPAs) and PTCs provide
annuity-like returns
Combined Heat and Power
Possible longer-term opportunities |
  NJNG Results
Strong results from NJNG
Added 3,658 new customers in the first half of Fiscal 2014
52 percent converted from other fuels
$17.5 million spent on SAVEGREEN Program
NGV stations on track for summer opening
BGSS incentive margin increased
14
($MM)
2014
2013
2014
2013
Gross Margin
$116.0
$110.5
$199.4
$189.0
Operating Income
$74.1
$71.4
$119.4
$114.1
Net Financial Earnings
$47.0
$45.9
$74.7
$71.4
Total Customers
503,679
498,933
503,679
498,933
Six Months Ended
Three Months Ended
March 31,
March 31, |
 Diversified and Growing Utility Gross Margin
NJNG expects incremental utility gross margin to more than
double by fiscal
2017 15 |
 Contributed $2.3 and $3.7 million to three and six month NFE, respectively
Steckman Ridge
12 Bcf Storage field, located in south central PA
50 percent joint venture with Spectra Energy
Iroquois
5.53 percent ownership in pipeline from Canada to the northeast
16
NJR Midstream |
  NJR Energy Services Results
Extreme weather created dramatic increase in natural gas demand
Validated long-option strategy
Producer Services
NJRES expects to contribute 35 to 40 percent to fiscal 2014 NFE
17
($MM)
2014
2013
2014
2013
Financial Margin
$163.0
$29.2
$179.3
$38.0
Net Financial Earnings
$91.4
$16.4
$98.8
$19.4
Gas Sold and Managed (Bcf)
175.0
161.4
342.1
305.3
Firm Transportation (Bcf/d)
1.6
1.2
1.6
1.2
Firm Storage (Bcf)
38.7
35.3
38.7
35.3
Six Months Ended
Three Months Ended
March 31,
March 31, |
                             18
Severe Winter Weather Validates NJRES Long-
Option Strategy
Firm Storage
Firm Transportation
Producer Service Area
February 11, 2014, Chicago
experienced
low
of
-8
o
compared
to
5-year
historic
low
for
month
of
19
o
.
January 7, 2014, Atlanta experienced
low
of
6
o
compared
with
5-year
historic
average
for
month
of
34
o
. |
  NJR
Clean Energy Ventures 19
Forecast is to place into service $75 to $85 million of capital in fiscal
2014 Strong legislative commitment to solar in New Jersey
Expected to contribute 5 to 15 percent to fiscal 2014 NFE
($MM)
2014
2013
2014
2013
Operating Revenues
$2.7
$1.4
$4.9
$4.6
ITC Impact
$15.0
$5.9
$20.6
$13.2
Net Financial Earnings
$12.8
$5.2
$16.4
$10.5
SRECs Generated
10,996
8,422
26,155
18,083
SRECs Sold
11,314
7,362
20,678
32,362
SREC Inventory
16,828
14,079
16,828
14,079
Six Months Ended
Three Months Ended
March 31,
March 31, |
 Improving SREC Fundamentals
NJ increased solar RPS effective June 2013
Solar construction activity has moderated
SREC prices have responded
NJRCEV forecasts SREC inventory to grow from
approximately 65,000 in fiscal 2013 to 174,000 in fiscal 2017
20 |
 NJR Home Services
2Q fiscal 2014 loss of $1.1 million compared with a loss of $847,000 last year,
Six month of loss of $1.7 compared with a loss of $1.1 million last year
Majority of earnings derived from service contracts
Approximately 119,000 service contract customers
Contract revenue keeps growing due to Premier Heating and Cooling Plans
Expanded array of services now offered
Whole-house electric and plumbing contracts
Standby generator contracts
Air conditioning
Generators
Brand recognition provides confidence
Moving from direct mail to Internet media
Expected to contribute 2 to 5 percent of Fiscal 2014 NFE
21
Selling more to current customers |
 Deliver consistent net financial
earnings and dividend growth
Invest significantly in NJNG’s
infrastructure to enhance system
reliability
Diversify and grow NJNG’s gross
margin
Committed capital to clean energy
portfolio
Grow other energy-related, non-
utility businesses
NJR Will Continue to Meet Investor Expectations
22
* Assumes dividends reinvested, period 3/31/04 to 3/31/14
|