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| 8-K - FORM 8-K - NEW JERSEY RESOURCES CORP | d603626d8k.htm |
 Stamford Financial Community
September 26, 2013
Exhibit 99.1 |
 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. Forward-looking
statements
can
also
be
identified
by
the
use
of
forward-looking
terminology
such
as
“may,”
"will,"
“intend,”
“expect,”
"believe,"
or
“continue”
or
comparable
terminology and 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 the Company
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 net financial earnings
(NFE) for the remainder of fiscal 2013, forecasted contribution of business segments to fiscal
2013 long-term NFE, long-term financial goals of NJR, expected
contribution by new customers of New Jersey Natural Gas Company (NJNG) to utility gross margin, expected
number of new and customers of NJNG, sources of gross margin at NJNG, the
approval and completion of NJR Clean Energy Venture's planned solar projects in fiscal 2013,
Solar Renewable Energy Certificate (SREC) prices, NJR’s effective tax rate,
estimated capital expenditures in fiscal 2013 and beyond, by NJNG and NJRCEV, planned natural
gas vehicle (NGV) stations, the diversification of NJRCEV’s strategy,
expected dividend payout ratio, and the impact of post-tropical cyclone Sandy, (commonly referred to
as “Superstorm”
Sandy).
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), 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 the
proposed regulatory framework for over-the-counter derivatives; 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”
sections
of
our
Annual
Report
on
Form
10-K
filed
on
November
28,
2012,
as
filed
with the Securities and Exchange Commission (SEC) and our Quarterly Report on Form
10-Q, filed with the SEC on August 7, 2013, each of which is available
on the SEC’s website at sec.gov.
NJR disclaims any obligation to update and revise statements contained in these
materials based on new information or otherwise 1
|
 Disclaimer Regarding Non-GAAP Financial Measures
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. 2
2
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, 2012, filed on November 28, 2012. This information has been provided
pursuant to the requirements of SEC Regulation G. |
 NJR at a Glance
3
Ticker Symbol (NYSE):
NJR
Price Range (52 Weeks)
$38.51
-
$47.60
Market Capitalization:
$1.8 billion
Annual Dividend Rate:
$1.68
Dividend Yield:
3.8 percent
Total Assets:
$2.7 billion |
 NJR’s Long-Term Financial Goals
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 utility gross
margin growth
Provide annual dividend growth of at least 5 percent
Targeted payout ratio of 60 to 65 percent
Expect at least 60 to 70 percent of earnings from NJNG
Supported by constructive and collaborative regulatory relationships
4 |
 5
NJR Has Provided 4 –
7 Percent Average Long-Term
NFE Growth
* Assumes a range of 4-7 percent average annual growth
5
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
$3.40
$3.60
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
2014E
2017E*
$1.61
$1.73
$1.80
$1.88
$2.11
$2.24
$2.40
$2.46
$2.58
$2.71
$2.70 –
$2.75
$2.75 –
$2.95
$3.21 –
$3.49
Net Financial Earnings Per Share |
 Payout ratio goal is 60 –
65 percent
NJR Has Provided a Growing and Sustainable Dividend
* Current annual rate
** Assumes 5 percent average annual growth
6
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
2017E**
$0.87
$0.91
$0.96
$1.01
$1.12
$1.24
$1.36
$1.44
$1.54
$1.62
$1.68
$1.92
Dividend Growth |
 Midpoint of Fiscal 2013 NFE Guidance Increased
NJNG -
67 percent
Seasonal nature of NJNG/NJRES operations typically
result in fourth quarter net financial loss
Fourth Quarter NFE Guidance
Non-Utility
-
33
percent
7
-$0.30
-$0.25
-$0.20
-$0.15
-$0.10
-$0.05
$0.00
$0.05
2013E
2012A
$(.27)
$(.03)
$.02
$2.70 to $2.75 per share |
 4
to 7 Percent Average Long-Term Annual NFE Growth Strategies
New Jersey Natural Gas
Significant increase in
regulated infrastructure
investments
Diversified and growing
sources of gross margin
November 2015 base
rate filing
Non-Utility
Improving market
fundamentals for
NJ
solar assets
Wind and CHP investments
to reduce solar over the
long term
Steady contributions from
wholesale and midstream
Expanded products and
markets in NJRHS
8 |
 Our Core Distribution Business
Growing customer base
–
primarily residential and
commercial
Net plant, property and equipment of nearly $1.2 billion
Collaborative regulatory relations
High customer satisfaction
Decoupled rates; margin per customer model
9
0.0%
5.0%
10.0%
15.0%
NJ
Morris
Monmouth
Ocean
4.5%
4.7%
2.5%
12.8%
Population Change 2000-2010 |
 5,301 new customers through June
2013
2,493 new construction customers, an
increase of 19 percent over last year
2,808 conversions
Strong Customer Growth
Sources: Arthur D. Little, Harte Hanks and NJNG
Demographics and customer service support future customer growth
497 existing customer heat conversions
Customer growth expected to add
$3.6 million of utility gross margin
annually
Increased customer growth, estimated at
13,000-15,000 new customers over the
next fiscal two years |
 Capital of Over $1 Billion Drives Long-Term Growth
Earnings on rate base investments expected by fiscal 2017
11
NJNG Capital Expenditure Estimates
2009-
2012
Actual
2013F
2014P
2015P
2016P
2017P
Total
Regulatory
Treatment?
Customer Growth
$79.4
$21.6
$24.7
$25.6
$25.5
$25.5
$202.3
N
Maint./Other
177.4
43.0
57.5
49.0
48.1
40.6
415.6
N
AIP/SAFE
136.7
48.5
38.3
40.4
39.1
-
303.0
Y
Sandy
-
28.0
5.3
5.2
-
-
38.5
N
NGV Advantage
-
5.0
5.7
-
-
-
10.7
Y
Southern Rel.
-
.1
2.3
12.3
80.6
34.8
130.1
N
Liquefaction
-
-
16.0
16.3
3.4
-
35.7
N
NJ RISE
-
-
4.6
13.0
12.0
12.0
41.6
Y
NJNG Total
$393.5
$146.2
$154.4
$161.8
$208.7
$112.9
$1,177.5 |
 New Infrastructure Capital Projects
Southern
Reliability
Link
(SRL)
—
$130
million
Additional high-pressure pipeline to support growth in Ocean County
Diversifies supplier base to increase system reliability
Liquefaction
Facility
—
$35.7
million
Reduces LNG transportation costs
Results in customer savings
NJ
RISE
(Reinvestment
in
System
Enhancement)
—
$102
million
NJNG storm response filing
Filed with NJ BPU on September 6, 2013
Additional pipe to barrier islands/excess flow valves
Provides benefits to customers and shareowners
12 |
 Customer Growth -
Utility Gross Margin
13
Annual 1.4 to 1.5 percent
customer growth
Improving new
construction
Strong conversion
market
NJNG has decoupled
rates (CIP)
Eliminates impacts of
weather and usage
13
$0.0
$6.0
$12.0
$18.0
$24.0
FY13F
FY14E
FY15E
FY16E
FY17E
$3.6
$8.1
$12.8
$17.4
$22.1 |
 The SAVEGREEN Project
®
-
Utility Gross Margin
14
BPU approved significant
program expansion in
June 2013
Promotes customer
investment in high-
efficiency heating
equipment
NJNG earns 9.75 to 10.3
percent return on equity
NJNG expects to invest $85 million over the next two years
14
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
FY13F
FY14E
FY15E
FY16E
FY17E
$2.9
$5.7
$8.2
$10.1
$10.6 |
 The NGV Advantage -
Utility Gross Margin
15
Total potential
investment of up
to $10 million
$6 -
$8 million
committed
NJNG earns 10.3
percent return
on equity
15
$0.0
$1.0
$2.0
$3.0
FY13F
FY14E
FY15E
FY16E
FY17E
$1.8
$1.8
$1.8
$0.6
$0.7
$0.8
Infrastructure
Throughput
$.01
$.2
$2.3
$2.5
$2.6 |
 BGSS Incentives -
Utility Gross Margin
16
Various programs benefit
both customers and
shareowners
Adds about $.08 annually
to NFE per share
Saved customers
approximately $621
million since inception
in 1992
Programs in place through October 2015
16
$0.0
$2.0
$4.0
$6.0
$8.0
FY13F
FY14E
FY15E
FY16E
FY17E
$7.3
$6.5
$6.0
$6.0
$6.0 |
 Diversified and Growing Utility Gross Margin
$14.1
Incremental utility gross margin expected to triple over five years
17
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
FY13F
FY14E
FY15E
FY16E
FY17E
Customer Growth
SAVEGREEN
NGV
BGSS Incentives
$20.3
$29.3
$36.0
$41.3 |
 4 to 7 Percent Average Long-Term Annual NFE
Growth Strategies
New Jersey Natural Gas
Significant increase in
regulated infrastructure
investments
Diversified and growing
sources of gross margin
November 2015 base
rate filing
Non-Utility
Improving market
fundamentals for NJ
solar assets
Wind and CHP investments
to reduce solar over the
long term
Steady contributions from
wholesale and midstream
Expanded products and
markets in NJRHS
18 |
 NJR Clean Energy Ventures
About 55 MW of installed capacity in residential and commercial
projects
Approximately 65,000 Solar Renewable Energy Certificate (SRECs) generated
annually
Goal is to commit $70 to $90 million in fiscal 2014; reduce by fiscal 2017
Solar industry in NJ supported by a strong legislative commitment
New state legislation
Signed in July 2012 to bring long-term stability to New Jersey’s solar
industry
Increases Renewable Portfolio Standard (RPS) starting in June 2013
Mandates BPU approval process for grid-connected projects
Extends SREC life to five years
19 |
 Investing in Onshore Wind
Strategic Considerations
29 states and the District of Columbia have mandatory renewable
portfolio standards
Wind is typically the most economic solution for meeting RPS in most
states NJR’s Onshore Wind Energy Strategy
Strategic partnership with OwnEnergy, specializing in small to
mid-sized projects
Current pipeline of projects totaling 1,300 MW
Will focus on long-term power purchase agreements and project
financing 20
Long-term goal to maintain NJRCEV at 10 to15 percent of NFE
and reduce new solar capital |
 Steady Contributions from Other Non-Utility Businesses
NJR Energy Services
Growth opportunities from physical natural gas marketing and producer
services
Portfolio restructured to reflect current market realities
10 to 15 percent of total NFE
Midstream Investments
Existing investments provide consistent earnings stream
Seeking additional opportunities by leveraging customer contacts
5 to 10 percent of total NFE
NJR Home Services
Growth though expansion of geographic footprint and service offerings
2 to 5 percent of total NFE
21 |
 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 renewable
portfolio
Growing other energy-related, non-
utility businesses
NJR Will Continue to Meet Customer and Investor
Expectations
22
* Assumes dividends reinvested, period 9/30/03 to 9/23/13
10.2%
7.9%
7.7%
0.0%
3.0%
6.0%
9.0%
12.0%
NJR
Dow
S&P 500
10-Year Annualized Total Return* |
 Stamford Financial Community
September 26, 2013 |