UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 2014
NEW JERSEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey | 001-8359 | 22-2376465 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1415 Wyckoff Road Wall, New Jersey |
07719 | |
(Address of principal executive offices) | (Zip Code) |
(732) 938-1480
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On July 31, 2014, the Registrant issued a press release reporting financial results for the third fiscal quarter ended June 30, 2014 (the Press Release). A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
The Registrant will host a conference call and live internet webcast to discuss its financial results on July 31, 2014, at 10:00 a.m. ET. A copy of the presentation that will be used during the webcast is attached hereto as Exhibit 99.2 and incorporated by reference herein.
The information in this Current Report is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed to be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
(a) | Financial statements of businesses acquired: | Not applicable. | ||
(b) | Pro forma financial information: | Not applicable. | ||
(c) | Exhibits: |
Exhibit Number |
Description | |
99.1 | Press Release dated July 31, 2014 | |
99.2 | Presentation dated July 31, 2014 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NEW JERSEY RESOURCES CORPORATION | ||||||
Date: July 31, 2014 |
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By: |
/s/ Glenn C. Lockwood | |||||
Glenn C. Lockwood | ||||||
Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
Exhibit Number |
Description | |
99.1 | Press Release dated July 31, 2014 | |
99.2 | Presentation dated July 31, 2014 |
Exhibit 99.1
Date: July 31, 2014 | Media Contact: | |
Michael Kinney | ||
732-938-1031 | ||
mkinney@njresources.com | ||
Investor Contacts: | ||
Joanne Fairechio | ||
732-378-4967 | ||
jfairechio@njresources.com | ||
Dennis Puma | ||
732-938-1229 | ||
dpuma@njresources.com |
NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE
Strong Year-To-Date Results at NJR Energy Services Drives Growth
New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
WALL, NJ New Jersey Resources (NYSE: NJR) today reported results for the third quarter of fiscal 2014 and reaffirmed increased net financial earnings (NFE) guidance for fiscal 2014.
A reconciliation of net income to NFE for the third quarter and first nine months of fiscal years 2014 and 2013 is provided below.
Three Months Ended June 30, |
Nine Months Ended June 30, |
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(Thousands) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net (loss) income |
$ | (14,274 | ) | $ | 29,155 | $ | 166,390 | $ | 134,830 | |||||||
Add: |
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Consolidated unrealized (gain) loss on derivative instruments |
(6,585 | ) | (44,148 | ) | 45,811 | (23,682 | ) | |||||||||
Effects of economic hedging related to natural gas inventory |
38,139 | 13,440 | (3,409 | ) | (9,425 | ) | ||||||||||
Tax adjustments |
(12,766 | ) | 11,291 | (12,497 | ) | 12,172 | ||||||||||
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Net financial earnings |
$ | 4,514 | $ | 9,738 | $ | 196,295 | $ | 113,895 | ||||||||
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Weighted Average Shares Outstanding |
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Basic |
42,117 | 41,608 | 42,072 | 41,697 | ||||||||||||
Diluted |
42,117 | 41,732 | 42,456 | 41,820 | ||||||||||||
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Basic (loss) earnings per share |
$ | (0.34 | ) | $ | 0.70 | $ | 3.95 | $ | 3.23 | |||||||
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Basic net financial earnings per share |
$ | 0.11 | $ | 0.23 | $ | 4.67 | $ | 2.73 | ||||||||
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NFE is a financial measure not calculated in accordance with generally accepted accounting principles (GAAP) of the United States as it excludes all unrealized, and certain realized, gains and losses associated with derivative instruments, net of applicable tax adjustments. For further discussion of this financial measure, as well as reconciliation to the most comparable GAAP measure, please see the explanation below under Additional Non-GAAP Financial Information.
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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| NJR Reports Net Financial Earnings |
Fiscal 2014 year-to-date NFE at NJR totaled $196.3 million, or $4.67 per share, compared with $113.9 million, or $2.73 per share, during the first nine months of fiscal 2013. For the three-month period ended June 30, 2014, NFE were $4.5 million, or $0.11 per share, compared with $9.7 million, or $0.23 per share, during the same period last year.
Three Months Ended June 30, |
Nine Months Ended June 30, |
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(Thousands) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net financial earnings (loss) |
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New Jersey Natural Gas |
$ | 4,882 | $ | 5,528 | $ | 79,564 | $ | 76,937 | ||||||||
NJR Energy Services |
(8,628 | ) | 2,097 | 90,153 | 21,479 | |||||||||||
NJR Clean Energy Ventures |
3,865 | (1,381 | ) | 20,286 | 9,078 | |||||||||||
NJR Midstream |
1,896 | 1,541 | 5,584 | 5,600 | ||||||||||||
NJR Home Service and Other |
2,485 | 1,944 | 708 | 813 | ||||||||||||
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Sub-total |
4,500 | 9,729 | 196,295 | 113,907 | ||||||||||||
Eliminations |
14 | 9 | | (12 | ) | |||||||||||
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Total |
$ | 4,514 | $ | 9,738 | $ | 196,295 | $ | 113,895 | ||||||||
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Year-to-date NFE growth was driven by extremely strong results at NJR Energy Services (NJRES), the companys wholesale provider of physical natural gas services and customized energy solutions, and NJRs unregulated distributed power subsidiary, NJR Clean Energy Ventures (NJRCEV), as well as continued steady growth at New Jersey Natural Gas (NJNG), NJRs regulated utility. Strong third-quarter results at NJRCEV were primarily offset by the anticipated loss at NJRES, which was due primarily to the seasonal use of natural gas, and year-round transportation and storage portfolio expenses.
Were having an extraordinary year, led by the results at three of our key subsidiaries, said Laurence M. Downes, chairman and CEO of New Jersey Resources. On behalf of our board of directors, I would like to thank all our employees for their passion and commitment, which remain the driving force behind our ability to continually meet our customers expectations for safety, reliability and affordable service every day and, at the same time, deliver value to our shareowners.
| NJR Reaffirms Increased Fiscal 2014 Net Financial Earnings Guidance |
Subject to the risks and uncertainties identified below under Forward-Looking Statements, NJR is reaffirming previously announced increased fiscal 2014 NFE guidance in a range of $4.00 to $4.20 per basic share.
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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The company is forecasting a net financial loss of between $0.47 and $0.67 per share in the fourth quarter of fiscal 2014. The forecasted fourth-quarter loss is due to the seasonal nature of NJRES and NJNGs businesses and higher discretionary expenses, including the estimated impact of a voluntary early retirement program.
In fiscal 2014, NJR expects its regulated businesses, NJNG and NJR Midstream, to contribute 43 to 60 percent to NFE and, as in the past, expects NJNG to be the largest contributor to NFE. The following chart represents the contributions NJR currently expects from its businesses in fiscal 2014:
Company |
Expected Fiscal 2014 Net Financial Earnings Contribution | |
New Jersey Natural Gas |
40 to 50 percent | |
NJR Midstream |
3 to 10 percent | |
Total Regulated |
43 to 60 percent | |
NJR Energy Services |
35 to 45 percent | |
NJR Clean Energy Ventures |
5 to 15 percent | |
NJR Home Services |
2 to 5 percent |
Assuming a return to more normal weather, NJR expects NJRES will generate between 5 to 15 percent of total NFE in fiscal 2015 and beyond. The company expects its regulated businesses will contribute 65 to 80 percent of total NFE over the long term. Contributions from NJRs various business segments are expected to return to previously announced levels in fiscal 2015 as shown in the chart below:
Company |
Expected Fiscal 2015 and Beyond Net Financial Earnings Contribution | |
New Jersey Natural Gas |
60 to 70 percent | |
NJR Midstream |
5 to 10 percent | |
Total Regulated |
65 to 80 percent | |
NJR Clean Energy Ventures |
10 to 20 percent | |
NJR Energy Services |
5 to 15 percent | |
NJR Home Services |
2 to 5 percent |
| Board of Directors Declares Dividend |
On July 15, 2014, NJR announced its board of directors unanimously declared a quarterly dividend of $0.42 per share on its common stock. The dividend will be payable on October 1, 2014, to shareowners of record on September 15, 2014. NJR has paid quarterly dividends continuously since its inception in 1952.
| New Jersey Natural Gas |
Fiscal 2014 year-to-date NFE at NJNG, the companys regulated utility subsidiary, totaled $79.6 million, compared with $76.9 million for the first nine months of fiscal 2013. For the three-month period ended June 30, 2014, NFE totaled $4.9 million, compared with $5.5 million during the same period last year. The
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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improved year-to-date results were driven by higher utility gross margin from customer additions, incentive programs and regulatory initiatives, as well as the continued impact of accelerated infrastructure investments. The lower results in the third quarter were due primarily to higher operations and maintenance expenses and a higher effective tax rate, which more than offset higher gross margin from incentive programs. Lower forecasted cost of removing assets placed in service before 1980 resulted in an increased tax adjustment in the third fiscal quarter of 2014.
During the first nine months of fiscal 2014, NJNG added 5,151 new customers, compared with 5,301 in the same period last year. Of these customers, 2,463 were related to new construction, compared with 2,493 in the same period last year. Year-to-date, 3,125 customers, including 437 existing customers, converted to natural gas heat. These new and conversion customers, along with the addition of firm natural gas sales to existing customers, will contribute approximately $3.1 million annually to utility gross margin, a 15 percent increase over the same period last year.
We continue to see positive signs in the residential new construction market, continued Downes. Combined with favorable service territory demographics and competitive natural gas pricing, we are well on our way to meeting our projected new customer additions goal of between 14,000 to 16,000 during fiscal 2014 and 2015. This will represent a new customer annual growth rate of about 1.5 percent.
NJNG expects these new customers and conversions to contribute approximately $4 million annually to utility gross margin. For more information on utility gross margin, please see Non-GAAP Financial Information below.
| $102.5 Million Infrastructure Investment Approved; Regulatory Update |
On July 23, 2014, NJNG received approval from the New Jersey Board of Public Utilities (BPU) for its New Jersey Reinvestment in System Enhancement (NJ RISE) program. Through NJ RISE, NJNG will invest $102.5 million over a five-year period in six capital projects designed to enhance the resiliency of its natural gas distribution and transmission systems and help diminish the impact of major weather events in the future.
The NJ RISE program will enable us to pursue storm-hardening and mitigation investments to best serve our customers in storm-prone areas surrounding the barrier island communities and other coastal areas of New Jersey in our service territory, continued Downes.
These system enhancements, which align directly with the states appetite for energy resiliency and preparedness, will help mitigate future outages, improve NJNGs service disruption response and strengthen the overall safety, reliability and integrity of its natural gas delivery system. NJNG will recover its capital investment costs through July 31, 2015 through an adjustment to its base rates in November 2015. The NJ RISE investments will earn a weighted average cost of capital of 6.74 percent, including a 9.75 percent return on equity (ROE) with a 53.5 percent common equity ratio. Additional cost recovery will be addressed in NJNGs next base rate case scheduled to be filed no later than November 15, 2015.
In the first nine months of fiscal 2014, NJNG invested $33.7 million in its Safety Acceleration and Facility Enhancement (SAFE) program, a planned $130 million, four-year infrastructure investment. Through SAFE, NJNG will replace 276 miles of its distribution main to further ensure the reliability and integrity of its natural gas delivery system. The SAFE program includes the replacement of NJNGs entire cast iron
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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distribution main and approximately 50 percent of its unprotected bare steel distribution main, along with the associated services. SAFE investments will earn a weighted average cost of capital of 6.9 percent, including a 9.75 percent ROE with a 53.5 percent common equity ratio.
Equipment manufacturing is underway for NJNGs Howell, New Jersey, Liquefied Natural Gas (LNG) plant, which will give the company the ability to liquefy pipeline natural gas for peak-day use and reduce LNG transportation costs. The $35.7 million investment will benefit customers by reducing Basic Gas Supply Service costs and will create additional value for shareowners.
The company is currently evaluating route options for its Southern Reliability Link (SRL) project, an estimated $130 to $160 million investment, which will connect an interstate pipeline to NJNGs transmission system in Ocean County, New Jersey, to support system reliability and redundancy.
| Conservation Incentive Program Continuation Approved |
In the third quarter of fiscal 2014, NJNG received approval from the BPU to continue its Conservation Incentive Program (CIP). As a result of this action, there is no future expiration date for the CIP; however, it is subject to review in a future rate filing in 2017. Separately, the company has proposed a reduction to its CIP rates that would result in a bill decrease for residential and commercial customers, effective October 1, 2014.
First enacted in 2006, the CIP enables NJNG to more actively encourage savings for customers through conservation and energy-efficiency improvements, while allowing NJNG to maintain sufficient operating revenues that might otherwise be impacted by declines in usage patterns. By eliminating the link between usage and margin recoveries, NJNG is in a stronger position to help customers manage their energy bills. Additionally, rate impacts continue to be subject to tariff requirements, which ensure protection for customers.
Since its inception, the CIP has helped customers reduce their natural gas usage by 295 million therms, saving a total of $305 million. These conservation actions reduce greenhouse gas emissions and help customers save energy and money, supporting the states environmental goals without impacting NJNGs gross margin.
| The SAVEGREEN Project® Encourages Energy Savings |
In the first nine months of fiscal 2014, The SAVEGREEN Project, NJNGs energy-efficiency program, invested $24.7 million on grants, incentives and NJNGs On-Bill Repayment Program (OBRP) to help make the investment in high-efficiency natural gas equipment and energy-efficient upgrades more affordable for NJNG customers. During the same period, SAVEGREEN performed 3,432 home energy audits to identify additional energy-efficiency opportunities with an emphasis on whole-house improvements to further increase energy savings for customers. Year-to-date, 1,690 NJNG customers have taken advantage of the OBRP.
Since its inception in 2009, SAVEGREEN grants, incentives and OBRP loans, totaling $85.2 million, have helped over 31,447 customers reduce energy consumption and lower their bills, supporting the states environmental goals and its mandate to reduce energy costs for residents. NJNGs SAVEGREEN energy-efficiency programs are in place through June 30, 2015.
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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In total, NJNG plans to invest approximately $138 million in SAVEGREEN grants, financial incentives and the OBRP over the life of the program. The company is authorized to earn an overall return on its SAVEGREEN investments, ranging from 6.9 to 7.76 percent, with a ROE ranging from 9.75 to 10.3 percent. The recovery period varies from two to 10 years, depending on the type of energy-efficiency investment.
| Compressed Natural Gas Refueling Stations on Track to Open This Year |
NJNG is investing approximately $10 million in three compressed natural gas (CNG) refueling stations throughout its service territory. Construction contracts have been awarded for all three projects and the company expects to break ground on all three stations this summer.
The host sites, located at Waste Management, Inc. of Toms River, Ocean County, the Middletown Department of Public Works and Shore Point Distributing Company, Inc. of Freehold Township, both in Monmouth County, will be the first to open to the public in each of these counties.
NJNG will install, own and maintain the CNG infrastructure for all three stations, and the host companies will be required to initially use at least 20 percent of the refueling capacity and open the stations to the public on a 24/7 basis. These new CNG fueling stations align with the states public policy goal to encourage the use of natural gas vehicles and give New Jersey residents and businesses easier access to cleaner, cost-effective fuel options. NJNG expects all three CNG stations to be operational in calendar year 2014. NJNG is authorized by the BPU to earn an overall return of 7.1 percent, including a 10.3 percent ROE on these investments.
| New Jersey Natural Gas Supply Incentive Program |
For the three-month period ended June 30, 2014, NJNGs gross margin-sharing incentive programs, which include off-system sales, capacity release, storage optimization and financial risk management programs, contributed $5.9 million to utility gross margin, compared with $1.9 million during the same period last year. During the first nine months of fiscal 2014, these incentives contributed $10.4 million to utility gross margin, compared with $6 million for the same period last year. The higher results in both periods were due primarily to increased margins in the storage incentive program, driven mainly by lower natural gas prices as well as timing of storage injections. NJNG capacity release margins were also higher during both periods, primarily due to an increase in the amount of volumes released and the value of capacity as a result of increased market area volatility.
NJNG shares the gross margin earned from these incentive programs with customers and shareowners, according to a gross margin-sharing formula authorized by the BPU that is in place through October 31, 2015. Since their inception in 1992, these incentive programs have saved customers approximately $685 million.
| Strong Year-To-Date Results at NJR Energy Services |
Year-to-date NFE at NJR Energy Services (NJRES), the companys wholesale provider of physical natural gas services and customized energy solutions, were $90.2 million, compared with $21.5 million in the first nine months of fiscal 2013. These exceptionally strong results were due primarily to significantly increased demand for natural gas in regions affected by the sustained extreme cold weather this past winter across the United States, especially in the Midwest.
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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For the three-month period ended June 30, 2014, NJRES reported a net financial loss of $8.6 million, compared with NFE of $2.1 million in the same period last year. The seasonal nature of natural gas usage in addition to year-round transportation and storage portfolio expenses combined with the cost of unwinding hedges associated with natural gas sales in the second quarter of fiscal 2014, contributed to the expected net financial loss in the third fiscal quarter.
Over the course of the past several years, NJRES has restructured its portfolio of storage and pipeline capacity assets to reflect the changing dynamics in the natural gas industry and position the company to serve the growing market for physical natural gas services. During this past winter, NJRES effectively utilized its strategically located assets across North America, including the Marcellus region and Midwest, to meet the needs of its diverse customer base and create significant value for our shareowners, continued Downes. NJRES asset portfolio currently consists of approximately 47 Bcf of firm storage contracts and 1.4 Bcf/day of firm transportation contracts.
| Strong Earnings at NJR Clean Energy Ventures; The Sunlight Advantage® Grows |
Fiscal 2014 year-to-date NFE at NJR Clean Energy Ventures (NJRCEV), the companys unregulated distributed power subsidiary, were $20.3 million, compared with $9.1 million in the first nine months of fiscal 2013. For the three-month period ended June 30, 2014, NJRCEV reported NFE of $3.9 million, compared with a net financial loss of $1.4 million in the same period last year. The higher results in both periods were due primarily to increased investment tax credits (ITCs) from higher capital expenditures to be placed into service in fiscal 2014, compared with fiscal 2013, and the receipt of a one-time credit support payment related to a change in ownership at the site of one of NJRCEVs commercial solar projects.
During the third quarter of fiscal 2014, NJRCEV placed into service a 9.2 megawatt (MW) ground-mounted, grid-connected commercial solar system in West Pemberton, New Jersey. This project, in addition to two other ground-mounted commercial solar systems placed in service in the first nine months of fiscal 2014, represent a total capacity of 10.9 MWs and $28.8 million.
Currently, NJRCEV has two commercial solar projects under construction. NJRCEV expects to place into service a $15.9 million, 6.1 MW grid-connected system in North Hanover, New Jersey in the fourth quarter of fiscal 2014. Additionally, NJRCEV expects to place into service a $26.9 million, 10 MW grid-connected system in Howell, New Jersey during the first quarter of fiscal 2015. In fiscal 2014, NJRCEV expects to place into service a total of $44.7 million in commercial solar systems, compared with $33.1 million in fiscal 2013.
The Sunlight Advantage, NJRCEVs residential solar lease program, added 739 customers, totaling 7.2 MWs of capacity, during the first nine months of fiscal 2014, bringing the total number of customers to 2,825 since the programs inception. The Sunlight Advantage provides savings to eligible homeowners through both roof- and ground-mounted solar systems with no upfront installation or maintenance costs. NJRCEV expects to invest approximately $31.5 million in residential solar systems in fiscal 2014, compared with $29 million in fiscal 2013.
NJRs effective tax rate is significantly impacted by the amount of tax credits that are forecasted to be earned during the fiscal year. GAAP requires NJR to estimate its annual effective tax rate and use this rate to calculate its year-to-date tax provision. Based on projects completed in the first nine months of fiscal 2014, and NJRCEVs forecast of projects to be completed for the balance of the fiscal year, NJRs estimated annual
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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effective tax rate is 28.2 percent. Accordingly, $17.8 million related to tax credits, net of deferred taxes, were recognized in the first nine months of fiscal 2014, compared with $13.1 million, net of deferred taxes, in the same period last year. For NFE purposes, the effective tax rate for fiscal 2014 is estimated at 28.4 percent and $20.9 million of tax credits were recognized in the first nine months of fiscal 2014, compared with $13.1 million last year. For further discussion of this tax adjustment and reconciliation to the most comparable GAAP measure, please see the explanation below under Additional Non-GAAP Financial Information.
The estimated effective tax rate is based on information and assumptions that are subject to change, and may have a material impact on quarterly and annual net financial earnings. Factors considered by management in estimating completion of projects during the fiscal year include, but are not limited to, board of directors approval, regulatory approval, execution of various contracts, including power purchase agreements, construction logistics, permitting and interconnection completion. See the Forward-Looking Statements section of this news release for further information regarding the inherent risks associated with solar investments.
| NJR Clean Energy Ventures Places First Onshore Wind Project into Service |
In the third quarter of fiscal 2014, NJRCEV placed its first onshore wind project into service. The Two Dot Wind Farm, located on 176 acres in Two Dot, Montana, consists of six, General Electric 1.62 MW, 87-meter rotor diameter wind turbines with a capacity of 9.7 MWs. The energy and clean energy credits generated from Two Dot will be sold to a regional utility through a 25-year power purchase agreement. This approximate $22 million investment, which is owned and operated by NJRCEV, qualifies for federal production tax credits (PTCs), that are based on kilowatt-hour output and are expected to provide annuity-like returns.
Wind energy offers us the opportunity to further diversify our distributed power portfolio, and will play an increasingly important role in our renewable investment strategy, continued Downes.
Construction continues on NJRCEVs second onshore wind farm, a 20 MW, $42 million investment in Carroll County, Iowa, which NJR expects to be operational in the second quarter of fiscal 2015. Like Two Dot, NJRCEV will construct, own and operate the wind farm and the energy and clean energy credits it generates will be sold to a regional utility through a 25-year power purchase agreement. This project will also qualify for federal PTCs.
Both the Two Dot and Carroll Area Wind Farms are shovel-ready projects purchased from OwnEnergy, Inc., a developer of midsize and community wind projects. In 2012, NJRCEV acquired an approximate 19 percent ownership position in OwnEnergy, with an option, but not the obligation, to purchase projects that fit NJRs investment profile.
| Long-Term Outlook for NJR Clean Energy Ventures |
Over the next several years, NJRCEV expects a declining percentage of its NFE to come from ITCs associated with solar investments. Looking out through fiscal 2017, NJRCEV anticipates its existing projects will benefit from Solar Renewable Energy Certificate (SREC) prices the company expects will continue to improve based on a decline in solar construction, higher renewable portfolio standards (RPS) and an increased likelihood of a return to a market where RPS requirements will exceed installed capacity by 2017.
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
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NJRCEV continues to focus on diversifying its distributed power portfolio to include small- to mid-sized onshore wind projects, supported by long-term power purchase agreements, such as the Two Dot and Carroll Area Wind Farms and investments in combined heat and power, thereby reducing its reliance on ITCs.
In fiscal 2015, NJRCEV expects to generate between 10 to 20 percent of total NFE.
| Midstream Investments |
NJRs natural gas midstream asset segment, NJR Midstream, reported year-to-date NFE of $5.6 million, the same as in the first nine months of fiscal 2013. For the three-month period ended June 30, 2014, NFE was $1.9 million, compared with $1.5 million in the third fiscal quarter of 2013.
NJR Midstream consists of two Federal Energy Regulatory Commission (FERC)-regulated investments, NJRs 50 percent equity ownership in Steckman Ridge, a 12 Bcf natural gas storage facility in southwestern Pennsylvania jointly owned with Spectra Energy, and NJRs 5.53 percent equity investment in Iroquois Pipeline, which delivers natural gas to the New England and New York markets.
| NJR Home Services Update |
In the third quarter of fiscal 2014, NFE at NJR Home Services (NJRHS), the companys unregulated retail and appliance service subsidiary, were $2 million, compared with $1.8 million in the third quarter of fiscal 2013. NJRHS generated NFE of $283,000 in the first nine months of fiscal 2014, compared with $688,000 in the same period last year when NJRHS experienced higher-than-expected generator and plumbing installation sales as a result of Superstorm Sandy.
NJRHS offers home energy solutions for customer comfort, including equipment sales and installations, solar lease and purchase plans and a recently expanded service contract product line that now includes electric, plumbing and standby generator contracts. NJRHS expanded service territory now includes Monmouth, Ocean, Middlesex, Morris, Sussex, Warren and Hunterdon counties in New Jersey. Currently, NJRHS serves approximately 119,000 service contract customers.
Webcast Information
NJR will host a live webcast to discuss its financial results today at 10 a.m. ET. A few minutes prior to the webcast, go to njresources.com and select Investor Relations. Scroll down and click Investor Information on the left side of the page and select Events & Presentations then click on the webcast link.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. NJR cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond NJRs ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants. Words such as anticipates, estimates, expects, projects, forecasts, may, will, intends, plans, believes, should and similar expressions may identify forward-looking information and such forward-looking statements are made based upon managements current expectations and beliefs, as of this date, concerning future developments and their potential effect upon NJR. There can be no assurance that future developments will be in accordance with managements expectations or that the effect of future developments on NJR will be those anticipated by management. Forward-looking information in this release includes, but is not limited
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 10 of 17
to, certain statements regarding NJRs NFE guidance for fiscal 2014, forecasted contribution of business segments to fiscal 2014 and 2015 NFE, expected contribution by NJNGs new customers to utility gross margin, expected number of new customers of NJNG, SREC prices, estimated capital expenditures and planned investments in fiscal 2014 and beyond by NJNG, including those related to SAVEGREEN, SAFE and NJ RISE, planned compressed natural gas fueling stations, the long-term outlook for NJRCEV, diversification of NJRCEVs strategy, NJRCEVs future investments in solar projects and the Two Dot and Carroll Area wind farms.
The factors that could cause actual results to differ materially from NJRs expectations include, but are not limited to, weather and economic conditions; demographic changes in the NJNG service territory and their effect on NJNGs customer growth; volatility of natural gas and other commodity prices and their impact on NJNG customer usage, NJNGs BGSS incentive programs, NJRES operations and on the companys 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 NJRs pension and post-employment 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 companys joint ventures and partnerships; risks associated with our investments in renewable energy projects and our investments in an onshore 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 NJRs eligibility for ITCs and PTCs, 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 NJNGs planned infrastructure programs; the level and rate at which NJNGs 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 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. 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 SECs website at sec.gov. Information included in this release is representative as of today only and while NJR periodically reassesses material trends and uncertainties affecting NJRs results of operations and financial condition in connection with its preparation of managements discussion and analysis of results of operations and financial condition contained
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 11 of 17
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.
Non-GAAP Financial Information
This press release includes the non-GAAP measures NFE (losses), financial margin and utility gross margin. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. As an indicator of the companys operating performance, these measures 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 (losses) and financial margin exclude unrealized gains or losses on derivative instruments related to the companys 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.
NJNGs 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 companys operations that move in relation to each other. Natural gas costs, sales and other taxes and regulatory rider expenses are passed through to customers and, therefore, have no effect on gross margin. Management uses these non-GAAP financial measures as supplemental measures to other GAAP results to provide a more complete understanding of the companys performance. Management believes these non-GAAP measures are more reflective of the companys business model, provide transparency to investors and enable period-to-period comparability of financial performance. A reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below. For a full discussion of NJRs non-GAAP financial measures, please see NJRs most recent Form 10-K, Item 7 and most recent Form 10-Q, Part I, Item 2.
About New Jersey Resources
New Jersey Resources (NYSE: NJR) is a Fortune 1000 company that provides safe and reliable natural gas and clean energy services, including transportation, distribution and asset management. With annual revenues in excess of $3 billion, NJR is comprised of five primary businesses:
| New Jersey Natural Gas is NJRs principal subsidiary that operates and maintains 7,000 miles of natural gas transportation and distribution infrastructure to serve over half a million customers in New Jerseys Monmouth, Ocean and parts of Morris and Middlesex counties. |
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 12 of 17
| NJR Energy Services manages a diversified portfolio of natural gas transportation and storage assets and provides physical natural gas services and customized energy solutions to its customers across North America. |
| NJR Clean Energy Ventures invests in, owns and operates solar and onshore wind projects with a total capacity in excess of 85 megawatts, providing residential and commercial customers with low-carbon solutions. |
| NJR Midstream serves customers from local distributors and producers to electric generators and wholesale marketers through its equity ownership in a natural gas storage facility and a transportation pipeline, both of which are Federal Energy Regulatory Commission, or FERC-regulated investments. |
| NJR Home Services provides heating, central air conditioning, standby generators, solar and other indoor and outdoor comfort products to residential homes and businesses throughout New Jersey and serves approximately 119,000 service contract customers. |
NJR and its more than 900 employees are committed to helping customers save energy and money by promoting conservation and encouraging efficiency through Conserve to Preserve® and initiatives such as The SAVEGREEN Project® and The Sunlight Advantage®.
For more information about NJR:
Visit www.njresources.com.
Follow us on Twitter @NJNaturalGas.
Like us on facebook.com/NewJerseyNaturalGas.
Download our free NJR investor relations app for iPad and iPho
-more-
NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 13 of 17
RECONCILIATION OF NON-GAAP PERFORMANCE MEASURES
|
||||||||||||||||
NEW JERSEY RESOURCES | ||||||||||||||||
|
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
A reconciliation of Net income at NJR to Net financial earnings, is as follows: |
|
|||||||||||||||
Net (loss) income |
$ | (14,274 | ) | $ | 29,155 | $ | 166,390 | $ | 134,830 | |||||||
Add: |
||||||||||||||||
Consolidated unrealized (gain) loss on derivative instruments |
(6,585 | ) | (44,148 | ) | 45,811 | (23,682 | ) | |||||||||
Effects of economic hedging related to natural gas inventory |
38,139 | 13,440 | (3,409 | ) | (9,425 | ) | ||||||||||
Tax adjustments |
(12,766 | ) | 11,291 | (12,497 | ) | 12,172 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net financial earnings |
$ | 4,514 | $ | 9,738 | $ | 196,295 | $ | 113,895 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted Average Shares Outstanding |
||||||||||||||||
Basic |
42,117 | 41,608 | 42,072 | 41,697 | ||||||||||||
Diluted |
42,117 | 41,732 | 42,456 | 41,820 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic net financial earnings per share |
$ | 0.11 | $ | 0.23 | $ | 4.67 | $ | 2.73 | ||||||||
|
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|
|
|
|
|||||||||
|
||||||||||||||||
NJR ENERGY SERVICES
|
| |||||||||||||||
The following table is a computation of Financial margin at Energy Services:
|
| |||||||||||||||
Operating revenues |
$ | 560,633 | $ | 633,533 | $ | 2,439,926 | $ | 1,741,081 | ||||||||
Less: Gas purchases |
599,773 | 593,730 | 2,311,718 | 1,661,362 | ||||||||||||
Add: |
||||||||||||||||
Unrealized (gain) loss on derivative instruments and related transactions |
(7,101 | ) | (45,267 | ) | 46,357 | (24,312 | ) | |||||||||
Effects of economic hedging related to natural gas inventory |
38,139 | 13,440 | (3,409 | ) | (9,425 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial margin |
$ | (8,102 | ) | $ | 7,976 | $ | 171,156 | $ | 45,982 | |||||||
|
|
|
|
|
|
|
|
|||||||||
A reconciliation of Operating income at Energy Services, the closest GAAP financial measurement, to Financial margin is as follows:
|
| |||||||||||||||
Operating (loss) income |
$ | (44,554 | ) | $ | 35,782 | $ | 101,045 | $ | 68,541 | |||||||
Add: |
||||||||||||||||
Operation and maintenance expense |
5,033 | 3,595 | 25,992 | 10,190 | ||||||||||||
Depreciation and amortization |
15 | 10 | 40 | 32 | ||||||||||||
Other taxes |
366 | 416 | 1,131 | 956 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Subtotal Gross margin |
(39,140 | ) | 39,803 | 128,208 | 79,719 | |||||||||||
Add: |
||||||||||||||||
Unrealized (gain) loss on derivative instruments and related transactions |
(7,101 | ) | (45,267 | ) | 46,357 | (24,312 | ) | |||||||||
Effects of economic hedging related to natural gas inventory |
38,139 | 13,440 | (3,409 | ) | (9,425 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial margin |
$ | (8,102 | ) | $ | 7,976 | $ | 171,156 | $ | 45,982 | |||||||
|
|
|
|
|
|
|
|
|||||||||
A reconciliation of Energy Services Net income to Net financial earnings, is as follows:
|
| |||||||||||||||
Net (loss) income |
$ | (28,254 | ) | $ | 22,222 | $ | 62,996 | $ | 42,812 | |||||||
Add: |
||||||||||||||||
Unrealized (gain) loss on derivative instruments and related transactions |
(7,101 | ) | (45,267 | ) | 46,357 | (24,312 | ) | |||||||||
Effects of economic hedging related to natural gas inventory |
38,139 | 13,440 | (3,409 | ) | (9,425 | ) | ||||||||||
Tax adjustments |
(11,412 | ) | 11,702 | (15,791 | ) | 12,404 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net financial (loss) earnings |
$ | (8,628 | ) | $ | 2,097 | $ | 90,153 | $ | 21,479 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
NJR CLEAN ENERGY VENTURES
|
| |||||||||||||||
A reconciliation of Clean Energy Ventures Net income to Net financial earnings, is as follows:
|
| |||||||||||||||
Net income (loss) |
$ | 5,029 | $ | (1,381 | ) | $ | 17,193 | $ | 9,078 | |||||||
Add: |
||||||||||||||||
Tax adjustments |
(1,164 | ) | | 3,093 | | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net financial earnings (loss) |
$ | 3,865 | $ | (1,381 | ) | $ | 20,286 | $ | 9,078 | |||||||
|
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|
|
|
NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 14 of 17
NEW JERSEY RESOURCES
|
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands, except per share data) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
OPERATING REVENUES |
||||||||||||||||
Utility |
$ | 111,383 | $ | 119,022 | $ | 739,380 | $ | 689,621 | ||||||||
Nonutility |
576,874 | 648,447 | 2,406,851 | 1,774,752 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating revenues |
688,257 | 767,469 | 3,146,231 | 2,464,373 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
OPERATING EXPENSES |
||||||||||||||||
Gas purchases |
||||||||||||||||
Utility |
39,546 | 55,708 | 298,694 | 356,069 | ||||||||||||
Nonutility |
599,530 | 593,534 | 2,310,930 | 1,660,528 | ||||||||||||
Operation and maintenance |
45,995 | 43,630 | 149,291 | 126,767 | ||||||||||||
Regulatory rider expenses |
9,337 | 6,258 | 67,380 | 44,014 | ||||||||||||
Depreciation and amortization |
13,620 | 11,942 | 39,014 | 34,966 | ||||||||||||
Energy and other taxes |
9,437 | 9,397 | 50,894 | 50,869 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
717,465 | 720,469 | 2,916,203 | 2,273,213 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
OPERATING (LOSS) INCOME |
(29,208 | ) | 47,000 | 230,028 | 191,160 | |||||||||||
Other income |
10,952 | 1,238 | 12,791 | 4,284 | ||||||||||||
Interest expense, net |
6,507 | 6,008 | 19,108 | 17,579 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF AFFILIATES |
(24,763 | ) | 42,230 | 223,711 | 177,865 | |||||||||||
Income tax (benefit) provision |
(7,808 | ) | 15,297 | 65,377 | 51,342 | |||||||||||
Equity in earnings of affiliates |
2,681 | 2,222 | 8,056 | 8,307 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
NET (LOSS) INCOME |
$ | (14,274 | ) | $ | 29,155 | $ | 166,390 | $ | 134,830 | |||||||
|
|
|
|
|
|
|
|
|||||||||
(LOSS) EARNINGS PER COMMON SHARE |
||||||||||||||||
BASIC |
$ | (0.34 | ) | $ | 0.70 | $ | 3.95 | $ | 3.23 | |||||||
DILUTED |
$ | (0.34 | ) | $ | 0.70 | $ | 3.92 | $ | 3.22 | |||||||
DIVIDENDS DECLARED PER COMMON SHARE |
$ | .42 | $ | .40 | $ | 1.26 | $ | 1.20 | ||||||||
AVERAGE SHARES OUTSTANDING |
||||||||||||||||
BASIC |
42,117 | 41,608 | 42,072 | 41,697 | ||||||||||||
DILUTED |
42,117 | 41,732 | 42,456 | 41,820 |
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 15 of 17
NEW JERSEY RESOURCES
|
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Thousands, except per share data) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Revenues |
||||||||||||||||
Natural Gas Distribution |
$ | 111,383 | $ | 119,022 | $ | 739,380 | $ | 689,621 | ||||||||
Energy Services |
560,633 | 633,533 | 2,439,926 | 1,741,081 | ||||||||||||
Clean Energy Ventures |
3,155 | 2,563 | 8,007 | 7,182 | ||||||||||||
Midstream |
| | | | ||||||||||||
Retail and Other |
13,798 | 13,704 | 31,896 | 32,842 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sub-total |
688,969 | 768,822 | 3,219,209 | 2,470,726 | ||||||||||||
Eliminations |
(712 | ) | (1,353 | ) | (72,978 | ) | (6,353 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 688,257 | $ | 767,469 | $ | 3,146,231 | $ | 2,464,373 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income (Loss) |
||||||||||||||||
Natural Gas Distribution |
$ | 13,045 | $ | 10,339 | $ | 132,400 | $ | 124,438 | ||||||||
Energy Services |
(44,554 | ) | 35,782 | 101,045 | 68,541 | |||||||||||
Clean Energy Ventures |
(2,203 | ) | (1,988 | ) | (7,176 | ) | (5,338 | ) | ||||||||
Midstream |
(202 | ) | (190 | ) | (721 | ) | (611 | ) | ||||||||
Retail and Other |
4,136 | 3,119 | 689 | 1,402 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sub-total |
(29,778 | ) | 47,062 | 226,237 | 188,432 | |||||||||||
Eliminations |
570 | (62 | ) | 3,791 | 2,728 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | (29,208 | ) | $ | 47,000 | $ | 230,028 | $ | 191,160 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Equity in Earnings of Affiliates |
||||||||||||||||
Midstream |
$ | 3,511 | $ | 3,052 | $ | 10,594 | $ | 11,012 | ||||||||
Eliminations |
(830 | ) | (830 | ) | (2,538 | ) | (2,705 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 2,681 | $ | 2,222 | $ | 8,056 | $ | 8,307 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
||||||||||||||||
Natural Gas Distribution |
$ | 4,882 | $ | 5,528 | $ | 79,564 | $ | 76,937 | ||||||||
Energy Services |
(28,254 | ) | 22,222 | 62,996 | 42,812 | |||||||||||
Clean Energy Ventures |
5,029 | (1,381 | ) | 17,193 | 9,078 | |||||||||||
Midstream |
1,896 | 1,541 | 5,584 | 5,600 | ||||||||||||
Retail and Other |
2,485 | 1,944 | 708 | 813 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sub-total |
(13,962 | ) | 29,854 | 166,045 | 135,240 | |||||||||||
Eliminations |
(312 | ) | (699 | ) | 345 | (410 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | (14,274 | ) | $ | 29,155 | $ | 166,390 | $ | 134,830 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Net financial earnings (loss) |
||||||||||||||||
Natural Gas Distribution |
$ | 4,882 | $ | 5,528 | $ | 79,564 | $ | 76,937 | ||||||||
Energy Services |
(8,628 | ) | 2,097 | 90,153 | 21,479 | |||||||||||
Clean Energy Ventures |
3,865 | (1,381 | ) | 20,286 | 9,078 | |||||||||||
Midstream |
1,896 | 1,541 | 5,584 | 5,600 | ||||||||||||
Retail and Other |
2,485 | 1,944 | 708 | 813 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Sub-total |
4,500 | 9,729 | 196,295 | 113,907 | ||||||||||||
Eliminations |
14 | 9 | | (12 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 4,514 | $ | 9,738 | $ | 196,295 | $ | 113,895 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Throughput (Bcf) |
||||||||||||||||
NJNG, Core Customers |
11.6 | 10.7 | 70.1 | 63.6 | ||||||||||||
NJNG, Off System/Capacity Management |
53.8 | 31.4 | 124.0 | 103.7 | ||||||||||||
NJRES Fuel Mgmt. and Wholesale Sales |
127.0 | 152.7 | 469.1 | 458.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
192.4 | 194.8 | 663.2 | 625.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Common Stock Data |
||||||||||||||||
Yield at June 30 |
2.9 | % | 3.9 | % | 2.9 | % | 3.9 | % | ||||||||
Market Price |
||||||||||||||||
High |
$ | 57.68 | $ | 47.60 | $ | 57.68 | $ | 47.60 | ||||||||
Low |
$ | 47.70 | $ | 40.97 | $ | 42.54 | $ | 38.51 | ||||||||
Close at June 30 |
$ | 57.16 | $ | 41.53 | $ | 57.16 | $ | 41.53 | ||||||||
Shares Out. at June 30 |
42,168 | 41,380 | 42,168 | 41,380 | ||||||||||||
Market Cap. at June 30 |
$ | 2,410,298 | $ | 1,718,511 | $ | 2,410,298 | $ | 1,718,511 | ||||||||
|
|
|
|
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|
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NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 16 of 17
NATURAL GAS DISTRIBUTION
|
Three Months Ended | Nine Months Ended | |||||||||||||||
(Unaudited) | June 30, | June 30, | ||||||||||||||
(Thousands, except customer & weather data) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Utility Gross Margin |
||||||||||||||||
Operating revenues |
$ | 111,383 | $ | 119,022 | $ | 739,380 | $ | 689,621 | ||||||||
Less: |
||||||||||||||||
Gas purchases |
40,373 | 56,559 | 373,982 | 363,646 | ||||||||||||
Energy and other taxes |
6,404 | 6,852 | 43,330 | 43,619 | ||||||||||||
Regulatory rider expense |
9,337 | 6,258 | 67,380 | 44,014 | ||||||||||||
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|||||||||
Total Utility Gross Margin |
$ | 55,269 | $ | 49,353 | $ | 254,688 | $ | 238,342 | ||||||||
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|||||||||
Utility Gross Margin, Operating Income and Net Income |
||||||||||||||||
Residential |
$ | 29,336 | $ | 28,277 | $ | 152,934 | $ | 147,398 | ||||||||
Commercial, Industrial & Other |
8,532 | 8,460 | 38,960 | 38,112 | ||||||||||||
Firm Transportation |
11,356 | 10,555 | 52,029 | 46,450 | ||||||||||||
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|
|
|
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|
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|||||||||
Total Firm Margin |
49,224 | 47,292 | 243,923 | 231,960 | ||||||||||||
Interruptible |
190 | 165 | 411 | 368 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total System Margin |
49,414 | 47,457 | 244,334 | 232,328 | ||||||||||||
Off System/Capacity Management/FRM/Storage Incentive |
5,855 | 1,896 | 10,354 | 6,014 | ||||||||||||
|
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|
|
|
|
|
|||||||||
Total Utility Gross Margin |
55,269 | 49,353 | 254,688 | 238,342 | ||||||||||||
Operation and maintenance expense |
30,466 | 28,414 | 88,417 | 82,310 | ||||||||||||
Depreciation and amortization |
10,567 | 9,537 | 30,374 | 28,213 | ||||||||||||
Other taxes not reflected in gross margin |
1,191 | 1,063 | 3,497 | 3,381 | ||||||||||||
|
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|
|||||||||
Operating Income |
$ | 13,045 | $ | 10,339 | $ | 132,400 | $ | 124,438 | ||||||||
|
|
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|
|
|
|
|
|||||||||
Net Income |
$ | 4,882 | $ | 5,528 | $ | 79,564 | $ | 76,937 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Throughput (Bcf) |
||||||||||||||||
Residential |
5.3 | 5.0 | 40.3 | 35.7 | ||||||||||||
Commercial, Industrial & Other |
1.0 | 1.0 | 7.6 | 6.9 | ||||||||||||
Firm Transportation |
2.6 | 2.3 | 16.2 | 13.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Firm Throughput |
8.9 | 8.3 | 64.1 | 56.3 | ||||||||||||
Interruptible |
2.7 | 2.4 | 6.0 | 7.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total System Throughput |
11.6 | 10.7 | 70.1 | 63.6 | ||||||||||||
Off System/Capacity Management |
53.8 | 31.4 | 124.0 | 103.7 | ||||||||||||
|
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|
|
|
|
|
|
|||||||||
Total Throughput |
65.4 | 42.1 | 194.1 | 167.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Customers |
||||||||||||||||
Residential |
418,792 | 408,903 | 418,792 | 408,903 | ||||||||||||
Commercial, Industrial & Other |
25,108 | 24,901 | 25,108 | 24,901 | ||||||||||||
Firm Transportation |
59,796 | 63,521 | 59,796 | 63,521 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Firm Customers |
503,696 | 497,325 | 503,696 | 497,325 | ||||||||||||
Interruptible |
37 | 41 | 37 | 41 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total System Customers |
503,733 | 497,366 | 503,733 | 497,366 | ||||||||||||
Off System/Capacity Management* |
28 | 29 | 28 | 29 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Customers |
503,761 | 497,395 | 503,761 | 497,395 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
* The number of customers represents those active during the last month of the period. |
| |||||||||||||||
Degree Days |
||||||||||||||||
Actual |
489 | 513 | 5,050 | 4,593 | ||||||||||||
Normal |
511 | 530 | 4,600 | 4,633 | ||||||||||||
|
|
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|
|
|
|
|
|||||||||
Percent of Normal |
95.7 | % | 96.8 | % | 109.8 | % | 99.1 | % | ||||||||
|
|
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|
NEW JERSEY RESOURCES ANNOUNCES FISCAL 2014 THIRD-QUARTER EARNINGS; REAFFIRMS INCREASED FISCAL 2014 NET FINANCIAL EARNINGS GUIDANCE; Strong Year-To-Date Results at NJR Energy Services Drives Growth; New Jersey Natural Gas $102.5 Million Infrastructure Investment Approved
Page 17 of 17
|
||||||||||||||||
ENERGY SERVICES | ||||||||||||||||
|
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(Unaudited) | June 30, | June 30, | ||||||||||||||
(Thousands, except customer, SREC and megawatt) |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Income |
||||||||||||||||
Operating revenues |
$ | 560,633 | $ | 633,533 | $ | 2,439,926 | $ | 1,741,081 | ||||||||
Gas purchases |
599,773 | 593,730 | 2,311,718 | 1,661,362 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross Margin |
(39,140 | ) | 39,803 | 128,208 | 79,719 | |||||||||||
Operation and maintenance expense |
5,033 | 3,595 | 25,992 | 10,190 | ||||||||||||
Depreciation and amortization |
15 | 10 | 40 | 32 | ||||||||||||
Energy and other taxes |
366 | 416 | 1,131 | 956 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating (Loss) Income |
$ | (44,554 | ) | $ | 35,782 | $ | 101,045 | $ | 68,541 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Net (Loss) Income |
$ | (28,254 | ) | $ | 22,222 | $ | 62,996 | $ | 42,812 | |||||||
|
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|
|
|
|
|
|
|||||||||
Financial Margin |
$ | (8,102 | ) | $ | 7,976 | $ | 171,156 | $ | 45,982 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Net Financial (Loss) Earnings |
$ | (8,628 | ) | $ | 2,097 | $ | 90,153 | $ | 21,479 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Gas Sold and Managed (Bcf) |
127.0 | 152.7 | 469.1 | 458.0 | ||||||||||||
|
|
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|
|
|
|
|||||||||
|
||||||||||||||||
CLEAN ENERGY VENTURES | ||||||||||||||||
|
||||||||||||||||
Operating Revenues |
||||||||||||||||
SREC sales |
$ | 1,867 | $ | 1,793 | $ | 4,965 | $ | 5,652 | ||||||||
Electricity sales |
618 | 462 | 1,319 | 831 | ||||||||||||
Other |
670 | 308 | 1,723 | 699 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Operating Revenues |
$ | 3,155 | $ | 2,563 | $ | 8,007 | $ | 7,182 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Depreciation and Amortization |
$ | 2,823 | $ | 2,196 | $ | 7,969 | $ | 6,131 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating (Loss) |
$ | (2,203 | ) | $ | (1,988 | ) | $ | (7,176 | ) | $ | (5,338 | ) | ||||
|
|
|
|
|
|
|
|
|||||||||
Income Tax (Provision) Benefit |
$ | (1,286 | ) | $ | 1,477 | $ | 18,146 | $ | 15,703 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Net Income (Loss) |
$ | 5,029 | $ | (1,381 | ) | $ | 17,193 | $ | 9,078 | |||||||
|
|
|
|
|
|
|
|
|||||||||
Net Financial Earnings (Loss) |
$ | 3,865 | $ | (1,381 | ) | $ | 20,286 | $ | 9,078 | |||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|||||||||
Solar Renewable Energy Certificates Generated |
23,845 | 19,070 | 50,000 | 37,153 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Solar Renewable Energy Certificates Sold |
13,364 | 13,861 | 34,042 | 46,223 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Megawatts Installed |
11.3 | 2.7 | 18.1 | 14.2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Megawatts Under Construction |
16.5 | 2.8 | 16.5 | 2.8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
||||||||||||||||
MIDSTREAM | ||||||||||||||||
|
||||||||||||||||
Equity in Earnings of Affiliates |
$ | 3,511 | $ | 3,052 | $ | 10,594 | $ | 11,012 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operation and Maintenance Expense |
$ | 161 | $ | 143 | $ | 675 | $ | 561 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Interest Expense |
$ | 333 | $ | 466 | $ | 1,108 | $ | 1,533 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net Income |
$ | 1,896 | $ | 1,541 | $ | 5,584 | $ | 5,600 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
|
||||||||||||||||
RETAIL AND OTHER | ||||||||||||||||
|
||||||||||||||||
Operating Revenues |
$ | 13,798 | $ | 13,704 | $ | 31,896 | $ | 32,842 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income |
$ | 4,136 | $ | 3,119 | $ | 689 | $ | 1,402 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 2,485 | $ | 1,944 | $ | 708 | $ | 813 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Customers as of June 30, |
126,038 | 129,805 | 126,038 | 129,805 | ||||||||||||
|
|
|
|
|
|
|
|
Exhibit 99.2
|
Fiscal 2014 Third Quarter Update
July 31, 2014
|
1
Regarding Forward-Looking Statements
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, forecasts, may, will, intends, expects, believes, or should and similar expressions may identify forward-looking information and such forward-looking statements are made based upon managements 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 managements 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 NJRs NFE guidance for fiscal 2014, forecasted contribution of business segments to fiscal 2014 NFE and to NFE beyond fiscal 2014, long-term benefits of increased NFE, future NJNG customer growth, future NJNG capital expenditures and infrastructure investments, NJNG incremental utility gross margin, the long-term outlook for NJRCEV, diversification of NJRCEVs strategy, and the completion of Carroll area wind farm include many factors that are beyond the Companys 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 NJRs expectations include, but are not limited to, weather and economic conditions; demographic changes in the NJNG service territory and their effect on NJNGs customer growth; volatility of natural gas and other commodity prices and their impactonNJNGcustomer usage, NJNGs Basic Gas Supply Service incentive programs, NJRES operations and on the Companys 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 NJRs 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 Companys 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 NJRs 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 theresulting effect on our effective tax rate and earnings; regulatory approval of NJNGsplanned infrastructure programs; the level and rate at which NJNGs 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 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 SECs website at sec.gov. Informationincludedinthis presentation is representative as of today only and while NJR periodically reassesses material trends and uncertainties affecting NJRs results of operations and financial condition in connection with its preparation of managements 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
This presentation includes the non-GAAP measures net financial earnings (NFE), financial margin and utility gross margin. As indicators of the Companys operating performance, these measures should not be considered alternatives 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 Companys 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. NJNGs utility gross margin represents the resultsof revenues less natural gas costs, sales and other taxes and regulatory rider expenses, which are key components of the Companys operations that move in relation to each other.
Management uses NFE, financial margin and utility gross margin as supplemental measures to other GAAP results to provide a more complete understanding of the Companys performance. Management believes these non-GAAP measures aremorereflectiveofthe Companysbusiness 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 NJRs most recent Form 10-K, Item 7 and most recent Form 10-Q, Item 2. This information has been provided pursuant to therequirementsof SEC Regulation G.
2
|
Net Financial Earnings (NFE)
($MM) Three Months Ended Nine Months Ended
June 30, June 30,
Company 2014 2013 2014 2013
New Jersey Natural Gas $4.9 $5.5 $79.6 $76.9
NJR Energy Services (8.6) 2.1 90.2 21.5
NJR Clean Energy Ventures 3.9 (1.4) 20.3 9.1
NJR Midstreamdst 1.9 1.5 5.6 5.6
NJR Home Services/Other 2.4 2.0 .6 .8
Total $4.5 $9.7 $196.3 $113.9
Per basic share $.11 $.23 $4.67 $2.73
Steady growth and higher gross margin from incentive programs at New
Jersey Natural Gas (NJNG)
Strong results from NJR Energy Services (NJRES)
NJR Clean Energy Ventures (NJRCEV) places first wind project into service
3
|
NJR Affirms Fiscal 2014 NFE Per Share Guidance $4.00 to $4.20
Fiscal 2014
5-15%
40-50% 35-45%
2-5% 3-10%
New Jersey Natural Gas NJR Energy Services NJR Clean Energy Ventures NJR Midstream NJR Home Services
NJR expects NJRES to contribute 35-45 percent of Fiscal 2014 Earnings
4
|
Fiscal 2015-2017 Earnings Guidance
Most Recent Fiscal 2015
Fiscal 2014 through
Guidance Fiscal 2017
5-15%
60-70%
40-50% 35-45% 10-20%
5-15%
5-10%
2-5% 3-10%
2-5%
New Jersey Natural Gas NJR Clean Energy Ventures NJR Energy Services NJR Midstream NJR Home Services
NJR expects regulated businesses to contribute
65-80 percent of total NFE
5
|
New Jersey Natural Gas Our Core Business
Customer growth rate of 1.5 percent exceeds industry average
New construction market continues to expand 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 (BPU) of major electric and gas companies
Infrastructure investments to strengthen distribution and transmission system are supported by regulatory riders
Rate case to be filed by mid-November 2015
6
|
$1.4 Billion of Capital Drives Long-Term Growth
NJNG Capital Investment Estimates
2009-
2013 Immediate
($MM) Actual 2014E 2015E 2016E 2017E Total Return
Customer Growth $103.9 $28.0 $25.6 $25.5 $25.5 $208.5 Yes
Maintenance/Other 219.9 67.6 55.7 48.1 40.6 $431.9
AIP/SAFE 182.0 38.0 33.7 32.7 $286.4 Yes
Superstorm Sandy 26.1 9.3 5.2 $40.6
NGV Fueling Stations 1.0 9.0 $10.0 Yes
NJ RISE 7.5 13.5 27.6 $48.6 Yes
Liquefaction Project 16.0 16.3 3.4 $35.7
Southern Reliability 17.1 94.3 48.6 $160.0
SAVEGREEN 60.5 36.9 40.3 $137.7 Yes
Total $593.4 $204.8 $201.4 $217.5 $142.3 $1,359.4
Over 50 percent of capital expenditures are earning an immediate return
7
|
Current NJNG Infrastructure Investments
SAFE (Safety Acceleration and Facility Enhancement Program)$130 million over four years to replace 276 miles of cast iron and unprotected steel main Update: Invested $33.7 million, completed 145 miles of replacement pipe
NGV Fueling StationsTotal investment of about $10 million
Update:Various stages of development. All three CNG stations to be operational by end of calendar 2014
SAVEGREEN Promotes customer investment in high-efficiency heating equipment; expanded to invest another $85 million Update: Spent $24.7 million for home energy audits, on bill repayments and grants
8
|
9
Planned NJNG Infrastructure Capital Projects
NJ RISE (Reinvestment in System Enhancement)$102.5 million
NJNG storm response plan filed with BPU on September 3, 2013 Additional pipe to barrier islands and excess flow valves Update: Approved by BPU on July 23, 2014
Liquefaction Project$35.7 million
Liquefy natural gas for company peak-day use; reduces LNG transportation costs and creates customer savings Update: Equipment manufacturing began June 2014
Southern Reliability Link (SRL)$130-$160 million
Adding high-pressure natural gas pipeline to support reliability, diversify supplier base and support growth in Ocean County Update: Evaluating route options
9
|
NJRES: Generating Profits* Every Year Since 1995
10
Serves wholesale customers across North America Average tenure of employees is 10+ years Diverse portfolio of physical natural gas assets
Firm storage (46.6 Bcf in the US and Canada) Firm transportation (1.4 Bcf/day)
Services include:
Transporting natural gas
Selling storage gas during peak periods Asset management agreements Producer Services
Fee-based service; located primarily in the Marcellus
assets
$200
$180
$160
$140
$120
$100
MM $80
$
$60
$40
$20
$0
2009 2010 2011 2012 2013 FYTD
14
Margin NFE
Marcellus
* On an annual Net Financial Earnings basis
|
NJR Clean Energy Ventures
11
Unique opportunity created in New Jersey
Energy policy drives renewable investment
Strong fundamentals for solar investments
Legislation supports solar investment
Growing Renewable Portfolio Standard (RPS)
Improving Solar Renewable Energy Certificates (SREC) fundamentals
Rising residential solar demand
Goal to diversify from New Jersey Solar
Solar Investment Tax Credits (ITCs) expected to decline to 10 percent in January 2017
Gradual decline in solar capital spending by 2017
$64 million of committed capital for wind projects
Long-term goal to maintain NJRCEV at 10 to 20 percent of NFE
|
NJRCEV: Improving SREC Fundamentals
12
Capacity Additions By Month (MW)
85
6
SREC Prices By Month ($/SREC)
Karbone Bid Prices
New Jersey increased solar RPS effective June 2013
Solar construction activity has moderated
SREC prices increased 31 percent in Energy Year 2014
NJRCEV forecasts SREC production to grow from
approximately 65,000 in fiscal 2013 to 184,000 in fiscal 2017
|
NJRCEV:Wind Strategy
13
Wind Value Drivers
29 states and the District of Columbia have RPS and wind remains the best economic alternative to meeting the standard Production-based tax credits (PTC) Long-term Power Purchase Agreements (PPAs) & PTCs provide annuity-like returns
Investment Status Two Dot
9.7 MW, $22 million utility scale wind farm project located in Two Dot, MT In service, June 14, 2014
Investment Status Carroll Area
20 farm MW, project $42 million located utility in Carroll scale County, wind IA NJRCEV Spring 2015 expects to begin operations,
|
NJNG Results
14
($MM) Three Months Ended Nine Months Ended
June 30, June 30,
2014 2013 2014 2013
Gross Margin $55.3 $49.4 $254.7 $238.3
Operating Income $13.0 $10.3 $132.4 $124.4
Net Financial Earnings $4.9 $5.5 $79.6 $76.9
Total Customers 503,761 497,395 503,761 497,395
Added 5,151 new customers in first nine months of fiscal 2014
52 percent converted from other fuels
$24.7 million spent on The SAVEGREEN Project®
Basic Gas Supply Service (BGSS) incentive margin increased Natural Gas Vehicle (NGV) stations on track for 2014 opening
|
NJNG: Strong Customer Growth Continues
15
5,151 new customers added through June 30, 2014
2,463 new construction customers 2,688 conversions from other fuels
8,000 7,175 6,783 6,704 7,456
7,000 6,189
5,841
6,000
5,000
4,000
3,000
2,000
1,000
0
FY08 FY09 FY10 FY11 FY12 FY13
New Construction Conversions
437 existing customer heat conversions
Over next two fiscal years, NJNG expects to add a total of 14,000-16,000 new customers
|
Diversified and Growing Utility Gross Margin
16
$38.0
$40.0 $34.4
$35.0 $30.1
$30.0 $26.1
$25.0
millions $20.0 $15.6
$15.0
$
$10.0
$5.0
$0.0
FY13A FY14E FY15E FY16E FY17E
Customer Growth SAVEGREEN NGV BGSS Incentives
NJNG expects incremental utility gross margin to more than double by fiscal 2017
|
NJRES Results
17
($MM) Three Months Ended Nine Months Ended
June 30, June 30,
2014 2013 2014 2013
Financial Margin ($ 8.1) $ 8.0 $171.2 $ 46.0
Net Financial Earnings ($ 8.6) $ 2.1 $90.2 $ 21.5
Gas Sold and Managed (Bcf) 127.0 152.7 469.1 458.0
Firm Transportation (Bcf/d) 1.4 1.2 1.4 1.2
Firm Storage (Bcf) 46.6 35.3 46.6 35.3
Extreme weather created dramatic increase in natural gas demand
Validated long-option strategy
Producer Services provides a relatively steady income stream NJRES expects to contribute 35 to 45 percent to fiscal 2014 NFE
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NJRCEV
18
($MM) Three Months Ended Nine Months Ended
June 30, June 30,
2014 2013 2014 2013
Operating Revenues $ 3.2 $2.6 $8.0 $7.2
ITC Impact $ 1.3 $0.3 $17.8 $13.1
Net Financial Earnings $ 3.9 (1.4) $20.3 $9.1
SRECs Generated 23,845 19,070 50,000 37,153
SRECs Sold 13,364 13,861 34,042 46,223
SREC Inventory 27,309 19,288 27,309 19,288
Solar Megawatts Installed 11.3 2.7 18.1 14.2
Solar Megawatts Under Construction 16.5 2.8 16.5 2.8
Forecast is to place $70 to $80 million of solar-related capital into service in fiscal 2014 NJR expects NJRCEV to contribute 5 to 15 percent to fiscal 2014 NFE
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NJR Will Continue to Meet Investor Expectations
19
Invest significantly in NJNGs infrastructure to support customer growth and enhance system reliability
Diversify and grow NJNGs utility gross margin
Commit capital to clean energy portfolio
NJRES poised to benefit from natural gas market volatility
Deliver consistent net financial earnings and dividend growth
1 Year Total Return*
50.0%
45.0% 42.6%
40.0%
35.0%
30.0%
24.6%
25.0%
18.7%
20.0% 15.6%
15.0%
10.0%
5.0%
0.0%
NJR Peer Dow S&P 500
Group
* Assumes dividends reinvested, period 6/30/13 to 6/30/14
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