Fourth Quarter & Fiscal Year 2019 Results November 19, 2019 - PowerPoint PPT Presentation

Fourth Quarter & Fiscal Year 2019 Results November 19, 2019

Forward-Looking Statements & Non-GAAP Measures Forward Looking Statements Non-GAAP Measures This presentation contains forward-looking statements within the meaning of Section 27A of the This presentation includes the non-GAAP measures, NFE and utility gross margin. As an Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as indicator of the Company’s operating performance, these measures should not be considered an amended, and the Private Securities Litigation Reform Act of 1995. New Jersey Resources alternative to, or more meaningful than, GAAP measures, such as cash flows, net income, Corporation (NJR or the Company) cautions readers that the assumptions forming the basis for operating income or earnings per share. forward- looking statements include many factors that are beyond NJR’s ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other NFE/net financial loss excludes unrealized gains or losses on derivative instruments related to market participants. Words such as “anticipates,” “estimates,” “expects,” “projects,” “may,” “will,” the Company’s unregulated subsidiaries and certain realized gains and losses on derivative “intends,” “plans,” “believes,” “should” and similar expressions may identify forward -looking instruments related to natural gas that has been placed into storage at Energy Services, net of statements and such forward- looking statements are made based upon management’s current applicable tax adjustments, as described below. Volatility associated with the change in value of expectations, assumptions and beliefs as of this date concerning future developments and their these financial and physical commodity contracts is reported in the income statement in the potential effect upon NJR. There can be no assurance that future developments will be in current period. In order to manage its business, NJR views its results without the impacts of the accordance with management’s expectations, assumptions and beliefs or that the effect of future unrealized gains and losses, and certain realized gains and losses, caused by changes in value developments on NJR will be those anticipated by management. Forward-looking statements in of these financial instruments and physical commodity contracts prior to the completion of the this presentation include, but are not limited to, certain statements regarding NJR’s NFE planned transaction because it shows changes in value currently as opposed to when the guidance for fiscal 2020, forecasted contribution of business segments to fiscal 2020 NFE, future planned transaction ultimately is settled. An annual estimated effective tax rate is calculated for NJNG customer and utility gross margin growth, future NJR capital expenditures, infrastructure NFE purposes and any necessary quarterly tax adjustment is applied to CEV, as such programs and investments, Clean Energy Ventures’ ITC -eligible projects and demand for adjustment is related to tax credits generated by CEV. residential solar, earnings and dividend growth, NJNG’s base rate cases, permanent financing plans for Leaf River, as well as the ability to close the Adelphia Gateway transaction and NJNG’s utility gross margin represents the results of revenues less natural gas costs, sales and, successfully implement the Leaf River acquisition, and construct the Southern Reliability Link and other taxes and regulatory rider expenses, which are key components of the Company’s PennEast pipeline projects. 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 Additional information and factors that could cause actual results to differ materially from NJR’s gross margin. expectations are contained in NJR’s filings with the U.S. Securities and Exchange Commission Management uses NFE and utility gross margin as supplemental measures to other GAAP (SEC), including NJR’s Annual Reports on Form 10 -K and subsequent Quarterly Reports on results to provide a more complete understanding of the Company’s performance. Management Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at believes these non- GAAP measures are more reflective of the Company’s business model, the SEC’s web site, http:.//www.sec.gov. Information included in this presentation is provide transparency to investors and enable period-to-period comparability of financial representative as of today only and while NJR periodically reassesses material trends and performance. In providing fiscal 2019 earnings guidance, management is aware that there could uncertainties affecting NJR's results of operations and financial condition in connection with its be differences between reported GAAP earnings and NFE due to matters such as, but not limited preparation of management's discussion and analysis of results of operations and financial to, the positions of our energy-related derivatives. Management is not able to reasonably condition contained in its Quarterly and Annual Reports filed with the SEC, NJR does not, by estimate the aggregate impact or significance of these items on reported earnings and therefore including this statement, assume any obligation to review or revise any particular forward-looking is not able to provide a reconciliation to the corresponding GAAP equivalent for its operating statement referenced herein in light of future events. earnings guidance without unreasonable efforts. For a full discussion of our non-GAAP financial measures, please see NJR’s most recent Form 10 -K, Item 7. This information has been provided pursuant to the requirements of SEC Regulation G. 1

Agenda ▪ Fiscal 2019 Highlights and 2020 Outlook Steve Westhoven ▪ Financial Review Pat Migliaccio ▪ Q&A

Fiscal 2019 Highlights & 2020 Outlook Steve Westhoven President & Chief Executive Officer

Fiscal 2019 Financial Highlights $2.74 NFEPS* for fiscal 2019 – met $0.68 guidance range; $1.96 $1.96 CAGR of 6.4% $1.73 $1.61 from 2017 to 2019 Net Financial Earnings $2.06 $1.96 Expected long-term $1.73 $1.61 6-8% NFEPS growth rate FY 16 FY 17 FY 18 FY 19 NFE Per Share Tax Reform Expected long-term dividend $1.25 $1.17 6-8% growth rate; 6.8% dividend $1.09 $1.02 increase for fiscal 2020 $0.96 Consecutive year of Dividends 24 th dividend increases 60% 60% 60% (2) 59% 40% (1) Long-term target dividend 60-65% FY 16 FY 17 FY 18 FY 19 FY 20E payout ratio Annual Dividend Per Share Payout Ratio (1) Includes outperformance of Energy Services and tax reform. 4 * A reconciliation from NFE to net income can be found in the Appendix on Slide 25. (2) 2020 payout based on midpoint of fiscal 2020 guidance.

New Jersey Natural Gas ▪ Reached settlement of $62.2 million increase in rates effective November 15, 2019 Rate Case ▪ Since our last rate case settlement, our rate base has grown at a CAGR of 8.7% ▪ Added 9,711 new customers during fiscal 2019, a 1.8% annual customer growth rate Customer ▪ Expect to add between 28,000 and 30,000 new customers from 2020 through 2022 Growth ▪ Received all permits and awarded contract for final phase of the project Southern ▪ Began construction during fiscal 2019 and expect an in-service date in 2021 Reliability ▪ Recovery for the project will be addressed in subsequent rate case Link ▪ SAFE II – replaced 72 miles of bare steel main in fiscal 2019 Accelerated ▪ NJ RISE – completed the South Seaside Reinforcement project and continued Recovery construction to install a new distribution main into Long Beach Island Programs Infrastructure ▪ Accelerated recovery program for natural gas transmission and distribution enhancement Investment and for the replacement of IT infrastructure ▪ Regulatory review process is ongoing and expect conclusion in fiscal 2020 Program 5

New Jersey Natural Gas New Customer Additions Rate Base ($Billions) Annual Total Customer Growth Rate: 1.8% in FY 2019 and FY 2020E +34% 9,800 9,596 9,711 3,221 3,430 3,359 +28% $2.4 $1.8 6,490 6,370 6,237 $1.4 FY 18 FY 19 FY 20E New Construction Conversions FY 16 Rate Base FY 19 Rate Base FY 22E Rate Base FY 2020E Capex Accelerated Return ($MM) Capital Expenditures ($MM) $445 9% 30% $348 $134 ~35% of FY $79 $242 $57 2020E capex $64 $6 17% $445 $47 $97 earns an $77 $77 $37 13% accelerated $79 $68 $77 return 8%* $44 $50 $42 22% FY 18 FY 19 FY 20E New Customer SAFE/NJ RISE IIP New Customer SAFE/NJ RISE IIP Maintenance Cost of Removal/Other SRL Maintenance Cost of Removal/Other SRL * IIP is currently under regulatory review and has not been approved yet for 6 an accelerated rate recovery.