Newjersey Resources Corporation · NYSE:NJR
Newjersey Resources — Investor Presentation (March 2021)
40 slides from Newjersey Resources's investor presentation, Mar 15, 2021
Slide 1: Week of March 15, 2021
Week of March 15, 2021 (
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Forward-Looking Statements ‘This presentation contains forward-looking statements within the meaning of Section 27A of the Securties Act of 1022, as amended, Section 21€ of the Securties Exchange Act of 1024, as amended, and the Private Secures Litiga
Slide 3: Strategic Update agenda
1 Strategic Update 2 NJNG Business Update 3. CEV Business Update 4 S&T Business Update 5 Energy Services Business Update 6 Appendix heed WIMieuxe 2
Slide 4: NJR's Business Portfolio
NJR’s Business Portfolio Our complementary businesses create an Energy Infrastructure Platform that originates from our deep expertise across the energy value chain Retail Operations, Clean Energy Ventures Natural Gas Utility with more Residential and Storage: forage, HVAC and than 558,000 customers
Slide 5: Covid-19 Update
Covid-19 Update Our Team Our Customers and Communities Our Business Non-essential employees continue to work remotely Essential employees in the field or office are following CDC and state guidelines Continue to suspend customer disconnects and late fees Energy assistance available for customers’ bi
Slide 6: Recent Events Update
I Recent Events Update Increased FY 2021 NFEPS* guidance on March 15 to $1.85 to $1.95 from $1.55 to $1.65 due to outperformance at Energy Services + Period of widespread cold across the U.S. led to unusually high demand for natural gas + Energy Services’ geographically diverse storage and transport
Slide 7: Updated Fiscal 2021 and 2022 NFEPS Guidance
Updated Fiscal 2021 and 2022 NFEPS Guidance Increased FY 2021 NFEPS Guidance to $1.85 - $1.95; FY 2022 NFEPS Guidance Remains at $2.20 - $2.30; NJNG Continues to Generate the Large Majority of NFE Net Financial Earnings per Share FY 2021E FY 2022E NJNG 56%-61% CEV 10%-15% S&T T%-11% ES 18%-23% tee N
Slide 8: Strong Cash Flows Supporting Dividend
Strong Cash Flows Supporting Dividend Energy Services’ contributions improve operating cash flows, strengthen the balance sheet and reinforce our commitment not to issue block equity Cash Flow from Operations Dividend as Percentage of CFFO Millions ~25% a a — CAGR FY2020 — FY2024 aA $500$530 ae 559
Slide 9: Energy Services' AMAs De-Risk Business and Drive Value
Energy Services’ AMAs De-Risk Business and Drive Value 10-Year Asset Management Agreements (AMAs) with Investment Grade Utility + Entered into AMAs to release certain natural gas transportation contracts of Energy Services for aggregate cash proceeds of approximately $500 million payable over 10 yea
Slide 10: Capitalizing on Clear Market Opportunities to Drive Organic Growth and Value Creation
Capitalizing on Clear Market Opportunities to Drive Organic Growth and Value Creation Fundamental Beliefs GY Shift to low carbon and renewables [Ay Natural gas will continue to play 4 vital role in energy future Aas Existing natural gas infrastructure will become more valuable -4. Solar power is cor
Slide 11: NJR's Sustainability Vision
Putting Sustainabigl NJR’s Sustainability Vision: into Action Leading the Way ® 6 g@ ais, Bealeading Operate Deliver clean, Invest in Leverage energy high-integrity, decarbonized solar to expertise to infrastructure environmentally fuel to reliably power support company responsible heat homes homes
Slide 12: NJNG Business Update
Strategic Update 2 NJNG Business Update 3 CEV Business Update 4 . S&T Business Update 5. Energy Services Business Update Appendix WIMieuxe "
Slide 13: Premier Natural Gas Utility
Premier Natural Gas Utility Operates and Maintains Over 7,500 Miles of Natural Gas Transportation and Distribution Infrastructure Serving Over 558,000 Customers Predominately in Monmouth, Ocean and Morris Counties Total Customers Approved ROE Rate Base Non-volumetric utility gross margin Forecasted
Slide 14: Supportive Regulatory Construct
Supportive Regulatory Construct Stable Rate Case Results + Rate case results are stable + Current ROE of 9.60% with an equity layer of 54% + Full recovery of plant investments to date + Rate cases are settled (almost never litigated) + Resolution of cases have been timely + Last case filed in March
Slide 15: Growing Customer Base with Strong Demographics
Growing Customer Base with Strong Demographics Population’ thousands Attractive 1.740 1.840 service territory i z Ocean with mostly 470 490 510 voce , residential 620 630 630 = Monmouth customer base 2000 Census 2010 Census 2019P 2029P and growing FY2020 Customer — Median Household Income? Compositi
Slide 16: Most Environmentally Sound Natural Gas Delivery System in New Jersey
Most Environmentally Sound Natural Gas Delivery System in New Jersey! Committed to reducing and minimizing methane emissions from distribution system $1.9B 41t Niu. utility invested in natural gas expected to replace delivery system the bare steel in its infrastructure in last decade system by end o
Slide 17: Expanding Rate Base Through FY2024
Expanding Rate Base Through FY2024 Infrastructure Investment Driving Growth Rate Base Growth ~1 1 % Billions $1.76 2019 Rate Base New Customer ‘SAFE II/NJ Rise. MIP Clean Energy IF: SRL Maintenance, 2024 Rate Cost of Base Removal & Other
Slide 18: Capital Plan Leading to Double Digit Rate Base CAGR
Capital Plan Leading to Double Digit Rate Base CAGR FY2021-FY2024 CapEx Millions Hl New Customer SAFE/NJ RISE of CapEx expected to MM sAveGREEN earn an accelerated recovery i Maintenance ~$1,540m Cost of Removal/Other IT RNG & Hydrogen
Slide 19: Most successful residential energy-efficiency programs in NJ
Most successful residential energy-efficiency programs in NJ. Conducts home energy audits and provides various grants, incentives and financing alternatives designed to encourage installation of high-efficiency heating and cooling equipment + Since 2009, more than $212 million invested through rebat
Slide 20: Development of Alternative Fuels Presents Opportunities
Development of Alternative Fuels Presents Opportunities NJNG’s Power-to-Gas Project 1 has been safely injected into local bution company pipeline systems in Europe H, _ » ty fornia use gener ydrogen to e power Surplus Power Creates Stored in Pipeline Renewable Electrolysis Renewable System for Later
Slide 21: CEV Business Update
Strategic Update 2 NJNG Business Update 4 S&T Business Update 5_.« Energy Services Business Update 6 Appendix WIMieuxe =
Slide 22: Leading New Jersey's Clean Energy Future
Leading New Jersey’s Clean Energy Future NUR is the Largest Solar Owner-Operator in New Jersey! Portfolio of Over 350MW of Installed Capacity, With 11% Commercial Residential Market Share in N.J.' Largest segment of The Sunlight “Teta Vv: (owned or developed): the CEV portfolio Advantage® continues
Slide 23: Significant Investment in Solar Will Continue to Drive Growth
Significant Investment in Solar Will Continue to Drive Growth Across NUR... Capital Investment (Millions) and Installed Capacity (MW) ~$850M investment in solar over the next 4 years $450 $121 FY2020A 1 Commercial CapEx FY2021€ FY2022E I Sunlight Advantage CapEx ~ 765-785 FY2023E FY2024E = Total ins
Slide 24: Growing Solar Revenues by ~60% Through FY2024
Growing Solar Revenues by ~60% Through FY2024 Solar Revenues Expected Evolution of Revenue Composition Millions FY2020 FY2024 $165-$170 8% $127-$132 $0 $105-$110 : FY2020 FY2021E FY2022E FY2023E FY2024E ™ Wholesale Energy Revenue TREC Revenue mLease Revenue ™ SREC Revenue PPA Revenue
Slide 25: Maintaining Project Returns Even After ITCs Reduce to 10%
...While Maintaining Project Returns Even After ITC’s Reduce to 10% ITC RATES (before Dec 2020 legislation) Fy2021 FY2022 © FY2023 «© FY2024 «= FY2025 Statutory ITC rate 22% 10% 10% 10% 10% Cost Expected Safe-Harbored ITC rate 26% 26% 22% 22% 10% umprovemen ts Memo: ITC RATES after Dec 2020 Legislat
Slide 26: Expand Into Other Markets
Expand Into Other Markets Optimize and In-Source Prioritize Tax Equity Financing Invest In & Adopt New Technologies Advance partnerships and new business development outside of New Jersey Optimize performance of existing solar portfolio Drive down development, operating and capital costs to maximize
Slide 27: S&T Business Update
Strategic Update 2 NJNG Business Update 3 CEV Business Update 5. Energy Services Business Update Appendix Misz 2%
Slide 28: Strong Growth Outlook Across Projects
Strong Growth Outlook Across Projects... S&T Adjusted EBITDA’ Millions Strong Adjusted EBITDA profile supported by long-term capacity $62.0 - $67.0 $64.0 - $69.0 commitments with highly rated S90 s6e0) iti Incremental entities revenues from Mitigating Adelphia Gateway’s organic execution risk as it
Slide 29: Underpinned by Stable Customer Base with High Quality Credit Profiles
... Underpinned by Stable Customer Base with High Quality Credit Profiles Producing Stable Fee-Based Revenue FY2020 Revenue FY2020 Revenue by FY2020 Revenue by by Customer Type Credit Quality Fee Type Utility =Marketer —m Producer =Power Gen = Pipeline )\ : alG = Credit Support m= Non-Rated ™ Take-o
Slide 30: Energy Services Business Update
Strategic Update 2 NJNG Business Update 3 CEV Business Update 4 . S&T Business Update 5 Energy Services Business Update 6 Appendix Misz 29
Slide 31: Proven Track Record of Success
Proven Track Record of Success Consistent Profitability Since 1995 with Strong Financial Margins and NFE; Able to Cover Physical Asset Demand Charges Even During Extremely Unfavorable Market Conditions (FY2020) Millions st72 sity S12 $118 $100 stor 597 $90 $92 $91 $89 $80 $80 S73 $86 ee $60 sas sa7
Slide 32: Appendix
Strategic Update 2 NJNG Business Update 3 CEV Business Update 4 . S&T Business Update 5. Energy Services Business Update 6 Appendix WIMieuxe 2
Slide 33: Selected Investments
Selected Investments Southern Reliability Link (SRL) ‘30-mile high-pressure pipeline designed to diversify natural gas supply Delivery of 180,000 Dthsiday Total investment of ~$270 million Reliability, redundancy, resiliency Currently 95% of natural gas supply for Monmouth and Ocean Counties comes f
Slide 34: Revenue Recognition for AMAs
Revenue Recognition for AMAs e@ e@ e The Transaction: The Accounting: The Result: AMAs feature initial and ASC 606 revenue recognition Disproportionate value is permanent capacity standard requires that allocated to the permanent releases with cash revenue be allocated to both release periods in FY
Slide 35: NJR Capital Plan
NJR Capital Plan (Millions) FY2021 FY2022 FY2023 & FY2024 Near Real Time Retur New Jersey Natural Gas New Customer $52 - $54 $56 - $59 $98 - $109 Yes Maintenance & Integrity $92 - $95 $142 - $150 $218 - $241 SAFE Il/ NJ RISE $36 - $38 $3 - $3 ‘Yes IP $6 - $7 $10 - $11 $82 - $90 Yes SRL $63 - $66 (Ul
Slide 36: Impact of Change in Accounting Policy for ITCs
Impact of Change in Accounting Policy for ITCs Deferral Method Results in More Stable, Predictable NFE Deferral Method i i Rtemiaen pis Tax Equity Under Deferral Method Accounting will Reduce Annual and Method methodology Any Method Quarterly NFE Volatility Millions ITC NEE ‘Immediate ITC amortized
Slide 37: Liquidity and Term Debt Maturity Schedule
Liquidity and Term Debt Maturity Schedule + Manageable debt repayment schedule with no significant maturity towers in any particular year + Substantial liquidity available for both NJNG and NJR Term Debt Maturity Schedule as of September 30, 2020, Millions' sa7o $180 150 s130 $130 aa $125 $125 $125
Slide 38: Reconciliation of NFE and NFEPS to Net Income for FY2020
Reconciliation of NFE and NFEPS to Net Income for FY2020 + NFE is a measure of earnings based on eliminating timing differences surrounding the recognition of certain gains and losses, net of applicable tax adjustments, to effectively match the earnings effects of the economic hedges with the physic
Slide 39: Reconciliation of S&T's Adjusted EBITDA to Net Income for FY2020
Reconciliation of S&T’s Adjusted EBITDA to Net Income for FY2020 + Adjusted EBITDA is earnings, including equity in earnings of affiliates, before interest, income taxes, depreciation and amortization, and Other Income, net, which includes non-cash earnings of AFUDC from our wholly owned subsidiarie
Slide 40: Reconciliation of Energy Services Financial Margin to Operating Income for FY2020
Reconciliation of Energy Services Financial Margin to Operating Income for FY2020 Energy Services Financial Margin, FY2020 (Millions) Energy Services Operating (Loss) Income (GAAP) (11.7) Add Back Operation and maintenance $17.4 Depreciation and amortization $0.2 Unrealized (gain) loss on derivative
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