New Jersey Resources : NJR Q2 2024 Earnings Presentation

May 2024

Investor Presentation

Fiscal 2024 Second Quarter and Year-to-Date Financial Results

Forward-Looking Statements and Non-GAAP Measures

Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and 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 NJR's 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," "may," "will," "intends," "plans," "believes," "should" and similar expressions may identify forward-looking statements and such forward-looking statements are made based upon management's current expectations, assumptions 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 management's expectations, assumptions and beliefs or that the effect of future developments on NJR will be those anticipated by management. Forward-looking statements in this earnings presentation include, but are not limited to, certain statements regarding NJR's NFEPS guidance for fiscal 2024, including NFEPS guidance by Segment and EPS, long term growth targets and guidance range, long term annual growth projections and targets, Capital Plan expectations, projections of dividend and financing activities, customer growth at NJNG, future NJR and NJNG capital expenditures, potential CEV capital projects, project pipeline (under construction, contract or exclusivity) through Fiscal 2028, total expected shareholder return projections, dividend growth, CEV revenue and service projections, our debt repayment schedule, contributions from Leaf River, Steckman Ridge and Adelphia Gateway, SREC Hedging strategies and Asset Management Agreements, the outcome and timing of Base Rate Cases with the BPU, emissions reduction strategies and clean energy goals, environmental social and governance efforts, rising interest rates, and other legal and regulatory expectations.

Additional information and factors that could cause actual results to differ materially from NJR's expectations are contained in NJR's filings with the SEC, including NJR's Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC's web site, http://www.sec.gov. Information included in this presentation is representative as of today only and while NJR periodically reassesses material trends and uncertainties affecting NJR's results of operations and financial condition in connection with its preparation of management's discussion and analysis of results of operations and financial condition contained in its Quarterly and Annual Reports filed with the SEC, NJR does not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events.

Non-GAAP Measures

Non-GAAP Measures

This presentation includes the non-GAAP financial measures NFE/net financial loss, NFE per basic share, financial margin, utility gross margin, adjusted funds from operations and adjusted debt. 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 NJR's operating performance, these measures should not be considered an alternative to, or more meaningful than, net income or operating revenues as determined in accordance with GAAP. This information has been provided pursuant to the requirements of SEC Regulation G.

NFE and financial margin exclude unrealized gains or losses on derivative instruments related to NJR's unregulated subsidiaries and certain realized gains and losses on derivative instruments related to natural gas that has been placed into storage at Energy Services, net of applicable tax adjustments as described below. Financial margin also differs from gross margin as defined on a GAAP basis as it excludes certain operations and maintenance expense and depreciation and amortization as well as the effects of derivatives as discussed above. Volatility associated with the change in value of these financial instruments and physical commodity reported on 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 NJR Energy Services Company.

NJNG's utility gross margin is defined as operating revenues less natural gas purchases, sales tax, and regulatory rider expense. This measure differs from gross margin as presented on a GAAP basis as it excludes certain operations and maintenance expense and depreciation and amortization. Utility gross margin may also not be comparable to the definition of gross margin used by others in the natural gas distribution business and other industries. Management believes that utility gross margin provides a meaningful basis for evaluating utility operations since natural gas costs, sales tax and regulatory rider expenses are included in operating revenues and passed through to customers and, therefore, have no effect on utility gross margin.

Adjusted funds from operations is cash flows from operating activities, plus components of working capital, cash paid for interest (net of amounts capitalized), capitalized interest, the incremental change in SAVEGREEN loans, grants, rebates, and related investments, and operating lease expense.

Adjusted debt is total long-term and short-term debt, net of cash and cash equivalents, excluding solar asset financing obligations but including solar contractually committed payments for sale lease-backs, debt issuance costs, and other Fitch credit metric adjustments.

Management uses NFE/net financial loss, utility gross margin, financial margin, adjusted funds from operations and adjusted debt, as supplemental measures to other GAAP results to provide a more complete understanding of the Company's performance. Management believes these non-GAAP measures are more reflective of the Company's business model, provide transparency to investors and enable period-to-period comparability of financial performance. In providing NFE guidance, management is aware that there could be differences between reported GAAP earnings and NFE/net financial loss due to matters such as, but not limited to, the positions of our energy-related derivatives. Management is not able to reasonably estimate the aggregate impact or significance of these items on reported earnings and therefore is not able to provide a reconciliation to the corresponding GAAP equivalent for its operating earnings guidance without unreasonable efforts. In addition, in making forecasts relating to S&T's Adjusted EBITDA and adjusted funds from operations and adjusted debt, management is aware that there could be differences between reported GAAP earnings, cash flows from operations and total long-term and short-term debt due to matters such as, but not limited to, the unpredictability and variability of future earnings, working capital and cash positions. Management is not able to reasonably estimate the aggregate impact or significance of these items on reported GAAP measures and therefore is not able to provide a reconciliation to the corresponding GAAP equivalent for such forecasts without unreasonable efforts. NFE/net financial loss, utility gross margin and financial margin are discussed more fully in Item 7 of our Report on Form 10-K and, we have provided presentations of the most directly comparable GAAP financial measure and a reconciliation of our non-GAAP financial measures, NFE/net financial loss, utility gross margin, financial margin, adjusted funds from operations and adjusted debt, to the most directly comparable GAAP financial measures, in the appendix to this presentation. This information has been provided pursuant to the requirements of SEC Regulation G.

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Contents

Fiscal 2024 Second Quarter and Year-to-Date Conference Call

• Agenda

• Fiscal 2024 Second Quarter and Year-to-Date Highlights
  6 Re-affirms Fiscal 2024 NFEPS Guidance of $2.85 to $3.00
  7 NFEPS Guidance by Segment
  8 New Jersey Natural Gas
  9 NJNG Rate Case Update

1. Clean Energy Ventures (CEV): Pipeline of Investment Opportunities
2. Storage and Transportation (S&T): Organic Growth Initiatives
3. Financial Review
4. Review of Fiscal 2024 Second Quarter and Year-to-Date NFE Changes
5. Capital Plan
6. Projected Cash Flows
7. Investment Grade Profile
8. Debt Repayment Schedule
9. Growth Strategy and Key Highlights

Appendix: Financial Statements and Additional Information - 19

1. Reconciliation of NFE and NFEPS to Net Income
2. Other Reconciliation of Non-GAAP Measures
3. Reconciliation of Adjusted Funds from Operations to Cash Flow from Operations
4. Fiscal 2024 Second Quarter and Year-to-Date NFE and NFEPS by Business Unit
5. CEV: SREC Hedging Strategy Stabilizes Revenue
6. Capital Plan Table
7. NJR: Business Portfolio
8. NJNG: Supportive Regulatory Construct
9. CEV: Overview
10. Energy Services (ES): Overview
11. Dividend Growth: Committed to Building Shareholder Value
12. Environmental, Social and Governance Efforts
13. Shareholder and Contact Information

FY 2024 Second Quarter Conference Call Agenda

• FY 2024 Q2 and YTD Highlights
  Steve Westhoven | President and CEO

• Financial Highlights
  Roberto Bel | SVP and CFO

3 Q&A Session

Fiscal 2024 Second Quarter and Year-to-Date Highlights

Executing on our Strategic Plan to Drive Continued, Organic Growth

NJNG	CEV	S&T	Energy
Services

Second Quarter NFEPS

$1.41

Q2 FY 2024 NFEPS1

YTD NFEPS

$2.15

YTD FY 2024 NFEPS1

On January 31st, NJNG filed a base rate case

Current SAVEGREEN energy efficiency programs extended for an additional 180 days.

Filed for next generation of SAVEGREEN energy efficiency offerings

Higher utility gross margin in Q2 2024 / YTD 2024

Increased capacity by	NFEPS	Derived
~5MW in fiscal 2024	contribution in line	significant value
YTD	with expectations	from pipeline
Project pipeline of	Commenced	capacity during
brief periods of
~874MW	open season at
strong demand in
	Leaf River on
	an otherwise
	~4BCF of
	warmer than
	additional working
	historical winter
	capacity to be	period
	added over the
	next year

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1. A reconciliation from NFE to net income can be found in the Appendix.

Re-Affirming Fiscal 2024 NFEPS Guidance of $2.85 to $3.00

Guidance Raised by $0.15 in February 2024; Represents 18.4% Increase from Midpoint of FY 2023 Initial Guidance Range

$3.00

$2.75

$2.50

$2.25

$2.00

$1.75

$1.50

Net Financial Earnings per Share

Outperformance Above Long-Term Growth Rate and Initial Guidance Range1

Represents the midpoint of NJR's Long-Term Growth Rate

	$2.70
$2.50		Winter Storm Elliot
Strong energy prices
$2.42 - $2.521
(NJNG, CEV, ES)
$2.20 - $2.301

Guidance Range

$2.85 - $3.00

Large contracted revenues from ES' AMA and January 2024 weather event

$2.70 - $2.851

7-9%

LONG-TERM

ANNUAL GROWTH1

FY 2022

FY 2023

FY 2024

Initial Guidance Range1

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1. NFEPS long-termannual growth projections are based on the midpoint of the $2.20 - $2.30 initial guidance range for fiscal 2022, provided on February 1, 2021. Initial fiscal 2023 NFEPS guidance was $2.42 - $2.52; initial fiscal 2024 NFEPS guidance was $2.70 - $2.85

NFEPS Guidance by Segment

Energy Services to Represent a Larger Portion of NFEPS Guidance in 2024; Long-term NJNG Remains the Largest Contributor to NFEPS

Fiscal 2024 NFEPS Guidance

by Segment

CEV	S&T	Home Services
0% - 1%
12% - 17%	3% - 7%

Long-term Expected

NFEPS Composition

NJNG and CEV projected to make up the predominate portion of NJR's total business mix

CEV

20% - 25%

New Jersey	Non-Utility
Natural Gas
Utility
40% - 45%

Energy

Services

38% - 43%

Energy Services will represent a higher than normal % of NFEPS due to contributions from the AMAs for fiscal year 2024 as well as outperformance in January 2024

New Jersey	Utility
Natural Gas
Non-Utility
60% - 70%

S&T

5% - 10%

Energy

Services

6% - 10%

Home Services

0% - 1%

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New Jersey Natural Gas (NJNG)

Strong Trend of Favorable Customer Growth

Fiscal 2024 Capital Expenditures1,2,3

IIP	System Integrity
$64
$14

~45% of capital

expenditures	SAVEGREEN
$33
earning a
~$211M
near real-
time return	Cost of
Removal/Other
	$21

New Customer	IT
$48	$30

1. Total change in PP&E (cash spent, capex accrued and AFUDC). Includes SAVEGREEN investments, which for GAAP purposes are included as part of cash flows from operations.
2. Facilities included in "Other".
3. The sum of actual amounts may not equal due to rounding.

NJNG Customers

(in thousands) 580

570
560
550
540					569	576	582
				564
530			558
	548
520	539
510
500
2018	2019	2020	2021	2022	2023 YTD 2024

New Carbon Capture Units

NJR President & CEO Steve Westhoven, NJNG COO Pat Migliaccio and CEO & Founder of Clean02 Jaeson Cardiff standing in front of two operational CarbinX units in the mechanical room of NJNG's Corporate Headquarters

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NJNG: Rate Case Filing

Continued Progress	Overall Cost of Capital and Rate of Return
Requested an increase to base rates of $222.6 million	($ millions)	Amount	Percent	Embedded Cost	Weighted Cost
(increase of $158.7 million in operating income)	Long-Term Debt	$1,573.2	44.6%	4.0%		1.8%
Proposed rate base of $3.4 billion	Common Equity	$1,955.7	55.4%	10.4%		5.8%
Total	$3,528.9	100%			7.6%

Expected Base Rate Case Procedural Schedule

January

March

May

August

September - October

Filed Base Rate	ALJ2 & Staff,	Filing of 9+3	Expected Filing of	Settlement
Company, Rate	Update	12+0 Update	Discussions
Case with the
2	Counsel Agree on
BPU	Procedural

Schedule

Link:White Paper with Additional Details on Rate Case Filing

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1. As illustrated in the timeline, a rate case by statute in New Jersey is a nine-month process from the filing date to completion; however, 10-12 months is not uncommon.
2. Administrative Law Judge (ALJ) and New Jersey Board of Public Utilities (BPU).

Clean Energy Ventures (CEV): Pipeline of Investment Opportunities

CEV owns and operates solar projects with approximately 474MW of capacity

MWs
1600					~49% of pipeline located in NJ
					~51% located outside of NJ
1400					222
1200
1000					442
800			~5MW
600			177	1126
			New In-Service in Fiscal 2024
400				34
				684
200	469	474	474

Total

~1.3 GW

Pipeline of ~874MW including projects under construction, contract, or exclusivity

~474MW of projects in-service

0

In Service at 9/30/2023	In Service at 3/31/2024	FY2024 - 2025E	FY2026E - FY2027E	FY2028E -
			In Service			Under Construction		Under Contract or Exclusivity

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