EX-99.2 3 d634039dex992.htm EX-99.2

Fiscal 2013 Year-End Review November 25, 2013 Exhibit 99.2

Regarding Forward-Looking Statements 1 Certain statements contained in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “estimates,” “expects,” “projects,” “may,” "will," “intends,” “expects,” "believes," or “should” and similar expressions may identify forward-looking information and such forward-looking statements are made based upon management’s current expectations and beliefs as of this date concerning future developments and their potential effect upon New Jersey Resources (NJR or the Company). There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on 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 regarding NJR’s dividend growth goal, NJR's net financial earnings (NFE) for fiscal 2014, forecasted contribution of business segments to fiscal 2014, long-term financial goals, growth initiatives and NFE forecasts of NJR, expected contribution by new customers of New Jersey Natural Gas Company (NJNG) to utility gross margin, expected number of new customers of NJNG, new sources of utility gross margin at NJNG for 2014 through 2017, Solar Renewable Energy Certificate (SREC) prices, NJR’s effective tax rate, estimated capital expenditures in fiscal 2014 and beyond by NJNG and NJRCEV, planned natural gas vehicle (NGV) stations, the diversification of NJRCEV’s strategy, the impact of the Two Dot Wind farm on earnings, and NJRES’ growth opportunities include many factors that are beyond the Company’s 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 NJR’s expectations include, but are not limited to, weather and economic conditions; demographic changes in the NJNG service territory and their effect on NJNG's customer growth; volatility of natural gas and other commodity prices and their impact on NJNG customer usage, NJNG's Basic Gas Supply Service incentive programs, NJRES' operations and on the Company's risk management efforts; changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to the Company; the impact of volatility in the credit markets; the ability to comply with debt covenants; the impact to the asset values and resulting higher costs and funding obligations of NJR's pension and postemployment benefit plans as a result of downturns in the financial markets, a lower discount rate, and impacts associated with the Patient Protection and Affordable Care Act; accounting effects and other risks associated with hedging activities and use of derivatives contracts; commercial and wholesale credit risks, including the availability of creditworthy customers and counterparties and liquidity in the wholesale energy trading market; the ability to obtain governmental approvals and/or financing for the construction, development and operation of certain non-regulated energy investments; risks associated with the management of the Company's joint ventures and partnerships; risks associated with our investments in renewable energy projects and our investment in an on-shore wind developer, including the availability of regulatory and tax incentives, logistical risks and potential delays related to construction, permitting, regulatory approvals and electric grid interconnection, the availability of viable projects and NJR's eligibility for federal investment tax credits (ITC), 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 the resulting effect on our effective tax rate and earnings; the level and rate at which NJNG's costs and expenses (including those related to restoration efforts resulting from Superstorm Sandy) are incurred and the extent to which they are allowed to be recovered from customers through the regulatory process; access to adequate supplies of natural gas and dependence on third-party storage and transportation facilities for natural gas supply; operating risks incidental to handling, storing, transporting and providing customers with natural gas; risks related to our employee workforce, including a work stoppage; the regulatory and pricing policies of federal and state regulatory agencies; the possible expiration of the NJNG Conservation Incentive Program (CIP); the costs of compliance with present and future environmental laws, including potential climate change-related legislation; risks related to changes in accounting standards; the disallowance of recovery of environmental-related expenditures and other regulatory changes; environmental-related and other litigation and other uncertainties; risks related to cyber-attack of failure of information technology systems; and the impact of natural disasters, terrorist activities, and other extreme events on our operations and customers, including any impacts to utility gross margin, and restoration costs resulting from Superstorm Sandy. The aforementioned factors are detailed in the “Risk Factors” sections of our Annual Report on Form 10-K filed on November 28, 2012, as filed with the Securities and Exchange Commission (SEC), our Annual Report on Form 10-K to be filed on November 25, 2013, and our Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2013, each of which is available on the SEC’s website at 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. 1

Disclaimer Regarding Non-GAAP Financial Measures This presentation includes the non-GAAP measures net financial earnings (losses), financial margin and utility gross margin. As an indicator of the Company’s operating performance, these measures should not be considered an alternative to, or more meaningful than, GAAP measures, such as cash flow, net income, operating income or earnings per share. Net financial earnings (losses) and financial margin exclude unrealized gains or losses on derivative instruments related to the Company’s unregulated subsidiaries and certain realized gains and losses on derivative instruments related to natural gas that has been placed into storage at NJRES. Volatility associated with the change in value of these financial and physical commodity contracts is reported in the income statement in the current period. In order to manage its business, NJR views its results without the impacts of the unrealized gains and losses, and certain realized gains and losses, caused by changes in value of these financial instruments and physical commodity contracts prior to the completion of the planned transaction because it shows changes in value currently as opposed to when the planned transaction ultimately is settled. NJNG’s utility gross margin represents the results of revenues less natural gas costs, sales and other taxes and regulatory rider expenses, which are key components of the Company’s operations that move in relation to each other. Management uses net financial earnings (NFE), financial margin and utility gross margin as supplemental measures to other GAAP results to provide a more complete understanding of the Company’s performance. Management believes these non-GAAP measures are more reflective of the Company’s business model, provide transparency to investors and enable period-to-period comparability of financial performance. For a full discussion of our non-GAAP financial measures, please see Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2012, filed on November 28, 2012. This information has been provided pursuant to the requirements of SEC Regulation G. 2 2

Fiscal 2013 - Highlights of a Challenging Year Achieved our 22 nd consecutive year of higher NFE; increased dividend for the 18 th consecutive year Despite Superstorm Sandy, added 11 percent more new utility customers than fiscal 2012 Invested $60 million in solar and recently announced first wind project NJRES nearly doubled its NFE from fiscal 2012 Generator sales and equipment installations led to improved Home Services results Established a platform to support long-term growth 3

NJR Delivered Improved Performance in the Quarter and Fiscal Year 4 Company 2013 2012 2013 2012 New Jersey Natural Gas $(3.1) $(5.2) $73.8 $73.2 NJR Energy Services (2.2) (7.3) 19.3 10.8 NJR Clean Energy 1.0 (1.4) 10.1 19.5 NJR Midstream 1.6 1.3 7.2 6.8 NJR Home Services/Other 2.5 1.5 3.3 2.1 Total $(0.2) $(11.1) $113.7 $112.4 Per basic share $(.01) $(.27) $2.73 $2.71 September 30, September 30,

Despite Superstorm Sandy, NJNG Delivered Improved Results 5 Approximately 75 percent of Sandy customers back $26.1 million invested in system restoration Will seek recovery in November 2015 base rate case $14.8 million in deferred O&M costs (Thousands) 2013 vs. 2012 Customer Impact $3,221 AIP 821 SAVEGREEN 1,018 Superstorm Sandy (3,362) Total $1,698 Change in NJNG Gross Margin

Fiscal 2013 Segment Results 6 NJR Energy Services -- Benefited from pockets of cold winter and hot summer weather NJR Midstream -- Improvement from lower expenses and improved performance at Iroquois Pipeline NJR Clean Energy Ventures -- Lower capital spending due to grid- connected approval process NJR Home Services -- Higher results from increased generator sales and equipment installations

$1.00 $1.20 $1.40 $1.60 $1.80 $2.00 $2.20 $2.40 $2.60 $2.80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $1.61 $1.73 $1.80 $1.88 $2.11 $2.24 $2.40 $2.46 $2.58 $2.71 $2.73 Net Financial Earnings Per Share 7 Fiscal 2013 Net Financial Earnings 7

$0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 2007 2008 2009 2010 2011 2012 2013 2014* $1.01 $1.12 $1.24 $1.36 $1.44 $1.54 $1.62 $1.68 Dividend Growth Goal is to grow dividend 5 percent annually Growing and Sustainable Dividend * Current annual rate ** Based on NJR net financial earnings *** Peer group average based on 2013 earnings estimates and indicated dividend from Bloomberg. Peer group: ATO, GAS, LG, NWN, PNY, SJI, SWX, VVC and WGL 8 0% 16% 33% 49% 65% 2007 2008 2009 2010 2011 2012 2013 Peer Group*** 48% 50% 52% 55% 56% 57% 59% 63% Payout Ratio**

Fiscal 2014 NFE Per Share Guidance - $2.75 to $2.95 9 New Jersey Natural Gas 60-70% NJR Midstream 5-10% NJR Clean Energy Ventures 10-20% NJR Home Services 2-5% NJR Energy Services 5-15% Regulated businesses expected to contribute 65-80 percent of total NFE

4 to 7 Percent Average Long-Term Annual NFE Growth Strategies Regulated Businesses Significant increase in NJNG regulated infrastructure investments Diversified sources of NJNG gross margin November 2015 base rate filing Targeted growth from NJR Midstream Non-Regulated Businesses Diversify clean energy portfolio Expand onshore wind investments Steady contributions from NJR Energy Services Expanded products and markets at NJR Home Services 10

7,456 new customers in fiscal 2013, up 11 percent over last year; highest number since 2008 3,627 new construction customers; up 27 percent over last year 3,829 conversions from other fuels; 51 percent of total 11 NJNG Customer Growth Estimated to Add $3.9 Million Annually of Utility Gross Margin Over next two fiscal years, NJNG expects to add 14,000-16,000 new customers 619 existing customer heat conversions in fiscal 2013

12 Key Trends Support Future Customer Growth Non Heat 6,900 On Main 37,749 Near Main 28,974 Off Main 47,840 Future Conversions Sources for new construction: Arthur D. Little, Harte Hanks and NJNG Source for Population change: US Census Bureau 0.0% 5.0% 10.0% 15.0% NJ Morris Monmouth Ocean 4.5% 4.7% 2.5% 12.8% Population Change 2000-2010 Source for Fuel Pricing: US Energy Information Administration. * Data as of November 2013. Based on 100,000 comparable BTUs Demographics Fuel Pricing 2014- 2017 17,350 2019- Buildout 66,993 Future New Construction

Capital of Over $1 Billion Drives Long-Term Growth NJNG Expects Base Rate Case Resolution by Fiscal 2017 13 NJNG Capital Expenditure Estimates ($mm) 2009- 2012 Actual 2013A 2014E 2015E 2016E 2017E Total Customer Growth $79.4 $24.5 $24.7 $25.6 $25.5 $25.5 $205.2 Maintenance/Other 177.4 42.5 63.3 55.9 48.1 40.6 427.8 AIP/SAFE 136.7 45.3 31.6 33.7 39.1 - 286.4 Superstorm Sandy - 26.1 5.3 5.2 - - 36.6 NGV Advantage - 1.0 9.0 - - - 10.0 NJ RISE - - 4.6 13.0 12.0 12.0 41.6 Liquefaction/LNG - - 16.0 16.3 3.4 - 35.7 Southern Reliability - - 2.3 12.3 80.6 34.8 130.0 SAVEGREEN 36.5 24.0 42.5 42.5 - - 145.5 Total $430.0 $163.4 $199.3 $204.5 $208.7 $112.9 $1,318.8

Current NJNG Infrastructure Investments 14 SAFE (Safety Acceleration and Facility Enhancement Program)- $130 million over four years to replace 276 miles of cast iron and unprotected steel main FISCAL 2014 GOAL: Invest $32 million, complete 79 miles of replacement pipe Superstorm Sandy - Range of $35 to $40 million over three years FISCAL 2014 GOAL: Deploy $5 million for continuing system restoration FISCAL 2014 GOAL: Seek to commit remaining capital of $2 - $4 million of capital before December 2013; Open CNG stations to public FISCAL 2014 GOAL: Implement and expand program offerings to residential and commercial customers SAVEGREEN – Promotes customer investment in high-efficiency heating equipment; invest up to $85 million over the next two years NGV Advantage - Total investment up to $10 million; $6 - $8 million already committed to three refueling stations

Planned NJNG Infrastructure Capital Projects NJ RISE (Reinvestment in System Enhancement) - $102 million NJNG storm response plan filed with NJ BPU on September 3, 2013 Additional pipe to barrier islands and excess flow valves FISCAL 2014 GOAL: Develop regulatory review process; will set timetable for NJ BPU decision this fiscal year Liquefaction Facility/LNG Upgrades - $35.7 million Reduces LNG transportation costs and creates customer savings FISCAL 2014 GOAL: Invest $16 million in equipment; completion by fiscal 2016 Southern Reliability Link (SRL) - $130 million Adding high-pressure natural gas pipeline to support reliability, diversify supplier base and support growth in Ocean County FISCAL 2014 GOAL: Finalize route selection and engineering design; submit engineering studies to NJ BPU 15

Diversified and Growing NJNG Gross Margin Incremental utility gross margin expected to more than double by fiscal 2017 16

Targeted Growth from Regulated NJR Midstream Current investments provide 5 to 10 percent of NFE Strategic Marcellus location supports value Leverage customer contacts to identify new opportunities 17 Iroquois Pipeline 5.53 percent interest in gas pipeline to serve the Northeast market Steckman Ridge 50/50 joint venture with Spectra Energy 12 Bcf natural gas storage facility in SW PA

Clean Energy Portfolio Strategy Renewable Portfolio Standard (RPS) provides a growing source of demand 62 MW inventory of grid-connected projects over next three years Sunlight Advantage residential solar program Eliminate reliance on solar ITC by January 2017 Currently estimate approximately 174,000 SRECs by fiscal 2017 Solar investments beyond 2017 depend on market conditions FISCAL 2014 GOALS: Solar spending of $60-$95 million One or two onshore wind projects in the 20-70 MW range 18 Continue to diversify into onshore wind projects and other clean energy investments

Clean Energy Portfolio Diversification: Onshore Wind Why are we doing this? Supports NJR’s electric strategy Earnings growth opportunities supported by long-term Power Purchase Agreements (PPAs) with annuity-like returns 29 states and the District of Columbia have RPS Tax credits are production based How will growth continue? Increase SREC revenue; higher prices and volume Invest in onshore wind projects and other clean energy investments Regulated earnings growth 19

Clean Energy Portfolio Diversification: Two Dot Wind Farm Announced on October 23, 2013 9.7 MW utility scale wind farm project located in Montana, east of Helena Approximately $22 million investment; PTC eligible 25-year PPA in place to sell power to NorthWestern Energy to support their RPS requirement Strong partners - GE, Mortenson Construction, etc. Current Status: Construction work underway All turbines to be on site in December Commercial operations on track for summer 2014 20 Two Dot NJR expects Two Dot to contribute to earnings in fiscal fourth quarter 2014

NJRES: Growth Opportunities in a Changing Market Portfolio restructured to succeed in current market Growth opportunities from physical natural gas and producer services Providing energy solutions for diverse customers in the Marcellus Shale and other natural gas regions Producers, Utilities, Power Generators, Pipelines and Industrials Holds 1.1 Bcf/day of firm transportation and more than 33 Bcf of storage throughout the U.S. and Canada 5 to 15 percent of total NFE in fiscal 2014 21

NJR Home Services: Retail Solutions for Customer Comfort Majority of earnings derived from service contracts Approximately 121,000 service contract customers Expanded array of services now offered Whole-house electric and plumbing contracts Standby generator contracts Air conditioning Generators Brand recognition provides customer confidence 2 to 5 percent of total NFE in fiscal 2014 22

NJR Affirms Long-Term Financial Goals Achieve average long-term NFE growth of 4 to 7 percent Significant capital investment in regulated business to support customer growth and maintain safe, reliable and resilient service New customers and regulatory initiatives generate significant NJNG utility gross margin growth Provide annual dividend growth of at least 5 percent Targeted payout ratio of 60 to 65 percent Expect at least 65 to 80 percent of earnings from Regulated Businesses Supported by constructive and collaborative regulatory relationships 23

Delivering consistent net financial earnings and dividend growth Investing significantly in NJNG’s infrastructure to enhance system reliability Diversifying and growing NJNG’s gross margin Committing capital to clean energy portfolio Growing other energy-related, non-utility businesses NJR Will Continue to Meet Customer and Investor Expectations 24

Fiscal 2013 Year-End Review November 25, 2013