Chris Senyek, CFA, CPA

Head of Macro Research Chief Investment Strategist 646-845-0759 CSenyek@wolferesearch.com

Chip Miller, CFA, CPA 646-845-0752 CMiller@wolferesearch.com

Adam Calingasan, CFA, CPA 646-845-0757 ACalingasan@wolferesearch.com

Portfolio Strategy Weekly Audio: Cash Usage: Alpha Opportunities

A 5 Minute Audio Brief

DO NOT FORWARD – DO NOT DISTRIBUTE – This report is limited solely for the use of clients of Wolfe Research. Please refer to the DISCLOSURE SECTION located at the end of this report for Analyst Certifications and Other Disclosures. For Important Disclosures, please go to www.WolfeResearch.com/Disclosures or write to us at Wolfe Research, LLC, 420 Lexington Avenue, Suite 648, New York, NY 10170

March 10, 2015

2

All Eyes on FOMC

Sources: Wolfe Research Portfolio Strategy, Standard & Poor’s, Thomson Financial, Bloomberg, and FactSet.

• Meager wage growth and a stronger dollar are two items we believe puts the Fed on hold for longer than market expectations, despite a stronger than expected February jobs report

• Moreover, the Fed typically raises rates in stronger economic environments, and the U.S. outlook is currently slowing, in our view.

3

Buybacks, Debt, and Free Cash Flow

Sources: Wolfe Research Portfolio Strategy, Standard & Poor’s, Thomson Financial, Bloomberg, and FactSet.

• Net buybacks to free cash flow after dividends are running ~21% currently, well below prior peaks of 30%+

• Despite zero interest rate policy, debt to equity ratios remain at over 25 year lows

• The market’s 4.7% free cash flow yield is still attractive on both an absolute and relative basis

4

Cash Usage & The Market Cycle

Sources: Wolfe Research Portfolio Strategy, Standard & Poor’s, Moody’s, Thomson Financial, Bloomberg, and FactSet.

• We’ve found a number of Cash Usage strategies to add alpha over the course of the market cycle as well as those that tend to work in the mid to late innings of the market cycle

5

Cash Usage: Alpha Opportunities

Sources: Wolfe Research Portfolio Strategy, Standard & Poor’s, Moody’s, Thomson Financial, Bloomberg, and FactSet.

• Among cash usage metrics, high gross cash to market capitalization has been the top stock picking tool over time. We attribute this to the market ascribing a low ‘value’ to cash on balance sheet with the stock ‘re-rating’ positively when cash is deployed

• Accelerating stock buybacks are the second best metric, and when combined with a high gross cash balance, the returns were significantly higher

– Accelerating buyback defined as high ratio of the 2 most recent quarters’ share repurchase amount to the past 12 quarters share repurchase amount

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6

Accelerating Buybacks and High Cash Balances

Notes: Universe = Russell 3000 market cap. > $250 million. Market data as of 3/2/2015. 2015E PE based on consensus estimates. Sources: Wolfe Research Portfolio Strategy, Standard & Poor’s, Thomson Financial, Bloomberg, and FactSet.

• The top performing buyback strategy we’ve found historically has been buying companies with high cash balances and accelerating usage of their buyback programs

Ticker Company Sector

Market

Cap. ($ in

millions)

LTM

Total

Return

2015E

P/E

LTM FCFF

Yield

SIM Score

[1 = best;

5 = worst]

LTM Share

Repos / Ave.

Mtk. Cap.

2 MRQ

Repos / 12

MRQ Repos

Cash & ST

Inv. / Mkt.

Cap.

Short

Interest /

Float %

F Ford Motor Co. Cons. Disc. 65,550 11% 10.4x 5% 2 3.0% 48% 33% 2%

GT The Goodyear Tire & Rubber Co. Cons. Disc. 7,332 2% 9.3x -2% 5 3.8% 72% 29% 2%

CTB Cooper Tire & Rubber Co. Cons. Disc. 2,211 57% 13.0x 9% 2 10.5% 100% 25% 3%

RYL Ryland Group Inc. Cons. Disc. 2,137 -1% 12.9x -4% 5 1.6% 100% 26% 16%

RGS Regis Corp. Cons. Disc. 893 15% NA 9% 2 2.9% 61% 22% 5%

CROX Crocs, Inc. Cons. Disc. 870 -27% 46.6x -5% 5 6.7% 59% 40% 11%

WBA Walgreen Co. Cons. Staples 91,144 25% 23.0x 4% 2 1.6% 42% 14% 1%

BG Bunge Limited Cons. Staples 11,874 4% 12.7x 12% 1 2.6% 69% 28% 2%

HRG Harbinger Group Inc. Cons. Staples 2,443 10% NA 8% 2 3.5% 75% 50% 5%

MED Medifast Inc. Cons. Staples 390 23% 17.7x 8% 1 14.0% 60% 14% 31%

QEP QEP Resources, Inc. Energy 3,809 -25% NA -22% 5 1.9% 79% 30% 4%

CKH SEACOR Holdings Inc. Energy 1,292 -19% 25.3x -8% 3 12.1% 50% 38% 13%

REX REX American Resources Corp. Energy 440 15% 6.4x 36% 1 1.4% 50% 37% 23%

HUM Humana Inc. Healthcare 24,237 45% 18.2x 5% 4 4.6% 38% 39% 2%

HNT Health Net, Inc. Healthcare 4,427 69% 17.7x 18% 1 4.5% 48% 60% 3%

NHC National Healthcare Corp. Healthcare 904 27% NA 3% 1 0.9% 60% 22% 2%

AEGR Aegerion Pharma, Inc. Healthcare 775 -50% NA -2% 4 3.7% 100% 47% 49%

ARWR Arrowhead Research Corp. Healthcare 401 -62% NA -20% 4 6.1% 85% 32% 31%

AAL American Airlines Group Inc. Industrials 33,655 32% 4.6x -4% 5 4.1% 97% 22% 2%

UAL United Continental Holdings, Inc. Industrials 25,670 49% 6.1x 3% 4 2.0% 99% 17% 3%

MAS Masco Corp. Industrials 9,273 15% 21.4x 6% 2 1.9% 59% 18% 3%

PBI Pitney Bowes Inc. Industrials 4,659 -6% 11.9x 8% 1 0.9% 100% 24% 8%

TEX Terex Corp. Industrials 2,896 -40% 12.1x 10% 3 3.8% 68% 17% 6%

EME EMCOR Group Inc. Industrials 2,808 -4% 15.5x 8% 2 6.6% 80% 15% 1%

HURN Huron Consulting Group Inc. Industrials 1,472 1% 17.2x 8% 1 3.5% 69% 17% 2%

NX Quanex Building Products Corp. Industrials 723 4% 47.6x -2% 4 3.5% 95% 17% 4%

IDCC InterDigital, Inc. Info. Tech. 2,008 80% 27.6x 16% 1 8.8% 43% 35% 9%

UIS Unisys Corp. Info. Tech. 1,176 -31% 14.5x 8% 3 2.7% 46% 42% 7%

TIVO TiVo Inc. Info. Tech. 1,167 -16% 27.8x 2% 4 17.2% 34% 73% 7%

UTEK Ultratech, Inc. Info. Tech. 511 -29% NA -4% 4 3.0% 100% 53% 15%

RTEC Rudolph Technologies Inc. Info. Tech. 411 11% 22.0x 2% 3 4.2% 92% 38% 8%

CNSI Comverse, Inc. Info. Tech. 400 -47% 165.8x -33% 5 2.5% 51% 44% 4%

ENOC EnerNOC, Inc. Info. Tech. 374 -41% NA 21% 2 6.3% 76% 66% 11%

CHMT Chemtura Corp. Materials 1,861 8% 25.6x -8% 4 27.6% 68% 23% 9%

USCR U.S. Concrete, Inc. Materials 431 13% 12.6x 1% 5 2.2% 56% 22% 4%

ETR Entergy Corp. Utilities 14,018 27% 14.4x 6% 1 1.3% 90% 10% 2%

7

Large New Buyback Programs: Another Big Alpha Contributor

Notes: This measures the returns of new buyback announcements since 2009 of $5 billion+ market cap. companies with no announced buybacks in the prior 3 years and repurchasing >8% of shares over the subsequent two years. Returns are measured beginning 3 days subsequent to announcement. Sector relative returns. Sources: Wolfe Research Macro Research; Company filings; Bloomberg; Standard & Poor’s; FactSet.

• Large, new buyback programs are positively rewarded by the market if actually executed

• Below are $5b+ market cap companies implementing large buyback programs since 2009 and the relative 2 year share price returns…2 year average outperformance of 10.7%

8

Large New Buyback Programs: Recent Announcements

Notes: Universe = S&P 1500 market cap. > $2 billion. 2015E PE based upon consensus estimates. Market data as of 3/2/2015. (1) Remaining buyback based on # of shares originally authorized, less repurchases, x current stock price Sources: Wolfe Research Macro Research; Company filings; Bloomberg; Standard & Poor’s; FactSet.

Ticker Company Sector

Market

Cap. ($ in

millions)

LTM

Total

Return

2015E

P/E

LTM FCFF

Yield

Cash & ST

Inv. / Mkt.

Cap.

New Buyback

Program

Announced

Estimated

Remaining

Auth.

Amount

Remaining

Buyback

Auth. /

Market Cap.

HSNI HSN, Inc. Cons. Disc. 3,590 40% 19.3x 3% 4% 1/28/2015 260 7% (1)

TOL Toll Brothers Inc. Cons. Disc. 6,715 -2% 18.5x 3% 9% 12/23/2014 753 11% (1)

CST CST Brands, Inc. Cons. Disc. 3,221 29% 21.5x 2% 11% 8/6/2014 200 6%

GPC Genuine Parts Co. Cons. Disc. 14,803 13% 20.1x 5% 1% 7/21/2014 921 6% (1)

DRI Darden Restaurants, Inc. Cons. Disc. 7,986 32% 24.8x 2% 2% 5/16/2014 436 5% (1)

VFC V.F. Corp. Cons. Disc. 33,358 34% 24.1x 4% 1% 2/14/2014 3,131 9% (1)

WWW Wolverine World Wide Inc. Cons. Disc. 3,134 18% 19.8x 5% 7% 2/12/2014 200 6%

HELE Helen of Troy Limited Cons. Disc. 2,221 20% 14.0x 5% 1% 2/10/2014 265 12%

HOG Harley-Davidson, Inc. Cons. Disc. 13,764 0% 15.3x 5% 5% 2/5/2014 1,064 8% (1)

VAC Marriott Vacations Worldwide Corp. Cons. Disc. 2,540 52% 24.0x 10% 14% 10/10/2013 220 9% (1)

PHM PulteGroup, Inc. Cons. Disc. 8,259 8% 16.7x 3% 16% 7/24/2013 738 9%

AEO American Eagle Outfitters, Inc. Cons. Disc. 2,904 7% 18.9x 1% 10% 3/6/2013 269 9% (1)

CL Colgate-Palmolive Co. Cons. Staples 64,412 15% 23.6x 4% 2% 2/19/2015 5,000 8%

TAP Molson Coors Brewing Co. Cons. Staples 14,142 36% 19.4x 7% 4% 2/10/2015 1,000 7%

KMB Kimberly-Clark Corp. Cons. Staples 40,351 8% 19.3x 4% 2% 11/13/2014 5,000 12% (1)

GIS General Mills, Inc. Cons. Staples 32,301 10% 17.8x 4% 3% 7/3/2014 4,327 13% (1)

KRFT Kraft Foods Group, Inc. Cons. Staples 37,514 20% 19.6x 4% 3% 12/17/2013 2,255 6%

MDLZ Mondelez Int'l, Inc. Cons. Staples 60,849 10% 21.4x 3% 3% 3/13/2013 3,098 5%

CHK Chesapeake Energy Corp. Energy 11,011 -31% 51.9x -8% 37% 12/22/2014 1,000 9%

OII Oceaneering Int'l, Inc. Energy 5,397 -23% 16.9x 6% 8% 12/15/2014 540 10% (1)

EGN Energen Corp. Energy 4,696 -20% 54.5x -4% 0% 11/7/2014 235 5% (1)

NOV National Oilwell Varco, Inc. Energy 22,870 -18% 14.8x 9% 15% 9/30/2014 2,221 10%

QEP QEP Resources, Inc. Energy 3,809 -25% NA -22% 30% 1/30/2014 500 13%

BXS BancorpSouth, Inc. Financials 2,169 -5% 15.5x NA NA 12/11/2014 130 6% (1)

MSCI MSCI Inc. Financials 7,325 33% 26.5x NA NA 2/6/2014 550 8%

AFL AFLAC Inc. Financials 27,462 0% 10.4x NA NA 11/13/2013 1,837 7% (1)

9

Large New Buyback Programs: Recent Announcements (cont.)

Notes: Universe = S&P 1500 market cap. > $2 billion. 2015E PE based upon consensus estimates. Market data as of 3/2/2015. (1) Remaining buyback based on # of shares originally authorized, less repurchases, x current stock price Sources: Wolfe Research Macro Research; Company filings; Bloomberg; Standard & Poor’s; FactSet.

Ticker Company Sector

Market

Cap. ($ in

millions)

LTM

Total

Return

2015E

P/E

LTM FCFF

Yield

Cash & ST

Inv. / Mkt.

Cap.

New Buyback

Program

Announced

Estimated

Remaining

Auth.

Amount

Remaining

Buyback

Auth. /

Market Cap.

ISRG Intuitive Surgical, Inc. Healthcare 18,419 13% 28.8x 3% 7% 2/2/2015 1,000 5%

ESRX Express Scripts Holding Co. Healthcare 61,735 13% 15.6x 6% 3% 3/7/2013 7,076 11% (1)

BEAV B/E Aerospace Inc. Industrials 6,762 5% 20.6x 1% 4% 11/13/2014 400 6%

PH Parker-Hannifin Corp. Industrials 17,632 5% 15.3x 7% 11% 10/22/2014 3,484 20% (1)

MAS Masco Corp. Industrials 9,273 15% 21.4x 6% 18% 9/30/2014 1,180 13% (1)

JEC Jacobs Engineering Group Inc. Industrials 5,670 -27% 13.2x 7% 12% 8/19/2014 308 5%

CNW Con-way Inc. Industrials 2,572 19% 16.0x -1% 17% 7/30/2014 133 5%

ROK Rockwell Automation Inc. Industrials 15,952 -2% 17.8x 6% 12% 6/4/2014 833 5%

TGI Triumph Group, Inc. Industrials 3,059 -7% 10.2x 7% 1% 2/25/2014 266 9% (1)

JOY Joy Global, Inc. Industrials 4,251 -19% 13.6x 6% 6% 8/28/2013 517 12%

LECO Lincoln Electric Holdings Inc. Industrials 5,475 -5% 17.6x 6% 5% 7/26/2013 787 14% (1)

CLC CLARCOR Inc. Industrials 3,366 17% 20.8x 2% 3% 6/25/2013 219 7%

EMR Emerson Electric Co. Industrials 39,968 -8% 15.4x 7% 8% 5/7/2013 2,366 6% (1)

TER Teradyne Inc. Info. Tech. 4,349 0% 20.4x 9% 19% 1/28/2015 500 11%

TSS Total System Svcs, Inc. Info. Tech. 7,167 29% 17.5x 6% 4% 1/27/2015 768 11% (1)

RAX Rackspace Hosting, Inc. Info. Tech. 7,166 38% 53.9x 1% 5% 11/10/2014 500 7%

MENT Mentor Graphics Corp. Info. Tech. 2,783 13% 13.1x 4% 6% 6/12/2014 175 6%

CA CA Technologies Info. Tech. 14,542 1% 13.2x 7% 18% 5/15/2014 875 6%

CSC Computer Sciences Corp. Info. Tech. 10,014 14% 14.5x 13% 24% 5/8/2014 963 10%

IT Gartner Inc. Info. Tech. 7,227 19% 34.8x 4% 5% 2/6/2014 368 5%

MSFT Microsoft Corp. Info. Tech. 359,982 18% 18.0x 9% 25% 9/17/2013 31,091 9%

MLM Martin Marietta Materials Inc. Materials 9,633 19% 27.6x 2% 1% 2/10/2015 2,833 29% (1)

CBT Cabot Corp. Materials 2,918 -14% 14.3x 6% 3% 1/13/2015 227 8% (1)

ATR AptarGroup, Inc. Materials 4,145 2% 23.3x 4% 10% 10/30/2014 350 8%

CRS Carpenter Tech Corp. Materials 2,188 -29% 22.0x -2% 1% 10/24/2014 470 21%

SMG The Scotts Miracle-Gro Co. Materials 4,013 23% 18.6x 2% 3% 8/11/2014 485 12%

IP Int'l Paper Co. Materials 24,094 22% 14.8x 6% 8% 9/10/2013 1,556 6%

TDS Telephone & Data Systems Inc. Telecom. 2,731 13% NA -7% 17% 8/2/2013 201 7%

UGI UGI Corp. Utilities 5,718 14% 17.7x 6% 7% 1/30/2014 466 8% (1)

10

Shorts: High Capital Spending and Weak Free Cash Flow

Notes: We use monthly M2 growth less consumption (PCE) growth as a proxy for ‘excess’ money supply. Consumption is the largest part of U.S. GDP at roughly 70%. We believe that money not consumed by the economy tends to find its way into risk assets, driving up multiples. Sources: Wolfe Research Portfolio Strategy, Bloomberg, Standard & Poor’s, Compustat, Thomson Financial, and FactSet.

• A number of our best short idea screens are generated from companies making high capital expenditures relative to their peers

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11

High Capital Spending and Weak Free Cash Flow

Notes: Market data as of 3/2/2015. SIM = our proprietary Stock Idea Model based on five weighted and historically back tested factors, depending on the economic cycle. Sources: Wolfe Research Portfolio Strategy; Company filings; Standard & Poor’s; FactSet.

Ticker Company Sector

Market

Cap. ($ in

millions)

LTM

Total

Return

SIM Score

[1 = best;

5 = worst]

Short

Interest /

Float %

2015E

P/E

LTM FCFF

Yield

LTM

Capex /

Prior 4-yr

Avg

KBH KB Home Cons. Disc. 1,271 -32% 5 24% 15.5x -18% 483%

LGF Lions Gate Entertainment Corp. Cons. Disc. 4,598 8% 5 18% 18.7x -1% 387%

LL Lumber Liquidators Holdings, Inc. Cons. Disc. 1,051 -64% 4 30% 14.5x -1% 358%

LEN Lennar Corp. Cons. Disc. 9,952 14% 5 18% 16.1x -5% 348%

CONN Conns Inc. Cons. Disc. 914 -30% 5 79% 10.6x -18% 347%

CZR Caesars Entertainment Corp. Cons. Disc. 1,592 -58% 2 44% NA 0% 295%

RH Restoration Hardware Holdings, Inc. Cons. Disc. 3,570 33% 5 32% 30.1x -2% 288%

DHI DR Horton Inc. Cons. Disc. 9,917 12% 5 4% 14.5x -7% 261%

ASNA Ascena Retail Group Inc. Cons. Disc. 2,182 -27% 5 6% 18.4x -4% 245%

LTM Life Time Fitness Inc. Cons. Disc. 2,286 24% 4 12% 17.7x -5% 239%

CAB Cabela's Inc. Cons. Disc. 3,946 -16% 5 16% 17.7x -2% 235%

ISCA Int'l Speedway Corp. Cons. Disc. 1,463 -6% 3 4% 23.1x -1% 210%

MTH Meritage Homes Corp. Cons. Disc. 1,744 -8% 5 13% 11.9x -9% 207%

LAD Lithia Motors Inc. Cons. Disc. 2,502 52% 4 6% 15.4x -1% 202%

LOPE Grand Canyon Education, Inc. Cons. Disc. 2,153 -3% 2 3% 17.4x 0% 198%

KMX CarMax Inc. Cons. Disc. 14,233 40% 5 7% 23.3x -5% 192%

FRGI Fiesta Restaurant Group, Inc. Cons. Disc. 1,710 30% 4 8% 40.9x 0% 183%

SAM Boston Beer Co. Inc. Cons. Staples 3,452 12% 5 11% 35.0x 0% 297%

UNFI United Natural Foods, Inc. Cons. Staples 4,159 15% 5 7% 28.0x -3% 260%

FANG Diamondback Energy, Inc. Energy 4,181 10% 5 8% 40.1x -21% 483%

GLNG Golar LNG Ltd. Energy 2,884 -12% 4 5% 90.8x -31% 472%

SWN Southwestern Energy Co. Energy 9,600 -40% 2 12% 23.1x -30% 341%

AR Antero Resources Corp. Energy 9,964 -37% 5 14% 55.1x -20% 289%

GPOR Gulfport Energy Corp. Energy 3,901 -31% 5 4% NA -20% 273%

LPI Laredo Petroleum, Inc. Energy 1,587 -57% 5 22% NA -23% 191%

RDC Rowan Companies plc Energy 2,556 -38% 5 7% 6.8x -20% 183%

12

High Capital Spending and Weak Free Cash Flow (cont.)

Notes: Market data as of 3/2/2015. SIM = our proprietary Stock Idea Model based on five weighted and historically back tested factors, depending on the economic cycle. Sources: Wolfe Research Portfolio Strategy; Company filings; Standard & Poor’s; FactSet.

Ticker Company Sector

Market

Cap. ($ in

millions)

LTM

Total

Return

SIM Score

[1 = best;

5 = worst]

Short

Interest /

Float %

2015E

P/E

LTM FCFF

Yield

LTM

Capex /

Prior 4-yr

Avg

SKYW SkyWest Inc. Industrials 795 24% 5 3% 17.8x -18% 464%

ARII American Railcar Industries, Inc. Industrials 1,189 -18% 4 8% 10.6x -12% 304%

RRTS Roadrunner Transportation Systems, Inc.Industrials 976 9% 5 6% 15.9x 0% 287%

AAL American Airlines Group Inc. Industrials 33,655 32% 5 2% 4.6x -4% 248%

HEES H&E Equipment Svcs Inc. Industrials 848 -25% 5 4% 14.6x -6% 236%

PRIM Primoris Svcs Corp. Industrials 1,087 -32% 5 4% 11.7x -2% 207%

HUBG Hub Group Inc. Industrials 1,480 3% 5 4% 21.2x -1% 192%

JBHT JB Hunt Transport Svcs Inc. Industrials 9,970 20% 4 4% 23.8x -1% 191%

RUSHB Rush Enterprises, Inc. Industrials 1,092 3% 5 0% NA -2% 184%

KSU Kansas City Southern Industrials 12,921 26% 4 3% 21.7x 0% 182%

GMT GATX Corp. Industrials 2,789 -1% 5 8% 11.9x -9% 179%

INVN InvenSense, Inc. Info. Tech. 1,563 -14% 5 34% 25.5x -2% 451%

FARO FARO Technologies Inc. Info. Tech. 1,019 2% 5 5% 30.2x -2% 448%

SSYS Stratasys Ltd. Info. Tech. 3,203 -51% 5 20% 29.7x -1% 415%

SNX SYNNEX Corp. Info. Tech. 3,104 33% 5 12% 11.5x -7% 238%

SUNE SunEdison, Inc. Info. Tech. 6,167 24% 5 32% NA -19% 223%

GOGO Gogo Inc. Info. Tech. 1,572 -12% 4 40% NA -5% 218%

CRAY Cray Inc. Info. Tech. 1,180 -13% 5 10% 25.4x -7% 211%

FNSR Finisar Corp. Info. Tech. 2,206 -10% 5 13% 16.4x -4% 189%

CF CF Industries Holdings, Inc. Materials 14,917 27% 4 3% 14.0x -2% 376%

LPX Louisiana-Pacific Corp. Materials 2,413 -10% 5 19% NA -3% 308%

FCX Freeport-McMoRan Copper & Gold Inc. Materials 21,952 -32% 5 4% 20.7x -3% 296%

FUL HB Fuller Co. Materials 2,275 -6% 5 5% 17.4x -4% 249%

LXU LSB Industries Inc. Materials 855 15% 5 4% 17.0x -14% 227%

NWE Northwestern Corp. Utilities 2,509 20% 5 5% 16.6x -20% 447%

POR Portland General Electric Co. Utilities 2,839 18% 4 15% 15.8x -8% 236%

LG The Laclede Group, Inc. Utilities 2,208 15% 5 8% 16.1x -1% 203%

ALE ALLETE, Inc. Utilities 2,437 10% 5 2% 16.5x -8% 196%

OTTR Otter Tail Corp. Utilities 1,215 12% 3 4% 18.4x -3% 189%

EDE The Empire District Electric Co. Utilities 1,088 10% 3 5% 17.9x -2% 170%

NI NiSource Inc. Utilities 13,388 25% 5 2% 23.4x -2% 153%

SJI South Jersey Industries, Inc. Utilities 1,902 1% 3 2% 16.1x -5% 147%

13

DISCLOSURE SECTION

Analyst Certification:

The analyst of Wolfe Research, LLC primarily responsible for this research report whose name appears first on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the research analysts’ personal views about the subject securities or issuers and (ii) no part of the research analysts’ compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in this report.

Other Disclosures:

Wolfe Research, LLC Fundamental Stock Ratings Key:

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Peer Perform (PP): The security is projected to perform approximately in line with analyst's industry coverage universe over the next 12 months.

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Wolfe Research, LLC uses a relative rating system using terms such as Outperform, Peer Perform and Underperform (see definitions above). Please carefully read the definitions of all ratings used in Wolfe Research, LLC research. In addition, since Wolfe Research, LLC research contains more complete information concerning the analyst’s views, please carefully read Wolfe Research, LLC research in its entirety and not infer the contents from the ratings alone. In all cases, ratings (or research) should not be used or relied upon as investment advice and any investment decisions should be based upon individual circumstances and other considerations.

Wolfe Research, LLC Sector Weighting System:

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Market Weight (MW): Expect the industry to perform approximately in line with the primary market index for the region (S&P 500 in the U.S.) over the next 12 months.

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Wolfe Research, LLC Distribution of Fundamental Stock Ratings (As of December 31, 2014):

Outperform: 41% 2% Investment Banking Clients

Peer Perform: 50% 1% Investment Banking Clients

Underperform: 9% 0% Investment Banking Clients

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