Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Q1 2021 Earnings Presentation
36 slides from Essential Utilities's earnings presentation, May 6, 2021
Slide 1: Earnings Call First Quarter 2021
(s Essential“! UTILITIES EARNINGS CALL First Quarter 2021 May 6, 2021
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Chief of Staff, Investor Relations, and Communications Essential etl. umes
Slide 3: Forward Looking Statement
Forward Looking Statement This presentation contains in addition to historical information, forward looking statements based on assumptions made by management regarding future circumstances over which the company may have little or no control, that involve risks, uncertainties and other factors that
Slide 4: Investor Presentation
INVESTOR Essential. . a4 Ny PRESENTATION | 4 uTLTIes
Slide 5: Chris Franklin
Company Update Chris Franklin Chairman, Chief Executive Officer, and President y 4 Essential. PRESENTATION | 5 umes INVESTOR
Slide 6: One year as Essential Utilities
U One year as Essential Utilities 7 Pending Acquisitions” INVESTOR PRESENTATION | 6 Essential
Slide 7: INVESTOR
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Slide 8: INVESTOR
INVESTOR Essential PRESENTATION | 8
Slide 9: Financial Results
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Slide 10: Q1 2020 vs Q1 2021 Financial Results
Q1 2020 Q1 2021 In millions except per share Revenues + Regulated water segment of $228.4M + Regulated natural gas segment of $343.1M, ns and Maintenance Expense $106.6 $125.1 including gas costs of $122.9M O&M * Full period of natural gas segment accounts for additional $42.9M, offset by the impact
Slide 11: Operating Revenues
Operating Revenues Q1 2021 vs. Q1 2020 hange in Operating Revenues (t ands) $6,549 $3,275 $2,349 ($33) Water Consumption up 1.7% year over year. $255,585 $354.4M of gross revenue, including $132.2M of purchased gas costs. Revenue Q1 2020 ' Peoples Revenue Rates & Surcharges W & WW Growth Volume Othe
Slide 12: Q1 2021 Water Usage Trends Table
Q1 2021 Water Usage Trends Table Due to COVID-19, we have seen residential usage increase by almost 5% in the first quarter of 2021 when compared to the same time last year, while commercial usage decreased by approximately 5.5% Q1 2021 vs Q1 2020 (Millions of Gallons) 9,543 9,094 = Q1 2020 = 14,729
Slide 13: 2021 Heating Degree Days
2021 Heating Degree Days Heating Degree Days PA Residential Gas Consumption 2020 2,900 2,845 2,766 2,800 2,726 2,700 2,600 45% 2,500 2,421 33% 2,400 16% 2,300 6% Actual Q1 2020 Proforma 20-Year Q1 Actual Q1 2021 Qi Q2 Q3 Q4 Normalized Q1 Average 2020 Source: Actual HDD’s as reported by NOAA Note: 20
Slide 14: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q1 2021 vs. Q1 2020 Change in Operations & Maintenance Expense (thousands) $3,468 $839 $778 Includes — _—— $8.8M of expenses sods. (525,397) —e $125,075 ‘ ($2,429) ($1,685) $106,637 rose Peoples O&M COVID-19 Costs Peoples Acquisition’ Production (Water) O&M Q1 2020
Slide 15: Earnings per Common Share
Earnings per Common Share Q1 2021 vs. Q1 2020 ange in Earnings Per Share 0.007 $0.018 $0.013 $0.007 $l ($0.030) $0.318 $0.60 oo 20 2) ‘ a ett gti rr a a er e > Pas ee os : at ¢ oy" i ¢ ie . oe « eoRige® me ape eo 7 ee = (gessential ones iSTOR |g umiumies
Slide 16: Earnings Weighted to 1Q, 4Q
Earnings Weighted to 1Q, 4Q Approximate Net Income By Quarter 1Q 2Q 3Q 4Q (@ Essential. 10% 10% Based on proforma projections, 65-75% of net income is earned in 1Q and 4Q INVESTOR PRESENTATION 116
Slide 17: 2021 Completed Rate Cases and Surcharges
2021 Completed Rate Cases and Surcharges Gas segment base rate cases or surcharges in PA and KY with annualized revenue increase of $1.1 million a Essential. uTLTIes Pending Rate Cases and Surcharges No pending gas segment base rate cases or surcharges INVESTOR PRESENTATION | 17
Slide 18: $400M Unsecured Senior Notes
Essential $400M Unsecured Senior Notes Closed April 19, 2021 Tenor of 10 years Coupon rate of 2.40% Proceeds used to pay down short-term borrowings and credit lines INVESTOR Essential. PRESENTATION [18 uTLTIes
Slide 19: Acquisition Update and 2021 Guidance
Acquisition Update and 2021 Guidance Chris Franklin Chairman, Chief Executive Officer, and President ( Essential. awe uTimies
Slide 20: Pending Acquisitions
Commons Water?) DELCORA + Water + Wastewater * 198,000 customers) + $276.5M purchase price + 980 customers + $4M purchase price East Whiteland Willistown + Wastewater + Wastewater + 8,175 customers() + 2,300 customers() + $54.9M purchase price + $17.5M purchase price Essential. uTLTIes Lower Makefie
Slide 21: Active Municipal Opportunities
Active Municipal Opportunities Size Range We are actively pursuing acquisition (Approx. # of opportunities in most of our states, Customers) totaling approximately 395,000 customers. While we do not expect to close all of these opportunities, this illustrates the number of municipals we are evaluati
Slide 22: Earnings, Capex, Rate Base, Customer Growth, ESG
. Customer (1) Earnings Capex Rate Base Growth ESG * Regulated water segment infrastructure investments of approximately $550 million in 2021 + Average annual regulated water customer (or equivalent dwelling units) growth of 2 to 3% from acquisitions and organic customer growth * Regulated natural g
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Slide 24: Thank You for Attending
Thank You for Attending Essential’s First Quarter 2021 Conference Call Conference Call and Webcast 7 SS Second Quarter 2021 Earnings Thursday, August 5, 2021
Slide 25: For more information contact
For more information contact: Brian ; Renee Dingerdissen Marquis Vice President, Chief of Staff, Director, Investor Relations Investor Relations and Communications (610)645-1191 \ ae (610)645-1021 BJDingerdissen@Essential.co A’ {Wa RTMarquis@Essential.co INVESTOR & Essential. PRESENTATION | 25 UTILI
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Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In thousands, except per share amounts arter ended March 31, Net income (GAAP financial measure) $ 183,689 $ 51,781 Adjustments: Plus: Transactionrelated expenses for acquisition of Peoples - 25,573 Plus: Adjustments to provide full-year 2020 run rate of Peoples opera
Slide 28: 2021 Rates and Surcharges Completed
2021 Rates and Surcharges Completed 4s of os/os/2021 Awarded Annualized Docket Number Segment Revenue Increase ($thousands) New Jersey NWR20010056 Wastewater Rate Case $500 North Carolina W-218, Sub 497A Water Surcharge $140 W-218, Sub 497A. Wastewater Surcharge $63 Ohio 89-7028-WW-TRF Water Rate Ca
Slide 29: Rates and Surcharges Pending
Rates and Surcharges Pending As of 05/05/2021 Requested Annualized Docket Number Segment Revenue Increase ($thousands) Vir PUR-2020-00106 Water Rate Case $1,476 PUR-2020-00106 Wastewater Rate Case $257 Total $1,733 INVESTOR (@ Essential. PRESENTATION [29 umiumies
Slide 30: Rate Base and Connections by State
Rate Base Water Wastewater Total Rate Base Gas ($000s) Connections Connections Customers ($000s) Connections PA $3,729,551 444,998 45,277 490,275 PA $2,367,176 699,326 IL $382,985 66,238 16,732 82,970 KY $126,567 39,285 OH $382,232 150,352 6,923 157,275 wv $29,375 12,891 TX $352,134 67,890 19,240 87
Slide 31: Capital Investment ($ in Billions)
($ in Billions) 2019A 2020A 2021E 2022E 2023E Organic Acquisitions Essential og Gas ($ in Billions) 2019A 2020A 2021E 2022E 2023E INVESTOR PRESENTATION Is
Slide 32: Balance Sheet: Credit Ratings and Metrics
g Balance Sheet: C — — Select Credit Metrics S&P Global Moopy’s (2020P 70234) Ratings \ | \ | Debt/Total issuer issuance issuer issuance Capitalization {@ Essential. A B- Baa2 Baa2 50-55% AQU A. A A+ - - FFO/Net Debt \ 12-14% @ PEOPLES A A Baa1 Baat Peer Issuer Ratings( Peer Issuer Ratings In order
Slide 33: Earnings Guidance
Earnings Guidance 2019 — 2023 Earnings Per Share 2020 annual adjusted earnings per share of $1.58 2021 annual earnings per share guidance of $1.64 to $1.69 $1.64-$1.69 $1.47 $1.58 *Adjusted income per share 2019A* 2020A* 2021E 2022E 2023E "A" denotes Actual INVESTOR ¢ Essential. “E denotes Estimate
Slide 34: Dividends Per Share (Annualized)
Dividends Per Share (Annualized) $1.0028 $0.9372 $0.8760 $0.8188 $0.7652 $0.7120 $0.6600 2014-2015. 2016-)S 2017's 2018 =. 2019 = 2020 Essential = INVESTOR PRESENTATION 134
Slide 35: Operational Excellence
Operational Excellence Continue to keep employees safe and the company strong through the pandemic Execute a $1B capital program Continue progress on ESG program File Aqua Rate Cases in multiple states Essential. INVESTOR PRESENTATION | 35, uTLTIes
Slide 36: Years as a company
135 Years as a Half a century on One year as company the NYSE Essential Utilities 1886 1971 2020 Swarthmore College Initial Public Offering +