Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Q2 2023 Earnings Presentation
33 slides from Essential Utilities's earnings presentation, Aug 8, 2023
Slide 1: Earnings Call Second Quarter 2023
EARNINGS CALL Second Quarter 2023 August 8, 2023 NYSE LISTED WTRG
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Investor Relations and Treasurer 2
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: Company Update
Company Update Chris Franklin Chairman, Chief Executive Officer, and President 4
Slide 5: Corporate Updates
Corporate Updates $0.34 Infrastructure Seven Systems Earnings Per Investment of Acquired in Share $547.6M 2023(1) Pending 7% Dividend Acquisition of Increase 33rd increase in 32 years Four Systems(2) 78th consecutive year of dividend payments (1) Purchase prices totaling $44.6M 5 (2) Purchase prices
Slide 6: Upgrading, Expanding, and Replacing Infrastructure
Upgrading, Expanding, and Replacing Infrastructure ($ in Billions) Annual Capital Investment Rate Base $10.3 $9.3 $8.6 $8.0 $1.06 $1.10 $1.02 $0.89 $5.0 $4.5 $4.1 $3.8 $0.55 $3.5 $0.48 $0.50 $0.36 $0.38 1 ”A” denotes Actual “E” denotes Estimate 1 Includes $0.05 of capital invested by Peoples prior t
Slide 7: Robust Infrastructure Investment Profile
Robust Infrastructure Investment Profile Reducing water loss and Undeniable expertise and track record in methane emissions significantly improving the reliability and environmental profile of systems we acquire Miles of Pipe Replaced Over 1,300 miles Over 1,100 miles Expect to replace over 1,300 mi
Slide 8: Continued Water and Wastewater Acquisition Success
Continued Water and Wastewater Acquisition Success Cumulative Additions of Customers 2023 Acquisitions Through Acquisitions Since 2015 PA OH PA Nearly 129,000 (1) North Heidelberg Union Rome Shenandoah Water and Wastewater Customers and Customers • Wastewater • Wastewater • Water 140,000 • 275 custo
Slide 9: Dividend Growth Targeted In Line with EPS
Dividend Growth Targeted In Line with EPS Dividends Per Share (Annualized) Dividend target: maintain similar level payout ratio, no higher than 65% 9
Slide 10: Financial Results
Financial Results - Neil Armstrong Dan Schuller Executive Vice President, Chief Financial Officer 10
Slide 11: Q2 Financial Highlights
Q2 Financial Highlights As of June 30, 2023 Q2 2022 Q2 2023 In millions except per share Operating Revenues $448.8 $436.7 Revenues Purchased Gas $75.1 $41.9 • Additional revenues from regulatory recoveries, regulated water segment customer growth, and increased water volume were the main drivers for
Slide 12: Operating Revenues
Operating Revenues Q2 2023 vs. Q2 2022 Change in Operating Revenues (millions) 1 2 1 Includes $75.1 of purchased gas. 2 Includes $41.9 of purchased gas. 12
Slide 13: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q2 2023 vs. Q2 2022 Change in Operations & Maintenance Expense (millions) 13
Slide 14: Earnings per Common Share
Earnings per Common Share Q2 2023 vs. Q2 2022 Change in Earnings Per Share 14
Slide 15: Regulatory Activity
Regulatory Activity As of August 7, 2023 2023 Completed Pending Regulatory Regulatory Recoveries Recoveries Water segment base rate cases Water segment base rate cases or surcharges in IL, IN, NC, OH, or surcharges in OH, TX, and VA PA, and VA with annualized with requested annualized revenue increa
Slide 16: Summary and 2023 Guidance
Summary and 2023 Guidance Chris Franklin Chairman, Chief Executive Officer, and President 16
Slide 17: Pending Municipal Transactions
Pending Municipal Transactions ~$335.8M of pending rate base is expected to generate ~$17M of incremental annual earnings potential(1) Over 208,000 Total Customers (2) $335.8M Total Purchase Price Customers PA PA DELCORA Beaver Falls • Wastewater • Wastewater • 198,000 customers(2) • 7,600 customers
Slide 18: Active Municipal Opportunities
Active Municipal Opportunities Size Range 10,000- We are actively pursuing acquisition >25,000 <10,000 opportunities in most of our states, (Approx. # of 25,000 Customers) totaling over 400,000 customers. While we do not expect to close all of these opportunities, this illustrates the number of muni
Slide 19: 2023 Guidance
2023 Guidance(1) Earnings Capex Rate Base Customer Growth ESG • In 2023, net income per • Through 2025, we will • Through 2025, the • The regulated water • Reduction of Scope 1 and 2 diluted common share will make regulated regulated water customer base (or greenhouse gas emissions by be $1.85 to $1
Slide 20: Questions?
& Essential. 20 umlumes
Slide 21: Thank You for Attending
Thank You for Attending Essential’s Second Quarter 2023 Conference Call Third Quarter 2023 Earnings Conference Call and Webcast NYSE Tuesday, November 7, 2023 LISTED WTRG 21
Slide 22: For more information contact
For more information contact: Brian Renee Dingerdissen Marquis Vice President, Director, Investor Relations Investor Relations and Treasurer (610)645-1191 (610)645-1021 BJDingerdissen@Essential.co RTMarquis@Essential.co 22
Slide 23: Appendix
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Slide 24: Year to Date Financial Highlights
Year to Date Financial Highlights As of June 30, 2023 In millions except per share YTD 2022 YTD 2023 Percent Change Operating Revenues $1,148.0 $1,163.2 1.3% Purchased Gas $302.9 $298.2 (1.5%) Operations and Maintenance Expense $277.6 $271.5 (2.2%) Operating Income $365.4 $380.7 4.2% Net Income $281
Slide 25: Operating Revenues
Operating Revenues YTD June 30, 2023 vs. YTD June 30, 2022 Change in Operating Revenues (millions) 1 2 1 Includes $302.9 of purchased gas. 2 Includes $298.2 of purchased gas. 25
Slide 26: Operations & Maintenance Expenses
Operations & Maintenance Expenses YTD June 30, 2023 vs. YTD June 30, 2022 Change in Operations & Maintenance Expense (millions) 26
Slide 27: Earnings per Common Share
Earnings per Common Share YTD June 30, 2023 vs. YTD June 30, 2022 Change in Earnings Per Share 27
Slide 28: 2023 Regulatory Activity Completed
2023 Regulatory Activity Completed As of August 7, 2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio Water Rate Case $1,569 Indiana Wastewater Rate Case $134 Illinois Water Surcharge $1,352 Wastewater Surcharge $567 Virginia PUR-2022-00113 Wastewater Surch
Slide 29: Regulatory Activity Pending
Regulatory Activity Pending As of August 7, 2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio 22-1094-WW-AIR Water Rate Case $9,364 22-1096-ST-AIR Wastewater Rate Case $452 Texas 53428 Water Surcharge $5,715 53428 Wastewater Surcharge $2,234 Kentucky 2022-
Slide 30: State by State Comparison
State by State Comparison As of December 31, 2022 Rate Base Water Wastewater Total Rate Base Gas State State ($000s) Connections Connections Customers ($000s) Connections PA $4,245,240 450,618 61,440 512,058 PA $2,737,318 702,862 IL $485,191 68,834 23,605 92,439 KY $139,217 40,533 OH $472,344 151,88
Slide 31: Maximizing Rate Base Growth Potential
Maximizing Rate Base Growth Potential Water Gas ($ in Billions) ($ in Billions) $7.2 $7.8 $6.4 $6.9 $3.4 $3.8 $4.2 $2.9 2022A 2023E 2024E 2025E 2022A 2023E 2024E 2025E “A” denotes Actual “E” denotes Estimate (1) Includes signed municipal water and wastewater acquisitions for which the company has en
Slide 32: Earnings Guidance
Earnings Guidance 2022 – 2025 Earnings Per Share 2023 annual earnings per share guidance of $1.85 to $1.90 $1.85 - $1.90 $1.77 2022A 2023E 2024E 2025E “A” denotes Actual “E” denotes Estimate 32
Slide 33: Strong Balance Sheet: Central to our Strategy
Strong Balance Sheet: Central to our Strategy Select Credit Metrics (2023P – 2025E) Debt/Total Issuer Issuance Issuer Issuance Capitalization A A- Baa2 Baa2 50 – 55% Dividend A A+ -- -- FFO/Net Debt Payout Ratio 12 – 14% 60 – 65% A A Baa1 Baa1 In order to maintain our credit metrics, achieve our 202