Slide 1: Earnings Call Full Year 2018
Earnings Call Full Year 2018 February 19, 2019
Slide 2: Forward Looking Statement
Forward Looking Statement Brian Dingerdissen Vice President, Chief of Staff and Investor Relations AQUA NYSE: WTR 6
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: Introduction
Introduction Chris Franklin Chairman, Chief Executive Officer and President AQUA NYSE: WTR 6
Slide 5: 2018 Highlights
2018 Highlights Adjusted income in line with guidance, excluding costs related to Peoples transaction = PA rate case filed * Strong municipal growth momentum, reaching 1 million water customers " Fair Market Value passed in North Carolina and Ohio * Record safety and compliance * Record infrastructu
Slide 6: Growth in Income from Continuing Operations per Share
Growth in Income from Continuing Operations s13s $1.40 $1.32 Sh $1.26 per Share $1.20 $1.20 $1.15 $1.10 $1.08 $1.00 $0.90 $0.80 $0.70 $0.60 2013 2014 2015 6 2016 2017 2018 6 Income from Continuing Operations per Share (diluted) $1.50 $1.41 6 2015: Income from Continuing Operations adjusted for joint
Slide 7: Aqua Files PA Rate Case Settlement
Aqua Files PA Rate Case Settlement First rate case since 2011 filing * Included more than $2 billion of investment " Incorporates more than 20 new acquisitions " Filed settlement on Feb. 8, awaiting approval by administrative law judges and PA PUC * Settlement includes rates designed to add approxim
Slide 8: Momentum Continues in Municipal Acquisitions
A Momentum Continues in Municipal Acquisitions UA
Slide 9: Six of Aqua's States Have Fair Market Value Legislation
Six of Aqua’s States Have Fair Market Value Legislation
Slide 10: Water Compliance Trend and Lost Time Incident Rate
Water Compliance Trend 10 9 Lost Time Incident rate (# per 100 workers) 8 6.9 Restricted & Transfer 7 6.0 6 5.7 Other Recordables 5 4.1 4 3.5 3 2 1 0 '14 '15 '16 '17 '18 Since 2003 in southeastern PA water quality service orders are down 53% and main breaks are down 60% to eight per 100 miles. 10
Slide 11: Record Investment in Infrastructure
A Record Investment in Infrastructure UA
Slide 12: Inaugural CSR Report and CDP Survey
Providing and protecting earth’s most essential resource October 2018 Inaugural CSR Report January 2019 CDP Survey
Slide 13: Summary of Financial Results
Summary of Financial Results Dan Schuller Executive Vice President, CFO AQUA NYSE: WTR 6
Slide 14: 2018 Full Year Highlights
2018 Full Year Highlights In millions 2018 2017 Variance except per share Revenue $838.1 A $809.5 3.5% Operations and Maintenance | $3085 | A | $2823 | 9.3% Expense Favorable Change Net Income 9 a g GAAP) si920 | W | $239.7 | (19.9%) BH Unfavorable Change Net Income 5 per Share (GAAP) $1.08 v $1.35
Slide 15: Operating Revenues FY 2018 vs. FY 2017
Operating Revenues FY 2018 vs. FY 2017 nge in Operating Revenues (thousands) $6,633 $2,508 ($1,208) $838,091 — $20,633 TY $820,000 $809,525 a $800,000 $860,000 $840,000 $780,000 $760,000 $740,000 $720,000 $700,000 Revenue FY 2017 Rates & Regulated Other Market Based Revenue FY 2018 Surcharges Growth
Slide 16: Operations & Maintenance Expenses FY 2018 vs. FY 2017
Operations & Maintenance Expenses FY 2018 vs. FY 2017 $320,000 $300,000 $280,000 $260,000 $240,000 $220,000 $200,000 AQUA nge in Operations & Maintenance Expenses (thousands) 564 4,254 $1,363 s $308,478 $8,301 $4 — ” 7 $14,184 | $282,253 ($2,441) a | et O&M FY Market ‘Transaction Employee Other Regu
Slide 17: Earnings per Common Share FY 2018 vs. FY 2017
Earnings per Common Share FY 2018 vs. FY 2017 nge in Earnings Per Share 1.55 . $0.021 —_($0.040) $0.104 $0.02 — = $141 ($0.265) gigs | $1.35 || SUS ‘= a $1.08 $0.95 $0.75 $0.55 $0.35 EPS FY 2017 Rate cases and Regulated Growth Other Expenses MBA& Other Adjusted Income Mark-to-Market Transaction EPS
Slide 18: Completed Rate Cases and Surcharges
As of 12/31/2018 • Completed Rate Cases and Surcharges •
Slide 19: Completed Rate Cases and Surcharges
As of 2/18/2019 Completed • Rate Cases and Surcharges As of 2/18/2019 • Pending Rate Cases and • Surcharges
Slide 20: Growth
Growth Matt Rhodes Executive Vice President, Strategy & Corporate Development AQUA NYSE: WTR 4
Slide 21: 2018 Closed Municipal Acquisitions
2018 Closed Municipal Acquisitions As of Dec. 31, 2018 Approximate Rate Acquisitions State Type Total Customers Base (Sthousands) Manteno IL Www 3,890 $25,200 Limerick PA Www 5,497 $64,100 Peotone IL w/Www 3,083 $12,500 East Bradford PA Ww 1,240 $5,000 Total 13,710 $106,800 Listed in chronological o
Slide 22: Signed Municipal Agreements
Signed Municipal Agreements As of Feb. 18, 2019 Approx. # of Approx. Purchase Acquisition State Type Customers Price (SO00s) New Garden PA ww 2,106 $29,500 Schuylkill PA WwW 600 $3,600 Grant Park IL Www 540 $2,300 Cheltenham PA ww 10,450 $50,250 Skyline IL wW/WW 752 $3,550 East Norriton PA ww 4,952
Slide 23: Peoples Transaction Update
Peoples Transaction Update Matt Rhodes Executive Vice President, Strategy & Corporate Development AQUA NYSE: WTR 6
Slide 24: A regulated natural gas distributor with over 740,000 total customers
A regulated natural gas distributor with over 740,000 total customers. • • • • • • • • • • 24
Slide 25: Peoples Pennsylvania Rate Case
Peoples Pennsylvania Rate Case Filed by Peoples Natural Gas, LLC on January 28, 2019 Supports the largest infrastructure initiative in company history First rate case filed by Peoples Natural Gas since 2012 Requests $94.9 million base rate increase Recovery of infrastructure replacement and ongoing
Slide 26: Capital Expenditures
Peoples’ Distribution System Material (Miles) 7,448 8,000 (>99.9% plastic) PA WV KY 6,000 LTIIP-approved replacement Can be included in LTIIP as “at-risk” assets 4,107 4,000 3,064 2,000 92 525 131 0 Cast Iron Bare Unprotected Steel Bare Cathodically Coated Unprotected Coated Cathodically Plastic, Co
Slide 27: Overview of Financing Plan
Overview of Financing Plan Acquisition Financing Strategy Fully committed acquisition bridge facility Current standalone Aqua FFO / Debt of 14% to 15% will remain strong for a fully regulated company following the acquisition at 12% to 13% Permanent financing plan targets a strong balance sheet and
Slide 28: Key Milestones
Key Milestones v Public Announcement v Bridge Financing Secured v Regulatory Filings Completed J Equity Offering _) Debt Financing “) State PUC Approvals Expected Closing Mid-2019 AQUA. NYSE: WTR 6
Slide 29: Guidance
Guidance Chris Franklin Chairman, Chief Executive Officer and President AQU A NYSE: WTR 6
Slide 30: 2019 Aqua Stand-Alone Guidance
2019 Aqua Stand-Alone Guidance Excluding Peoples transaction-related items and earnings impacts from Peoples post-closing » Adjusted income of $1.45 to $1.50 per share * Infrastructure investments of approximately $550 million in 2019 for communities served by Aqua * Infrastructure investments of ap
Slide 31: Q&A Session
O&A Session Aqua America
Slide 32: Thank You for Attending Aqua's Full Year 2018 Conference Call
Thank You for Attending Aqua’s Full Year 2018 Conference Call First Quarter 2019 Earnings Conference Call and Webcast Friday, May 3, 2019 For more information contact: Brian Dingerdissen Vice President, Chief of Staff and Investor Relations 610.645.1191 BJDingerdissen@AquaAmerica.com AQUA. NYSE: WTR
Slide 33: Aqua America
NYSE: WTR . ; _ Aqua America » , > r Abe.
Slide 34: Public Information Available on Peoples
Public Information Available on Peoples Publicly Available Information + Aqua America Press Release Announcing Peoples Acquisition + Aqua America Peoples Acquisition Investor Presentation and Call Transcript + Aqua America Q3 18 Earnings Presentation and Call Transcript * 2017 Annual Gas LDC Filing
Slide 35: 2018 Closed Acquisitions
2018 Closed Acquisitions As of December 31, 2018 Approximate Number of Acquisition State Transaction Customers Rate Base ($000s) Sun Valley PA Private Ww 81 $5 Firestone Trace OH Private W/WW 367 $186 Manteno IL Municipal Www 3,890 $25,200 Limerick PA Municipal Www 5,497 $64,100 Peotone IL Municipal
Slide 36: Fourth Quarter Highlights
Fourth Quarter Highlights As of Dec. 31, 2018 Favorable Change BH Unfavorable Change AQUA In millions . except per share Q4 2018 Q4 2017 ~=~Variance Revenue $205.7 | A | $203.3 1.2% Operations and Maintenance $92.4 A | $78.0 18.4% Expense Net Income (loss) 9 (GAAP) ($3.7) Vv $53.5 (106.8%) Net Incom
Slide 37: Operating Revenues Q4 2018 vs. Q4 2017
Operating Revenues Q4 2018 vs. Q4 2017 Change in Operating Revenues (thousands) $988 ($5,141) $210,000 $4,660 a iz $205,747 $205,000 $203,312 |_| $200,000 $215,000 $195,000 $190,000 $185,000 $180,000 $175,000 Revenue Q4 2017 Rates & Surcharges Regulated Growth Other Consumption Revenue Q4 2018 AQUA
Slide 38: Operations & Maintenance Expenses Q4 2018 vs. Q4 2017
Operations & Maintenance Expenses Q4 2018 vs. Q4 2017 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 AQUA Change in Operations & Maintenance Expenses (thousands) $14,184 $622 $231 $124 $92,393 $78,004 —«($574) ($198) O&M Q4 2017 Other Employee Transaction Regulated Production Market Based
Slide 39: Earnings per Common Share Q4 2018 vs. Q4 2017
Earnings per Common Share Q4 2018 vs. Q4 2017 $0.38 $0.33 $0.28 $0.23 $0.18 $0.13 $0.08 $0.03 -$0.02 AQUA nge in Earnings Per Share $0,005 $0.005 — $0.004 02) $0.019 — $0.31 ($0.265) $0.30 || | ($0.065) ($0.02) | EPS Q42017 = Ratecasesand Other Expenses Regulated Market Based Consumption Adjusted In
Slide 40: 2018 Rates and Surcharges Completed
2018 Rates and Surcharges Completed As of December 31, 2018 Awarded Annualized Revenue Increase (Sthousands) Docket Number AQUA Rates and Surcharges differentiated by water (w) and wastewater (ww) systems *Revenue increase was zero primarily because the adjustment for the Tax Cuts and Jobs Act offse
Slide 41: 2019 Rates and Surcharges Completed
2019 Rates and Surcharges Completed As of February 18, 2019 Awarded Annualized Revenue proeiicee Kemal Increase ($thousands) Illinois N/A Surcharge (w) $1,118 Ohio 89-7028-WW-TRF Rate Cases (w) $974 18-0337-WW-SIC Surcharge (w) $2,267 Pennsylvania M-2018-3006585 Surcharges (w) So M-2018-3006634 Surc
Slide 42: 2019 Rates and Surcharges Pending
2019 Rates and Surcharges Pending As of February 18, 2019 Requested Annualized Docket Number Revenue Increase (Sthousands) New Jersey WRT18121351 Rate Case (w) $7,202 : 18-1843-WW-UNC & 18- Tax Compliance Ohio 1841-ST-UNC Surcharge ($3,917) Pennsylvania R-2018-3003558 Rate Case (w) $58,299 R-2018-30
Slide 43: Dividend per Share (annualized)
Dividend per Share (annualized)
Slide 44: Water & Wastewater Regulatory Trends
Water & Wastewater Regulatory Trends 4/30/13 7. IN Forward THs anata Test Year 6/6/13 13. IN DSIC Increase to 10% 8.NC W&WW 1. PA WW DSIC DsIC 3/22/16 Ione 2. Forward Test Year 14. IN Expands FMV 3. WW Consolidation Vv4/g9 ae cai 20. Ohio Fair Marke alr 6/13/16 Market arket 15. PA Fair Value Value M
Slide 45: State by State Comparison
State by State Comparison As of December 31, 2018 State Rate Base Water Wastewater Total (Smillions) Connections Connections Customers PA 3,096,255 440,487 28,115 468,602 OH 317,168 145,938 6,878 152,816 IL 320,002 65,214 15,222 80,436 T™ 234,569 64,360 17,480 81,840 NJ 171,113 53,639 6,213 59,852 N
Slide 46: Infrastructure Capital Investment Breakdown 2019 - 2021
| nfra st ru ct ure Capital Investment Breakdown 2019 - 2021 Investment 1.5%% Meters Regulated Operations 3.8% Mains & Services Source Treatment & 49.3% Facilities 36.0% Tanks & Boosters 3.7% ] 3 Year Total = $1.4 billion AQU A NYSE: WTR 4
Slide 47: PA Rate Case Summary
PA Rate Case Summary June 2012: Rates went into effect November 2011: Aqua PA filed its 2011 Rate Case AQUA January 2013: DSIC Reduced to 0% @ October 2012: Implemented Repair Deduction 2013 - 2016 October 2017: Re-implemented DSIC August 2018: Feb 2019: Filed Rate Case Settlement Filed May 2019: Ra
Slide 48: PA Rate Case Summary
PA Rate Case Summary Timeframe: y PA CAPX ear ($000’s) * Filed: August 2018 2012 $129,923 * Settlement filed: February 2019 2013 $212,721 * Rates expected to take effect: May 2019 Case Summary/Issues: 2014 $214,155 ¢ First case filed in 7 years 2015 $248,354 * Over $2 billion of capital 2016 $251,37