Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Q1 2020 Earnings Presentation
35 slides from Essential Utilities's earnings presentation, May 7, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
e NYSE: WTRG Se atereares Ineo _ First Quartaeeeas — SS Essential May 7, 2020 eee Providing natural
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Chief of Staff, Investor Relations, and Communications Essential
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: Agenda and speakers
NYSE: WTRG Chris Franklin – Company Update Dan Schuller – Financial Update Rick Fox – Operations Update Chris Franklin – Summary and Guidance Q&A
Slide 5: Company Overview
Company Overview Chris Franklin Chairman, Chief Executive Officer, and President
Slide 6: Corporate Highlights
Corporate Highlights Infrastructure Investment ($m) Q1 2019 Q1 2020 *Includes $53.5 million invested by Peoples, pre-closing NYSE: WTRG Essential. Peoples Transaction * Received Pennsylvania PUC Regulatory approval on January 16, 2020 * Closed the acquisition on March 16, 2020 and completed CPPIB’s
Slide 7: Essential States map
NYSE: WTRG Legend: Enacted FMV Essential States
Slide 8: 2020 Water Segment Acquisitions
NYSE: WTRG 2020 Water Segment Acquisitions “@ Essential. $100m of rate base acquired expected to generate ~$5m of incremental annual earnings potential? Closed Acquisitions Campbell OH Ww 3,100 $7,535 Since 2015 we have closed 57 total deals (includes Total 3,100 $7,535 investor-owned ies and munici
Slide 9: Essential COVID-19 Actions
Essential COVID-19 Actions x) Essential. * Activated task force in February to coordinate strategy and execution Following Federal and local guidelines to ensure health and safety Communicating with all stakeholders on a frequent basis For Employees: * Working remotely where possible since March 16t
Slide 10: Financial Overview
Financial Overview Dan Schuller Executive Vice President, Chief Financial Officer 6 Essential.
Slide 11: First Quarter Highlights
NYSE: WTRG First Quarter Highlights 6 Essential. As of March 31, 2020 | | Favorable Change | Unfavorable Change ions except per share Q1 2020 Q1 2019 Variance In mi Revenue $255.6 $201.1 27.1% Operations and Maintenance Expense $106.6 $79.3 34.4% Net Income per Share (GAAP) $0.20 $0.09 122.2% Adjust
Slide 12: Operating Revenues Q1 2020 vs. Q1 2019
Operating Revenues Q1 2020 vs. Q1 2019 NYSE: WTRG % Essential. Change in Operating Revenues (thousands) $270,000 $250,000 $38,544 $230,000 $3,792 $210,000 $201,132 $190,000 $170,000 $150,000 Revenue Q1 2019 Peoples Rates & Water and Revenue Surcharges Wastewater Growth $270 $255,585 Other $(1,121) V
Slide 13: Operations & Maintenance Expenses Q1 2020 vs. Q1 2019
Operations & Maintenance Expenses Q1 2020 vs. Q1 2019 % Essential. NYSE: WTRG Change in Operations & Maintenance Expenses (thousands) $110,000 $1,488 oo ee $8,823 — ~~ $(246) $100,000 $18,751 | $90,000 $80,000 $79,314 $70,000 $60,000 $0,000 —_—_—_—— O&M Q1 2019 Peoples Peoples Regulated Employee Pro
Slide 14: Earnings per Common Share Q1 2020 vs. Q1 2019
NYSE: WTRG Earnings per Common Share i Essential. Q1 2020 vs. Q1 2019 Change in Earnings Per Share $0.037 $0.60 $0.60 0002), $0.291 $(0.003) $(0.001) rr $0.50 $(0.082) $0.40 $0.30 $0.184 $0.28 0.20 $0.20 $0. $(0.317) $0.10 uS0.09 $- EPS Peoples Adjusted Growth ** Rates & Volume Other Adjusted People
Slide 15: Rate Activity
NYSE: WTRG Rate Activity ‘@ Essential. As of 5/6/2020 °° * Water base rate cases or surcharges in IL, VA, OH, and NC with 2020 Completed Rate annualized revenue increase of $5.2 million Cases and Surcharges * Gas surcharges in KY and PA with annualized revenue increase of $977,000 Asai sfieias * Wat
Slide 16: Completed Completed Planned
NYSE: WTRG Completed • • • • • • • • • • • • • • • • • • • • Completed Planned NYSE: WTRG
Slide 17: Customers and revenue by class
NYSE: WTRG Residential 822,817 80.1% $ 521,972 58.7% Residential 685,624 91.8% $ 624,245 68.7% Commercial 41,892 4.1% $ 145,581 16.4% Commercial 59,471 8.0% $ 180,822 19.9% Industrial 1,339 0.1% $ 30,667 3.4% Industrial 1,454 0.2% $ 57,245 6.3% Public 9,110 0.9% $ 13,251 1.5% Other - 0.0% $ 46,341 5
Slide 18: Operations Overview
Operations Overview y Rick Fox Executive Vice President, Chief Operating Officer 6 Essential.
Slide 19: COVID-19: Keeping Workers Safe
COVID-19 Keeping Workers Safe - Limiting Employee-to-Employee Exposure @ Essential. Home Start - Wherever possible Staggered Shop/Field Office/Plant Report Times - O&M and Construction crews Avoid Entering Shops/Field Offices * Work orders provided by supervisors at vehicles, via lap-tops/tablets or
Slide 20: COVID-19 Update - Essential Work - Field Operations
COVID-19 Update - “Essential Work” - Field Operations Gas Operations *O & M-Leak repairs, corrosion, damage prevention, GM&R, compressor & storage operations * Emergency Premise Work Inside and Grade 1 Leaks * No gas/low pressure * CO Investigations * Compliance — Leak surveys, inspections (critical
Slide 21: Gas Pipeline Safety Initiatives
Gas Operations - Gas Pipeline Safety Initiatives Over Pressure Protection/Gas Safety Self Review - Black & Veatch Report (Issued May 4, 2020) Findings & Recommendations *Validation of Peoples Planned OPP Mitigation Steps (Immediate and Long-Term) * Hydraulic Modeling of LP Systems — Strategic placem
Slide 22: Summary and Guidance
Summary and Guidance y Chris Franklin Chairman, Chief Executive Officer, and President
Slide 23: What have we learned from COVID-19?
What have we learned from COVID-19? x) Essential. * Strong management team able to coordinate and react under unique circumstances * Remain on track to accomplish capital budget * Ability to have 1/3 of work force productive and effectively work from home *Remote call centers *Underscores value of i
Slide 24: Guidance
Guidance NYSE: WTRG % Essential. Rate Base Customer Growth + Adjusted income of $1.53 to $1.58 per share for 2020 + 3 year earnings growth CAGR 5-7% for 2019 through 2022 * Regulated water segment infrastructure investments of approximately $550 million in 2020 * Regulated natural gas segment infras
Slide 25: Questions?
NYSE: WTRG Questions? Essential.
Slide 26: Thank You for Attending
NYSE: WTRG Thank You for Attending Essential’s First Quarter 2020 Conference Call
Slide 27: For more information contact
For more information contact: Essential. ee Providing natural resources for life. Brian Dingerdissen Vice President, Chief of Staff, Investor Relations and Communications 610.645.1191 BJDingerdissen@Essential.co NYSE: WTRG Renee Marquis Director, Investor Relations 610.645.1021 RTMarquis@Essential.c
Slide 28: Appendix
NYSE: WTRG Appendix
Slide 29: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (In thousands, except per share amounts) Net income (GAAP financial measure) Adjustments: Plus: Transaction-related expenses for the Peoples transaction closed on March 16, 2020 Plus: Adjustments to provide full-year 2020 run rate of Peoples operating results, includi
Slide 30: 2020 Rates and Surcharges Completed
NYSE: WTRG 2020 Rates and Surcharges Completed é Essential. As of May 6, 2020 —_ Awarded Annualized Docket Number Segment Revenue Increase ($thousands) Illinois N/A Water Surcharge $2,902 N/A Wastewater Surcharge $369 Virginia PUR-2019-00209 Water Surcharge $137 PUR-2019-00209 Wastewater Surcharge $
Slide 31: Rates and Surcharges Pending
Rates and Surcharges Pending As of May 6, 2020 NYSE: WTRG @ Essential. Docket Number Segment Requested Annualized Revenue Increase ($thousands) Indiana 45314U 45308 U New Jersey 'WR20010056 North Carolina W-218, Sub 526 W-218, Sub 526 Ohio 20-0532-WW-SIC Water Wastewater Wastewater Water Wastewater
Slide 32: State by State Comparison
NYSE: WTRG State by State Comparison i Essential. AQUA. @ PEOPLES Rate Base Water Wastewater Total State State Rate Base Gas ($000s) Connections Connections Customers ($000s) Connections PA 3,428,271 443,152 38,208 481,360 PA 2,133,506 694,737 OH 343,602 146,483 6,922 153,405 KY 119,510 38,967 IL 35
Slide 33: GAAP Adjusted Proforma
NYSE: WTRG GAAP Adjusted Proforma • • • • • • • • •
Slide 34: Approximate Net Income by Quarter
NYSE: WTRG Approximate Net Income by Quarter ¢ Essential. Overview Based on proforma projections, we expect 65% to 75% of net income in a given year will be earned in the first and fourth quarters. Percentage of annual net income 34
Slide 35: Diluted Shares Outstanding
Diluted Shares Outstanding (Millions) NYSE: WTRG % Essential. We’re committed to providing clarity around share count in our EPS calculations. 300 280 260 240 220 200 180 160 140 120 100 178.8 WTRG Shares Outsanding Prior to Transaction 37.4 Shares from April 2019 Equity Issuance 16.9 TEUs (as- conv