Slide 1: Second Quarter 2020
e NYSE: WTRG Se atereares Ineo _ ee 5 ca — “Second Quarter 2020 a Essential August 6, 2020
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: Call agenda
NYSE: WTRG Chris Franklin – Company Update Dan Schuller – Financial Results Matt Rhodes – Strategy and Corporate Development Update Chris Franklin – Summary and Guidance Q&A
Slide 5: Chris Franklin, Chairman, CEO and President
Company Update Chris Franklin Chairman, Chief Executive Officer, and President @ Essential.
Slide 6: Corporate Highlights
NYSE: WTRG Corporate Highlights Essential. Infrastructure Investment ($m) Q2 2019 Q2 2020 *Includes $53.5 million invested by Peoples, pre-closing Dividend Increased by 7.0% * Increased quarterly dividend to $0.2507 * 30t increase in the last 29 years + 75th consecutive year of dividend payments
Slide 7: Dividend Increase History
NYSE: WTRG Dividend Increase History ¢ ; 7.0% Increase to Annualized Dividend Rate Effective 9/1/2020 % Essential. Dividends Per Share (annualized) 7.2% weeneea=o-" ee Re cee $1.0028 ' $0.9372 $0.8188 $0.8760 *080 $0.7652 $0.6600 $0.7120 $0.60 $0.40 $0.20 $0.00 2014 2015 2016 2017 2018 2019 2020
Slide 8: Peoples Leadership Update
NYSE: WTRG Peoples Leadership Update Mike Turzai General Counsel, Peoples Mike Huwar Kim Mangano President, Peoples Edvardsson VP, Finance, Peoples 6 Essential.
Slide 9: Financial Results
Financial Results Dan Schuller Executive Vice President, Chief Financial Officer 6 Essential.
Slide 10: Second Quarter Highlights
NYSE: WTRG Second Quarter Highlights 6 Essential. As of June 30, 2020 In millions except per share Q2 2020 Q2 2019 Variance Revenue $384.5 A $218.9 75.6% Operations and Maintenance Expense $128.6 A $86.4 48.8% Net Income (GAAP) $74.6 A $54.9 35.9% Net Income per Share (GAAP) $0.29 $0.25 16.0%
Slide 11: Operating Revenues Q2 2020 vs. Q2 2019
NYSE: WTRG Operating Revenues 6 Essential. Q2 2020 vs. Q2 2019 Change in Operating Revenues (thousands) $400,000 $ $5,165 3,661 $384,468 $7,584 s — $149,637 = $471) $350,000 $300,000 $250,000 $218,892 $200,000 $150,000 rl rl Revenue Q2 2019 Peoples Rates & Volume Water and Other Revenue Q2 2020 Reve
Slide 12: NYSE: WTRG
NYSE: WTRG +10% -16% -11% -18% -21% +22%
Slide 13: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q2 2020 vs. Q2 2019 Change in Operations & Maintenance Expenses (thousands) $150,000 $140,000 $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $86,445 O&M Q2 2019 $52,757 Peoples O&M $1,613 Employee-Related Costs $838 Growth $215 $(12,744)
Slide 14: Earnings per Common Share
NYSE: WTRG Earnings per Common Share 6 Essential. Q2 2020 vs. Q2 2019 Change in Earnings Per Share EPS Q2 2019 (GAAP) Peoples Transaction Costs . $0.002 $0.022 $0.014 ___$0.002__ $0.036 = $0.29 $(0.101) Growth, Net of Rates & Volume Expenses Other EPS Dilutive Effect from Surcharges Q2 2020 Equity O
Slide 15: Approximate Net Income by Quarter
NYSE: WTRG Approximate Net Income by Quarter ¢ Essential. 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 15
Slide 16: Rate Activity
NYSE: WTRG Rate Activity ‘@ Essential. As of 8/5/2020 . * Water segment base rate cases or surcharges in IL, IN, NC, OH, 2020 Completed Rate VA, and PA with annualized revenue increase of $10.2 million SHEGES GIC SEDEAEV EEE * Gas segment surcharges in KY and PA with annualized revenue increase of $
Slide 17: Strategy and Corporate Development
Strategy and Corporate Development Matt Rhodes Executive Vice President, Strategy and Corporate Development @ Essential.
Slide 18: Growth Strategy
Growth Strategy * Driver of growing our foundational Municipal water/wastewater business Initiative * Our primary focus today * Infrastructure Investment (pipes, plants, etc.) * Regulatory Affairs * Operational Excellence
Slide 19: Legend: Essential States
NYSE: WTRG Legend: Enacted FMV Essential States
Slide 20: 2020 Water Segment Acquisitions
NYSE: WTRG 2020 Water Segment Acquisitions “@ Essential. Closed Municipal Acquisitions Since 2015 we have closed 58 total deals (includes investor- ___owned utilities and Campbell OH w 3,100 $7,535 municipalities). These contributed approximately 53,0001 new East Norriton PA WW 4,966 $20,750 connect
Slide 21: Current Water Segment Municipal Transaction Opportunities
NYSE: WTRG Current Water Segment Municipal Transaction Opportunities ‘@Essential Size Range Total Customers We are actively pursuing acquisition opportunities in most of our states, totaling approximately 365,000 customers. While we do not expect to close >25,000 120,000 all of these opportunities,
Slide 22: Pittsburgh International Airport New Generation Microgrid
Pittsburgh International Airport Pittsburgh International Airport is . . : building a first-of-its-kind microgrid New Generation Microgrid powered by natural gas and solar, ensuring greater power reliability, enhancing public safety and creating cost efficiencies Community and Environmental Impact O
Slide 23: Summary and Guidance
Summary and Guidance y Chris Franklin Chairman, Chief Executive Officer, and President
Slide 24: Summary & Priorities
NYSE: WTRG Summary & 6 Essential. Priorities - Dividend increased by 7%, our 29" consecutive year of increases - On track to spend $950M on infrastructure improvements in 2020 - Filed the Tax Repair Catch-up with the Pennsylvania PUC - Continue operational excellence (water quality, gas safety, etc.
Slide 25: Guidance
NYSE: WTRG Guidance % Essential. + 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 infrastructure investments of ap
Slide 26: Questions?
NYSE: WTRG Questions? Essential.
Slide 27: Thank You for Attending
NYSE: WTRG Thank You for Attending Essential’s Second Quarter 2020 Conference Call
Slide 28: 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 29: Appendix
NYSE: WTRG Appendix
Slide 30: GAAP to Non-GAAP Reconciliation
NYSE: WTRG GAAP to Non-GAAP Reconciliation ¢ Essential. (In thousands, except per share amounts) —_ Quarter Ended June 30, Six Months Ended June 30, Net income (GAAP financial measure) $ 74,629 $ 54,903 $ 126,410 $71,827 Adjustments: Plus: Transaction-related expenses for the Peoples transaction clo
Slide 31: Year to Date Highlights
NYSE: WTRG Year to Date Highlights 6 Essential. As of June 30, 2020 In millions except per share YTD 2020 YTD 2019 Variance Revenue $640.1 A $420.0 52.4% Operations and Maintenance Expense $235.2 A $165.8 41.9% Net Income (GAAP) $126.4 A $71.8 76.0% Net Income per Share (GAAP) $0.50 A $0.36 38.9% Ad
Slide 32: Operating Revenues YTD
NYSE: WTRG Operating Revenues 6 Essential. YTD June 30, 2020 vs. YTD June 30, 2019 Change in Operating Revenues (thousands) $650,000 $20,552 $7,453 $4,044 $640,053 $188,181 | —_— $(201) $600,000 $550,000 $500,000 $450,000 $420,024 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 — Revenue YTD 2
Slide 33: Operations & Maintenance Expenses YTD
Operations & Maintenance Expenses YTD June 30, 2020 vs. YTD June 30, 2019 NYSE: WTRG % Essential. Change in Operations & Maintenance Expenses (thousands) $250,000 $230,000 $210,000 $190,000 $170,000 $150,000 $130,000 $110,000 $90,000 $70,000 $50,000 $165,759 O&M YTD 2019 $6,007 — Peoples Transaction
Slide 34: Earnings per Common Share YTD
NYSE: WTRG Earnings per Common Share 6 Essential. YTD June 30, 2020 vs. YTD June 30, 2019 Change in Earnings Per Share ° “ $0.014 _$0.011 _$0.005 $1.00 $0058 —— <= $0.275 | a $0.90 $(0.119) $0.80 $0.283 _$0.009 —_$0.65 $0.60 $(0.318 ‘ y | $0.50 $(0.082) $0.40 $9.36 $0.20 $- EPS YTD 2019 (GAAP) Peopl
Slide 35: 2020 Rates and Surcharges Completed
NYSE: WTRG 2020 Rates and Surcharges Completed é Essential. As of August 5, 2020 Awarded Docket Number Segment Revenue ($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 $141 North Carolina W
Slide 36: Rates and Surcharges Pending
Rates and Surcharges Pending As of August 5, 2020 NYSE: WTRG @ Essential. Docket Number Segment Requested Annualized Revenue Increase New Jersey WR20010056 Virginia PUR-2020-00106 PUR-2020-00106 North Carolina W-218, Sub 526 W-218, Sub 526 Ohio 20-0532-WW-SIC Wastewater Water Wastewater Water Wastew
Slide 37: 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 38: 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 39: GAAP Adjusted Proforma
NYSE: WTRG GAAP Adjusted Proforma • • • • • • • • •