Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Aqua America — Q3 2019 Earnings Presentation
36 slides from Essential Utilities's earnings presentation, Nov 5, 2019
Slide 1: Third Quarter 2019 Earnings
"i N "OS ok I ie ys | iia | = “2 ‘ Earnings ean =, = oe x = a a Teck Quarter 2019 = November 5, 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 upon, among other things, our current assumptions, expectations, plans and beliefs concerning future events and their potential effect on us. These forward-looking statements
Slide 4: Welcome
Welcome Renee Marquis Director, Investor Relations AQU A NYSE: WTR 6
Slide 5: Introduction
Introduction Chris Franklin Chairman, Chief Executive Officer and President AQUA NYSE: WTR }
Slide 6: Agenda
Y Agenda L} Corporate Highlights L}] Peoples Transaction Update i] Summary of Financial Results UL) Municipal Growth L) 2019 Guidance L] Questions deploy AQU A NYSE: WTR 6
Slide 7: Revenue Growth and EPS Growth
Revenue Growth • • EPS Growth • • •
Slide 8: Oct. Nov. Dec.
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Oct. ✓ ✓ ✓ ✓ ✓ 8
Slide 9: Summary of Financial Results
Summary of Financial Results Dan Schuller Executive Vice President and Chief Financial Officer | AQUA NYSE: WTR é
Slide 10: Third Quarter Highlights
Third Quarter Highlights As of September 30, 2019 Favorable Change BH Unfavorable Change AQUA In millions except per share Q3 2019 Q3 2018 Variance Revenue $243.6 | A | $2261 7.7% Operations and Maintenance $82.0 A | $686 19.5% Expense Net Income 9 (GAAP) $88.5 A | $782 13.1% Net Income 6 per Share
Slide 11: Operating Revenues
Operating Revenues Q3 2019 vs. Q3 2018 $260,000 nge in Operating Revenues (thousands) $250,000 $429 615,375 $1,901 ($216) $243,626 ; $240,000 $230,000 $226,137 $220,000 $210,000 $200,000 $190,000 $180,000 Revenue Q3 2018 Rates & Growth Volume Other Revenue Q3 2019 Surcharges AQUA NYSE: WTR 4
Slide 12: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q3 2019 vs. Q3 2018 Change in Operations & Maintenance Expenses (thousands) $90,000 $85,000 $2,053 $684 $82,022 $2,353 $80,000 $2,496 | | $75,000 $5,812 || $70,000 $68,624 $65,000 $60,000 $55,000 $50,000 O&M Q3 2018 = 2018 Nonrecurring Peoples Other Employee-Related
Slide 13: Earnings per Common Share
Earnings per Common Share Q3 2019 vs. Q3 2018 ge in Earnings Per Share $0.017 $0.005 $0.002 —-($0.046) $0.064 — — 50.48 $0.50 || | (0078) ($0.024) $0.38 $0.40 | $0.30 $0.20 $0.10 $0.00 EPS Q3 2018 Rates & Other Growth Volume Expenses Adjusted Dilutive Effect Peoples EPS Q3 2019 A U A Surcharges Inco
Slide 14: Pending Rate Cases and Surcharges
As of 11/4/2019 Completed Rate • Cases and Surcharges As of 7/16/2019 As of 11/4/2019 Pending • Pending • Rate Rate Cases and Cases and • Surcharges Surcharges
Slide 15: Peoples PA Rate Case Settlement
Peoples PA Rate Case Settlement * Fully-projected future test year ending Oct-2020 * Peoples’ first rate case since 2012 filing Authorized | ase * Supports the largest infrastructure initiative in the Commentary company’s history + Represents consolidation of Peoples and Equitable divisions $59.5m i
Slide 16: Municipal Growth
Municipal Growth Matt Rhodes Executive Vice President, Strategy and Corporate Development AQUA NYSE: WTR 6
Slide 17: DELCORA Overview
DELCORA Overview Aqua signed an Asset Purchase Agreement (APA) wit! he Delaware County Regional Water Quality Control Authority (DELCORA) to acquire the municipal Authority’s wastewater (WW) assets for $276.5M. DELCQRA Situation Overview + DELCORA provides WW services to 42 municipalities and ~500,0
Slide 18: Aqua Area DELCORA/Aqua Partnership
Aqua Area DELCORA/Aqua Partnership DELCORA Area Legend
Slide 19: Pending Acquisitions and Purchase Prices
Approx. Purchase Price Acquisition State Type Total Customers ($000s) New Garden PA WW 2,106 $29,500 Schuylkill3 PA W 600 $3,600 Grant Park IL WW 540 $2,300 Cheltenham3 PA WW 10,450 $50,250 Skyline IL W/WW 752 $3,550 East Norriton PA WW 4,952 $21,000 Campbell OH W 3,200 $7,500 DELCORA PA WW 165,0001
Slide 20: Size Range of Customers
Size Range Total Customers (Approx. # of Customers) (approx.) >25,000 160,000 10,000 – 25,000 45,000 <10,000 70,000 Total 275,000
Slide 21: Guidance
Guidance Chris Franklin Chairman, Chief Executive Officer and President AQU A NYSE: WTR 6
Slide 22: 2019 Guidance
• • • • • • *Excluding Peoples transaction-related items, the effect of the April 2019 offerings of common equity and tangible equity units on earnings per share and earnings impacts from Peoples post-closing
Slide 23: Q&A Session
Q&A Session Aqua America
Slide 24: Thank You for Attending Aqua's Third Quarter 2019 Conference Call
A UA Thank You for Attending Aqua’s Third Quarter 2019 Conference Call For more information contact: Brian Dingerdissen Vice President, Chief of Staff and Investor Relations 610.645.1191 BJDingerdissen@AquaAmerica.com
Slide 25: Appendix
Appendix Aqua America
Slide 26: Non-GAAP Reconciliation
(In thousands, except per share amounts) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 2019 2018 2019 2018 Net income (GAAP financial measure) $ 88,489 $ 78,216 $ 160,316 $ 195,645 Adjustments: Plus: transaction-related expenses for the Peoples transaction 3,367 - 65,453 - Plus: pre-acquisitio
Slide 27: Year-to-date Highlights
Year-to-date Highlights As of September 30, 2019 Favorable Change BH Unfavorable Change AQUA In millions YTD 2019 YTD 2018 Variance except per share Revenue $663.7 | A | $6323 5.0% Operations and Maintenance $247.8 A $216.1 14.7% Expense Net Income $1603 | W] si956 | (18.1%) (GAAP) . : . Net Income
Slide 28: Operating Revenues YTD
Operating Revenues YTD September 30, 2019 vs. YTD September 30, 2018 Change in Operating Revenues (thousands) $700,000 $680,000 $9,964 ($47) ( $2,957) $663,650 $660,000 $24,346 |_| $640,000 $632,344 $620,000 $600,000 $580,000 $560,000 $540,000 $520,000 $500,000 Revenue YTD 2018 Rates & Growth Other
Slide 29: Operations & Maintenance Expenses YTD
Operations & Maintenance Expenses YTD September 30, 2019 vs. YTD September 30, 2018 Change in Operations & Maintenance Expenses (thousands) $260,000 $3,017 $2,265 $674 ($2,243) $247,781 6,097 — $21,886 | | $240,000 |_| $220,000 $216,085 $200,000 $180,000 $160,000 $140,000 O&M YTD 2018 Peoples 2018 G
Slide 30: Earnings per Common Share YTD
Earnings per Common Share YTD September 30, 2019 vs. YTD September 30, 2018 Change in Earnings Per Share 0.042) ( $0.040) .012 ) 0.103: $0.027 | mm (80.0 $120 s — — 1.13 . $1.10 || $ ($0.202 ) $1.00 ($0.105 ) ($0.062 ) $0.80 $0.60 $0.40 $0.20 $0.00 EPS YTD 2018 = Rates & Growth Other Expenses Volume
Slide 31: Aqua 2019 Rates and Surcharges Completed
Aqua 2019 Rates and Surcharges Completed As of Nov. 4, 2019 Awarded Annualized Docket Number Revenue Increase (Sthousands) Illinois N/A Surcharge (w) $1,394 N/A Surcharge (ww) $268 New Jersey WRT18121351 Rate Case (w) $5,000 North Carolina W-218, Sub 497A Surcharge (w) $538 W-218, Sub 497A Surcharge
Slide 32: Aqua 2019 Rates and Surcharges Pending
Aqua 2019 Rates and Surcharges Pending As of Nov. 4, 2019 Requested Annualized Docket Number Revenue Increase ($thousands) 18-1843-WW-UNC & 18- Tax Compliance ($3,917) Ohio 1841-ST-UNC Surcharge (w/ww)* Indiana 45308 Rate Case (ww) $10 45314 U Rate Case (w) $53 ($3,854) A U A Note: Rates and Surchar
Slide 33: State by State Comparison
State by State Comparison As of December 31, 2018 State Rate Base Water Wastewater Total (Sthousands) Connections Connections Customers PA 3,095,126 440,487 28,109 468,596 OH 317,168 145,938 6,878 152,816 IL 320,002 65,241 15,222 80,463 T™ 234,569 64,360 17,480 81,840 NJ 171,113 53,639 6,213 59,852
Slide 34: Infrastructure Capital Investment Breakdown 2019 - 2021
| nfra st ru ct ure Capital Investment Breakdown 2019 - 2021 Investment 15% 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 35: Seven of Aqua's States Have Fair Market Value Legislation
History of successful collaboration with legislatures and regulators to implement constructive regulatory mechanisms and introduce Fair Market Value legislation Aug-2018 Apr-2013 Jul-2015 20. IL Re-enacted 7. IN Forward Test 13. IN DSIC Increase to 10% Fair Market Value Feb-2012 Year Jun-2013 Dec-20
Slide 36: Aqua and Peoples' Commitment to Safety and Sustainability
Aqua and Peoples’ Commitment to Safety and Sustainability • Issued inaugural Corporate Social Responsibility Report in Aqua Southeastern Pennsylvania Main Break Averages 2018 40 • Participated in Carbon Disclosure Project (CDP) Survey and Aqua Southeastern Pennsylvania break rates 35 received a stro