Slide 1: Earnings Call Full Year 2020
( Essential. °- UTILITIES EARNINGS CALL Full Year 2020 February 25, 2021
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Chief of Staff, Investor Relations, and Communications (6 Essential enesttOR| ~— uTLiTes
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: Investor Presentation
INVESTOR Essential , ‘presentation | 4 uTimies
Slide 5: Chris Franklin
Company Update Chris Franklin Chairman, Chief Executive Officer, and President y (6 Essential onestOR| ~— uTLiTes
Slide 6: Impact of 2021 Winter Weather
Impact of 2021 Winter Weather Winter Storm in Texas Pennsylvania Legacy System Break Averages 30 yn 2 + Activated our incident command € 2 fo} * The storm and resulting power fo) outages Impacted 2/3 of our Texas a 20 customer base oO Qa * Sent employees and resources to xv 15 V Texas to assist with
Slide 7: Infrastructure
Infrastructure Investment of Approximately $900M”” 2.0% Water Customer Growth Essential
Slide 8: Operational Excellence
Operational Excellence Met top end of stated earnings guidance range Executed over $900M capital investment program Implemented companywide PFAS strategy Completed safety review (Gas) All while supporting our employees, customers and communities during COVID INVESTOR Essential PRESENTATION | 8 um
Slide 9: Continued Successful Municipal Acquisition Program in 2020
Continued Successful Municipal Acquisition Program in 2020 Cumulative Additions of Customers Through Acquisitions Almost 87,000” Water and Wastewater Customers and $325 Million in Rate Base Acquired Through M&A Since 2015 2015. 2016 §=©2017) «2018 =. 2019 (@ Essential. TILITS 2020 2020 Closed Mun on
Slide 10: Pending Municipal Acquisitions
DELCORA Lower Makefield + Wastewater + Wastewater + 198,000 customers) * 11,000 customers + $276.5M purchase price + $53M purchase price Commons Water?) + Water + 980 customers + $4M purchase price Bourbonnais East Whiteland Willistown + Wastewater + Wastewater * 8,175 customers@) + 2,300 customers@
Slide 11: Active Municipal Opportunities
Active Municipal Opportunities Size Range We are actively pursuing acquisition (Approx. # of opportunities in most of our states, Customers) totaling approximately 375,000 customers. While we do not expect to close all of these opportunities, this illustrates the number of municipals we are evaluati
Slide 12: Financial Results
Financial Results 4 Essential ones uTLiTes
Slide 13: Q4 Financial Results
Q4 2019 Q4 2020 In millions except per share Revenues + Natural gas segment, including gas cost of $92.8M, was $240.6M + $18.9M in rate credits to natural gas customers in Q4 2020 $157.2 ns and Maintenance Expense O&M * New natural gas segment accounts for $72.6M * COVID related expenses account for
Slide 14: Full Year 2020 Financial Highlights
Full Year 2020 Financial Highligh As of December 31, 2020 In millions except per share FY 2019 FY 2020 Percent Change Revenue (GAAP) $889.7 $1,462.7 164.4% Adjusted Revenue (non-GAAP)* $889.7 $1,485.7 167.0% Operations and Maintenance Expense $333.1 $528.6 158.7% Net Income (GAAP) $224.5 $284.8 126.
Slide 15: Operating Revenues FY 2020 vs. FY 2019
Operating Revenues FY 2020 vs. FY 2019 hange in Operating Revenues (t ands) $29,415 $889,692 (Includes) $165.7M of gas costs and impact of $18.9M of rate credits.) Revenue FY 2019 Peoples Revenue Rates & Surcharges (@ Essential. TILITS $15,741 Volume $14,673 W & WW Growth ($4,080) Rate Credits ($3,6
Slide 16: 2020 Usage Trends
2020 Usage Trends Table : : COVID Due to COVID-19 and favorable weather, we have seen residential usage Moratorium increase by almost 6% in 2020 when compared to the same time last year, . while commercial usage has decreased by approximately 6% 4U T d Lift Q sage rends Texas 6/13/2020 ‘son * Usage
Slide 17: 2020 Heat Days
2020 Heat Days Weather drives natural gas consumption and revenue is impacted by heating degree days. Avg. Monthly Heating Degree Days by Year PA Residential Gas Consumption 2020 45% 33% 16% Qi Q3 a4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 —2016 —2017 —2018 —-2019 —=2020 Qe INVESTOR (@
Slide 18: Operations & Maintenance Expenses
Operations & Maintenance Expenses FY 2020 vs. FY 2019 Change in Operations & Maintenance Expense (thousands) $7,202 $6,291 $2,506 a $528,611 $199,851 $8,518 ($26,784) ($1,327) ($748) Includes $6M in bad debt expense and $1.5M in employee recognition. COVID- 19 related expenses $333,102 totaled ~$1.5
Slide 19: Earnings per Common Share
Earnings per Common Share FY 2020 vs. FY 2019 Change in Earnings Per Share ($0.311) $0.113 $1.47 sos "cen tax repait benefits, and D&A 031s) ($0.082) MM $1.12 $1.04 ($0.064) | | — 2 é& = ea = & fi F é¢ se £ é s é $ os & ¢ & < if s &s 3 ¢ é es & < é iy gs £8 iv ? fas é & ese oJ é & # s & (gessential
Slide 20: 2021 Priorities and Guidance
2021 Priorities and Guidance Chris Franklin Chairman, Chief Executive Officer, and President uTLTi INVESTOR PRESENTATION | 20
Slide 21: Operational Excellence
Operational Excellence Continue to keep employees safe and the company strong through the pandemic Execute a $1B capital program Continue progress on ESG program File Aqua Rate Cases in multiple states Essential INVESTOR PRESENTATION | 21 uTimies
Slide 22: 2021 Outlook: Capex, Rate Base, Customer Growth
. Customer (1) Earnings Capex Rate Base Growth ESG * Regulated water segment infrastructure investments of approximately $550 million in 2021 + Average annual regulated water customer (or equivalent dwelling units) growth of 2 to 3% from acquisitions and organic customer growth * Regulated natural g
Slide 23: Years as a company
135 Years as a Half a century on One year as company the NYSE Essential Utilities 1886 1971 2020 Swarthmore College Initial Public Offering +
Slide 24: Essential Utilities
4 Essential ones ag uTLiTes
Slide 25: Thank You for Attending
Thank You for Attending Essential’s Full Year 2020 Conference Call Conference Call and Webcast = * SS First Quarter 2021 Earnings Thursday, May 6, 2021
Slide 26: For more information contact
For more information contact: Brian ; Renee Dingerdissen Marquis Vice President, Chief of Staff, Director, Investor Relations Investor Relations and Communications (610)645-1191 \ ae (610)645-1021 BJDingerdissen@Essential.co A’ {Wa RTMarquis@Essential.co INVESTOR & Essential. PRESENTATION | 26 uTLiT
Slide 27: Appendix
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Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In thousands, except per share amounts Quarter ended December 31 Year ended December 3 Net income (GAAP financial measure) $ 102,707 $ 64,227 $ 284,849 $ 224,543 Adjustments: Plus: Transactiorrelated credits issued to utility customers 18,924 - 23,004 - Plus: Transact
Slide 29: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights As of December 31, 2020 ns except per share Q4 2019 Q4 2020 Percent Change Revenue (GAAP) $226.0 $474.0 1 109.7% Adjusted Revenue (non-GAAP)* $226.0 $492.9 1 118.1% Operations and Maintenance Expense $85.3 $157.2 184.2% Net Income (GAAP) $64.2 $102.7 159.9% Net In
Slide 30: Operating Revenues Q4 2020 vs. Q4 2019
Operating Revenues Q4 2020 vs. Q4 2019 ange in ing Revenues $5,010 $3,316 $2,016 $473,998 ($3,030) $226,042 Revenue Q4 2019 Peoples Revenue Rates & Surcharges W & WW Growth Volume Other Revenue Q4 2020 INVESTOR a) Essential. PRESENTATION 130 TILITS
Slide 31: Operations & Maintenance Expenses Q4
Operations & Maintenance Expenses Q4 2020 vs. Q4 2019 Change in Operations & Maintenance Expense (thousands) $2,077 $72,615 22,866_ 2570, — — $157,196 ($6,278) ($1,005) ($970) $85,321 Peoples O&M COVID-19 Costs Other Production (Water) O&M Q4 2019 Growth Employee-Related Peoples Transaction O&M Q4 2
Slide 32: Earnings per Common Share Q4
Earnings per Common Share Q4 2020 vs. Q4 2019 ange in Earnings Per Share go.014 _$0.006 _ $0,001 $0018 —— $0.146 | $0.46 ($0.072) ($0.053) $0.40 é = = ¢ = > 2 > & é £ fo ¢ @ 2s g < é f§ € §&§ é ¢ ss ¢ ¢ é es £ es e INVESTOR yy Essential. PRESENTATION 132 TILITS
Slide 33: Rate Base and Customers by State
Rate Base Water Wastewater Total Rate Base Gas ($000s) Connections Connections Customers ($000s) Connections PA $3,729,551 444,998 45,277 490,275 PA $2,367,176 699,326 IL $382,985 66,238 16,732 82,970 KY $126,567 39,285 OH $382,232 150,352 6,923 157,275 wv $29,375 12,891 TX $352,134 67,890 19,240 87
Slide 34: Rate Cases and Surcharges
2020 Completed 2021 Completed Pending Rate Cases Rate Cases and Rate Cases and and Surcharges Surcharges Surcharges INVESTOR Essential preseNTATION [34
Slide 35: 2020 Rates and Surcharges Completed
2020 Rates and Surcharges Completed 4s of 0224/2021 Awarded Annualized Docket Number Segment Revenue Increase ($thousands) Ilinois N/A Water Surcharge $2,902 N/A Wastewater Surcharge $369 20-0309 Water Surcharge $840 20-0309 Wastewater Surcharge $125 Virginia PUR-2019-00209 Water Surcharge $132 PUR-
Slide 36: 2021 Rates and Surcharges Completed
2021 Rates and Surcharges Completed 4s of o2z2a/2021 Awarded Annualized Docket Number Segment Revenue Increase ($thousands) New Jersey N/WR20010056, Wastewater Rate Case North Carolina W-218, Sub 497A Water Surcharge W-218, Sub 497A. Wastewater Surcharge Ohio 89-7028-WW-TRF Water Rate Case Pennsylva
Slide 37: Rates and Surcharges Pending
Rates and Surcharges Pending As of 02/24/2021 Requested Annualized Docket Number Segment Revenue Increase ($thousands) Vir PUR-2020-00106 Water Rate Case $1,476 PUR-2020-00106 Wastewater Rate Case $257 Indiana 45416-U Water Rate Case $33 Total $1,766 INVESTOR (@ Essential. PRESENTATION [37 TILITS
Slide 38: Rate Base Growth Water and Gas
Gas ($ in Billions) ($ in Billions) 2019A 2020A 2021E 2022E 2023E 2019A 2020A 2021E 2022E 2023E Organic Acquisitions Essential ede INVESTOR | PRESENTATION | 38
Slide 39: Balance Sheet: Credit Ratings and Metrics
g Balance Sheet: C — — Select Credit Metrics BP Global Moopy’s (nae < 20236) Issuer Issuance Issuer —_ Issuance ae ‘@ Essential. A B- Baa2 Baa2 50-55% AQU A. A A+ - - FFO/Net Debt A 12-14% @ PEOPLES A A Baa1 Baat Peer Issuer Ratings( Peer Issuer Ratings In order to maintain our credit metrics and ac
Slide 40: Earnings Guidance
Earnings Guidance 2019 — 2023 Earnings Per Share 2020 annual adjusted earnings per share of $1.58 2021 annual earnings per share guidance of $1.64 to $1.69 $1.64-$1.69 $1.47 $1.58 *Adjusted income per share 2019A* 2020A* 2021E 2022E 2023E "A" denotes Actual INVESTOR ¢ Essential. “E" denotes Estimate
Slide 41: Earnings Weighted to 1Q, 4Q
Earnings Weighted to 1Q, 4Q Approximate Net Income By Quarter 1Q 2Q 3Q 4Q @ Essential. 10% 10% Based on proforma projections, 65-75% of net income is earned in 1Q and 4Q INVESTOR PRESENTATION | 41
Slide 42: Dividends Per Share (Annualized)
Dividends Per Share (Annualized) 7.2% CAGR = 2014-2015. 2016-)S 2017's 2018 =. 2019 = 2020 INVESTOR (@ Essential enesenTaTion Laz
Slide 43: Emissions Reduction Commitment
Emissions Reduction Commitment By 2035, Essential Utilities will reduce its annual Scope 1 and 2 emissions by 60% from its 2019 baseline * Goal applies to all our operations, including gas, water and wastewater * Represents planned and ongoing initiatives that utilize existing technology * Our commi
Slide 44: Supplier Diversity
iT] Supplier Diversity Multiyear plan to increase diverse supplier spend to Inclusion of Diversity, Equity e and Inclusion (DE&l) metrics ‘Oe into executive compensation Employee Diversity Susser Multiyear plan to supply chain achieve employees of color ‘@ Essential presentation La uTimies