Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Q3 2023 Earnings Presentation
32 slides from Essential Utilities's earnings presentation, Nov 7, 2023
Slide 1: Earnings Call Third Quarter 2023
EARNINGS CALL Third Quarter 2023 November 7, 2023 NYSE LISTED WTRG
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Investor Relations and Treasurer 2
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: Company Update
Company Update Chris Franklin Chairman, Chief Executive Officer, and President 4
Slide 5: Corporate Updates
Corporate Updates YTD $0.30 Pending Infrastructure Earnings Acquisition of Investment of Per Share Five Systems(1) $874.5M Completed Sale Announced Sale Appointment of of West Virginia Agreement for Rod West to Gas Utility Energy Projects Board Assets (1) Purchase prices totaling $353.8M 5
Slide 6: Updated ESG Reporting and Progress
Updated ESG Reporting and Progress Available at ESG.Essential.co Progress on Commitments Through 6/30/2023 2022 ESG Report GHG Emissions Reduction: By 2035, Essential will achieve Full Update of 2020 ESG Report a 60% Scope 1 and 2 greenhouse gas emissions reduction, from a 2019 baseline SASB and ESG
Slide 7: Financial Results
Financial Results - Neil Armstrong Dan Schuller Executive Vice President, Chief Financial Officer 7
Slide 8: Q3 Financial Highlights
Q3 Financial Highlights As of September 30, 2023 Q3 2022 Q3 2023 In millions except per share Operating Revenues $434.6 $411.3 Revenues Purchased Gas $52.0 $16.6 • Additional revenues from regulatory recoveries, regulated water segment customer growth, and other items were the main drivers for the q
Slide 9: Operating Revenues
Operating Revenues Q3 2023 vs. Q3 2022 Change in Operating Revenues (millions) 1 2 1 Includes $52.0 of purchased gas. 2 Includes $16.6 of purchased gas. 9
Slide 10: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q3 2023 vs. Q3 2022 Change in Operations & Maintenance Expense (millions) 10
Slide 11: Earnings per Common Share
Earnings per Common Share Q3 2023 vs. Q3 2022 Change in Earnings Per Share 11
Slide 12: Sale of Non-Core Assets
Sale of Non-Core Assets Closed Pending • Sale of Peoples Gas utility assets in West Virginia • Approximately 13,000 customers • Announced closing October 2nd, 2023 Pittsburgh International District Energy Project – District Energy Project – Airport Microgrid AHN Wexford Hospital Allegheny County • S
Slide 13: Regulatory Activity
Regulatory Activity As of November 6, 2023 2023 Completed Pending Regulatory Regulatory Recoveries Recoveries Water segment base rate cases or Water segment base rate cases surcharges in IL, IN, NJ, NC, OH, or surcharges in NJ, OH and VA PA, TX, and VA with annualized with requested annualized reven
Slide 14: Summary and 2023 Guidance
Summary and 2023 Guidance Chris Franklin Chairman, Chief Executive Officer, and President 14
Slide 15: Continued Water and Wastewater Acquisition Success
Continued Water and Wastewater Acquisition Success Cumulative Additions of Customers 2023 Acquisitions Through Acquisitions Since 2015 PA OH PA Nearly 129,000 (1) North Heidelberg Union Rome Shenandoah Water and Wastewater Customers and Customers • Wastewater • Wastewater • Water 140,000 • 275 custo
Slide 16: Pending Municipal Transactions
Pending Municipal Transactions ~$353.8M of pending rate base is expected to generate ~$17.7M of incremental annual earnings potential(1) Over 211,000 Total Customers (2) $353.8M Total Purchase Price Customers PA PA DELCORA Beaver Falls • Wastewater • Wastewater • 198,000 customers(2) • 7,600 custome
Slide 17: 2023 Guidance
2023 Guidance(1) Earnings Capex Rate Base Customer Growth ESG • In 2023, net income per • Through 2025, we will • Through 2025, the • The regulated water • Reduction of Scope 1 and 2 diluted common share will make regulated regulated water customer base (or greenhouse gas emissions by be $1.85 to $1
Slide 18: Questions?
& Essential. 18 umlumes
Slide 19: Thank You for Attending
Thank You for Attending Essential’s Third Quarter 2023 Conference Call Fourth Quarter and Full Year 2023 Earnings Conference Call and Webcast NYSE Friday, February 23, 2024 LISTED WTRG 19
Slide 20: For more information contact
For more information contact: Brian Renee Dingerdissen Marquis Vice President, Director, Investor Relations Investor Relations and Treasurer (610)645-1191 (610)645-1021 BJDingerdissen@Essential.co RTMarquis@Essential.co 20
Slide 21: Appendix
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Slide 22: Year to Date Financial Highlights
Year to Date Financial Highlights As of September 30, 2023 In millions except per share YTD 2022 YTD 2023 Percent Change Operating Revenues $1,582.6 $1,574.4 (0.5%) Purchased Gas $354.9 $314.8 (11.3%) Operations and Maintenance Expense $428.9 $418.5 (2.4%) Operating Income $491.2 $518.1 5.5% Net Inc
Slide 23: Operating Revenues
Operating Revenues YTD September 30, 2023 vs. YTD September 30, 2022 Change in Operating Revenues (millions) 1 2 1 Includes $354.9 of purchased gas. 2 Includes $314.8 of purchased gas. 23
Slide 24: Operations & Maintenance Expenses
Operations & Maintenance Expenses YTD September 30, 2023 vs. YTD September 30, 2022 Change in Operations & Maintenance Expense (millions) 24
Slide 25: Earnings per Common Share
Earnings per Common Share YTD September 30, 2023 vs. YTD September 30, 2022 Change in Earnings Per Share 25
Slide 26: 2023 Regulatory Activity Completed
2023 Regulatory Activity Completed As of November 6, 2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio Water Rate Case $1,569 Indiana Wastewater Rate Case $134 Illinois Water Surcharge $1,352 Wastewater Surcharge $567 Virginia PUR-2022-00113 Wastewater Sur
Slide 27: Regulatory Activity Pending
Regulatory Activity Pending As of November 6, 2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio 22-1094-WW-AIR Water Rate Case $9,364 22-1096-ST-AIR Wastewater Rate Case $452 Virginia PUR-2023-00073 Water Rate Case $5,215 PUR-2023-00073 Wastewater Rate Cas
Slide 28: State by State Comparison
State by State Comparison As of December 31, 2022 Rate Base Water Wastewater Total Rate Base Gas State State ($000s) Connections Connections Customers ($000s) Connections PA $4,245,240 450,618 61,440 512,058 PA $2,737,318 702,862 IL $485,191 68,834 23,605 92,439 KY $139,217 40,533 OH $472,344 151,88
Slide 29: Maximizing Rate Base Growth Potential
Maximizing Rate Base Growth Potential Water Gas ($ in Billions) ($ in Billions) $7.2 $7.8 $6.4 $6.9 $3.4 $3.8 $4.2 $2.9 2022A 2023E 2024E 2025E 2022A 2023E 2024E 2025E “A” denotes Actual “E” denotes Estimate (1) Includes signed municipal water and wastewater acquisitions for which the company has en
Slide 30: Earnings Guidance
Earnings Guidance 2022 – 2025 Earnings Per Share 2023 annual earnings per share guidance of $1.85 to $1.90 $1.85 - $1.90 $1.77 2022A 2023E 2024E 2025E “A” denotes Actual “E” denotes Estimate 30
Slide 31: Strong Balance Sheet: Central to our Strategy
Strong Balance Sheet: Central to our Strategy Select Credit Metrics (2023P – 2025E) Debt/Total Issuer Issuance Issuer Issuance Capitalization A A- Baa2 Baa2 50 – 55% Dividend A A+ -- -- FFO/Net Debt Payout Ratio 12 – 14% 60 – 65% A A Baa1 Baa1 Peer Issuer Ratings(1) Peer Issuer Ratings(1) In order t
Slide 32: Active Municipal Opportunities
Active Municipal Opportunities Size Range 10,000- We are actively pursuing acquisition >25,000 <10,000 opportunities in most of our states, (Approx. # of 25,000 Customers) totaling over 400,000 customers. While we do not expect to close all of these opportunities, this illustrates the number of muni