Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Q2 2021 Earnings Presentation
37 slides from Essential Utilities's earnings presentation, Aug 5, 2021
Slide 1: Earnings Call Second Quarter 2021
(s Essential UTILITIES EARNINGS CALL Second Quarter 2021 August 5, 2021
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Chief of Staff, Investor Relations, and Communications Essential ee umes
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: Earnings
EARNINGS Essential. . a4 Nv PRESENTATION | 4 uTLTIes
Slide 5: Chris Franklin
Company Update Chris Franklin Chairman, Chief Executive Officer, and President y 4 Essential. PRESENTATION | 5 umes EARNINGS
Slide 6: Net Income
Net Income Growth of 8.4% 7% Dividend Increase 7 Pending Acquisitions” 315t increase in 30 years 76" consecutive year of, dividend payments EARNINGS PRESENTATION | 6 Essential.
Slide 7: Dividends Per Share (Annualized)
Dividends Per Share (Annualized) $1.0728 $1.0028 $0.9372 $0.8760 $0.8188 $0.7652 $0.7120 L . J 2014 2015 2016 2017 2018 2019 2020 2021 EARNINGS Essential PRESENTATION | 7
Slide 8: 2020 ESG Report Highlights
Essential Utilities 2020 ESG Report 4 VALUE REPORTING FOUNDATION SASB STANDARDS Essential. 2020 ESG Report Highlights oon nearly 7 times " better than Diversity community hiring grew water by more than systems 7% nationwide* 2021 Mid-year Target Update 5% Scope 1 and 2 emissions reduction towards 60
Slide 9: Financial Results
Financial Results (s Essential ed umes
Slide 10: Q2 financial results in millions except per share
Q2 2020 Q2 2021 In millions except per share Revenues * Regulated water segment of $248.2M * Regulated natural gas segment of $141.6M, including gas costs of $39.8M Operations and Maintenance Expense $128.6 $12 O&M * Expenses remained relatively flat for the quarter EARNINGS 6 Essential. PRESENTATIO
Slide 11: Operating Revenues
Operating Revenues Q2 2021 vs. Q2 2020 hange in Operating Revenues (t ands) 1,172 $2,660 $1,477 $1, $9,162 3 ees — a $397,032 ($4,910) $384,468 Water consumption 42% a seam “overeat. ‘to Water. —— aS. Revenue Q2 2020' Rates & Surcharges Volume - Water Growth - Water Purchased Gas Other Volume - Gas
Slide 12: Q2 2021 Water Usage Trends
Q2 2021 Water Usage Trends Given the reopening across the water states, residential usage decreased by approximately 1%, while commercial usage increased 20% 10,808 10,722 Q2 2021 vs Q2 2020 (Millions of Gallons) 3,743 3,119 I = Q2 2020 = 16,272 million gallons ® Q2 2021 = 16,954 million gallons (+4
Slide 13: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q2 2021 vs. Q2 2020 Change in Operations & Maintenance Expense (thousands) $1,224 ce Ce 334 ($3,525) Includes $3.2M of increased medical costs O&M Q2 2020 Employee-Related Production Costs - Growth - Water Other COVID-19 Costs O&M Q2 2021 Costs Water EARNINGS: (@ Es
Slide 14: Earnings per Common Share
Earnings per Common Share Q2 2021 vs. Q2 2020 ange in Earnings Per Share ($0.014) , | $0.32 ($0,010) EPS Q2 2020 (GAAP) Rates & Surcharges Volume - Water O&M Growth - Water Volume - Gas Other EPS Q2 2021 (GAAP) EARNINGS: (@ Essential. presentation [14 umiumies
Slide 15: Earnings Weighted to 1Q, 4Q
Earnings Weighted to 1Q, 4Q Approximate Net Income By Quarter 1Q 2Q 3Q 4Q (@ Essential. 10% 10% Based on company projections, 65-75% of net income is expected to be earned in 1Q and 4Q EARNINGS PRESENTATION 115,
Slide 16: 2021 Completed and Pending Rate Cases and Surcharges
2021 Completed Rate Cases and Surcharges Gas segment base rate cases or surcharges in PA and KY with annualized revenue increase of $1.3 million a Essential. uTLTIes Pending Rate Cases and Surcharges Gas segment base rate cases in KY with requested annualized revenue increase of $9.1 million EARNING
Slide 17: Acquisition Update and 2021 Guidance
Acquisition Update and 2021 Guidance Chris Franklin Chairman, Chief Executive Officer, and President ( Essential. awe uTimies
Slide 18: Pending Acquisitions
Commons Water?) Closed August 2, 2021 + Water * 980 customers * $4.0M purchase price East Whiteland + Wastewater * 8,175 customers?) + $54.9M purchase pric Essential 2! uTLTIes e DELCORA * Wastewater 198,000 customers?) + $276.5M purchase price Willistown * Wastewater * 2,300 customers”) + $17.5M pu
Slide 19: Active Municipal Opportunities
Active Municipal Opportunities Size Range We are actively pursuing acquisition (Approx. # of opportunities in most of our states, Customers) totaling approximately 390,000 customers. While we do not expect to close all of these opportunities, this illustrates the number of municipals we are evaluati
Slide 20: Customer, Earnings, Capex, Rate Base 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 21: Essential Utilities
essential ait UTILITIES:
Slide 22: Thank You for Attending
Thank You for Attending Essential’s Second Quarter 2021 Conference Call Conference Call and Webcast 7 SS Third Quarter 2021 Earnings Monday, November 1, 2021 22
Slide 23: 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 EARNINGS: & Essential. PRESENTATION | 23 UTIL
Slide 24: Essential
Essential. umluTes
Slide 25: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In thousands, except per share amounts arter ended June 30, Six Months ended June 30, Net income (GAAP financial measure) $ 80,914 $ 74,629 $ 264,603 © $126,410 Adjustments: Plus: Transactionrelated expenses for acquisition of Peoples - - - 25,573 Plus: Adjustments to
Slide 26: Year to Date Financial Highlights
Year to Date Financial Highlights As of June 30, 2021 Inm ns except per share YTD 2020 YTD 2 Percent Change Revenue (GAAP) $640.1 $980.6 1 53.2% Operations and Maintenance Expense $235.2 $252.6 T 7.4% Net Income (GAAP) $126.4 $264.6 1 109.3% Net Income per Share (GAAP) $0.50 $1.04 1 108.0% Adjusted
Slide 27: Operating Revenues YTD
Operating Revenues YTD June 30, 2021 vs. YTD June 30, 2020 ange in $15,711 $5,935 $5,352 $1,477 $1,139 $980,597 —_—_—_— ($4,910) $315,840 $640,053 Peoples Q1 2021 Revenue Growth - Water Purchased Gas Volume - Gas Revenue YTD 2020 Rates & Surcharges Volume - Water Other Revenue YTD 2021 EARNINGS: (@
Slide 28: Operations & Maintenance Expenses YTD
Operations & Maintenance Expenses YTD June 30, 2021 vs. YTD June 30, 2020 Change in Operations & Maintenance Expense (thousands) $8,040 $1,766 — 461 2,686) sae) ($2,686) ($6,777) | $252,590 $235,241 ($25,397) Peoples O&M Growth - Water COVID-19 Costs Peoples Acquisition Qi 2021 O&M YTD 2020 Employee
Slide 29: Earnings per Common Share YTD
Earnings per Common Share YTD June 30, 2021 vs. YTD June 30, 2020 ange in Earnings Per Share ($0.014) oe oe * eo or? & EARNINGS: Essential. PRESENTATION 129 umiumies
Slide 30: 2021 Rates and Surcharges Completed
2021 Rates and Surcharges Completed 4s of osos2021 Docket Number Segment Awarded Annualized Revenue Increase ($thousands) New Jersey North Carolina Ohio Pennsylvania Illinois Indiana Virg Pennsylvania Kentucky (@ Essential. uTLTIes NWR20010056 W-218, Sub 497A, W-218, Sub 497A 89-7028-WW-TRF M-2020-3
Slide 31: Rates and Surcharges Pending
Rates and Surcharges Pending As of 08/04/2021 Requested Annualized Docket Number Segment Revenue Increase ($thousands) Ohio 21-0595-WW-AIR Water Rate Case 21-0596-ST-AIR Wastewater Rate Case Kentucky 2021-00185 Gas Rate Case Total EARNINGS ¢ Essential. PRESENTATION [31 umiumies
Slide 32: Rate Base and Customer Connections
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 $352,134 67,890 19,240 87
Slide 33: Capital Investment ($ in Billions)
($ in Billions) 2019A 2020A 2021E 2022E 2023E Organic Acquisitions Essential og Gas ($ in Billions) 2019A 2020A 2021E 2022E 2023E EARNINGS PRESENTATION |53
Slide 34: Balance Sheet and Credit Ratings
g Balance Sheet: C — — Select Credit Metrics S&P Global Moopy’s (2020P 70234) Ratings \ | \ | Debt/Total issuer issuance issuer issuance Capitalization {@ Essential. A B- Baa2 Baa2 50-55% AQU A. A A+ - - FFO/Net Debt \ 12-14% @ PEOPLES A A Baa1 Baat Peer Issuer Ratings( Peer Issuer Ratings In order
Slide 35: 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 EARNINGS ¢ Essential. “E denotes Estimate
Slide 36: 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 Rate Cases in multiple states Essential. EARNINGS PRESENTATION | 36 uTLTIes
Slide 37: 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 +