Slide 1: Second Quarter 2019 Earnings Call
m X | ESN ' v4 . '~ St Vs é So *. " = li ‘ fa By < > a * Earnings Call = ay S* : =i «wn 5 Second Car 2019 Sc August 7, 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: Introduction
Introduction Chris Franklin Chairman, Chief Executive Officer and President AQUA NYSE: WTR 6
Slide 5: Agenda
Y Agenda LI Corporate Highlights LJ Summary of Financial Results LI Municipal Growth LI Regulatory Update L} 2019 Guidance LJ Questions AQU A NYSE: WTR 6
Slide 6: Revenue Growth and EPS Growth
• Revenue Growth • • • EPS Growth • • • •
Slide 7: Dividend Increase History
Dividend Increase History 7.0% Increase to Annualized Dividend Rate Effective 9/1/2019 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 AQUA Dividends Per Share (annualized) nn $0.880 — $0.765 $0.818 $0.660 $0.712 | 2014 2015 2016 2017 2018 2019 NYSE: WTR 4
Slide 8: Summary of Financial Results
Summary of Financial Results Dan Schuller Executive Vice President, CFO AQUA NYSE: WTR é
Slide 9: Second Quarter Highlights
Second Quarter Highlights As of June 30, 2019 Favorable Change BH Unfavorable Change AQUA In millions except per share Q2 2019 Q2 2018 Variance Revenue $218.9 A | sang 3.3% Operations and Maintenance $86.4 A | $735 17.6% Expense Net Income 9 (GAAP) $54.9 Vv $66.6 (17.6%) Net Income 9 per Share (GAAP
Slide 10: Operating Revenues
Operating Revenues Q2 2019 vs. Q2 2018 Change in Operating Revenues (thousands) $3,967 ($297) ($677) $218,892 $240,000 $230,000 $220,000 $4,039 211, $211,860 = $210,000 $200,000 $190,000 $180,000 $170,000 $160,000 $150,000 Revenue Q2 2018 Growth Rates & Other Consumption Revenue Q2 2019 Surcharges A
Slide 11: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q2 2019 vs. Q2 2018 Change in Operations & Maintenance Expenses (thousands) $90,000 $1,131 ($57) ($143) ($745) 86,445 $12,744 a — $ $85,000 $80,000 $75,000 $73,515 $70,000 $65,000 $60,000 O&M Q2 2018 Transaction Expenses Growth Employee Related Production Costs Othe
Slide 12: EPS Bridge Q2 2018 to Q2 2019
$0.049 ($0.148) $0.012 ($0.004) ($0.026) $0.021 $0.37 $0.374 (0.025) $0.25
Slide 13: Shares Issued
▪ Shares Delivered by Company at Maturity 1 ▪ Stock Price < Reference Price Reference Price < Stock Price < Stock Price > Conversion Price Conversion 19.9mm shares Price Shares Issued ▪ 16.3mm shares ▪ Reference Price Conversion Price $34.62 $42.41
Slide 14: Pending and Completed Rate Cases and Surcharges
As of 8/6/2019 Completed Rate • Cases and Surcharges • As of 7/16/2019 As of 8/6/2019 Pending • Pending • Rate Rate Cases and Cases and • • Surcharges Surcharges
Slide 15: Peoples PA Rate Case Settlement
Peoples PA Rate Case Settlement oples Natural Gas! (PA) 28-Jan-2019 $2,052m Fully-projected future test year ending Oct-2020 $94.9m $59.5m in additional annualized revenue New rates expected to go into effect Oct. 25, 2019 Settlement Agreement Peoples’ first rate case since 2012 filing Supports the
Slide 16: Municipal Growth
Municipal Growth Chris Franklin Chairman, Chief Executive Officer and President AQU A NYSE: WTR 6
Slide 17: Pending Acquisitions
Approx. Purchase Price Acquisition State Type Total Customers ($000s) New Garden PA WW 2,106 $29,500 Schuylkill PA W 600 $3,600 Grant Park IL WW 540 $2,300 Cheltenham 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 Total 22,600 $117,700
Slide 18: Acquisition Pipeline by Size Range
Size Range Total Customers (Approx. # of Customers) (approx.) >50,000 280,000 10,000 – 50,000 85,000 <10,000 60,000 Total 425,000
Slide 19: Regulatory Update
Regulatory Update Kim Joyce Vice President, Regulatory, Legislative and External Affairs AQUA NYSE: WTR 6
Slide 20: Regulatory Timeline
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Fall Oct. Nov. Dec. Jan. Feb. March April May June July Aug. 2019 ✓ ✓ ✓ ✓ 20
Slide 21: Estimated Regulatory Timeline
Estimated Regulatory Timeline There is no statutory timeline for approval of an acquisition in PA, but we project the following sequence for approval of the Peoples transaction: Estimated ALJ . etuunaestiar Recommended Estimated Reply Estimated PUC ettiement Fle Decision xceptions Due Public Meeting
Slide 22: 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 Apr-2013 Jul-2015 7. IN Forward Test 13. IN DSIC Increase to 10% Feb-2012 Year Jun-2013 Jan-2019 1. PA WW DSIC Mar-2016 20. Ohio Fair 8. NC
Slide 23: Guidance
Guidance Chris Franklin Chairman, Chief Executive Officer and President AQU A NYSE: WTR 6
Slide 24: 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 25: Summary
Summary v Dividend increased by 7%, our 28" consecutive year of increases v Texas fair market value legislation passed, adding a catalyst for acquisitions v On track for 2 to 3% customer growth and pursuing DELCORA wastewater acquisition v Peoples PA rate case settlement filed v Peoples transaction
Slide 26: Q&A Session
Q&A Session Aqua America
Slide 27: Thank You for Attending Aqua's Second Quarter 2019 Conference Call
A Thank You for Attending Aqua’s Second Quarter 2019 Conference Call For more information contact: Brian Dingerdissen Vice President, Chief of Staff and Investor Relations 610.645.1191 BJDingerdissen@AquaAmerica.com UA
Slide 28: Appendix
Appendix Aqua America
Slide 29: Non-GAAP Reconciliation
(In thousands, except per share amounts) Quarter Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net income (GAAP financial measure) $ 54,903 $ 66,590 $ 71,827 $ 117,429 Plus: transaction-related expenses for the Peoples transaction 20,658 - 62,086 - Plus: pre-acquisition interest expen
Slide 30: Year-to-date Highlights
Year-to-date Highlights As of June 30, 2019 Favorable Change BH Unfavorable Change AQUA In millions YTD 2019 YTD 2018 Variance except per share Revenue $420.0 | A | $406.2 3.4% Operations and Maintenance $165.8 Al s1475 12.4% Expense Net Income 9 (GAAP) $71.8 vV $117.4 (38.8%) Net Income 9 per Share
Slide 31: Operating Revenues YTD
Operating Revenues YTD June 30, 2019 vs. YTD June 30, 2018 Change in Operating Revenues (thousands) $8,063 $309 ($3,261) $400,000 $440,000 $430,000 $420,024 $390,000 $380,000 $370,000 $360,000 $350,000 Revenue YTD 2018 Rates & Surcharges Growth Other Consumption Revenue YTD 2019 AQUA NYSE: WTR 4
Slide 32: Operations & Maintenance Expenses YTD
Operations & Maintenance Expenses YTD June 30, 2019 vs. YTD June 30, 2018 Change in Operations & Maintenance Expenses (thousands) $180,000 $2,103 601 $581 4,377) $19,390 s ($4,377) $165,759 — | | $160,000 $147,461 $140,000 $120,000 $100,000 $80,000 $60,000 O&M YTD 2018 Peoples Transaction Growth Pro
Slide 33: EPS Bridge YTD 2018 to YTD 2019
$0.024 ($0.015) ($0.056) $0.041 $0.66 $0.65 ($0.178) ($0.105) ($0.009) $0.36
Slide 34: Aqua 2019 Rates and Surcharges Completed
Aqua 2019 Rates and Surcharges Completed As of Aug. 6, 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) $538 W-218, Sub 497A Surcharge
Slide 35: Aqua 2019 Rates and Surcharges Pending
Aqua 2019 Rates and Surcharges Pending As of Aug. 6, 2019 Requested Annualized Docket Number Revenue Increase ($thousands) 18-1843-WW-UNC & 18- Tax Compliance ($3,917) 1841-ST-UNC Surcharge (w/ww)* 19-567-WW-SIC Surcharge (w) $2,335 ($1,582) A U A Note: Rates and Surcharges differentiated by water (
Slide 36: 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 37: 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 38: 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
Slide 39: Dilutive Impact on EPS of Tangible Equity Units
Dilutive Impact on EPS of Tangible Equity Units
Slide 40: Aqua America 6% Tangible Equity Units
Aqua America 6% Tangible Equity Units " Prepaid stock purchase contracts equal to $41.37091 per unit are recorded to Additional Paid in Capital upon issuance * Senior amortizing notes equal to $8.62909 per unit are recorded to Long-term Debt upon issuance " Applicable market value for conversion pur
Slide 41: Purchase Contract Impact on Basic EPS
Shares EPS Purchase Contract Impacted by adding Assume share Increases weighted “minimum purchase contracts average common converted” shares are converted into shares for Basic EPS to denominator common stock for by minimum used in calculating period units are number of shares to Basic EPS outstandi
Slide 42: Conversion Impact on Diluted EPS
Shares Impacted by adding “as if Assume share purchase Purchase Contract converted” shares to contracts are converted into denominator used in calculating common stock for period units Diluted EPS are outstanding EPS Conversion Increases weighted average common Expected number of shares based on sha
Slide 43: TEU Impact on Diluted Earnings Per Share
TEU Impact on Diluted Earnings Per Share Example: = 900 TEUs are issued on 5/1/19 that allow conversion into common shares based on $50.00 / VWAP and subject to a minimum and maximum shares » VWAP is calculated at the end of each reporting period — assuming a VWAP of $40.00 at June 30, 2019, $50 / $
Slide 44: 2Q19 Basic and Diluted Share Calculation
2Q19 Basic: Minimum number of issued shares 1,000 Days outstanding in period 61/91 Basic shares outstanding during the period 670 2Q19 Diluted: Volume weighted average price (VWAP) $ 40.00 Price per unit $ 50.00 Shares to be issued per each TEU 1.25 TEUs 900 Shares expected to be issued based on con