Slide 1: Third Quarter 2020 Earnings Call
ba NYSE: WTRG Se teronntes Inc _ Tr ee 5 ca -_——- =fhire Quarter'2020- Essential November 4, 2020
Slide 2: Welcome
Welcome Brian Dingerdissen Vice President, Chief of Staff, Investor Relations, and Communications 6 Essential.
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: Agenda
NYSE: WTRG Agenda Y Essential. — Chris Franklin - Company Update ‘ Mike Huwar - Peoples Update . Chris Franklin — Third Quarter Highlights and ESG ‘ Dan Schuller — Financial Results ‘ Chris Franklin - Municipal Acquisition Program Update and Refined Guidance ‘ Q&A ‘
Slide 5: Chris Franklin
Company Update Chris Franklin Chairman, Chief Executive Officer, and President 6 Essential.
Slide 6: NYSE: WTRG
NYSE: WTRG • • • • • These forecasts are from the U.S. Energy Information Administration’s (EIA) 2020 Annual Energy Outlook, released in January.They represent EIA’s moderate base case, referred to as AEO2020 Reference.
Slide 7: Mike Huwar
Mike Huwar 6 Essential. Start Date: August 2020 President, Peoples Background Information: * 34-year career with Columbia Gas President and COO of Columbia’s Pennsylvania and Maryland operations since 2017 Responsible for overseeing the operations, maintenance and construction for both states as wel
Slide 8: Peoples Gas Observations
Peoples Gas Observations * Award winning safety program * Leadership has 263 years of experience * Capable of increased capital investments *Strong existing culture Visible presence in the community @O Essential. ws: wis , 2 var * Situated in region with low-cost gas supply * 130+ year history of he
Slide 9: The Truth About Natural Gas
Affordability The Truth About Natural Gas A Local Abundant al NYSE: WTRG a) Essential. Safe and Reliable Services 179 million Americans use natural gas in their homes. Households that use natural gas for heating, cooking and clothes drying save an average of $879 per year compared to homes using ele
Slide 10: Corporate Highlights
NYSE: WTRG Corporate Highlights Essential. Infrastructure Investment ($m) YTD 9/30/2019 YTD 9/30/2020 *Includes $53.5 million invested by Peoples, pre-closing. Published ESG Report Company-wide PFAS contamination standard set below EPA’s health advisory level Renewables commitment in water business
Slide 11: ESG Program
NYSE: WTRG ESG Program “@Essential. We have long been an ESG company committed to environmental stewardship, sustainable business practices, employee safety, diversity and inclusion, customer experience, and community engagement. Transparent & comprehensive ESG reporting New full time ESG (co; Manag
Slide 12: Financial Results
Financial Results Dan Schuller Executive Vice President, Chief Financial Officer 6 Essential.
Slide 13: Third Quarter Highlights
NYSE: WTRG Third Quarter Highlights ¢ Essential. As of September 30, 2020 —~_ In millions except per share Q3 2020 Q3 2019 Revenue (GAAP) $348.6 A $243.6 Adjusted Revenue (non-GAAP)* $352.7 A $243.6 Operations and Maintenance Expense $136.2 A $82.0 Net Income (GAAP) $55.7 V $88.5 Net Income per Shar
Slide 14: Operating Revenues
NYSE: WTRG Operating Revenues 6 Essential. Q3 2020 vs. Q3 2019 $400,000 , Change in Operating Revenues (thousands) 371 $350,000 $9,816 ee 82.206 2: ch $348,647 $92,119 | $(4,080) $300,000 $250,000 $243,626 $200,000 $150,000 — Revenue Q3 2019 Peoples Volume Water and Rates & Other Water Rate Revenue
Slide 15: NYSE: WTRG
NYSE: WTRG 1 Potential to be extended based on Governor's request 2 Shut-offs commenced on 10/12/2020 +10.8% -3.4% +0.5% -13.9% -7.0% +22.5%
Slide 16: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q3 2020 vs. Q3 2019 $160,000 $150,000 $140,000 $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 Change in Operations & Maintenance Expenses (thousands) $82,022 O&M Q3 2019 $62,156 Peoples O&M $3,856 De COVID-19 Costs (Water) $2,009 Growth
Slide 17: Earnings per Common Share
NYSE: WTRG Earnings per Common Share 6 Essential. Q3 2020 vs. Q3 2019 — $0.60 . . Change in Earnings Per Share $0.009 $0.005 $0.025 — saree $0027 $0.50 $0.024 $0.48 $0.074 $0.40 $0.38 $0.30 $(0.231) $0.23 $0.20 $(0.086) $(0.011) $0.10 $- EPs Dilutive Effect Peoples Adjusted Volume Expenses Rates & G
Slide 18: Rate Activity
NYSE: WTRG Rate Activity ‘@ Essential. As of 11/3/2020 . * Water segment base rate cases or surcharges in IL, IN, NC, OH, 2020 Completed Rate VA, and PA with annualized revenue increase of $21.0 million Cases and Surcharges * Gas segment surcharges in KY and PA with annualized revenue increase of $1
Slide 19: Municipal Acquisition Program Update & Refined Guidance
Municipal Acquisition Program Update & Refined Guidance 4 Chris Franklin Chairman, Chief Executive Officer, and President 6 Essential.
Slide 20: 2020 Water Segment Acquisitions
NYSE: WTRG 2020 Water Segment Acquisitions “@ Essential. Closed Municipal Acquisitions Since 2015 we have closed 59 total deals (includes investor- _ owned utilities and Campbell OH w 3,100 $7,535 municipalities). These contributed approximately 54,0001 new East Norriton PA Www 4,966 $20,750 TE Rock
Slide 21: Current Water Segment Municipal Transaction Opportunities
Current Water Segment Municipal Transaction Opportunities NYSE: WTRG a) Essential. We are actively pursuing acquisition opportunities in most of our states, totaling approximately 360,000 customers. While we do not expect to close all of these opportunities, this illustrates the number of municipals
Slide 22: Refined Guidance
NYSE: WTRG Refined Guidance % Essential. + Adjusted income at top end of the range of $1.53 to $1.58 per share for 2020 - 3 year earnings growth CAGR 5-7% for 2019 through 2022 * Regulated water segment infrastructure investments of approximately $550 million in 2020 * Regulated natural gas segment
Slide 23: Questions?
NYSE: WTRG Questions? Essential.
Slide 24: Thank You for Attending
NYSE: WTRG Thank You for Attending Essential’s Third Quarter 2020 Conference Call
Slide 25: For more information contact
For more information contact: NYSE: WTRG Brian Dingerdissen Vice President, Chief of Staff, Investor Relations and Communications 610.645.1191 BJDingerdissen@Essential.co Renee Marquis Director, Investor Relations 610.645.1021 RTMarquis@Essential.co Essential. ae Providing natural resources for life
Slide 26: Appendix
NYSE: WTRG Appendix @ Essential.
Slide 27: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (In thousands, except per share amounts) Quarter Ended September 30, NYSE: WTRG Essential. Nine Months Ended September 30, Net income (GAAP financial measure) $ 55,732 $ 88,489 $ 182,142 $ 160,316 Adjustments: Plus:Transactionrelated rate credits granted to Pennsylvan
Slide 28: Year to Date Highlights
NYSE: WTRG Year to Date Highlights 6 Essential. As of September 30, 2020 In millions except per share YTD 2020 YTD 2019 Revenue (GAAP) $988.7 A $663.7 Adjusted Revenue* (non-GAAP) $992.8 A $663.7 Operations and Maintenance Expense $371.4 A $247.8 Net Income (GAAP) $182.1 A $160.3 Net Income per Shar
Slide 29: Operating Revenues YTD
Operating Revenues YTD September 30, 2020 vs. YTD September 30, 2019 NYSE: WTRG % Essential. $1,100,000 Change in Operating Revenues (thousands) $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $280,300 $663,650 Revenue YTD 2019 11,349 $13,870 $11. $23,441 = LE Rates & Volume Water and Surcha
Slide 30: Operations & Maintenance Expenses YTD
Operations & Maintenance Expenses YTD September 30, 2020 vs. YTD September 30, 2019 NYSE: WTRG % Essential. $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 Change in Operations & Maintenance Expenses (thousands) 4,335 $4,213 iL ws SO $247,781 O&M YTD 2019 Peoples COVID-19 Growth Emplo
Slide 31: Earnings per Common Share YTD
Earnings per Common Share YTD September 30, 2020 vs. YTD September 30, 2019 NYSE: WTRG (essential $1.40 . . $0.029 $0.020 Change in Earnings Per Share 139 ——_=— $0.049 aa $1.20 $0.068 Se ° soosz2 $1.13 Fe $1.12 $0307 Si $(0.210) $1.00 $0.80 | $0.76 . so317) $0.71 $(0.082) $(0.011) $0.60 $0.40 $0.20
Slide 32: 2020 Rates and Surcharges Completed
2020 Rates and Surcharges Completed = *5°f Nevember3, 2020 Virginia North Carolina Ohio Indiana Pennsylvania Kentucky Pennsylvania a) ESSentiall. wse: wre Docket Number N/A NA 20-0309 20-0309 PUR-2019-00209 PUR-2019-00209 W-218, Sub 497A W-218, Sub 497A W-218, Sub 526 W-218, Sub 526 89-7028-WW-TRF 2
Slide 33: Rates and Surcharges Pending
Rates and Surcharges Pending As of November 3, 2020 NYSE: WTRG @ Essential. Docket Number Segment Requested Annualized Revenue Increase ($thousands) New Jersey WR20010056 Wastewater Virginia PUR-2020-00106 Water PUR-2020-00106 Wastewater Indiana 45416-U Water Rate Case Rate Case Rate Case Rate Case
Slide 34: State by State Comparison
State by State Comparison As of December 31, 2019 NYSE: WTRG 4 Essential. AQUA. State Rate Base Water Wastewater Total ($000s) Connections Connections Customers PA 3,428,271 443,152 38,208 481,360 OH 343,602 146,483 6,922 153,405 IL 357,344 65,851 16,330 82,181 ™ 298,240 65,874 18,281 84,155 NJ 199,
Slide 35: Approximate Net Income by Quarter
NYSE: WTRG Approximate Net Income by Quarter ¢ Essential. Based on proforma projections, we expect 65% to 75% of net income in a given year will be earned in the first and fourth quarters. Percentage of annual net income 35
Slide 36: Customer and revenue breakdown by class
NYSE: WTRG Residential 822,817 80.1% $ 521,972 58.7% Residential 685,624 91.8% $ 624,245 68.7% Commercial 41,892 4.1% $ 145,581 16.4% Commercial 59,471 8.0% $ 180,822 19.9% Industrial 1,339 0.1% $ 30,667 3.4% Industrial 1,454 0.2% $ 57,245 6.3% Public 9,110 0.9% $ 13,251 1.5% Other - 0.0% $ 46,341 5
Slide 37: GAAP Adjusted Proforma
NYSE: WTRG GAAP Adjusted Proforma • • • • • • • • •
Slide 38: Diluted Shares Outstanding
Diluted Shares Outstanding (Millions) NYSE: WTRG % Essential. We’re committed to providing clarity around share count in our EPS calculations. 300 280 260 240 220 200 180 160 140 120 100 | 178.8 WTRG Shares Shares from CPPIB PIPE Outstanding April 2019 Shares Priorto Equity Issuance Transaction 72 0
Slide 39: NYSE: WTRG
NYSE: WTRG • • • • • • • 1 Measured as the percentage of community water systems with health-based (Tier 1 and Tier 2) violations