Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Aqua America — Merger or Acquisition (October 2018)
20 slides from Essential Utilities's merger presentation, Oct 23, 2018
Slide 1: Aqua America to Acquire Peoples
NYSE: WTR Aqua America to Acquire Peoples Creating a Leading, Fully Regulated Water and Natural Gas Infrastructure Company October 23, 2018
Slide 2: Forward-Looking Statement
This presentation contains, in addition to historical information, forward - looking statements including statements with respect to anticipated impact of the transaction on the company’s earnings, anticipated growth rates, the expected timing of closing of the transaction, expectations regarding th
Slide 3: Today's Presenters
3 Brian Dingerdissen Vice President, Chief of Staff & Investor Relations Dan Schuller Executive Vice President, CFO Matthew Rhodes Executive Vice President, Strategy & Corp. Development Morgan O’Brien CEO and President, Peoples Today’s Presenters 3 Chris Franklin Chairman, CEO and President
Slide 4: Agenda
• Transaction Summary: Creating a Larger, More Diversified, Regulated Water and Natural Gas Utility • Strategic Rationale: Two Highly Complementary Businesses with Significant Growth Potential and Benefits to Customers • Aqua: A Leading Water Utility • Peoples: A Leading Natural Gas Utility • Combin
Slide 5: Transaction Summary
• Aligns with growth strategy and core competencies of infrastructure investment, regulatory affairs and operational excellence • Forms a >99% regulated water and gas distribution utility that will trade under a renamed holding company • Increases rate base by nearly 50% and provides platform for or
Slide 6: Strategic Rationale
6 Adds platform for growth • Creates a multi - platform regulated utility company • Adds substantial opportunities for organic growth, continued muni acquisitions, and infrastructure investment • Builds on Aqua’s existing core competencies • Strong proforma balance sheet that positions the company w
Slide 7: Aqua: A Leading Water Utility
• Market Capitalization: ~$6.5 billion • Enterprise Value: ~$9.0 billion • Projected 2019 Rate Base: $5.0 billion • Projected Annual Rate Base Growth: ~7% (’19 - ’21) • Projected 2019 Assets: $7.4 billion • Founded in 1886; headquarters in Bryn Mawr , Pennsylvania • Aqua is a >99% regulated water an
Slide 8: Peoples: A Leading Natural Gas Utility
Source(s): SNL, FERC filings; Peoples projections per Peoples management, adjusted per Aqua diligence. 1. Includes the 3,000 connections that Equitable has in Kentucky 2. EBITDA is a non - GAAP financial measure derived from the financial statements of Peoples Gas as follows: net income, plus intere
Slide 9: Combined Utility Profile
Legend Peoples + Aqua Peoples only Aqua only $5.0 $2.2 2019 Rate Base Estimate ($B) Aqua Peoples 1,000,000 740,000 Current Customers Aqua Peoples 9 Combined Utility Profile A Balanced Portfolio with Significant Potential Upside
Slide 10: Significant Capex Recovery Mechanisms
46% DSIC Eligible 54% Standard Rate - Making Aqua Capex: 2019 - 2021 70% DSIC Eligible 30% Standard Rate - Making Peoples Capex: 2019 - 2021 57% DSIC Eligible 43% Standard Rate - … Combined Capex: 2019 - 2021 State PA IN OH NJ IL NC Mechanism DSIC DSIC SIC DSIC QIPS WSSIC Allowed Surcharge 7.5% W 5%
Slide 11: Creating a New Infrastructure Company Well-Positioned for Strong Growth
• Creates fully regulated water and natural gas utility, building on regulatory and capital investment expertise • Accretive to earnings in first full year and over the long term; increases rate base and earnings growth • Water: 7% annual rate base growth (‘19 - ’21) • Natural Gas: 8 to 10% annual r
Slide 12: Significantly Enhances Scale
Significantly Enhances Scale Pro forma company will be among the top 3 largest pure - play water and/or gas utilities in the United States based on enterprise value. ~$13.3 ~$9.0 ~$4.3 Water & Gas Utility Peers: Enterprise Value ($B) Water Peers Gas LDC Peers Note: Market data as of 10/16/2018 +48%
Slide 13: Key Milestones
Key Milestones x Public Announcement x Bridge Financing Secured □ Regulatory Filings Completed □ Equity Offering □ Debt Financing □ State PUC Approvals Expected Closing Mid - 2019 13
Slide 14: Overview of Financing Plan
Acquisition Financing Strategy • Fully committed acquisition bridge facility • Permanent financing plan targets a strong balance sheet and strong investment grade credit ratings • Equity : Anticipate issuance of ~$2.2 - 2.5B of common equity and equity - linked securities • Debt : 1 Anticipate ~$0.5
Slide 15: Pro Forma Organization Overview
Combined Company Formerly Aqua America, Inc. 15 Peoples Natural Gas Company LLC Peoples Gas Company LLC Delta Natural Gas Company, Inc. Aqua Pennsylvania, Inc. Other Aqua Operating Companies (IN, OH, TX, IL, NJ, VA, NC) Note: Organization chart simplified to exclude non - operational legal entities
Slide 16: Commitment to Stakeholders
Customers • Continued best - in - class service from established gas and water utilities • No impact to customer rates from transaction • Financial capacity will enhance infrastructure investments, increasing reliability and safety Employees • Shared culture of safety, operational excellence and pro
Slide 17: Q&A
NYSE: WTR Q&A
Slide 18: Thank You for Attending
Brian Dingerdissen Vice President, Chief of Staff and Investor Relations 610.645.1191 BJDingerdissen@AquaAmerica.com For more information contact: Third Quarter 2018 Earnings Conference Call and Webcast Tuesday, November 6 , 2018 Thank You for Attending Aqua’s Acquisition of Peoples Conference Call
Slide 19: Appendix
NYSE: WTR Appendix
Slide 20: 2018 Guidance
2018 Guidance 20 Earnings • Full - year earnings per share between $1.37 – $1.42, excluding transaction expenses Capex • Infrastructure investment of approximately $500 million in 2018 • Infrastructure investment of approximately $1.4 billion planned through 2020 in existing operations • Rate base g