Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — FY2022 Earnings Presentation
35 slides from Essential Utilities's earnings presentation, Feb 27, 2023
Slide 1: Earnings Call Full Year 2022
EARNINGS CALL Full Year 2022 February 27, 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: Agenda
Agenda Company Update Financial Results Acquisition Program Update Summary and Guidance Q&A 4
Slide 5: Company Update
Company Update Chris Franklin Chairman, Chief Executive Officer, and President 5
Slide 6: Corporate Highlights
Corporate Highlights $1.77 Infrastructure 7.9% Earnings Per Investment of Rate Base Share for 2022 $1.06B Growth Three 2.7% Pending Closed Water Segment Acquisition of Acquisitions(1) Customer Nine Systems(2) Growth (1) Purchase prices totaling $120.4M 6 (2) Purchase prices totaling $379.7M
Slide 7: ESG Progress and Recognition
ESG Progress and Recognition Progress on Commitments Through 12/31/2022 GHG Emissions Reduction: By 2035, Essential Employee Diversity: Multi-year goal to reach will achieve a 60% Scope 1 and 2 greenhouse gas 17% employees of color emissions reduction, from a 2019 baseline Reported 16% of Essential
Slide 8: Financial Results
Financial Results - Neil Armstrong Dan Schuller Executive Vice President, Chief Financial Officer 8
Slide 9: Q4 Financial Highlights
Q4 Financial Highlights As of December 31, 2022 Q4 2021 Q4 2022 In millions except per share Operating Revenues $535.7 $705.4 Revenues Purchased Gas $137.7 $247.1 • Additional revenues from higher purchased gas costs, regulatory recoveries, increased volume and regulated water segment Operations and
Slide 10: Full Year Financial Highlights
Full Year Financial Highlights As of December 31, 2022 In millions except per share YTD 2021 YTD 2022 Percent Change Operating Revenues (GAAP) $1,878.1 $2,288.0 21.8% Purchased Gas $340.3 $602.0 76.9% Operations and Maintenance Expense $550.6 $613.6 11.5% Operating Income $602.7 $661.2 9.7% Net Inco
Slide 11: Operating Revenues
Operating Revenues FY 2022 vs. FY 2021 Change in Operating Revenues (millions) 1 2 1 Includes $340.3 of purchased gas. 2 Includes $602.0 of purchased gas. 11
Slide 12: Operations & Maintenance Expenses
Operations & Maintenance Expenses FY 2022 vs. FY 2021 Change in Operations & Maintenance Expense (millions) 12
Slide 13: Earnings per Common Share
Earnings per Common Share FY 2022 vs. FY 2021 Change in Earnings Per Share 13
Slide 14: Regulatory Activity
Regulatory Activity As of 2/26/2023 2022 Completed 2023 Completed Rate Cases and Rate Cases and Pending Pending Rate CasesRate and Cases and Surcharges Surcharges Surcharges Surcharges Water segment base rate cases Water segment base rate cases Water segment base rate cases or surcharges in IL, NC,
Slide 15: Acquisition Growth and 2023 Guidance
Acquisition Growth and 2023 Guidance Chris Franklin Chairman, Chief Executive Officer, and President 15
Slide 16: Continued Water and Wastewater Acquisition Success
Continued Water and Wastewater Acquisition Success Cumulative Additions of Customers 2022 Closed Acquisitions Through Acquisitions Since 2015 PA PA Nearly Customers 118,000 (1) 120,000 Lower Makefield East Whiteland • Wastewater • Wastewater Water and Wastewater Customers and • 8,175 customers(1) •
Slide 17: Pending Municipal Transactions
Pending Municipal Transactions ~$380M of pending rate base is expected to generate ~$19M of incremental annual earnings potential(1) Nearly 219,000 Total Customers (2) $379.7M Total Purchase Price Customers Approved by PUC PA PA PA PA TX Willistown DELCORA Shenandoah Beaver Falls Southern Oaks • Was
Slide 18: 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
Slide 19: 2023 Priorities
2023 Priorities Integration Growth Operational Excellence • Continue to build on the benefits • Execute a $1.1B capital program • Continue to enhance customer of our infrastructure platform and employee experiences • Close and integrate signed pending • Implement integration plans for acquisitions •
Slide 20: 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 be $1.85 to $1.90
Slide 21: Questions?
% Essential. SS 21 UTILITIES:
Slide 22: Thank You for Attending
Thank You for Attending Essential’s Full Year 2022 Conference Call First Quarter 2023 Earnings Conference Call and Webcast NYSE Tuesday, May 9, 2023 LISTED WTRG 22
Slide 23: 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 23
Slide 24: Appendix
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Slide 25: Operating Revenues Q4 2022 vs. Q4 2021
Operating Revenues Q4 2022 vs. Q4 2021 Change in Operating Revenues (millions) 1 2 1 Includes $137.7 of purchased gas. 2 Includes $247.1 of purchased gas. 25
Slide 26: Operations & Maintenance Expenses Q4
Operations & Maintenance Expenses Q4 2022 vs. Q4 2021 Change in Operations & Maintenance Expense (millions) 26
Slide 27: Earnings per Common Share Q4
Earnings per Common Share Q4 2022 vs. Q4 2021 Change in Earnings Per Share 27
Slide 28: 2022 Regulatory Activity Completed
2022 Regulatory Activity Completed As of 12/31/2022 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio Water Rate Case $1,378 21-0595-WW-AIR Water Rate Case $5,179 21-0596-ST-AIR Wastewater Rate Case $304 Pennsylvania M-2021-3030074 Water Surcharge $4,016 M-2021
Slide 29: 2023 Regulatory Activity Completed
2023 Regulatory Activity Completed As of 2/26/2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio Water Rate Case $1,603 Indiana Wastewater Rate Case $134 Illinois N/A Water Surcharge $1,427 N/A Wastewater Surcharge $420 Total $3,583 29
Slide 30: Regulatory Activity Pending
Regulatory Activity Pending As of 2/26/2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Virginia Water Surcharge $411 Wastewater Surcharge $148 North Carolina W-218, Sub 573 Water Rate Case – Year 1 $12,704 W-218, Sub 573 Wastewater Rate Case – Year 1 $5,360 W
Slide 31: 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 $472,344 151,88
Slide 32: Dividend Growth Targeted In Line with EPS
Dividend Growth Targeted In Line with EPS Dividends Per Share (Annualized) Dividend target: maintain similar level payout ratio, no higher than 65% 32
Slide 33: Maximizing Rate Base Growth Potential
Maximizing Rate Base Growth Potential Water Gas ($ in Billions) ($ in Billions) $7.1 $7.5 $7.8 $6.4 $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 34: Strong Balance Sheet: Central to our Strategy
Strong Balance Sheet: Central to our Strategy Select Credit Metrics (2022P – 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 35: 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 35