Essential Utilities, Inc. · NYSE:WTRG
Essential Utilities — Q1 2023 Earnings Presentation
30 slides from Essential Utilities's earnings presentation, May 9, 2023
Slide 1: Earnings Call First Quarter 2023
EARNINGS CALL First Quarter 2023 May 9, 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 Corporate 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 Updates
Corporate Updates $0.72 Infrastructure Pending Earnings Per Investment of Acquisition of Share $243.7M Nine Systems(1) 2nd Annual Industry-leading Essential Earth Approach to Day Emerging Contaminants (1) Purchase prices totaling $380.2M 6
Slide 7: Industry Leading Water Quality Commitment
Industry Leading Water Quality Commitment Managing Contaminants of Emerging Concern: Industry-leading multi-year plan to ensure that finished water does not exceed the federal maximum contaminant level once finalized, of PFOA, PFOS, and PFNA compounds across all states served by our regulated water
Slide 8: Operational Excellence with a Customer Focus
Operational Excellence with a Customer Focus 8
Slide 9: Financial Results
Financial Results - Neil Armstrong Dan Schuller Executive Vice President, Chief Financial Officer 9
Slide 10: Q1 Financial Highlights
Q1 Financial Highlights As of March 31, 2023 Q1 2022 Q1 2023 In millions except per share Operating Revenues $699.3 $726.5 Revenues Purchased Gas $227.7 $256.3 • Additional revenues from higher purchased gas costs, regulatory recoveries, and regulated water segment customer growth were the Operation
Slide 11: Operating Revenues
Operating Revenues Q1 2023 vs. Q1 2022 Change in Operating Revenues (millions) 1 2 1 Includes $227.7 of purchased gas. 2 Includes $256.3 of purchased gas. 11
Slide 12: Q1 2023 Heating Degree Days
Q1 2023 Heating Degree Days Weather, as indicated by heating degree days, drives natural gas consumption and thus revenue. A heating degree day (HDD) is a measurement designed to quantify the demand for energy needed to heat a building. It is the number of degrees that a day's average temperature is
Slide 13: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q1 2023 vs. Q1 2022 Change in Operations & Maintenance Expense (millions) 13
Slide 14: Earnings per Common Share
Earnings per Common Share Q1 2023 vs. Q1 2022 Change in Earnings Per Share 14
Slide 15: Regulatory Activity
Regulatory Activity As of May 8, 2023 2023 Completed Pending Rate Cases Pending Rate Cases and Rate Cases and and Surcharges Surcharges Surcharges Water segment base rate cases Water segment base rate cases or surcharges in IL, IN, OH and or surcharges in NC, OH, and TX VA with annualized revenue wi
Slide 16: Acquisition Growth and 2023 Guidance
Acquisition Growth and 2023 Guidance Chris Franklin Chairman, Chief Executive Officer, and President 16
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) $380.2M Total Purchase Price Customers PA PA PA TX DELCORA Shenandoah Beaver Falls Southern Oaks • Wastewater • Water • Wastewater •
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 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 by be $1.85 to $1
Slide 20: Questions?
& Essential. 20 umlumes
Slide 21: Thank You for Attending
Thank You for Attending Essential’s First Quarter 2023 Conference Call Second Quarter 2023 Earnings Conference Call and Webcast NYSE Tuesday, August 8, 2023 LISTED WTRG 21
Slide 22: For more information contact
For more information contact: Brian Renee Dingerdissen Marquis Vice President, Director, Investor Relations Investor Relations and Treasurer (610)645-1191 (610)645-1021 BJDingerdissen@Essential.co RTMarquis@Essential.co 22
Slide 23: Appendix
Essential. uTLTiEs
Slide 24: 2023 Regulatory Activity Completed
2023 Regulatory Activity Completed As of May 8, 2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) Ohio Water Rate Case $1,569 Indiana Wastewater Rate Case $134 Illinois Water Surcharge $1,352 Wastewater Surcharge $567 Virginia PUR-2022-00113 Wastewater Surcharg
Slide 25: Regulatory Activity Pending
Regulatory Activity Pending As of May 8, 2023 Requested Annualized State Docket Number Segment Type Revenue Increase ($thousands) 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-218, Sub 573 Water Rate Case – Year 2 $3,143 W-218, S
Slide 26: 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 $472,344 151,88
Slide 27: Dividend Growth Targeted In Line with EPS
Dividend Growth Targeted In Line with EPS Dividends Per Share (Annualized) Dividend target: maintain similar level payout ratio, no higher than 65% 27
Slide 28: Maximizing Rate Base Growth Potential
Maximizing Rate Base Growth Potential Water Gas ($ 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 29: 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 30: 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 30