Slide 1: Earnings Call Third Quarter 2022
EARNINGS CALL Third Quarter 2022 November 7, 2022 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 YTD YTD Earnings Net Income Infrastructure Per Share of Growth of Investment of $0.26 11.2% $719.7M Seven Two Appointment of Pending Closed Bryan Lewis to Acquisitions(1) Acquisitions(2) Board (1) Purchase prices totaling $364.5M 6 (2) Purchase prices totaling $107.9M
Slide 7: Organization Update
Organization Update Richard Fox Essential Utilities, Inc. Executive Vice President and Chief Operating Officer • Retiring December 1, 2022 • Served as COO since 2015 and in multiple leadership roles prior, including customer service, southern operations and executive management. • Contributions to t
Slide 8: Platform Growth
Platform Growth Rate Base Utility Customer Connections ($M) (000s) $9,500 1,840 958 $3,470 2015A 2022E 2015A 2022E 8 “A” denotes Actual “E” denotes Estimate
Slide 9: Consistent Leadership of Regulated Businesses
Consistent Leadership of Regulated Businesses Colleen Arnold Michael Huwar Aqua, President Peoples, President 9
Slide 10: 2022 Philadelphia CIO of the Year
2022 Philadelphia CIO of the Year Whitney Kellett Essential Utilities, Inc. Senior Vice President of Business Transformation • Joined the company in 2016 as the Vice President and Chief Information Officer. • Finalist for the CIO of the Year ORBIE Award every year since 2018. • Responsible for Essen
Slide 11: Infusing External Talent
Infusing External Talent Sumit Nair Jeanne Russo Essential Utilities, Inc. Essential Utilities, Inc. Vice President and Vice President, Communications Chief Information Officer 11
Slide 12: Financial Results
Financial Results - Neil Armstrong Dan Schuller Executive Vice President, Chief Financial Officer 12
Slide 13: Q3 Financial Highlights
Q3 Financial Highlights As of September 30, 2022 Q3 2021 Q3 2022 In millions except per share Operating Revenues $361.9 $434.6 Revenues Purchased Gas $25.5 $52.0 • Additional revenues from rates and surcharges, higher purchased gas costs, and Gross Margin (non-GAAP) (1) $336.4 $382.6 increased volum
Slide 14: Operating Revenues
Operating Revenues Q3 2022 vs. Q3 2021 Change in Operating Revenues (thousands) $25.9M related to Water and $1.3M related to Gas 1 2 1 Includes $25,488 of purchased gas. 2 Includes $52,041of purchased gas. 14
Slide 15: Operations & Maintenance Expenses
Operations & Maintenance Expenses Q3 2022 vs. Q3 2021 Change in Operations & Maintenance Expense (thousands) 15
Slide 16: Earnings per Common Share
Earnings per Common Share Q3 2022 vs. Q3 2021 Change in Earnings Per Share 16
Slide 17: Rate Activity
Rate Activity As of 11/06/2022 2022 Completed Pending Rate Pending Cases Rate Cases and Rate Cases and and Surcharges Surcharges Surcharges Water segment base rate cases Water segment base rate cases or surcharges in IL, NC, OH and or surcharges in NC, NJ, TX and PA with annualized revenue VA with r
Slide 18: Acquisition Growth and 2022 Guidance
Acquisition Growth and 2022 Guidance Chris Franklin Chairman, Chief Executive Officer, and President 18
Slide 19: Continued Water and Wastewater Acquisition Success
Continued Water and Wastewater Acquisition Success Cumulative Additions of Customers 2022 Closed Acquisitions Through Acquisitions Since 2015 Nearly PA PA Customers 114,000 (1) 120,000 East Whiteland Lower Makefield Water and Wastewater Customers and 100,000 • Wastewater • Wastewater $469 Million •
Slide 20: Pending Municipal Transactions
Pending Municipal Transactions ~$364.5M of pending rate base is expected to generate ~$18.2M of incremental annual earnings potential(1) 217,062 Total Customers(2) $364.5M Total Purchase Price Approved by PUC PA PA PA Willistown DELCORA Beaver Falls • Wastewater • Wastewater • Wastewater • 2,300 cus
Slide 21: Delcora Process Update
Delcora Process Update Upcoming Regulatory Key Dates Public Input Hearing November 17, 2022 Rebuttal and Surrebuttal Testimony December 16, 2022 and January 13, 2023 Hearings February 14 - 15, 2023 Recommended ALJ Decision Late April 2023 PUC Order June 15, 2023 Litigation with Delaware County Relat
Slide 22: 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 approximately 430,000 customers. While we do not expect to close all of these opportunities, this illustrates the numbe
Slide 23: Guidance
Guidance Earnings Capex Rate Base (1) Customer Growth ESG • Income per diluted • Regulated infrastructure • Regulated rate base • Average annual • Reduction of Scope 1 and 2 common share of $1.75 to investments of compound annual regulated water greenhouse gas emissions $1.80 for 2022 approximately
Slide 24: Questions?
% Essential. ~_— 24 UTILITIES:
Slide 25: Thank You for Attending
Thank You for Attending Essential’s Third Quarter 2022 Conference Call Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast NYSE Friday, February 24, 2023 LISTED WTRG 25
Slide 26: 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 26
Slide 27: Appendix
Essential. umluTes
Slide 28: Year to Date Financial Highlights
Year to Date Financial Highlights As of September 30, 2022 In millions except per share YTD 2021 YTD 2022 Percent Change Operating Revenues (GAAP) $1,342.5 $1,582.6 17.9% Purchased Gas $202.5 $354.9 75.2% Gross Margin (non-GAAP)(1) $1,139.9 $1,227.8 7.7% Operations and Maintenance Expense $391.9 $42
Slide 29: Operating Revenues
Operating Revenues YTD September 30, 2022 vs. YTD September 30, 2021 Change in Operating Revenues (thousands) 29
Slide 30: Operations & Maintenance Expenses
Operations & Maintenance Expenses YTD September 30, 2022 vs. YTD September 30, 2021 Change in Operations & Maintenance Expense (thousands) 30
Slide 31: Earnings per Common Share
Earnings per Common Share YTD September 30, 2022 vs. YTD September 30, 2021 Change in Earnings Per Share 31
Slide 32: 2022 Rates and Surcharges Completed
2022 Rates and Surcharges Completed As of 11/06/2022 Requested Annualized State Docket Number Segment Type Revenue Increase ($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 $4,016 M-202
Slide 33: Rates and Surcharges Pending
Rates and Surcharges Pending As of 11/06/2022 Requested Annualized State Docket Number Segment Type Revenue Increase ($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
Slide 34: State by State Comparison
State by State Comparison As of December 31, 2021 Rate Base Water Wastewater Total Rate Base Gas State State ($000s) Connections Connections Customers ($000s) Connections PA $3,936,496 447,726 45,572 493,298 PA $2,540,494 699,949 IL $437,697 66,670 23,578 90,248 KY $133,246 40,378 OH $430,046 151,22
Slide 35: Maximizing Rate Base Growth Potential
Maximizing Rate Base Growth Potential Water Gas ($ in Billions) ($ in Billions) $0.5 $0.5 $0.1 $6.3 $6.8 $7.1 $5.9 $3.0 $3.3 $3.6 $2.7 2021A 2022E 2023E 2024E 2021A 2022E 2023E 2024E Organic Acquisitions “A” denotes Actual 35 “E” denotes Estimate
Slide 36: Strong Balance Sheet: Central to our Strategy
Strong Balance Sheet: Central to our Strategy Select Credit Metrics (2021A – 2024E) Issuer Issuance Issuer Issuance Debt/Total Capitalization A A- Baa2 Baa2 50 – 55% A A+ -- -- Dividend FFO/Net Debt 12 – 14% Payout Ratio 60 – 65% A A Baa1 Baa1 Peer Issuer Ratings(1) Peer Issuer Ratings(1) 5 In order
Slide 37: Earnings Guidance
Earnings Guidance 2021 – 2024 Earnings Per Share 2022 annual earnings per share guidance of $1.75 to $1.80 $1.75 - $1.80 $1.67 2021A 2022E 2023E 2024E “A” denotes Actual “E” denotes Estimate 37
Slide 38: Earnings Weighted to 1Q, 4Q
Earnings Weighted to 1Q, 4Q Approximate Net Income By Quarter 1Q 35% 45% 2Q 10% 20% Based on company projections, 65-75% of 3Q 10% 20% net income is expected to be earned in 1Q and 4Q 4Q 25% 35% 38