On this page of StockholderLetter.com we present the latest annual shareholder letter from Essential Utilities, Inc. — ticker symbol WTRG. Reading current and past WTRG letters to shareholders can bring important insights into the investment thesis.

 •  3/19/2024 Letter Continued (Full PDF)
 •  3/20/2023 WTRG Stockholder Letter
 •  More "Water Utilities" Category Stockholder Letters
 •  WTRG Benford's Law Stock Score = 90

WTRG Shareholder/Stockholder Letter Transcript:

Proven. Purpose. Progress.
NYSE: WTRG
2023 ANNUAL REPORT

2023 YEAR IN REVIEW
Proven: OUR FOOTPRINT
9
5.5 million
1.9 million
3,200+
states
people served
customer connections
employees
Purpose: OUR IMPACT
4,700+
$5.5M+
450+
employee
volunteer hours
in charitable
donations
community organizations
supported
Progress: OUR INVESTMENT
443
$1.2 billion
7
11,000
miles of pipeline
replaced or retired
in infrastructure
improvement
acquired water
and wastewater
systems
new customer
equivalents gained
SI G N ED ACQU I S I T I O N AG REEM EN T S A S O F Y E A R EN D
6
215,000
~$380 million
water &
wastewater systems
total customer
equivalents
total purchase
price

A WORD FROM OUR CHAIRMAN & CEO
Dear Shareholder,
In March 2024, we celebrated four years as Essential Utilities after
combining two companies that collectively enjoy more than 260
years of successful operations. When I re   ect on what we   ve
accomplished in that time     the success we   ve achieved, lessons
we   ve learned and milestones we   ve reached     one thing is clear:
together we are among the strongest utilities in the United States.
Four years ago, our premise was that we could put Aqua and
Peoples together and create a large, regulated, underground pipe
company. We believed then     and still believe today     that we could
use our combined operational expertise,    nancial strength and
regulatory credibility to continuously improve our water and natural
gas infrastructure while providing a regulated and fair return for our
shareholders.
Our sharp focus on operational excellence has allowed us to
consistently provide high-quality service to our customers. In
fact, our water utility regularly and signi   cantly outperforms the
U.S. average for water quality compliance. These are remarkable
accomplishments for even the best utilities in the United States.
When we announced the combination of Aqua and Peoples in
2018, some had doubts about whether the companies could
be successfully combined and operated. We had a lot to prove!
Since then, we have invested $1.7 billion to improve natural gas
infrastructure including the replacement or addition of nearly
1,200 miles of natural gas mains. In 2023, we invested more
than $527 millon in natural gas infrastructure improvements to
increase safety and reliability across the natural gas platform.
These improvements also allowed us to reduce our carbon footprint
by nearly 30 percent since the acquisition of Peoples by decreasing
stray methane emissions.
Although natural gas was a new priority for us, we never lost
focus on the water business. Since 2020, we have invested more
than $2.4 billion on water projects including the replacement of
more than 600 miles of water main. We are meeting the nationally
recognized challenges associated with lead service line removal and
PFAS contamination by addressing these issues with scienti   cally
sound treatment and technology. As of this publication, the EPA
is still writing the PFAS regulations, but we will fully comply with
federal and state regulations once they are promulgated.
Another advantage to our combined company has been the ability
to use the strong reputation of Peoples to grow our water utility in
the Pittsburgh region. While we have no plans to acquire additional
natural gas utilities, we have completed one water transaction and
have several others under consideration in western Pennsylvania.
Leveraging the reputation and relationship of the Peoples team has
made these transactions possible.
Essential continues to build on our history of growth through
acquisition, with a strategy of investing in water and wastewater
systems that are struggling to meet increasingly stringent
regulatory, environmental and/or cybersecurity demands. By
leveraging our compliance expertise, purchasing power and
operational ef   ciencies, we have infused needed capital and
resources into the systems we own and acquire to rehabilitate the
infrastructure required for reliable and safe services.
In 2023, Essential   s regulated water segment acquired seven
systems, collectively adding over $44.5 million in rate base and
more than 11,000 new customers or equivalent dwelling units to
our footprint. Additionally, we have six signed purchase agreements
for additional wastewater systems in two of our existing states that
are pending closing. Together these systems represent over 215,000
equivalent retail customers
or equivalent dwelling units
and total approximately $380
million in purchase price.
Throughout this report,
we   ve detailed our work
in 2023 to deliver on our
company   s mission: to
sustain life and improve
economic prosperity by safely
and reliably delivering Earth   s
most essential resources
to our customers and
communities. I   m immensely
proud of Essential Utilities   
PROVEN track record and
deep PURPOSE that drives the work we do every day. And     as we
look ahead     we   re committed to continuing to drive PROGRESS
for our customers and the communities we serve resulting in
shareholder value.
Essential   s long history of operational and compliance expertise
has earned us a reputation as a trusted community partner. In
2023, we were proud to lend our expertise in times of need,
including stepping in to operate a troubled water system in Western
Pennsylvania at the direction of the DEP, and utilizing our lab testing
capabilities to support the EPA and the Greater Philadelphia region
during a chemical spill in the Delaware River. Our operational
capabilities have also enabled us to take proactive measures to
protect our water customers against contaminants of emerging
concern, including PFAS and lead.
Above all, we take our responsibility as a corporate citizen seriously.
In 2023, our investment in the community included more than
$5.5 million from the Essential Foundation, providing funding to
organizations that create positive outcomes for the environment,
address human services and food insecurity, encourage diversity
and inclusion, focus on economic growth and development,
support education, and protect emergency services.
We remain focused on ensuring that our employee base and
procurement of goods and services re   ect the complexion of the
communities we serve. You can learn more about our ongoing
commitments by reading our latest sustainability report at ESG.
Essential.co.
When we chose the name    Essential Utilities    for our newly formed
company in 2020, it was no accident. After all, the work we do
every day is truly essential, and we take that responsibility seriously.
The services we deliver     24 hours a day, 365 days a year, to millions
of people in homes and businesses across our footprint     are critical
to sustaining life and fueling the economy.
I   m grateful to all who make this work possible: our employees, our
customers and our shareholders. Together, we are well-positioned
to build upon our longstanding track record of operational
excellence and growth throughout 2024 and beyond. Thank you for
your support and your con   dence.
Christopher H. Franklin
Chairman and CEO,
Essential Utilities Inc.
2023 Annual Report | 1

2023 FINANCIAL HIGHLIGHTS
In thousands, except per-share amounts
2023
2022
% Change
$2,053,824
$2,288,032
-10.2%
Regulated Water Segment Revenues
$1,153,376
$1,082,972
6.5%
Regulated Natural Gas Segment Revenues
$863,759
$1,143,362
-24.5%
Operations and Maintenance Expense
$575,518
$613,649
-6.2%
Net income
$498,226
$465,237
7.1%
Capital Expenditures
$1,199,103
$1,062,763
12.8%
$1.86
$1.77
5.1%
$1.2284
$1.1480
7.0%
$16,841,459
$15,719,107
7.1%
1,857,461
1,851,586
0.3%
Operating Revenues
Regulated Segments:
Diluted net income per common share
Annualized dividend rate per common share (12/31)
Total Assets
Number of utility customers served (12/31)
2 | 2023 Annual Report

Diluted Adjusted Income per Common Share
Dividends per Share (annualized)
$1.86
$1.228
$1.77
$1.148
$1.67
$1.073
$1.47
$1.003
$1.27
2019 (1)
2020 (2)(3)
$0.937
2021
2022
2023
2019
Capital Investment (in millions of dollars)
2020
2021
2022
2023
Utility Customer Connections
$1,199.1
Natural Gas
Water
$1,020.5
751,502
$1,062.8
753,244
756,341
743,746
$889.1
1,095,245 1,113,715
1,026,704 1,047,301 1,066,805
$550.3
2019
2020 (4)
2021
2022
2023
2019
2020
2021
2022
2023
(1) 2019 Net income per share was $1.04 (GAAP). 2019 adjusted for transaction costs and other items related to the Peoples transaction (Non-GAAP).
(2) 2020 Net income per share was $1.12 (GAAP). 2020 adjusted for transaction costs and other items related to the Peoples transaction (Non-GAAP).
(3) Includes Peoples    operating results as of the closing date of the Peoples acquisition on March 16, 2020.
(4) 2020 Capital investment includes $53.5 million of capital invested by Peoples prior to closing.
Please see the investor relations page of Essential.co for a reconciliation of GAAP to non-GAAP    nancial measures.
2023 Annual Report | 3



 3/19/2024 Letter Continued (Full PDF)