On this page of StockholderLetter.com we present the 3/20/2023 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.

 •  3/20/2023 Letter Continued (Full PDF)
 •  3/19/2024 WTRG Stockholder Letter
 •  3/25/2025 WTRG Stockholder Letter
 •  More "Water Utilities" Category Stockholder Letters
 •  WTRG Benford's Law Stock Score = 72

WTRG 3/20/2023 Shareholder/Stockholder Letter Transcript:

I NT EG R I T Y | I NF R A ST RUC T U RE | I NV EST M E N T | I NN OVAT I O N | I NC LUS I O N | I NFLU E N C E
YEAR IN
REVIEW
2022
Essential Utilities, Inc.
2022 Annual Report
NYSE: WTRG

2022 YEAR IN REVIEW
OUR FOOTPRINT
10
STATES
5.5 million
3,200
PEOPLE SERVED
EMPLOYEES
O U R I M PA C T
4,000+
EMPLOYEE
VOLUNTEER HOURS
$4.5M
IN CHARITABLE
DONATIONS
445+
COMMUNITY
ORGANIZATIONS SUPPORTED
OUR INVESTMENT
430+
MILES OF PIPELINE
RETIRED OR REPLACED
$1B+
IN INFRASTRUCTURE
IMPROVEMENT
3
CLOSED WATER &
WASTEWATER ACQUSITIONS
SIGNED ACQUI SI T IO N AG REEMEN T S
3
WATER & WASTEWATER
SYSTEMS
1 | 2022 Annual Report
6,700+
TOTAL CUSTOMER
EQUIVALENTS
$26.9M
TOTAL PURCHASE
PRICE

Dear Fellow Shareholders:
As I reflect on 2022, I   m proud of our team and
the progress we made in our continuous quest to
improve. Throughout the year, we adeptly navigated
external challenges including rising interest rates
and inflation, continued societal change, evolving
public sentiment on free enterprise, and supply
chain issues. By remaining agile, adjusting our
plans and leaning on our experienced management
team, we continued to make incremental and
meaningful progress in our pursuit of excellence.
Our remarkable 136-year heritage of dependable
service, consistent innovation and high performance
has been guided by our core values of integrity,
respect and excellence. We remained focused
throughout this period of vast change on our core
mission     delivering high quality water, wastewater
and natural gas service to our customers.
A key component of our commitment is our expansive
capital investment program. In 2022, we invested more
than $1 billion to replace aging water, wastewater
and natural gas infrastructure. This investment
improves quality and safety, increases reliability
and enhances compliance for our customers.
We continue to execute our growth strategy by
offering solutions to municipal governments
overwhelmed by the financial, operational and
compliance challenges associated with running
water and wastewater utilities. Across the country,
there are nearly 50,000 water systems and 16,000
wastewater systems, presenting an opportunity for
Essential as we offer a fair market price, compliance
and excellent service following an acquisition.
In 2022, we continued to acquire and sign asset
purchase agreements for new water and wastewater
systems that will add new customers to our
footprint. We do not intend to acquire additional
natural gas utilities, but our strong gas platform in
western Pennsylvania will play an important role
in our acquisition strategy as we expand our water
and wastewater footprint into the same area.
In the nearly three years since our milestone
transaction to become Essential Utilities, our
natural gas segment has outperformed our
financial, operational and safety expectations
thanks to the laser focus of our dedicated
workforce and strong management team. This
strong performance is an asset to the company as
we expand our water segment by acquisition.
As we look to the future, we firmly believe energy
independence in the United States will require
that natural gas remains a key component of our
energy mix. With our gas segment   s ideal location
and innovative focus, we   re proud to participate
in the development of a regional energy hub. The
importance of reliable and accessible natural gas
is more evident as we watch the European Union
grapple with its dependence on Russian reserves,
and we know natural gas will play a crucial role in
communities across the country for decades to come.
A Word
from Our
Chairman
& CEO
Throughout this report, you will read in detail about
the innovative solutions we bring to the problems
and opportunities our country faces, now and
into the future. We pride ourselves on meaningful
innovation and believe real operational excellence
is achieved through continuous improvement.
Lastly, we continue to be an industry leader in our
environmental, social and governance (ESG) efforts,
setting and achieving ambitious goals to ensure we
are well-positioned to solve our nation   s infrastructure
challenges while protecting our natural environment.
We are committed to reducing our carbon footprint by
60 percent from a 2019 baseline by 2035, which we will
achieve through extensive gas pipeline replacement,
renewable energy purchasing, methane leak detection
and remediation, and natural gas and electric-powered
vehicle replacement. By the close of 2022, we achieved
a more than 23 percent reduction in emissions.
We are also dedicated to creating a culture of
inclusion at Essential, valuing differences as a
competitive advantage and ensuring our workforce
accurately represents the communities we serve. We
committed to 15 percent of our overall controllable
spend procured from diverse suppliers, and I am
thrilled to report our achievement of this target.
In addition, we are nearing achievement of our
target to reach 17 percent employees of color.
There is always more work to do, but I am encouraged
by our progress and proud to reach our first-stage
growth milestones as Essential. We are well positioned
to ensure our customer and employee experiences are
uniformly high, and we continue to grow in 2023.
On behalf of the entire Essential leadership team,
board of directors and our employees, we thank
you for your confidence and ongoing support.
Christopher H. Franklin
Chairman and CEO,
Essential Utilities Inc.
2022 Annual Report | 1

2022 FINANCIAL HIGHLIGHTS
In thousands, except per-share amounts
2022
2021
% Change
$2,288,032
$1,878,144
21.8%
Regulated Water Segment Revenues
$1,082,972
$980,203
10.5%
Regulated Natural Gas Segment Revenues
$1,143,362
$859,902
33.0%
Operations and Maintenance Expense
$613,649
$550,580
11.5%
Net income
$465,237
$431,612
7.8%
$1,062,763
$1,020,519
4.1%
$1.77
$1.67
6.0%
$1.1480
$1.0728
7.0%
$15,719,107
$14,658,278
7.2%
1,851,586
1,820,049
1.7%
Operating Revenues
Regulated Segments:
Capital Expenditures
Diluted net income per common share
Annualized dividend rate per common share (12/31)
Total Assets
Number of utility customers served (12/31)
2 | 2022 Annual Report

Diluted Adjusted Income per Common Share
Diluted Adjusted Income per Common Share
Dividends per Share (annualized)
$1.073
$1.77
$1.148
$1.003
$1.67
$0.937
$1.41
$1.47
$0.876
$1.27
th
7.0% Grow
2018 (1)
2019 (2)
2020 (3)(4)
2021
2022
2018
Capital Investment (in millions of dollars)
2019
2020
2022
Utility Customer Connections
751,502
$1,020.5
2021
753,244
756,341
$1,062.8
Water
Natural Gas
$889.1
1,047,301 1,066,805 1,095,245
1,005,590 1,026,704
$495.7
2018
$550.3
2019
2020 (5)
2021
2022
2018
2019
2020
2021
2022
(1) 2018 Net income per share was $1.08 (GAAP). 2018 adjusted for transaction costs and other items related to the Peoples transaction (Non-GAAP).
(2) 2019 Net income per share was $1.04 (GAAP). 2019 adjusted for transaction costs and other items related to the Peoples transaction (Non-GAAP).
(3) 2020 Net income per share was $1.12 (GAAP). 2020 adjusted for transaction costs and other items related to the Peoples transaction (Non-GAAP).
(4) Includes Peoples    operating results as of the closing date of the Peoples acquisition on March 16, 2020.
(5) 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 financial measures.
2022 Annual Report | 3



 3/20/2023 Letter Continued (Full PDF)