Veolia Utility Resources LLC

Overview Key strengths Key risks Derives the vast majority of cash flows from low-risk, rate-regulated water and wastewater utility operations. Negative forecast discretionary cash flow indicates external funding needs, which will likely entail additional leverage. Benefits from geographic and regulatory diversity, given that it provides services to about 2.1 million customers across six states. Inflationary trends and the higher interest rate environment could weigh on the company?s credit quality. Effective management of regulatory risk, as demonstrated by the implementation of numerous constructive regulatory mechanisms. Derives the majority of revenue from residential and other lower-risk sources, which are less cyclical than industrial and commercial sources. The company files for periodic water rate cases, as needed, in its main operating regions--including New

...Veolia Utility Resources (VUR) continues to demonstrate effective regulatory risk management. The company files for periodic water rate cases, as needed, in its main operating regions--including New York, New Jersey, Pennsylvania, Delaware, Idaho, and Rhode Island--and is subject to regulation by the public utility commissions of each of these states with respect to its rate filings. Some of VUR's ongoing rate filings are in New York and Idaho, where it is seeking to either increase its annual water rates or recover costs associated with water system integrity and improvement projects. We will continually monitor developments related to these rate filings, as well as VUR's ability to reach constructive regulatory outcomes. We expect VUR to remain an insulated subsidiary of Veolia Environnement S.A. (Veolia). A number of insulating measures between VUR and Veolia enable us to rate VUR up to three notches above our rating on Veolia. We expect VUR to maintain funds from operations (FFO) to...

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