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V2 PENNICHUCK:?

VIA HAND DELIVERY

March 31, 2021

Ms. Lori Wilshire, President
Board of Aldermen

City of Nashua

229 Main Street

Nashua, NH 03060

Dear President Wilshire:

25 WALNUT STREET
PO BOX 428
NASHUA, NH 03061-0428

(603) 882-5191
FAX (603) 913-2305

WWW.PENNICHUCK.COM

On behalf of the Pennichuck Corporation Board of Directors, I am enclosing the following items
with respect to the Annual Meeting of Sole Shareholder to be held on Saturday, May 8, 2021:

1. Notice of Annual Meeting of Sole Shareholder and Proxy Statement;

2. Proxy Card; and

3. Annual Report to the Sole Shareholder (includes the Audited Consolidated

Financial Statements for December 31, 2020 and 2019).

Due to the state of emergency declared by Governor Sununu relating to the COVID-19 virus, the
Annual Meeting of Sole Shareholder will be conducted via electronic and telephonic means. To

attend the meeting, please use the following dial-in instructions:

Dial-in Number: 1-425-436-6322
Access Code: 871028#

Please contact Thomas J. Leonard, Chairman of the Board of Directors, or me, if you need

further information.

Regards,

22 Ale

Larry D. Goodhue
Chief Executive Officer and
Chief Financial Officer

cc. Mayor James Donchess
Board of Aldermen
Steven Bolton, Corporation Counsel
Susan Lovering, City Clerk

(O PENNICHUCK®

Pennichuck Corporation

Quarterly Report to the
Sole Shareholder
(City of Nashua Board of Aldermen)

Quarter Ended September 30, 2020

Pennichuck Corporation — Quarterly Report (Quarter Ended September 30, 2020)

Executive Summary

Revenues for the third quarter of 2020 were 14.4% higher than the prior year ($15.9 million
for 2020 versus $13.9 million for 2019). Revenues on a year-to-date basis were 10.9%
higher than last year ($37.6 million for the nine months in 2020 versus $33.9 million in
2019). Quarterly and year-to-date revenues were higher to prior year results as the
Company benefited from increased consumption levels at the regulated utilities due to the
dry weather patterns experienced during the Spring and mid-Summer months, versus the
comparative year. The Pennichuck Water Service Company revenues were below 2019
comparative results, due to reductions in their Unplanned Revenues and Backflow sales as
these activities were negatively impacted by the ongoing COVID-19 pandemic, versus
prior year results.

Operating Income for the third quarter of 2020 was 42.5% higher than the prior year
($5.7 million for 2020 versus $4.0 million for 2019). Operating Income on a year-to-date
basis was 68.6% higher than the prior year ($8.6 million for 2020 versus $5.1 million for
2019). Both of these variances are almost exclusively attributable to the quarter and
year-to-date revenue variations as previously discussed.

Pre-tax Income for the third quarter of 2020 was $3.0 million versus $1.3 million for
2019. Ona year-to-date basis, pre-tax income was $0.3 million for 2020 versus pre-tax
loss of $3.1 million for 2019.

Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) for the
third quarter of 2020 was 27.4% higher than the prior year ($7.9 million in 2020 versus
$6.2 million for 2019). On a year-to-date basis, EBITDA was $15.1 million for 2020
versus $11.5 million for 2019.

During the quarter, the Company paid approximately $2.1 million to the City in principal,
interest and dividends to fund the City Acquisition Debt. Year-to-date, the Company has
paid approximately $6.4 million to the City in principal, interest and dividends to fund
the City Acquisition Debt.

Capital expenditures for the third quarter of 2020 were $2.9 million compared to

$6.9 million in the third quarter of 2019. On a year-to-date basis, capital expenditures for
2020 were $5.8 million compared to $9.4 million in 2019. The decrease in activity for the
quarter and year-over-year can be attributed mainly to the Pennichuck Water Works, Inc.
deferment of the Kessler Farm Tank replacement project in Nashua to 2021, due to the
ongoing COVID-19 pandemic.

We remain focused on the Company’s primary mission, in that we continue to provide clean
water and excellent service to our customers and operate within the confines of the budgeted and
planned levels of operating and capital expenditures.

Pennichuck Corporation — Quarterly Report (Quarter Ended September 30, 2020)

Unaudited Financial Highlights

Financial highlights on a Generally Accepted Accounting Principles (“GAAP”) basis for the
third quarter of 2020 as compared to the third quarter of 2019, and the nine months of 2020 as
compared to the nine months of 2019, are as follows:

(000s)
Quarter Ended Year-to-Date
September 30, 2020 September 30,2019 September 30.2020 September 30, 2019

Revenues
Regulated Utilities $ 15,285 $ 13,201 $ 35,595 $ 31,748
Other 608 689 2.008 2.176
Total $ 15,893 $ 13,890 $ 37,603 $ 33,924
Operating Expenses
Regulated Utilities $ 9584 $ 9,287 $ 27,138 $ 26,787
Other 632 639 1,905 2.026
Total $ 10,216 $ 9,926 $ 29,043 $ 28,813
Operating Income $ 5,677 $ 3,964 $ 8,560 $ 5,111
Non-Operational Income 83 143 89 159
(Expense)
Net Interest Expense (2.728) (2.847) (8.333) (8.344)
Pre-Tax Income (Loss) $ 3,032 $ 1,260 $ 316 $ (3,074)
Income Tax Benefit (Expense) 1,026 437 277 253
Net Income (Loss) $ 4,058 $ 823 $ 593 $ (3,327)
Earnings Before Interest, $ _ 7,897 $ _ 6,153 $ 15,062 $ 11,512
Taxes, Depreciation and
Amortization

Revenues from the water utility operations increased 15.9% in the quarter and increased 12.3% on
an annual basis versus last year. Revenues include actual billed amounts through and including
the September billing cycles, plus an accrual of unbilled amounts through the end of that month
(based upon trailing consumption patterns). Revenues from the unregulated water service
business have decreased 14.3% in the quarter and 9.1% on an annual basis, respectively. This is
primarily due to the revenue variations previously discussed.

Operating Expenses have increased approximately 3.0% in the third quarter and 0.7% on a year-
to-year basis. The increase is mainly attributable to increased direct operating costs associated
with the increase in water consumption levels, as well as increases in labor and benefit costs.

Pennichuck Corporation — Quarterly Report (Quarter Ended September 30, 2020)

Operating Income has increased year-over-year as a result of the variation in revenue and
operating expense levels recognized for the quarter and year-to-date.

Interest Expense decreased in the third quarter by 3.6%, as compared to the third quarter of last
year; however, year-to-date versus last year has remained virtually unchanged as the results from
the September 2™ Pennichuck Water’s issuance of approximately $73.6 million of taxable bonds
will not be fully impactful until the 4" quarter of 2020. The taxable bond refinancing was
completed in order to: (1) advance refund and refinance Pennichuck Water’s series 2014A,
2015A, and 2015B bonds; (2) early retire an AULI bank loan set to mature on March 1, 2021;
(3) replenish the MOERR RSF account to its original imprest level; and (4) provide for
repayment of Pennichuck Corporation’s Working Capital Line of Credit (WCLOC) for monies
borrowed to maintain the Company’s RSF funds awaiting the completion of this refinancing and
the implementation of new water rates for Pennichuck Water Works, in conformity with the
Company’s key mission objectives.

The third quarter pre-tax income and year-to-date pre-tax income for 2020 versus pre-tax levels
for 2019 are due to the revenue and expense variations discussed above.

The year-to-date income tax benefit in the current year reflects the treatment for the Municipal
Acquisition Regulatory Asset as well as the inclusion of contributions-in-aid-of-construction
(“CIAC”), which are not deductible for tax purposes. Therefore, the tax benefit is -87.7% versus
the statutory rate benefit of 27.08% on a year-to-date basis.

Earnings before interest, taxes, depreciation and amortization (EBITDA) are higher than EBITDA
for the same periods last year due to increased revenues, which more than offset increased operating
expenses and relatively flat interest expense levels in comparison to 2019.

Pennichuck Corporation — Quarterly Report (Quarter Ended September 30, 2020)

(000’s)
Balance Sheet As of As of
September 30, 2020 December 31, 2019
(Unaudited) (Audited)
Assets
Property, Plant & Equipment, Net $ 237,995 $ 237,182
Current Assets:
Cash 1,826 4.885
Restricted Cash See! 10,289 1,963
Restricted Cash — Bond Project Funds 24 3,426
Accounts Receivable N°? 7,821 5,631
Inventory 626 648
Other Current Assets N°? 1,057 1.418
Total Current Assets 21,643 17.971
Other Assets:
Acquisition Premium 67,718 69,263
Other Assets 13,398 13.727
Total Other Assets 81.116 82.990
TOTAL ASSETS $ 340,754 $ 338.143
Shareholder’s Equity and Liabilities
Shareholder’s Equity $ _ 3.036 $ _ 2.739
Bonds, Notes and Mortgages 223,830 212.296
Current Liabilities:
Lines of Credit 8+ 5,262 9,283
Current Portion of Long-Term Debt 7,167 6,582
Other Current Liabilities X°> 4.552 6.722
Total Current Liabilities 16,981 22.587
Other Long-Term Liabilities:
CIAC, net 54,753 54,770
Deferred Income Taxes 14,122 14,427
Accrued Pension Liability “°“° 12,627 12,971
Other Long-Term Liabilities 15.405 18.353
Total Other Long-Term Liabilities 96.907 100,521
TOTAL SHAREHOLDER’S EQUITY AND $ 340,754 $ 338.143

LIABILITIES

Board of Aldermen 07-13-2021 Page 28

amend this process so that if someone has not paid their dog fees that that essentially gets tacked on to another
bill like their car registration if they have one or property taxes to make it a little bit more of an efficient process.

| think there are a lot of issues with it. | think the $7.00 cost of service fee part cost doesn’t cover the cost of an
actual service of the Police Department. So | would hope maybe we can look into that; the State can look into
that moving forward. Again it is not really a big issue but something that comes up every year and bothers me so
| thought | would bring it up.

| also wanted to congratulate the Mayor of getting the support of all the public comment tonight. | think it’s a first
for the people coming in so congratulations.

Alderman Lopez

First | just wanted to express my condolences to the family, friends and the community on the passing of
Reverend Perkins. She has attended a lot of events over the years, particularly vigils and faith gatherings. She
is a very inspirational part of the community and | just wanted to acknowledge her passing. | wanted to - we
brought up the upcoming resolution to adopt Juneteenth; | just wanted to communicate that last year we had
talked about adopting Indigenous Persons Day as a substitute for Columbus Day and | have been in coordination
with Alderman Kelly and with the Cultural Connections Committee, the Library and the Mayor and doing some
due diligence on that and making sure that we are actually coordinating the Indigenous People and are making
sure that they are represented in our history and how we would celebrate that day.

| wanted to bring the Board’s attention to the Board of Health Meeting tomorrow at 12:30. | had emailed them
and let them know that we had tabled the motion to expand the Board. | didn’t hear any specific concerns about
the size about, the scope of it or that it would interfere, just that there was a preference on the part of the Chair
not to. So | wanted to have that discussion at the Committee Level because he has expressed that he had not
heard of it prior to that and had not gotten any emails. | did double check and our Legislative Assistant did
forward that to the Board of Health when it was passed and | do personal recall (audio feedback) bringing it up at
past meetings. But | think either way the Board of Health should have the opportunity to discuss it. How that is
reflected in their minutes | am not entirely sure because they don’t take verbatims which is why | am inviting other
Aldermen to attend because | don’t intend to contradict a Board with regards to a recommendation on how it is
structured but you won’t be able to hear the arguments or see the arguments unless there is an audio record kept
or the meetings are done verbatim which has not been the case for the last several. So, again, that would be
tomorrow at 12:30.

And then finally | wanted to draw the Board’s attention to the Your Choice Your Voice initiative that the
Community Development Office is doing. The futsal court that Alderman Klee mentioned and has really been a
huge addition to Ash Street was created at the behest and with the support of local residents. Some of the
children at the PAL Center particularly identified that as a possible use for resources and that’s how participatory
budgeting works. You let people living in that immediate area and in that neighborhood identify what kind of
amenities or what kind of resources or what kinds of supports they would like to use $40,000.00 for. So it is a
great educational experience for people in the community, it’s a great opportunity for them to feel like they are
heard and they are actually involved, even the name Your Choice Your Voice kind of communicates that. So |
would encourage Aldermen to attend to that. | am planning a local town hall meeting two weeks from Wednesday
on July 28" at 9:00 a.m. in Palm Square and | am expecting the Community Development Division to present at
that point. So if Aldermen would like to attend for that, you are definitely invited. Thank you.

President Wilshire
What day is that Alderman Lopez?

Alderman Lopez
Wednesday July 28" at 9:00 a.m.

Board of Aldermen 07-13-2021 Page 29
President Wilshire

Thank you. Alderman Caron?

Alderman Caron

Yes, thank you. Just a couple of things. Mayor | want to thank you and Channel 16 for showing the 4" of July
fireworks on TV live that day. | did get a lot of comments because people still did not want to go out with such a
large crowd. So hopefully next year you can do it again. | thought it was great, maybe a little bit more advertising
ahead of time. But! thought it was fabulous. And the other thing is | want to thank your staff for taking the time
to review all those members whose terms have expired on these Boards and Commissions because | had
received a phone call that there were some that were really outdated. And they really worked hard and Madam
President, none of them have to come to the Personnel Meeting, we will just read them off. But thank you. And |
think you have about 10 or 15 more to go. So | really appreciate Cheryl and your staff taking the time to do that
really. And Alderman Jette, Mr. Fredette is old enough to retire.

Alderman Dowd

Yeah | would just like to say that all of our FY’22 budget meetings are now over. We will have a budget meeting
later in the month; | think we have one thing, maybe two now with this meeting on the Agenda. So it will be very
short. And | just want to thank all of the members of the Budget Committee for going through all the time and
effort to look through the budget. It is always difficult and | think in the end we will cherish the budget that we
approved. So thank you.

Alderman Klee

Thank you Madam President. To Alderman Lopez, | got word that the July Board of Health meeting was
cancelled because they are moving. That’s what | got from Dr. ...

Alderman Lopez

There’s still an update on my thing.

Alderman Klee

... from Dr. Wolf-Rosenbloom this morning because | have been trying to meet with her. So | think it has been
cancelled. She said the meeting for July is cancelled due to the Public Health Department’s move. So | don’t

know if that was advertised or not, | actually put out that the meeting was there too so we may need to check on
that.

Alderman Lopez

So it had been originally proposed to but | still got the meeting invite, so | mean the meeting invites went out —
maybe nothing.

Alderman Klee
Maybe she’s mistaken.

Alderman Lopez

She’s 30% of the Board so | don’t think she is. That ties back to that quorum issue.

Board of Aldermen 07-13-2021 Page 30
Alderman Klee

I'd like to thank my colleagues and especially the Budget Committee for all of their hard work. We didn’t always
agree on everything but | don’t think we’ve made any mistakes. | think everybody worked very hard and the way
it came out is the way it came out. | think everybody and | think the citizens should know that every single person
went to that — every meeting — with 100% and for those who couldn’t such as myself due to illness or other
things, watched those meetings, asked those questions. It is never an easy decision to make in any way, shape
or form. But I’d like to thank all my colleagues for all their hard work on that.

And | also wanted to comment on the passcode error. | did get a couple of phone calls on that as well. And | just
want to remind the citizens that if they can’t get in, there is a telephone number that is usually part of that for
them to call and | think that that person might be able to help them. For one of my constituents that did work so
just for future reference, we are human, we all mistakes. | just recently gave out my phone number and only
gave out six digits and | missed one of the ones in the middle and someone said to me, is this a contest and |
went, yes and if you get it right you get to talk to me. So yeah those things kind of happen.

| would also like to acknowledge again Hazy Ice Cream. That fire was in my Ward and | got so many phone calls
from people telling me how wonderful they were and | believe that they are constituents of Alderman Lopez but
they were so kind and there were scared children there and giving them some ice cream and trying to help them,
it doesn’t take away the fear but it kind of lessens the anxiety a little bit. They went above and beyond and | am
very grateful that they were given the commendation from the fire fighters and from the Mayor. And as far as Mr.
Fredette is concerned, | agree with you Alderman Jette, he does not look old enough but | have to go with my
esteemed colleague based on all of the things that the Mayor had said that he had done, no one could
accomplish in the amount of years that he looks versus the amount of years that he’s had. So | want to know
who his doctor is.

And as far as the dog warrants are concerned, | agree again with Alderman Tencza. | get a lot of phone calls
from people saying, well why are we charging this and why are we charging that. It does come down from the
State, it is not the City Clerk trying to be mean and nasty and rile up all their dogs. It is a small fee but people do
forget. | know during COVID | got a few phone calls, people saying Oh my God, it’s June and July and | forgot to
do my ... and it was try to do it online if you can. You can’t if your rabies vaccination is up but | know Ms.
Lovering and that the City Clerk’s Office has bent over backwards to try to help people get in there and they are
not the bad guys in all of this. It is the State, | appreciate some of the suggestions that Alderman Tencza had
brought up. | am not sure that those necessarily would work putting it on property taxes or cars because some
people may not have those. But | agree, there has got to be some work around for it and | think we should look
into.

And | am also grateful that we have agreed to put the Charitable gaming back on the ballot and let the voters
decide. If they so “no” so be it; if they say “yes” than more for it. So thank you so much for the time.

Alderman O’Brien

Thank you Madam President. | too would like to recognize Dave Fredette, worked with him on several
committees. He’s been here a long time and | have referred to him with his knowledge; he will be missed. But
congratulations Dave on your announcement. And | also would like to thank the Mayor and to Fire Chief Rnodes
for recognizing Hazy Ice Cream. Every once in a while people that know that | was a firefighter will probably ask
what do | prefer, fight a fire during a blizzard or a 90 degree day; I'll take the blizzard. You can always get warm
but when it is a hot day like it was that day, my son was working | had my grandson with me and we went up to
watch the fire. And I'll tell you being there myself my heart went out to the brothers they did a very good job
under extreme weather conditions and where some people were taking their siesta or resting or finding a shady
tree, these guys are going from heat into heat and they come back out and there’s no break. So therefore to have
a tasty treat from the Hazy Ice Cream Company, water supply from the Department was very much needed and
again thank you Mr. Mayor and to the Chief for recognizing them. And it is nice to see the community
involvement of people caring like that. So very good, tally ho. Thank you Madam President.

Board of Aldermen 07-13-2021 Page 31
President Wilshire
Thank you. Two bites at the apple tonight? Alderman Lopez.

Alderman Lopez

So | checked the public calendar and the Board of Health Meeting is not on it so it is probably some kind of
computer glitch or something. So | don’t think there’s a meeting tomorrow.

President Wilshire

OK | would like to send my condolences to the community who was touched by Reverend Perkins. She was quite
a dynamite person. She had been around for a long time, has done a lot of good things in the community so my
condolences to her family, friends and her community. Also, regarding Dave Fredette, I’ve known Dave Fredette
for well 25, 30 years or so; top notch guy. | mean he is | think one of the best employees this City has. | think he
is very competent; he will be missed. | mean he’s done a lot of good work for the City, great guy. | wish him well
in his retirement. Also my condolences to him for the loss of his brother. | guess that’s all | have.

Committee announcements:

Alderman Dowd
Yes Thursday the Joint Special School Building Committee 7:00 p.m. in the Nashua High North Board Room
and it is all in person; there’s no Zoom here. And if you think you should add it to there, it is all up to the Board
of Education because they own the building.
Alderman O’Brien
Yes unfortunately or fortunately nothing is up on Infrastructure so members of the Committee enjoy your time
off; it is the first one. And | think the Personnel and Administrative Affairs Committee will be taking up the slack,
so good luck to you.
ADJOURNMENT
MOTION BY ALDERMAN O’BRIEN THAT THE JULY 13, 2021, MEETING OF THE BOARD OF ALDERMEN
BE ADJOURNED, BY ROLL CALL
A viva voce roll call was taken to adjourn the Board of Aldermen meeting which resulted as follows:
Yea: Alderman O’Brien, Alderman Klee, Alderwoman Kelly, Alderman Dowd,

Alderman Caron, Alderman Clemons, Alderman Lopez, Alderman Tencza,

Alderwoman Lu, Alderman Jette, Alderman Schmidt, Alderman Laws,

Alderman Cleaver, Alderwoman Harriott-Gathright, Alderman Wilshire 15
Nay: 0
MOTION CARRIED

The meeting was declared adjourned at 9:24 p.m.

Attest: Susan K. Lovering, City Clerk