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[ Press Release ] Fitch Affirms Indian River County, FL Water & Sewer Revs at'AAA'; ... Page 2 of 7 MAINTENANCE OF STRONG FINANCIAL POSITION: Indian River County, Florida water and sewer system's very strong underlying credit fundamentals, which include healthy financial performance, limited and rapidly amortizing debt, and limited capital needs, support the'AAA' rating. A significant decline in one or more of these positive attributes, although unexpected, could affect the rating. CREDIT PROFILE Indian River County (Issuer Default Rating 'AAA') is located on Florida's central Atlantic coast about 86 miles southeast of the city of Orlando. The county covers nearly 500 square miles and has a population of roughly 150,000. The economy is supported by construction, manufacturing, health care, tourism, educational services, retail and distribution. STRONG CURRENT AND FUTURE FINANCIAL PROFILE The system's financial performance has been historically solid, with above 2.Ox DSC consistently since 2009 and 3.Ox Fitch -calculated DSC in fiscal year 2017. The county's conservative management maintains this positive coverage level as well as substantial cash reserves in an effort to guarantee available cash for unforeseen system needs. According to the management provided forecast, Fitch -calculated unaudited coverage for fiscal year 2018 is expected to be 3.8x, and 3.3x and above through fiscal year 2023. Based on historic performance and limited capital and expenditure needs, Fitch expects that positive financial results will continue. Liquidity is extremely strong, with the system ending fiscal year 2017 with more than $45 million in unrestricted cash on hand in addition to roughly $27 million in restricted construction funds. Strong cash balances are expected to continue as capital needs are limited. LOW DEBT, MANAGEABLE CAPITAL NEEDS The system's debt profile is a key credit strength. Debt per customer is very low at approximately $280 in fiscal year 2017, well below average compared with other similarly rated systems. Debt to net plant is also strong at 12% for the same period, and amortization is very fast, with all debt maturing by 2024. The county's five year 2018-2022 CIP of $47 million is expected to be funded entirely via pay - go with some grant support. Major projects include septic to sewer conversions, automated meter reading, and overall improvements to the system. Historic capital spending since 2013 has been low, with capex relative to the rate of annual depreciation averaging only 31 % during that time. While Fitch views this level of capex as somewhat weak and possibly as an indicator of deferred maintenance, the system is relatively new (estimated age of plant is 18 years, slightly above the AAA median of 15 years) and underwent substantial capital investment in 2008 to ensure long-term supply and capacity availability. Positively, the system increased the amount it spent on R&R in fiscal year 2017 and expects to continue this level moving forward. 7 https://www.fitchratings.com/site/Pr/10050946 11/13/2018