American Water Works Company, Inc.

Good morning and welcome to American Water's second quarter 2019 earnings conference call. As a reminder, this call is being recorded and is also being webcast with an accompanying slide presentation through the company's investor relations website. Following the earnings conference call, an audio archive of the call will be available through August 8, 2019. U.S. callers may access the audio archive toll-free by dialing 1-877-344-7529. International callers may listen by dialing 1-412-317-0088. The access code for replay is 1-0133-489. The audio webcast archive will be available for one year on American Waters Investor Relations website at ir.amwater.com forward slash events. If you require operator assistance, please press star then zero on your telephone keypad. I would now like to introduce your host for today's call, Ed Vallejo, Vice President of Investor Relations. Mr. Vallejo, you may begin.

Thank you, Andrew, and good morning everyone, and thank you for joining us here today. So during the course of this conference call, both in our prepared remarks and in answers to your questions, we may make forward-looking statements that represent our expectations regarding our future performance or other future events. These statements are predictions based upon our current expectations, estimates, and assumptions. However, since these statements deal with future events, They are subject to numerous known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from the results indicated or implied by such statements. Additional information regarding these risks, uncertainties, and factors, as well as a more detailed analysis of our financials and other important information, is provided in the earnings release and in our Form 10-Q, each as filed with the SEC. Reconciliations for non-GAAP financial information discussed in this conference call, including adjusted income, adjusted earnings per share, adjusted return on equity, and our adjusted regulated O&M efficiency ratio can be found in our earnings release and in the appendix of the slide deck for this call. Also, this slide deck has been posted to our investor relations page on our website. All statements in this call related to earnings and earnings per share refer to diluted earnings and earnings per share. At the end of our prepared remarks, we will open the call up for questions. And now I will turn the call over to American Water's President and CEO, Susan Story.

Thanks, Ed. Good morning, everyone, and thanks for joining us. Today, our CFO, Susan Hardwick, will cover our second quarter financial results, and our COO, Walter Lynch, will give key updates on our operations. American Water employees delivered strong results in the second quarter despite the significant impact of unusually wet weather throughout our service area. I'll highlight just a few of the accomplishments this quarter. First, we continue to deliver strong, consistent growth and financial performance. Adjusted earnings were up 13.3% compared to last year despite the wet weather I just mentioned. As a reminder, weather impacts typically occur in the third quarter, but the historical rains and flooding the second quarter resulted in a five-cent quarter-over-quarter difference. We saw growth in our regulated and market-based businesses during this quarter. We added more than 37,000 customer connections year-to-date through both closed acquisitions and organic growth. This includes welcoming over 23,000 wastewater customers in Alton, Illinois, where we have been privileged to provide water for our company's entire 133-year history. Alton is also home to one of our regulated business customer care centers and a homeowner services customer center. We finalized general rate cases in Kentucky and Indiana, where we have invested more than $600 million combined since our last cases to ensure clean, safe, and reliable water for our customers. Walter will give more details on our regulatory activities in just a minute. All three market-based businesses grew with especially strong growth from homeowner services. We were proud to join Philadelphia officials in May to announce that our water and sewer line protection partnership is already having a significant positive impact for customers in the Philadelphia community. Also in the quarter, we successfully completed a $1.1 billion debt offering and S&P affirmed our A corporate credit rating with a stable outlook. We're pleased with S&P's decision. Having access to capital at lower debt costs enhances our ability to make needed investments while minimizing the cost impact on the customers we serve. Slide six shows our year-to-date performance. The foundation for our earnings growth continues to be the capital investment we make in our regulated operations. We invested almost $800 million during the first half of the year, with virtually all dedicated to our regulated business. We expect to invest $1.8 to $1.9 billion for the year, reflecting both the strong acquisition closings this year, along with continued and growing need for infrastructure investment in our regulated states. And, as I mentioned, results for our market-based businesses continues to be strong. Moving to slide seven. With this continued strong performance and our commitment to the execution of our strategies, we are affirming our 2019 adjusted EPS guidance of $3.54 to $3.64 per share. American Water will invest $8 to $8.6 billion from 2019 through 2023 as we continue to invest in our infrastructure. We have a line of sight to a 31.5% O&M efficiency ratio by 2023, which is a key element of our commitment to ensure affordability for our customers. And under our 2019 to 2023 plan, we do not see the need to issue equity. In summary, we remain on track to meet our long-term earnings growth target in the top half of the 7% to 10% range. Now, Walter will give a more detailed update on our regulated business.