American Water Works Company, Inc.

Good morning and welcome to the American Water's third 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 November 7, 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 the replay is 101-35909. The audio webcast archive will be available for one year on American Waters Investor Relations' website, at ir.amwater.com slash events. 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, Alyssa, and good morning, everyone, and thank you for joining us in today's call. During the course of this conference call, both in our prepared remarks and 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 estimates 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 in an informed 10-Q each as filed with the SEC. Reconciliations for non-GAAP financial information discussed on 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 of 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, of course, open the call to your questions, and now I'll turn the call over to American Water's President and CEO, Susan Storey.

Thanks Ed. Good morning everyone and thanks for joining us. Today our CFO Susan Hardwick will cover our third quarter financial results and our COO Walter Lynch will give key updates on our operations. American Water employees continue to deliver strong results. Let me highlight just a few of our third quarter accomplishments. We continue to have strong financial performance. Adjusted earnings were up 10.8 percent compared to last year's third quarter and we saw growth in both our regulated and market-based businesses. In our regulated business, we've added more than 57,000 customer connections year-to-date. This includes 46,900 customers through closed acquisitions and 10,400 through organic growth in our existing service areas. We most recently closed on the water assets of Stilton Borough, Pennsylvania and Lake Station, Indiana, as well as the wastewater assets of Exeter Township in Pennsylvania. We're excited to welcome our new customers and our new employees. Additionally, in the coming months, we will welcome an additional 26,400 customer connections through agreements that are signed and pending. Moving to our market-based businesses, we're extremely honored to be awarded Department of Defense contracts for the water and wastewater systems at Joint Base San Antonio in Texas and the United States Military Academy at West Point, New York. Joint Base San Antonio includes Randolph Air Force Base, Fort Sam Houston, Camp Bullis, and Lackland Air Force Base. These installations support over 187,000 jobs across the state of Texas. The United States Military Academy at West Point is the oldest continually operated Army post in the United States. The campus is home to 4,400 cadets, and was once home to our own COO, Walter Lynch, a West Point alumnus and Army veteran. The opportunity to expand our military footprint to 16 bases across the country is a testament to American Water's industry-leading water research, development, and operational excellence. It's a privilege to ensure the delivery of safe, clean, and reliable water and wastewater services for our country's military members and their families. With this continued strong performance and our disciplined approach to our business, we are narrowing our 2019 adjusted EPS guidance to $3.56 to $3.64 per share from $3.54 to $3.64. Moving to slide six, the foundation for our earnings growth continues to be the capital investment we make in our regulated operations. Through September 30, we invested around $1.3 billion, with about $1.2 billion into our existing regulated infrastructure and around $85 million in regulated acquisition closings. We expect to invest approximately $1.9 billion total for the full year, with projections of more than $260 million for regulated acquisition closings and around $1.7 billion to address the continued and growing need for infrastructure investment across our footprint. Results for our market-based businesses are also strong, contributing to both net income growth and cash flow generation, given the capital-light nature of these businesses. So in summary, we will continue to invest in our infrastructure, and we have line of sight to a 31.5% O&M efficiency ratio by 2023, which is key to ensuring affordability for our customers as we make these much-needed investments. And finally, we remain on track to meet our 7% to 10% long-term earnings growth target. Now, Walter will give a more detailed update on our regulated business.