American Water Works Company, Inc.

Good day and welcome to American Water's third quarter 2023 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. The audio webcast archive will be available for one year on American Water's investor relations website. I would now like to introduce you to your host for today's call. Aaron Musgrave, Vice President of Investor Relations. Mr. Musgrave, you may begin.

Thank you, Chris. Good morning, everyone, and thank you for joining us for today's call. At the end of our prepared remarks, we will open the call for your questions. Let me first go over some safe harbor language. Today, we will be making forward-looking statements that represent our expectations regarding our future performance or other future events. These statements are predictions based on our current expectations, estimates, and assumptions. However, since these statements deal with future events, they're 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 third quarter earnings release and in our September 30th Form 10-Q, each filed yesterday with the SEC. And finally, all statements during this presentation related to earnings and earnings per share refer to diluted earnings and diluted earnings per share. Susan Hardwick, our President and CEO, will share highlights of third quarter and year-to-date results. and will comment on our 2024 EPS guidance and longer-term targets. Cheryl Norton, our Executive Vice President and COO, will then discuss our new capital investment plan, including the expected impact of PFAS-related investments, and will conclude with a regulatory update, including our views on customer affordability. John Griffith, our Executive Vice President and CFO, will then discuss our year-to-date financial results in more detail. discuss our acquisition outlook, and we'll close with details behind our 2024 outlook and longer-term goals and our 2024 to 2028 financing plan. After a few final remarks, we'll then close by answering your questions. With that, I'll turn the call over to American Waters President and CEO, Susan Hardwick.

Thanks, Aaron, and good morning, everyone. Let's turn to slide five, and I'll start by covering some highlights from the third quarter and year-to-date periods. As we announced yesterday, we delivered strong financial results in the third quarter of 2023, and we're pleased to again reaffirm our 2023 guidance on a weather normalized basis. Earnings were $1.66 per share for the quarter compared to $1.63 for the same period last year. In the first nine months of 2023, earnings were $4.03 per share compared to $3.70 per share in the same period of 22. The estimated net favorable weather impact year to date in 23 is about 11 cents per share compared to 6 cents per share favorable in 22. These weather normalized results so far in 2023 continue to reflect our strong execution in line with our growth expectations for the year. John will elaborate further on results later. Moving on to some of our other key accomplishments to date in 2023. We have invested $1.8 billion in capital projects year to date. reflecting great work by our teams responsible for planning and completing these investments. As you will recall, the total capital investment plan for 2023 includes approximately $400 million of acquisitions, including one sizable transaction in Pennsylvania we expect to close in December and another in Illinois around the end of the year. As you know, we completed an equity issuance of $1.7 billion in March and a $1 billion convertible debt issuance in June. These were the two key priorities of our 2023 financing plan. We were focused on completing these issuances in the first half of the year to reduce market-related pricing risk and overall execution risk, which has served our investors, customers, and our customers well, considering the current market conditions. Turning to slide six, as we roll out our new five-year plan today, we are affirming our long-term targets, including 7% to 9% EPS and dividend compounded annual growth rates. We are also initiating our 2024 earnings guidance of $5.10 per share to $5.20 per share, which John will discuss further later in the discussion. This represents our expectation of 8% EPS growth in 2024 compared to our weather normalized 2023 EPS guidance. One thing to note on this slide is that we have revised the look of our earnings growth outlook. Recall that we'd historically referred to it as our growth triangle. We believe this new version better highlights our compelling 79% earnings growth expectation and better represents the key drivers of growth. As a nearly 100% regulated water and wastewater utility, rate-based growth and regulatory execution are the key drivers of growth for our company. Rate-based growth continues to be driven by the accelerated CapEx plan we put forth two years ago and now with this updated plan. Combined with our robust regulated acquisition strategy on which we've proven we can execute, we continue to expect 8% to 9% rate-based growth over the next decade. Later, Cheryl will review the amount of capital we expect to spend over the next five years, including related to acquisitions. On this slide, you can see we are highlighting our acquisition growth strategy measured by a compounded annual growth rate in customer connections of 2%. The timing of closing on acquisitions is often difficult to control within a calendar year, which can cause volatility in acquisition investment on a year-to-year basis. This 2% customer additions CAGR target should be an easier way for investors to monitor and measure our growth through acquisitions. And as I said, rate-based growth, which includes acquisition investment, is the key driver to earnings growth. Our growth outlook also includes the organic revenue growth opportunities we expect from our military services group from the 18 installations we currently serve with an added upside for any new basis secured. One of our company's competitive advantages is its diverse regulated operations across 14 states that provides us with flexibility in the timing of rate cases and capital deployment. We also have a very predictable and controllable set of capital projects annually, almost half of which are recoverable through infrastructure mechanisms. Along with our other regulatory approaches, we are confident we can deliver consistent earnings growth and dividend growth over the next five years and beyond. While utility stocks, including ours, have seen the impact on the short-term of higher interest rates, history has shown that over medium and longer-term horizons, the utility sector, and certainly American Water, has delivered compelling value to investors. We believe the combination of our EPS and dividend growth, supported by our significant yet low-risk capital investment plan and our focus on customer affordability and ESG leadership, will continue to be rewarded by investors. Based on this long-term plan and our history of executing on our strategies, we intend to continue to deliver a very competitive, sustainable shareholder return for many years to come. With that, let me turn it over to Cheryl to talk more about our capital investment plan and our focus on customer affordability and regulatory execution. Cheryl?