Essential Utilities, Inc.

Please stand by. We're about to begin. Good day, everyone, and welcome to the Essential Utilities Q1 2020 Earnings Conference Call. As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Dingerdissen. Please go ahead, sir.

Thank you, Melinda, and good morning, everyone. Thank you for joining us for Essential Utilities, formerly Aqua America's first quarter 2020 earnings call. I am Brian Dingerdissen, Vice President, Chief of Staff, and Head of Investor Relations and Communications. If you did not receive a copy of the press release, you can find it by visiting the Investor Relations section of our website at essential.co. The slides that we will be referencing and a webcast of this event can also be found on the site. As a reminder, some of the matters discussed during this call may include forward-looking statements that involve risk, uncertainties, and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Please refer to our most recent 10Q, 10K, and other SEC filings for a description of such risk and uncertainties. During the course of this call, reference may be made to certain non-GAAP financial measures. A reconciliation of these non-GAAP to GAAP financial measures is included at the end of the presentation and also posted in the investor relations section of the company's website. After the presentation, we will open the call for questions. Our call will start with Chris Franklin, our chairman and CEO, who will discuss the highlights from the year to date and provide an update on the company's COVID-19 actions. Dan Schuller, our CFO, will then discuss our financial results and our recent financing activity. Dan will be followed by Rick Fox, our chief operating officer, who will provide an update on our operations, including at People's. Finally, Chris Franklin will conclude the call with a review of our 2020 guidance, and open the call for questions. With that, I would like to turn the call over to Chris Franklin.

Hey, thanks, Brian, and good morning, everyone. I'll start right in. We had a strong and eventful first quarter that had an end that I don't think any of us would have predicted. But let's start back in January with the final regulatory approval in Pennsylvania of the People's Transaction, of our strong start to the year. Then we closed the transaction and introduced a new parent company name, Essential, Nobody knew how appropriate that name would be when we chose it. And then we changed our ticker symbol to WTRG. And after that, we quickly followed up with a filing with the IRS to begin using the tax repair at Peoples in Pennsylvania. We also filed our application with the Pennsylvania Public Utility Commission for approval of the Del Cora transaction, the largest municipal transaction we've ever done. Then before the quarter ended, We had to react to the COVID-19 pandemic by activating our business continuity plan. Our primary objective was of course to preserve and ensure the health and the safety of our essential employees, our customers, and the communities we serve. You'll have to excuse me, but I have to brag for a minute about our essential employees. Their dedication to our mission has never shown brighter than it has over the past eight weeks. Our people have continued to provide high-quality water, wastewater, and natural gas service that our customers depend on. Many of our people have the same challenges as their neighbors. You know, children out of school, caring for family members, and concerns about their own personal health. But despite these challenges, Our people have continued to get the job done, and I'm very proud of our essential team. Let's take a look at the first quarter highlights. Since the beginning of the year, we invested $172.2 million in capital to improve the infrastructure in the community that we serve. Of that $172 million, $110.6 million was spent in our regulated water segment. I'll note that this number includes $53.5 million that was invested by Peoples in the first quarter pre-closing. In the next box over, you'll see that on a non-GAAP basis, adjusted income per share rose 114.3% over last year's first quarter. Of course, most of that resulted from the acquisition of Peoples. Dan's going to give you more detail on that in just a few moments. will remain on track for another strong year of municipal acquisitions. I'll talk about that in a moment as well, and I'll review our list of signed acquisitions, which includes over $327 million in expected rate base, more than 205,000 new customers. And finally, as many of you know, we announced the closing of the $750 million investment from the Canada Pension Plan Investment Board, CPPIB, and the completion of the acquisition of Peoples on March 16th. In addition, upon the closing and financing of the acquisition, we've added Wendy Franks from CPP IB to our board of directors. With the addition of Wendy Franks, our board is now 30% women. Yesterday was our annual meeting of shareholders, and I'm pleased to report that all of the items on the ballot were voted according to management's recommendations. I should also note that if you haven't had a chance, try to review our proxy, and I encourage you to do so. We revamped it, and this year I think it's a lot easier to read, and we provided significant updates to our various disclosures and policies. At this point, All of you know how important fair market value legislation is. As we offer our companies as a solution to municipal leaders, this is always a key part of the discussion. This map indicates the states where fair market value legislation has been passed. And you'll recall at the Investor Day, we noted that seven of our eight states where we had water and wastewater operations had already implemented fair market value. I'm happy to report that this legislation has now been passed in the eighth state, which is Virginia. So fair market value is now available in all eight states where we currently serve water customers. This is great news. Now, based on our experience, it typically takes a couple years to get a robust pipeline of opportunities to develop after we pass the fair market value legislation. We're starting to see this materialize in states like Ohio and Texas. For example, we recently completed the municipal acquisition of Campbell in Ohio, which is here on the next slide. This slide represents acquisitions for our regulated water segment. So far this year, we've closed Campbell in Ohio and continue to move toward closing New Garden, East Norton, and Del Cora, all in Pennsylvania. At this time, we don't expect major delays in the regulatory process due to the COVID-19 crisis, but the longer everybody works from home, the likelihood of delays could increase, and those proceedings could take a little longer. During this COVID-19 crisis, we've ramped up communications with our regulators. So we can work together as best we can to keep our regulatory activities on track. We continue to see a strong pipeline of acquisitions in our municipal strategy, especially given the passage of fair market value laws. And now with the economic pressures that are undoubtedly arising from the COVID-19 crisis, we are anticipating that many more municipalities will be looking for solutions to their financial problems. and we stand ready to partner with these towns and cities on their utilities so that they can focus on their other vital municipal programs and community projects and we can focus on their water and wastewater issues. I think that's a good segue to the next slide that discusses our response to the COVID-19 crisis. As I mentioned, we activated our business continuity plan on March 16th. and immediately implemented a work from home policy for any of our employees who could actually work from their home and get their jobs done. Within days, we had nearly a third of our workforce working from home. The really challenging decision was to send the people's natural gas employees to work from home on the very same day that we closed the transaction. That's right. On March 16th, we closed the people's transaction, and that same day, we sent employees home to work. As difficult as that decision was, now in hindsight, I will tell you it was the right decision. So far, only four of our employees have tested positively for the virus. Three of those employees are already back safely at work, and we're hoping the fourth will be back soon. I will say there is a silver lining to this COVID crisis. It really accelerated the development of relationships between the two organizations, ACWA and Peoples, and we truly are a stronger company for it. Since mid-March, we've altered many of our health and safety procedures to adapt to state and federal guidance. We've also enhanced our communications to keep our employees and our customers and regulators up to date with the latest information. And as part of this effort, we've invited all employees to participate in weekly town hall meetings. Each week, nearly 1,000 employees have participated live. Really impressive, the engagement. Lastly, we held virtual meetings with representatives from each of the public utility commissions from the states where we operate. During these meetings, we updated the officials, both staff and commissioners, on the impact of the COVID-19 on the company and the company's response. And I have to say, all of the meetings were very constructive. So at this point in time, nearly a third of our employees are still working from home. But as states begin to soften restrictions, we expect to implement a very thoughtful plan to slowly return to more normal work practices. With that, I'm going to turn it over to Dan to update you on the financial results. Dan? Thank you, Chris. Good morning, everyone.