Essential Utilities, Inc.

Good day and welcome to the Essential Utility Inc. Second Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Dingerdisen. Please go ahead, sir.

Thank you, Cassie. Good morning, everyone, and thank you for joining us for Essential Utility's Second Quarter 2021 Earnings Call. I am Brian Dingerdisen, Head of Investor Relations. 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 the webcast of this event can also be found on our website. Here is our forward-looking statement. 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. 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 website. After the presentation, we will open the call up for questions. Here's our agenda for the call today. We'll start with Chris Franklin, our chairman and CEO, who will discuss highlights and provide a company update. Next, Dan Shuler, our CFO, will discuss our financial results. Chris will then provide an update on our municipal acquisition program and conclude the presentation portion before opening the call for questions. With that, I will turn the call over to Chris Franklin.

Hey, thanks, Brian, and good morning, everyone. Thanks for joining us. Let's start the call with a look at the second quarter highlights. We had another strong quarter with net income growth of 8.4%. Dan's going to discuss that in detail in just a moment. We invested over $404 million in infrastructure improvements throughout all of our systems in the first half of the year, as compared to $346.6 million in the second quarter of 2020. You might recall that in May, our long-term board member and former CEO, Nick Benedictus, stepped down, creating a vacancy on the board. Then in July, the board appointed Dave Szczesinski to join the board of directors. Dave currently serves as president, CEO, and director of Lancaster Colony Corporation and serves as president of T. Marzetti Company. It's a food company based in Ohio. At Essential, Dave will serve on our audit and corporate governance committees where he brings extensive experience developing and implementing plans for growth and with a very successful leadership team. The addition of Dave Szczesinski, along with Edwina Kelly, who was appointed earlier in the year, has brought our board back now to nine members. Also last month, the board approved a 7% increase to the quarterly dividend, which is now nearly 27 cents, marking three decades of dividend increases. Our municipal acquisition strategy remains strong as we announce the closing of our first fair market value transaction in Texas, and we have seven pending acquisitions totaling about $458.5 million in purchase price. And finally, we published our 2020 ESG report that fully incorporates our natural gas segment, and I'll talk a little bit more about that in just a moment. But first, the 7% dividend increase we announced in July marks the 31st increase in 30 years and the 76th consecutive year of quarterly dividend payments. We're very proud of that. Following the increase, the annualized dividend rate will be just over $1.07 per share. We're really proud of not only our commitment to providing safe and reliable access to natural resources for our customers, but also our long and consistent record of delivering shareholder value. Now, you might recall that last October, we launched our new ESG microsite, which included our 2019 results for our legacy water and wastewater operations. But I'm excited to tell you today that we are launching our 2020 ESG report on the microsite. We just published it in the last couple of days. And in the new report, gas operations are fully included for the first time. In fact, we provide the same level of depth for both our legacy water wastewater business and our natural gas business. We also share information at the enterprise level in the new report. Now, we didn't simply add gas operations to the report. We also included some new topics, and some more extensive information on some of the topics that I know are important to many of you as investors. I think you'll find the ESG microsite makes the experience even sharper, more dynamic, and even more user-friendly, so I hope you take a look at it. Now, this enhanced site covers our continued commitment to our mission despite our COVID-19 challenges. It also covers our excellence in water quality, including our seven-time outperformance of the average in the United States. It further discusses our 7% increase in diversity hiring year over year, along with more detailed workforce composition data, as many companies are now doing. This progress on ESG during a difficult year in 2020 helped us earn recognition as one of the 100 best corporate citizens in the Russell 1000. Again, something we're very proud of. While we're talking about ESG, I want to update you on our progress on the ESG commitments we announced at the start of the year. We set a multi-year employee diversity target to reach 17% of our employees of color. Currently, we're at 14% of our essential employees are people of color. We also set up another multi-year target of 15% of our suppliers would be diverse. We've made strong progress since the beginning of the year. In fact, we currently stand at about 9.6%. We've also achieved a 5% scope one and scope two emissions reduction. This is a strong start toward our ultimate goal, well, our 2035 goal of a 60% reduction in greenhouse gas from a 2019 baseline. and achieving that target will put us more than halfway toward our ultimate goal of net zero emissions. We're confident that we have the programs and the plans in place to achieve our targets and look forward to continuing to share our progress with you over the coming years. We know that our commitment to environmental stewardship, sustainable business practices, employee safety and diversity and inclusion, customer experience, and community engagement is also very important to our investors. And with that, let's talk about the second quarter financial results. Dan?