Essential Utilities, Inc.

Hello and welcome to Essential Utilities Q3 2022 earnings call. My name is Sarah and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host, Brian Dingerdissen, to begin today's conference. Thank you.

Thanks, Sarah. Good morning, everyone, and thank you for joining us for Essential Utilities' third quarter 2022 earnings call. I am Brian Dingerdissen, Vice President of Investor Relations and Treasurer at Essential. 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 that event will also be found there. 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 10-Q, 10-K, 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. Here is our agenda for the call today. We'll start with Chris Franklin, our chairman and CEO, who will discuss the highlights from the quarter and provide a company update. Next, Dan Shuler, our executive vice president and CFO, will discuss our financial results. Lastly, Chris will provide an update on our acquisition program and conclude the presentation with a summary of our guidance 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 off with some highlights from the quarter. We continue our focus on the fundamentals of operational efficiency, infrastructure improvement, and service-related priorities, and as a result, we had a strong third quarter with earnings per share of 26 cents and year-to-date net income growth of 11.2%. Dan will provide you some details on this in just a few moments. Our commitment to investing in critical infrastructure has resulted in an investment of $719.7 million through our water, wastewater, and natural gas systems in the first nine months of the year. This compares favorably to $675.8 million from the same period in 2021. We remain on target to achieve our capital plans of approximately $1 billion of capital spending for the year. Currently, we have asset purchase agreements signed for seven municipal acquisitions, totaling nearly $365 million in purchase price. This year, 2022, we've closed two acquisitions, which added over 19,000 customer equivalents to our footprint. As I'll discuss later, we continue to have a robust pipeline of opportunities. Now, just this month, last month in October, The board appointed Brian Lewis to our board. Brian currently serves as the chief investment officer for U.S. Steel Corporation, which is headquartered in Pittsburgh, Pennsylvania. Brian is responsible for the company's global investments for both the defined contribution and defined benefit plans, as well as other related programs at the company. Prior to his appointment at U.S. Steel, Brian managed a $30 billion pension fund for the Pennsylvania State Employees Retirement System. And before that, served as executive director of the $20 billion Illinois State University's Retirement System. Now, in addition to Brian's professional career, he's dedicated to increasing the financial literacy and leadership presence in underrepresented populations and serves on several nonprofit boards. At the Essential Board, Brian will serve on our Audit Committee, as well as our Risk Mitigation Committee. Great addition to our board. We welcome Brian, filling an open seat. Now, I wanted to take a moment to update you on a few other salient issues. Last week, we were informed for the second consecutive year that MSCI has upgraded our ESG rating, and it's now AA. In their upgrade, MSCI noted that essential is a global leader in governance, that we are stronger than the industry average in the environmental and social areas as well. We are really pleased with this outcome. A lot of hard work went into this and really pleased with that result. Now, staying with the ESG theme, we recently announced a hydrogen pilot with the University of Pittsburgh. Partnership will study the potential of safety and safely and securely transporting hydrogen through natural gas systems Now together people's and Pitt will conduct some in-depth research Related to the technical issues involved with using natural gas pipelines to transport a blend of hydrogen and natural gas following our research phase The organizations expect to work together on a pilot project to test the impacts of hydrogen on people's natural gas distribution infrastructure. In addition, we're now a member of a consortium that is applying for federal funds to create one of the hydrogen hubs in the country. This one would be based in the Appalachian region. Forty-four entities, including businesses, state governments, and other organizations have all signed on to this consortium. It will be an exciting part of this to see what these hydrogen hubs around the country can do to advance hydrogen as a component of clean energy. I should also mention that legislation was just approved in Pennsylvania, which included $50 million in annual tax credits to incentivize hydrogen production. Certainly a developing area for us to be involved in. So now let's move on to some organizational announcements. You may have read that Rick Fox, our Executive Vice President and Chief Operating Officer, is retiring next month, actually at the end of this month. I want to thank Rick for his dedication to the company and his contributions over the last 20 years. He has served as Chief Operating Officer since 2015 when I became CEO, and prior to COO, Rick had multiple leadership roles, including regional president and vice president of customer operations. Over his career, Rick has led important change at the company, including the standardization of our customer service across all states, implementing best practices, and leading some of our key acquisitions and divestitures. He was also responsible for the execution of our first ever billion dollar capital budget in 2021. Also, Rick's work in safety allowed our company to experience dramatic reductions in workplace injuries. His contributions are really too numerous for us to mention today. You know, when we experience key retirements like Rick's, it often triggers some level of reflection. Most of our management team now has been together since 2015, and so we looked at a few measures that demonstrate the good work we've done together over that time. In addition to delivering annual earnings growth in line with our guidance and raising our annualized dividend, slide 8 here demonstrates that we've grown the rate base and customer base of the company from nearly 3.5 billion and 958,000 customers to to approximately $9.5 billion and 1.8 million customers over that time. During this time, the market cap of the company has grown from $4.5 billion to $10 billion, over $10 billion today. So nice, really nice outcome. This performance would not have been made possible without people like Rick Fox on the leadership team. Rick, I'd like to congratulate you on a great career, and I am happy to call you my friend. We wish you and Ellen great happiness in your retirement. And now as we look to the future, we've been working diligently on our succession planning, and I'm happy to report that we have two strong executives that will now report directly to me when Rick retires. Colleen Arnold, president of ACWA, and Mike Heuer, president of Peoples. Colleen has been the president of our eight state water and wastewater utility operations since 2020, Prior to becoming the first female president in the company's history, Colleen was the deputy chief operating officer reporting to RIC. Colleen joined the company in 2007 and is active in the American Water Works Association and the National Association of Water Companies. Now, Mike's been the president of our three state natural gas utility operations since 2020. Prior to coming to the company, Mike had a 34-year career with Columbia Gas, where he was president and COO of Columbia's Pennsylvania and Maryland operations since 2017. Now, here on the next slide, you may have seen this, that Whitney Kellett was recognized as the 2022 Philadelphia CIO of the Year. This is the annual Orbi Award, one of the most prestigious awards for CIOs. Whitney was recently promoted to Senior Vice President of Business Transformation and is responsible for the company's technology strategies, decisions, and policies in areas like cybersecurity and the protection of our customer information. Whitney will also be the company's Chief Administrative Officer in 2023 when our current CAO, Sue Heindel, retires. Now, as part of our succession plan, we've hired Sumit Nair to replace Whitney as the new Vice President and Chief Information Officer. Sumit will oversee our internal group of 130 IT professionals and will execute the strategic and operational imperatives that are so important to the company's operations and growth. Sumit comes with a wealth of technology experience from companies like Independence Blue Cross, Delage Landon, and ICON. Lastly, I want to recognize Gene Russo, who joined the company early this fall as Vice President of Communications. In this newly elevated role, Gene will report directly to me and will oversee all internal and external communications across the enterprise. With growing public interest in our acquisition initiatives, Jean will bring important and focused communications counsel to our work. She also brings a wealth of experience having worked on top global brands across several industries. We're really excited to have Jean and these other executives take their new roles. Hopefully, this brief update on our organization gives you some sense of the depth of our team, but also the new young leadership that is stepping up in the organization. So with that, let me hand it over to Dan to discuss our financial results for the quarter. Dan?