Essential Utilities, Inc.

Good day and welcome to the Essentials Utilities Full Year 2022 Earnings Call. This meeting is being recorded. At this time, I'd like to hand the call over to Brian Dingerdusen. Please go ahead, sir.

Thank you, Sergey. Good morning, everyone, and thank you for joining us for Essential Utilities 2022 Full Year Earnings Call. I am Brian Dingerdusen, 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 in the webcast of this event can also be found on our website. 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 than 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 begin with Chris Franklin, our chairman and CEO, who will discuss the highlights from 2022 and provide a company update. Next, Dan Shuler, Executive Vice President, 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 up for questions. With that, I will turn the call over to Chris Franklin.

Thank you, Brian, and good morning, everyone. Thanks for joining us. Let's start out with some highlights from our 2022 year. Our focus on operational efficiency and infrastructure improvement and service-related priorities led us to another strong year, reporting earnings per share of $1.77, which is 6% better than last year and the midpoint of our 2022 guidance. It's also in line with our 5% to 7% long-term guidance, despite macro challenges of inflation and rising interest rates, among others you all know about. Importantly, in the context of that, I want to point out that since I became CEO in 2015, my team and I have always met the guidance we provided to the street. We take pride in our accuracy. In 2022, we invested over $1.06 billion in infrastructure improvements as compared to $1.02 billion in 2021 improvements. Our commitment to investing in critical infrastructure across our footprint has led to the replacement, retirement, and installation of over 430 miles of pipeline just last year throughout our water, wastewater, and natural gas systems. These investments, along with our municipal acquisitions, led to rate-based growth of 7.9%. Our municipal acquisition strategy continues to provide consistent and steady growth opportunities. And in 2022, we closed three acquisitions, adding approximately $120 million of rate base and over 23,000 new customers. These three acquisitions, coupled with strong organic growth, led to customer growth of 2.7% for the regulated water segment. Currently, we have asset purchase agreements signed for nine municipal acquisitions, totaling nearly $380 million in purchase price. The success of our growth strategy has allowed us to report over a billion dollars in revenues from our regulated water segment for the first time last year. I also want to take a moment to thank our employees who have diligently worked through the installation of SAP in our water utility over the last year. You may recall that our gas company already had SAP. We completed the conversion of our financials and expect a clean audit opinion, which if you're familiar with how this works, you know, the complication of installing SAP is quite an accomplishment. We're very proud of it. These installations are difficult and time-consuming, and we wouldn't be here if it were not for the efforts of so many patient and hardworking at the company. Finally, I think it's important to mention the work our natural gas teams did during winter storm Elliott. In late December, just before Christmas, our teams worked through extremely cold weather to keep our customers' natural gas flowing so that their homes would remain warm. Our people worked long hours and right through Christmas Eve doing an unbelievable job for our customers under those extreme conditions. A real tribute to the folks working at our natural gas company. So let's move on to the next slide and talk a little bit about ESG in 2022. Earlier this year, we reaffirmed our ESG commitments, and I'm proud to report that as of year end 2022, the company made really progress. Extensive gas pipeline replacement, renewable energy purchases, accelerated methane leak detection and repair, and among many other initiatives have led us substantial reduction of our scope one and scope two greenhouse gas emissions. As of the end of the year, we are estimating a 23% reduction in emissions from our 2019 baseline, and we remain on track toward our commitment of 60% reduction by 2035. In the fall of 2023, we're going to again publish a fully refreshed ESG report on our website. And it was award-winning last time we did it. Keep an eye out for it. It's always a good read. We also reaffirmed our industry-leading multi-year plan to ensure that our finished water does not exceed 13 parts per trillion of PFOA, PFOS, across all the states served by our regulated water segment. While we continue to wait for the EPA to issue their MCL, or maximum contaminant level, it's worth noting that two of the states in which we have water options have already enacted their own thresholds. Pennsylvania, where nearly 50% of our water customers are located, has set limits of 18 parts per trillion for PFAS and 14 parts per trillion for PFOA. And New Jersey has set limits at 14 parts per trillion for PFAS and 13 parts per trillion for PFOA and PFA. Our commitment is at or below each of these. Now, regarding our employee and supplier diversity commitments, we ended 2022 with people of color representing 16% of our work towards our multi-year target of 17%. We're also pleased to report that we exceeded our supplier diversity target of 15% in 2022 and continue to work to align the makeup of our workforce and the spending on goods and services with the makeup of our customer base. I'll remind you that We've been one of the leaders when it comes to connecting these metrics to incentive compensation. Finally, we received a number of notable ESG awards and recognitions throughout 2022, including being renamed to Newsweek's America's Most Responsible Companies list, renamed to 3BL Media's Best Corporate Citizens list, and renamed as Champion of Board Diversity by the Forum of Executive Women. We were recognized as a three-plus company by 50-50 women on boards, highlighting the diversity of our board, and we were also named Business of the Year by the Delaware County Chamber of Commerce. Now, in addition to these recognitions, we continue to make strong advances in our ESG ratings. Upgrades from MSCI, Thanalytics, CDP, and ISS have placed Essential as an industry leader and at or near the top of our proxy peer group in 2022. Folks, this is work that we are very proud of and plan to continue. Now, with that, let me hand it over to Dan to discuss our financial results.