Essential Utilities, Inc.

Thank you for standing by. My name is Ellie and I will be your conference operator for today. At this time, I would like to welcome everyone to the Essential Utilities third quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by number one on your telephone keypad. If you would like to withdraw your question press star and 1 again. Thank you. I would now like to turn the conference over to Brian Dingerdissen. You may now begin.

Good morning everyone and thank you for joining us for Essential Utilities third quarter 2024 earnings call during which we will provide an update on new long-term guidance. The slides that we will be referencing and a webcast of this event can 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 from any future results expressed implied by such forward-looking statements. Please refer to our most recent 10-Q, 10-K, and other SEC filings for 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 any non-GAAP to GAAP financial measures is posted in the investor relations section of the company's website. We will begin the call today with Chris Franklin, our chairman and CEO, who will provide an update on the company, and then Dan Schuller, our CFO, who will provide an update on the financial results before Chris closes the call with our guidance. With that, I will turn the call over to Chris Franklin.

Hey, thanks, Brian, and welcome, everyone. We've got some really exciting news to share with you today. I've got some more color, but let me just run through it in a very, very brief summary on top here. We had a great quarter financially. We had a strong capital investment so far this year. And we have an approved Pennsylvania gas rate case that included a weather normalization mechanism. We had a settlement in our Pennsylvania water rate case yielding us $73 million. And we are reinstating our multi-year EPS guidance at a 5% to 7% growth rate through 2027. which, importantly, does not include Del Cora, any earnings associated with Del Cora. And then we're also going to talk a little bit about our strong recovery from the Hurricane Helene that hit North Carolina. So a lot of good things to talk about for the quarter, so let me get into the details. First, we posted 25 cents in earnings per share for the quarter, which was above expectations. Our capital spending remains right on schedule this year, We've invested $932.5 million through the end of the third quarter, and we'll spend about $1.3 to $1.4 billion to improve water, wastewater, and natural gas infrastructure this year. Dan will get into more details about the financials for the quarter in just a few minutes. So in September, the Pennsylvania PUC unanimously approved the first rate case for People's Natural Gas under our ownership. The approval included an annualized revenue increase of $93 million and a weather normalization mechanism. You probably know this mechanism because others have it. It's designed to provide a greater financial stability and predictability for both our customers and our investors by mitigating the financial volatility associated with abnormal weather impacts. I know you'll recall that Both this year and last year have been unusually warm weather and have impacted our results. However, it could have just as easily gone the other way and we could have had two abnormally cold years, which would have negatively impacted our customers. So this new mechanism will provide the ability to mitigate these abnormalities in weather and should assist with reducing the volatility for all parties going forward. I do want to mention that the Office of the Consumer Advocate filed a petition for review of the approval in the PNG case. Dan will talk a little bit more about that in a minute, but I did want to mention that. Let's also talk about the water rate case, the Aqua Pennsylvania rate case. We filed our briefs on October 28th, and in those documents, you'll see that we have a settlement agreement designed to provide a total annualized revenue increase of $73 million from our water and wastewater operations. We expect the settlement agreement to be filed formally on November 7th and available on the PUC website at that time. It's important to note that this settlement agreement, as all settlements would be, remains subject to a recommended decision by the administrative law judges and approval by the PUC. I should also mention that East Whiteland You'll recall that acquisition as a wastewater acquisition in Pennsylvania was excluded from the settlement and will be fully litigated in front of PUC with an expected decision on that, coincident with the rate case decision in February. Now, on the next slide, our significant progress on the two Pennsylvania rate cases have provided us the opportunity to re-establish long-term guidance. This guidance which I'll review in more detail later, includes EPS growing at a compound annual growth rate of 5% to 7% for the next three years. That's through 2027. Continued rate-based growth of over 8% combined and our continued commitment to improving and upgrading water, wastewater, and natural gas infrastructure by investing $7.8 billion over the next five years through 2029. Importantly, We expect to achieve this EPS growth without including any addition to the EPS from the Delcorra transaction. So to be clear, we remain confident that our valid and enforceable asset purchase agreement will ultimately prevail and that we will close the Delcorra transaction. But we want to remove any potential overhang that might be associated with the delayed closing of Delcorra, so we've taken it out of our numbers. We believe this guidance communicates the right balance of growth for our investors built on the right level of infrastructure investment that ultimately results in rates that are affordable for our customers. Truly a win-win. As this slide indicates, we've consistently executed our plan to grow earnings between 5% and 7% every year. We've delivered these results despite elevated inflation, higher interest rates, and some of the warmest weather on record in our natural gas territory. Hopefully, our most recent achievements and the continued strong results indicated on this slide underscore our ability to execute and our regulatory credibility in the jurisdictions where we operate. All right, let's just take a moment. We were hit hard by the hurricane as so many people were in our country, particularly in the south. I want to talk a little about the impact of Hurricane Helene on our North Carolina operations. Thankfully, our team was quick to respond, clearing trees and other debris that allowed us to do some damage assessments early on after the storm had passed. We prioritized communications with our customers most importantly, providing regular updates through our disruption map and other forms of electronic communication and physical communication Signage, etc. We also dispatched a special reconnaissance team equipped with drones to inspect damage in areas that were either inaccessible or unsafe, particularly in the more mountainous communities where we serve. Now, in total, 90 of our systems in North Carolina were impacted. But through really strong work by our teams, all but six systems were back up in just five days after the storm. and as of October 19th, everything was back in power and repaired and fully functional. We're grateful for the patience of our customers and the understanding they provided and we also appreciate the dedication and extensive work effort of our North Carolina team. With that, let me turn to Dan and he's going to cover our financials for the quarter and some regulatory matters.