Essential Utilities, Inc.

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the essential Q2 2025 earnings conference 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 the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I would now like to turn the conference over to Brian Dingerdissen. You may begin.

Thank you. Good morning, everyone, and thank you for joining us for the second quarter 2025 earnings call. If you did not receive a copy of the press release, you can find it by visiting our website. The slides are also found on the 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 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, references may be made to certain non-GAAP financial measures Reconciliation of any non-gap-to-gap financial measures is posted on our website. We will begin the call with Chris Franklin, our chairman and CEO, who will provide an update on the company. Then Colleen Arnold, the president of our aqua business, will provide an update on the water business. Dan Shuler, our chief financial officer, will then provide an overview of the financial results before Chris closes the call and opens it up for questions. With that, I will turn the call over to Chris Franklin.

Hey, thanks, Brian. Good morning, everyone. Let's just jump right in on slide five there with some highlights from the quarter. We delivered another strong quarter reporting gap earnings per share of 38 cents. That's a 35% increase over the same quarter last year. Both our water and gas businesses performed very well and in line with our expectations. And simply put, both divisions are firing on all cylinders. Our gas business continued its impressive trajectory with net income for the quarter of 17 and a half million dollars i'm not going to steal any thunder from colleen she's going to share a little bit more about the water business in a few minutes but as you come to expect we are executing nearly flawlessly in both our water and our natural gas segments based on our strong year-to-date performance we expect to achieve gap earnings per share above our guidance range of two dollars and seven cents to two dollars and eleven cents largely due to several non-recurring benefits. We're also reaffirming our capital investment plans with a target of approximately $1.4 billion in infrastructure investment for 2025. As of June 30th, we've already deployed $613 million in critical infrastructure improvements across our footprint. Now let me take a moment to highlight some exciting developments happening in our home state of Pennsylvania. Earlier this month, we participated in the Pennsylvania Energy and Innovation Summit, which was hosted by our new United States Senator, Dave McCormick. Energy leaders from around the country gathered to share thoughts, breakthroughs in energy and technology. And our Gas Division President, Mike Huer, showcased our ongoing hydrogen pilot project. This is a cutting-edge technology developed in partnership with HQuest, and the University of Pittsburgh. Now, the comparatively low price of energy in Pennsylvania makes it such a logical choice for hyperscalers looking to locate data centers. And we continue to have active discussions with some of those hyperscalers as we speak. Now moving from Pennsylvania to Texas, we serve customers in the Kerrville area of Texas. You'll recall the terrible flood that took place just several weeks ago. Fortunately, All of our employees and their families made it through the storm. One of our employees and his family had nine feet of water in their home and had some absolutely harrowing moments. But thank God, they're healing from their injuries and working to reestablish their home. During the height of the event, we had some customer outages, but restored service to most customers within 24 hours and all customers within 48 hours. A really exemplary job done by our Texas team. Speaking of employees, last month we wrapped up our most recent employee engagement survey under the theme Better Together. And I know employee engagement is becoming a common topic for investors. Now, our results reflected the impact of our focused efforts to enhance our work environment. In fact, participation in the survey increased 23%, which was fantastic. Satisfaction scores rose by 6%, and on average, survey scores improved by seven points. These results reflect our continued focus on creating an engaging, inclusive, and supportive workplace. Each year, we take great pride in reminding shareholders that for more than 30 years in a row, we've increased our dividend. And as an expression of continued confidence, Yesterday, the Board of Directors approved a 5.25% increase in the dividend. We remain committed to delivering long-term shareholder value through dividends and share price appreciation. So let's take a look at slide six. I want to touch on a couple of community engagement issues. In April, we successfully concluded our fourth annual Essential Earth Day. And this is a 30-day campaign dedicated to environmental stewardship and community engagement. The slide showcases our efforts in recent years, which include volunteer events, environmental programs, and a significant investment from our essential foundation. As a recognition for our community engagement and leadership, we were recently honored as one of Greater Philadelphia's most community-minded businesses. This is a recognition that we really appreciate and take to heart. modeled after the Points of Light National Program, the award recognizes companies that set the standard for civic engagement through using their time, talent, and resources. This commitment to community engagement is something we do in all of our states where we have businesses. And finally, on a personal note, I am thrilled and honored to be named the Chairman-Elect of the Philadelphia Chamber of Commerce. I look forward to partnering with leaders from around the region to promote economic growth and regional priorities, which hopefully end up with more utility customers. Moving to slide seven, let's talk about the shareholder value. We continue to deliver steady, reliable growth in earnings and dividends. 2025 is shaping up to be another strong year with core earnings per share expected to grow this year between 5% and 7%. Most of this growth is driven by investments in water and natural gas infrastructure. Of note, since we started providing annual guidance back in 2016, we have consistently met or exceeded market expectations. This consistency has enabled strong dividend growth underpinned by the outstanding execution of our operations team and their commitment to communities we serve. I have to tell you, I continue to be impressed by what our team has achieved, and I'm honored to continue to be steward of this great company with its 140-year history. Today, I want to continue the tradition of spotlighting our business segment leaders. Last quarter, you heard from Mike Huard, president of our natural gas division, and today we welcome Colleen Arnold, president of our water division. We'll share some thoughts on our water business.