Essential Utilities, Inc.

Thank you for standing by and welcome to the essential Q3 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. I would now like to turn the conference over to Brian Vingerdissen. You may begin.

Thank you. Good morning, everyone, and thank you for joining us for our third quarter 2025 earnings call. If you did not receive a copy of the press release, you can find it on our investor relations website. The slides can also be found on the website along with a webcast of the event. As a reminder, some of the matters discussed today 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. References may be made to certain non-GAAP financial measures. Reconciliation of any non-GAAP to GAAP financial measures is posted on the website. We will begin with Chris Franklin, our chairman and CEO, who will provide an update on the company. Then Dan Shuler, our chief financial officer, will provide an overview of the financial results. With that, I will turn it over to Chris Franklin.

Hey, thanks, Brian, and good morning, everyone. Let's begin with the big news from last week, our merger with American Water, detailed here on slide 5. This transaction represents a truly transformational opportunity designed to integrate the assets and the expertise of two industry leaders, resulting in some synergies over time and creating a combined entity that is demonstrably greater than the sum of its parts. Now, the combined entity will result in the emergence of the preeminent water and wastewater utility in the United States, anchored by a robust rate base approaching $34 billion, serving more than 5 million connections and an expanded operational footprint across 17 states and 18 military installations. Now, as outlined on slide six, this strategic consolidation effectively leverages the core operational expertise of both companies, substantially bolstering our combined financial strength and will present a compelling investment thesis to the market. a low-risk, low-beta stock with a strong balance sheet offering first quartile growth rate of 79% EPS and dividend growth anchored on the multi-decade need for infrastructure investment in our nation's aging water and wastewater systems, including pipe replacement, PFAS remediation, and lead service line replacements, just to name a few. I think we also have to consider the setting for the combined company. It's still a fragmented water industry, 85% municipal. And the combined company's concentration in Pennsylvania, the state where our highest concentration in water and wastewater exists, is still less concentrated than FPL is in Florida or Encore is in Texas or even PG&E in California. Maybe just one final thought on the transaction. The combined company is a natural hedge for utility investors who are heavily concentrated in electric utilities. The demand growth projections associated with AI and data center growth is baked into electric utility valuations, which is just not the case with our new combined company. More to come on this exciting opportunity as we progress through shareholder and regulatory approvals. For now, let's talk about the third quarter results. Slide seven has some highlights for the quarter. We delivered another robust quarter of growth, reporting gap earnings per share of 33 cents, a 32% increase over the same quarter last year. Both our water and natural gas businesses performed very well and in line with our expectations. My assessment remains the same as I reported last quarter. Both our natural gas and water businesses are firing on all cylinders. I am proud of the results our team has achieved so far this year. Based on our strong year-to-date performance, we expect to achieve GAAP earnings per share above our guidance range of $2.07 to $2.11 due to non-recurring benefits as discussed in August. We're also reaffirming our capital investment plans with a target of approximately $1.4 billion in infrastructure investments for 2025. Now, as of September 30th, we've already deployed nearly a billion dollars in critical infrastructure improvements across our footprint. Based on the many calls we received, I know you saw our exciting announcement in late August that Essential has become an investor in a 1,400-acre data center facility in southwestern Pennsylvania. Our real interest in the project, though, is the option we have to design, build, and operate an 18 million gallon per day water treatment plant to serve as the data center and is dedicated behind the meter natural gas power plant. I'll speak more about this in a few moments, but it's a promising opportunity. Switching to sustainability, we're excited to share with you our updated sustainability report. For years now, We have delivered high-quality, transparent, and detailed information to you on our sustainability performance and initiatives. You've heard me say this many times before, but it bears repeating, and I want to make sure all our stakeholders hear it directly from me. Our sustainability commitments mean much more than checking a box. As stewards of Earth's most precious natural resources, responsible business practices are foundational. to who we are as a company. Our dedication to these principles remains steadfast and supports our continued success. Our updated report can be found on our website. Finally, I'd like to follow up on a topic we spoke about on our Q1 earnings call. We mentioned that our natural gas division had progressed from a successful pilot program to commencing a full implementation plan to install new Intellis gas meters in all residential and small commercial properties within our service area. Today, I am really pleased to share with you that we've already reached our 2025 goal of installing more than 60,000 meters in Pennsylvania. We're also closing in on this year's target of 3,500 meters installed in Kentucky. This brings our installed base of new meters to a total of 93,000. putting us among the industry leaders in adopting this new technology. We are moving forward with a comprehensive program to install Intellis meters for nearly 700,000 customers in the coming years. These new meters, equipped with enhanced safety measures, are a central driver of our ongoing effort to be among the safest and most reliable natural gas utilities in the United States. All right, turning to slide eight. Let's review our recent announcement regarding our data center investment. So in August, we announced our investment of $26 million in a project to bring a data center to Greene County, Pennsylvania. For context, this is about 60 miles south of our gas division headquarters in Pittsburgh. We deliver natural gas to customers in that same general area. The location of the project, Greene County, Pennsylvania, draws on Pennsylvania's abundant natural resources, world-class workforce, and strong federal, state, and local support for the project across the political aisle. The data center project, led by International Electric Power, will be powered by 944 megawatts, that's right, nearly a gigawatt, from behind-the-meter natural gas combined cycle turbines, supplemented by battery storage, and backed up with an existing interconnection with the electric grid. Importantly, the project has secured the turbines, which are at a premium given demand in the market. Our $26 million initial investment is structured in the form of a convertible note, and we can take the return on that investment as cash proceeds or instead roll it into the larger project as a formal equity position. The expected rate of return on this investment will be higher than the typical returns of our regulated utility operations. The project will include an 18 million gallon per day water treatment plant that will serve both the gas power plant and the data center's cooling needs. Our initial estimate is that the water treatment plant will cost between $125 and $175 million. Although we will not be supplying the natural gas to the power plant, Essentia will lend its expertise by providing gas consulting and energy management services to the project. IEP is actively seeking investors for the next stage of the project, now that the initial funding has been achieved and the gas turbines have been secured. We'll update you on significant new developments as they occur. This exciting project is not factored into any of our previously announced guidance and, as a reminder, is expected to be fully operational in 2029, which currently falls outside of our three-year EPS guidance. We previously shared that we are in active discussions with data center developers representing over five gigawatts of power demand. The Greene County site is about 20% of that. Plus, we continue to field inquiries related to onsite power generation and data center development to support AI and data center boom. States like Pennsylvania, Ohio, Indiana, and Virginia are among the hot targets for hyperscalers these days. We operate in all of these states with our water, wastewater, and natural gas assets and expertise. This, combined with our regulatory credibility in these states, makes us believe Essential is particularly well-positioned within our industry to take advantage of this opportunity. All right. Now, as we move to Slide 9, I'd like to talk a little bit about our consistent approach to delivering shareholder value. Our aim is to generate reliable growth in both earnings and dividends, and we are proud of our long track record. With three quarters behind us now, 2025 looks to be another year reflective of this success. Our business and its economic model have proven resilient through economic booms and downturns, as well as through political and regulatory changes. Consistency underpins our success as a company. All right, now that we're reminded of the context, let's focus on the numbers for the quarter. Dan?