WTRG - Earnings call transcript Q4 2021 | Essential Utilities, Inc.

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Operator

Good day, and welcome to the Essential Utilities Inc.'s Full Year 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Dingerdissen. Please go ahead, sir.

Brian Dingerdissen

Thank you, Madison. thank Year joining Earnings and Utilities for everyone, Full XXXX Call. morning, you us for Essential Good I am Brian Dingerdissen, Head of Investor Relations.

not find also there. the and a If release, be The slides our found did receive of be of essential.co. copy you referencing will the website you at can Relations this it Investor visiting webcast we by section of a press event can

filings discussed and during that As a factors of this and implied may results Please the a our recent statements. for reminder, the statements uncertainties some expressed refer forward-looking include be from most cause description involve may XX-Q, matters risks, to uncertainties. materially other SEC risks of that forward-looking such or results and any XX-K such to call actual by different future other

During at be this non-GAAP measures Investor website. the company's A reconciliation to GAAP end these also section financial of in the is and of measures. certain financial call, non-GAAP presentation posted to may of included Relations made reference the the

our we and with a Chairman update. Franklin, our from who will CEO, the provide call, agenda and for Chris and XXXX will company start discuss For today's highlights

CFO, Chris then over our our our questions. call that, our Schuller, Dan opening call conclude before update the the and Chris growth I turn to will for the With discuss Next, finally results. provide strategy, financial guidance a will will of on an Franklin. summary presentation portion

Chris Franklin

to is of busy in I'm news going get Brian, so morning, Thanks, know it. with day the and good lot a I right a everyone. market, today to

line to in earnings strong that our our was X% X% XXXX guidance we've quick midpoint XXXX, year of provided. This really per XXXX to share Let's and highlights. We look $X.XX in a growth had represents at start guidance. our with the long-term which of another report happy with

another and of over and were And natural invested both this segments replaced on miles of infrastructure a we importance billion infrastructure. moment in improvements. of in investment water XXX infrastructure over talk combined, the Maine In improvements. example about Our continued $X gas focused I'll

the million And asset Our remains year, base. alone, municipal acquisition of we in rate adding We two agreements last $XXX.X XXXX million $XX.X closing price. working for six in total in signed diligently strong. eight pending the plans purchase acquisitions we're purchase deals strategy announced the of purchase and on plans totaling integration over now And in $XXX for that price. acquisitions million closing and

billion I'm important increased last significant detail Our also continue X.X% while from $X.X the on in pleased billion you XXXX. And work, recognition public total initiatives, I'll slides. over tell and for $X our base finally, you to XXXX ESG on our rate give this to in by upcoming strong that progress more make to in receiving we year,

pre-dramatic In a has slide was really looking. XXXX, there this national focus Now on infrastructure.

is our water, customers play with to to recognize and renewal and that role continue critical natural it's frankly, a critical industry and company Our provide We infrastructure. for the well-maintained wastewater the and that responsibility, safety reliability. our communities gas our infrastructure our in of

about calls, events. operational You some brought in challenges by external were we've previous talked might that recall of on the

service our this right that you inside them. and you remember territory. see and those from was of Ida the in came the very those met our about the collapsed operations But is flooding result news, that winter it each think each our you Texas of Uri this a Southeastern storm challenges our instances, in bridge as Pennsylvania. gas Hurricane from a natural in teams facilities and that of national If outages the Pittsburgh was here, most proud and of area and in plant of I recently, picture the overcame

who our so of the allowing gas to quickly our public, the happy main and so just of our to the the action, that associated damaged. a continue isolation Really that team to report, serve Biden, our You large quick their was XX-inch that impacted to already the we were safety was really resilient. am no our and our also in of them did control, issues may rest impressed were heat their disruption have of out quick at scheduled customers that there were weather-related section President and fuel and very Even continuously bridge. professionalism response be that I site continue group that one depend be stronger of while of though, the of act to to was gas of And I our system to is but pipe as to which collapse collapse. be able seen impact the the ensure systems this in The homes town, make minimal there our to only more small some improve important, with mains, on the visited in connected our to customers. able appliances. to of safer news, our and though the resulted service injuries

we're Now reaffirmed miles anticipate over that infrastructure we to main lab highlighted highlighted month, and XXX as project we our Brinmar, three to efforts the of new commitments. These our in I replace should Earlier field our miles addition our In this Illinois in to some pipeline. year, mentioned accomplishments. really in like solar state-of-the-art well. replace of XXXX, major that throughout of the and years, and are next about replaced water projects the ESG going we over gas X,XXX be

of progress the XXXX, base. our We So with of customer of racial XX% our strong workforce. of ended overall people made the with making our color XXXX up as year-end that workforce of in makeup company aligning

a which suppliers. of diverse the our Our overall on was serve. to spending services the use goods nearly target year, customers nicely Last XX% three-year goal achieve the is reflects population that really XX%, through and of we of of

the Scope over parts commitments overall track our proxy next achieved to on the Scope pace tied the originally to in also compensation. The of announced. trillion XX% X towards PFOS number plan company all the an can reminder, what of X our substantially multiyear program we achieve send customers to not three that details years. that emissions. and compounds is leak emissions is X% is find reaffirmed to on ensure already the and a largely And reduction as replacement other our they planned our area industry-leading baseline, accelerated XX% PFNA and pipeline progress these to this a this reducing across achievable make exceed our PFOA, in are water statement company the on detection states in greenhouse by goal through renewable have of a we executive XX X achieved finished right Since XXXX methane does X company we already reminds And And all utility. gas and reduction has served plan toward commitments, energy This extensive Our estimated Scope as our of and per water our commitment gas all you XXXX. of by our purchases, that's initiatives. our and from – making

Newsweek peer rankings This strong and focus us is and and our make to strong Project in and of time. for the more credibility who of responsible aware list our most already continued well-designed ESG us XXXX. industry XXXX, award-winning score A, progress. giving microsite. upgrade gas of stronger profile. a to our are to similar notable and the ESG here for even companies recognition the than includes our MSCI Now commitment We we've after the maintained the ESG in best And transcend BBB one ISS proxy the result Statista's incorporated and have of strong compensation the off grade, our any and of this. we're Carbon on highlighted group. scores tied This incentive I this The minus their ESG our Essential really continues our team work ratings, that's companies. our Sustainalytics, CDP from which disclosure pleased most and were strong complement company made really well-executed America's finally, really for of other upgraded result is focused first our advances Really the us making from ESG add the in scores done. B overall across ESG a in all XX.X company's we on to ESG not work. is Disclosure level to utility proud strong into remain These a our and peers. or work the for many strong peer Capping major

Finally, adding a last an bylaws, amended which our filed we requirement shareholders. for notice X-K, week, corporate

me more with financial Dan review this amendment S&P of our that, in notice XXX. after it results. This about took policy companies than talk shareholder action Board annual aligns over governance turn XX% to normal With let Our the our policies. of our to

Dan Schuller

Thanks, morning, Chris, good and everyone.

we the Before let's last million take had full to a We review $XXX.X fourth highlights. dive million, from the quarter $XXX of minutes $XX.X into year. revenues few million up year,

to up costs, water purchased natural water the $XXX.X segment surcharges slightly as $X.XX. for X% fourth $XXX.X per as growth quarter the increased million from quarter of segment. volume in $X.XX million, contributors from regulated $X.XX compared well the increased quarter customer rate segment income The regulated GAAP year, from and $XXX.X revenues in primarily of O&M Our decreased to contributed from were of a was adjusted contributed million net EPS as and revenues credits by our $XXX.X employee-related XX.X% XXXX Adjusted additional than rates the up million and from year-over-year higher and and to million $XXX.X to less last income gas gas $XXX.X million. largest regulated of to costs. recovery to for our same increase $XXX.X the quarter $XXX.X and share was million, fourth Fourth million period result from $X.XX. income XXXX,

discuss year financial full the we'll highlights. Next,

another reminding XXXX. subsequent Gas the earlier, the I'll XXXX of figures for Essential. include As Chris Natural by everyone our from March strong off results closing year the was that on year acquisition operating date segment to prior Peoples start emphasized XX,

XXXX, $X.XX $X.XX excluded per for above share year. million year rate just range the basis midpoint $XXX.X guidance $X.XX gas per months When to of XX.X% to In $XXX.X million adjusted the income of transaction-related $X.XX, O&M X.X in from ended transaction is $X.XX. Peoples-related last XXXX, Last XX-months billion income in $X.XX XXXX approximately from $X.XX with up as XX.X% from up $XXX.X million. which We billion by and income $XXX.X to to X.X% full to nearly year. of year million, GAAP EPS net increased a in $XXX.X compared million in Year-over-year, XXXX. being the increased expenses a and XX.X% to So was our of XXXX in on revenue, compared to share credit. of adjusted XXXX. adjusted income last earnings and increased

let's full XXXX, year through Next, the GAAP slides, variance the basis. details revenue. billion revenues increased nearly waterfall In on in walk with a starting $X.XX to

You'll $XXX.X million higher purchase costs, lifestyles. the towards first full revenue the credits XXXX gas wanted main you XXXX the return offset the from revenue class segment and more, water our next both was provided by recovery additional we by quarter water The let's in of to opportunity we review million on pre-COVID the was with quarter in notice and compared slightly usage to XXXX. our on driver water which regulated of increase, that trends the partial And continue growth take segments. surcharges, Once water an to rate to $XXX.X in gas as rates first and from update decreased then consumption that, the slide. gas to volumes additional customer

a older as as in and has typically historically business, appliances the neutral water water X% can than was consumption consumption XXXX overall its As usage reminder, compared we in pre-pandemic fixtures. level usage levels. to normalcy, of X% residential back see see to customers water a fallen XXXX commercial about change and return XXXX was level higher risen consumption when its last decline in With well. you and out annually natural this to as less year, than has to XXXX And here,

very direct consumption impact recall weather has that on You'll revenue. and associated a gas

heating heating monitor XXXX with as degree days closely the first the degree indicator, we ending out averages. XX-year quarter between day relatively So started and the normal an X-

meaning XXXX. was days the about than days on throughout was how consumption natural heating resulting of favorably largest the was through the residential than the the sold colder gas compares natural in segment, quarter the year-to-date This XXXX. of XX.X% regulated February XX portion in and in shows chart distributed normal, gas season, to was Pennsylvania degree this winter, and first for gas quarters XX% the first was and XXXX the weather was than year. through XXXX, weather of the The fourth degree our quarter to far year. Note in the than that colder of during were higher last last consumed Thus in year-to-date gas heating total, similar X,XXX, during in heating However, period X,XXX X.X% year's normal. winter fourth degree XX February when X.X% the days was which XXXX, warmer right heating same total recorded normal,

for our water employee-related growth XXXX. year. by a increases on move These Operations waterfall. let's were $XX.X the amount nonrecurring slide, contributed $XX.X was and Other in for the expenses the million in in segment and the gas Peoples the driver expenses notice expense revenue the in regulated million business to maintenance Next, XXXX to for full an and main maintenance reduction first the the million compared additional from $XXX.X in production quarter acquisition, XXXX. $XX year partial million you'll were from in operations million the expenses to small expenses, related $XXX.X costs Similar XXXX. to compared offset of COVID-XX and first $XX.X to million another quarter the costs of

our let's year chart just of to was credit adjusted the the of income of expenses natural Rates These the GAAP per the there, operations. contribution on waterfall. gas guidance volume share XXXX XXXX and the and versus the EPS EPS brings mentioned, from full in GAAP gas from side segment the both above combined our us water share full of the earnings $X.XX of year start of the $X.XXX. of left midpoint as for XXXX lower of the were $X.XXX added of regulated which the rate $X.XXX. growth and review $X.XX, was our Next, offset We regulated which XXXX Peoples' with added expenses, of XXXX regulated $X.XXX; $X.XXX year for $X.XXX $X.XXX added add in then from segment we and $X.XX by water surcharges of with other range. months I segments items for year. regulated year an that then $X.XX per transaction-related in the EPS and another X.X for $X.XX results of partial GAAP natural the another Building full and gas back

full we we natural by as some company. gas the segment, water, in This quarterly back gas brought the a usage seasonality think Given year this should and second XXXX. constructing that how the assistance reminder we're we slide wastewater move net in reflect projections and as of a of operating that gas water provide in about income natural earnings quarter as into

with of $XX.X or activity other seven rate states states we and to gas rate in total eight a combined our of surcharges regulatory increase on In cases in matters. water and two Moving of XXXX, million. revenue three completed annualized natural our

or as on cases base water as law February million. of with Pennsylvania with gas annualized regulated revenue a states We $X.X of well in currently decision administrative aware, in case, increase Pennsylvania. million as recommended rate a in total rate completed of cases XXXX, four many water segment in last for one we've natural of base week and water states incremental our underway have rate subsidiaries annualized $X.X judge the revenue So surcharges our our And you Ohio a far in are provided rate our XX. of

matter. ALJ ROE don't long-standing of with believe stance on Our precedent this in decision is on decisions the X.X% simply ROE. suggested objection recommended is We the primary this the alignment

of quarterly currently data settlement, they in had Pennsylvania. X.X% box although their case an in is estimated the ROE recent ROE a black additionally, And a DSIC most published American As point, X.X%.

accordance that, line new the it we that of back time ROE. hand May program. next, advocate then to expect their acquisition I'll we statutory May with in In exceptions, on by And will So agenda, on to discuss commissioners would case will the order. will rates implement the be Chris for XX included drafting the municipal in position And and commission while file support to Pennsylvania, the to be exceptions in these XXXX. our materials with over they're we then considered this we vigorously

Chris Franklin

The regulated each we Appreciate the XXXX supplement two our of $XX.X segment. closed rate organic Village in XX,XXX for the Water with existing its we customers base. the our about the and about base company X,XXX wastewater business strategy with million Dan. Listen, acquisitions water the water base increased system XXXX. wastewater investing customer it. in This supplement Thanks, over to in strategy Illinois. include growth, infrastructure essentially, acquisitions shows year, our systems acquisitions municipal Bourbonnais System of Combined in and acquisition it, slide in right? customers these in Commons Together, added and in Texas by buying

XX,XXX Now over in since and our and program. wastewater through customers base added $XXX through XXXX, we've million growth water acquisition rate

slide, versions before, Now or of next this think, you've this it. seen I on

incremental eight have fair or over We acquisition which purchase market Water the that – announced Southern total in purchase Oaks acquisition customer will second fair month. pending signed million asset XXX,XXX and market this price. This This agreements we is future. nearly includes earlier customers they're agreements incremental equivalents $XXX add just annual the in of Texas. rate to state on approximately acquisitions are require $XXX the in Based expected approximate the of million these might value these income capital $XX.X any is the this acquisition earning. And that base generate signed fully million, once of before

DELCORA are here was awaiting Commonwealth last close panel to day. purchase DELCORA and we the County heard could our decision enforceability Delaware we be any the by with that will October, with that confident regarding remain Court Pennsylvania transaction, We the litigation continue agreement the asset of

a still hopeful the help county with also we reach settlement accelerate can of are that this transaction. the closing which would We

on really in Many we're addition municipalities. customers. where and slide municipal potential in remains pending of strong. Currently, signed are municipal wastewater XXX,XXX at which pipeline water slide, Now you illustrates with to healthy engaged opportunities with previous familiar acquisition approximately the of the this and transactions actively discussions opportunities this our active point, are we pursuing

this get market Number in eight environments. of regulatory have to currently we in one, water that fair two, legislation value of have the all operate would a strong to where Number rate believe states that number number our states solutions. have there's our that continued we fair us Now I we contributors the utilities. three, capital long-term of expertise stability course, four And be strong years. ability low-cost our offer Number over in we industry provided pipeline. and

Authority, city passing Water the declaring that is the immediately Chester City of Water of in rightful the Pennsylvania that X.X by sell Because Council crisis, you and Chester receiver. the Chester fall, to agree requesting process might the a the Authority. the the the And decision, court-appointed Water public regarding its we So last unanimously solution city's the the city owner receiver that Court ruled recall Commonwealth of hear the a followed the Aqua winner of fiscal to Authority Chester as Chester was RFP provide expeditiously continue position to that receiver wait must ultimate and the Aqua. consent to to public to ordinance

All it's to to us partner forward. us given really going However, the the preference city's Council's with City right. to as is why there the confusion any in unclear market action,

year. significant our all portion we now announced we A We XXXX the focus and forward a on and on remain operational be growth overcame good our acquisitions successful very the focused excellence look of opportunities will we obstacles, integration, to and external successes Now that in in in of pipeline. building record-breaking year. and this XXXX, on had

utility. that in acquisition of area leveraging are the One of and is utility to gas Falls Peoples a of with reputation Pittsburgh Last Peoples' the benefits we of Pittsburgh systems. leveraging and purchase water wastewater grow to the is the combination Beaver the great water example the year's

core for focus new and Now going remain will acquisitions integration competency forward. a the of company

we onboard to seamlessly our Our to plan that ensure platform. and customers world-class is employees

based rate time in lines. excluding to close or on $XXX to base So approval in this DELCORA, year expected early regulatory expect million next we year add

to complete of $X Additionally, at resolve course, this before our day-to-day case $XXX We'll and very to effort potentially ongoing our not leadership Aqua These much until Pennsylvania close, least would maintain – to And we progress rate the that our We'll Utility another ESG XXXX. sometimes on a expect invest and Public Pennsylvania for sign at billion commitments another sophisticated the work. least But Commission. in planning of we sounds lastly, in agreements continue to million the acquisitions infrastructure peers. position does easy. more require to among XXXX. expect

in me XXXX let the the guidance released by So earlier month. reviewing wrap up

Customer to our targets. experience conclude to are and sustainable and our And share reaffirm business and $X.XX and we've through XX% also CapEx, between we as water natural For my share not On only in between water, toward committed X% annually through gas. expect our some and billion remain growth strengthen today, be to community that, grow to respectful growth and be we've earnings and many safety, our environmental questions. customer and gas. We're and of X% and earnings we'll rate we and approximately per and XXXX, between times. we Rate our XXXX, and rehabilitate of I'll formal for to per wastewater diversity share. our X% $X to average discussed is stewardship, And but base regulators stable inclusion, activity the ESG engagement $X.XX water continue to with always progress practices, ongoing will X% on but three-year expected confident our for between always natural take remarks gas commitments for X% happy XXXX. X% expect to spend employee made X% systems for

back let you. So Madison, to me turn it

Operator

[Operator We'll ISI. take much. Chopra first Evercore with and you go from question Thank Durgesh right. Instructions] our ahead All so

Chris Franklin

Hey, Durgesh.

Durgesh Chopra

Hey.

Chris Franklin

Good morning, Durgesh.

Durgesh Chopra

you rate. you can to base Chris. thinking guidance just sort needs remind us are equity plan? I'm Hey, of acquisitions, morning. financing that Good your business Hey, growth embedded Thanks X% Can – into XXXX update. – color or X% and there? any plus what in the for the

Dan Schuller

Yes.

take that, Let me Durgesh.

said we number a credit you to times support of know, of maintain $X so we ratings on year. our to intend as a So be municipal in investing, acquisitions. metrics order we're our number credit We're investing making we've will these calls, billion as a

to issue from equity will balance. we metrics keep time, So credit to our time in

In terms additional beyond, our XXXX some of specifics for and for on transactions larger we clarity much more really before provide color. waiting

I to some an will likely However, say this ATM program at later to year announce point we're raise equity needed. as

Durgesh Chopra

That's marketplace. thoughts. Got helpful. just, the ton Chris, obviously, it. maybe a seen We've And high-level just transactions of strategic in

You obviously, today. your referenced it in remarks, opening

sort updated eliminate Just made business, have portfolio sort any peer equity needs? any opportunistic thoughts kind back some there. of or your and can assets the capital on moves recycle to of some into Just of your they utilities of thoughts of

Chris Franklin

the in lot of Ukraine center other a Russia today, events front or and market. – natural of on with transactions internationally whether gas Clearly, levels, the with Yes. and the is in news it's the

know What safety, So I've gas general before, I natural while like a entity now. underscore Having to you meaning in I'll of company. value commodity, not this company. is only gas know said is we with projections, operating and market, happens market continue market, today though, excess of but really company which to like only – of financial, should specifically what we our valuable important that – for to operational. is said year. It's again multiples This We private see see. our the We all gas say, utility. the an or the in this a it's not nice really we'd thought just the that, in public

that to here, But to this States. the we march some on refocusing we the natural point And at so gas going this point, independent, return probably also that forward in we're And country of see options. if United a this the to gas natural wants market. multiples year, remain in at reasonable have importance more potentially knowing energy continue to

look and at we as for going forward. stand pat this to now move we're to So continue

Durgesh Chopra

giving time. you Thank and Appreciate, back jump in others let will the Understood. the you guys. I ask. queue me

Dan Schuller

bet. You

Chris Franklin

Durgesh. Thanks,

Operator

And Kim Sachs. our we'll go Insoo ahead next question take from Goldman with and

Chris Franklin

Hey, Insoo.

Insoo Kim

guys. Hey

again, three-year First CapEx through the on through year, with the XXXX XXXX, the a range. question, billion XXXX through relatively XXXX $X consistent XXXX,

the CapEx. if think base forwards you no the amount the increase And other typically, larger Just with wondering utilities you base about getting rate see with dollar there. just the CAGR raising roll

how conservative missing from for accelerated assumption this of the on and M&A? piece is sustaining wondered expectations growth is the whether pace Just municipal coming

Chris Franklin

Yes, to we We so the the let for us. fit size a spending morning. more is spot. size these a utility company natural gas, in we about business me need it's company the again, in think are spending is Both we And CapEx, the a lot water start sweet work year talk with many for our for coming us billion $X I a like this CapEx. obviously careful And than it's just And the are, billion good that. we every in precision. and think is in right $X exercise. to know do things of with

opportunities, continue unit might but follow-on acquisitions can it. to those capital, we capital judge we provide by generally on add transactions. it? to of some to other do we Now think to and Dan, as size be there as We with how anything about color follow-on we do have these the unit. But acquisitions particularly that's

Dan Schuller

Yes.

out the Chris. CapEx which is only we the would from example, think period. the been is only DELCORA the CapEx are which our in – Maybe to only in thing step-up I our include about with add you is beyond absolutely approved. already of think associated about is in acquisitions, really we – into signed, DELCORA, included being thing have That process CapEx right, when for CapEx. the think this that's for three-year CapEx growth, the But if –

numbers would it $X see beyond be it, three So you that. to, referred billion it call don't that – in you these

Insoo Kim

Right.

that sense. Now makes

base the Pennsylvania cases that pointed kind the like what the versus points or guess, about Pennsylvania was ROE reasoning side point, case, you the other of your from most up some here largely with based recent items. there. ALJ the of think read have other for differs rate the Pennsylvania, came Aqua When the to Anything either I case in or out on on was it the others that cases. resonating to On other in more ROE seems that said it on the us

Dan Schuller

is No. saw the is I ALJ statutory used straight here, the ROE we one of advocates with came that would [indiscernible]. say what the from has –

be selection – And was it fairly kind of to of a a so straightforward fairly the appeared it ROE.

in line PECO rate precedent received As with most not recent Gas XX.XX% historical we said, case. just received their Pennsylvania. X.XX%. in it's Columbia

think – well, first we other the a of all, say, So ALJ positions. I should supported of our number do that

on those issue. There's our here. in shortly historical was this biggest The will other issue an more appropriate. felt we I commissioners end things, biggest ultimately considering think It's up a exceptions ROE the and with So precedent and few line is PUC that things. think the we here the exceptions that those with really with outcome being much ROE that filed

Chris Franklin

overreaching, been that. really. an have the not pandemic like the recommendation, if ALJ, Dan, living level. probably I'm on at mistaken, effect living all recommendation, the I that been of referenced we whole country a whole world think, listen which The But the that to has think, in effect through through I pandemic some have

decisions commissioners the – hopefully, ROE. with on the long-standing stay the to continued with So see fit precedent

Insoo Kim

Thank you. Thank it. color. that you Got for

Dan Schuller

You bet.

Chris Franklin

care. Thank you. Take

Operator

next from question with go & Ryan Connors Scattergood. and take we'll our Boenning ahead And

Chris Franklin

Good morning, Ryan.

Dan Schuller

Hey, Ryan.

Ryan Connors

at that gas be side. with taking up mean, Yes, to not obviously being delve wanted when raises all? get a thanks viewpoint with not that general, your of is, for question deal really issue peer expanding approached a kind that your turning can't up morning. just this you, to specific when Or huge I questions. but in interested a pretty buyer, So sort takeout known deals, on my And I follow Chris, are premium we gas? on Obviously, that it are things just this morning. eyebrow change there's for not you you an you the you Or natural here down? that right? that interested you on but into market the by But ESG, expanding well you're are inefficiency want do an gas? approached my on Does would of in be seller, driven in Good being is sale? on in specifically,

Chris Franklin

Yes.

public position this been some Ryan, not on time natural saying are that now, gas really in at I for our we acquisition. think by this any and growth we've point, pursuing

don't And aware. – so think the mean, us I say think position. wouldn't us knowing it Yes, be aware. to that bankers buy hard, PEs. don't we're pursuing for I listen, in mean, I always always today's differential But beneficial anybody the we're talking, no, so natural always I our gas, would environment, just public is are in I given more

to to market be the to is public going interesting happening. of plays how response year though, see this all what that's terms it's So out, in

So we'll see. market now. But position doing firm and in we're real but – the very is our is we're pretty fortunately, side. water well, water growing And hot, the

Ryan Connors

Yes.

any are and the next the about huge towns because got that. things of opportunity Is synergies one digs some mean, I like create growth, their years? would compelling there. that some at point water the We that certain of the municipal both things and from is actual there where to think few build – gas are multi-utility gas able do us franchise over and water between deals water both water where and format you've territories to speaking that Now you be overlap you can there there to any they coordinate know

Chris Franklin

I being out, divulging a we But here, solution. among a for obvious once administration solutions we're issues the still we change talk by in just power what, those opened points – Pittsburgh. for to could improvements be Street, where utilities, one in Pittsburgh the a combine that getting And but we make dealing could would be we we one I'll well, customers. you opening rather call they're But been powerful and of in Pittsburgh the as easiest with whole in Even could times. infrastructure would are the could provide. multiple there's Well, in and coordination often, that while than and to the city any about Street listen, it's And needs adds streets – think there, think I the wet you that an be with while wouldn't and they're still for different provide opportunities a is see time, feet tell solution. there their region, that – combinations. at growth If secrets, cost it I

Ryan Connors

Good. And then one last one for me.

on at think market X-X-X-X to Just October, color bill can't been that it to give was I ahead it There in there. systems, guess you the us around that called to it went can Is value kind behind I dormant. Or us and seem a update. of house I update give last, and idea the moving distressed wonder an if Pennsylvania any was that floated one? fair find limit you we've can all? XXXX, was legislature any

Chris Franklin

gone To my Yes. anywhere. that is knowledge, not

their the tool customers interested in – capital that. to leaders would because want it but out they favorite they who they These the stay advocating there's but today, legislator limiting might have important their I not belt. is think they some be this to a want have use leadership, their many want. away maybe why don't would I find if I in in take municipal want the authorities Listen, it your there regularly. despite don't constituency in it an spent legislature that can they Senate, from and even think state particularly tool against municipal house independent And I've use to promoting to overall governments and with time that – it, tool in – what they

going chatter. Ryan. place, have I But you'll of that don't so that any see some And

Ryan Connors

Got it.

time. your for thanks Okay,

Dan Schuller

bet. You

Chris Franklin

Take care, Ryan.

Operator

America. we'll of go Ryan question next take with And and Bank ahead from Greenwald our

Chris Franklin

Ryan. Hey,

Ryan Greenwald

morning good Appreciate guys. the Hey, time.

the way additional here any on of would the with to starting think that maybe So acquisitions good from financing, about that percent be equity? financed

Dan Schuller

Yes. about the think the that obviously, Ryan, from think here I is things changed way Peoples for, I mean, acquisition. with simple to

high Peoples our the of credit metrics. credit room before on acquisition, we had lots were with remember, metrics very you that If

With make acquisitions acquisition, we reset so municipal And debt. could that and metrics. we'll do our those exclusively credit with

equity transactions, as us at those this so and about effectively half each of point, should you half debt. really about financed And transactions doing you being think think

that's simple Ryan. way think I a that, do So to

Ryan Greenwald

not helpful. rate the another business, but hard, too push in earlier, just states base, all market and to the to Xx alluded That's then terms gas have here. And at it. place of fair transaction in as eight Got here value legislation

terms how back strategy can relative public You you into on you financing a particularly side, a to just that fact it thinking time and can you're in of guys in here deeper that patient XX% one the bit your your terms about bit like the seems water equity? market, the water It one at the given but dive are deploy of a being time. is

Chris Franklin

of safety team. the we're all say, have But a a pretty you it with Yes. while would this. compensation doing I we've utilities own how about the rather if investment. environment I we're general improving opinions, it, am We're may about make happy I to own and Listen, again. different on others who thinking the it I gas think been the tied think matter, gas I'll management and revisit we a have but We strategic should clear utility. think and to was the of concerns do

ours You this want companies running in utilities gas country. like

tide moving a Now are not shifting it's that it to where necessarily. be infrastructure strategic appears to owners

But in I years. see let's are we've know where year. we And we is asset market what that so only option just And two owned this let's see that, XXXX. again, exists. for the – here doing about this

that's years We applies we because that thinking thought long think and are short in XXX to our business, old, our I here successful we've we think always a well. And term not as but term. been company because

stay your Hopefully, question. So answers that we're going now. for to in pat

Ryan Greenwald

developments sounds timing Any like day any Absolutely. be That's helpful. And then now. for Chester? expectations maybe around could thoughts DELCORA just lastly, it

Chris Franklin

bit Chester Authority Water they and little it's really more The months complicated. a before ago. [ph] Court. application an months for the call appeal what is Supreme to applied or been Chester That's

So case city had the wait I with to to is not. I all is the don't But he going cleanup or know for whether disclose finances. take we fix pensions recognize kinds where on the receiver it. that do to of in Court publicly to he the Supreme meantime, and

time, this But of a authority’s around takes patient. at that Board that be been the sale another will developments and point, at is in turnover to So there there level, will be is Board summer. authority the think of this I – city and there continued we've there us alignment the

the is no there's his time factor developments. be? in move. And so key move here next think next there with will And I the I think be will what – But the associated frame meantime, receivers specific

Ryan Greenwald

guys leave See will you I Great. there. it soon.

Chris Franklin

Thanks, Ryan.

Dan Schuller

care, Ryan. Take

Operator

and our from with ahead take question Travis go Miller we'll And next Morningstar.

Chris Franklin

Hey, Travis.

Travis Miller

strategy? What inflation. investments go my does at that Good make for about for If most these elevated around some Think taking become your a morning. Does that likely Thanks stays for that? municipals water more to are do Hi. reason. or question. levels thoughts the to while, what inflation the ahead more because acquisition likely expensive

Chris Franklin

think question. rate think just And municipal. nightmare put They to their is consider they would. because don't inflation, a sustained you if most a transitory, want a I rate near jeopardy. That increases. sustained tax thing It's assume municipals the a And is increase I and in let's great not reelection therefore, inflation to increase, the would for go require same

and would tilt think inflation on harmful So rather here we helpful as toward municipals. I the purchase than impacts the of wastewater water weighting about future

Travis Miller

share right and might looking ones, Okay. opportunity That's your the that of wastewater your deals wastewater right even also about there and the acquisition? you DELCORA But toward now, that's strategy business one. and the more a seems attractive or And looks should within now obviously, in take have great. set ongoing big weighted other today be it something is larger the obviously, then works out at then either a

Chris Franklin

Yes. No. Yes.

people say Some wastewater would stinks. think don't We so.

no is that – It's water. a regulatory is yet, model. traction we It's think as we towns, the reason same And affinity is same about same they less say look the economic It I water wastewater I wastewater are more at the the recovery. is way the little local. think because gets same municipals to have often, wastewater, the where process. really most the

the with Council considered local feel whoever being they we local be, often, toward officials so the strongly water or City water. affinity the might some authorities see And

hard it So to for municipals plant. put replace – gets have on to pipe make to. really – then improvements expensive and because – wastewater are or Those wastewater, it's you

And more we so that's and why exit. it's fairly see often transactions water. And think in that at that, wastewater they look I straightforward, just –

Travis Miller

Great. answer. Okay. you. Thank Sweet

Chris Franklin

Thank you, Travis.

Dan Schuller

care, Travis. Take

Operator

go We'll and Instructions] ahead [Operator Fargo. next take Reeder Wells Jonathan question from with our

Chris Franklin

Jonathan. Hey,

Jonathan Reeder

process another Chris, one Good the because the morning. Hey, they rate review I April? remaining quarterly have determining for think the for in on me. X.X% What's just PaPUC disk question that

Chris Franklin

able could necessarily you get but Yes. it's that you calculation detail a be I as give can't to up, it, maybe the the I'm probably want, into publicly without know. published quarter, they each not we follow that probably which going you to formula revisiting Jonathan.

Dan Schuller

Renee Probably and Brian we that you Yes. can help up on, and process. follow something with to with

Jonathan Reeder

with ROE to useful. I disk how think be mine Okay. would the most be would I'm the would and be determined. ROE I honest, Yes. might perhaps recent, of No, guess, of is that kind that maybe not whether indication that familiar on

So that be would helpful. Thanks.

Dan Schuller

And you point Yes. a it that agree strong really reference very here. is with we

Jonathan Reeder

Good with the final Thanks. right. All Yes. luck outcome.

Dan Schuller

Thanks, Jonathan.

Chris Franklin

care. Take Thanks, Jonathan.

Operator

further would for remarks. are any time. Franklin, at the conference back this no Mr. there I additional to turn you closing appears to or questions like It

Chris Franklin

and look everybody, follow-up, joining you. forward we're to so much. Thanks, Brian, Thanks And us as and myself for to today. always, available Dan for talking Renee,

Operator

Thank all today's for you this And call. concludes participation. your

disconnect. now may You

Essential Utilities (WTRG) 24 Feb 222021 Q4 Earnings call transcript