American Water Works (AWK) 2 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to American Water's Third Quarter 2023 Earnings Conference Call.

As a reminder, this call is being recorded and is also being webcast with an accompanying slide presentation through the company's Investor Relations website. The audio webcast archive will be available for 1 year on American Water's Investor Relations website.

I would now like to introduce you to your host for today's call, Aaron Musgrave, Vice President of Investor Relations. Mr. begin. may you Musgrave,

questions. Good today's and of call. will for remarks, Chris. joining our you us we your call the for At open morning, you, thank everyone, for prepared Thank the end

we Let me first performance expectations making our over predictions some or our expectations, other statements represent and our These current will statements based language. that are safe forward-looking regarding be harbor go Today, assumptions. future future estimates events. on

subject with may by deal the known future to statements to these are and that numerous or such unknown they factors be since cause uncertainties risks, implied However, results indicated from and events, results statements. materially other different actual

yesterday and each earnings related SEC. Form and second Additional earnings and uncertainties as diluted factors per information more filed finally, well quarter XX in earnings these share. is presentation our as and and risks, with September provided this statements in to important all earnings other diluted information our release per the the detailed earnings regarding to financials a during analysis refer of XX-Q, And share

regulatory Hardwick, and Susan our related our comment CEO, and President Executive our EPS of including PFAS investments share and Cheryl capital views will update, Vice a new XXXX plan our will targets. and Norton, will guidance longer-term on on expected investment customer of year-to-date impact and President our second quarter discuss conclude the highlights COO, affordability. and results will then with including

and with behind and and financing more questions. discuss a to year-to-date Executive our Griffith, plan. outlook financial by your President then close longer-term final results Vice we'll in details outlook discuss acquisition XXXX answering our remarks, detail, then our XXXX few goals XXXX and close will CFO, After our our John will

the turn American Water's I'll to call and CEO, Hardwick. Susan over that, President With

good Thanks, everyone. Aaron, and morning,

start periods. and X, Slide to highlights year-to-date and I'll the third by quarter some turn covering Let's from

third the guidance and pleased results yesterday, basis. strong we're our announced delivered we quarter As to of again financial in weather-normalized we XXXX a reaffirm XXXX, on

year-to-date quarter same share $X.XX earnings per $X.XX XXXX will months 'XX. net The for period further John share to expectations continue in execution on year. $X.XX share the of about is 'XX far to year. the compared so compared In for per our favorable with for $X.XX in per in in weather our were 'XX. share $X.XX same $X.XX last reflect to favorable elaborate Earnings compared weather-normalized per were the estimated results to impact of per the first XXXX, share X results These period in line strong growth the later.

other on Moving to in to of some XXXX. date accomplishments our key

capital planning for billion work We have and by projects $X.X invested our reflecting completing in great teams investments. these year-to-date, responsible

$XXX XXXX approximately million and in you plan As acquisitions total Pennsylvania, transaction investment to X Illinois capital recall, for end includes sizable the the of the in year. in December another of around expect including we will close

of a our first debt As our served equity considering billion half which June. risk, our current customers investors, to These customers issuances and priorities overall plan. issuance focused and X these well the billion were you issuance were $X.X of conditions. the risk completing execution year market on pricing market-related has in -- reduce the the in $X XXXX we an of in and March convertible key completed financing We know,

X. Slide to Turning

As dividend X% including long-term are and affirming we plan EPS rates. to targets, today, our out we our annual X% growth X-year roll compounded new

to of per XXXX $X.XX in $X.XX our earnings compared guidance are X% represents XXXX share, to later our in John share growth discussion. XXXX, We will which This further per expectation also EPS discuss of the weather-normalized initiating EPS guidance. our

historically earnings earnings this highlights better to on growth to version to the referred look X% as our compelling revised it new expectation have our represents believe triangle. this we of better that growth. had We drivers we thing the of growth growth X% and our that is slide note outlook. One Recall key

decade. rate wastewater our XXX% company. base we've X% forth can X CapEx X% the on robust years rate and growth of growth plan we nearly water acquisition drivers growth this execute, utility, growth by Combined for expect base with regulated the ago updated to plan. regulatory a strategy key the As to are we and accelerated put to Rate now execution continues driven regulated with and base over our which we be continue next proven

easier X acquisitions. annual Later, growth expect we next acquisition measure to over timing this and connections Cheryl highlighting a by acquisitions rate to cause should is years, to X%. amount are you spend basis. through the on review slide, compounded measured acquisitions. of within related our can customer see and often in investment growth on year-to-year The calendar difficult capital way closing to investors X% On of we acquisition will for a our an which including a strategy of control monitor volatility the customer additions can target year, be growth CAGR This

acquisition And driver earnings key said, to is base as rate growth. I growth, investment which includes the

installations outlook growth we an added any Services we for new currently from Military includes growth organic secured. Group Our from the also opportunities the upside serve expect revenue our bases XX with

across and in XX our flexibility competitive with advantages company's provides of timing deployment. states its capital regulated the us rate that of operations One diverse is cases

consistent growth set of mechanisms. and and X capital infrastructure annually, next also which have growth predictable years other recoverable are of the dividend very almost earnings deliver and regulatory through beyond. approaches, confident, projects are over we with controllable our can half Along We a we

affordability higher American believe EPS the and have history medium the to interest this plan sector Based our to and seen return rates, customer our many value on supported executing that shown and of impact low-risk and over for to While including continue short by strategies, of history has ours, horizons, yet we utility and a intend very ESG stocks, shareholder competitive, will Water dividend rewarded combination on deliver term investors. capital our compelling on be the years sustainable investors. significant delivered to the focus leadership long-term utility on and longer-term to We our our has growth, of continue come. certainly investment by plan

to to affordability let it me capital about execution. our talk more customer Cheryl? that, investment turn regulatory Cheryl over and on our With plan and focus

Thanks, Susan, morning, and good everyone.

teams years. discussion want job a I into of I capital current starting executing done that plan, great few these on on have X, investment our a Before first jump long-term capital our to our last acknowledge accelerated Slide plans

deployment $X.X which billion on plan by investments. includes overall of this capital our we're our We capital pace acquisition it again met year, have goal, and consistently to meeting do

to level ahead increase in XXXX, billion. our $X.X Looking investment we spending roughly expect modest a to

to reflects $XX of project billion consistent expect about increase billion, I'll of in the with invest $X more is Over analysis, shortly. our the X next level variable of speak to billion risk-based over our planning. our result about an affordability This years, spending approximately $XX customer key risk, previous we which Along plan. a

previous out decade, $X acquisitions, over billion next which expect our plan. to systems than the higher in Looking we is $XX the XX-year regulated to billion $XX billion and invest

higher to PFAS, expect the other related goods and time. continue we costs modestly over capital addition follow-on time for acquisitions tackling and In to to pipe needs increase over to capital

capital is X needs. Continuing plan primarily driven on by Slide the X. in X-year The increase

$X for treat contamination approximately of the plan our to across PFAS billion systems. includes needed water First, investment

be than supports be in many water we've protect efforts required the As would utility will by any a under to company said proposing we proposed. for position that times, drinking the health rule And national USEPA's better American PFAS. we've is public Water standards the remove also significant. to cost at as said our comply the And to PFAS water believe level

capital without upon federal the estimate we which will or based Roughly best early $X XXXX remains modification. proposed finalized EPA much be XXXX billion our rule, in late expect of

costly related New example. PFAS contamination beginning for We X-year like our expect served, as over and the are because treatment source larger sources. we Jersey an cost-effective in more our terms as treatment carbon, to and in use American than for that a The option occur a activated it's include supplies water later of remediation most Jersey Water period our capital customers PFAS that PFAS in treat have for New investments water surface of said, we've to primarily systems. primary XXXX -- large granular proven method or be more will states granulated activated And groundwater supplies GAC, these

However, the compare we're which also to PFAS of along piloting GAC removal ion performance, resins exchange overall treatment. cost media and impacts

related wastewater of topic advocate continue important While and including much expect of that for and and we equal any around also to PFAS, for to state this the fall cleanup ownership, the constructive funding to We'll operating recovery to all responsibility of contaminants PFAS. should we and/or will outcomes initiative, providers water costs, capital quality of advocate ultimate exists the the uncertainty access continue that water the these treating have regardless to federal related polluters. utility

In wastewater continue permanent funding to program. water customer efforts addition, we'll and federal low-income our our for request assistance

to well The our in plan replacement the such meter projects a higher future XXXX of acquisitions. XXXX are as footprint, higher related increased other level to pipe spend a renewal of to hydrant, follow-on X of and prioritized drivers CapEx as level as related across expected capital for

estimated standards, compliance capital order Following our into investment recent and which level wastewater a regulatory water in bring acquisitions, of we experience of need driving to and $XXX to the to is need have operating higher continued higher systems million. up

have ongoing the You later analysis can risk of we analysis. We beyond that our see risk-based a deferred affordability our this projects $XXX part extensive X-year also of conjunction with project plan. years to in as lower million did

service we determined some XX-year the For mains reliability to services until they not risk was did that example, immediate plan, where or an deferred replacement and water the pose later in of capital quality. it

pending rate cases a states. also details some Let's you'll and of the snapshot activity this summary charges most to a for facts each. rate XX I'll the regulatory our top as key key some our across latest turn states. well in related from slide of in Shown general general the infrastructure outcomes cover the In our recent appendix, XX, find case as to is Slide with

and general California, Indiana, West Virginia progressing cases are well Kentucky, all expected. Our as rate and in

cases, will All California, most of early resolved except XXXX. perhaps be these likely in

and expect in in investments system additional April annual year. next covering Just general $XXX interim of go rates case of a May million into million revenue reflecting $XX XXXX May effect rate seeking XXXX. to We're yesterday, in Virginia we through filed

XX.X%. increasing increase point which of general to additional capital basis filed which filed to of we basis Outside go request authorized October in bring California's cases, quarter, as our July XXXX, a last XX water effect request our increase ROE XX approved XX would in rate return was as effective to X, to an by the July similar on we mechanism X.X% ROE a on into seeking cost our discussed XX. XXXX, a We equity or January for point

to long-running issue, related a is we entity finally, proudly over This own have a And just community assets. a latest expertise effort respect not entity it system local in years. operate enabling the system lacks with to the these in served complex the by an customers domain chapter the adopted to imminent distribution file to resolution, an In the water Monterey and lawsuit customers. we October, Monterey a XXX a new believe serving very Monterey that for

defend believe if we upon filed. against it's we'll precedent, successfully be to line, based lawsuit, an domain existing imminent able Bottom legal

on You SEC topic this in can information quarter's XX-Q. our filings, find including more this

levels plan. of and for XX. specific allow our the base target would to we residential I'll investment Bureau analysis increasing rising assumptions to wrap this median an serve, discussion stay us our Moving customer bills affordability household household research with new U.S. X% median around data of capital projected combined that concluded with to or Slide a of less of geographies and conservative Using customer up water income within income. Census

water are we positions is affordability Thankfully, relative challenges terms the and affordability wastewater in wallet of industry today, difficult share. most of balancing good our customer investments are and magnitude the of that our very with One in or the the company needed. in system industry face

and must we are who with customers in around continue cost and continue assist the to focus management evolve our rate our efficiencies technology, same strategies programs our on customer to At order affordability. We must to deliver realize we scale time, design of on also affordability. challenged

years. been part many operating a affordability our Our DNA customer of has efficiency for on dual focus company's valuable and

at managing As metric managing efficiency O&M as O&M as to that we benchmark grow recent one success just years, has measure to our of you we've revenue know, costs. we've as used emphasized growth business. efficiency In as our historically metrics impactful costs been the the

this an whether come the effectiveness business. As at More to continuing XXXX. running on this to judge best is look efficient ahead, metric we're evaluate we in to costs which our managing by and

John I'll financial our it over plans hand to further that, results With in John? cover to detail. and

morning, everyone. Thank you, good Cheryl, and

XX. Turning to Slide

few results. Let quarter of EPS, results. a also details which me the same third The provide of year-to-date as year-to-date many more as details appendix on drivers has

$X.XX compared share general were basis. in in per we per earnings to share by and rate Consolidated up the cases a our XXXX and $X.XX weather-normalized were driven completed period on larger revenues share per same early states. XXXX in year-to-date, $X.XX late XXXX up Increased

These additional and the continue in significant systems. make revenues by made our are investments have driven to we

quarter XXXX As quarters as to Pennsylvania. weather in to of by Jersey. and a due result warm $X.XX net This dry share of noted, second conditions, in in conditions warm mostly third $X.XX of dry related which the year-to-date per and earnings Jersey an to in and higher Missouri, were New net New favorable third share, and estimated per weather the primarily compares

In in through through higher cost of proactively higher to XX months. including traditional $X.XX expense large completed are years recovered inflationary and service looking general test the of to at pressures the use sought cases we about forward and part per in being of rate share $X.XX XX chemical operating of base last and revenues updates we per share, about pension costs costs, increased

expense increased and in those continuing dilution. $X.XX This share strategy cost investment per related strategy recently our financing the primarily has a long-term line limited and and $X.XX upcoming additional share, higher are cases. growth, use per impact to of depreciation is increased in share bottom our of Supporting the costs filed to to we XXXX count

mentioned equity rate our the higher I interest interest As last the count the share the offsets from avoided expense environment. of issuance quarter, impact current EPS in

impact as outlook. for the neutral current to based full on year well expect EPS to approximately We be the the

growth. growing our course, Slide at acquisitions are rate base and of illustrates XX. a X%. long-term graph succeeding base on regulated investments capital of sector our uniquely utility earnings high Water We This and Turning our the the Rate to execution thesis. and drive that capital visibility the projects infrastructure combined the plan, growth, of positions continued will both to with to X% is investment rate low-risk American to believe in nature investment degree of plan fundamental

first for We that million ability we Slide many to XX continue set states strong acquisitions. the acquisitions which growth demonstrates continued on deals X X XX, to XXXX, through see be $XX up across months Turning you'll closed in our of totaling in to close states.

agreement end across in had early including in million, also under totaling West the Virginia we closed million. which September We for October, transactions $XX of XX states of XX $XXX through X X

wastewater This treatment Authority, both we total Illinois, wastewater Area includes and City Granite system also the in previously Sewer the in plant announced. Pennsylvania, Butler

our Also $XXX we March. We is approvals Pennsylvania, purchase year those pending the system expect the to announced included Towamencin back Township City expect close forward acquisition and we in look this wastewater serving to regulatory Butler customers. in around under for million acquisitions year-end, as later in for to in Granite agreement each

We in expect pending final those to XXXX, customers and acquisition serving as regulatory approval, or XXXX well. to look we this late close early forward

City. XXXX and Our future the over of acquisitions we very remains outlook at under Butler end of closings strong Granite for million expected acquisitions of have the expect as after to $XXX agreement

pipeline we build is close work as the to course, continuous. Of and on the refill transactions, acquisition

is Our pipeline this rate of leading outlook. of growth indicator supports X.X base a our that million piece customer connections strong

results in to outlook $X.XX EPS per On we established regarding provide Slide our considerations range our share. $X.XX guidance for XX, some newly XXXX of

our return earning by investment. a that serve to will our growth you capital and investment would be on customers as expect, driven First,

year talked our base As and so earnings see about from is plan XXXX in CapEx in the following reflected X ramp-up HOS previously, sale, of accelerated rate we've we mechanisms. infrastructure that increases both XXXX,

growth of also for As just CapEx consistent mechanisms, active will a being recoverable rate meaningful into so driver or year. drive earnings cases a regulated growth our incorporated by XX% completed approximately of acquisitions next reminder, that is Recent very infrastructure us. are it's

add Services show projects for XX driving MSG's resulted in installations to and increased it work does growth Military to our improvement trust military we continued has U.S. serves built allocating government our growth incrementally earnings expectation great note outlook. Group the as additional to the like in that have I'd revenues. our on funds

my Just strategy run manage as critical final this to slide. it growth our ability prudently is operating goes which to on costs to our to the business, the takes point

to construct closely of affordability bills. the to of ultimately, interests the culture cost and in our of in is regulators of O&M only strong efficiency and of These affordability customer investors management, we with XXXX. increases want we customer Because heart operating protect the modest in go efforts aligned expect which managing

Finally, of done and will be related drive expense. I'd to that pension, our our you that obligation pension remeasurement at pension year-end remind will XXXX simply determination the XXXX

Slide before profile. The Turning financing plan. market to be Based through period of liquidity X-year of $X.X successfully plan plan of from to estimated $X is to financing plan equity needed XXXX now plan, We need. of towards of $X billion equity XXXX balance our equity I'll includes expected this middle XXXX, billion of billion conditions. the billion In closing new the prior XX. near total of with an our a we financing on that provide capital our plan equity our leaving XXXX a issued end our to in financing prior and through look issuances $X subject new sheet $XXX year, issued of XXXX. the the at update a million earlier billion expected $X

is need in by equity of new plan. in $X CapEx driven million the the billion external $XXX The increase incremental anticipated the

and includes expect now, both we from and cash equity, debt As flow operations. which we've external funded CapEx be incremental times roughly equity to XX-XX said many

plan to account Our than takes financing maintaining of the XX%. continuing strong also capital to of target sheet meet and our a design less goal into debt long-term balance

inherent minimum to in tax in our we especially will be to new will alternative as the assumption corporate the Another subject become likely plan that is continue coming cash a we taxpayer, years. new

On strong XX, of Slide continued we summary a financial condition. our provide

Our than within roughly XX of less of which of on of comfortably $XXX remains XX%, at net million is ratio hand debt-to-capital the as target our long-term total XX%. cash September

As we higher challenging. rate all aware, interest are the is current environment

number a a in position the of in with strength on however, are, challenge. We of dealing fronts

holding advantage of issuing allows remain of and scale We company take capital our at debt we long us strategy that Our access debt have the to confident to level for the term. pricing issuances. strong will

In fact, we extended a has which billion. XXXX, facility of October credit capacity $X.XX our just revolving of the maturity to

Our the gives diversified some liquidity. coupled great and banking relationships business banks of world, us the strongest credit strong with fully and model our in ratings confidence regulated largest with around

environments Our to over duration risk, to cases we rate interest is manage one costs. minimize the laddered general the allows like and approach managing any long-term in contributes may minimize very rate to which lag current recovery experience financings between debt important related customer to us cash our short And affordability. years flows to of debt

With turn Susan? closing that, to it over back Susan thoughts. for some I'll

very To execution you've on our all about close today, it should sound strategic John. thinking heard familiar. Thanks, latest and level. every at Slide It's XX,

ESG focus will demonstrate we execute, rewarded combined our be to on by continue industry-leading highly growth, to EPS continue believe valued and consistently our to leadership and with dividend our As affordability investors. we ability and

to water a outstanding excellent team water the the military by well-planned wastewater XX culture high separate investment and the utilities. including sheet best-in-class business acquisitions our us achievement on standards, from American raised our maturity leading the a industry. all our has maintaining our regulatory while execution. includes success footprint. affordability Through capital Water safety of installations operating consistent significant of a And and proudly strategies profile for serve bar our our in our Services They low-risk Military at quality debt proposition. accolades, which and aspects Group our includes in differentiated and team underpinned that strong execution these All efforts by our with plan, are balance believe and We

strategies today superior continue our ability have Our history goals confidence return. track shareholder has of this talked executing about record to a competitive, we of we very With and our shareholder delivering long-term sustainable plan, in value. our achieve delivered full on the

you turn call me and And over with that, any begin to have. let may back to Chris the take questions Q&A

Instructions] JPMorgan. question from with first [Operator Sunderland Richard Today's comes

X% I the you with around back to start I the year, you've has up language outlined anything different M&A here. outlook, revision appreciate but back of But customer bridging Obviously, details significantly, customer affordability to kind outlook last angle. accelerated target on now? into and update 'XX, plan, when as the for investment is new curious the the if is I'm curious the to the CapEx affordability crafted gave that around the plan there factored also this capital bill details angle additions and back around wanted some looking in customer not CapEx there how XXXX, you the to first well?

Yes, Rich. lot Okay, in there. a there's

add to affordability. been then of concept sharpened the over me Let start, has focus, wallet related John number talked that has the think, customer share and can I really I about. last Cheryl the sharpened of would Cheryl to our sort say And around focus it. that years and

and challenges operate customers to and us those it's those think we of are communities demographics that what communities. in the communities understand in important the for I of the

ability very been wallet in to we've able income, percentage household think, various share And years. impacts this developing level that a a do of And here analysis I now focus for we've been, concept think lot I around our just detailed of And clearly serve. number communities income. a as our at of that that defined a the And around been household economic around not very we maintain think to has we've affordability, continue our X% communities base And position this continue grow we'll bill customers I the of it continue that and to with in specifically. confidently or think us plan plan, it, to allowed has a as say how grow to overburdening customer's how growth focus grow while expectations. our how rate less about really to we roughly this our to build to that continued of to serve to around

plan nicely this concept. in I fits think that very

Cheryl, you want add to anything?

Yes. the would to serve. not the are communities demographics yet sure that we at look that, are that level communities. Susan of and look different at Rich, that And add, as We the community community. we in need I investments right from just to investing we all said, the at capital make all those we

that lot Lead New regulations also like but capital a PFAS, of and is driving Copper the Rule, investment board. across the

have that, we to that to need so communities. the to And continue all do in and do we

water. model of continue there. increase. that Because So they use, drinking these think treat clean, fair infrastructure investment affordability balance think getting all that priority getting of really serve. But the we we we of communities amount will in serving, right we're way, safe it's calculations, balance to communities of deserve right that customers have the as number grow all that we risk best to all we in And the we we're to the the our a the

concept the And we've Cheryl, every and and for right plan impacts made. at we and customers how how affordability plan as in the been it add have layout affects the service we've very customers the I alongside the a jurisdiction, talking that that about we affordability regulatory territory. additional thought investments transparently about is analysis this We're to this one might we've comment. also with sharing regulators, done. a And From in perspective, that just

is a as that here. that party regulators are we've think taken a X it's we that. differentiating view And and I recognizing just certainly again, concept So think

And of Rich, I'll X% question. your the part up pick on

base growth know, to customer to rate X% variability spread you're a able the X% X% right context, is X% But metric, mentioned being Susan But the we what As growth. to X% over our that her commentary, growth. growth think to that just element base larger X% good is to as the acquisitions. given short-term healthy this of point in to out about a earnings rate in a a drives long-term you is is think it base around metric as X%

that think the Great. a step 'XX looks to It on 'XX course separately, there? the like That kind financing curious any was color about versus relative equity 'XX very 'XX. then just rate on I'm items of in prior the Is the to discrete normal cash versus And to drivers you're to here, operating to significant Just up clear helpful the there. recovery, how around new? turning CapEx. flow side. plan

good Really, Yes. is step Rich. question, It's a a there big up.

If flow you just And portion plan increase and the interim in period we spend increase as step-up go the plan. think that cash of accounts up. years out when capital step given XXXX, capital increased then as in such operating significant accumulation the that is capital you also from as the through the back you 'XX for the a forward the cash that very 'XX the in about you of well, significant 'XX drop and of plan flow would a intuitively think 'XX, -- is our bring there into plan,

is Zimbardo question with Our Paul from next of America. Bank

last that on line, clarify to understanding. just confirm And my

it, no triangle, you of just it's representation. call in So there's the effectively of a kind as the growth kind change

acquisitions or to rate think is the Yes, give fair. We we'll you a that base, driver. progress rolls Rate to base around is -- that think, that's some I which maybe in investment investment, continue emphasize better around is I we're want the growth it make additions. do includes to clarity base trying here, acquisition into driver. metric as to by growth customer sort toward through always to can view has. rate which how The of giving that you just continue acquisitions our measure just What

potentially view just it's around better a real that. to acquisition progress able think we're be making no So change in strategy. I investors for to the see

Okay. what shifting financing Understood. And then plan. to I thought. the That's

assume state proceeds, it I'm federal funding, So wrong, PFAS. right, if for funding of litigation doesn't and if me any I understand correct kind it

any is of sense Just customer kind of there what out be help bills? that to on offset could

the Yes, the as Obviously, current necessary cost be laid have numbers a estimates continue yet. the Obviously, out our of here, outlined question. that we have don't we rule it's to rule. a proposed meet Cheryl best to good

rule. occur finalizing So we final numbers have will once those a

And you we look since whole all queue litigation. do about participate than it ongoing talk more this so the can that in out We've it in at the ongoing much issue. around there litigation that is and laid probably won't that

is we say fair costs would to our incur. think estimates I expect the that are today it to

the polluters our believe responsibility. do may this how think see be of We have. works to of should by that participation Cheryl that have We ultimately And out see first in virtue line our covered here what to litigation I litigation impact the well.

we are executed. that to is So involved quite that that, sure make in properly

it To does understood, around sure Okay. not? make an external assumption have or of funding it getting does kind I

No, estimates does It we just not cost this this have developed at point. so that the far. is

The comes Grainger Will with next from Mizuho. question

Just PFAS -- that be would makeup ask Is that unpack billion outlined service if today, we about be dollars underlying that helpful. over of should yes, on your wanted it or territories? the how pretty could there, assumptions you've to thinking ratable the the you

on, you on to high pretty let to level, want might just I'll that. Cheryl, that. We Cheryl I a think, comment hit Yes. but reemphasize

water there that large of to in but also of more largest in expect are amount that at -- reason example. costly the a is comments contamination spend my I as New have We states And of plants spend the add to. being we that earlier, that be general, -- our footprint the for surface where looked treatment are Jersey, mentioned this, to we these there's larger we've as the very bulk our in Yes. for driver customers, of

a We have Pennsylvania state, larger numerous locations as there.

outlined it's add groundwater add plant surface to be to a haven't source But costly everywhere lot water going that opposed that a to But that treatment. anywhere to as is treatment. going we more really a we're

our Jersey for is New so state, And biggest dollar sure.

Got to just the then then you're got $XXX That's still million you're that incremental million, helpful. billion? equity it. is and issue Or plan, $X that The And maybe incremental an planning an math on the million? equity it is -- for just $XXX if I've incremental your right. -- is $XXX my now

It's You've right, million. got $XXX it incremental Will. an

half back come ATM timing the of ratable? Or like your just to as plan? Okay. in of pretty the be And that kind would we should that of an towards like issued expect

the What XXXX plan, conditions, new to obviously. we've we'll to of our market is in XXXX said issue subject middle

Reeder with next Our is from Fargo. Jonathan Wells question

looks higher Just billion the question. of needs on following increased last more up cash kind bit flows, capital increase. the than the $X that like Despite a it external operating little CapEx

$XXX debt. You Anything of unique got the million it's billion equity and there? I going $X.X think on of then

looking No, really Jonathan, lead metrics. our this by credit analysis at we

and back as said we a where it goes the equity think past incremental generated what well internally XX-XX fund debt of as issuance. so as it CapEx it's lot And will just there, funds equity about in to we've new

So it's, think it I -- as in of lining think that regard. up we

a the just have than was thinking Okay. was about portion thought. debt No, I little would I higher

capital a as of just maturity spend That's the the function well Yes. as schedule.

Okay. Yes, maybe maturity in the schedule.

Okay.

[ probably XX-day Cheryl, like there's that So ended yesterday. which 'XX said the know ROE, to a comment increase I period, been request? opposition think I allowed filed there has to you this California ] any filed maybe XX/XX on

a of that. period. intervention over is kind concern kind And Jonathan, of of unaware there I any or am Yes, any XX-day

I -- It's formula. Jonathan, just a any with yes, mean that. be we don't pretty expect formulaic, follows to really It issue there

think concern No. some the than monitor side, I more electric the investor mean water, whether on both. the I see you intervention but is Yes.

the by Is there kind more anything I bumped you that? up placeholder $X passage anything? of of just specific think the billion. driving that time than is plan, M&A Or XX-year CapEx

it. part say, certainly I'd of as of Jonathan, passage it's Yes, time

system. capability and the as well investing -- in integrations. due with and across We Starting diligence are our as originations

at that of a a just continue to we our best-in-class there's momentum look operator there what this that us a standards strength lot the systems We think acquire. program. acquisitions when and as just relative we and we lot to happens of make in As continuing

So pointed yes, move it as you maintain we expect of capability level investing we we're to time, bigger in is forward those and out, numbers significantly a become contribution. that as relative that to in

your cost for that 'XX pension? key have tracking much mechanisms pension Okay. But figuring on that? do states And of now and mentioned exposure out. most have you then you Or do the for last,

We you have states, we go accounts that Jonathan. And trackers and in with through deferral certain in detail. can

need mix the pick already picked and what in a would to up what of up there be there's future. we So

[Operator Instructions] with from next The UBS. Gregg Orrill question comes

on working do getting 'XX, about you you're close for Pennsylvania mentioned reasonable in 'XX. when acquisition $XXX do into time you you of the think approvals. think How How an that? of I late in million line acquisitions, go to sort about think you

the do say a arrangement want of recall, traditional it's one when you a particular, referring exit process, [indiscernible] into you're John, to, I decided acquisition. we it's little the more to sort And wouldn't to in opportunity. comment that I stepped on the that? complicated. NextEra think

complicated. a more just that So was little

John, But of around sort want typically talk how process the you about think we acquisitions. to

there's And clock. application an The be then go state Gregg, mentioned state. through you But to you Yes. deemed that starts varies to file Pennsylvania, application. statutory and a complete has since process to a it

a within you're And statutory statutory your approval, timetable? settling X-month in then litigating runs And so that but clock through. there's of your the you're X-month either all that case Pennsylvania, approval,

And so what's different about this situation?

Pennsylvania. one is in post how allowing from of on the that just in approval the bit based we're latitude event PUC see out. interveners. the a there's approval [indiscernible] follow-up there's where But We'll Well, PUC little opportunity plays to any precedent

The with Wolfe Gandhi next question from Research. comes Aditya

risk expense doesn't to on the $XX of of hear give it additional can X qualifies about water protections? for and trackers mechanisms? maybe portion I any a O&M color contain is, your specific on around and wanted the related CERCLA? then any from thinking latest released under or final the you you Do is of some start liability to what protection second systems PFAS PFAS sort How topic rule you And curious million annual if financial just are see topics. thoughts

This questions. those take is can Cheryl. I

have we around pushing engaged that space. As hard far that that as and CERCLA, really utilities protections been in wastewater have process, been the really in protected are and we to water ensure

is going we're going fight be and but to able that space. we're that be now, we're And pretty a in impact confident right, continue there, to you're that able bit Right out treated going feel that to to so battle. we little to of vulnerability that how there we're through to manage

about But fight I like state. whether protected talked come to breakdown, rest So as as mechanisms And are have. there. that and that mechanisms the we going to would an make have type far a sure But to more or would to recovered we breakdown crazy not from don't on are just through exact that $XX be haven't that. state of we state depends an million, the on exact assured,

their that have kind tracker production any to those mechanism them a allow in in that space costs, costs. would So they really of recover be if would helpful

In some that cases, capital we capital of and operating writers some improvements. have improvements, include environmental them include

as to them allow costs those would that well. recover So

to of So there's the those portion going lag, will we're just would able be little rest be But with as front. concerned. rate a I that general are recover through recover up as very going to far to costs anticipate, a right them case

the And thing an to that add have don't we're timely recovery, only design mechanism we to I one. is Yes. or going work to approach would where ensure existing an to

we of timely it, are make else. we the these a argument costs and And that we'll have are mandate taking think care is a federal and federally of behind created by mandated recovery great around rule someone here federal to recovery. and view that Our because problem

for we create to existing opportunity don't looking new we'll looking to where that. be have we'll So do solutions, be

a have and this rule know out. So how final regulatory on front lot here to there'll the a be we do once plays

implementation us make would add put those treatment that in things have kinds and time I just of regulatory do we period gives improvements. Susan, to that to Yes, those that, place X-year

Got color. That's John. just for super Right. question it. And X helpful -- one

in On through the your 'XX 'XX of equity the plan. you middle it's needs, mentioned new

sort in 'XX the So of time frame.

at XXXX. end from in, to I HOS of come note going also due are You have the proceeds the believe they're

of little block? Just couple just in to maybe forward this a color add timing to you'll sort going on going years. a about down forward How form this equity? draw Or think like over we the a is the more you of Is of some be be that? where can straight bit on should

would exact Yes, -- made terms form have not that the equity. enough yet on in close to decision haven't Aditya, we time of of the we're I say

approach we But timing, You're closer proceeds. point. immediate we'll right no on to that timing HOS as more the our the the develop of then thinking

But certainly, $X $X.X We you've year look -- did with straight for we'll issued the for equity us the convert the there. what's I'd as do we're billion. best year issue this seen say that billion. we and this shareholders

make approaches. that everything. say so as time willing to And decision we're we'll at look I'd But that's a

for wanted there you your point couldn't all? find the And X% to EPS Okay. to the base just -- just is clarify status? Can Got in or And your your just made follow-up. I taxpayer on confirm, cash release. the at X% it. slides X I a earnings CAGR that you

Yes.

at talked that play minimum in when So this Act, With another that would let Those to become about, us. dictate to we that we for the certain alternative -- in coming will point Not cash Inflation to on are clear, me will AMT, are become and regards be we'll that Reduction the timing the finalized just do regulations are and but the be that case it the be the we equity not tax status for expect our years. with elements the clarify equity. taxpayer corporate precise replace subject there to the instrument we've are to equity. subject expecting to

year, in a With that, is as regards think a to base long-term the X% I'd that on this target. we say X% a to target of

guidance pointed years, our the the 'XX York, in and case to we over plan that in we was with and and XX% out, EPS CAGR reflects 'XX. aware You're X% last of sale as midpoint. time sale proceeds reset the needed capital at of and the those which HOS And the the few an Susan redeploy New

to CAGR. really base So X% a target, long-term X% we X% by is growth to X% long-term rate think of driven the

this no may conclude session question-and-answer showing are attending today's we for conference. queue, Thank time, as this does and well you At disconnect. questioners in now our you further and as presentation, the our