Essential Utilities (WTRG) 6 May 212021 Q1 Earnings call transcript

Good day, and welcome to the Essential Utilities Q1 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Dingerdissen. Sir, please go ahead.

Thank you, Katie. thank earnings joining call. and first for everyone XXXX quarter morning, you us for our Good I of Investor Brian Relations. am Dingerdissen, Vice President, Head press section of did copy website. it And receive our visiting release, the by Relations you find you Investor if the can not of a event that slides this be be found the webcast referencing The also and on will of we can our website.

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

be of of certain company's on and non-GAAP call to the course this to will open measures. reconciliation included may for is the the website. end measures the questions. After reference call, at of made A the the presentation GAAP these presentation, financial we non-GAAP posted During also financial

Franklin, Here’s Chris We'll for Chairman and provide today. company start with who update. our a CEO, agenda will our

Schuller, discuss will conclude update Chris it turn for the At now it presentation call, will will financial results. the we then a an acquisition questions. our Franklin. open will on up our portion Dan with program over municipal I guidance. XXXX CFO, the our With and our of Next to review Chris conclusion that, of

everyone. and good morning, Thanks, for Thanks us. joining Brian

quarter at of first with highlights. look out a some start Let's our

And our as a XX.X% the $X.XX closing of share to per essential months as anniversary just GAAP -- at moments. $XXX.X the few year strong one-year the same basis quarter the and infrastructure million get and $XXX for Peoples. in year. first the in marked invested earnings compared a improvements of of first The one-year will into up quarter first details and We three already approximately time systems our We Dan quarter last on had quarter. that was through in the a first million utilities

purchase was and acquisitions Our of yesterday meeting all one meeting $XXX.X seven really of our Also our management's million ballot shows pleased strength with annual acquisition items The municipal price to report also strategy. recommendations. were shareholders pending in the the I'm on voted was of transition. that accordance totaling in

left Franks coming Wendy director Kelly. CPPIB down position of Board expect CPPIB back to Board's And long-time with to add Our member CEO Peoples well-qualified from to bring the acquisition And with and comply a members also then firm. policy. board Nick stepped since replaced months Board the age by was the a friend represented who Franks, another the to nine to former, Edwina take different DeBenedictis again. we the in Wendy

necessary levels, water add who additional XX, has The million customers in lab dynamic employs the adapt of the regulatory now building including to lab And staff These in do operational commitment which so. Mawr do As per to is four Bryn to size parameters. diversity, and other great includes through Environmental a million-fold ensure gone lot high-quality to environment water our I'm brand-new had women, backgrounds. and equipment service about acquisition. in Board microbiologists color be proxy. health parts environmental the proxy, though energy have professional more and that it XXX,XXX as by if wastewater our our here. XX Protection note previous agencies. trillion, use different what spent to for that of right. will confident protect year. and eight three us We will water. to and certified requires lakes different I of drinking systems operations. double The per accommodate water diverse we we regulatory one to the and which tests busy sampling over a on streams and all state increasing is than read. the very The to chemists new return wastewater is is methods around the scientists increase new and It a years. to the lab and to as haven't perform should board for also XXX reminder, I Department current two and each that the health samples experiential which pristine. we member cognitive has of campus and announce lab a of strong we did and XX,XXX on was XX that treat safe also two-storey This business to a feel our analytical we allow of water March, and public laboratory environmental of excellence a people excited Pennsylvania I rivers, informative needs encourage a chance and our capacity that you measuring example time easy state-of-the-art able will It's opened you parts mission just group. we've All from review detection our new in deliver a a quality the and lab It's The

parts year and part that the PFOS all ago, Now a of trillion presence we are address of set uniformly as PFNA, family a contaminants PFOA, the chemicals. company-wide of standard announced per to which PFOS of XX

probably still one of the only an parts PFOS federal and our As I is standard And enforceable and is to EPA's is Pennsylvania. certified PFOS laboratory non-enforceable years the labs two test think you're although level still away, aware XX accredited per trillion. utility in advisory health at for PFOA

important investment safety serve. trillion commitment this per our the health to work. lab water source for where new is Our integral making And capital of XX customers exceeds to necessary is the and parts we our

earlier in Illinois the two projects field completion. in guidance of are stages to light of that the this announced in highlight I'd final Now that solar we like ESG year,

$XXX,XXX nearly at $XX,XXX see of end good of customers. The the pictures we operate to the plant. year. estimate power here. field February. the We the solar and XX% solar anticipated annually needed supply $XX,XXX Danville is project eight the XX% costs. of needed megawatt solar became this plant acres operating the can wastewater project will and quarter X.X the will between $XXX,XXX of will save project was in Manteno estimate operating annually will power in and the is field one approximately between approximately And very that become project, This operational second a plant. field spend water the operational You megawatt supply This solar and for operate that to The and to completed costs save in

in So our and also lower across emissions, savings. now cost reliability have while projects solar we footprint. It's these like six with reliabilities total achieving that increased fields allow

switch financial we and continue energy about let by our X With renewable XX% As over to talk the target company's emissions over years. to footprint, it reduce XX the our Scope next to throughout results. to we'll X improve aggressive Scope options to Dan me hand already that

about quarter XXX% good and of million, Thanks, from first year. revenues ended the with morning, up Chris We $XXX.X everyone. last

natural March growth. of contributed year. primary $XXX.X first quarter, recall from up the the gas Net $X.XX. this from transaction million and from and primarily a was XXth of business of $XXX.X was result gas natural the from EPS on closed revenue to Therefore, sell-out to from $XXX.X to O&M talk of year. $XXX.X that which was $XXX.X was full increased $XXX.X last $X.XX. in driver increase income quarter, million income quarter You'll we and business Peoples income million the $XX.X when of the last more increased addition the the the to the in million O&M Again, the waterfall. addition little up the million $X.XX $X.XX we'll from million increased of year-over-year per XX.X% bit share Adjusted million adjusted up a GAAP about first

And As XXth, period quarter. for expenses XXXX XXXX forma Xst a from a last first were year people's a no rate transaction there providing quarter results thereby and clarify, operating January March year the operating a Peoples-related to for for the to for results this first for adjustments as full excluded of run XXXX. income basis a of reminder, reminder the for included adjusted pro adjustment for

the offset we'll In for of walk million or with basis. $XXX.X Next, the gas The revenues the through slightly natural figure both our increased includes the increase $XXX increased other. $XX.X segment full and starting driven first growth and Rates details of costs. due DSIC period revenue water in write from revenue. quarter acquisition gas following primary and consumption purchased volumes. being volume additional surcharges, waterfall to segment. volumes $XXX.X by reflects organic towards the the a the on $X.X slides GAAP million million The million related This driver XXXX, XXX.X% and which wastewater to our increase, regulated was water Pennsylvania an million primarily by

offsetting our Next X.X%. residential let's up in declines we've look quarter, was X% and usage commercial And public class. the COVID usage Since Overall, increased the trend continued customer first almost the in by the consumption classes. strong this experienced water started, usage was at up customer and quarter. for again,

water commercial has down recall, consistently cover since will you consumption began. As been

Next, gas our segment. gas business little usage or and in let's a about weather gas talk

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

indicator. an closely So the days as degree monitor we heating

side the XX-year natural short of was of XXXX, as on and distributed degree XXXX largest of the with just fourth the shows, year, heating days. left heating a XXXX warmer in was of the the of improvement normal that This first XXXX than and serves XXXX compared the last Pennsylvania of pro portion more gas sold degree slide to being somewhat average noting than reminder was right days chart over of first As quarter quarter. consumption quarters days forma quarter a had The X/X throughout how in in with degree in heating the XXXX. we first the an residential year's gas Western of however the first a Pennsylvania

maintenance move let's expenses. operations Now, on to and

of the million XX.X% $XX.X Adjusting expenses savings were impact Peoples' expenses experience. contributing expenses segment by $XXX.X cover $XXX.X production historical increased last O&M Looking with at year this related increase of incurred costs. for related of million in operations increased water Other growth increased and year. million the O&M from for drivers employee-related the the debt in expenses, line for the associated costs, offset transaction-related additional The and first Peoples was O&M other last quarter, year. segment waterfall, in to and quarter from reason QX include, growth, our with regulated costs maintenance million pension water the full and for the in by $XX.X primary expenses by offset which cover bad

few minutes quarter the share waterfall. then a spend from the XXXX of EPS bridges to GAAP presentation on the the Next, EPS. first quarter share income and quarter earnings XXXX going adjusted we're first XXXX per GAAP This to to per first

the You Peoples adjustment for the of between that to contribution repair we results of the in GAAP in right, year. but almost for X XXXX XX-day basis will an increased together water peoples first resulting to brought XXXX, Peoples-related by income which pro GAAP $X.XX segment this include March note were offset the versus related $X.XX growth, forma share from was The XXXX. followed $X.XX quarter which of and XX, period $X.XX QX, volume due to and transaction for increased for the $X.XX expenses, surcharges, up costs back by the items, These per included EPS Peoples adding $X.XX, three-month XXXX. on $X.X.XXX. tax on first adjusted that and $X.XX, quarter, other full had EPS last QX, added for regulated to depreciation, rates the and January primarily $X.XX operating is amortization Continuing quarter from and interest, contributed incremental

most usage full quarters year peoples will repair the it's tax the attributed $X.XX but XXXX, high $X.XX, to of contribute receive benefit. based quarters the on gas For will of so the to profitability,

per that guidance forward to above GAAP the noted this as about slide. natural and everyone quarter, the push of We QX falls take intact. to to third on reiterate range results basis midpoint on Given $X.XX, remind wastewater slide could which But $X.XX us we gas strong moment our that year think falloff was income And lack of to of of remains Due look a net and the range second to as at full how stated water, the of income we'd in creating wanted reported assist a a like ranges. projections. by quarterly the comparisons, our the previously quarter investors for first company. of gas of the we historical in lower share natural we to consumption the those the intent to quarters, $X.XX

to improve As a results, will we our a ability actual earnings of establish quarterize previously noted, record our collective as combined track as we company.

base in natural rate million. water with rates And to regulated and Indiana, activity in million. Virginia rate our we far, segment. for for new expect cases other filings natural In Jersey, revenues year, so annualized Kentucky, and total of have $X.X rate surcharge have completed point in regulatory water the Ohio, with or coming regulated we completed we our Pennsylvania in regulated segment $XX.X to the revenue months, this or on Carolina, pending our we've for not segment, or and receive matters. total gas gas regulated Moving Illinois do In base annualized In surcharge XXXX, New Pennsylvania, surcharges of our filings cases at North any rates segment.

approved The on This file a previously we this last the the That's PUC The Pennsylvania Aqua up to on related Also, recommended the catch it catch-up expect to case statutory we I comment. the by the wanted the of commission the now docket advocates for sometime occur matter with zero we utility deduction. second reached had to and XXXX. was Law to provided year filed adjustment period, peoples before at approve. rate half. with to next that over call its the loop the administer And was settlement Judge. settlement without file noted, be year. of Pennsylvania As we discussion for on customers was with will point, five- was recommendation today to case but another a base the proposes the that and rate the in PUC Peoples close end to expected a

its expect, you'd as impact potential proposed Essential. tax watching on Now, been we've and legislation gauging

tax the the regulatory TCJA increase. currently recover that benefit. like essential a on reverse an expect For wouldn't in appears tax we'd regulated surcharge a utilities, at tax the increase the And rate time. on the actually as and to repair or discussed fortunately, would increase it apply would book customer to bills minimum Interestingly, this look asset increase income

on call. expect reform we'll So, but during have obviously this next is something more developing, to discuss our that's still I'd earnings tax

activities. few a spend let's Finally, financing minutes discussing our

that close August company do date XX. and end the the the settlement, million allows As for corporate DELCORA to you million our intend receiving our the announced wastewater shares the common shares other between used settle DELCORA likely XX, counterparties. the be the by forward August forward offering know, and to pipeline. company to Regardless and for an we by the cash to last the of XXXX. purposes, proceeds acquisitions a We'd of delivering sale and stock X.X now fully August equity the expected closing, agreement agreement transaction water timing that including sale from forward general $XXX settle million. of in of The X.X Post acquisition of are

the take Additionally, priced purposeful average April used X.XX%. offering on of bonds borrowings debt, long-term years throughout company corporate the years on The expeditiously On of mortgage and a company public attractive capital XX were our XX-year refinancings purposes. In a Ohio debt with interest falling of rates bonds advantage million weighted proceeds notes a March XXXX, average these of average hire weighted markets the of rate rate credit moved pay XX, for coupon million now $XXX these $XXX X, X.XX%. conditions. first issued company of cases, for proceeds debt down April closing general Upon After tenor we at of our and weighted of both these of X.X%. stands to used and at lines. short-term to completed

credit borrow facilities. of effect on company Chris. after back these capacity to had to various billion that, the over financing, XX, As considering I'll April hand of with of the And it $X.X

as topics purchase with let's of April, six municipal acquisitions. and Thanks, these signed announced this an previously And Great. pending signed asset acquisitions units. that equivalent we now slide in are familiar Dan. Illinois a for for approximately $XX.X dwelling agreement municipal to have are been think with closing. In our system million Many X,XXX I switch of municipal you we

Now transactions when XXX,XXX these seven close in of will approximately to and total equivalents $XXX.X customer add million customers base or closed. rate

winning we the been We have also additional which deal bidder. one as have in selected

an sign to hope here. working are future well to and announce that the We APA in near as

moment Now to DELCORA. a let's take discuss

valid has agreement has DELCORA of county the ruled validity a and on the purchase that with our and the ruled recall concept. enforceable court You'll is twice contract trust also asset

County that we're awaiting has those a We court. appealed Commonwealth the Pennsylvania decision. Delaware state in judge's So state court decisions to Court and know called

a clarity typically Absent of the months rulings state court, the County Given or court. the this takes positive six more. from expect about we a in settlement process decision

municipal the for XX last Now upon proceedings further the the back commissioners recommended developments, vacated about remanded Judge's to settlement conduct and reached Pennsylvania the the and agreements public regulatory decision law March recent let's DELCORA. Since with our quarterly record Court. administrative process case based a the to utility ALJ call, in commission the on including talk reopen of the its final indicated remand pending of case. all decision order, the the State Commonwealth the in decision ALJ county's for unappealable by the issued April and of order XX, awareness the of But favor the In DELCORA. stay appeal trial then a interveners court's on case

we've for its the asked the review to petitioned remand since law remanded as is the All proceeding. to the inconsistent right. judge clearly order commission ALJ administrative the And commission very ALJ's direction have clarify order, to the the directive. We commission's with

to of that larger possibility the is always like as and folks through focused there move going remain transactions municipal role. We litigation patient get process. DELCORA, we be a play these As the politics and

best Aqua that convinced the customers remain is DELCORA and also solution and We for shareholders. our essential

All We will to this right. conclusion. see

we are This actively acquisition engaged of As opportunities. into continue includes in with pipeline table healthy we here municipalities. potential municipal we XXXX, a opportunities where discussions have

As illustrated XXX,XXX acquisition. pursuing on approximately customers this slide, we actively are through

market approved pipeline wastewater states fair water believe have of legislation the which and utilities legislation where that market XXXX. Bill similar the XXX environments has note governor legislation private fair natural in capital strong the Kentucky driver fair legislation needs in a been law month, favorable Virginia in These or main in West is the last signed to and opportunity our to pursue Also states value industry and we continue municipalities serve value is providing eight access are market we gas. that House to We of similar solutions And market acquisitions which the opportunities. to into fair water their for value. value experience. regulatory passed infrastructure

to our XXXX. want I for guidance in So, closing, reaffirm

We helpful between best And Dan expect $X.XX earnings to you. discussion to hopefully, was and led, per share. think about, the the be about quarters $X.XX to how

track, $X this approximately for nearly remain is we be regulated for include to in water emissions the Question-and-Answer you our finally, remarks. not And our by Our -- targets million for a billion X% the and year great. greenhouse X% on water XXXX. be does growth XXXX. be formal if conclude and XX% X% in with capital questions, infrastructure this to to Rate Kate, across gas X% line expected spending obviously regulated growth plans for base X% I'll a on Session Customer segment. And $X average, and And that, want gas. does as to would platform our it XX% acquisitions our open ESG is Essential on anticipate side. And between reduction to $X water billion by expected include

Thank you Thank Sir. you. [Operator Instructions]

Ryan comes question with first Our Boeing Connors Scattergood. and from

morning. Good Ryan. Hey,

kind Good that escalation question in side. that. the and cycle of frame Peers Chris. chemicals seeing down, you morning. one, for a rate But above. here out Thanks materials Dan much actually you're experiencing mentioned Dan of bit be time. taking cost And why big for have we're can environment Dan, in an labor impacts you the anyway. as production question of that's little the picture a forward? late water Obviously, that for don't any that? anticipate then, to your called and just And us headwind, but going for PA the got I've all not and cost P&L whether in seem you inflationary on a you that

Yeah, And And we're Ryan for providers but we have lots we with as it yet. thanks. obviously, of long-term have do not of our chemicals. lookout well the as it materials agreements on seen

we some more price of bit have warning little aware But the of we we're that, types of we'll before expect commodity those in market So the see of a increases things. increases obviously, broadly.

we're And look a so, on here. forward

-- do do think assume you're make matters, things years aggressive involved maybe future about some test in that. as assumptions have And you mean in you rate to and How I like more I you that?

Yeah. I mean, we do that.

right into future to what like terms As and here, go for, expense the expect chemicals that. we so forward, we are power operational expenses things we as a see and of looking specifically test in

test got increases Now something one-year on which we look we budgeting place. they our in read see as in Chemicals from a and here, of to done power long-term rate go in year. ultimately through that usually getting then terms inflationary as case in we what basis, year, chemical a forward use as subsequent are that that's is future process subsequent we expect filing a we've our agreements to in providers

will -- go now at are we we So looking that, for budgeting as we this be process through XXXX.

Got it.

my Chris big the was, just side. talk picture question about acquisition then, municipal And Okay.

basically suggesting front Pennsylvania. there biggest opposition sort Sunday, to in in more municipal of Philadelphia the and there's a was very past sales that asset growing element story this above prominent page acquirer, organized the the newspaper state, fold Just in

strategize piece. against you reality the give that there's you if your about were think fact of to how you you sum-up, just -- quoted how in think that kind that? any us Can raised I And issues in there?

at spend made Andy -- was sentiments with he article not captured I'm think they my as It time the us. article, some were them. interesting. sure I about the who Yeah.

to One opposition of you is, the and Andy the at was look that sense we or -- that year. DELCORA. I I XX signed had that one-by-one flawed, deals there of those them had was premise thought last that in closed in was if things one XX in said only was somewhat And that

Now you could some referendum back it to of we did add a kind. that. We but before to that came kind a step did from or any of flight Willistown,

we So of it see are the the transactions is volume way increasing.

And so proportionately, we see people voicing their opinions, in the same way.

there's deals disproportionate, more would market, some in market. yes, I But And that So the say opposition. more more in say, proportionately. there's the growing wouldn't I it's it's

behind name some one? town disclose this why of you're disclosed that the or a system. disclosing Okay. fair. been Illinois the that? Has another picking front see I not was thought on locally, there M&A story lastly, the That's other it's or don't the that you good And deal of it bit kind What's that then, is to but unusual there there, up reason

there announcement it's Obviously, have very and things news we associated make is we're purchase and up are It do very Yeah. is we wanted formal Ryan. in a we're some and just reason there. soon wind it that an place. but make public. And before we agreement good And unusual, other it here, finalizing the not sensitive we asset there -- some that to announce agreements to hope

That's it signed. be the agreements little of some we of will get associated but we investors time a progress to So all. that bit there want let can know made before we've the

Great. for Thanks time Sure. your today.

Thank you.

Thanks, Take Ryan. care.

Thank you.

Chopra Durgesh from with comes Evercore question next ISI. Our

Hey, Durgesh

Durgesh Hey,

question. to guys. Hey, taking I slides. be facial Chris for must Thanks picture say here updated needs the my on with the

It's already already gone Durgesh. It's gone.

earnings in comment. my anyways to was call that, that I sat inappropriate hear

like going so forth there the targeting there's and half here maybe in year? the seems XXXX flows, between pushed. closing next or is in and Just were perhaps – DELCORA. year get of there a second remember correctly I maybe to Is that early LG see it target like back if – there guys this Is I and commission wanted – to a you –

Yes. I that, I provided be courts, another months. kind through – just was least winds the if guidance, could of it it at six the

settlement. winds this Now there's it through a the through all court, said of that always state a But while a for possibility it be if could We've again. process.

So an haven't exact provided date. we

formal the We days file county has coming be in have the begins. to that brief here. And a to clock the will see, – then probably

would a best year. probably probably sometime So is estimate be next – settlement unless

the just timing the And then timing of XX, – with that Understood. correctly? – hear sort we that? equity forwards that what are And is in I August did accordance that of think or should on you of perhaps

Yes.

So a have the is they one-year way work agreement forward those Durgesh, life.

you one-year actually issue got price So and you've from to when take forward settle that cash. the shares the

on XXXX XX, here. that expires So August

settle if settle will. close to the weeks it days So need before that we'd you we end days would or that it expect that the We before we would expect date that. don't in we to settle now but

is And already for year. of associated the the the rest dilution the in numbers importantly,

Correct, correct.

when – guidance range. EPS and already that shares in August see be put simply That's you'd denominator through in kind year-end. would those So our range of in we just of about guidance the from the think middle place the

Understood.

Okay. Appreciate that.

So guidance. but in big picture XX already or incorporated August question for Maybe you Perfect. it's around Chris. your XXXX settlement one before just

of guys ownership done for in how amongst So sure private. a private valuation Would – should like clearly, market some an Clearly, opportunity things. a very do your assets in if the a valuation transactions, part utilities a that? LDC versus assets type you disconnect put gas you're premier about – market equity deals these – the right? about you private thinking I'm lot how have you, here you multiples there or Is public think and other years electric of for of market How the market? marker to between we do following consider kind closely these you there's asset gas

gone happy We is has The the accordance with with Peoples. expectations. better. extremely our well. integration It's in are really of acquisition And operating even

investors we think And happy the that and to very understanding going the a and life here for this are general we're very see time. among a combination. long so I through stay We gas And long in natural course. with public is together continued

future. XX% as You greenhouse estimated by consciously We're a believe for strong to the next energy XX%. is we combination operate the this least by environmentally going tighten our We're of gas at to XX% as footprint going into up mix with our years. to footprint our And the be dropping going can system. XX we

So we're course. going to stay the

that And expect those that that, that I to add market think, at toward to see level to market well. We level. private valuations Durgesh to public increasing with see would see if disconnect start transactions converge that we or to start – as we you

Understood. the Appreciate for morning. guys. it. sense makes time That this Thanks

bet. You

Take care.

you. Thank

Our next Sachs. Goldman comes from with question Insoo Kim in

Hi, Insoo.

Thank good morning. Hey, you.

First at offsets this game do recent are just in this and on that of out to maintain potential embedded. drive and DELCORA closing what's timing look XXXX does five appreciate the have a could how some standpoint, forward with what seven. the timing H XXXX of and and this just you the mean on from point comments what equity I on the just the impact of much delays a that to question, could potential When updates, the to the disconnect you and

small I'd total number guess relatively it's number I to our relative say, shares of of Yes. a today. shares

right, that addition we've to mitigate impact. pike said, Chris in helps here an six acquisitions coming the as signed And So, DELCORA. already down got

strong pipeline opportunities so of and -- additional plus that. beyond And a very

as drive incorporating the business. to go can planning to our to you in put then, those as we -- shares budget And much They'll for it we'll And our shares. a pieces, that know, earnings for other to to in good go to, we dilution might you have in of -- So, some that. take these offset ahead take we they're an to and alluded any those we've capital acquisitions sense as right, work. annual where August you XXXX. decision-making, already five-year number plan to XXXX I take to as be shares get of you process. close and do believe And to we the Obviously, can in work have be issue got you there's manage got numbers cash. our manage that's and kind as a these settlement it business We'll parts through, as to in makes and just

also you equity, spending are a $X think the think increased when about I we year. that, billion

capital our clip of said we're metrics, about earlier. very credit a mindful so, Dan pretty that's And as good and

balance. things, so, And it's a as Dan said, these

So, future. all before. And take just about that we're things prudent remain in about mind, I going the think think to close confident the Listen, I we talking to in DELCORA. equity you it's or here very August down

think I things Dan a guidance behind got said, we'll of But hopper. we've the As here. stand couple our other in

agree. completely Yes,

Got it.

but And Second, impacts the guidance XXXX just there? I assessment that fourth from impact color would if that discussed event? but call, in quarter had February updated there's of if the any magnitude? overall we just any wondering, giving it cost know that not

Yes.

the resolve event, the when down, the we at in So, operating And it's then, expenses not to a of that big analysis million on there, dollar the as there. said driven laboratory call, about care revenue outages. spend establish reason very kind that looked from $X.X cause and of systems to situation last that and Root did being cost much looking the by our look loss of we asset takes electrical for forward we

that the buy-in the kind advance that want we in make to of to in is need In if of the electrical to basically there successful saying, look we systems providing opportunity in service. generators, terms the it's large is opposed outage, generators. from power generate dollars. you putting there uninterrupted in fairly an have, some would systems Texas, ensure an and we're across number can a we with more PUC invest power hardening maybe out. number compliance opportunity really -- start There of to without systems lots we some freezing, the number the we generators aren't as there So, have outages of do customers huge These investment. of we in and of be some when to But, to to have certainly in big a for and continued our at Texas,

-- beyond that will PUC this tremendous don't point. at what I let So, a think allows PUC we'd the do amount

Yes.

everything customers up to the the don't the in million it between the level to to I And today's that sign own maybe customers future, of the would willing pay see and Dan spending regulation. willing the all XXX,XXX prohibitive. meeting hardening would there cost number. in range commission might cost don't see where have it capital what Probably generators. get that the at said. And spend than don't as I commission put would its less in in where requires system, for for just -- and just $XX facilities. see some have It's But, that us we We generators opportunity be many. some these place I we to call harden Texas,

Yes.

but dollars, of millions of million dollars. few not a maybe So, tens

Yes.

folks. Understood. Thank so much you

Yes. Thank you, Insoo.

you. Thank

comes question Travis from Miller with next Morningstar. Our

Travis. How you? are Hey,

Travis. Hey,

Hi, is if been that area on at everyone. historically just to look you Kentucky that that there. and the you've able a now or acquisitions Is give work legislation you with more more. at get Wondering thoughts not place to some and strategic that legislation, looked could might a

question. good a That's Yes.

have traditionally We because there. didn't there, not we base have a looked

Now, a otherwise. to natural we Kentucky, I a yes, answer gas. for utility an regulatory that base, from regulatory And gas utility there, a team, and It's utilities albeit we great there I a base and with it in have base a We there operations said, operational we expertise particularly that operating state a as an in give is, of gas And the natural standpoint. Kentucky. think do does the economic it's albeit short are interested enjoy look legislation. a management But team us base. have

Kentucky forward. to very in for would active I So, look going be us

and you CapEx guys you needs face for look opportunity these acquisitions does for large of Okay. in that's some move more potential as or think then direct wants? Great. for the the think Do the in proposals as And of kind investment your an system, level infrastructure possibly of the at you or open terms at about there. opportunity municipals national or it more

bear. funding bring as would and low-cost hope we capital is solution sanitary sort think that's easily and infrastructure you where the they as things capital my wastewater, about to as that like water Listen, storm as Yeah. to on roads really like focus to In more I sewers, bring thing, on well the game can't that private local federal making. of here, rate because of think bridges separating the infrastructure

that federal So a combination, rather a I than think about bailout. user almost like fee

extent relatively to think the band municipals that that, capital federal But that major it, see their them of need Obviously, temporary wastewater. the it and here massive designated really water be would So some would and to productive. vast dollars are To needs. on flow is aids a the our don't use, as impact that of not useful. for would and the for flow give small dollars I extent that, those given having I bucket

Sure.

thoughts. Okay. Great. I really appreciate the

bet. You

Thank from comes question Fargo. you. with Our Instructions] next Jonathan [Operator Reeder Wells

Hey, Jonathan.

Hey, Jonathan.

morning, a realized first on full Chris did Hey, benefit $X.XX benefit Good be to year? pro basis. Dan. consistent is $X.XX the you year for for that in say And and full expected XXXX Dan, of repairs is the the you to forma with Peoples

thought be previously was $X.XX. I For like it $X.XX to some you'd reason, to going indicated

to $X.XX – $X.XX XXXX. did That so say, for Yeah. Jonathan, I

think of right, about a said, what But So think there. COVID you're right Investor we the in we when Day $X.XX you're last started. do is didn't year, I year have before full had we we capital. to correct $X.XX if York, New

probably first days didn't three of have the year. that. full quarters. at and the in I'd end checked, the subsequent it's XX then the have quarter only again, high We we So had But

less capital invested was repair was that So eligible.

Okay.

gets $X.XX to to XXXX $X.XX that this and So year? for up the having to was $X.XX then full capital year you $X.XX

year capital capital Full year's Yes. with this program.

you. Got

both usage kind full the to weather assume range, call and that. that gas QX, to upper above we're if trends have year in Would strong it the Okay. at or current guidance also in of put normal of QX clarify just Great. the of guidance, the the and then water And you you does the end? in year remainder Appreciate around for consumption. terms the or trending comments

less I point residential start at serving the commercial to commercial see people we're if range. mean, see city. more say usage, in return go but suburbs the the not right, here to in I think more we'll of some would and the beneficiaries workplace, usage, right, the still guidance we I back that be usage, people may we'll

so weather the think to what of call I we water on come then the side, dependent. it's COVID basis back on side. normal we gas kind So And usage on right,

and But can the kind as remainder the of weather best sort I year. think always I is on variability earlier, that of that. range course, to would And guidance I made said say through there's around you the then remains as that normal do for of to I reiterated of $X.XX Chris that. it I think And focus $X.XX XXXX intact. – continue I think

terms DELCORA Chris. of – And Is respond Awesome. this you the appeal in there? When the expect in Okay. ALJ docket. then maybe of do is for day your you to

public respond XXth by. the they May is days. need XX meeting that to Yes

want didn't the out? I prepared they act yeah, you if those reiterate mean, guess kind commissions stayed, forward. they to then like before think appeal of if that, process And the they Would plays I – things move and

among the don't views question. That's a And diversity to It of question. I good I front-run commissioners. the think a there's commissioners. a want is

see. – trying time. have a we'll one We're things step let's to take at these So to

So let's from May do judgment XXth, on see what and there. give then they maybe a better

you're then to last, and February? made settlement. has your do in regards as you to headway you any Okay. I potential say the what compromise in additional a feel know reaching year-end in update And since But limited can say been

The X% at the Yes. we the this would raise that year. there's being XX% to They'll played publicly so a politics said discussions. rates We say again I'll DELCORA them had I is rates and have I've here. committed in disappointed this just year. been probably end transaction XX% last year the say raise I'm to this so of raise continues mean on. this can all only in I if

And it's we fees this. millions these continue need of for customers commentary on lot on than economics. ask the sad know a much to. to really county on how So more literally spending right are they're already paying is politics to spending over good a and dollars legal -- they process through a And

end we take end to of and contract to our And so enforceable Jonathan through. -- it as that this I is to valid here. the we're thing seeing day, the and plan but we said committed think the At

Okay. and movement get we the soon. some Great. DELCORA there I done can appreciate Yes. get And luck deal you those hopefully with responses. good

Thank you. Yes.

Jonathan. Thanks,

Thank you.

from Verity comes question next Our HSBC. Mitchell with

Hi, Verity

Hi, Verity

a Good of on I've focus of rate previous slide got water. gas a Hi. decks a question general of mild you've In rehabilitation. your about got business. been morning. lot one more There's gas your for

this step-up faster? Are you've you or in conservative, of being in therefore rehabilitation and more. year XXXX. XXXX kind So obviously and do And you gas could your a another in flat spend then got then step-up

that be on would comment interesting. Some Thank you.

Yes.

of give I a think, couple in Verity. Dan I'll to thoughts and opening then jump let

program a is do you one gas when rehabilitation the right safety. So number thing

City areas? Clearly work on the it it just complicated so there We're looking the And further Pittsburgh that That's like? out right? looks populated more densely - is. it complication being difficult Is is they where this Is out Pittsburgh? What depending feet city rural site completed? in of in week nine what city in construction day. how is Street a at a were moving and

However, more area move rural the more you quickly. can much in out

we've so the of more mix imagine densely then those And And what tried move our more program into first the rural capital of what populated element areas and do areas. can is of in part comes projects to as is the handle to here. bear you

period. a of it about estimated in you years there's that? throughout a will in that way Dan different total so And lot of any do But terms in pace little in about bit consider that things vary that XX think than to mix. and We've probably

the move when step-up the mileage underlies at you're I that outlines we here. And both other same to to are the -- looking to those is the part is infrastructure the file outside believe that that -- miles. dollars more invested intend now really each Chris. there mileage. things city couple other investing and terms transaction remember a number improvement a One of what year with it to Pennsylvania each PUT a of year-after-year. -- replace do looking at move And you very Verity long-term that right, plan the you're where talk in agreed also increase and of -- slide the do faster think we I that the year. about to the is is No, I'm there But as mileage we of miles

So LTIP our we've program. that into filed built

that is there sort of for plan how that do note place I in So we would it.

Another to constraint a labor capital is program. qualified implement obviously

both need lines. live we of up the large a tie-ins in gas a ramping fairly also but gas program do internal number crews we need this, where who more so customer internal the And of service to well-qualified business connecting resources outside means capital from are resources contractors as do to well any and because we're to type work

the of there's faster. try on well ramping question to do So resource as this to side a up

that being. what I very stated planning do think with we'll would as at that adhere on the much we slide point and is at we're filed it's this in that we what to the say you're So looking the time LTIP for

helpful. really Thanks. you. Its Thank

Verity. Thanks,

for remarks. you. today's call now closing to Chris to Thank would over I This turn the concludes like Q&A. back

us you joining Thank for all today.

Dan I Have Brian, follow-ups always Thanks always day. you if available joining As and for are needed. again for us. a great

this teleconference. Thank you. today's Ladies gentlemen, concludes and

disconnect. now may You