Good day everyone and welcome to the Essential Utilities' Q1 2020 Earnings Conference Call. As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Dingerdissen. Please go ahead, sir.

Thank you, Melinda, and good morning, everyone. Thank you for joining us for Essential Utilities' formerly Aqua America's first quarter 2020 earnings call. I am Brian Dingerdissen, Vice President, Chief of Staff, and Head of Investor Relations and Communications. If you did not receive a copy of the press release, you can find it by visiting the Investor Relations section of our website at essential.co. The slides we will be referencing and a webcast of this event can also be found on the site. As a reminder, some of the matters discussed during this call may include forward-looking statements that involve risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Please refer to our most recent 10-Q, 10-K, and other SEC filings for a description of such risks and uncertainties. During the course of this call, reference may be made to certain non-GAAP financial measures. A reconciliation of these non-GAAP to GAAP financial measures is included at the end of the presentation and also posted in the Investor Relations section of the company's website. After the presentation, we will open the call up for questions. Our call will start with Chris Franklin, our Chairman and CEO, who will discuss the highlights from the year-to-date, and provide an update on the company's COVID-19 actions. Dan Schuller, our CFO, will then discuss our financial results and our recent financing activity. Dan will be followed by Rick Fox, our Chief Operating Officer, who will provide an update on our operations, including at Peoples. Finally, Chris Franklin will conclude the call with a review our 2020 guidance and open the call up for questions. With that, I would like to turn the call over to Chris Franklin.

Hey thanks Brian and good morning everyone. I'll just start right in. We had a strong and eventful first quarter that had an end that I don't think any of us would have predicted. But let's start back in January with the final regulatory approval in Pennsylvania of the Peoples transaction, a very strong start to the year. Then we closed the transaction and introduced a new parent company name, Essential. Nobody knew how appropriate that name would be when we chose it. And then, we changed our ticker symbol to WTRG. And after that, we quickly followed up with a filing with the IRS to begin using the tax repair at Peoples in Pennsylvania. We also filed our application with the Pennsylvania Public Utility Commission for approval of the DELCORA transaction, the largest municipal transaction we've ever done. Then before the quarter ended, we had to react to the COVID-19 pandemic by activating our business continuity plan. Our primary objective was, of course, to preserve and ensure the health and safety of our Essential employees, our customers, and the communities we serve. You'll have to excuse me, but I have to brag for a minute about our Essential employees. Their dedication to our mission has never shone brighter than it has over the past eight weeks. Our people have continued to provide high-quality water, wastewater and natural gas service that our customers depend on. Many of our people have the same challenges as their neighbors, children out of school, caring for family members and concerns about their own personal health. But despite these challenges, our people have continued to get the job done, and I'm very proud of our Essential team. Let's take a look at the first quarter highlights. Since the beginning of the year, we invested $172.2 million in capital to improve the infrastructure and the communities we serve. Of that $172 million, $110.6 million was spent in our regulated water segment. I'll note that this number includes $53.5 million that was invested by Peoples in the first quarter pre-closing. In the text box in the next box over, you'll see that on a non-GAAP basis, adjusted income per share rose 114.3% over last year's first quarter. Of course, most of that resulted from the acquisition of Peoples. Dan is going to give you more detail on that in just a few moments. We remain on track for another strong year of municipal acquisitions. I'll talk about that in a moment as well. And I'll review our list of signed acquisitions, which includes over $327 million in expected rate base, more than 205,000 new customers. And finally, as many of you know, we announced the closing of the $750 million investment from the Canada Pension Plan Investment Board, CPPIB, and the completion of the acquisition of Peoples on March 16th. In addition, upon the closing of the acquisition, we've added Wendy Franks from CPPIB to our Board of Directors. And with the addition of Wendy Franks, our Board is now 30% women. Yesterday was our Annual Meeting of Shareholders, and I'm pleased to report that all of the items on the ballot were voted according to management's recommendations. I should also note that if you haven't had a chance, try to review our proxy, and I encourage you to do so. We revamped it. In this year, it's, I think, a lot easier to read, and we provided significant updates to our various disclosures and policies. At this point, all of you know how important fair market value legislation is as we offer our companies, as a solution to municipal leaders; this is always a key part of the discussion. This map indicates the states where fair market value legislation had been passed, and you'll recall at the Investor Day, we noted that seven of our eight states where we had water and wastewater operations, had already implemented fair market value. And I'm happy to report that this legislation has now been passed in the eighth state, which is Virginia. So, fair market value is now available in all eight states where we currently serve water customers. This is great news. Now, based on our experience, it typically takes a couple of years to get a robust pipeline of opportunities to develop after we pass the fair market value legislation. So, we're starting to see this materialize in states like Ohio and Texas. And for example, we recently completed the municipal acquisition of Campbell in Ohio, which is here on the next slide. This slide represents acquisitions for our regulated water segment. So far this year, we've closed Campbell in Ohio, and continue to move toward closing New Garden, East Norriton and DELCORA, all in Pennsylvania. At this time, we don't expect major delays in the regulatory process, due to the COVID-19 crisis, but the longer everybody works from home, the likelihood of delays could increase and those proceedings could take a little longer. Now, during this COVID-19 crisis, we've ramped up communications with our regulators so we can work together as best we can to keep our regulatory activities on track. We continue to see a strong pipeline of acquisitions in our municipal strategy, especially given the passage of fair market value laws. And now with the economic pressures that are undoubtedly arising from the COVID-19 crisis, we are anticipating that many more municipalities will be looking for solutions to their financial problems. And we stand ready to partner with these towns and cities on their utilities, so that they can focus on their other vital municipal programs and community projects, and we can focus on their water and wastewater issues. I think that's a good segue to the next slide that discusses our response to the COVID-19 crisis. As I mentioned, we activated our business continuity plan on March 16, and immediately implemented a work-from-home policy for any of our employees who could actually work from their home and get their jobs done. Within days, we had nearly one-third of our workforce working from home. The really challenging decision was to send the Peoples natural gas employees to work from home on the very same day that we closed the transaction. That's right, on March 16, we closed the Peoples transaction. And that same day, we sent employees home to work. As difficult as that decision was, now in hindsight, I will tell you, it was the right decision. So far, only four of our employees have tested positively for the virus. Three of those employees are already back safely at work, and we're hoping the fourth will be back soon. Now I will say there's a silver lining to this COVID crisis. It really accelerated the development of relationships between the two organizations, Aqua and Peoples, and we truly are a stronger company for it. Since mid-March, we've altered many of our health and safety procedures to adapt to state and federal guidance. We've also enhanced our communications to keep our employees and our customers and regulators up-to-date with the latest information. And as part of this effort, we've invited all employees to participate in weekly town hall meetings. Each week, nearly 1,000 employees have participated live, really impressed with the engagement. Lastly, we held virtual meetings with representatives from each of the public utility commissions from the states where we operate. During these meetings, we updated the officials, both staff and commissioners, on the impact of the COVID-19 on the company and the company's response. And I have to say, all of the meetings were very constructive. So at this point in time, nearly one-third of our employees are still working from home, but as states begin to soften restrictions, we expect to implement a very thoughtful plan to slowly return to more normal work practices. With that, I'm going to turn it over to Dan to update you on the financial results. Dan?

Thank you, Chris. Good morning, everyone. First, reviewing the financials for the quarter. We ended the first quarter with revenues of $255.6 million, up 27.1%. The recently acquired natural gas utility contributed $38.5 million of this revenue growth, while the remainder was largely due to rate increases in the regulated water segment. As a result of Peoples closing on March 16, we are reporting Peoples operating results since the acquisition date in our GAAP numbers. O&M increased to $106.6 million in the first quarter, up 34.4% from $79.3 million last year. This was primarily a result of an increase in Peoples transaction-related expenses, and the addition of the regulated natural gas segment, O&M expenses. Net income was up 206% year-over-year from $16.9 million to $51.8 million. And GAAP EPS was up 122.2%. As we discussed at our Investor Day in February, we're providing an adjusted income, non-GAAP measure for 2020 guidance, really to demonstrate the earnings power of the company going forward. This metric includes pro forma results for Peoples, as if we'd owned the Peoples for a full normalized first quarter. We'll continue providing this throughout the year and believe it best compares the combined company with the legacy Aqua company, in terms of both earnings power and financial results. Looking at the adjusted income and adjusted income per share lines, which exclude Peoples-related transaction expenses and include the pro forma adjustment for Peoples operating results for the period of January 1 to March 15. This shows that adjusted income was up 209.1%, and adjusted income per share was up from $0.28 to $0.60. This pro forma income per share result aligns with the guidance we provided in February of $1.53 to $1.58 for the full year. We did not see an impact of COVID-19 on our Q1 financials, but we're closely monitoring a number of metrics, including consumption and billing, collections and capital expenditures, some of which we'll discuss later in the presentation. In terms of share count, both the GAAP EPS and the adjusted income per share are based on approximately 255 million shares, which reflects the nearly 21.7 million shares issued to CPPIB for the pipe, plus the TEUs on an as-converted basis, considering the share price at quarter end. Next, we'll walk through details in the following waterfall slides, starting with revenue. Breaking down the 27.1% revenue increase for Q1, you'll see that new revenue related to our natural gas segment, and rates and surcharges from our water segment, were the main drivers, providing over $51 million of the roughly $54.5 million revenue increase. Remember, this is gas segment revenue for the 16-day period of our ownership during the quarter. Regulated water growth added an additional almost $3.8 million, which was offset by volume, which was down about $1.1 million. Next, we'll discuss the O&M waterfall on slide 13. The biggest drivers of the $27.3 million increase in O&M expenses were the $18.8 million increase in the Peoples transaction costs and the $8.8 million in Peoples O&M expenses for the two weeks of ownership. On a same system basis, O&M would have been about flat year-over-year, if not for the Peoples transaction. The segment reporting in the 10-Q, which we expect to file tomorrow, will clarify that. Next, we'll spend some time on the earnings per share waterfall. Similar to the slide we showed at the Investor Day, this presentation bridges between GAAP and adjusted figures for both 2019 and 2020. GAAP EPS in the first quarter of 2019 was $0.09, but adjusting out the Peoples transaction costs, which include the mark-to-market impact of the interest rate swap, brought us to $0.28 on an adjusted basis for Q1 2019. For Q1 2020, growth primarily from the Peoples acquisition and rates and surcharges were the biggest contributors, adding an additional almost $0.33 per share. These were slightly offset by volume and other, bringing us to $0.60 for the adjusted income per share for the first quarter of 2020. Continuing on to the right. The $0.60 is then impacted negatively by $0.08 of Peoples-related transaction expenses and almost $0.32 related to the pro forma adjustment of the Peoples operating results for that period between January 1 and March 15, resulting in GAAP EPS of $0.20 for the first quarter of 2020. In late March, the company elected the repair tax accounting method change as Chris mentioned. This is permitted under IRS regulations. We adopted that for Peoples Natural Gas or PNG, our largest natural gas subsidiary with about 633,000 of our 747,000 total gas connections. This change provides a tax deduction for qualifying infrastructure investments that were formerly capitalized for tax purposes. The company is using flow-through accounting for the repair benefit, allowing the tax impact to be reflected on our financial statements. In terms of its impact, the tax repair election reduced income tax expense by $5.9 million for the first quarter of 2020. This ongoing tax accounting change supports PNG's infrastructure investment program, benefiting customers, the community and shareholders. It should also benefit customers by providing more time between rate cases and should mitigate future rate increases. Also, as discussed at Investor Day, this summer we'll be asking the Pennsylvania PUC for guidance on how to treat the catch-up deduction that results from the repair-eligible capital that had been invested prior to Essential's ownership of Peoples. Lastly, I'll note that the winter in Pittsburgh was fairly mild, with 2,421 heating degree days for the first quarter compared to a normal winter with 2,844 days. April, however, was colder than normal with 515 heating degree days versus 387. Please keep in mind that the pro forma results are for a normalized first quarter with 2,844 heating degree days, more similar to last year's 2,900 heating degree days. Peoples, as you may recall, does not currently have weather normalization in Pennsylvania or West Virginia. Moving on to rate activity. In 2020 so far, we've completed rate cases or surcharges for our regulated water segment in Illinois, Virginia, Ohio and North Carolina, totaling annualized revenue of $5.2 million. In our regulated natural gas segment, we have completed surcharge filings in Kentucky and Pennsylvania with total annualized revenue of $977,000. In the coming months, we expect to receive new base rates or surcharges in Indiana, New Jersey, North Carolina and Ohio for our regulated water segment. At this point in the year, we do not have any pending base rates or surcharges for our natural gas segment. Let's spend a few minutes on the financing activities, which were disclosed in 8-Ks over the last month or so. In the early days of COVID-19, we were facing uncertain economic and capital markets conditions and we wanted to ensure that we had adequate liquidity to continue to operate the business as normally as possible and maintain our capital investment program. So, like many of our fellow utilities, we secured a 364-day term loan and put the proceeds, $500 million in our case on deposit with well-capitalized members of our bank group. In April, once the investment-grade credit markets had stabilized and credit spreads had narrowed, we completed a $1.1 billion public debt offering, which was attractively priced with a weighted average interest rate of 3.06% and a weighted average tenor of 20.9 years. And with those proceeds, we paid off the PNG $181 million term loan that was put in place in February to cover maturing long-term notes. We also paid off the Essential $150 million term loan put in place concurrent with the Peoples closing. And finally, we paid down the Essential $1 billion revolving credit facility to a balance of less than $50 million. Just after the public debt offering, we priced $175 million of Aqua Pennsylvania first mortgage bonds, which closed on May 1. This three-tranche offering has a weighted average coupon of 3.52% and a weighted average tenor of 33.5 years. The proceeds of these bonds were used to pay off short-term borrowings and will be used to fund a pending acquisition. As of May 1 after considering the effects of these financings, the company had $1.1 billion of capacity to borrow on various credit facilities. With respect to the $500 million term loan, we anticipate paying down $300 million of that next week. And then, we will determine the right time to pay off the remainder based on COVID-19 progression and Essentials' revenue and cash collection activity. And then finally, as the equity markets recover, we'll look for the appropriate time to issue approximately $300 million of equity later this year. That equity, as you may recall from Investor Day, is necessary to appropriately capitalize DELCORA and other acquisitions in the pipeline. In light of COVID-19 and its potential impacts on both consumption and bad debt, we've been receiving questions about our water and gas customer bases. To address these questions, we added this slide, illustrating the number of customers and revenue by customer class for full year 2019. As you can see, both of our utilities are largely residential businesses. While we have limited data, that is April and are still in the process of evaluating it, as expected we're seeing increased water consumption in residential and decreased usage in the commercial, industrial and public customer classes, given the shuttering of non-essential businesses. At this point, we don't expect a material impact on our financials, but we'll gain more insight into this impact as we move forward. And of course, it depends on how long stay-at-home orders and business shutdowns remain in place. Keep in mind that also keep in mind, that we're already past the main heating season in the gas business, and thus the impact there over the summer is expected to be minimal. As you can imagine, we're closely watching the customer usage patterns given the COVID-19 situation. We're analyzing things like reconnections and payment arrangements and looking at collections and bad debt expenses. As you may recall, we do not have decoupling in most of our states and our bad debt has historically been quite low. So for Aqua, that's been about 0.5%; and for Peoples, about 2%. And those levels have largely been recovered in rates. Given the unemployment levels and the moratoria on gas shutoffs and water shutoffs across our states, we expect those levels to increase, but it's difficult to say by how much. While this is a unique recession relative to what we've experienced before, for comparison the Aqua bad debt only rose to 1.1% in 2008, 2009. Additionally, we continue to track expenses related to the pandemic, but as of now those expenses appear to be relatively immaterial. Think of these as things like reconnection costs, cleaning expenses, masks and other PPE over time for certain roles. So we're tracking those for potential recovery through the regulatory process. And as you might expect, we have seen some savings from activities that are not being performed, like business travel, to help offset those. Some public utility commissions are issuing guidance for utilities to defer COVID-19 expenses, in anticipation of seeking recovery in future rate proceedings, and we're currently evaluating the impact of that guidance. And that's a good segue for Rick Fox to speak about some of our responses to COVID-19. And Rick, with that, I'll hand it over to you.

Well, thanks, Dan, and good morning, everyone. Today, I'd like to provide two important updates: first, on our operations response to the COVID-19; and second, an update on our safety review of our gas business that was recently completed by a third party. But before I get into those topics, let me start with this. It is really important to note that our water and wastewater treatment processes removed and inactivate COVID-19, as this virus is much less resistant to treatment than the other pathogens that Aqua routinely treats. Now on to COVID. Let me summarize our overall efforts on COVID-19, but I will share some additional details. First, as a utility, the work that we do is essential. And our employees recognized that, and they have performed exceptionally well. As you might expect, we have taken preventative measures to ensure employee and customer safety across the company. On this slide, you can see some examples of what we have done. We limited worker interaction by minimizing gatherings; starting work from home, rather than the office; and utilized one employee per vehicle. We adjusted work practices to ensure that it can be done safely using social distancing. And, of course, we provided the new and necessary personal protective equipment such as masks, gloves and face shields. As Chris indicated, only four out of our 3,100 employees have tested positive with COVID-19. None of these employees work together. And so, at-company transmission is unlikely. We care deeply about these employees and our families, and we believe our proactive measures help and continue to help prevent more employees from becoming infected. Turning to the next slide. You can see that we reviewed what types of work could not be deferred until after the COVID-19 crisis subsides. On the water side, any emergencies are handled with some adjustments to serve our customers while ensuring the safety of our employees. All compliance work is being conducted and maintained, but our ability to collect some routine samples in customer homes or in closed businesses has been challenging. And construction work to replace aging or failing infrastructure continues. On the gas side, the situation is similar. All gas emergencies are handled normally, but with some adjustments to procedures to keep our customers and employees safe. And leak surveys and inspections of critical operating equipment continue as normal. Lastly, in both gas and water, we did have a period of about two weeks in Pennsylvania when there was a moratorium on capital project work. We estimate that we are only about $30 million behind on our nearly $1 billion capital budget. And we expect to catch up in this work during the rest of the year, and stay on track to meet our commitments for infrastructure replacement and our financial projections for rate base. With that, let's turn to the next slide to provide an update on our gas pipeline safety initiative. As discussed at the Investor Day in February, Essential Utilities requested and Peoples engaged Black & Veatch, an industry leader in pipeline safety and integrity reviews, to provide an independent examination of Peoples' delivered pressure risk exposure. This included a review of existing and modified overpressure mitigation programs, industry-best practices and a detailed review of its leak management and unaccounted-for gas mitigation programs. The Black & Veatch review resulted in a report that was just issued on May 4. I'm very happy to say that the results of this report provide a solid validation of Peoples' overpressure protection mitigation steps, as well as its existing leak management and unaccounted-for gas programs. It also provides various recommendations for additional mitigation measures. These include installation of additional pressure-sensing equipment; use of a regulating station risk ranking model to prioritize upgrades; hydraulic modeling of low-pressure systems for the strategic placement of additional pressure-releasing systems; and finally, implementation of a GPS mapping project to precisely locate existing service lines. Peoples is currently evaluating the results of this report and preparing an action plan for the adoption of these recommendations. Now I will hand it back over to Chris Franklin.

Thank you, Rick, and thanks for the update on that new report to us, which is really good news on Peoples' safety. Now in closing, I just wanted to cover a couple of learnings from the first quarter. First, I think it's fair to say that there's no substitute for true dedication of the mission. We recognize that our company provides essential services to our customers that allows them the simple comforts like cooking and bathing and the warmth in their homes. At challenging times like this, I wish every company could experience the knowledge, expertise and commitment to the mission that I've witnessed from the employees at Essential during this crisis. Second, you can successfully close a major transaction in the middle of a pandemic. While I don't recommend it, the events resulting from the pandemic have actually accelerated the integration of our two companies. It forced the team to immediately begin working together to create standard operating policies like IT policies, cleaning policies, operating policies, and I could go on and on. So far, the results have been impressive though and, I believe, signal the overall success that lies ahead for the combined company. And third and finally, communication is critical. From the first day we began to work from home, the top 35 managers across the gas and water utilities met every single evening at 5 PM to coordinate the response, and ensure we were communicating on critical issues. While the calls no longer exist daily, strong and regular communications continue as we address any salient issues that arise. Steady communication with our regulators continues to be a staple of our work. And our weekly townhall meetings via video technology with our employee base, have provided us with an important feedback loop, as we adjust to this new work environment. And it's my hope that, as we look back on this time, probably many years from now, that we can be proud that the actions we took during this time, clearly reflected our core values of integrity, respect and excellence and our commitment to our customers, communities and to each other. I'm very proud of the work we've done and continue to do, to keep our company strong and our people healthy. As investors, please know that we remain committed and excited about our strategy, and we're confident that Essential's best days still lie ahead. Now in closing, I want to reiterate our confidence in the 2020 guidance that we provided at the Investor Day in February. Recognizing that information resulting from the pandemic is still unfolding, we believe the company's strength will allow us to continue to deliver strong results for the year. We expect adjusted income to be $1.53 to $1.58 per share on a pro forma basis. That earnings growth of 5% to 7%, along with our dividend yield of about 2%, should lead to shareholder return of about 7% to 9%, which is pretty good for a utility with our profile. We remain on track to spend approximately $550 million on regulated water segment infrastructure investments and also approximately $400 million on the regulated natural gas segment, which as previously mentioned, includes the capital invested during the first quarter of 2020 prior to our ownership. We anticipate investing approximately $2.8 billion across the Essential platform through 2022, which we expect will drive rate base growth in our regulated water segment of 6% to 7%, and drive rate base growth in our regulated natural gas segment of 8% to 10%. Lastly, we expect annual customer growth in water to be between 2% and 3% on average for our regulated water segment. And with that, let's open the line for questions.

And we'll go first to Ryan Connors of Boenning & Scattergood.

Thank you for taking my questions. I wanted to go into more detail about the rate activity pipeline. Looking at the slide information, it appears that you have either recently made or are planning to make a rate change in almost every state, except for Texas. The current situation doesn't look favorable for filing a rate case. Can you explain what's happening in Texas? Are there any other areas where the situation is becoming outdated and may require action?

Let's start with North Carolina. We're currently engaged in discussions there, and despite many people working from home, we have not experienced or expect any significant delays in that process. This is one of our ongoing efforts. Dan, would you like to discuss the others?

Yes. I think, Ryan, you kind of pinpointed the one where we've been obviously sort of out for the longest period of time. And I would say that we continue to drive capital and rate base growth in Texas. And we do see a time that in the not-too-distant future where we will be filing a rate case in Texas. As of this moment, don't need one, but we foresee one in the coming couple of years.

Okay. So it's not necessarily imminent in weeks or months. Okay.

That's fair.

In terms of the DSIC, it is not included in the base rate. It might be easier for someone to suggest temporarily removing that while rate payers are under financial strain. Has there been any discussion in any of the states about potentially suspending DSIC surcharges for a time?

None that I'm aware of, Ryan. I think everybody is trying to figure out what the bad debt expense might be. Ultimately, we need to understand the consumption issues and the constraints people face due to unemployment rates, but I haven't heard of any reductions in the use of the distribution system improvement charge at this time.

I agree with your observation that local governments will face budget pressures, potentially leading to more acquisition opportunities. Regarding the timing, what are your thoughts? Presumably, there are several deals currently being pursued. Have any of these begun to move closer to completion, or are we looking at a timeline further down the road?

No. Our Board met yesterday after the shareholder meeting to review the acquisition pipeline and current activities. I would say that in the last eight weeks, while most office employees have been working from home, about one-third of our time has still been focused on growth due to ongoing activity. Despite the lack of public and group meetings, many discussions continue. We have advanced several initiatives that we hope to discuss soon. Additionally, the opportunities we are pursuing seem to be larger than those in the past. There may be some long-term issues arising from financial constraints caused by COVID, but there will also likely be immediate opportunities due to the pressures some municipalities are facing.

Got it. Okay. And then just one last, more of a housekeeping item. I mean obviously it's a much smaller line item than it used to be, but relative to the size of the company. But the pipeline JV, obviously energy price situation, we had news Shell pulling out of Pennsylvania this week they announced. I mean what's the outlook for that asset in this energy price environment?

Yes. That's one, Ryan, you saw that we talked about it a little bit at the Investor Day. That it's something that we're considering strategic options with respect to that. Yes, we continue to have that pipeline operating when there's demand for water and we're looking for someone though since it is that small line item for us. We are looking to make a change there and sell that asset. That's probably the best place to us.

Yes. And the good news is Ryan, it's not eaten our bread today. It's on our books for a fairly low number. We wrote it down a number of years ago. It's about $5 million on our book, something like that, $6 million on our books. So it's really not hurting our numbers.

And the last couple of years, Ryan, have been really strong for it, in terms of just volume sold relative to what we had been seeing in; call it 2015, 2016, 2017.

Got it. Well, hey, thanks for your time.

Absolutely.

And next, we'll hear from Travis Miller of Morningstar.

Good morning. Thank you.

Good morning, Travis.

I had a quick follow-up at the municipal acquisition question earlier. Are there any in the pipeline that would require some kind of public input, some kind of scenario where you have to have public meetings of some kind that might get delayed or canceled?

The short answer is, yes. So one of the ones that's been public is in the city of Chester, the Chester Water Authority. It's a little bit of a messy situation there. The city believes that they own it. The Authority believes that they own it. The city's put it out for an RFP. There have been a number of bidders, and we were one of the ones who have responded. Narrowed down, I think to three bidders at this point, and that will go through a what I'll call a public process. I wouldn't expect public hearings. But nevertheless, the city council meets a couple of times a month, and there have been activities at those public meetings. So that's certainly one that we'll see some public activity and some press on it. And there might be a couple of others that are probably too early to talk about at this point that may go through a public process. These things are always call it a gestation period of a year or two, so that's not unusual.

And at this point, we don't have any pending transactions that require a referendum. So we wouldn't have that type of public input as a concern.

Okay. Okay. And then, sorry if I missed this earlier but what were your water usage levels as we think about post-coronavirus shutdowns, shelter-at-home type of events, late March and April on the residential and then just non-residential? I know you've got a lot of different customer classes that are nonresidential. Just generally, I think you said...

Yeah. Let me give you a little bit guidance there. Like other utilities, what we've experienced and it's easier to talk about the water side because gas is more driven by weather obviously. On the water side though, we saw a pickup in residential consumption with people staying at home. And then as expected, we saw a fall-off in commercial, industrial and public. And public, think of that as schools and government buildings, which really emptied out, right? So that's probably – that's where you see the biggest decline. But I think our view was going into this that we would expect that residential pickup to be helpful in offsetting the declines. And in fact, we just got our flash numbers for the water business for April, and they really show that is occurring as our April numbers, our April actuals came in right at budget. So we are seeing that offsetting occur as projected.

Okay. And then just real quick, how much do you have decoupling on any of it, if any?

We really only have – we don't have decoupling to any great degree. We have it in the state of Illinois, and that's really about it.

Great. Thank you very much. Appreciate it.

Yeah. Thanks, Travis.

And moving on to Richard Verdi of Coker & Palmer.

Hi, good morning. Thanks for taking my call. Great job on navigating the company here through the start of this COVID crisis. I just want to follow up on the – one of the last callers' inquiries on the volumes. Looking at slide 12, it was a lean line this quarter. But if you think about it, you have the COVID crisis but – and it's causing your commercial industrial to go down. But then if you look back at January 2, I know Liberty Electric had one of their plants down. I think it was 17 or 20-some days. And so I'm wondering how much of that from the quarter could have been from that down plant at Liberty versus COVID? And maybe kind of the feel for how COVID's really impacting your company, if you just talk to that a little bit more, please?

Well, I would say for the first quarter, we wouldn't really see any COVID-related financial impact on that first quarter. So the analysis that I was talking about a moment ago was really just – we're able to look at April year-over-year, last year, no COVID; this year, COVID. What are we seeing in terms of those consumption differentials in those various customer classes? And to your point – and industrial is an interesting one because as we keep in touch with all of our states. There are certain states where we see plants are still up and running at capacity. And so no real impact. But there have been some locations, including here in Pennsylvania, where their industrial customers that have dramatically reduced production of their product and thus consumption of our products on the water side.

Thank you for that. Regarding the acquisition front, if we examine the unemployment statistics since the onset of COVID on a state-by-state basis, some of the smaller states where we are experiencing growth rank among the top 15 to 20. This raises concerns about potential connection losses and rate case setbacks. However, it also means that municipalities facing financial challenges may be more inclined to sell. We have two potential strategies here: one is to focus on expanding in Pennsylvania despite the negative impacts of rate case setbacks and connection losses; the other is to pursue acquisitions in those states to mitigate the potential revenue losses from these setbacks in the short term, while positioning ourselves for future growth. I’d like to hear your thoughts on this strategy as we navigate the next year amid the ongoing COVID crisis and how you view acquisitions in relation to these challenges.

It's a lot to take in. Let's start with the fact that we still operate in states with strong regulatory environments. We have been very cautious and are not disconnecting customers; instead, we've reconnected those who requested it. We have also increased our support programs for customers facing difficulties in paying their bills. We've made these efforts, and I believe we've worked well with regulators so far. I don't anticipate any harsh penalties in rate cases. I think there is a mutual understanding in constructive regulatory states that we need to maintain the company's strength while also ensuring that bills remain affordable for customers. Looking ahead to the next few years, I believe we will find a good balance. I don't expect any extreme regulatory responses regarding rate cases. The positive aspect is that a significant portion of our rate base is located in Pennsylvania, where we just completed rate adjustments for both gas and water, so there's no pressing need for additional rate actions to maintain the company's stability. Regarding growth, we will continue to seek out opportunities and view ourselves as part of the solution rather than just pursuing mergers and acquisitions. We aim to identify towns, cities, and municipalities where we can play a constructive role. I believe that our current list of opportunities shows we'll have more chances for growth than we can manage, so I'm optimistic about steady regulatory support and gradual growth due to our capabilities and the ongoing need for our services. I hope that clarifies your question.

Yeah. Thanks its great color. I truly appreciate that. Thank you for your time guys. I really appreciate it. Be well.

Thank you, Richard.

Next, we'll hear from Jonathan Reeder of Wells Fargo.

How are you, Jonathan?

Great, great, how are you? Hey guys. Good call, good update, appreciate the color there. I just wanted to verify, that you said the adjusted Q1 results, $0.60 reflect, call it normal weather for the gas operations, and even though Peoples doesn't have the normalization causes in PA and West Virginia and weather was below normal. Is that right?

Yes, you're correct. That's what we've indicated. As I mentioned earlier, you'll find the heating degree days from the first quarter compared to the normal heating degree days in the transcript. I also noted that last year's numbers were slightly above what we consider normal. During our budgeting and planning for the Investor Day, we decided not to account for the business in this first quarter or for a significant portion of it. Therefore, the best approach to provide a comprehensive view of what a full year looks like was to utilize those normalized results for the ownership period before we acquired Peoples Gas. Consequently, the results include 75 days of normalized figures and approximately 15 to 16 days of actual results from the time we owned Peoples during the first quarter.

I think it makes sense for you to present it that way, as it helps us get a clearer idea of what to expect moving forward. I wanted to clarify that, and on the gas side, do you believe the Black & Veatch report will lead to a significant increase in my capital expenditure needs to implement some of those changes? Or is it just reinforcing the plan you mentioned earlier regarding an anticipated rate base growth of 8% to 10%?

Yes, I'm going to let Rick take this one. I want to start by saying that there is definitely an opportunity to invest more capital to enhance the system following the Black & Veatch report. One of the main insights from the report is that we are performing very well, particularly in comparison to others in the industry. The recommendations provided by Rick do not imply a pressing need to increase capital spending significantly as a result of the report. While there is an opportunity for additional capital investment, it's not urgent. Rick, I'll hand it over to you from here.

Yeah, Chris. I think you answered it well. Some of these items that I mentioned are just a refinement in the approach or in the focus, but if these things that would have been done anyways, the things that I speak to around prioritization. There are also some opportunities in here and needs to spend some additional capital, and that would be addressed in future plans. Some of that is in here are modest costs. And I'll point to the GPS project. It's a really important project, but it's not terribly expensive. And so I think that's the way we'll answer it for now, but there is an opportunity going forward to make things stronger by investing capital.

So Jonathan, I wouldn't think about a step change.

Yes. Okay. So yeah, I mean just you'll work it through the plan and based on rate affordability. If you can still keep, I guess, the rate impact manageable, then you could see some acceleration, I guess, in the near term. But you'll just keep that in mind.

Yes.

Okay. And then, when do you expect to get clarity from the Pennsylvania regulators regarding the catch-up component when you make that mid-summer kind of filing covers?

Well, are we through the COVID process by then, Jonathan?

I was going to say the same.

It's a little bit hard to know. Dan, go ahead.

Yes. No, I think that that's exactly right, Chris, that as we said, we'll file it in the summer, but where the PUC is in terms of the number of cases before them, yet to be seen. And thus, how long it takes for that to play out, just hard to tell right now. Hopefully at the next call, a little more detail around that for you.

Okay. But I mean, it might progress more along the timeline of like a rate case. So I mean we could be thinking like nine months or a year type?

Oh, I hope not.

I hope it's not that long for sure. Will there be a bit of back and forth? Absolutely.

Okay. Okay. So, maybe year-end. Okay. Great. Thanks so much for taking my questions and stay safe.

Yeah. You too, Jonathan.

Thanks, indeed Jonathan.

And there appear to be no further questions at this time. Mr. Franklin, we'll turn the conference back over to you for any additional or closing remarks.

We appreciate your joining us today. And obviously we're always available for follow-up questions after the meeting. And you have Brian's numbers, Renee's, Dan's and mine. We look forward to catching up with you. Please stay safe and healthy. Thanks for joining us.

That does conclude today's conference. We do thank you for your participation. You may now disconnect.