Essential Utilities, Inc. Q1 FY2023 Earnings Call

Hello, and welcome to Essential Utilities Q1 2023 Earnings Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded. I will now hand you over to your host, Renee Marquis, to begin today's conference. Thank you.

Thank you, Melissa. Good morning, everyone, and thank you for joining us for the Essential Utilities First Quarter 2023 Earnings Call. Unfortunately, Brian Dingerdissen couldn't be here today because he's under the weather, so I'm filling in. I'm Renee Marquis, the Director of Investor Relations at Essential. 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 that we will be referencing and the webcast of this event can also be found on our website. Here is our FLS, 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 or 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 on the Investor Relations section of the company's website. Here is our agenda for the call today. We will begin with Chris Franklin, our Chairman and CEO, who will provide an update on the company. Next, Dan Schuller, Executive Vice President and CFO, will discuss our financial results. And lastly, Chris will then provide an update on our acquisition program and conclude the presentation portion with a summary of our guidance before opening the call for questions. With that, I'll turn the call over to Chris Franklin.

Thanks, Renee. Good morning, everyone. Thanks for joining the call. Let's just start here with a quick mention that last week, we held our Board meeting and our Annual Meeting of Shareholders. And I'm very pleased to report that all of the items on the ballot were voted in accordance with management's recommendations. So we're very pleased with the outcome of our Annual Shareholders Meeting. All right. Let's take a quick look at the first quarter. We reported earnings per share of $0.72, and that was despite the unusually warm weather and the challenges of inflation and interest rates. We mentioned in February that weather was warmer than normal, and similar weather patterns continued through March. Remind you that we don't currently have weather normalization in our Pennsylvania tariff, previous owners of the company never filed for it. So we're going to do it in our upcoming rate case. We're going to file a Pennsylvania natural gas rate case at the end of the year. In that filing, we will include weather normalization. Now if the PUC follows its precedent decisions on weather normalization, then we should expect to have, at the conclusion of our rate case, call it spring of 2024. Again, this will be the first natural gas rate case we've filed in Pennsylvania under our ownership. So we need to get that work underway. Now despite the unfavorable weather in Q1, I want to tell you that we remain confident in our ability to meet our full-year earnings per share guidance of $1.85 to $1.90. We'll continue to evaluate our various options and initiatives that could help us make up for the first quarter weather. One of those initiatives was already in the plan, which is the current sale process for our energy projects at Peoples. So you may recall that we operate the Pittsburgh Airport microgrid, another district energy project, which is downtown and a combined heat and power project at a hospital in Pittsburgh. This again was a planned process for this year, and we expect to close the sale this year. This transaction is consistent with our long-term strategy of focusing on regulated growth opportunities. In this case, we hope to continue to work with the buyer of these assets to develop new projects in the future, given the residual benefits they have for our customers and for our gas utility. All right. Let's talk about capital work. In the first 3 months of 2023, we invested over $243.7 million in infrastructure improvements as compared to $183 million in the same period last year. Currently, we have asset purchase agreements signed for 9 municipal acquisitions totaling over $380 million in purchase price. Finally, as you may be aware, Earth Day was in April, so last month, we were excited to kick off our Second Annual Essential Earth Day series of events throughout our 10-state footprint. Really proud to mention that we had hundreds of employees participate in over 30 local volunteer events again this year. These activities included opportunities for customer education, employee volunteerism, community engagement, and we made contributions from our company foundation to many of the environmental initiatives, all of which was centered around protecting and providing the earth's most essential resources. Finally, another announcement with a big impact was made recently on PFAS. The U.S. Environmental Protection Agency finally proposed a maximum contaminant level or MCL for PFAS chemicals. We recognize the EPA's proposed maximum contaminant level for PFAS chemicals. You remember, these are also called forever chemicals, is an important step in protecting human health. Now remember, in 2020, in order to better protect the health of our customers and communities we serve, we set an industry-leading commitment to ensure all of our finished water across our entire footprint would not exceed 13 parts per trillion for multiple PFAS chemicals. And also, at that time, the EPA had a health advisory level of 70 parts per trillion for PFAS chemicals. We chose to adopt a much more stringent standard to protect the health of our customers and communities. To my knowledge, we're the only multistate company that made such a commitment. The following year in 2021, we cut the ribbon on our new state-of-the-art environmental laboratory, which was just 1 of the 2 accredited labs and the only utility certified to test for PFAS chemicals in Pennsylvania. We believe our commitment to operational excellence, along with the experience and expertise we've gained in our PFAS mitigation work will not only help us facilitate our compliance with the new EPA standards, but will also be an important part of our value proposition to municipal leaders struggling with PFAS issues. Now I remind you, at the same time, we're also going to continue to advance our litigation strategy to force the polluters to pay the cleanup costs so that our customers do not bear the total cost, total burden of these costs. And of course, we will continue to cooperate and support the EPA in their efforts to ensure all Americans have safe quality drinking water. Now as the national focus on water quality and safety continues to gain momentum, the technical and operational expertise of our people at Essential Utilities continues to be recognized. We understand our responsibilities as a provider of utility services, and it's also our responsibility to keep our customers and our communities well informed regarding their access to the life sustaining resources we provide. We're reminded of this recently when a pipe ruptured at a chemical plant, which skewed chemicals into the Delaware River, less than 0.5 miles downstream from one of our water plants. Fortunately, our employees' quick decision to close the plant intake ensured there was no impact to our customers, and we were able to disseminate timely information, provide reassurance about the safety of our water and lend a hand to neighboring systems. I continue to be impressed with the professionalism of our team and their ability to respond so quickly to ensure there was no interruption to our customers. If you look at that photo in the center on this slide, you can see that latex type material floating down the left side of the picture, close to intakes along the river, and that went on for miles. This was an important operational catch by our team. And with that, let me hand it over to Dan to review the financial results.

Thanks, Chris, and good morning, everyone. I'll start off with some of the first quarter highlights. We had revenues for the quarter of $726.5 million, up 3.9% from $699.3 million last year. Our Regulated Water segment contributed $267.3 million and our Regulated Natural Gas segment contributed $441.3 million. The largest contributor to the increase in revenues for the quarter was a recovery of higher natural gas commodity prices, and therefore, purchased gas costs increased by $28.6 million year-over-year for the first quarter. Additional revenues from regulatory recoveries, water and wastewater customer growth, and other items also contributed positively but were offset materially by decreased volumes in the natural gas segment due to the warmer-than-normal temperatures that Chris mentioned a moment ago. O&M expenses decreased to $138 million for the quarter, down from $142.6 million in the first quarter of last year. Higher water production costs and growth from added water customers were offset by lower employee-related costs, recoverable costs related to our natural gas segment customer assistance program, improved bad debt and other items for the quarter. Net income was down year-over-year from $199.4 million to $191.4 million, and GAAP EPS was $0.72 for the quarter. Next, we'll walk through the waterfall slide, starting with revenue. In the first quarter of 2023, revenues increased to $27.2 million or 3.9% on a GAAP basis. You'll notice the primary drivers were the recovery of higher purchased gas costs of $28.6 million due to the significant increase in natural gas commodity prices and regulatory recoveries of $22.9 million. Customer growth from our regulated water segment, which includes both acquisitions and organic growth, and other items provided an additional $6.4 million towards the revenue increase. The primary offset to these increases was decreased gas volumes of $30.5 million from our Regulated Natural Gas segment due to the warmer-than-normal winter weather. And with that, let's review the first quarter weather on the next slide. As you know, there's a strong correlation between weather and gas consumption and thus, associated revenue, and typically, the majority of gas is consumed by our customers in the first and fourth quarters, with the largest portion of gas being sold in the first quarter in Pennsylvania. This winter for our regulated natural gas segment, the weather in the first quarter was dramatically warmer-than-normal, with 2,330 heating degree days. This metric compares unfavorably not only in the first quarter of last year, which was colder than normal, but it also falls short of the 20-year first quarter average in Western Pennsylvania of 2,814 heating degree days. In fact, this was the warmest first quarter in the last decade and the fourth warmest first quarter since 1955. Next, let's move on to operations and maintenance expenses. Operations and maintenance expenses were $138 million for the first quarter, a decrease of 3.2% compared to $142.6 million for the same period in 2022. Increased production costs, including inflationary increases in chemical purchases, water and sludge hauling, and expenses related to newly acquired water and wastewater customers added a combined $4.5 million. These were offset by lower employee-related costs of $2.7 million, decreased gas customer system expenses of $2.5 million, and a decrease in other items of $2.5 million mainly related to lower maintenance expenses and a nonrecurring charge in 2022. And finally, bad debt was lower by $1.5 million. Next, we'll spend a minute on the earnings per share waterfall. Beginning on the left side of the slide, GAAP EPS for the first quarter of 2022 was $0.76. Regulatory recoveries contributed $0.06, growth from our regulated water segment added $0.01, and reduced expenses added $0.007. These were offset by decreased volume from our Regulated Natural Gas segment of over $0.08, other items of $0.03, and decreased volume from our Regulated Water segment of $0.001. The $0.03 impact in other includes increases in interest costs and depreciation, offset by income taxes. The result is GAAP EPS of $0.72 for the first quarter of 2023. As Chris mentioned earlier, we continue to expect to meet our annual earnings per share guidance for the year. Moving on to regulatory activity and other matters. So far in 2023, we completed rate cases or surcharge filings in 4 of our regulated water states for a total annualized revenue increase of $3.6 million. Also, we currently have base rate cases or surcharge filings underway in North Carolina, Ohio, and Texas for our regulated water segment and a surcharge filing in Kentucky for our regulated natural gas business. As we previously indicated, we expect to raise approximately $500 million in equity or equity-linked securities this year to maintain our credit metrics where we invest capital and close municipal acquisitions. And with that, I'll hand it back over to Chris.

Thanks, Dan. Let's talk a little bit about the municipal transactions. Matt Rhodes and his team have been busy. As of this call, we have 8 signed asset purchase agreements for 9 systems across 4 states in which we have existing water operations. So this includes the recently announced Greenville wastewater system that has over 2,300 customer connections and also serves over 1,700 additional customers through 2 wholesale customers in the neighboring townships of West Salem and Hempfield. Collectively, these acquisitions are expected to add nearly 219,000 customers or customer equivalents and total over $380 million in purchase price. Five, and I count two in Frankfurt, right, five transactions on this slide are on track to close in Q2 or Q3 of this year, including Shenandoah, Southern Oaks, Union Rome, and Frankfort, with other acquisitions expected to close in Q4 2023 and of course, some in Q1 of next year. As many of you know, progress on the DELCORA regulatory process is under a stay by the Federal Bankruptcy Court handling the bankruptcy of the city of Chester. The next hearing of the bankruptcy court is next week, May 15. Settlement discussions do continue, albeit at a slow pace, but we remain optimistic that a settlement can ultimately be reached. Importantly, our rate projections, along with the last rate projections I've seen from DELCORA continue to indicate that customer rates will be lower under our ownership when compared with DELCORA remaining independent, so this transaction remains good for the customers. It's probably important to reiterate again that despite the delay in the DELCORA process, we still plan to meet our current earnings for the year. I should also note that our sale of our small West Virginia gas operation remains on track in the regulatory process, and we expect to close the transaction in the third quarter of this year. So in addition to the signed municipal transactions on the previous slide, we continue to see a strong and healthy pipeline of opportunities for growth. As illustrated on this slide, we are currently engaged in active discussions with municipalities pursuing over 400,000 potential water and wastewater customers. Our teams in each of our 8 water states focus on potential acquisitions that happen between 2,500 and 25,000 customers. We continue to offer many benefits beyond just the competitive purchase price, including our technical and operational expertise, commitment to spend the needed capital and make improvements, and to provide long-term clean, safe, reliable utility service to the communities we serve. So let me wrap up with a reminder of our 2023 guidance that we had previously published. As we said throughout the call, we continue to expect to meet guidance for the year. Earnings are expected to be between $1.85 and $1.90 per share, with 3-year earnings per share growth of 5% to 7% through 2025. Our capital plans, including investing approximately $1.1 billion annually to rehabilitate and strengthen our water, wastewater, and natural gas systems through 2025. We continue to expect that rate base growth will be between 6% to 7% for water and between 8% and 10% for natural gas, and customer growth will be between 2% and 3% on average for water and stable for natural gas. Finally, we remain committed to environmental stewardship, sustainable business practices, employee safety, diversity and inclusion, enhanced customer experience, and strong community engagement. We're supportive of the EPA's proposed new regulations on PFAS, and we'll continue to pursue our legal action against those polluters to offset our overall cost of mitigation on the PFAS side. So with that, let me conclude our formal remarks and open the line for questions.

Our first question comes from Ryan Connors of Northcoast Research.

Three things from me this morning. The first is pretty quick and straightforward. Nothing in Pennsylvania right now on the rate pipeline side. DSIC filing in Pennsylvania, is that something that's contemplated for '23? Or is that you think it will be a little further out?

Ryan, I'd anticipate that we would have DSIC filings for both water and gas in Pennsylvania later this year.

Okay. Secondly, Chris, you mentioned the gas rate case and the weather normalization component of that. Conceptually, when you're taking a risk, like you did in the quarter where lower volumes affected you, you should be compensated for that risk, potentially with a better return on equity. What is your thought process on balancing the request for weather normalization while ensuring that it doesn't negatively impact you later if there's an argument that taking less risk should align with a lower return in terms of ROE?

Yes. I think what we found is as you look at other utilities who currently have weather normalization in Pennsylvania, there's been no discounted return on equity. I think we would expect if the commission stays with their precedent decisions, that we would see something similar in the case that we requested. So listen, I think as it's constructed, you will give away the upside as well as the downside. But I think when you think about water utility investors, typically people want certainty, stating this, right? And so we think weather normalization is a better outcome than taking the downswings and the upswings.

I wanted to discuss the recent Delaware River spill and cleanup. Congratulations to the team for effectively managing that situation. We're quite close to the area, and Aqua's response really stood out compared to neighboring communities. Many people in places like Philadelphia and some parts of Bucks County were in outright panic, but that was not the case here. Aqua's communication and remediation efforts were exemplary. My question is, given that your reputation has faced challenges locally, particularly in Bucks County due to last year's acquisition attempt, how can you leverage situations like this to convey your message? Have you taken any local steps to promote the outstanding job your company does compared to some of the local government-owned systems?

Yes, that's a good question. For clarity, when we say dragged through the mud, it's specifically in relation to acquisitions. The company's operational performance is excellent, and our reputation in all communities, including Southeastern Pennsylvania, is very strong. However, in these situations regarding acquisitions, we always seek opportunities to share our story. We've started to receive much more favorable press due to a strategic effort led by our new Vice President of Communications, Jeanne Russo, who has done an outstanding job in conveying our message effectively. In particular, we have empowered plant-level authorities, which means that previously, decisions about shutting down plant intake had to go through a chain of command, but that is no longer the case. Our plant operators and management teams are highly attentive, and that's where the decision should and was made in this case, preventing any contaminants from entering the plant. Furthermore, we communicated effectively during this situation. As you pointed out, it was reported nationally when the city of Philadelphia suggested residents might need to use bottled water, leading to a significant uptick in bottled water purchases, possibly unnecessarily in hindsight. However, people have come to expect our style of operational response and communication, and I take great pride in how we handled this situation.

And our next question comes from Paul Zimbardo of Bank of America.

Could you just give a little more quantification on some of the offsets to the very warm weather, again, DELCORA timing? I think you mentioned that there's an asset monetization in plan. Just if you could quantify that and help build up the bridge a little bit to the full year guidance.

Yes. Yes. Listen, it's a process that is taking place right now. And so I can't give a whole lot of detail on the process, but there is a process to sell the CHP as well as the microgrid at the airport and the steam system in the city. So that's three projects, we think about them as a unit, but they're not interconnected. And there is an ongoing process. So I can't give you a great deal of detail. Dan, do you have anything to add to that?

I guess the only thing I'd add, Chris, is Paul, as you would expect, we're taking a really close look at our O&M expenses this year to see if there are areas where we should be optimizing. And then also being exceptionally diligent with regard to regulatory filings, whether that's a pass-through or a SIC filing being diligent with respect to those. And frankly, we've been helped by a little bit of colder than normal weather in the April time frame and into May, which has helped a little bit when we think about the significant shortfall in the first 3 months.

Okay. I understand that on the cost flex. And then shifting over to the credit side, what FFO-to-debt do you expect now for 2023? And if I read the materials right, it looks like you went to the top end of that $400 million to $500 million range, now it's all in 2023. If you could just help explain that evolution there.

When considering FFO-to-debt, it's important to remember that we are currently in the process of repairs at Peoples. A significant portion of our income is coming from the tax line. It’s essential to keep this in mind as we evaluate how credit agencies perceive our situation, which may differ from our perspective. Nevertheless, I can confirm that our FFO-to-debt is steadily improving.

Yes, that's absolutely right, Chris. Just for clarity, we have been informed that our downgrade threshold is 12% FFO-to-debt. If we fall below that consistently, we would engage in discussions with the agencies. As Chris mentioned regarding repair, we typically calculate FFO-to-debt on a straightforward basis and also make adjustments for the challenges we've encountered in Pennsylvania due to repair. Instead of seeing an increase in FFO linked to revenues from the rate base, we're recognizing those earnings on the tax line. Therefore, we adjust for that, and we also have discussions related to weather. It’s fair to say that we are affected by both weather and interest rates, and we are working to mitigate those impacts.

And Dan, it's important to consider that as we move through the Peoples rate case we filed at the end of this year, the FFO calculation will become much clearer. Our perspective will align better with how the credit agencies view it. By this time next year, we expect things to return to what we would consider normal. However, for now, our interpretation of those numbers differs slightly from some of the credit agencies.

Okay. I appreciate that. And I could follow-up offline as well. But it sounds like that change is kind of in response to kind of preserve against that the rating agency trigger. Is that fair?

I think it's fair that we're always looking at the best way to finance the business, and these things evolve over time, changing from quarter to quarter. Today, we provided a more precise update regarding the amount of equity we plan to raise.

Okay. Great. And then following up, since you mentioned it, I know there was that new IRS guidance on natural gas repairs tax. Just any implications or impacts on whether earnings, cash flow or anything or the like?

Yes. So Paul, that literally just came out a few weeks ago and obviously been anticipated for a long time. Everyone is just trying to get their hands around it today to see what does this possibly mean and working with the various big 4 accounting firms. So let us do our work on that, and we'll get back to a later date when we know more. But it's, as I say, really early days.

And our next question comes from Travis Miller of Morningstar.

Back on the Pennsylvania gas potential filing here later this year. Apart from the stuff you already discussed with the ROE, the tax issue, the weather normalization, the core part of the rate case, what are you thinking or what have the trends been since the last filing since the acquisition on stuff like O&M, capital investment, some of the other core items.

Yes. As you can imagine, we have made significant capital investments since the previous rate case, which was completed before we took ownership of the company. This time, we will include a fully projected future test year to recover the capital and expenses we have invested thus far. We will incorporate the benefits of the lower effective tax rate from repairs into the revenue requirement, ensuring that the benefits go to the customers. Additionally, as mentioned, we will account for weather normalization. Those are the key points I wanted to address.

And obviously, any of the inflation that we've experienced will start to pick up.

Yes. Okay. That makes sense. And then more of a high-level conceptual question, talking about that 2% to 3% customer growth for water, flat for gas. Again, just a high-level, it seems like when you build a house, you need water and gas. So I wonder if you could square the difference. Are you seeing more houses electrified? Is there some kind of efficiency? I don't know. What are the thoughts there? What's the big delta?

Travis, it's mainly geography. So if we talk about where we have larger organic growth, we probably have more than organic growth in Southeast Pennsylvania than Southwest. And we see that large organic growth in North Carolina, Texas, Indiana, around the Indianapolis area. So we do tend to see more building, if you will, in our service territories in the states that I just walked through.

I've just seen recently a couple of housing developments that were all gas in the Pittsburgh region, which says it's still growing, but not enough to really move the needle. That's why we call it steady.

Yes. And even Chris, maybe we had pulled some data recently and it's hard to get exact data in terms of housing construction and gas connections out in Western Pennsylvania, but we are seeing there's still that desire to have natural gas in new construction. And so we think they're pretty well correlated out there that as you see new construction around Pittsburgh, there are gas connections.

Our next question comes from Gregg Orrill of UBS.

Just wondering what sort of updates on PFAS we should be looking for around the May 30 filings with the EPA.

Listen, I think a couple of things. One, the current reg suggests that we would have our work complete on mitigation by 2027. And I think that's going to be a stretch. And I think hopefully that gets extended a little bit. But we're running as fast as we can. It's just a big effort. Secondly, I would say this is a much bigger project or set of projects than I think EPA is talking about it. I think they're probably coming to terms with it, but they've estimated that the cost for this is nationally is somewhere around $2 billion. And I would say that's a gross underestimate. And I think that will come out as time goes along here. As we look at the projects across our areas, there's concentrations. So it's not focused on systems across the platform. It's focused on key areas, areas like North Carolina, New Jersey, and it's a little spotty. So it's not like you take this and spread it over the whole customer base. But when you think about where we were at 13 parts per trillion, and the costs associated with that and now where we are at 4 parts per trillion, the MCL that EPA has announced, it's fairly dramatically different. Four parts per trillion is almost non-detect and so the costs are vastly different. But listen, we're going to be supportive. I think the administration is going to press this one. So we don't anticipate seeing any changes we think the 4 parts probably goes, and we'll do our part to get there.

And our next question comes from Davis Sunderland of Baird.

Good to see some updates on the pending unit transactions and the file that are going to close in the next two quarters roughly. Just wanted to ask high-level thoughts on any changes that have been in the pipeline, whether there have been difficulties or opportunities related to the worsening macro environment, banking stress or any difficulties you guys are seeing with maybe competitors having financing challenges or just any opportunities that may be coming in that in the pipeline?

Yes. I guess the news over the last several months has been an exit of what could have been a fairly large player in the space, right, NextEra decided to exit the space. So that's probably one of the interesting pieces of news. I haven't heard particular financing challenges of peers. But I think what you probably start to see is some challenges materializing in the municipal sector. And certainly, PFAS will contribute, right? We believe the PFAS issue is much larger, again, than EPA is estimating. And once the municipals find these challenges, again, assuming that enforcement will be a key element here, then there will be a lot of municipals looking for help on PFAS. And whether that's helped implementing their own solution where we might be able to help or, oh my gosh, this is so expensive, we need to exit. And so that could be a key contributor toward our acquisition program as we offer our set of solutions.

Our next question comes from Jonathan Reeder of Wells Fargo.

A lot of my questions have been asked, but just a few follow-ups. So I guess, given the offsetting efforts already made and the favorable Q2 weather that you kind of mentioned, how much additional work do you think you have to do to fully offset what I think was roughly $0.08 headwind from the Q1 gas volumes?

Yes. Let me clarify because I don't want you to overthink or estimate the impact of a warm April. Consider an $0.08 weather impact in the first three months of the year. We might recover about $0.01 of that in the fourth quarter, possibly a bit more, but it was just one month. As you know, moving into April, the heater runs less. So there are days as we approach summer that have less impact than they do in January, February, and March. We have work to do here, as Chris mentioned. However, the sale of the energy projects and the focus on operations and maintenance, along with the diligence regarding regulatory filings, contribute to our efforts to make up for that shortfall.

Okay. But like the O&M decrease that we saw in Q1, was that related to you guys starting to kind of flex that muscle already? Or has that stuff not really kicked in yet?

I would say it's a mix. There were some other things that helped in Q1, certainly weather being warm, where you do have fewer main breaks, lower maintenance expenses. I'd say some of that focus you would have seen in the first quarter, but more of that focus is to play out through the next 9 months of the year.

Got you. And then I think you kind of did allude to it that you put a finer point on the amount of equity you needed. I think you said $500 million in 2023. So kind of two questions on that. Does that $500 million, I guess, does that include the like $50 million to $75 million that you issued in late '22 under the ATM? And then also, what would that total look like if DELCORA slips into 2024 from a close perspective?

Yes, there's some specificity there, Ryan. Let me talk about that a little bit. We are considering approximately $500 million more as an addition to what we did under the ATM. As we continue to assess our credit metrics regarding acquisitions, we will provide more clarity on this matter in the future. For now, I think we should leave it at that. So far this year, regarding the ATM, if you consider the raise we did last December and a small amount in January, it amounted to less than $20 million; it wasn't a significant number.

As we consider DELCORA, should we still view M&A deals as being split evenly or, given our focus on credit metrics, is the equity portion now exceeding 50%?

No, I think 50-50 is the right way to think about acquisitions. But I also would remind you, we have a significant CapEx program that we're running today, too. So it's capital, it's acquisitions. Think of the big dividends; big cash users all demand that we continue to look at how we finance the business.

Okay. Okay. And then lastly, did you give an estimate of what the expected proceeds from the sale of those kind of three Peoples projects are? Is it like anything meaningful from an equity offsetting perspective?

Well, we're in the midst of a process there, so we really can't comment on either what we think that top line price could be or what kind of gain might be built into that.

Thank you. At this time, we have no further questions. So I'd like to hand it back over to Chris Franklin for any closing remarks. Please go ahead.

Great. Thank you, everybody. Thanks for your time today. As always, we'll remain available for questions, follow-ups at any time. Renee standing in today for Brian. Brian will be back in action soon, though. And I appreciate you being with us today. Take care.

Thank you, everyone. At this time, you may disconnect. Hosts, you can stay on the line.