Good morning, everyone. I’m Ed Vallejo, Vice President of Investor Relations at American Water. And on behalf of our entire company, I'd like to welcome you to our Virtual 2021 Investor Day. Let me first go over some Safe Harbor language. Today, we will be making some forward-looking statements and those statements, those projections are made with the best estimates we have on hand. However, since these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties and other factors that may cause actual results to be materially different from the results indicated or implied by such statements. The reconciliation for non-GAAP financial information used in the O&M efficiency ratio can be found in our Investor Day press release and in the appendix of the accompanying slide deck, which has been posted to the Investor Relations page of our website. All statements during this presentation related to earnings and earnings per share, refer to diluted earnings and earnings per share. In addition, for the purposes of the presentation, our long-term EPS CAGR range is anchored off of the 2020 earnings per share results. Let me now spend a few minutes on safety, a very important topic for us. So much so that for every meeting we have, we start with a safety message. And you'll see this message woven throughout our presentation today. It's embedded in our culture. There is nothing more important than the safety of our employees and our customers. At the heart of our safety objective is our pursuit of zero injuries at work. You've heard us say that we want to send our employees home at the end of every day in the same or even better condition than when they came to work. A safe and inclusive work environment is key to achieving this path to zero. The safety and health of our team is the reason we decided to hold a Virtual Investor Day this year. The format allows our speakers and those working behind the scenes to remain in remote locations and maintain social distancing. We've practiced these and other COVID-19 safety measures throughout the year for our field teams, as well as those colleagues that work in offices. We're also taking into account all CDC and local and state guidance as we work on plans to return to a more normal state of operations when possible, with safety as our continued primary driver. And with that, I would now like to introduce American Water’s President and CEO, Walter Lynch.

Thanks Ed and good morning, everyone. I'm Walter Lynch, President and CEO of American Water. I want to welcome and thank you for taking the time to join us today. We know you have a choice in where to invest your money. We thank you for your confidence in American Water. We're confident that throughout our presentation today, you'll continue to see that we're positioned for success for decades to come. And we continue to have a compelling long-term value profile for you, our owners. We look forward to sharing our story. Before we discuss our agenda today and move to the presentation. I want to echo Ed's message on safety. Nothing matters more to everyone at American Water than the safety of our team and the public. As a company that provides essential services to communities across the country and an employer of more than 7,000 people with families and loved ones, no injury is ever acceptable to us. Safety is embedded in everything we do and is that the foundation, the plane will lay out for you today. Turning to our next slide. As outlined in our press release issued yesterday, American Water continues to execute on our strategies and we're well positioned for long-term success. Today, I'll start by discussing our strategic focus and our commitment to building and maintaining reliable and resilient water and wastewater infrastructure, cultivating an inclusive high performing culture, delivering water and wastewater solutions, where we create value for customers and communities and continuing our commitment to being a values-led company. Bill Varley, our Chief Growth Officer will discuss our regulated growth strategy. Cheryl Norton, our Chief Environmental Officer and President of New Jersey American Water will talk about our commitment to ESG principles and our new, and we think critical environmental targets.…

Thanks, Walter. Hi. I'm Bill Varley, Chief Growth Officer for American Water. Prior to my current role, I've held many leadership positions at our company, including President of New Jersey American Water, Senior Vice President for the Northeast and Midwest divisions and Deputy COO. Before I review our growth strategy, let's take a look at the landscape of the utility industry in general. Our industry is highly fragmented, there are more than 50,000 community water systems and approximately 15,000 community wastewater systems in the United States compare that to the U.S. electric utilities, which are comprised of approximately 3,800 systems and gas utilities, which are even more consolidated with approximately 1,400 system. The water industry's fragmentation provides ample opportunities for systems consolidate and bring efficiencies across the entire sector. To put that in perspective on the water side, 84% of the population is served by municipal water systems. And more than 90% of those systems serve a population of 10,000 people or less. This is significant for two reasons. First, these numbers illustrate the large volume opportunities available. Second, many of these smaller communities are facing infrastructure challenges that require capital investment, due to competing priorities funds may or may not be readily available. And the large amount of capital invested required must be distributed across a small customer. This can significantly impact rates and affordability. Because of our scale, we're able to spread capital investment costs over a much larger customer base, help we can maintain affordability for our customers. Opportunities on the wastewater side are also significant because many of these systems are already part or near our water footprint. This gives us the opportunity to leverage our existing infrastructure and drive operational and cost efficiencies. Let's move to the next slide. Beyond our scale, other competitive advantages…

Thank you, Bill; and good morning, everyone. I'm Cheryl Norton, Chief Environmental Officer of American Water and President of New Jersey American Water. As Walter said earlier, I'm a great example of the value that American Water places on the development of its employees. My career began at American Water 34 years ago, when I was hired as a temporary employee at our central lab in Belleville, Illinois. And on March 1, I will become the Chief Operating Officer. The path that I've taken to get here today has given me a broad base of experience across multiple states and multiple areas of the business. My start with American Water as a microbiology research technician gave me a unique perspective on water quality, which I continued to build on throughout the years. It's been fun to reconnect with those roots in the Chief Environmental Officer role. I've worked in Illinois, Kentucky, Missouri and New Jersey, and I even spent a few months in West Virginia. My leadership roles in these States allowed me to become familiar with operational challenges across the business. I've also experienced a wide range of regulatory and legislative environments and can directly relate to the efforts that Walter and Bill mentioned, and the importance to the business and our customers. My success is a direct result of the amazing people that I've worked with over the years, who've been willing to teach me the business and allow me to bring my whole self to work. I'm honored and grateful to have the opportunity to give back by mentoring and helping others find their path here at American Water. In the future, I'll be here to talk to you about the industry leading operations across American Water, but today, I'm excited to talk to you about our…

Thank you, Cheryl. Good morning, it's good to be with you virtually this morning. And we certainly look forward to doing this in person, hopefully very soon. I'm Susan Hardwick, Executive Vice President and Chief Financial Officer of American Water. You have just heard from my colleagues, the various elements of our strategy. Let me now translate what that means to our financial plan. But before we get into our longer-term financial outlook, let me take you through the highlights of our strong 2020 results. In the fourth quarter of 2020, earnings were $0.80 per share, compared to $0.54 per share in the same period of 2019, an increase of $0.26 per share. Results for the regulated business increased $0.01 per share and results from the market-based business increased $0.22 per share. Parent company results improved $0.03 per share in the fourth quarter of 2020, as compared to the same period in 2019. Consolidated results reflect a two set per share benefit from depreciation not recorded as required by assets held for sale accounting in 2020 related to the pending New York sale, and the loss of $0.19 per share on the disposal of Keystone Clearwater Solutions in the fourth quarter of 2019. For the 12 months ended December 31, 2020 earnings were $3.91 per share compared to $3.43 cents per share in the same period of 2019, an increase of $0.48 per share. Earnings in the regulated business increased $0.33 per share, while the market-based business results improved $0.24 per share compared to 2019. Parent company results were $0.09 per share lower in 2020 as compared to 2019, due primarily to higher interest expense. Regulated results reflect an estimated $0.10 per share, favorable impact year-over-year due to warmer and drier than normal weather across several of the company's subsidiaries…

Thank you, Susan. Proven and predictable financial performance is an outcome of the successful execution of our strategies. I think you've clearly heard today that we're confident in our long-term success. This confidence is rooted in our strengths, it starts and ends with our unwavering commitment to safety. To us, safety is more than just the right thing to do. The health and safety of our team is a leading indicator of our company's health. Simply put, if we can get safety, right, we can get everything else right. To excel we must get the fundamentals, right. Operational excellence helps us define better and more efficient ways to do business and it enables us to provide safe, clean and affordable water services for our customers. As the largest water and wastewater company in United States, we assume the responsibility to go beyond minimum requirements and be an industry leader in operational and environmental excellence. This can only be achieved by collaborative high-performing teams. Maintaining an environment, where our people feel valued, included and empowered it’s critical to our ability to serve customers every day. We're working together to create an environment where employees can live up to their fullest potential and feel confident that they can directly contribute to our company's ability to stay strong, grow and make a difference in our customer's lives. And making a difference for our customers and for the communities we serve is centered on providing solutions to water and wastewater challenges. When we grow, we're able to leverage our scale, we can invest more, we can create stable jobs and we can improve infrastructure and make communities stronger, and for some ESG is a relatively recent development. For American Water, it's an affirmation of the values we've upheld for decades, it's much broader than…

Thank you, Walter. At this time for members of the investment community that wish to ask a question, please dial in using the instructions we provided in a previous e-mail. We’ll now take a five minute break.

Ladies and gentlemen, welcome back to American Water's 2021 virtual Investor Day. We will now begin the question-and-answer session. [Operator Instructions] And today's first question comes from Angie Storozynski with Seaport Global. Please go ahead.

Thank you. Susan, so my first question is about equity needs. You guys do not have an ATM plan, so talk to me please about how you see that $700 million in equity exactly – roughly which years and again, would you consider an ATM?

Hey, good morning, Angie. Thanks for the question. Yes, so little bit of an update to this year's plan on the equity requirements as I indicated it’s about $700 million, we were at $500. And recall in our last plan, we had talked about that $500 million being sort of in the middle of the five year so roughly in the 2022, 2023 timeframe. I would say that's generally where we have this $700 million still scheduled, and my philosophy on this is we sort of line up the need or the issue with the need and the capital plan. So that's when it sort of comes into the plan in terms of expected requirements. We haven't really decided, and I know I keep saying this, but we haven't really decided on methodology yet, whether we do sort of a block issue or we do it using some other tool, we certainly are considering an ATM like program and you're right, we don't have one in place today, it may fit the profile a little better to use a program like that. We just haven't made any decisions on it, I would just tell you again, sort of generally speaking, it's in the middle of the five years and we'll continue to look at best method to get it to market.

Good. And the second question, so you increased the growth contributions – earnings growth contributions coming from regulated utility acquisitions. And forgive me if you guys have addressed that already. But is it assumption of acquisitions that have already been secured? Or is it just that the pipeline backlog of deals has improved to such an extent that even the larger base, you feel like the pace of growth associated with this portion of your business is going to accelerate?

Angie, Walter here, how are you? I'm going to take that question. So let me start by just apologizing for the issues with the webcast, if you missed any of the 30 to 60 seconds, let me tell you in my section, it was fabulous. So I would ask you to go back and look at it again. So the 1.5% to 2.5%, that's a reflection of the growing pipeline that we have, Bill Varley working with the State teams have been hard at it to truly identify opportunities and then work them through our pipeline. And right now, we believe that we're confident that the pipeline supports that increase up to 1.5% to 2.5%, so that's really the reason for the growing part of that growth triangle.

Okay. And lastly, any more color on what's going on in New York? I mean, you haven't really changed your expectations as to when the transaction should close. Also it seems like the financing plan includes proceeds from this asset sales, so if he could just comment on that.

Yes. Let me start with what's going on there and then Susan can talk about that. Yes, we still – we're working structurally with the public service commission as we work towards the sale of the system there. We still believe it's in the best interest of New York American Water customers to sell the Liberty. As you know on February 3, the governor directed a special council to complete a study on the feasibility of a public takeover, and that study is to be completed by April 1. So while we remain confident in the sale the date of that work and the outcome of that work may impact our timing to some degree.

And Angie on the proceed side, I'd just add quickly here. We have increased the expectation for proceeds, sort of after tax proceeds from the sale compared to our prior plan. We increased it about $250 million and obviously that's a source of equity if you will in this plan to help finance the growth here. And that really is just driven by – as we continue to kind of refine our estimates around tax position on the transaction, we feel like there is more proceeds coming after tax. So we did an increase at about $250 million from the prior plan.

And the last question I promise, New Jersey still hasn't ruled on the acquisition adjustments, right, I mean, it doesn't seem like [indiscernible] posted on the website.

Yes, Angie, they have not ruled on it yet.

Thank you.

And our next question today comes from Durgesh Chopra with Evercore ISI. Please go ahead.

Hey, good morning, Walter and I promise to go back and listen to the 30 to 60 seconds.

Thanks, Durgesh.

Just going back to – just the 1.5% to 2.5%, I just want to sort of understand that a little bit better. So, obviously that's sort of a large increase versus the base, right, a 1% base – that 1% to 2% base that you were targeting earlier. What gives you confidence? I mean, I know sort of Bill is in charge of that team and he has a proven track record of completing successful acquisitions. But, is there something that you're seeing in the pipeline here today, or recently that gives you confidence in the higher growth rate there.

Yes, thanks Durgesh. Well, as you know we increased our pipeline and almost doubled it over the last year and it's really focusing in the States where we want to grow and focusing on both water and wastewater. We're still pursuing wastewater opportunities in areas where we serve water customers and also adjacent to where we serve water customers. And I think if you look at the city of New York wastewater, that's a perfect example of that. But it's really a combination of the States doing a tremendous job in identifying opportunities and working them through the pipeline. But also the team here led by Bill, working with the States to look at best practices and things that we can take advantage of across our scale of our business. So that's why really the increase is there, but it's really back to the pipeline, it's all about a pipeline, you have to have a pipeline to deliver on those acquisitions. Bill, if there is anything you want to add.

Yes. Hi, Durgesh, how are you doing?

Good Bill. Thanks.

In part of the pipeline development, it's a discipline approach to evaluation Durgesh, and we're not just looking for financial conditions, we take a look at the water quality, looking at wastewater compliance and what are the community needs are too. So we're looking at solutions and it's a systematic process that we go through. And to the aspect of increasing the pipeline on the wastewater side, 93% of our business is the water side. But I think now the realization is that they actually – if communities is sitting on an asset that has value, which they didn't realize before by our proactive approach, and also the view is potential liability. So, you combine all the factors with a discipline approach, increasing the pipeline, I think that's what gives us our confidence

Understood. That's super helpful. And then maybe just Walter your thoughts on the market-based business, so that long-term growth rate has come down, can you just talk through that? Is that sort of intentional, or are you seeing less opportunities there going forward?

We moved it from 1% to 2% to 1%, and it's really a reflection of the regulated business growing at a faster clip and particularly the regulated acquisitions that we identified. So that's really what's driving that, we're still very confident in our market-based businesses, both in the military and homeowner services. In the military, as you know, we won the last three awards where there are five outstanding, we expect two to be awarded in the near-term and we're confident in our ability to continue to provide great service for the men and women in the military. So we're confident in both businesses and they contribute to the success of our organization. So the very complimentary to what we do and they provide free cash flow and we're able to extend our core competencies, particularly on the military side and provide a great service for the 17 installations.

Got it. So essentially it's focusing more on the regulator side of the business. You have a higher regulated acquisitions growth now. And so, the end result of that is a lower market based business growth. Okay. Understood.

Exactly.

And then just one quick clarification, Susan, the 2021 EPS guidance range that does not include New York American, am I correct about that?

Well, obviously we haven't filled it yet, as we plan to sell it sometime in 2021. So there'll be some results in 2021 related to it. We've not specifically identified it as an adjustment to or any sort of the impact to 2021’s guidance. So I would just say 2021’s guidance is what it is and it contemplates the sale of New York American Water sometime during the year.

Okay. Thanks guys, much appreciate the time.

Thanks Durgesh.

Thanks, Durgesh.

And our next question today comes from Insoo Kim from Goldman Sachs. Please go ahead.

Hi, can you guys hear me?

We can.

We can Insoo.

Got it. Thank you. Maybe starting off in Texas, I don't know if you mentioned this earlier, I'm sorry if I missed it. But I know you have a couple of the military bases down there, could you just describe a little bit about the experience you had with these winter storms and maybe related to that, currently you're not in your regular utilities, you're not in Texas, but given the water infrastructure issues that played out in that State, how do you see that State of a potential opportunity for expansion?

Yes, thanks Insoo. And you’re right, we don't have regulated operations in Texas. We do have two military bases where we provide water and wastewater service Joint Base San Antonio and then Fort Hood. And I've got to say, I'm so proud of our teams and the work they've done around the clock to continue to provide service. And while we experienced many more main breaks and other challenges within the systems, our folks kept the water running for our military folks on those bases, so we're really, really proud of them. As far as the Texas operations, I mean, there is a little bit different design and construction down in Texas because they're not really designed to withstand extended periods of cold weather, and that's been the challenge down there. And so when a storm like that hits, it really challenges the system from a number of perspectives. The pipes are not buried very deep. Many of them are above ground and they tend to freeze at a much quicker pace. And a lot of the homes are not insulated like they are in the Northeast. So that's really what contributed to a lot of the issues down there. Our systems are resilient. We spend a lot of money, as Cheryl said, 8% of our capital spend is spent on resiliency in our systems to make sure that our systems can withstand extended periods of cold weather. And we do a great job at it. And while we have at times many more main breaks, our teams are out repairing those main breaks and restoring service in the shortest amount of time. So I'm really proud again, of our operations in Texas as two military bases. And again, our systems are designed and constructed to withstand extended periods of cold weather.

Got it. I guess, from that expansion opportunity, do you think that this could be an interesting opportunity as you look towards increasing your municipal growth rate?

We continually assess where we want to operate and for us – we've said many times for us to enter a state, we've got to have a good regulatory environment, a good business environment, and the ability to grow to at least 50,000 customers roughly over a five-year period. So we'll continue to assess entry points in the different states using that methodology. But we're again really proud of our efforts down there and we've responded and helped the communities down there by shipping a bottle of water. We're really proud of that as well, because that's who we are as a company coming to the aid of people in this country, even though they're not our customers.

Understood. And then just one more, if I could, given Biden Administration focused on infrastructure spend and on the water side and water quality as well, how much of that do you think you've embedded in your five to 10 year plan and any sense initially, what type of upside opportunities exist?

Yes, I think we believe there's going to be an infrastructure bill. We don't believe there's going to be any free money going out to the municipalities. We think there'll be access to low interest loans for the state revolving funds, and we're working to get access to that. On the wastewater side, we do get access on the water side, but we're working to get access on the wastewater side. So we can – our customers can benefit like the other customers through a low interest loans. But our five-year plan is an increase of 1.3 billion over the last plan from last year. And we're going to continue to invest in the areas that we need to invest in and make sure our systems are resilient.

Got it. Thank you so much.

Thank you.

[Operator Instructions] Today's next question comes from Ryan Greenwald with Bank of America. Please go ahead.

Good morning, everyone. Appreciate the time.

Good morning.

So on the rebasing to the weather adjusted 2020. It implies slightly lower earnings relative to the 2018 base. Is this predominantly driven by the additional equity or is there any other considerations there?

Well, Ryan, we certainly don't view this as rebasing at all. I mean, we're simply growing off of 2020 actual results. And we had that available to us at the timing of our release for 2021 guidance. So growth of 2020, as we've talked about is very strong continues to focus on that long-term growth rate of 7% to 10% over the five years. So that is our focus and that's our continued reiteration of long-term guidance. There is more equity in the plan, obviously with a couple of hundred million more. So there was some dilution obviously built in the plan last year, and then just incrementally more dilution as a result of additional equity.

Got it. Fair enough. And then as you guys continue to assess your focal points and you work through the sale of New York this year, any other states right now that you're considering maybe divesting operations for use of – to get some proceeds, to finance all the regulated acquisition opportunities.

Yes, thanks for that, Ryan we continually assess where we want to operate and where we can provide the best customer service, most efficient operations and continue to grow. And we'll just continue to do that. We're not in any position now to say that.

Got it. Thanks for the time.

Thank you.

Thanks Ryan.

And our next question today comes from Verity Mitchell with HSBC London, please go ahead.

Good morning, everyone. Thank you very much for the presentation. Really helpful, I've got a question on efficiency. Actually I noticed on Slide 26, you've only say 4.3% since 2015. So 15% is quite an ambitious target and scare me that consumers actually use less water, or what happens if they actually use more water than that time? Are you really confident that you can deliver that?

Thank you for the question. And yes, we're very confident that we can deliver that. We think it's a lot more than our customers actually using less water. We think it's water efficiency across the board. So for example, by improving our leak detection efforts out in our distribution system, we will be able to recover more of that non-revenue water or that unaccounted for water within our systems. And so we're looking at it from a holistic perspective. We do continue to pick up a decline in usage in the residential space based on fixtures and appliances, but we really think this is going to be driven more by the capital improvements that we make so that we can reduce the amount of leakage and water loss that we have in the system.

Are you going to give us an update on an annual basis or is it going to be much more of a long-term target? How do we track or how you're managing?

Yes, it is a long-term target, but we do plan to provide annual updates on where we're at with it. And we probably in future calls may talk about some of the technology we're using just to help you have a clearer picture around our path to get there.

Great, thank you.

Yes. And it's really about the targeted investment that Cheryl said in replacing pipe that's old and worn out and maybe more prone to main breaks and also leveraging technology to identify leaks there. Those are two key areas for us to continue to improve in that area, Verity.

Thanks.

And our next question today comes from Jonathan Reeder with Wells Fargo. Please go ahead.

Hey, Walter and team most of mine have been asked and answered but I will just throw one more out there. Just kind of curious what cause the pushback in PaPUC’s final decision and your pending rate case, given the ALJ recommendation supporting the settlement.

Susan, you want to take that or I can jump in?

Well, either one. I guess, maybe we could just start with a bit of news. We did just get word here that the commission just did approve the settlement agreement. So we actually have an order now in Pennsylvania just issued moments ago. And they did approve the settlement as it was submitted.

Any other question, Jonathan, it’s timely.

Yes, yes, great presentation and appreciate the update.

Thanks Jonathan.

Thanks Jonathan

And our next question today comes from Becca Followill with U.S. Capital Advisors. Please go ahead.

Good morning, guys. The Biden Administration is reviewing a host of different environmental regulations. Is there anything in the works on the water side that might provide more stringent regulations for munis, et cetera, that might help facilitate further M&A for you guys?

Yes, thanks for the question, Becca. I think one of the areas and it's been out there for some time is really the PFAS limits. And again, there's a health advisory limit of 70 parts per trillion. Many states have enacted more stringent standards, but I think the EPA maybe monitored or coming up with a limit on that would be one area of focus for the Biden Administration. I know it's going to take some time and the EPA likes to focus on science to make their MCLs, but I think that's going to be a key area as they establish that, they'll continue to look at other emerging contaminants. And that will play again into our acquisition strategy as we continue to provide solutions for communities. And we think there is going to be a keen focus here by the EPA. Cheryl, is there anything you want to add to that?

I think that covers it, Walter. I fully anticipate that we're going to see the regulatory environment ramp up.

Thank you. And then the second question on from a state basis, is there any type of emerging legislation that would also help facilitate M&A, something that's in the works that has not yet been passed that looks like it's going to be introduced?

Well, let me start with Water Quality Accountability Act that started in New Jersey that two other states have adopted. I think that is being considered in other states within our footprint. So I would look out for that primarily in the Midwest and that again, establishes standards that are uniform across the sector, whether a municipally-owned or investor-owned, around cybersecurity, some of the challenges there, around pipe replacement rates, about long-term asset management plans. And that's been instrumental in many of the discussions we've had in the states where we operate that have that legislation. So I think it's a wake up call for many municipalities to say, maybe we should talk to American Water about selling assistance.

Great. Thank you.

Thank you.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Walter Lynch for any closing remarks.

Okay. Thanks Racco. First, let me say thanks for joining us today, and we value your participation and the work you do on behalf of your clients. We hope our open and transparent discussions give you confidence in our company and the investment in our stock. If you have any additional questions, please call the IR team and they'll be happy to answer them. Thanks again for joining us and please stay safe. Thank you.

And thank you, sir. Today's conference has now concluded. We thank you all for attending today's presentation. You may now disconnect.