Good morning, and welcome to American Water's Fourth Quarter and Year-End 2022 Earnings Conference Call. As a reminder, this call is being recorded and is also being webcast with an accompanying slide presentation through the Company's Investor Relations website. The audio webcast archive will be available for one year on American Water's Investor Relations website. I would now like to introduce your host for today's call, Maureen Duffy, Senior Vice President of Communications. Ms. Duffy, you may begin.

Thank you. Good morning, everyone, and thank you for joining us for today's call. I'm filling in today for Aaron, who is a bit under the weather. At the end of our prepared remarks, we will open the call for your questions. Let me first go over some safe harbor language. Today, we will be making forward-looking statements that represent our expectations regarding our future performance or other future events. These statements are predictions based on our current expectations, estimates and assumptions. However, since these statements deal with future events, they are subject to numerous known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results indicated or implied by such statements. Additional information regarding these risks, uncertainties and factors as well as a more detailed analysis of our financials and other important information is provided in the fourth quarter earnings release and in our 2022 Form 10-K, each filed yesterday with the SEC. And finally, all statements during this presentation related to earnings and earnings per share refer to diluted earnings and earnings per share. Susan Hardwick, our President and CEO, will comment on our successful 2022 and our longer-term performance expectations and shareholder value. John Griffith, our Executive Vice President and CFO, will cover our 2022 financial results in more detail, provide an update on acquisition activity and we'll close with a review of our outlook for 2023 and beyond, including financing plans. Cheryl Norton, our Executive Vice President and COO, will then discuss our capital investment plan rate base growth expectations and active general rate cases before concluding with some ESG recognition we recently received. We will then close by answering your questions. With that, I'll turn the call over to American Water's President and CEO, Susan Hardwick.

Thanks, Maureen, and good morning, everyone. Thanks for join us today. As we announced yesterday, we finished 2022 with strong financial results that were just ahead of our plan. As shown on Slide 5, earnings were $4.51 per share for the year, which included $0.06 per share of favorable weather we had previously discussed. Excluding weather, earnings of $4.45 per share were just above the midpoint of the guidance range we shared originally back in November of 2021. Think about what has occurred globally since November of 2021, including widespread inflation, interest rates on a significant climb upward, Russia's invasion of Ukraine, and many people are returning to the office as the world began to stabilize following recurring waves of COVID outbreak. When I reflect on how much has changed in the world since November of 2021, I'm very proud of our company's ability to stay focused on serving our customers safely and reliably, which gave us the ability to confidently execute on the plan we shared 1.5 years ago. I'm also proud of the resilient service we consistently deliver and especially over the last few months during an active and better cold storm season across the country. I want to thank our employees for safely providing reliable service to the 14 million people we serve in their homes, businesses and communities. You can see here on Slide 5, a checklist of some of our key accomplishments in 2022, and John and Cheryl will add to these in their remarks. Overall, we believe the takeaway today for investors and analysts is that our strong execution in 2022, amid a challenging backdrop, coupled with our clear capital growth plan, it demonstrates American Water's ability to deliver on our long-term plan. I'm very confident we can execute our plans in '23 and…

Thank you, Susan, and good morning, everyone. Turning to Slide 9. I'll start by providing more details on our financial results for the year. In 2022, earnings were $4.51 per share compared to $6.95 per share in 2021. Fourth quarter and full year 2021 results included a gain of $2.70 per share from the sale of Homeowner Services and the $0.19 per share contribution to the American Water Charitable Foundation from the proceeds of the sale. Excluding this net gain in 2021, earnings grew by $0.26 per share in 2022. Earnings on infrastructure investment were the key driver of the growth. In 2022, we saw an increase of $0.89 per share related to higher revenues from new rates, acquisitions and organic growth. Also, as discussed last quarter, weather was favorable by an estimated $0.06 per share in 2022 and $0.04 net year-over-year due primarily to warmer and drier conditions in 2022. Revenues in 2022 were favorable to plan for the year due to healthy organic demand and favorable and timely rate case execution in addition to the favorable weather. These factors, combined with expense management and lower pension costs as compared to plan, helped offset the impacts of inflation we earned in 2022. Specifically, O&M and other expense increased by $0.31 per share year-over-year with an estimated $0.23 of inflationary costs on chemicals, power and other fuel and higher interest rates. O&M and other also increased due to interest expense on new debt, state-level revenue taxes and insurance. Depreciation expense also increased $0.14 per share in support of growth in the regulated businesses. And as a reminder, 2021 results included $0.12 per share of operating earnings from our former New York subsidiary. The other operating segment results decreased in 2022 as the $0.31 per share of operating earnings from HOS…

Thanks, John, and good morning, everyone. On Slide 16, I want to start by acknowledging that our entire company did an excellent job of safely executing on our accelerated capital plan and safely performing our day-to-day work in 2022. While we didn't reach our ultimate goal of zero injuries, we did record our best year ever in terms of safety performance. That's quite an achievement since 2022 was also a record year of total investment in American Water, and we experienced some extreme weather conditions. We slightly exceeded our $2.5 billion goal for the year by making prudent investment decisions across our footprint and by acquiring many new systems, which John spoke about earlier. Looking ahead to 2023, and as we told you in November, we increased our investment plan this time to $2.9 billion overall and roughly $2.5 billion for capital expenditures. This will likely be our new annual threshold for the next few years. Coupled with detailed project plans, we expect this pace of investment to drive improvements in water quality and reliability for the benefit of our customers. These investments also generate significant economic benefit to the local and regional economies while improving the environmental compliance of the systems and the communities. These investments should also favorably impact our pipe replacement cycles, which are much better than the industry average. Taken together, these actions demonstrate how the values of ESG are integrated into our everyday work. Turning to Slide 17. I won't spend much time here, but this graph simply illustrates the result of our continued execution on capital investments. The combination of infrastructure projects and acquisitions is succeeding in growing our rate base at a long-term rate of 8% to 9%. Rate base growth, of course, will drive earnings growth as we make prudent investments in…

At this time, we will begin the question-and-answer session. [Operator Instructions] And the first question comes from Richard Sunderland with JPMorgan.

Maybe starting with the equity update. I know you reiterated a similar language to 3Q, but just -- now that we're getting into 2023, I just wanted to see if there was anything else you could share on kind of timing your message as we're into the calendar year now.

Rich, thanks for the question. I'll ask John to comment on that.

Rich, no update in terms of timing. We'll issue the bulk of the $2 billion in 2023. And then whatever we don't issue in '23, we'll issue in the back end of our 2023 to 2027 plan period.

Okay. Got it. Very clear. And then you noted the stabilizing chemical costs, and I see the differences in the '23 walk from 3Q and then the current tech. But just is that really the -- looking at, I think, is a $0.01 revision there on the total range. Is that really the change you're seeing versus initial assumptions? I guess, what I'm really getting at is across that intention, any kind of movement within the guidance range now that you have final marks and more line of sight on the chemicals front relative to your initial outlook?

Yes. Rich, I'd say no change from what we've previously discussed, both in terms of our results in '22 and expectations for '23. As we talked last quarter, pretty successful in the regulatory arena to really mitigate most of that exposure going into '23. And now that we finished our pension re-measurement, as John commented on, certainly anticipate no change to our guidance relative to that issue.

Thank you. And the next question comes from Gregg Orrill with UBS.

To follow-up on the equity, just how does that position you for incremental acquisitions? Is there sort of any element of prefunding there? And then if there's a follow-up, just on the rate base, how did that come in for 2022 versus your expectation? And how does that -- if it's different, how does that impact your guidance going forward?

Let me take the first -- or the second part of that first. No surprises relative to rate base as we ended the year. And again, as we look out really into this five-year period, don't expect any changes from what we've previously shown you around rate base. And John, you want to comment on the equity question?

Sure. Greg, I would just say that the amount of equity that we're raising and the cadence of the equity does capture the various scenarios that we've run around regulated acquisitions.

Thank you. And this concludes our question-and-answer session. The conference call has now concluded as well. Thank you for attending. You may now disconnect.