Good day, ladies and gentlemen and welcome to the Aqua America Q4 and Full-Year 2016 Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Brian Dingerdissen. Please go ahead.

Thank you, Keith. Good morning, everyone, and thank you for joining us for Aqua America's 2016 full-year and fourth quarter earnings conference call. 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 aquaamerica.com. The slides that we will be referencing can be found on our website. There will also be a webcast of this event available on our site. As a reminder, some of the matters discussed during this call may include forward-looking statements that involve risk, 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 risk 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 posted in the Investor Relations section of the Company's website. Presenting today is Chris Franklin, Aqua’s Chief Executive Officer, and Dave Smeltzer, the Company’s Chief Financial Officer. After the presentation, we will open the call up for questions. At this time, I'd like to pass it over to Chris Franklin.

Thanks, Brian, and good morning, everyone. For today's brief agenda will start with some recent news on the Company. And then I'll comment on your highlights for 2016 and Dave Semltzer our CFO is going to cover the financial results for the year and some of our rate activity. Then will conclude the formal portion of the presentation by reviewing our guidance for this year 2017 and after that we'll take any questions you might have. Let’s jump right in. As we close the books on 2016, which is our 130th year anniversary, I’d like to provide just a little bit color on the year. I think it was an exciting and a fulfilling year for all of us at the Company and we laid in some important ground work for a strong future. Probably most importantly, we built our strong management team and I believe we’re fielding a world-class team at this point. I'm thrilled with how the team as gelled and the talent that they possess. Secondly, we continue to maintain our high standard of operational excellence, including the handling of some of the industry type challenges like the fallout from Flint, Michigan, which is the national discussion as we've said before and we continuously get questions from our customers and our different constituencies about the lead issue. We invested nearly $400 million in our infrastructure this year at the Company. This is a record year for us. We provide a higher degree of services continuously for our customers and we continue to bring fair market value legislation in even more states where we do business, Pennsylvania obviously being the big accomplishment in 2016. We talked about that detail on our last call. So I am not going to get into the details other than to say that…

Thanks, Chris. Good morning everyone. Today I’d like to review the financial results for the full-year, just some of the driving factors that impact the Company's performance. While we're doing that also provide a look at our rate activity from 2016 and for the current year so far. Turning to the next slide, we've reported annual revenues of $819.9 million, which is up from the $814.2 million last year. In our regulated segment reported revenues of $800.1 million were up 2.6% compared to $779.6 million. Operating and maintenance expenses were down 1.4% to $304.9 million for the year, compared to $309.3 million in 2015. For our regulated segment operations and maintenance increased just less than 1% to $285.3 million, compared to $282.9 million last year. We reported net income of $234.2 million or $1.32 per share, compared to $201.8 million or $1.14 per share in 2015. And Chris mentioned the adjustment for the Marcellus write-off on an adjusted basis, earnings per share of $1.32 increased by 4.8% over the 2015 adjusted income per share. Turning to the next page, let’s take a look at the full-year revenue comparison, starting with our revenue for 2015 of $814.2 million, regulated growth rate surcharges, assumption and other factors increased revenue by approximately $20.5 million. From there, lower revenues from the Company's sale certain of its market based activities offset the increase by $14.8 million. The next page, we will look at O&M expenses, starting with our O&M from 2015 of $309.3 million. Increased employee-related costs and regulated acquisitions increased O&M by approximately $10.4 million. From there lower production costs and expenses related to sale of our market-based activities and other factors decreased expenses by 14.8% getting us to an overall decrease of $4.4 million or 1.4% O&E expenses for the year. The next…

Dave thanks. So let’s take a look at what lies ahead. We continue to be very excited about our opportunities, particularly our growth opportunities and particularly in water and wastewater. Among our top priorities for this year 2017, we plan to continue to grow our rate base from both acquisitions and needed infrastructure improvement in fact we'll again spend CapEx at record levels next year. We will obviously focus on our operating efficiencies and this is one of our hallmarks and we won't lose sight of operating efficiency. We will also focus on our safety programs as we want our workplace to be the safest in the industry and we'll continue our tremendous focus on safety programs. We will also continue to focus on succession planning. We know there's a wave of utility retirements coming through in most of the utility industry and we plan to be very prepared for that wave as we build greater diversity in our Company and greater depth of bench. I think we are doing that very, very well already. Of course, we will continue to work on fair market value legislation as this helps to fuel the growth in our municipal world and in states where it makes sense, we'll spend a lot of time in 2017 trying to get that legislation through the legislatures. So I’ll close by reviewing our 2017 guidance that we provided in January. On the next Slide, you'll see our full-year earnings per share guidance to be in the range of $1.34 to $1.39. On a same system basis, we expect O&M to increase only 1% to 2% for the full-year and as always we will remain very focused on that aspect of business. We expect to invest more than $450 million in infrastructure in 2017. Again this is…

Thank you. [Operator Instructions] We’ll take our first question from [David Cater] with Baird.

Hi, guys. Thank you for taking the question. I was hoping you could provide some color on your 1.6% customer growth. What percentage that was organic and is that level of organic growth sustainable do you think?

Yes, it looks like about - yes, our organic customer growth was about 6,500 and so the balance are 8,700 were from the 19 acquisitions we did during the year.

Got it.

I am sorry, the other way around. So our acquisitions were 6,500 and organic growth was 8,700.

And is that level of organic growth something that we can think about going forward, do you think sustainable?

Yes, I don’t see why that wouldn’t be a sustainable level of organic growth.

Excellent thank you. And lastly, I was hoping if you could provide some color on what levers you have to decrease the O&M ratio and what are your long-term goals there, your efficiency targets?

Yes, so the challenge with what we called the efficiency ratio is as you by municipal system and as we’re in that world now of municipal system. You have this delayed rate impact. So we buy it and typically it's a multi-year base as we wait for a rate case. And so as we do that, expenses slightly climb and as we of course recover in rates. We will get that all back. So over time we have a nice strong O&M to revenue ratio. If you look at it and this is the sort of non-GAAP measurement that we used in the industry. We're at about 33.4% today and so it's very strong. I think it's still the strongest in the industry despite our municipal activity. But I would expect as we ramp up municipal activity that expenses could front run revenues at least for a short period of time until we get rates. So it could impact that ratio slightly.

Got it. Thank you, guys.

You bet.

We'll take our next question from Ryan Connors with Boenning & Scattergood.

Good morning. Thanks for taking my question.

Good morning.

I wanted to actually - Chris thanks for the reiteration of the timeline there on the Pennsylvania rate activity, but now that we're kind of more into the tactical timeframe of this. I wonder if you can give us any modeling guidance on when you would actually expect the DSIC to begin actually impacting the P&L, with that be something you’d expect to see a little bit of that in the back half of this year or should we hold off on expecting any of that until 2018.

I think it's fair to say back half of the year certainly. I think that that's a very fair and I would say more towards Q4 than Q3.

Okay. Okay, that's good. That's helpful. And then I'm just curious, the Ohio, you just got new rates there, another one in the pipeline, just curious what's the reasoning behind there or the dynamics behind such rapid succession there in Ohio?

We have a couple different things going on in Ohio, right. We have the regulated, fully regulated, which is the PUCO rates and we go in on a fairly regular cadence for that and that they have a - they don't call it DSIC out there, and then we have the locally regulated system. So in Basil, in Ohio, for example we go to the county and the county regulates. So we go in for rates there, but it's not the same [information]. In those cases they're reviewed globally and the rates are through locally. So it's a much more - I'm going to use the word efficient, but in the sense that it’s a prosecutable rate case, the rate case expenses are a lot more efficient than they would be otherwise.

Interesting. Good.

So I would say multiple rate divisions there, Ryan if you think about it. One large at PCL and then two smaller which are locally negotiated.

And you know Ryan, Ohio is our second biggest state and obviously it’s a very old town that we serve where there is significant opportunity for infrastructure rehabilitation.

Yes, okay. That’s clear. I wasn’t aware of that. That’s a good color. And then my last one was just on the - I realized you are mostly out of the market-based businesses now, but do you still have the service line protection. And I noticed that there’s a new marketing document that home service using and they're much more robust, I mean it really - it looks great actually. Might actually get me on board for the first time, but is that something you're aware of that they've really beefed up their marketing of that and have they given you any forecast or expectation on their expectations of how that more aggressive marketing will maybe impact uptake on the service line protection. I mean it's really a multi-page brochure now with all these new graphics and stuff. Is there any expectation that that will accelerate that?

Remember the offerings today are a lot more robust than we first started, but it was really a service line protection, water service line protection. Now their services are into wastewater, electric or everything else, so the offerings are much more robust. What they call take-up rates or saturation come in my mind are already significant. So I don't have any projections that what they think they can attain through their new efforts, but I would say that just looking at what they saturated in the state whey they do business with us already. It’s very, very strong.

Okay. And then I apologize. One more, I mean just on the topic comes to mind that - this is a broad question for anybody in that business, but how does the commission's look at that. If someone subscribes to that it goes on the water bill rate, so I would assume they don't look at that. Then as part of your “rates” when they're assessing total households wherewithal to meet the water bill and whatnot. I mean how does the commission look at that when someone subscribes?

Yes. Ryan, it’s Dave. Most of the commissions don't really look at it very much. They recognized it’s a non-regulated business and they allow that to go on unattached. There is an occasional opportunity when the commission does take a look at it and incorporate into a rate case, but we’ve generally only seen that in one state.

Okay.

I think the fact is that it doesn't take really staff time or overhead from the Company, so since it operates largely independent it really doesn't impact the rates.

Got it. Okay. Well thanks for your time.

You bet. Thank you.

[Operator Instructions] At this time, we have no further questions in the queue. I would like to turn the conference back to Mr. Brian Dingerdissen for any additional or closing remarks.

This is Chris. Thanks for joining us today, and obviously if you have follow-up questions, we are always available. Thanks so much.

Ladies and gentlemen, this does conclude today's presentation. We appreciate your participation.