Good afternoon everyone and thank you for joining us for Aqua America's Full Year 2017 Earnings and Analyst Update. If you did not receive a copy of the press release, you can find it by visiting the Investor Relations section of our website. The slides that we will be referencing can be found on our website. There will also be a webcast of this event and a transcript available on our 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 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 our website. As most of you know, our Analyst Day and announcement of guidance was originally scheduled for January 17th. With the passage of the Tax Act, we postponed the event and combined it with our earnings report in order to take the time to evaluate the impact of tax changes on our results and future guidance. We appreciate you taking the time out of your busy schedules to attend today's event. Presenting today is Chris Franklin, Aqua America's Chairman and Chief Executive Officer; Dave Smeltzer, the company's Chief Financial Officer; Rick Fox the company's Chief Operating Officer; Dan Schuller, Executive Vice President of Strategy and Corporate Development; and Kimberly Joyce, Vice President of Regulatory and Government Affairs. In addition to those presenting today Chris Luning, Aqua's General Counsel; and Ben O'Brien who recently joined the Investor Relations team at Aqua are also in attendance. Today's presentation is expected to be one hour. After the formal presentation, we will open the floor for questions. At this time, I'd like to pass it over to Chris Franklin our Chairman and CEO.

Hey thanks Brian and welcome to all of you here at the Exchange and those of you who are on the webcast as well. I think we have a good solid agenda here for you today. We've combined a number of things in this presentation, right. We have are our year-end earnings call for 2017, we've got our Analyst Day presentation, and we're going to hit some hot topics as well. Topics like impact of the Tax Act on our on our financials. First on the agenda, I'll provide a brief overview, acclimate those of you who are maybe new to the story or new to the industry, and then I'll pass it over to Dave. Dave will take you through the 2017 financial results, the impact of the Tax Bill on the company. And then we'll talk a lot about the rate activity, I know the Pennsylvania Rate Case is a hot topic that you want to hear about. And then Rick will talk about the operations of the company and we've had a really strong operational year in 2017. And then Kim will talk about our legislative and regulatory efforts, which if you follow our story, you know pretty well that our work in the regulatory and legislative is pretty key to our growth strategy. And then Kim will -- Dan will follow-on right after Kim, and he'll talk about the update of our growth strategy and he'll also talk about particularly the municipal water and wastewater effort that I think has been very successful, particularly over the last couple of years. And then I'll summarize and we'll give you the 2018 guidance, which you've already seen at this point in our release. And then we'll open it up for questions. So, let me begin with a general…

Thanks Chris and good afternoon everyone. Today, I'll discuss our financial performance for 2017, I'll go into some details on the impact of the Tax Cuts and Jobs Act, also address our recent rate activity, the outlook for rate activity in 2018 including discussion of our upcoming Pennsylvania Rate Case. So, let's start with the full year 2017 results. Our revenue was down a bit, down really entirely because of our discontinuation of certain market-based businesses. You can see the regulated segment was up just about 1% and that was due to rates, surcharges, and growth offset by a fairly significant decline in sales, which I'll show you in a future chart. O&M expenses were down year-over-year, again, because of the market-based decline. So, you can see on the next line, regulated segment O&M expenses were up less than 1% and that was due to reduced production costs having converted a purchased water supply to one of our own supplies and so on a normalized basis, our O&M is probably up in the 2% to 4% range. Net income and earnings per share were both up about 2.5% rates, surcharges, and repair tax offset by the lower sales, and importantly, a $3 million charge related to the Tax Act got us to this ultimate conclusion and I'll talk about that a little bit later. Operating revenue, as you can see, we finished last year about $820 million. So, we had increases in revenue, $9 million from rates and surcharges and about $4.5 million from our regulated growth. But you can see we had some offsets to that about $15 million down in revenue related to the discontinuation of those non-regulated businesses and then about $9.5 million down related to a decline in consumption from 2016 to 2017. Operating and maintenance…

Thanks Dave and good afternoon. I'm starting my 17th year with the company and in my third year in this role and I'm proud to lead the men and women who actually make this company tick. As they staff our plants, visit our wells, repair our pipes, operate our lab instruments, read our meters, and plan our capital program. I will discuss Aqua's future capital investment plans, our continued focus on effective and efficient operations, and our recent safety results. As Chris and others have already said, Aqua, at its core, is an infrastructure company. We own and operate assets; things like reservoirs, water treatment plants, wells, pumping equipment, and pipelines. These assets are required to provide water and wastewater services to a nearly 1 million customer connections. The chart on the screen shows the types of assets we own and the total regulated earning value or rate base that they represent. Since the last Analyst Day two years ago, we have added 300 miles of pipe, one surface water treatment plant, four wastewater treatment plants, and numerous wells and large tanks in the communities that we serve. All of this to further benefit our customers. And as a result, our rate base has grown from $3.4 billion to approximately $4.1 billion. Now, let me explain a little bit more about these investments. First, I want to talk about the pace of spending. Here on this slide, you can see our average annual capital spending and our projection for 2018 through 2020. The bar at the right shows our average annual capital spending plan for the next three years, more than $460 million per year. And as a result, we expect to invest about $1.4 billion during the three-year period ending 2020. These figures do not include any investment for…

Thanks Rick. Good afternoon everyone. My name is Kim Joyce and oversee our regulatory and legislative initiatives and as well as our communications team, our volunteer efforts, and our community giving. For those of you that follow the water industry, you know the basics of our regulatory model. The basics and really the mission have stayed the same; provide safe and reliable water and wastewater service, work cooperatively with our regulators, customers, community groups, and key stakeholders, and strive to operate our company in the most efficient manner, so we continue to provide a fair return for investors. As far as our regulatory model, Aqua files traditional base rate cases and continues to be one of the most capital-intensive industries proactively investing in our communities in a timely and prudent way. At the same time, we know that many things in our industry have changed. With new technology, we're getting consistently better at understanding in parts per trillion what's flowing through our water treatment plants and we can receive real-time feedback from our customers if there's an unexpected main break in the winter time on our social media platforms. Post Flint, Michigan, water quality and the state of our infrastructure has been a national topic and we see lots of interest from our legislators across the country. And that has translated into many discussions about stricter environmental standards and the desire for more proactive infrastructure replacement. Just some recent examples include Indiana's passage of legislation that allows regulated utilities like Aqua to replace lead pipe laterals that are owned by the customers. And in New Jersey, legislation was recently passed that requires our fellow government-owned providers of water service to provide asset management plans and capital lands on a long-term scale. We use this slide here to demonstrate how the…

Thank you, Kim and thanks to all of you for joining us. Today, I'll be reminding of our growth strategy, take you through our transaction process, give you a snapshot of our historical growth performance, talk about a few transactions yet to close, and briefly discuss our acquisition pipeline. Our fundamental growth strategy remains the same as I presented to you back on Analyst Day of 2016. Our three-pronged growth strategy is really an outgrowth of our core competencies. As has been said earlier, three of our key strengths are investing capital to rehabilitate and upgrade infrastructure; that is pipe replacement, plant expansions, earning return off an unmet capital through our regulatory process, and running our businesses as efficiently as possible. First, the primary of our drive -- the primary driver of our growth is our municipal initiative; that is acquiring water and wastewater systems from cities, towns, and authorities. Aqua has invested a considerable amount in this initiative in terms of time, people, and training, as well as in process development to enhance our abilities to succeed in this key initiative. I'll be discussing the investment process, our recent results, and 2018 projections of our municipal initiative in the next few slides. Second, from time-to-time as opportunities present themselves, we evaluate strategic M&A targets. Think of these as either publicly-traded or privately-held regulated utility businesses ranging in size from a few hundred millions to billions of dollars in enterprise value. While most often these are water utilities like the water company that changed hands last year, we would consider other utilities or infrastructure businesses where we could apply our core competencies. Finally, we also value market-based businesses, MBAs as we call them, with traits and characteristics which would complement our regulated utility business and are large enough to supplement…

So, thanks to the team. I think hopefully you took away the level of focus that they bring to the job every day and we're very proud of the team we field. I'm going to wrap-up very briefly with a quick summary and then the guidance, and then we'll open it up for Q&A. So, key point, right. Since 2015, O&M expense for the utility has grown by only 0.8%. So, I think the focus on O&M control continues to be in place. Secondly, despite spending nearly $2 billion in infrastructure improvements, the company has not filed for a rate case in Pennsylvania for more than six years -- as Dave said, almost seven years with growth in EPS for each of those years. Just last year, we achieved the best environmental compliance record in the company's history. We achieved the safest year on record in the company's history. And we've led vast new regulatory and legislative efforts to improve our growth efficiency and recovery of capital. We've accomplished the signing of more than -- more municipal acquisitions in the last two and a half years than we did in the previous eight years combined. And, in fact, our internal investment committee, as Dan said, considered 37 different opportunities, many of those remain in the pipeline. So, I can tell you that there's not a more dedicated, focused, or hardworking management team in the industry and we remain very focused on quality customer service, value for shareholders, and opportunities for our employees. I couldn't be more pleased with not only the team, but our results at this point. So, with that let's pivot to the 2018 guidance. You've all seen the release last night, I've seen some of your reports already come out this morning and so let me just…

Hey Chris I know you lay out a 7% rate base CAGR. Is it any reason that your growth wouldn't at least be commensurate with that 7% now that you we're back in Pennsylvania getting rate relief?

I would think about this way Jonathan, two of those years are pre-PA rate case, right. So, we talked about 2018 and then 2019 will be in -- should be in the case. So, some of that period is not in the rate case, but it will follow in the -- in coming years should follow rate base growth and our earnings growth should be similar. Dave, you want to add anything to that? I think we have -- do we have another microphone for Dave?

Can you hear me? All right. Yes. No, I think Chris hit it. We're still doing very well in Pennsylvania. That's not why we're not in a rate case now. Our earnings report would suggest we're over-earning a little bit. And so clearly some of the capital will move to correct that situation before we get into the capital that will be used to really raise rates. So, we do have that little headwind, which creates a difference between those two growth rates.

Okay. But then certainly once the PA rate case goes into effect, we should be able to assume that EPS growth is at least on track with rate base and then whatever kind of M&A you might do in addition to that.

That's how we would think about. Yes.

Okay. And then can you give a little more color on what would or wouldn't fit into the strategic M&A for Aqua, for instance, how interested would you be in acquiring a regulated electric utility that say, owns generation or perhaps regulated utility with significant non-regulated businesses.

Yes. So, I would point you back to Dan's slide on our strategy. Clearly, we can't talk about anything that's in -- would be in a pipeline. But what I can tell you is that we will stick closely to our strategy, which essentially says we'll grow municipal water and wastewater systems and private water and wastewater systems in that first prong. And as we think about strategic M&A, it will be in regulated, largely regulated in that prong and we would capitalize on our core strength. So, Jonathan, I wouldn't see us looking for anything at least primarily outside of, call it, infrastructure that we can put in place, we could recover through, call it, at rates or regulatory process and then operate a regulated utility as efficiently as possible. If we think about then our third prong, the only thing we would look at if we looked that we call MBA or market-based activity, would be something that was very close to our core competencies, right, something close to -- would be complimentary to our utility business, which is our primary business. And that would be in some -- to some degree supplementary to earnings -- would enhance earnings. And unlike our previous entrée into the unregulated, we would think about it as opportunities to be scalable. So, that's how I would think about those.

On the regulated side though, I know, previously you mentioned like a gas utility pipes, you're comfortable with that. How about on the electric side, whether it's just TND versus actual generation owning power plants running those?

Yes, I mean, clearly when you think about a FERC-regulated transmission company, those are interesting, but there's only one that I'm aware of. So, -- and that is not in our primary set, right. I mean but as I think about other opportunities in this space, I would point you right back to that strategy again, that it's got to fit with those core competencies and with those key strategies. That's the only way we're going to do it. We're going to stick very closely to those Jonathan.

My question is kind of the reverse of Jonathan's question. So, we saw last week that a gas utility was interested in acquiring the Pittsburgh water system. They had kind of officially said that they had put in an RFP. We had Northwest Natural making an acquisition in Idaho. So, I'm wondering as you look at these four states where you're doing fair market valuations, if you're seeing an increase in competition from kind of relatively new competitors that hadn't previously been interested in the water market?

It's a good question [Indiscernible]. And I think as you look at the Pittsburgh situation in particular, that's an acute situation. If you're familiar at all what's happening in Pittsburgh, that's in the newspaper every day. There's water quality and operational type problems. They've had outsiders into to run that system for a while. They've changed management a number of times, they put different structures in place. And so I think they need a solution. But in general, to your question about increased competition, we really haven't seen increased competition. We've seen some new players enter the space up in New England, we saw an electric enter the space within the year -- last year. But we really haven't seen on individual, especially, our target market in water and wastewater, we really haven't seen increased competition in those areas, especially in the size range that we're looking at, call it, 2,500 to 25,000. It's typically been the same players.

Thank you. So, first on the earnings growth. So, I understand that you're spending more CapEx to catch up with the rate base growth to commensurate with the earnings growth. But -- so you're saying that the ability to grow your earnings with the right base is going to be more of a 2020 type of timeframe, so 2018 and 2019 -- I mean 2018, we already know, but 2019 is also going to be a below or weaker on rate base growth earnings year?

Well, I -- we only give one year guidance just to start with, but I would think about this we're spending our CapEx, growing our rate base at 7% -- 6% to 7%. And so I would think about it in those terms. But also the fact that as Dave said, we are over-earning in some of our key jurisdictions and so essentially what we've got to do is -- and we're spending capital at a large pace -- at a fast pace. And so the those returns on equity are coming down that we're achieving and so as we come -- go forward, we should get back down to a situation where we need to go in for rates. And as you can see, in a number of jurisdictions, we were in for rates currently and then planning some, Pennsylvania being one of those. But CapEx spend continues to be strong. But -- again, we're in a situation where you have some over-earning. You've got to move through that before you can go in for rates again. So, again, I stick to the one your guidance, 2018, and I'm happy to give future guidance on where we think we're going from there, post Pennsylvania Rate Case. Dave, I don't know if you have anything to add to that?

Okay. So, just -- I thought that the plan -- original plan was to actually file the rate case in Pennsylvania more like at the end of 2018. Now, it seems like it's middle of the year. You admit that you're over-earning, so what's the reason for filing a rate case in Pennsylvania?

Well, we won't be over-earning, right. We won't -- we -- at the current pace of capital spend, we won't be over-earnings. Shortly, we'll be back into -- as a matter of fact, we had to get into that to arrange where we could file a distribution system improvement charge at the end of last year. And so we're now moving to a situation where we won't be over-earnings. We're just slightly over it today. So, we -- always as we talk about the filing of the Pennsylvania Rate Case, what we typically discussed is the adjustments, I'll call them micro-adjustments to adjust to whatever the conditions are, the capital spend, the repair tax issues, and we -- to make sure that we're earning at the appropriate level before we filed for rates. And again, I'll defer to Dave, if you have anything you want to add to that.

Yes, I would just say that for years, we've done rate cases in Pennsylvania, but this is the first time we have the fully projected Future Test Year. So, rather than looking out one year for capital, now we're looking out two years for capital. And really that's one of the key differences that makes it possible now to talk about a rate case in the situation in which we exist today because we're not just looking at 2017 capital for a historic test year, we're not just looking at 2018 capital, we're actually incorporating 2019 capital and we're very confident, by then, we will be in a position to require a rate increase in Pennsylvania.

Just had a question on the $300 million deferred income tax you guys refund to customers. I'm curious to know why you think you can return in over 40 to 50 years versus the gas and electrics are doing it all with the next 12 to 24 months in general?

Yes, that's interesting. The way it works is the accounting requirement is that these taxes be reversed through the ARAM method, average rate assumption method. And that method calls for the reversal over a period that is the remaining life for the property. Now, if you're talking about an electric utility with perhaps some short-lived property, maybe that makes sense. But when you come to our space and most of the property -- our water mains that last over 100 years, they have very long property and the longest tax life that we can have. So, we're confident that our return of this money to our customers is going to be over that longer tax life and the 40 to 50 years that we've discussed.

I don't think that this is a tax life issue. It was more of a question as a windfall. And then that's why the electrics and gas are returning it faster to, kind of, please the regulators. I don't know if this is a water industry thought process or this is just different versus electric and gas sectors or other the utilities?

Yes, there may be some issues in electric industry where it's unrelated to specific plant, but our deferred taxes are really exclusively related to the depreciation differences in all of our operating plant. So, we don't have a choice. We don't select the refund method. It's been dictated by the IRS. The commissions have all signed on to that and that's the method that all of our water peers are using to return those excess taxes.

Great. And a follow-on is, what's your current FFO-to-debt that you guys are getting and what's going to be the impact to your credit once this is -- the average for the other players I think was a 300 bps hit. And are you willing to issue equity to defend your rating -- at the current rating that you have?

That's a really good question today. And we definitely see an impact there. However, for us, it is certainly nowhere near 300 bps, it's probably less than a 100 and based on where we are today with sufficient coverage over our downgrade threshold, we certainly don't see an impact on our credit rating as a result of tax reform.

Thank you. Hi Chris. Rich Verdi, Atwater Thornton. How are you doing?

Hey Rich. Good to see you.

Just a quick question for you. And I apologize if this was asked, I stepped out. Regarding the DSIC mechanism and I've asked this before, I just want to see if there's an update. From time-to-time I hear there's pushback from the consumer advocate. So, I'm just wondering if you're seeing any of that or if there has been any kind of sense that that might be coming where you could see a pushback on the DSIC moving forward?

Yes, fortunately, I don't foresee any pushback from the either the regulators or the consumer advocates on the DSIC. I think generally what we've seen is an acceptance that, in fact, this is a way of gradualism in rates, right, bringing rates up. It's an investment typically only in capital. Every state is a little bit different in how they -- what they allow in the DSIC mechanism. But generally it's been accepted as a prudent way to put capital in. Some states require some preapproval, other states don't. But each state seems to have gotten comfortable at this point with that approach. And again I'll point to Kim Joyce here if you think there's any -- no. So, I think we're very comfortable, Rich, where we're with the consumer advocates and the DSIC.

Okay, great. Thanks Chris. And then just one other question too regarding the regulatory environment overall throughout the country. Are there any states that you see that are becoming more favorable that Aqua does not participate in where maybe Aqua could someday make an acquisition and grow its footprint in said state?

You're asking about the secret sauce?

Yes.

So, we would be interested in expanding. I think we've said this many times, Rich. At one point we were in 14 different states, we're in eight today. We make decisions on regulatory climate all the time. I would say for starters, we're very fortunate that we're in eight states with very strong regulatory climates, just, I'll say constructive. Would we go to in others and are there targets? We are looking at a couple of other states. Right now I prefer not to say which ones given the competitive nature of the market, but I think there are states that that have climbing regulatory -- I'll point to one that we haven't been active in, but I think that has vastly improved, in Arizona, right. It still is an elected commission, but I think that commission has become very constructive and I think the companies that do business there have done very well since the improvement in that commission.

Thank you very much Chris. I appreciate it.

You bet. Any other questions?

I'll just revisit the strategic M&A when I can. When you say -- is there something that you're actively considering opportunities today or are you exclusively focused on the muni deals given the pickup in activity in that space?

Yes. So, I would say every day our focus is on the muni work, right, every day. We have teams deployed in each one of our states, every day they think about the muni deals. Occasionally, when an opportunity might meet our strategy and our core competencies, occasionally, we would consider an opportunity that might meet those and we would evaluate it at the Board level and we would make decisions at that point. But those I would say are occasional views.

Okay. And then to get clarity, Dave, in terms of equity needs, nothing in the foreseeable future given I guess kind of, sort of, steady state within your expectations on the muni deal front to fund the actual budget and then a reasonable number of kind of muni deals?

Yes, I'd love to issue equity, right, because that would mean we have so many municipal deals coming that it's starting to throw our capital structure off and we need to rebalance, right. But as we just look at the capital that we're deploying over the next number of years and the standard M&A transaction that we've done, historically, no, we don't see the need for equity in the short-term.

And what short-term, is that the three-year's budget?

I would say three years.

Right. And then last and I might have missed it that on the top 10 muni deals and kind of development, what level of -- like development are these on, are they exclusively negotiated deals that you're in? Are they kind of open bids -- like how likely are they to -- I guess, materialize and how should we handicap it?

Well, maybe as we migrate a microphone toward Dan here, I would say, Jonathan that there in multiple different stages and I think several different approaches. As Dan said, we've become more aggressive in the sense that if we see a struggling municipal, we will offer our solution publicly. And so we have been more aggressive than we have before. But let's all just remember that you can't hostilely takeover a municipal. They either want to sell and sell or not. But we, I think through our predictive modeling, have now identified those that are most likely to sell only because they have issues whether it's compliance or financial challenges or pension issues or wherever it might be, we try to narrow down that field to something that is more probable. And so when we offer our solutions, we like to think about those ways. But Dan maybe you talk about what stages are in?

Yes, absolutely Jonathan. So, there's 10 deals listed here and as I said, these are generally places where we're in dialogue with municipal leaders. In certain cases, we've made offers, a number of those has been unsolicited in [ph] term indications of interest and you've seen some of that activity from us. It's kind of watch the news. But when I look at this list, a quick count I get about -- it's kind of almost 50/50 or maybe six of them are kind of proprietary deals as we'd call them where we've initiated it. We're in discussions. We may or may not have put a proposal in and then the others, I would say, are more processes, if you will, we're in dialogue with municipality, but others maybe as well.

Jonathan, just to give you a sense, I mean it's been publicly reported, so I'm not giving anything confidential here. But these deals while we think there are more opportunities in the market than ever before, they are hard. And the one I'll point to is in Pennsylvania where we offered to freeze rates for 10 years and we offered a very large purchase price. And that one never went forward. So, you can see just in -- and that one is very troubled. It was not, I would say, troubled, but that one could use our help. Let's just say that. Just tough, tough to do. Any other questions?

All right. I thank you for your time all of you in the room at the Exchange and on the webcast. I appreciate it and look forward to your questions and comments in the future. Thanks so much for joining us.