Hello everyone. Thank you for joining us and welcome to the Essential Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Ed Vallejo, Director of Investor Relations. and please go ahead.

Thank you and good morning, everybody. Thank you for joining us for our third quarter 2026 earnings call. If you did not receive a copy of our press release, you can find the release on our investor relations website. The earnings call slides will also be found there alongside a webcast of the event. During this conference call, both in our prepared remarks and in answers to your questions, We may make forward-looking statements that represent our expectations regarding future events and our future financial performance. These statements are predictions based upon our expectations, estimates, and assumptions. However, as these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties, as discussed in detail in our documents filed with the SEC, including our most recently filed forms 10-K and 10-Q. During this call and in our third quarter 2026 earnings press release, we refer to GAAP and non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non-GAAP financial measures is included in our third quarter 2026 earnings press release available on our investor relations website. We will begin with Chris Franklin, our chairman and CEO, who will provide an update on the company. Then Dan Schuller, our chief financial officer, will provide an overview of the financial results. And with that, I will turn it over to Chris.

Hey, thanks, Ed, and good morning, everyone. Let's start on page five with a few corporate updates. We'll start with our pending merger with American Water. Our regulatory approval process continues to progress nicely. We've reached constructive settlement agreements in Pennsylvania, North Carolina, and Texas, all of which remain subject to final approvals from the respective state public utility commissions. We've already secured regulatory approvals in Kentucky, Ohio, and Virginia, which mark major milestones as we progress Thank you for joining us today. to see the teams from both Essential and American Water working so collaboratively and side-by-side to shape our future of the company. Turning now to the quarterly results, we reported gap earnings per share of 36 cents, an increase of 9% over last year. This gap EPS results include about 2 cents of merger-related expenses, bringing our non-gap EPS to $0.38 for the quarter. Overall, it was a solid quarter that underscores the steady, consistent growth we're driving across both our water and gas businesses as well as responsible expense management. A key driver of that performance is our ongoing commitment to system reliability and customer service. Year-to-date, we've invested over About $1.1 billion of capital keeping us on track to invest a record $1.7 billion in needed infrastructure improvements and upgrades in 2026. All right, now on the regulatory front, we currently have rate cases or infrastructure surcharges pending in Texas, Virginia, Illinois, Indiana, and New Jersey along with our natural gas rate case in Pennsylvania. We recently received a proposed decision from the ALJ in the natural gas case recommending a revenue increase of approximately $105 million. Now, we continue to engage constructively with the Pennsylvania Public Utility Commission, the Governor's Office, and the various stakeholders regarding the state's regulatory environment. Related to this, You may have seen that Chairman DeFrank recently established an ROE working group and will be meeting over the coming months to evaluate options for establishing the cost of capital used in rate cases and DSIC filings. We are optimistic that the process will yield some improvements in the regulatory process and frankly, a greater understanding by all the parties of the capital needs and the overall focus on affordability. Finally, reinforcing our long-standing commitment to shareholder value, on October 21st, our Board of Directors declared the quarterly dividend payment on December 1st, 2026 to shareholders of record on November 10th, 2026. Essential Utilities has paid consecutive quarterly cash dividends for over 80 years and has increased the dividend 36 times in the last 35 years, a record we are very proud of. And Dan, on that note, I'll hand it over to you for a deeper look at our quarterly numbers.

Thanks, Chris, and good morning, everyone. Today, my remarks will focus on our strong financial performance and the primary drivers of our results. Let's turn to slide 8 to review our year-over-year EPS bridge, beginning with our Q3 2025 earnings of $0.33 per share. In terms of positive drivers, earnings per share this quarter benefited from a $0.06 increase in regulatory recoveries and surcharges, with about 65% of this coming from our water segment, and a penny from higher water volumes. These gains were partially offset by $0.02 from increased depreciation and amortization and another $0.02 from higher interest and lower AFUDC. This brings us to GAAP earnings per share of $0.36 for the quarter. Now, you'll see the details of our operations and maintenance expenses when you see our 10-Q, but let me give you some color here. O&M decreased by approximately 0.6% for about $900,000. Thank you for joining us. is available in our earnings release and in the appendix to this presentation. Turning to slide nine, let me provide an update on our regulatory activity. Thus far in 2026, we have finalized rate cases or surcharges representing $70.5 million in incremental annualized revenue. Approximately 75% of this total is derived from our water and wastewater operations, with the remainder coming from our gas business. Looking ahead, our regulatory pipeline remains on track. Our water and wastewater segment currently has cases or surcharge proceedings pending in five states, representing over $78.5 million in requested annualized increases. Our natural gas subsidiary has a base rate case pending here in Pennsylvania for $163.2 million and, as Chris mentioned, The ALJ has recommended a revenue increase of approximately $105 million. This rate case filing is essential to supporting our long-term infrastructure improvement plan, which enhances system safety and reliability while continuing to drive emissions reductions. We expect a final order in this case in December. And as always, we manage these filings carefully to ensure we continue delivering safe, reliable service and earn a fair return on our invested capital while remaining highly sensitive to customer affordability. And with that, I'll turn the call over to Chris. Chris?

Well, thanks, Dan. Let's move to slide 11, and we'll summarize our acquisition activity. Here we show a selection of our business development opportunities. and our business development group had a very busy October. We started the month by completing the $1.1 million acquisition of DrillQuip, a small water and wastewater system in Harris County, Texas. We also entered into an asset purchase agreement to acquire the North Carolina water and wastewater assets of Central States Water Resources. These assets serve approximately 4,100 customers and we paid about $3.5 million. Then, on October 28th, we entered into an asset purchase agreement for the acquisition of the water and wastewater assets of the Buckingham Springs system in Pennsylvania. These systems serve 1,300 customers, and we are paying $2.8 million for that acquisition. Finally, on that same day, we entered into an asset purchase agreement for the acquisition of the wastewater assets of the Hempfield Township Municipal Authority in Pennsylvania, which serves about 1,200 customers for $2.2 million. The company has also signed purchase agreements for additional water and wastewater systems in North Carolina and Virginia. In total, we've signed asset purchase agreements totaling approximately $290 million in purchase price which are expected to serve approximately 208,000 customers. Now this includes our Del Cora transaction which remains under a stay put in place by a federal bankruptcy judge related to the bankruptcy of the city of Chester. And I'll remind you that the fully enforceable agreement of sale with Del Cora is assumable by American Water. Our active pipeline of potential water and wastewater acquisitions represents approximately 400,000 potentially new customers to the company. And with that, I'll wrap things up and hand it back to the operator so we can take your questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Travis Miller with Morningstar, Inc. Travis, please go ahead. Thank you.

Good morning, everyone.

Good morning.

I'm going to intentionally leave this one a little open here, but thoughts on the election. You're obviously operating in some key states that were featured in the election yesterday. Affordability, also an issue. Municipal M&A, potentially an issue. So I'm just going to leave this open for any of your thoughts there.

Yeah, it's a lot to digest, Travis. As you might imagine, there's some pretty big changes in the states where we operate. I will say this, though, just for starters. We are a 140-year-old utility. I've been at this company for nearly 35 years. My team has been with me for over a decade-plus, and we have relationships on both not only on the regulatory side but also the legislative side. And so we'll have to meet some new people, get to know them. We'll have to get to know what is important to them in terms of their issues and then assess our work from there. But I think we're, like so many people today, we're just in a digestion period at the moment.

Okay, that's fair. Just real quick, municipal M&A, anything you saw from the election locally that might impact that either way, either existing funding or potential?

I don't think so. A lot of the municipal folks in Pennsylvania, where we sit today, were not up for election, so not as much on the municipal side that we see in terms of change, positive or negative, for municipal M&A. I think the transactions we have in the works, there doesn't seem to be any particular concerns about those. So I feel like business as usual in the most part on our relationships with potential deals.

Okay, great. Appreciate all the thoughts.

Thank you, Travis. Take care, Travis.

Your next question comes from the line of Paul Zimbardo with Jefferies. Paul, please go ahead. Good morning, Paul.

Hi, good morning, team. Just one first for me, just on the, I noticed that long-term guidance was not included in the new press releases. Is it a change in the outlook, or just, do you have any comment on why not reaffirm the plan with the update today?

As we look forward, the reality is that I think we've communicated this as best we could over the last year here. To give earnings per share guidance just doesn't make a whole lot of sense. We feel very confident that the transaction will close early in the new year and how the business is financed will be largely up to the combined team, the combined board and management team. I think we decided here by the successor team here. I will say this, though, Paul. We continue to feel strongly that we're going to invest capital. We've said we're going to be over at least $8.7 billion over the next five years in capital spent, invested in our systems. So I don't think you should expect a great variation from the work we've been doing over the last decade plus.

Okay, understood. And then one small one. Could you quantify what that insurance recovery item was during the quarter?

Yeah, Paul, you'll see this in the 10Q that comes out. The insurance recovery is really tied to stop-loss insurance. So you think about health insurance cases that are significant claims. Last quarter, we noted that those claims were high. because we hadn't yet had the stop-loss reimbursement, but this quarter we're seeing that reimbursement come back through the income statement and sort of bringing those employee-related costs down. So you'll see in the queue that employee benefits, including that medical claim stop-loss reimbursement, increased thus by about $3.5 million, most of that really being driven by that stop-loss recovery.

Okay, got it. So the 3.5 is the net of the recoveries. Got it. Thank you.

Yeah. So I think it's important to say, in terms of the quarter, we had the positive benefit there. We had the benefit in terms of lower bad debt. But we also had about $4.9 million of merger-related expenses. And you'll see in the queue... Thank you very much. Thanks, Paul. Your next question comes from the line of Greg Orrell with UBS.

Greg, please go ahead.

Yeah, hi. Good morning.

Good morning. Two questions there. First, what are your expectations around converting the Texas and North Carolina settlements to final approvals? When does that occur and what's involved there? And secondly, I guess there was a Significant PFAS settlement yesterday around personal injury and 3M, and just wondering if there are any implications for the company. Thank you.

Yeah, let's take the first one. So North Carolina and Texas, we believe those are on track. As you know, we have settlements in each of our states. and, you know, although it's not a defined schedule, we would expect that we would see adjudication in both states before the end of the year. So, you know, I think we feel comfortable with that. On the PFAS, listen, I'm happy to get back to you on that. I'm not sure we have any thoughts on any new news from yesterday yet, but happy to reconnect with you on that, Greg.

Thanks a lot. Your next question comes from the line of Davis Sunderland with Baird. Davis, please go ahead.

Hey, Davis. Good morning, Davis.

Very good. Very good morning to you guys, gentlemen. Yeah, thank you very much for the time. And congrats. I'm sure it's been a very long process getting to where you are in the merger, and 2027 is right around the corner. So congrats on everything you guys have accomplished so far. Most of my questions have been taken. I guess maybe I'll just round out Greg's question. Obviously, you touched, Chris, on North Carolina, on Texas. If you could also just address Pennsylvania and New Jersey and the timelines and what to expect before your end or even if things, I guess, carry into Q1, what your guys' latest expectations are and how that may have accelerated or pushed out from what you guys thought a quarter ago. And thank you very much.

Sure, sure. Yeah, so in Pennsylvania, we're waiting for the administrative law judge to come across with a recommended decision. We'd expect that, you know, before Thanksgiving, could be a little after, but, you know, that's a reasonable time frame. And then it would go to the Public Utility Commission for their action. And as we've said, I think, all along, we expect that Sometime probably right after the first of the year. New Jersey, always good discussions there. And I would hope we'd have some news there to share soon. But, you know, discussions toward a settlement are, I think, constructive and in a good place. So hopefully we'll be able to share some news on that one soon. And as I said in my earlier comments, really feel good about a first quarter close here.

Maybe the one we didn't cover, Davis, was Illinois. And in Illinois, we have a statutory time frame there. So in that statutory time frame, we would expect to hear something quite soon in Illinois in terms of a commission order.

Very straightforward. Awesome. Appreciate the details, guys. Thanks again.

Yes, thanks, David.

There are no further questions at this time. I will now turn the call back to Chris Franklin, CEO, for closing remarks.

Thanks again, everyone, for joining us. As always, we stand ready to answer your questions. Feel free to follow up with Dan, myself, Red, and have a wonderful day. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.