M. Susan Hardwick
President, Chief Executive Officer and Chief Financial Officer at American Water Works
Thanks, Aaron. And good morning, everyone. Before we get started, I want to take just a moment to say thank you for all of the thoughtful comments sent our way over the past few months to express your best wishes for Walter in his recovery.
I also want to thank those who have reached out over the last few weeks with your encouragement for me in the role as CEO. It's an honor and a privilege to serve this great company. And as I begin this journey, I want to reassure you that our strategy remains unchanged from what we shared with you in November of last year.
This team is energized and is in execution mode to deliver on our commitment of 7% to 9% long-term earnings growth by continuing to invest in our infrastructure, grow our regulated operations through acquisition and support our military by growing our military services footprint. We are focused on operating where we create the most value. And now, as we've transitioned to a 100% regulated and regulated-like business, we believe we are positioned to deliver even higher quality earning.
There is no other water and wastewater service provider in the United States with our scale and capability. And for our investors that rely on our dividend, we are committed to grow our dividend at the high end of the 7% to 10% range. We know that the best way to secure your confidence in us is to deliver. That's exactly what we did in 2021 and what we are committed to do going forward.
And with that, let's get to it. Turning to Slides 5 and 6, I'll start by covering our financial results and then share some highlights of our operational excellence in 2021. For the 12 months ended December 31, 2021, earnings were $6.95 per share compared to $3.91 per share in the same period of 2020. Full year and fourth quarter 2021 results include a gain of $2.70 per share, which reflects the completion of the sale of homeowner services in December, reduced by the $0.19 per share contribution to the American Water Charitable Foundation from the proceeds on the sale.
Full year and fourth quarter 2021 results were $4.25 per share and $0.85 per share respectively before the gain on the sale of HOS. This represents an 8.7% growth over 2020 earnings, a strong result that is in line with expectations and demonstrates another year of successfully meeting our annual earnings guidance. Earnings in the regulated business in 2021 increased $0.40 per share. Regulated results include the impact of increased revenues from new rates in effect as well as earnings from acquisitions, offset somewhat by higher wages and other labor-related cost.
Production, operating and maintenance costs and depreciation also increased in support of growth in the business. Market-based business results, apart from the gain on the sale of HOS, decreased by $0.10 per share compared to 2020, primarily because of the timing of the sale of HOS. Parent company results were $0.04 per share higher in 2021 as compared to 2020.
On the people side, I'm very proud that last year marked one of our company's best years of safety performance and excellent outcome amid the ongoing operational challenges related to the pandemic. We also witnessed the value of our resiliency investments in our New Jersey, Pennsylvania and Maryland operations. We successfully withstood widespread flooding in the aftermath of Hurricane Ida, while our customers' drinking water quality was not impacted in any of our service areas.
Related to capital investments, our regulated business achieved $1.8 billion of infrastructure improvements, replacements and other system work in 2021 to better serve our customers. As we made these investments, we continue to work hard to keep customer bills affordable by focusing on operating and capital efficiencies, constructive regulatory outcomes and by leveraging the size and scale of our business, along with achieving our supply chain successes throughout the pandemic.
As we discussed with you in 2021, regulated acquisitions continue to be a key component of our customer affordability and growth strategies. While we welcomed approximately 20,000 new customer connections through acquisitions in six states last year, we know that these results are lower than our annual target. And of course, the acquisition totals fluctuate year to year, but we are encouraged that we currently have acquisitions under agreement covering about 77,000 customer connections to start the new year. Cheryl will talk more about our progress on acquisitions a bit later.
And finally, we are pleased to have successfully executed on the sales of HOS and our New York and Michigan operations. As we outlined in November, we will redeploy the proceeds from these divestitures into our regulated business where we can best serve customers and drive efficiencies and thus create value for our customers, employees and shareholders.
Turning to Slide 7, we believe the combination of our EPS growth our strong dividend and an ESG premium continues to be rewarded by investors, securing our place as a top performer in the utility sector on total shareholder return for many years now. As you can see on this slide, we have delivered an exceptional total return to shareholders of 185% over the past five years, including our excellent dividend growth. Based on the long-term plans we've laid out in our history of executing on our strategies, we expect to continue to deliver a very competitive total shareholder return for many years to come.
Moving to Slide 8, I want to emphasize just a few points here. We continue to believe that our plan, both the level of investment and how we intend to finance it, is supportive of our current credit ratings. As we've told you, both S&P and Moody's agree with that. They've both affirmed our ratings last year following our Investor Day presentation. This was due in part to their recognition of our shift to 100% regulated and regulated-like earnings, coupled with our decision to operate in constructive regulatory jurisdictions. They affirmed that our solid financial metrics are a good complement to our business profile. We're proud that our A credit rating at S&P is one of only two in the industry. Our strong credit profile is something we value and we will continue to work hard at maintaining it for the benefit ultimately of our customers.
The other thing I'll point out on this slide is our total debt to total capital metric. At the end of 2021, we were at 61% after adding back to total debt, the initial HOS sales proceeds of $480 million yet to be deployed. This is about 1% better than where we ended 2020 and puts us on a good path to our goal of roughly 60% by the end of our five-year plan.
As we look ahead to 2022, let's turn to Slides 9 and 10 for a recap of some of the important strategies we laid out back in November. The map on Slide 9 clearly demonstrates our geographic diversity and how our scale and size are a key competitive advantage, especially when it comes to customer affordability. Because of our large customer base in each state, we're able to spread capital investment costs across that base, helping to maintain affordability for our customers. Including the 17 military installations we serve through our Military Services Group, we provide drinking water and wastewater services to an estimated 14 million people in 24 states.
On Slide 10, as we laid out in November, we plan to spend $13 billion to $14 billion over the next five years and approximately $28 billion to $32 billion over the next 10 years in our regulated business. These capital investments generate significant economic benefit to the local and regional economies, while likely improving the environmental footprint of the systems in these communities. This is another demonstration of how the values of ESG are integrated into our everyday work. We'll balance these investments through a disciplined regulatory strategy and strategic cost management to support customer affordability. And again, while there is a ramp-up time related to the increased capital and the recovery of those investments, our earnings will be more consistent and stable in the long-term.
Turning to Slides 11 and 12, let's look ahead in our outlook for earnings in 2022 as compared to 2021. As we shared in our earnings release yesterday, we are affirming our 2022 guidance range of $4.39 per share to $4.49 per share. We thought it would be helpful to share some details of the drivers year-over-year since there were several moving parts.
As you can see on Slide 11, our regulated earnings growth range in '22 of $0.24 to $0.30 reflects the fact that we are filing several significant general rate cases in 2022, along with labor cost and chemical cost pressures this year that may not be recoverable outside of a rate case. So, we're backing that regulatory cycle that we've talked about before. And as I've mentioned previously, we will not see any material earnings in 2022 from the redeployment of sales proceeds from HOS in New York. But we will benefit from the interest income on the HOS note and the revenue share agreement in 2022, helping to offset the loss of earnings from HOS operations.
Finally, on Slide 12, I'll just reiterate that we are confident in the long-term financial targets we set forth in November, including 7% to 9% EPS growth through 2026, and we believe well-beyond that.
Next, I want to cover a few important points about ESG -- about our ESG efforts on Slide 13. American Water has been recognized as an industry leader in ESG for many years now, and we're very proud of those accolades. Today, I want to highlight what I think is an underappreciated aspect of our ESG story, namely our decades-long runway of transformational impact in communities across the US. We are positioned through a regulated acquisition growth strategy to leave significant environmental and social change in the communities we serve or will serve in the future.
Slide 13 highlights this ESG impact opportunity for our acquired systems. But the reality is, our entire growth triangle has impactful ESG-related initiatives integrated within each area. As you see and hear us continue to highlight this aspect of our ESG story, you'll begin to see our newly created ESG badge as shown on Slide 13. It will appear both internally and externally in our communications as we raise awareness of the integration of ESG principles and values in all that we do. And you'll see the water drop part of the badge shift from E to S to G, as appropriate, in order to highlight the key impact for the topic at hand.
Let me close on Slide 14 with just one example of a story of ESG impact because of American Water's investment. This story comes from Indiana American Water, which serves over 1 million customers in that state. As some of you know, I'm originally from a small town in Indiana that happens to be just a few hours from another small town in Indiana called Sheridan. A number of years ago, Sheridan was facing significant environmental compliance issues with the US EPA related to its wastewater system. As we so often see, the issue became bigger than just an environmental one. The town was facing business development restrictions because of its non-compliance issues.
And if you fast forward to today, you can see and, as you can see listed there on that slide, the many positive changes that have occurred as we partnered with the community to solve those issues. In the future, when you hear us talk about our acquisition pipeline of 1.3 million customer connections, I hope you'll see it in a different light. Sure it means financial growth opportunity, which is very important to us, but it also means a long runway of opportunities to make a positive impact environmentally and socially.
And with that, let me turn it over to Cheryl to cover our operating strategies for '22 in greater detail. Cheryl?
