Earnings per share growth of 5.6%; reaffirms
annual earnings guidance
Essential Utilities Inc. (NYSE: WTRG), today reported results
for the first quarter ended March 31, 2022.
“We delivered strong financial results for the first quarter of
the year and will continue to make significant investments in
infrastructure throughout the year, while remaining dedicated to
providing high quality, essential utility services for our
customers,” said Essential Chairman and Chief Executive Officer
Christopher Franklin. “I am especially proud of our entire team for
operating the company with excellence while adhering to industry
leading ESG standards throughout our company’s footprint. Beyond
operating the company efficiently, we will remain focused on our
commitments to environmental stewardship, sustainable business
practices, employee safety, diversity and inclusion, enhanced
customer experience and community engagement.”
Operating Results
Essential reported net income of $199.4 million for the first
quarter of 2022, compared to $183.7 million reported for the same
quarter in 2021. Earnings per share were $0.76 for the quarter, an
increase of 5.6% compared to $0.72 in the first quarter of 2021.
Regulated water segment rates and surcharges, increased volume from
the regulated natural gas segment, customer growth from the
regulated water segment, and other items were the largest
contributors to the increase for the quarter, which were offset by
increased expenses.
Revenues for the quarter were $699.3 million, an increase of
19.8% compared to $583.6 million in the first quarter of 2021.
Recovery of higher purchased gas costs, and additional revenues
from rates and surcharges, customer growth and volume from the
regulated natural gas segment were the largest contributors to the
increase in revenues for the quarter. Operations and maintenance
expenses increased to $142.6 million for the first quarter of 2022
compared to $125.1 million in the first quarter of 2021. The
increase in operations and maintenance expenses was primarily a
result of increased employee-related costs, increased customer
assistance program expenses (which are recovered through a revenue
surcharge), inflationary cost increases, increased insurance
expense (compared to non-recurring, prior year favorable
adjustments), and higher transportation costs.
The regulated water segment reported revenues for the quarter of
$239.2 million, an increase of 4.7% compared to $228.4 million in
the first quarter of 2021. Rates and surcharges and growth were the
largest contributors to the increase in revenues for the period.
Operations and maintenance expenses for Essential’s regulated water
segment increased to $86.1 million for the first quarter of 2022
compared to $78.3 million in the first quarter of 2021.
The regulated natural gas segment reported revenues for the
first quarter of 2022 of $445.2 million, an increase of 29.7%
compared to $343.1 million in the first quarter of 2021. Purchased
gas costs were $217.3 million for the quarter as compared to $122.9
million for the same quarter in 2021. As a result, the recovery of
higher purchased gas costs was the largest driver in the increase
of revenues. Operations and maintenance for the same period for
Essential’s regulated natural gas segment increased to $59.5
million, from $51.3 million in the first quarter of 2021.
Dividend
On March 21, 2022, Essential’s board of directors declared a
quarterly cash dividend of $0.2682 per share of common stock. This
dividend will be payable on June 1, 2022 to shareholders of record
on May 13, 2022. The company has paid a consecutive quarterly cash
dividend for more than 77 years.
Water Utility Acquisition Growth
Essential’s continued acquisition growth allows the company to
provide safe and reliable water and wastewater service to an even
larger customer base. On March 4, 2022, the company’s regulated
water segment subsidiary, Aqua Pennsylvania, closed its acquisition
of the Lower Makefield Township wastewater system, adding $53.0
million in rate base and approximately 11,000 customer
connections.
The company currently has seven signed purchase agreements to
acquire additional water and wastewater systems that are expected
to serve approximately 224,000 equivalent retail customers or
equivalent dwelling units and add approximately $418 million in
rate base in three of our existing states. This includes the
company’s agreement to acquire the Delaware County Regional Water
Quality Control Authority (DELCORA), a Pennsylvania sewer
authority, for $276.5 million that serves approximately 198,000
equivalent dwelling units in the Philadelphia suburbs.
The pipeline of potential water and wastewater municipal
acquisitions the company is actively pursuing represents
approximately 415,000 total customers or equivalent dwelling units.
On average, the company remains on track to annually increase
customers between 2 and 3% through acquisitions and organic
customer growth.
Capital Expenditures
Essential invested approximately $183.3 million in the first
three months of the year to improve its regulated water and natural
gas infrastructure systems and to enhance its customer service
across its operations. The company remains on track to invest
approximately $1 billion in 2022 to replace and expand its water
and wastewater utility infrastructure and to replace and upgrade
its natural gas utility infrastructure, with the latter leading to
significant reductions in methane emissions that occur in aged gas
pipes. In total, infrastructure investments of approximately $3
billion are expected through 2024 to improve water and natural gas
systems and better serve customers through improved information
technology. The capital investments made to rehabilitate and expand
the infrastructure of the communities’ Essential serves are
critical to its mission of safely and reliably delivering Earth’s
most essential resources.
Rate Activity
To date in 2022, the company’s regulated water segment received
rate awards or infrastructure surcharges in Illinois, North
Carolina, Ohio, and Pennsylvania of $8.2 million, and the company’s
regulated natural gas segment received a rate award in Kentucky of
$5.2 million. The company currently has rate proceedings for base
rates pending in Pennsylvania and Ohio for its regulated water
segment, which would add an estimated $106.4 million in incremental
revenue.
Reaffirms 2022 Essential Guidance
This guidance is based on the inclusion of signed water and
wastewater acquisitions but does not factor in the impact of the
expected continuation of significant water and wastewater customer
growth from acquisitions.
The following is the company’s 2022 full-year guidance:
- Net income per diluted common share of $1.75 to $1.80
- Continuation of the company’s stated long-term earnings per
share growth CAGR of 5 to 7% for the three-year period 2021 through
2024. The company expects to reaffirm the long-term earnings per
share growth guidance after the completion of significant
regulatory processes
- Regulated infrastructure investments of approximately $1
billion annually through 2024, weighted towards the regulated water
segment
- Regulated water segment rate base compound annual growth rate
of 6 to 7% through 2024
- Regulated natural gas segment rate base compound annual growth
rate of 8 to 10% through 2024
- Average annual regulated water segment customer (or equivalent
dwelling units) growth of between 2 and 3% from acquisitions and
organic customer growth
- Gas customer count stable for 2022
ESG Guidance and Commitments
- Reduction of Scope 1 and Scope 2 greenhouse gas emissions by
60% by 2035 from our 2019 baseline
- Multi-year plan to increase diverse supplier spend to 15%
- Multi-year plan to reach 17% employees of color
- Multi-year plan to ensure that finished water does not exceed
13 parts per trillion (ppt) of PFOA, PFOS, and PFNA compounds
Essential Utilities does not guarantee future results of any
kind. Guidance is subject to risks and uncertainties, including,
without limitation, those factors outlined in the “Forward Looking
Statements” of this release and the “Risk Factors” section of the
company’s annual and quarterly reports filed with the Securities
and Exchange Commission.
Earnings Call Information
Date: May 9, 2022 Time: 11 a.m. EDT (please dial in by 10:45
a.m.) Webcast and slide presentation link:
https://www.essential.co/events-and-presentations/events-calendar
Replay Dial-in #: 888.203.1112 (U.S.) & +1 719.457.0820
(International) Confirmation code: 6459000
The company’s conference call with financial analysts will take
place Monday, May 9, 2022 at 11 a.m. Eastern Daylight Time. The
call and presentation will be webcast live so that interested
parties may listen over the internet by logging on to Essential.co
and following the link for Investors. The conference call will be
archived in the Investor Relations section of the company’s website
for 90 days following the call. Additionally, the call will be
recorded and made available for replay at 2 p.m. on May 9, 2022 for
10 business days following the call. To access the audio replay in
the U.S., dial 888.203.1112 (pass code 6459000). International
callers can dial +1 719.457.0820 (pass code 6459000).
About Essential
Essential is one of the largest publicly traded water,
wastewater and natural gas providers in the U.S., serving
approximately 5.5 million people across 10 states under the Aqua
and Peoples brands. Essential is committed to excellence in
proactive infrastructure investment, regulatory expertise,
operational efficiency and environmental stewardship. The company
recognizes the importance water and natural gas play in everyday
life and is proud to deliver safe, reliable services that
contribute to the quality of life in the communities it serves. For
more information, visit http://www.essential.co.
Forward-looking statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, among others: the company’s role in the United States’
infrastructure investments; its ability to be an industry leader in
protecting the environment; the guidance range of adjusted income
per diluted common share for the fiscal year ending in 2022; the
continuation of the three-year period of earnings growth through
2024; the anticipated amount of capital investment in 2022; the
anticipated amount of capital investment from 2022 through 2024;
the reduction of Scope 1 and Scope 2 greenhouse gas emissions by
60% by 2035; that the Company’s pipeline replacement program will
lead to significant methane reductions; that the Company’s
municipal growth pipeline is strong; that the Company will help
solve the nation’s infrastructure challenge; the company’s ability
to increase diverse supplier spend to 15%; the company’s ability to
achieve 17% employees of color; the company’s anticipated rate base
growth from 2022 through 2024; and, the company’s ability to
accelerate the replacement of aged gas pipes. There are important
factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements
including: disruptions in the global economy; financial and
workforce impacts from the COVID-19 pandemic; the continuation of
the company's growth-through-acquisition program; the company’s
continued ability to adapt itself for the future and build value by
fully optimizing company assets; general economic business
conditions; the company’s ability to fund needed infrastructure;
housing and customer growth trends; unfavorable weather conditions;
the success of certain cost-containment initiatives; changes in
regulations or regulatory treatment; availability and access to
capital; the cost of capital; disruptions in the credit markets;
the success of growth initiatives; the company’s ability to
successfully close municipally owned systems presently under
agreement; the company’s ability to continue to deliver strong
results; the company’s ability to continue to pay its dividend, add
shareholder value and grow earnings; municipalities’ willingness to
privatize their water and/or wastewater utilities; the company’s
ability to control expenses and create and maintain efficiencies;
the company’s ability to acquire municipally owned water and
wastewater systems listed in its “pipeline”; and other factors
discussed in our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q, which are filed with the Securities and
Exchange Commission. For more information regarding risks and
uncertainties associated with Essential's business, please refer to
Essential's annual, quarterly, and other SEC filings. Essential is
not under any obligation - and expressly disclaims any such
obligation - to update or alter its forward-looking statements
whether as a result of new information, future events or
otherwise.
WTRGF
Essential Utilities, Inc. and Subsidiaries Selected Operating Data
(In thousands, except per share amounts) (Unaudited)
Quarter Ended
March 31,
2022
2021
Operating revenues
$
699,275
$
583,565
Operations and maintenance expense
$
142,581
$
125,075
Net income
$
199,376
$
183,689
Basic net income per common
share
$
0.76
$
0.72
Diluted net income per common share
$
0.76
$
0.72
Basic average common shares
outstanding
261,952
254,565
Diluted average common shares outstanding
262,431
254,969
Essential Utilities, Inc. and Subsidiaries Consolidated
Statement of Operations (In thousands, except per share amounts)
(Unaudited) Quarter Ended
March 31,
2022
2021
Operating revenues
$
699,275
$
583,565
Cost & expenses: Operations and
maintenance
142,581
125,075
Purchased gas
227,712
132,153
Depreciation
77,878
71,637
Amortization
468
1,307
Taxes other than income taxes
23,007
21,041
Total
471,646
351,213
Operating income
227,629
232,352
Other expense (income): Interest expense
53,636
50,769
Interest income
(609
)
(387
)
Allowance for funds used during construction
(5,839
)
(2,934
)
Gain on sale of other assets
-
(80
)
Other
(1,702
)
(3,471
)
Income before income taxes
182,143
188,455
Provision for income taxes benefit
(17,233
)
4,766
Net income
$
199,376
$
183,689
Net income per common share: Basic
$
0.76
$
0.72
Diluted
$
0.76
$
0.72
Average common shares outstanding: Basic
261,952
254,565
Diluted
262,431
254,969
Essential Utilities, Inc. and Subsidiaries Condensed Consolidated
Balance Sheets (In thousands of dollars) (Unaudited)
March 31, December 31,
2022
2021
Net property, plant and equipment
$
10,394,684
$
10,251,866
Current assets
443,515
437,795
Regulatory assets and other assets
4,038,824
3,968,617
$
14,877,023
$
14,658,278
Total equity
$
5,255,100
$
5,184,450
Long-term debt, excluding current portion, net of debt
issuance costs
5,871,960
5,779,504
Current portion of long-term debt and loans payable
211,489
197,146
Other current liabilities
466,689
477,917
Deferred credits and other liabilities
3,071,785
3,019,261
$
14,877,023
$
14,658,278
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220507005011/en/
Brian Dingerdissen Essential Utilities Inc. Investor Relations
O: 610.645.1191 BJDingerdissen@Essential.co Sarah Courtright
Communications and Marketing Media Hotline: 1.877.325.3477
Media@essential.co
Essential Utilities (NYSE:WTRG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Essential Utilities (NYSE:WTRG)
Historical Stock Chart
From Jul 2023 to Jul 2024