Essential Utilities Reports Financial Results for Q2 2023
- Record net income of $91.3 million for Q2 2023, 7% increase in quarterly dividend rate, acquisition of seven water and wastewater systems, reaffirmation of annual guidance
- None.
Earnings per share of
Company increases quarterly dividend rate by
Acquires seven water and wastewater systems
Reaffirms annual guidance
“We are pleased to report strong results for the first half of the year. Despite the weather challenges early in the year, we continue our track record of delivering strong financial results through significant and continuous investment in improvements for our customers, supplemented by a steady stream of acquisition of water and wastewater utilities,” said Essential Utilities Chairman and Chief Executive Officer Christopher Franklin. “As an industry leading water, wastewater, and natural gas utility, we remain committed to our mission while providing long-term value to our customers, shareholders and employees.”
Operating Results
Essential reported record net income of
Revenues for the quarter were
Essential’s regulated water segment reported revenues for the quarter of
Essential’s regulated natural gas segment reported revenues for the quarter of
As of June 30, 2023, Essential reported year-to-date net income of
For the first six months of 2023, the company reported revenues of
Dividend
On August 1, 2023, Essential’s board of directors declared a quarterly cash dividend of
Rate Activity
To date in 2023, the company’s regulated water segment received rate awards or infrastructure surcharges in
Capital Expenditures
Essential invested approximately
Water Utility Growth by Acquisition
Essential’s continued growth by acquisition allows the company to provide safe and reliable water and wastewater service to an even larger customer base than it could from organic customer growth alone. On June 30, 2023, the company’s regulated water segment subsidiary, Aqua Ohio, closed on its acquisition of the Union Rome Sewer system in
The company has four signed purchase agreements for additional wastewater systems in
The pipeline of potential water and wastewater municipal acquisitions the company is actively pursuing represents over 400,000 total customers. The company remains on track to annually increase customer connections by
Environmental, Social and Governance
As announced in January, Essential reaffirmed its ESG commitments, including its industry-leading, multi-year plan to ensure that finished water does not exceed 13 parts per trillion (ppt) of PFOA, PFOS, and PFNA compounds across all states served by its regulated water segment. This commitment better positions the company to meet the recently proposed maximum level for PFAS chemicals from the
Reaffirms 2023 Financial and Growth Guidance
Essential published guidance for 2023, including its long-term guidance, and reaffirms this guidance as previously announced:
-
In 2023, net income per diluted common share will be
to$1.85 $1.90 -
Through 2025, earnings per share will grow at a compounded annual growth rate of 5 to
7% , based off the company’s 2022 earnings per share of$1.77 -
Through 2025, we will make regulated infrastructure investments of approximately
annually, weighted towards the regulated water segment$1.1 billion -
Through 2025, the regulated water segment rate base will grow at a compounded annual growth rate of 6 to
7% -
Through 2025, the regulated natural gas segment rate base will grow at a compounded annual growth rate of 8 to
10% -
The regulated water customer base (or equivalent dwelling units) of the business will grow at an average annual growth rate of between 2 and
3% from acquisitions and organic customer growth -
Excluding the planned divestiture of
West Virginia , the regulated natural gas customer base of the business will be stable for 2023.
Reaffirms ESG Guidance and Commitments
-
Reduction of Scope 1 and Scope 2 greenhouse gas emissions by
60% by 2035 from the company’s 2019 baseline - Multiyear plan to ensure that finished water does not exceed the federal maximum contaminant level once finalized, of PFOA, PFOS, and PFNA compounds
-
Multiyear plan to increase diverse supplier spend to
15% -
Multiyear plan to reach
17% employees of color
Essential reaffirms its commitment to substantially reduce Scope 1 and 2 greenhouse gas emissions by 2035. The company plans to achieve these reductions through extensive gas pipeline replacement, the purchase of renewable energy, accelerated methane leak detection and repair, and various other planned initiatives. Essential also reaffirms its commitment to diversity, equity, and inclusion efforts to ensure the diversity of its employees and suppliers reflects the diversity of its customer population. Essential continues to be an industry leader regarding water quality with its commitment to test and treat for PFOA, PFOS, and PFNA compounds across all states served by its regulated water segment. The company reaffirms its commitment to providing finished water that will meet the EPA timelines and standards.
Updated Guidance Assumptions
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.
The earnings per share, infrastructure investment and rate base guidance includes the signed municipal water and wastewater acquisitions for which the company has entered into signed purchase agreements as of the date the guidance was announced but does not include DELCORA prior to the second half of 2025 or other potential municipal acquisitions from the company’s list of acquisition opportunities that currently represents over 400,000 customer equivalents. The average annual regulated water segment growth guidance reflects the company’s proven acquisition track record of adding nearly 129,000 customers or equivalent dwelling units and over
The guidance is also based on the company’s expectation that it will continue to issue equity and debt on an as needed basis to support acquisitions and capital investment plans.
The company’s guidance does not include any impact from the agreement to sell its
Second Quarter 2023 Earnings Call Information
Date: August 8, 2023
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 #: 866.583.1035 (
Confirmation code: 3478595
The company’s conference call with financial analysts will take place on Tuesday, August 8, 2023, at 11 a.m. Eastern Daylight Time. The call and presentation will be webcast live so 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 August 8, 2023, for 10 business days following the call. To access the audio replay in the
About Essential
Essential Utilities, Inc. (NYSE: WTRG) delivers safe, clean, reliable services that improve quality of life for individuals, families, and entire communities. With a focus on water, wastewater and natural gas, Essential is committed to sustainable growth, operational excellence, a superior customer experience, and premier employer status. We are advocates for the communities we serve and are dedicated stewards of natural lands, protecting more than 7,600 acres of forests and other habitats throughout our footprint.
Operating as the Aqua and Peoples brands, Essential serves approximately 5.5 million people across 10 states. Essential is one of the most significant publicly traded water, wastewater service and natural gas providers in the
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates,” and similar expressions. The Company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent its views only as of today and should not be relied upon as representing its views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, among others: the guidance range of net income per diluted common share; the continuation of the three-year period of earnings growth; the anticipated amount of capital investment; the reduction of Scope 1 and Scope 2 greenhouse gas emissions by
WTRGF
Essential Utilities, Inc. and Subsidiaries | |||||||||
Selected Operating Data | |||||||||
(In thousands, except per share amounts) | |||||||||
(Unaudited) | |||||||||
Quarter Ended | Year Ended | ||||||||
June 30, | June 30, | ||||||||
2023 |
2022 |
2023 |
2022 |
||||||
Operating revenues | $ |
436,700 |
$ |
448,756 |
$ |
1,163,150 |
$ |
1,148,031 |
|
Operations and maintenance expense | $ |
133,508 |
$ |
134,981 |
$ |
271,502 |
$ |
277,562 |
|
Net income | $ |
91,268 |
$ |
82,291 |
$ |
282,702 |
$ |
281,667 |
|
Basic net income per common share | $ |
0.35 |
$ |
0.31 |
$ |
1.07 |
$ |
1.08 |
|
Diluted net income per common share | $ |
0.34 |
$ |
0.31 |
$ |
1.07 |
$ |
1.07 |
|
Basic average common shares outstanding |
|
264,418 |
|
262,099 |
|
264,306 |
|
262,026 |
|
Diluted average common shares outstanding |
|
264,818 |
|
262,558 |
|
264,840 |
|
262,545 |
Essential Utilities, Inc. and Subsidiaries | |||||||||||||
Consolidated Statement of Operations | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||
(Unaudited) | |||||||||||||
Quarter Ended | Year Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||
Operating revenues | $ |
436,700 |
|
$ |
448,756 |
|
$ |
1,163,150 |
|
$ |
1,148,031 |
|
|
Cost & expenses: | |||||||||||||
Operations and maintenance |
|
133,508 |
|
|
134,981 |
|
|
271,502 |
|
|
277,562 |
|
|
Purchased gas |
|
41,933 |
|
|
75,143 |
|
|
298,248 |
|
|
302,855 |
|
|
Depreciation |
|
84,937 |
|
|
77,425 |
|
|
167,860 |
|
|
155,303 |
|
|
Amortization |
|
724 |
|
|
1,751 |
|
|
1,595 |
|
|
2,219 |
|
|
Taxes other than income taxes |
|
20,348 |
|
|
21,720 |
|
|
43,226 |
|
|
44,727 |
|
|
Total |
|
281,450 |
|
|
311,020 |
|
|
782,431 |
|
|
782,666 |
|
|
Operating income |
|
155,250 |
|
|
137,736 |
|
|
380,719 |
|
|
365,365 |
|
|
Other expense (income): | |||||||||||||
Interest expense |
|
69,182 |
|
|
55,221 |
|
|
141,850 |
|
|
108,857 |
|
|
Interest income |
|
(970 |
) |
|
(824 |
) |
|
(1,789 |
) |
|
(1,433 |
) |
|
Allowance for funds used during construction |
|
(3,424 |
) |
|
(6,151 |
) |
|
(9,112 |
) |
|
(11,990 |
) |
|
Gain on sale of other assets |
|
(220 |
) |
|
(478 |
) |
|
(469 |
) |
|
(478 |
) |
|
Other |
|
(323 |
) |
|
(423 |
) |
|
(563 |
) |
|
(2,125 |
) |
|
Income before income taxes |
|
91,005 |
|
|
90,391 |
|
|
250,802 |
|
|
272,534 |
|
|
Provision for income taxes benefit |
|
(263 |
) |
|
8,100 |
|
|
(31,900 |
) |
|
(9,133 |
) |
|
Net income | $ |
91,268 |
|
$ |
82,291 |
|
$ |
282,702 |
|
$ |
281,667 |
|
|
Net income per common share: | |||||||||||||
Basic | $ |
0.35 |
|
$ |
0.31 |
|
$ |
1.07 |
|
$ |
1.08 |
|
|
Diluted | $ |
0.34 |
|
$ |
0.31 |
|
$ |
1.07 |
|
$ |
1.07 |
|
|
Average common shares outstanding: | |||||||||||||
Basic |
|
264,418 |
|
|
262,099 |
|
|
264,306 |
|
|
262,026 |
|
|
Diluted |
|
264,818 |
|
|
262,558 |
|
|
264,840 |
|
|
262,545 |
|
Essential Utilities, Inc. and Subsidiaries | ||||
Condensed Consolidated Balance Sheets | ||||
(In thousands of dollars) | ||||
(Unaudited) | ||||
June 30, | December 31, | |||
2023 |
2022 |
|||
Net property, plant and equipment | $ |
11,590,849 |
$ |
11,130,946 |
Current assets |
|
406,710 |
|
658,159 |
Regulatory assets and other assets |
|
4,104,376 |
|
3,930,002 |
$ |
16,101,935 |
$ |
15,719,107 |
|
Total equity | $ |
5,614,698 |
$ |
5,377,386 |
Long-term debt, excluding current portion, net of debt issuance costs |
|
6,615,516 |
|
6,371,057 |
Current portion of long-term debt and loans payable |
|
246,792 |
|
427,856 |
Other current liabilities |
|
518,343 |
|
594,013 |
Deferred credits and other liabilities |
|
3,106,586 |
|
2,948,795 |
$ |
16,101,935 |
$ |
15,719,107 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230807637827/en/
Media Contact:
Jeanne Russo
Vice President, Communications
Media Hotline: 1.877.325.3477
Media@Essential.co
Investor Contact:
Brian Dingerdissen
Vice President, IR and Treasurer
O: 610.645.1191
BJDingerdissen@Essential.co
Source: Essential Utilities Inc.
FAQ
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