Yahoo Finance Essential Utilities Inc (WTRG) Surpasses Q1 Earnings Expectations with Strategic Sales and ...
Earnings Per Share (EPS): Reported at $0.97 for Q1 2024, surpassing the estimated $0.77.
Net Income: Achieved $265.8 million, exceeding estimates of $195.84 million.
Revenue: Totaled $612.1 million for the quarter, falling short of the estimated $750.08 million.
Dividend: Declared a quarterly cash dividend of $0.3071 per share, continuing a 79-year tradition of consecutive quarterly payments.
Capital Expenditures: Invested approximately $253.0 million in infrastructure improvements during the quarter.
Regulatory Rate Awards: Received new rate awards expected to increase annual revenues by $14.7 million across various states.
Acquisition Strategy: Signed agreements for wastewater systems expected to serve over 215,000 customers, with a total purchase price of approximately $385 million.
Essential Utilities Inc (NYSE:WTRG) released its 8-K filing on May 2, 2024, revealing a significant outperformance in its first-quarter earnings for the fiscal year 2024. The company reported earnings per share (EPS) of $0.97, substantially higher than the analyst estimate of $0.77. This marks a robust increase from the $0.72 EPS recorded in the first quarter of 2023. Net income also saw a remarkable rise to $265.8 million from $191.4 million in the previous year, surpassing the estimated $195.84 million.
Company Overview
Essential Utilities, based in Pennsylvania, is a prominent holding company for utilities distributing water, wastewater, and natural gas across the United States. The company primarily operates through its subsidiaries, serving approximately 3 million water customers and over 700,000 gas customers in states like Pennsylvania and Kentucky. Recently, Essential Utilities has strategically exited non-core competitive water and energy services to focus more on its principal utility operations.
Operational Highlights and Financial Metrics
The first quarter of 2024 was marked by the sale of non-core energy projects, which added a one-time gain of $91.2 million, significantly impacting the net income. Total revenues for the quarter, however, stood at $612.1 million, a decrease of 15.7% from the previous year's $726.5 million, primarily due to lower purchased gas costs and other factors. Despite this, the company benefited from regulatory recoveries and growth in customer numbers in its regulated water segment.
The regulated water segment itself reported a revenue increase of 4.7%, reaching $279.9 million. This was supported by rate adjustments and surcharges alongside customer growth. Meanwhile, the regulated natural gas segment saw revenues decrease to $324.3 million from $441.3 million, largely due to lower commodity prices which reduced purchased gas costs.
Strategic Divestitures and Financial Position
In a strategic move to streamline operations and focus on core business areas, Essential Utilities completed the sale of three non-utility microgrid and district energy projects for $165 million. This not only provided a significant one-time gain but also allowed the company to finance its capital expenditures without needing external funding. As of March 31, 2024, Essentials weighted average cost of fixed-rate long-term debt stood at 3.99%, with $1,073.2 million available on its credit lines.
Future Outlook and Investments
Looking ahead, Essential Utilities plans to continue its robust investment in infrastructure, with an anticipated expenditure of $1.3 to $1.4 billion in 2024. These investments are aimed at enhancing the reliability and safety of its water and natural gas services. Over the next five years, the company expects to invest approximately $7.2 billion in infrastructure improvements, including significant efforts to reduce methane emissions and address PFAS contamination in water.
The company also remains committed to its dividend policy, having declared a quarterly cash dividend of $0.3071 per share, continuing its history of dividend payments for over 79 years.
Acquisition Strategy and Regulatory Developments
Essential Utilities continues to expand through acquisitions, with several pending deals expected to significantly increase its customer base. Regulatory developments have also been favorable, with recent rate awards expected to boost annual revenues.
In conclusion, Essential Utilities Inc (NYSE:WTRG) has demonstrated a strong start to 2024, with strategic sales boosting earnings significantly above expectations. The company's focus on operational efficiency and strategic investments in infrastructure position it well for sustained growth and stability in the utility sector.
For detailed financial figures and future projections, interested parties are encouraged to view the full earnings report and join the upcoming earnings call scheduled for May 3, 2024.
Explore the complete 8-K earnings release (here) from Essential Utilities Inc for further details.
This article first appeared on GuruFocus.
