Essential Utilities (WTRG) Q2 Earnings in Line With Estimates

Essential Utilities Inc. WTRG reported second-quarter 2022 operating earnings per share (EPS) of 31 cents, which is in line with the Zacks Consensus Estimate. The bottom line missed the year-ago quarter’s earnings of 32 cents per share by a penny.

Earnings were driven by increased volume in its regulated natural gas segment, along with customer growth, increased volume and regulated water rates in its regulated water segment, which were offset by increased expenses and other items.

Total Revenues

Second-quarter operating revenues of $448.7 million surpassed the Zacks Consensus Estimate of $413 million by 8.6%.

Total revenues improved nearly 13% year over year. The year-over-year improvement in total revenues was due to the recovery of purchased gas costs, customer growth and volume from the regulated water segment and volume increase from the regulated natural gas segment.

Essential Utilities Inc. Price, Consensus and EPS Surprise

 

Essential Utilities Inc. Price, Consensus and EPS Surprise

Essential Utilities Inc. price-consensus-eps-surprise-chart | Essential Utilities Inc. Quote

Highlights of the Release

Essential Utilities continues to expand operations through acquisitions. The potential water and wastewater municipal acquisitions, once completed, will add nearly 410,000 customers to the existing customer base.

Currently, Essential Utilities has seven signed purchase agreements to acquire additional water and wastewater systems that are expected to serve nearly 224,000 retail customers or equivalent dwelling units and add around $418 million in rate base in three of its existing states.

Year to date, Essential Utilities’ regulated water segment received rate awards or infrastructure surcharges in Illinois, North Carolina, Ohio and Pennsylvania of $77.8 million, and the regulated natural gas segment received a rate award of $5.5 million in Kentucky.

Operation and maintenance expenses for the second quarter were $311.1 million, up 16.2% from the year-ago figure of $267.7 million.

Operating income was $137.7 million, down 2.1% year over year.

Interest expenses increased 5.9% to $55.2 million from $52.1 million in the year-ago quarter.

Financial Highlights

Current assets were $413.3 million as of Jun 30, 2022, compared with $437.8 million as of Dec 31, 2021. Long-term debt was $6,087.7 million as of Jun 30, 2022, higher than $5,779.5 million as of Dec 31, 2021.

Essential Utilities invested $424.6 million in the first half of 2022 to replace and expand the water and wastewater utility infrastructure, as well as upgrade the natural gas utility infrastructure.

Guidance

Essential Utilities reiterated the 2022 earnings guidance at $1.75-$1.80 per share. The mid-point of the earnings guidance is on par with the Zacks Consensus Estimate of $1.78 per share. WTRG expects EPS growth of 5-7% between 2021 and 2024.

For 2022, Essential Utilities expects its customer base from the water segment to expand 2-3% due to acquisitions and organic customer growth.

Essential Utilities also plans to invest $1 billion in 2022 and $3 billion through 2024 to improve the water and natural gas systems, and better serve customers through the use of improved information technology.

Zacks Rank

Currently, Essential Utilities carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

American Water Works Company AWK posted second-quarter 2022 operating earnings per share of $1.20, which surpassed the Zacks Consensus Estimate of $1.14 by 5.3%.

Long-term (three to five years) earnings growth of American Water Works is currently pegged at 8%.  The Zacks Consensus Estimate for AWK’s 2022 earnings per share of $4.45 suggests year-over-year growth of 4.7%.

Middlesex Water Company MSEX recorded second-quarter 2022 operating earnings per share of 50 cents, which lagged the Zacks Consensus Estimate of 76 cents by 34.2%.

Middlesex Water Company’s current dividend yield is 1.28%. The Zacks Consensus Estimate for MSEX’s third-quarter 2022 earnings per share of 88 cents indicates year-over-year growth of 35.3%.

American States Water Company AWR reported second-quarter 2022 operating earnings per share of 71 cents, which lagged the Zacks Consensus Estimate of 77 cents by 7.8%.

The Zacks Consensus Estimate for AWR’s 2022 and 2023 earnings per share suggests year-over-year growth of 4.9% and 6.4%, respectively.

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