Essential Utilities(US:WTRG)2024-11-06 19:49Company Overview - The Company serves approximately 5.5 million people across nine states under the Aqua and Peoples brands[112]. Financial Performance - Consolidated operating revenues increased by $24,000 or 5.8% for the three months ended September 30, 2024, compared to the same period in 2023[132]. - Net income for the three months ended September 30, 2024, was $69,402, a decrease from $80,076 in the same period of 2023[132]. - Consolidated operating revenues decreased by $92,675 or 5.9% for the nine months ended September 30, 2024, compared to the same period in 2023[139]. - For the first nine months of 2024, revenues increased by $45,287 or 5.2%, mainly due to higher water and wastewater rates and a larger customer base[157]. Cash Flow and Debt - In the first nine months of 2024, cash flow from operations was $622,510, a decrease from $804,569 in the same period of 2023[122]. - The Company issued $1,394,411 in long-term debt during the first nine months of 2024 to finance capital expenditures and repay existing indebtedness[123]. - As of September 30, 2024, the Company had $8,436 in cash and cash equivalents, an increase from $4,612 at December 31, 2023[127]. - As of September 30, 2024, the company had $824,226 available for borrowing from its $1,000,000 unsecured revolving credit facility[128]. Capital Expenditures - Capital expenditures for the first nine months of 2024 totaled $932,498, primarily for improvements to water, wastewater, and natural gas infrastructure[123]. - The Company estimates a capital expenditure of at least $450,000 to comply with new EPA water quality standards by 2029[115]. - Approximately 6% of the Company's regulated water service systems contain lead or galvanized service lines requiring replacement, with a budget of $210,000 for this over the next five years[117]. Asset Sales and Gains - The Company sold its regulated natural gas utility assets in West Virginia for a final purchase price of $41,178, representing about 2% of its regulated natural gas customers[113]. - The Company recognized a gain of $91,236 from the sale of three non-utility local microgrid and distributed energy projects, completed in January 2024[113]. - Gain on sale of assets was $92,067 for the nine months ended September 30, 2024, compared to $184 in the same period of 2023[145]. - Gain on sale of assets was $91,581 for the nine months ended September 30, 2024, compared to $0 for the same period in 2023[179]. Expenses - Operations and maintenance expense decreased by $2,650 or 1.8% for the three months ended September 30, 2024, primarily due to the sale of regulated natural gas utility assets[133]. - Purchased gas increased by $2,505 or 15.1% for the three months ended September 30, 2024, due to higher average gas costs and usage[134]. - Operations and maintenance expense increased by $7,903 or 2.9% in the first nine months of 2024, primarily due to increased production costs and employee-related costs[158]. - Operations and maintenance expense decreased by $3,642 or 2.5% due to the sale of regulated natural gas utility assets and non-utility projects[175]. - Employee-related costs increased by $3,777, materials and supplies by $2,121, and customer assistance surcharge costs by $692[175]. Depreciation and Amortization - Depreciation and amortization expense increased by $6,566 or 7.6% due to continued capital expenditures and acquisitions[135]. - Depreciation and amortization increased by $3,182 or 5.8% in Q3 2024, attributed to ongoing capital investments and acquisitions of new utility systems[153]. - Depreciation and amortization for the first nine months of 2024 increased by $11,303 or 7.0%, driven by capital investments and acquisitions[159]. - Depreciation and amortization increased by $5,904 or 6.3% due to continued capital investment in pipe replacement[178]. Interest Expense - Interest expense, net of interest income, increased by $7,804 or 11.5% for the three months ended September 30, 2024[136]. - Interest expense, net of interest income, rose by $4,227 or 13.7% in Q3 2024 due to higher debt borrowings for the Regulated Water segment[153]. - Interest expense, net of interest income, increased by $13,231 or 14.5% in the first nine months of 2024, primarily due to higher debt borrowings[160]. Tax Rate - The effective income tax rate for the Regulated Water segment was 14.7% in Q3 2024, up from 13.9% in Q3 2023, reflecting changes in jurisdictional earnings mix[155]. - The effective income tax rate for the first nine months of 2024 was 17.1%, compared to 14.6% in the same period of 2023, due to changes in jurisdictional earnings mix and tax deductions[162]. - The effective income tax rate was a benefit of 27.9% in the first nine months of 2024, down from a benefit of 137.3% in the same period in 2023[180]. Management and Governance - The Chief Accounting Officer announced retirement effective August 2025, with a successor already appointed[186]. - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2024[183]. Other - AFUDC increased by $1,489 due to the increase in the average balance of utility plant construction work in progress[178]. - The company recognized a decrease in legal expenses of $2,735 and bad debt expense of $1,207[175].