Essential Utilities(WTRG) - 2025 Q1 - Quarterly Results

Essential Utilities Q1 2025 Earnings Report Financial Highlights The company reported strong Q1 2025 results with increased net income and EPS while affirming full-year guidance Q1 2025 vs Q1 2024 Key Financials | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $283.8 million | $265.8 million | | Diluted EPS | $1.03 | $0.97 | | Revenues | $783.6 million | $612.1 million | - The company affirmed its 2025 earnings per share guidance range of $2.07 to $2.11 and its long-term targets[7] - Invested $270.5 million in infrastructure in the first three months of the year, on track for a total of $1.4 to $1.5 billion in 2025[7] - The company was named to USA Today's annual list of Climate Leaders for the third consecutive year[4] Operating Results Revenues grew significantly due to regulatory recoveries and higher gas volumes, boosting overall earnings - Q1 2025 revenue increased 28% to $783.6 million from $612.1 million in Q1 2024, primarily due to regulatory recoveries, purchased gas costs, and higher regulated natural gas volumes[6] - Operations and maintenance expenses rose slightly to $137.8 million from $136.9 million in Q1 2024[6] - The current quarter's earnings were favorably compared to Q1 2024, even after accounting for a prior year gain on sale of a business valued at 24 cents per share[5] Regulated Water Segment The water segment's revenue grew due to approved rates and surcharges while O&M expenses slightly decreased Water Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $300.8 million | $279.9 million | | O&M Expenses | $89.4 million | $90.7 million | - The primary driver for the 7.5% increase in revenue was from rates and surcharges[8] Regulated Natural Gas Segment The natural gas segment's revenue surged from higher purchased gas costs and colder weather-driven volumes Natural Gas Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $470.8 million | $324.3 million | | O&M Expenses | $55.7 million | $45.9 million | - Revenue growth was driven by an increase in purchased gas costs and higher volumes delivered due to colder weather conditions[9] Capital Management and Financing The company maintained its dividend, managed debt costs, and utilized equity and commercial paper programs for financing - The board declared a quarterly cash dividend of $0.3255 per share, continuing a streak of over 80 years of consecutive quarterly dividends[10] - As of March 31, 2025, the weighted average cost of fixed-rate long-term debt was 4.02%, and the company had $728 million available on its credit lines[11] - Through its at-the-market (ATM) equity program, the company issued shares for net proceeds of approximately $63 million in Q1 2025 and an additional $145 million in April 2025[12] - A new commercial paper program was established in March 2025, allowing for up to $1.0 billion in short-term unsecured notes to reduce borrowing costs for infrastructure investments[13] Growth and Investment Strategy Growth is driven by substantial infrastructure investments, rate case activity, and a robust acquisition pipeline Rate Activity The company secured significant rate awards in 2025 and has multiple base rate cases pending Recent Rate Awards (as of May 9, 2025) | Segment | States | Amount | | :--- | :--- | :--- | | Regulated Water | PA, NC, OH | $89.6 million | | Regulated Natural Gas | KY | $0.5 million | Pending Base Rate Cases | Segment | State | Requested Revenue | | :--- | :--- | :--- | | Regulated Natural Gas | Kentucky | ~$10.9 million | | Regulated Water | North Carolina | ~$45 million | Capital Expenditures (CapEx) The company is on track for its 2025 CapEx target and has a multi-year plan focusing on infrastructure and PFAS remediation - Invested approximately $271 million in the first three months of 2025[15] - On track to invest between $1.4 and $1.5 billion in 2025[15] - Plans to invest approximately $7.8 billion from 2025 through 2029, with at least $450 million dedicated to addressing PFAS[15] Growth by Acquisition Acquisitions continue to be a key growth driver with recent closings and a large pipeline of potential new customers - Recently acquired the Village of Midvale's water system in Ohio (~1,000 customers) and Greenville Sanitary Authority's wastewater assets in Pennsylvania (~2,300 customers)[17] - Has five signed purchase agreements pending for systems in Pennsylvania and Texas, expected to serve over 210,000 customers, including the large DELCORA system[18] - The active pipeline of potential municipal acquisitions represents approximately 400,000 total customers[19] 2025 Guidance and Long-Term Outlook The company reaffirmed its 2025 EPS guidance and long-term growth targets, excluding the potential DELCORA acquisition 2025 Full-Year Guidance | Metric | Guidance | | :--- | :--- | | Diluted EPS | $2.07 to $2.11 | | Regulated Infrastructure Investments | $1.4 to $1.5 billion | Long-Term Growth Targets (through 2029) | Metric | Target | | :--- | :--- | | EPS CAGR (through 2027) | 5% to 7% | | Total Regulated Investments | ~$7.8 billion | | Water Segment Rate Base CAGR | ~6% | | Natural Gas Segment Rate Base CAGR | ~11% | | Combined Utility Rate Base CAGR | >8% | - The company plans to reduce Scope 1 and Scope 2 greenhouse gas emissions by 60% by 2035 from its 2019 baseline[22] - Guidance assumptions exclude the DELCORA acquisition, though the company remains confident in its ability to close the deal[21] Financial Statements This section presents the unaudited Q1 2025 operating data, statement of operations, and balance sheets Selected Operating Data A high-level summary shows year-over-year increases in Q1 revenues, net income, and earnings per share Selected Operating Data (Unaudited, In thousands, except per share) | | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Operating revenues | $783,626 | $612,069 | | Operations and maintenance expense | $137,824 | $136,900 | | Net income | $283,789 | $265,772 | | Diluted net income per common share | $1.03 | $0.97 | Consolidated Statement of Operations The detailed income statement shows operating revenues of $783.6 million and net income of $283.8 million for Q1 2025 Consolidated Statement of Operations (Unaudited, In thousands) | | Quarter Ended March 31, 2025 | Quarter Ended March 31, 2024 | | :--- | :--- | :--- | | Operating revenues | $783,626 | $612,069 | | Operating income | $338,905 | $230,666 | | Income before income taxes | $263,194 | $255,130 | | Net income | $283,789 | $265,772 | Condensed Consolidated Balance Sheets Total assets grew to $18.33 billion and total equity increased to $6.46 billion as of March 31, 2025 Condensed Consolidated Balance Sheets (Unaudited, In thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $18,327,161 | $18,026,554 | | Net property, plant and equipment | $13,320,374 | $13,143,476 | | Total Liabilities | $11,867,070 | $11,827,745 | | Long-term debt, net | $7,524,985 | $7,368,381 | | Total Equity | $6,460,091 | $6,198,809 |