Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $1.86, which aligns with the guidance of 5% to 7% growth [7][32] - Total revenue for the year was $2.05 billion, down from $2.29 billion in the previous year, reflecting a decrease of 10.2% [31][34] - Net income increased by 7.1% year-over-year, from $465.2 million to $498.2 million [32][34] Business Line Data and Key Metrics Changes - The Regulated Water segment generated $1.15 billion in revenue, while the Regulated Natural Gas segment contributed nearly $864 million [31] - Operations and maintenance expenses decreased by 6.2% to $575.5 million, primarily due to lower outside services costs and reduced contributions to the foundation [32][39] Market Data and Key Metrics Changes - The company experienced a $43 million net revenue shortfall due to adverse weather conditions, particularly warmer temperatures affecting gas usage [7][33] - Purchase gas costs decreased by $249.7 million or 41.5% compared to the prior year, significantly impacting revenue [31][35] Company Strategy and Development Direction - The company plans to invest approximately $7.2 billion annually on regulated infrastructure through 2028, with a focus on PFAS and lead mitigation [69][70] - The strategy includes continued consolidation in the water and wastewater industry, with a strong pipeline of acquisition opportunities [57][60] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of affordability and regulatory compliance, particularly regarding PFAS regulations, which may require significant capital investment [22][62] - The company is optimistic about its ability to meet compliance deadlines and manage costs associated with new regulations [25][94] Other Important Information - The company has been recognized on Newsweek's 2024 list of America's most responsible companies for the third consecutive year [12] - The company completed rate cases or surcharge filings in all 9 states, resulting in total annualized revenue increases of $47.2 million for Water and $21.3 million for Natural Gas [47] Q&A Session Summary Question: Impact of Pennsylvania rate increases on tactical thinking - Management indicated that the cadence of capital expenditures may be influenced by regulatory timelines for PFAS compliance, which could allow for a more spread-out investment approach [76] Question: Effect of recent PUC decisions on acquisition pipeline - Management noted that recent decisions provide clearer guidance on expected purchase prices, which may affect seller sentiment but still allow for attractive premiums for troubled systems [78][80] Question: Long-term growth rate expectations - Management refrained from providing long-term EPS guidance due to pending rate cases, emphasizing the importance of regulatory outcomes [102][103] Question: Discussion on PFAS investment needs - Management confirmed that the estimated costs for PFAS compliance could increase depending on regulatory timelines and the ability to secure low-interest loans [93][94] Question: Weather normalization clause in rate case - Management confirmed that a request for a weather normalization clause has been included in the current rate case, which could benefit the company [98][100]

Essential Utilities, Inc. (NYSE:WTRG) Q3 2023 Earnings Conference Call November 7, 2023 11:00 AM ET Company Participants Brian Dingerdissen - Vice President, Investor Relations & Treasurer Chris Franklin - Chairman & Chief Executive Officer Dan Schuller - Executive Vice President & Chief Financial Officer Conference Call Participants Julien Dumoulin-Smith - Bank of America Durgesh Chopra - Evercore Gregg Orrill - UBS Jonathan Reeder - Wells Fargo Ryan Connors - Northcoast Research Operator Good day, and wel ...

Financial Performance - Q3 2023 operating revenues were $411.3 million, compared to $434.6 million in Q3 2022[13] - Q3 2023 net income was $80.1 million, compared to $68.6 million in Q3 2022[13] - Q3 2023 net income per share was $0.30, compared to $0.26 in Q3 2022[13] - YTD 2023 operating revenues were $1,574.4 million, a decrease of 0.5% compared to $1,582.6 million in YTD 2022[38] - YTD 2023 net income was $362.8 million, an increase of 3.6% compared to $350.3 million in YTD 2022[38] - YTD 2023 net income per share was $1.37, an increase of 3.0% compared to $1.33 in YTD 2022[38] Acquisitions and Divestitures - Year-to-date infrastructure investment reached $874.5 million[4] - The company has agreements to acquire five systems for a total purchase price of $353.8 million[6, 7] - The company closed on the sale of Peoples Gas utility assets in West Virginia for $37 million[26] - The company announced the sale of three unregulated district energy and microgrid projects in Pittsburgh for $165 million[26] - Over $526 million in rate base acquired through M&A since 2015[28] ESG and Regulatory - Essential aims for a 60% reduction in Scope 1 and 2 greenhouse gas emissions by 2035, from a 2019 baseline[10] - 18% of Essential's controllable spend is with diverse suppliers, achieving the company's target[10] - Completed regulatory recoveries are expected to increase annualized revenue by $42.4 million for the water segment and $21.3 million for the gas segment[27]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $0.34 for Q2 2023, a nearly 10% increase from $0.31 in the same quarter last year [33] - Revenues for the quarter were $436.7 million, down from $448.8 million year-over-year, primarily due to a decrease in natural gas commodity costs [30][34] - Net income increased from $82.3 million to $91.3 million year-over-year [33] Business Line Data and Key Metrics Changes - The Regulated Water segment contributed $293.7 million to revenues, while the Regulated Natural Gas segment contributed $139 million [30] - Operations and maintenance (O&M) expenses decreased by 1.1% to $133.5 million compared to $135 million in Q2 2022 [32] Market Data and Key Metrics Changes - The company closed six acquisitions in 2023, adding over $44.6 million in rate base and more than 11,000 customer equivalents [10][26] - The company expects to invest $1.1 billion in capital projects this year, with over 8,000 projects aimed at improving service and reliability [9][19] Company Strategy and Development Direction - The company aims for consistent 5% to 7% EPS growth, driven by significant capital investment in water and gas infrastructure [7][22] - The company has a strong focus on infrastructure rehabilitation and capital improvement, which is critical for long-term earnings growth [12][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the annual earnings guidance despite challenges faced in Q1 due to mild winter weather [8][40] - The company remains committed to its capital investment program and expects annual capital budgets to exceed $1 billion for the foreseeable future [19] Other Important Information - The Board increased the dividend by 7%, marking the 33rd increase in 32 years [11][29] - The company is actively pursuing over 400,000 potential water and wastewater customers for future acquisitions [57] Q&A Session Summary Question: Impact of weather on revenue - Management noted a $30 million shortfall in net revenue due to warmer weather in Q1, which was partially recovered in Q2 [62][63] Question: East Whiteland acquisition decision - Management expressed disappointment with the court's decision to overturn the PUC order but remains optimistic about future acquisitions in Pennsylvania [27][66] Question: Capital expenditure strategy - Management clarified that the focus on capital expenditure is a reminder of its importance in generating earnings, rather than a shift in strategy [68][69] Question: PFAS remediation costs - Management estimated that capital investment for PFAS remediation could reach at least $350 million, emphasizing that polluters should bear the cleanup costs [48][92] Question: DELCORA transaction status - Management removed DELCORA from financial plans for 2023 and 2024 due to delays but remains confident in long-term earnings guidance [55][56][102]