Essential Utilities(US:WTRG)2023-08-08 21:22Financial 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]