Essential Utilities(US:WTRG)2021-08-05 19:28Financial Data and Key Metrics Changes - The company reported revenues of $397 million for Q2 2021, an increase of 3.3% year-over-year [17] - Net income grew by 8.4% from $74.6 million to $80.9 million, with GAAP earnings per share increasing from $0.29 to $0.32 [17][21] - Operations and maintenance (O&M) expenses decreased slightly to $127.5 million from $128.6 million in the same quarter last year [17][20] Business Line Data and Key Metrics Changes - The regulated water segment contributed $248.2 million to revenues, while the regulated natural gas segment contributed $141.6 million [17] - Water consumption increased by 4.2% in Q2 2021, with commercial usage rising by 20% as businesses reopened [19] - The regulated natural gas segment experienced a decrease in volume, contributing to a revenue decline of $4.9 million due to warmer weather [18] Market Data and Key Metrics Changes - The company completed rate cases or surcharge filings in multiple states, resulting in total annualized revenue of $16.7 million for the regulated water segment and $1.3 million for the regulated natural gas segment [26][27] - The company anticipates customer growth of 2% to 3% on average for the regulated water segment [34] Company Strategy and Development Direction - The company is focused on a municipal acquisition strategy, with 7 pending acquisitions totaling approximately $458.5 million [10][30] - The company plans to invest nearly $3 billion across its platform by 2023, aiming for rate base growth of 6% to 7% in water and 8% to 10% in gas [34] - The company is committed to ESG initiatives, including a multiyear target for employee diversity and a goal of 60% reduction in greenhouse gas emissions by 2035 [15][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing positive regulatory environment for fair market value transactions, despite some detractors [40] - The company expects to maintain its earnings guidance of $1.64 to $1.69 per share for the full year, despite anticipated expenses in the second half [34][24] - Management noted that the gas business typically does not generate significant revenue in Q3 but expects a rebound in Q4 with the heating season [25] Other Important Information - The company announced a 7% increase in its quarterly dividend, marking 31 years of consecutive increases [10] - The company published its 2020 ESG report, which includes detailed information on its natural gas segment for the first time [12] Q&A Session Summary Question: Impact of fair market value (FMV) on legislation and individual deals - Management believes there will be no rollback on FMV legislation and sees positive momentum as municipalities seek solutions for capital constraints [40][41] Question: Status of water quality accountability legislation in Pennsylvania - Management indicated that the legislation is still moving forward and expects it to progress through the legislature before the year ends [44] Question: Insights on the Texas acquisition process - The Texas deal was described as relatively smooth, taking about a year to complete [46] Question: Update on Pennsylvania commissioner appointments - Management noted a potential 2:1 Republican majority on the commission, which could influence pending applications [50] Question: Stability of gas customer count and weather conditions - Gas customer count is expected to remain stable, with organic growth in certain states, while weather conditions have been generally favorable [60][61] Question: Interaction between ESG profile and local utility commissions - Management acknowledged that ESG elements are increasingly discussed with regulators, particularly regarding greenhouse gas emissions and customer assistance programs [68][70]