Essential Utilities(US:WTRG)2020-08-07 07:39Financial Data and Key Metrics Changes - The second quarter ended with revenues of $384.5 million, up 75.6% year-over-year, with the Peoples acquisition contributing $149.6 million to this growth [31] - Net income increased by 35.9% year-over-year from $54.9 million to $74.6 million, and GAAP EPS rose 16% to $0.29 [31][20] - Operations and maintenance (O&M) expenses increased to $128.6 million, up 48.8% from $86.4 million last year, primarily due to the addition of Peoples operations [31][37] Business Line Data and Key Metrics Changes - The regulated water segment saw significant revenue growth, with new revenue related to Peoples being the main driver, adding almost $150 million [33] - The regulated natural gas segment also contributed to revenue growth, with $129 million invested in infrastructure [17] - The municipal acquisition strategy remains strong, with signed agreements totaling over $300 million in expected rate base and over 200,000 new customers [21] Market Data and Key Metrics Changes - Residential water usage increased nearly 10%, offsetting declines in commercial and industrial segments due to COVID-19 [34] - The company secured a $500 million term loan as a precautionary liquidity measure during the pandemic, which was repaid in June [36] Company Strategy and Development Direction - The company is focused on a municipal acquisition program as a primary growth engine, with significant opportunities in water and wastewater transactions [50] - The company aims to maintain a balanced rate base mix of approximately 70% water and 30% gas, with a focus on strategic acquisitions [52] - The company is committed to ESG initiatives and has appointed a manager to enhance its ESG program [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year earnings per share guidance of $1.53 to $1.58, despite ongoing pandemic challenges [69] - The company is closely monitoring COVID-19 impacts on operations, including consumption, billing, and collections [32] - Management emphasized the importance of affordability for customers and the need for a balanced approach to regulatory moratoriums on service disconnections [90][91] Other Important Information - The board approved a 7% dividend increase, marking the 29th consecutive year of dividend increases [23][24] - The company has a robust capital investment plan, anticipating approximately $2.8 billion in investments across the Essential platform through 2022 [70] Q&A Session Summary Question: Can you provide more color around the acquisition platform in Texas? - Management expressed optimism about opportunities in Texas, highlighting the recent fair market value deal and ongoing discussions for additional acquisitions [74][75] Question: Any regulatory update on service disconnection moratoriums in Pennsylvania? - Management noted that the Pennsylvania PUC has provided relief for COVID-related debt expenses and anticipates action on disconnection moratoriums by September [84][85] Question: How is the company managing the balance between operational costs and customer affordability during COVID-19? - Management emphasized a surgical approach to handling collections and providing assistance to customers, while advocating for a balanced regulatory approach [90][91] Question: What factors are enabling the company to outpace the industry in municipal acquisitions? - Management attributed success to a strong reputation in the community, proactive engagement with municipalities, and a focus on providing solutions during financial constraints [93]