Workflow
Essential Utilities(WTRG) - 2024 Q3 - Earnings Call Transcript
WTRGEssential Utilities(WTRG)2024-11-05 19:53
Filings
Slide

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of 0.25forQ32024,adecreasefrom0.25 for Q3 2024, a decrease from 0.30 in Q3 2023, primarily due to one-time tax benefits in the previous year [23][29] - Revenues for Q3 2024 were 435.3million,anincreaseofapproximately6435.3 million, an increase of approximately 6% compared to 411.3 million in Q3 2023, driven by rate increases, surcharges, and customer growth [21][22] - Operations and maintenance (O&M) expenses decreased compared to Q3 2023, mainly due to reduced bad debt expenses and divestitures [22][26] Business Line Data and Key Metrics Changes - The regulated water segment saw revenues increase by nearly 8% in Q3 2024 compared to the same period in 2023, attributed to higher water volume due to warm and dry weather [25] - The natural gas segment experienced a minor revenue decline due to lower gas sales from warmer-than-normal weather [21][24] Market Data and Key Metrics Changes - The Pennsylvania Public Utility Commission (PUC) approved a rate case for Peoples Natural Gas, resulting in an annualized revenue increase of 93million[9][31]−AsettlementagreementforAquaPennsylvaniaisexpectedtoyieldanannualizedrevenueincreaseof93 million [9][31] - A settlement agreement for Aqua Pennsylvania is expected to yield an annualized revenue increase of 73 million, pending approval [11][35] Company Strategy and Development Direction - The company reinstated its multiyear EPS guidance at a growth rate of 5% to 7% through 2027, excluding any contributions from the DELCORA transaction [7][43] - Plans to invest approximately 7.8billionininfrastructureimprovementsthrough2029,focusingonwater,wastewater,andnaturalgassystems[13][44]−Thecompanyaimstomaintainaffordableratesforcustomerswhileachievinggrowththroughacquisitionsandorganiccustomergrowth[47][48]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedconfidenceinachievingEPSgrowthdespitechallengessuchaselevatedinflationandhigherinterestrates[16]−Thecompanyisoptimisticaboutfuturegrowthopportunities,particularlyinTexasandNorthCarolina,wheresignificantpopulationgrowthisexpected[42][47]OtherImportantInformation−Thecompanyisactivelypursuingacquisitions,withsignedagreementsprojectedtoaddover213,000customersacrossthreestates[38]−Regulatoryactivitiesincludependingratecasesandinfrastructuresurchargesinmultiplestates,withatotalrevenuerequestof7.8 billion in infrastructure improvements through 2029, focusing on water, wastewater, and natural gas systems [13][44] - The company aims to maintain affordable rates for customers while achieving growth through acquisitions and organic customer growth [47][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving EPS growth despite challenges such as elevated inflation and higher interest rates [16] - The company is optimistic about future growth opportunities, particularly in Texas and North Carolina, where significant population growth is expected [42][47] Other Important Information - The company is actively pursuing acquisitions, with signed agreements projected to add over 213,000 customers across three states [38] - Regulatory activities include pending rate cases and infrastructure surcharges in multiple states, with a total revenue request of 149.2 million [36] Q&A Session Summary Question: Equity financing expectations and timing - Management clarified that they plan to raise approximately 350millioninequitybetween2024and2025,withflexibilityintimingbasedonmarketconditions[51][52]Question:ClarificationonEPSgrowthstartingpoint−Thestartingpointforthe5350 million in equity between 2024 and 2025, with flexibility in timing based on market conditions [51][52] Question: Clarification on EPS growth starting point - The starting point for the 5% to 7% EPS growth CAGR is expected to be close to the 2024 guidance midpoint, which is still being finalized [64] Question: PFAS-related costs and recovery mechanisms - Management indicated that they expect to recover PFAS-related costs through various regulatory mechanisms, including deferred accounting treatment [80][81] Question: Timeline for the Peoples Gas appeal - The appeal process is expected to take about a year, with management confident in the strength of the PUC's decision [82][85] Question: Water rate increase implementation - The 73 million water and wastewater base rate increase from the settlement will be implemented all at once in February 2025 [87]