Essential Utilities(US:WTRG)2025-02-27 18:36Financial Data and Key Metrics Changes - For the year 2024, the company reported GAAP earnings per share (EPS) of $2.17, an increase from $1.86 in 2023, which includes a gain on sale from Pittsburgh Energy projects [12][39] - Non-GAAP earnings per share for 2024 were approximately $1.97, aligning with the guidance range of $1.96 to $2.00 [12][49] - Operating revenues increased due to rate increases and surcharges, with a total increase of nearly $83 million, primarily from water and gas [41][37] Business Line Data and Key Metrics Changes - The water segment saw an increase in revenue of approximately $51 million, while the gas segment contributed about $32 million to the revenue increase [41] - Operating expenses grew by only 2% year-over-year, reflecting the company's focus on operational efficiency [13][44] - The company completed its capital plan of $1.3 billion, which included significant investments in water quality and gas safety [13][20] Market Data and Key Metrics Changes - The company experienced a decline in natural gas commodity prices year-over-year, positively impacting customer bills [38] - Weather normalization mechanisms were implemented to alleviate revenue volatility due to extreme weather conditions [38][18] - The company reported that it was the strongest performing water stock in 2024, although it expressed disappointment in its overall valuation [27][28] Company Strategy and Development Direction - The company plans to invest nearly $7.8 billion in capital over the next five years, focusing on infrastructure improvements and operational excellence [25][61] - A key theme for 2025 is the adoption of lean practices to enhance operational efficiency [29] - The company is exploring opportunities related to data centers, which could provide growth in its natural gas service territory [32][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory environment in Pennsylvania, highlighting successful rate cases and a constructive regulatory reputation [16][19] - The company anticipates continued growth in its water customer base at an average annual rate of 2% to 3% due to consolidation opportunities [64] - Management noted that the volatility of earnings associated with unusual weather should be dramatically reduced due to the weather normalization mechanism [60] Other Important Information - The company has a strong pipeline of acquisition opportunities, with six signed asset purchase agreements adding over 210,000 customer equivalents [57][58] - The company is actively engaged in PFAS mitigation efforts, with a capital spend of approximately $450 million planned over four years [20][102] - The company plans to raise approximately $315 million in equity through its multiyear ATM program to support growth initiatives [65] Q&A Session Summary Question: Update on M&A activity and Delcora acquisition - Management indicated that the Delcora acquisition is not expected to close this year and has been taken out of the five-year plan, but they remain committed to it [71][72] Question: Consumer advocate situation in Pennsylvania - Management noted that the acting consumer advocate has similar powers to a confirmed advocate, and they are closely monitoring the timeline for a permanent nomination [80][82] Question: PFAS investment strategy and potential earnings - Management confirmed that the $450 million PFAS investment is expected to be net of proceeds from lawsuits and grants, and they are optimistic about the potential for earnings from their patent-pending technology [102][111] Question: Data center opportunities - Management discussed the potential for various types of deals with data centers, including on-site generation and infrastructure projects that could enhance rate base [90][121]