Earnings per share of $1.86 for 2023, compared to 2022 earnings
of $1.77
Record infrastructure investments of $1.19 billion
Acquired seven systems, adding over $44 million in rate base and
11,000 customers
Initiating 2024 annual earnings per share guidance range of
$1.96 to $2.00
Initiating capital investment guidance of $7.2 billion from 2024
through 2028
Essential Utilities Inc. (NYSE: WTRG) today reported results for
the fourth quarter and year ended December 31, 2023. Essential’s
net income of $498.2 million or $1.86 per share for 2023 compared
favorably to $465.2 million or $1.77 per share reported for
2022.
“Despite the winter weather that was significantly warmer than
normal in 2023, we successfully delivered earnings per share that
met our 2023 guidance expectations,” said Essential Utilities
Chairman and Chief Executive Officer Christopher Franklin. “Also,
for the third consecutive year, Essential has been named to
Newsweek’s list of America’s Most Responsible Companies. We are
honored to be recognized for our commitments to operational
excellence, environmental stewardship, and sustainable business
practices and are excited to continue in our role as an industry
leader throughout 2024.”
Full-year 2023 Operating Results
Essential reported revenues of $2.05 billion in 2023 compared to
$2.29 billion in the prior year. The decrease in revenues for the
year were primarily due to lower purchased gas costs and
unfavorable weather resulting in decreased volume from the
regulated natural gas segment, which were offset by additional
revenues from regulatory recoveries.
Operations and maintenance expenses were $575.5 million for 2023
compared to $613.6 million in the prior year. The decrease in
operations and maintenance expenses was primarily a result of lower
operating expenses, customer assistance program expenses, employee
retirement expenses, and customer bad debt, offset partially by
higher water production expenses and regulated water segment
customer growth.
Essential’s net income of $498.2 million or $1.86 per share
compared to $465.2 million or $1.77 per share reported through the
same period of 2022. Regulatory recoveries, decreased expenses, and
regulated water segment customer growth were offset by lower
regulated natural gas segment and regulated water segment volumes
and other items.
Essential’s regulated water segment reported revenues of $1.15
billion, an increase of 6.5% compared to $1.08 billion in 2022.
Regulatory recoveries and customer growth were the largest
contributors to the increase in revenues for the period. Operations
and maintenance expenses for Essential’s regulated water segment
decreased to $368.8 million compared to $370.9 million in 2022.
Essential’s regulated natural gas segment reported revenues of
$863.8 million, compared to $1.14 billion in 2022. Purchased gas
costs were $327.5 million as compared to $551.0 million in 2022. As
a result, the recovery of lower purchased gas costs was the primary
driver in the decrease of revenues. Operations and maintenance
expenses for the same period for Essential’s regulated natural gas
segment decreased to $209.1 million, from $239.5 million in
2022.
Fourth Quarter 2023 Operating Results
Essential reported net income of $135.4 million for the fourth
quarter of 2023, compared to $114.9 million for the same quarter in
2022. Earnings per share were $0.50 for the quarter compared to
$0.44 in the fourth quarter of 2022. For the quarter, lower
expense, revenues from regulatory recoveries, and other items were
offset by lower regulated natural gas segment and regulated water
segment volumes.
Revenues for the quarter were $479.4 million compared to $705.4
million in the fourth quarter of 2022. Lower purchased gas costs,
decreased volume from the regulated natural gas segment, due to
unfavorable weather, and regulated water segment, and other items
were the primary contributors to the decrease in revenues for the
quarter, which was offset by additional revenues from regulatory
recoveries. Operations and maintenance expenses decreased to $157.0
million for the fourth quarter of 2023 compared to $184.7 million
in the fourth quarter of 2022.
Essential 2024 Financial and Growth Guidance
In December 2023, Essential’s largest regulated natural gas
subsidiary, Peoples Natural Gas, filed a base rate case and the
company’s largest regulated water subsidiary, Aqua Pennsylvania,
also expects to seek rate relief in the second quarter of 2024.
Therefore, the company will refrain from providing a multi-year
earnings per share guidance range until the conclusion of these
base rate cases. The following is the company’s 2024 guidance:
- In 2024, net income per diluted common share will be $1.96 to
$2.00
- In 2024, regulated infrastructure investments will be
approximately $1.3 to $1.4 billion
- Through 2028, we will make regulated infrastructure investments
of approximately $7.2 billion, weighted towards the regulated water
segment
- Through 2028, the regulated water segment rate base will grow
at a compounded annual growth rate of approximately 8%
- Through 2028, the regulated natural gas segment rate base will
grow at a compounded annual growth rate of approximately 10%
- Through 2028, the regulated utility rate base will grow at a
compounded annual growth rate of over 8%
- The regulated water customer base (or equivalent dwelling
units) of the business will grow at an average annual growth rate
of between 2 and 3% from acquisitions and organic customer
growth
- The regulated natural gas customer base of the business will be
stable for 2024
- In 2024, approximately $250 million in equity is expected to be
raised using an ATM equity program
Dividend
As previously announced in 2023, Essential’s board of directors
declared a March 1, 2024, quarterly cash dividend of $0.3071 per
share of common stock, this dividend will be payable to
shareholders of record on February 9, 2024. On February 21, 2024,
Essential’s board of directors declared a quarterly cash dividend
of $0.3071 per share of common stock payable on June 1, 2024, to
shareholders of record on May 10, 2024. The company has paid a
consecutive quarterly cash dividend for more than 79 years.
Financing
At year-end 2023, Essential’s weighted average cost of
fixed-rate long-term debt was 3.86%, and the company had $538.5
million available on its credit lines.
As part of the company’s 2024 financing plan, on January 8,
2024, Essential completed a $500 million issuance of long-term
debt, due in 2034 with an interest rate of 5.375%. This debt was
used to repay existing indebtedness and for general corporate
purposes. The company also expects to raise approximately $250
million in equity in 2024 using an At-The-Market (ATM) equity
program.
Rate Activity
In 2023, the company’s regulated water segment received rate
awards or infrastructure surcharges in Illinois, Indiana, New
Jersey, North Carolina, Ohio, Pennsylvania, Texas, and Virginia of
$47.2 million and its regulated natural gas segment received
infrastructure surcharges in Pennsylvania and Kentucky of $21.3
million.
To date in 2024, the company’s regulated water segment received
rate awards or infrastructure surcharges in Illinois, Ohio, and
Pennsylvania of $9.1 million and its regulated natural gas segment
received infrastructure surcharges in Pennsylvania and Kentucky of
$22.1 million.
The company currently has base rate cases or infrastructure
surcharges pending in Illinois, New Jersey, Texas and Virginia for
its regulated water segment, which combined would add an estimated
$43.2 million in incremental annual revenues, and a base rate case
pending in Pennsylvania for its regulated natural gas segment for
an estimated $156.0 million in incremental annual revenues.
Capital Expenditures
In 2023, Essential invested a record amount of approximately
$1.19 billion to improve its regulated water and natural gas
infrastructure systems and to enhance customer service across its
operations. The company continues to be a leader in the country at
replacing miles of underground utility pipe and is committed to
maintaining elevated levels of infrastructure investment. In 2024,
the company expects to invest between $1.3 to $1.4 billion in
needed infrastructure investments. From 2024 through 2028, the
company expects to invest approximately $7.2 billion to improve
water and natural gas systems and better serve customers through
improved information technology. Essential’s investments during
this time period include at least $450 million to address PFAS,
replacing and expanding its water and wastewater utility
infrastructure, and replacing and upgrading its natural gas utility
infrastructure, with the latter leading to significant reductions
in methane emissions that occur in aged gas pipes. The capital
investments made to rehabilitate and expand the infrastructure of
the communities’ Essential serves are critical to its mission of
safely and reliably delivering Earth’s most essential
resources.
Water Utility Growth by Acquisition
Essential’s continued growth by acquisition allows the company
to provide safe and reliable water and wastewater service to an
even larger customer base than it could from organic customer
growth alone. In 2023, the company acquired seven systems, that
collectively added over $44.5 million in rate base and more than
11,000 new customers or equivalent dwelling units to the company’s
footprint. Coupled with organic growth, the company increased its
water and wastewater customer base by approximately 1.7%.
The company has six signed purchase agreements for additional
wastewater systems in Pennsylvania and Illinois that are pending
closing and are expected to serve over 215,000 equivalent retail
customers or equivalent dwelling units and total approximately $380
million in purchase price. This includes the recently signed
agreement with North Versailles Township Sanitary Authority to
acquire their wastewater system in Allegheny County, Pennsylvania
for up to $30 million, which is expected to add approximately 4,400
customers. The company’s $276.5 million agreement to acquire the
Delaware County Regional Water Quality Control Authority (DELCORA),
a Pennsylvania sewer authority that serves approximately 198,000
equivalent dwelling units in the Philadelphia suburbs, is included
among these signed purchase agreements.
The pipeline of potential water and wastewater municipal
acquisitions the company is actively pursuing represents over
400,000 total customers.
Sale of Assets
As previously announced in 2023, the company completed the sale
of its West Virginia natural gas utility assets. The sale enables
Essential to prioritize the growth of its water and wastewater
utilities in states in which it has scale, while the remaining gas
operations will continue to focus on efficient, safe operation and
reducing emissions through pipeline replacement.
On January 30, 2024, the company completed the previously
announced $165 million sale of its three non-utility microgrid and
district energy projects in Pittsburgh, including the innovative
microgrid at the Pittsburgh International Airport. The company will
use the proceeds to finance its capital expenditures and water and
wastewater acquisitions in place of external funding from equity
and debt issuances. This sale, which allows the company to focus on
its core business as a regulated utility, resulted in a one-time
gain to be recognized in the first quarter of 2024.
Sustainability Guidance and Commitments
- Reduction of Scope 1 and Scope 2 greenhouse gas emissions by
60% by 2035 from the company’s 2019 baseline
- Multiyear plan to ensure that finished water does not exceed
the federal maximum contaminant level once finalized, of PFOA,
PFOS, and PFNA compounds
Essential reaffirms its commitment to substantially reduce Scope
1 and 2 greenhouse gas emissions by 2035. The company plans to
achieve these reductions through extensive gas pipeline
replacement, the purchase of renewable energy, accelerated methane
leak detection and repair, and various other planned initiatives.
Essential continues to be an industry leader regarding water
quality with its commitment to test and treat for PFOA, PFOS, and
PFNA compounds across all states served by its regulated water
segment. The company reaffirms its commitment to providing finished
water that will meet the EPA timelines and standards.
Guidance Assumptions
Essential Utilities does not guarantee future results of any
kind. Guidance is subject to risks and uncertainties, including,
without limitation, those factors outlined in the “Forward Looking
Statements” of this release and the “Risk Factors” section of the
company’s annual and quarterly reports filed with the Securities
and Exchange Commission.
The earnings per share, infrastructure investment and rate base
guidance includes the signed municipal water and wastewater
acquisitions for which the company has entered into signed purchase
agreements as of the date the guidance was announced but does not
include DELCORA or other potential municipal acquisitions from the
company’s list of acquisition opportunities that currently
represents over 400,000 customer equivalents. The average annual
regulated water segment growth guidance reflects the company’s
proven acquisition track record of adding nearly 129,000 customers
or equivalent dwelling units and over $500 million in rate base
since 2015, its current backlog of approximately $380 million of
signed pending acquisitions with over 215,000 equivalent customers,
and the current acquisition landscape.
The company’s guidance includes the expectation that the company
will continue to issue equity and debt on an as needed basis to
support acquisitions and capital investment plans.
Fourth Quarter and Full Year 2023 Earnings Call
Information
Date: February 23, 2024 Time: 11 a.m. EST (please dial in by
10:45 a.m.) Webcast and slide presentation link:
https://www.essential.co/events-and-presentations/events-calendar
Replay Dial-in #: 866.583.1035 (U.S.) & International callers
can find their dial in here Confirmation code: 7545494
The company’s conference call with financial analysts will take
place on Friday, February 23, 2024, at 11 a.m. Eastern Standard
Time. The call and presentation will be webcast live so interested
parties may listen over the internet by logging on to Essential.co
and following the link for Investors. The conference call will be
archived in the Investor Relations section of the company’s website
for 90 days following the call. Additionally, the call will be
recorded and made available for replay at 2 p.m. on February 23,
2024, for 10 business days following the call. To access the audio
replay in the U.S., dial 866.583.1035 (pass code 7545494).
International callers can find their dial in number here (pass code
7545494).
About Essential
Essential Utilities, Inc. (NYSE: WTRG) delivers safe, clean,
reliable services that improve quality of life for individuals,
families, and entire communities. With a focus on water, wastewater
and natural gas, Essential is committed to sustainable growth,
operational excellence, a superior customer experience, and premier
employer status. We are advocates for the communities we serve and
are dedicated stewards of natural lands, protecting more than 7,600
acres of forests and other habitats throughout our footprint.
Operating as the Aqua and Peoples brands, Essential serves
approximately 5.5 million people across nine states. Essential is
one of the most significant publicly traded water, wastewater
service and natural gas providers in the U.S. Learn more at
www.essential.co.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
which generally include words such as “believes,” “expects,”
“intends,” “anticipates,” “estimates,” and similar expressions. The
Company can give no assurance that any actual or future results or
events discussed in these statements will be achieved. Any
forward-looking statements represent its views only as of today and
should not be relied upon as representing its views as of any
subsequent date. Readers are cautioned that such forward-looking
statements are subject to a variety of risks and uncertainties that
could cause the company’s actual results to differ materially from
the statements contained in this release. Such forward-looking
statements include, among others: the guidance range of net income
per diluted common share; the anticipated amount of capital
investment in 2024 and through 2028; the rate base growth of
company through 2028; the reduction of Scope 1 and Scope 2
greenhouse gas emissions by 60% by 2035 from the company’s 2019
baseline; the annual average capital investment per year; the rate
base growth from its organic capital investment program through
2028; its plan to raise approximately $250 million in equity
through at At-The-Market equity program; the Company’s water
utility customer base growth at an average annual long term growth
rate of between 2-3% for acquisitions and organic customer growth;
the stability of the Company’s regulated natural gas customer base
in 2024; and, the Company’s water utility compounded growth rate of
8%; the Company’s gas utility compounded growth rate of 10%. There
are important factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements including: disruptions in the global economy; potential
disruptions in the supply chain for raw and finished materials; the
continuation of the company's growth-through-acquisition program;
general economic business conditions; the company’s ability to
raise additional equity, including on an as needed basis; housing
and customer growth trends; unfavorable weather conditions; the
success of certain cost-containment initiatives; changes in
regulations or regulatory treatment; the company’s ability to
successfully close municipally owned systems presently under
agreement and successfully complete other acquisitions and
dispositions; and other factors discussed in our Annual Report on
Form 10-K and our Quarterly Reports on Form 10-Q, which are filed
with the Securities and Exchange Commission. For more information
regarding risks and uncertainties associated with Essential's
business, please refer to Essential's annual, quarterly, and other
SEC filings. Essential is not under any obligation - and expressly
disclaims any such obligation - to update or alter its
forward-looking statements whether as a result of new information,
future events or otherwise.
WTRGF
Essential Utilities, Inc. and
Subsidiaries
Selected Operating Data
(In thousands, except per share
amounts)
(Unaudited)
Quarter Ended
Year Ended
December
31,
December
31,
2023
2022
2023
2022
Operating revenues
$
479,419
$
705,383
$
2,053,824
$
2,288,032
Operations and maintenance
expense
$
156,998
$
184,726
$
575,518
$
613,649
Net income
$
135,448
$
114,932
$
498,226
$
465,237
Basic net income per common
share
$
0.50
$
0.44
$
1.86
$
1.77
Diluted net income per common
share
$
0.50
$
0.44
$
1.86
$
1.77
Basic average common shares
outstanding
273,210
262,711
267,171
262,246
Diluted average common shares
outstanding
273,536
263,317
267,659
262,868
Essential Utilities, Inc. and
Subsidiaries
Consolidated Statement of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Quarter Ended
Year Ended
December
31,
December
31,
2023
2022
2023
2022
Operating revenues
$
479,419
$
705,383
$
2,053,824
$
2,288,032
Cost & expenses: Operations and maintenance
156,998
184,726
575,518
613,649
Purchased gas
37,468
247,099
352,306
601,995
Depreciation
86,447
80,037
338,655
315,811
Amortization
1,758
888
5,040
5,366
Taxes other than income taxes
22,775
22,672
90,208
90,024
Total
305,446
535,422
1,361,727
1,626,845
Operating income
173,973
169,961
692,097
661,187
Other expense (income): Interest expense
72,922
68,771
283,362
238,116
Interest income
(670
)
(732
)
(3,401
)
(3,675
)
Allowance for funds used during construction
(2,400
)
(5,863
)
(16,967
)
(23,665
)
Gain on sale of other assets
119
(214
)
(65
)
(991
)
Other
(612
)
3,060
(2,613
)
494
Income before income taxes
104,614
104,939
431,781
450,908
Provision for income taxes (benefit)
(30,834
)
(9,993
)
(66,445
)
(14,329
)
Net income
$
135,448
$
114,932
$
498,226
$
465,237
Net income per common share: Basic
$
0.50
$
0.44
$
1.86
$
1.77
Diluted
$
0.50
$
0.44
$
1.86
$
1.77
Average common shares outstanding: Basic
273,210
262,711
267,171
262,246
Diluted
273,536
263,317
267,659
262,868
Essential Utilities, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(In thousands of dollars)
(Unaudited)
December 31,
December 31,
2023
2022
Net property, plant and
equipment
$
12,097,072
$
11,130,946
Current assets
491,979
658,159
Regulatory assets and other
assets
4,252,408
3,930,002
$
16,841,459
$
15,719,107
Total equity
$
5,896,183
$
5,377,386
Long-term debt, excluding current
portion, net of debt issuance costs
6,826,085
6,371,057
Current portion of long-term debt
and loans payable
227,538
427,856
Other current liabilities
570,389
594,013
Deferred credits and other
liabilities
3,321,264
2,948,795
$
16,841,459
$
15,719,107
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222068479/en/
Media Contact: David Kralle Communications Media Hotline:
1.877.325.3477 Media@Essential.co
Investor Contact: Brian Dingerdissen Vice President, IR
and Treasurer O: 610.645.1191 BJDingerdissen@Essential.co
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