Essential Utilities (WTRG) Q3 Earnings & Sales Beat Estimates
Essential Utilities Inc. WTRG reported third-quarter 2022 operating earnings per share (EPS) of 26 cents, surpassing the Zacks Consensus Estimate of 23 cents by 13%. The bottom line also improved from the year-ago quarter’s earnings of 19 cents per share by 36.8%.
Earnings were driven by customer growth, increased volume in its regulated natural gas segment, increased volume and regulated water rates in its regulated water segment, which were offset by increased expenses and other items.
Total Revenues
Third-quarter operating revenues of $435 million surpassed the Zacks Consensus Estimate of $376 million by 15.6%.
Total revenues improved 20.1% year over year. The year-over-year improvement in total revenues was due to the recovery of purchased gas costs, customer growth and volume from the regulated water segment.
Essential Utilities Inc. Price, Consensus and EPS Surprise
Essential Utilities Inc. price-consensus-eps-surprise-chart | Essential Utilities Inc. Quote
Highlights of the Release
Essential Utilities continues to expand operations through acquisitions. The potential water and wastewater municipal acquisitions will add nearly 430,000 customers to the existing customer base.
Currently, Essential Utilities signed seven purchase agreements to acquire additional water and wastewater systems that are expected to serve nearly 217,000 retail customers or equivalent dwelling units for $364.5 million.
Year to date, Essential Utilities’ regulated water segment has received rate awards or infrastructure surcharges in Illinois, North Carolina, Ohio and Pennsylvania totaling $83.3 million, and the regulated natural gas segment has received a rate award of $5.5 million in Kentucky.
Operation and maintenance expenses for the third quarter were $308.8 million, up 18.6% from the year-ago figure of $260.4 million.
Operating income was $125.8 million, up 23.9% year over year.
Interest expenses increased 16.1% to $60.5 million from $52.1 million in the year-ago quarter.
Financial Highlights
Current assets were $541.3 million as of Sep 30, 2022, compared with $437.8 million as of Dec 31, 2021. Long-term debt was $6,173.6 million as of Sep 30, 2022, higher than $5,779.5 million as of Dec 31, 2021.
Essential Utilities invested $719.7 million in the first nine months of 2022 to replace and expand the water and wastewater utility infrastructure, as well as upgrade the natural gas utility infrastructure.
Guidance
Essential Utilities reiterated its 2022 earnings guidance at $1.75-$1.80 per share.
For 2022, Essential Utilities expects its customer base in the water segment to expand 2-3% due to acquisitions and organic customer growth.
Essential Utilities also plans to invest $1 billion in 2022 and $3 billion through 2024 to improve the water and natural gas systems and better serve customers through the use of improved information technology.
Essential Utilities expects compound annual growth rate of 6 to 7% through 2024 and 8 to 10% through 2024 for its regulated water and regulated natural gas segment respectively.
Zacks Rank
Currently, Essential Utilities carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Releases
American Water Works Company AWK posted third-quarter 2022 operating earnings per share (EPS) of $1.63, which surpassed the Zacks Consensus Estimate of $1.49 by 9.4%.
Long-term (three to five years) earnings growth of American Water Works is currently pegged at 8%. The Zacks Consensus Estimate for AWK’s 2022 earnings per share of $4.46 suggests year-over-year growth of 4.9%.
American States Water Company AWR reported third-quarter 2022 operating earnings per share of 70 cents, which lagged the Zacks Consensus Estimate of 69 cents by 1.4%.
The Zacks Consensus Estimate for AWR’s 2022 and 2023 earnings per share suggests year-over-year growth of 2% and 7.5%, respectively.
Middlesex Water Company MSEX recorded third-quarter 2022 operating earnings per share of 80 cents, which lagged the Zacks Consensus Estimate of 88 cents by 9.1%.
Middlesex Water Company’s current dividend yield is 1.32%. The Zacks Consensus Estimate for MSEX’s 2022 earnings per share of $2.29 indicates year-over-year growth of 10.6%.
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