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Essential (WTRG) Q1 Earnings and Revenues Surpass Estimates

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·4 min read
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Essential Utilities Inc. WTRG reported first-quarter 2022 operating earnings per share (EPS) of 76 cents, which surpassed the Zacks Consensus Estimate of 74 cents by 2.7%. The bottom line improved 7.5% from the year-ago quarter’s earnings of 72 cents per share.

Total Revenues

The first quarter’s operating revenues of $699.3 million were up 19.8% from $583.6 million in the prior-year quarter. The year-over-year improvement in total revenues was due to the recovery of purchased gas costs, customer growth and volume from the regulated natural gas segment.

Operating revenues for the first quarter surpassed the Zacks Consensus Estimate of $627 million by 11.5%.

Essential Utilities Inc. Price, Consensus and EPS Surprise

Essential Utilities Inc. Price, Consensus and EPS Surprise
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 continues to expand operations through acquisitions. The potential water and wastewater municipal acquisitions, once completed, will add nearly 415,000 customers to the existing customer base.

Currently, Essential Utilities has seven signed purchase agreements to acquire additional water and wastewater systems that are expected to serve nearly 224,000 retail customers or equivalent dwelling units and add around $418 million in rate base in three of its existing states.

Year to date, Essential Utilities’ regulated water segment received rate awards or infrastructure surcharges in Illinois, North Carolina, Ohio, and Pennsylvania of $8.2 million, and the regulated natural gas segment received a rate award of $5.2 million in Kentucky.

Operation and maintenance expenses for the first quarter were $142.6 million, up 13.4% from the year-ago figure of $125.1 million.

Operating income was $227.6 million, down 2.1% year over year.

Interest expenses increased 5.7% to $53.7 million from $50.8 million in the year-ago quarter.

Financial Highlights

Current assets were $443.5 million as of Mar 31, 2022 compared with $437.8 million on Dec 31, 2021. Long-term debt was $5,871.9 million as of Mar 31, 2022, higher than $5,779.5 million on Dec 31, 2021.

Essential invested $183.3 million in the first quarter of 2022 to replace and expand the water and wastewater utility infrastructure as well as upgrade the natural gas utility infrastructure.

Guidance

Essential reiterated the 2022 earnings guidance in the range of $1.75-$1.80 per share. The midpoint of the earnings guidance is on par with the corresponding Zacks Consensus Estimate of $1.78 per share. WTRG expects EPS growth of 5-7% from 2021 through 2024.

For 2022, Essential continues to expect that its customer base from the water segment will expand 2-3% due to acquisitions and organic customer growth.

Essential also plans to invest nearly $1 billion in 2022 and $3 billion through 2024 to improve the water and natural gas systems and to better serve customers through the usage of improved information technology.

Zacks Rank

Currently, Essential carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

American Water Works Company AWK posted first-quarter 2022 operating earnings per share of 87 cents, which surpassed the Zacks Consensus Estimate of 75 cents by 16%.

The 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 $4.47 reflects year-over-year growth of 5.2%.

Middlesex Water Company MSEX recorded first-quarter 2022 operating earnings per share of 68 cents, which surpassed the Zacks Consensus Estimate of 50 cents by 36%.

Middlesex Water Company reported an average beat of 2% in the last four quarters. The Zacks Consensus Estimate for MSEX’s 2022 earnings per share of $2.65 reflects year-over-year growth of 28%.

American States Water Company AWR reported first-quarter 2022 operating earnings per share of 38 cents, which lagged the Zacks Consensus Estimate of 54 cents by 29.6%.

The Zacks Consensus Estimate for AWR’s 2022 and 2023 earnings per share reflects year-over-year growth of 6.5% and 5.1%, respectively.


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