Essential Utilities: Essential Utilities Inc (WTRG) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and ...

In This Article: Earnings Per Share (EPS): $1.03 GAAP EPS, a 6% increase over last year's quarter. 2025 EPS Guidance: Reaffirmed at $2.07 to $2.11. Infrastructure Investments: Planned $1.4 billion to $1.5 billion in 2025; $270.5 million invested through March 31. Equity Raised: Approximately $210 million issued through ATM program. Revenue: Increased 28% from $612.1 million to $783.6 million. O&M Expenses: Flat year over year. Regulatory Recoveries: $67 million increase, with two-thirds from gas and one-third from water. Rate Increases: Implemented in Ohio and North Carolina, increasing annual revenues by $5.8 million. Dividend Growth: Averaged about 7% since 2015. Rate Base Growth: 15% compounded annual growth rate since 2015, including the purchase of Peoples. Customer Base: Over 700,000 gas customers in Pennsylvania and over 40,000 in Kentucky. Acquisitions: Closed on the village of Midvale's Water System and Greenville Wastewater utility assets. Pending Acquisitions: Five signed agreements expected to serve over 210,000 customers, totaling approximately $340 million in purchase price. Warning! GuruFocus has detected 12 Warning Signs with WTRG. Release Date: May 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript . Positive Points Essential Utilities Inc ( NYSE:WTRG ) reported a strong first quarter with a 6% increase in GAAP earnings per share, reaching $1.03. The company reaffirmed its 2025 earnings per share guidance range of $2.07 to $2.11, indicating confidence in its financial outlook. Essential Utilities Inc ( NYSE:WTRG ) plans to invest between $1.4 billion and $1.5 billion in infrastructure improvements in 2025, with $270.5 million already invested by March 31. The company achieved a 99.8% water quality compliance rate, showcasing its commitment to operational excellence. Essential Utilities Inc ( NYSE:WTRG ) was named to USA Today's list of climate leaders for the third consecutive year, highlighting its dedication to environmental stewardship. Negative Points The company faces potential challenges with its Texas rate case, as it has not filed a rate case in the state for 20 years, which may lead to complexities in the regulatory process. Despite strong first-quarter results, Essential Utilities Inc ( NYSE:WTRG ) is cautious about potential headwinds in the remaining quarters, which could impact its ability to meet guidance. The PFAS remediation project, while necessary, involves significant capital expenditure, with $450 million projected to be spent by 2028. The company is still in the early stages of its lean initiative, which aims to improve operational efficiency, indicating that cost savings may not be realized immediately. The acquisition of the Beaver Falls system faces regulatory hurdles, as an adverse recommendation from the ALJ could delay the process. Q & A Highlights Q : Given recent share price strengths, are you considering completing the remaining equity issuance ahead of the second quarter and possibly pulling forward a portion of 2026 equity needs? A : Daniel Schuller, Executive Vice President and CFO, stated that the focus is on raising the $315 million in equity for 2025 rather than considering 2026 needs. They will issue shares when market conditions are favorable without significantly impacting the share price. Q : What level of revenue increase and equity ratio are you targeting for the upcoming Texas rate case? A : Daniel Schuller mentioned that the rate case filing is targeted for the end of the month. The revenue ask, equity layer, and ROE will be consistent with other states. Christopher Franklin, CEO, added that they aim to work closely with Texas regulators, acknowledging potential challenges due to the long gap since the last filing. Q : With a strong start to the year, why not raise guidance? Are you moving costs from 2026 into 2025 to de-risk 2026? A : Daniel Schuller explained that it's premature to adjust guidance after only four months, despite favorable first-quarter tailwinds. They prefer to wait and provide clarity as the year progresses, considering potential headwinds in the remaining quarters. Q : How does the recent EPA announcement on PFAS impact your operational strategy and capital plans? A : Christopher Franklin confirmed that they are proceeding full speed ahead with their PFAS mitigation plans, aiming to complete the $450 million project by 2028. There is no indication from the EPA or the administration to slow down, and they continue to test and mitigate affected wells. Q : Regarding data centers, are you considering more gas distribution or direct contracts for on-site generation? A : Michael Huwar, President of Peoples Natural Gas, stated that they are exploring various approaches, including behind-the-meter generation for data centers and large volume customers. The PJM grid's inadequacy for future projects highlights the role of natural gas, and they are actively working on potential investments and partnerships. For the complete transcript of the earnings call, please refer to the full earnings call transcript . This article first appeared on GuruFocus .