Back to top

Image: Bigstock

Essential (WTRG) Q1 Earnings Beat Estimates, Revenues Lag

Read MoreHide Full Article

Essential Utilities Inc. (WTRG - Free Report) reported first-quarter 2021 earnings per share of 72 cents, which surpassed the Zacks Consensus Estimate by 9.1%. The reported earnings were 20% higher than 60 cents per share recorded in the year-ago quarter.

GAAP earnings per share for the reported quarter were 72 cents compared with 20 cents in the year-ago period.

Total Revenues

First-quarter revenues of $583.6 million were up 128.3% year over year. The year-over-year improvement in total revenues was due to contribution from its acquired natural gas assets, increased volume, growth and rate along with surcharge increases in the regulated water segment.

However, revenues for the reported quarter missed the Zacks Consensus Estimate by 16.6%.

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

The company continues to expand operations through strategic acquisitions. The pipeline of potential water and wastewater municipal acquisitions that it is actively pursuing represents nearly 395,000 total customers or equivalent dwelling units.

To date in 2021, the regulated water segment received rate awards in different jurisdictions that led to an increase in annualized revenues of the company by $13.5 million. Essential’s regulated natural gas segment has received rate awards or infrastructure surcharges in Pennsylvania and Kentucky, estimated to increase annualized revenues by $1.1 million. The company currently has a proceeding pending in Virginia for the regulated water segment, which would add an estimated $1.7 million in incremental revenues.

Operation and maintenance expenses increased 17.3% year over year to $125.1 million. This was primarily due to an increase in Peoples transaction-related costs.

Operating income for the reported quarter was $232.4 million, up 216.2% year over year.

Interest expenses increased 44.7% to $50.8 million from $35.1 million in the year-ago quarter.

Financial Highlights

Current assets were $348.1 million as of Mar 31, 2021 compared with $380.2 million as of Dec 31, 2020. Long-term debt was $5,547.9 million as of Mar 31, 2021, higher than $5,507.8 million on Dec 31, 2020

Essential invested $178 million in the first three months of 2021 to improve regulated water and natural gas infrastructure systems. The company remains on track to invest nearly $1 billion in 2021 to replace and expand its water and wastewater utility infrastructure as well as replace and upgrade its natural gas utility infrastructure.

Guidance

The company reaffirmed its 2021 earnings guidance in the range of $1.64-$1.69 per share. The mid-point of the earnings guidance is on par with the corresponding Zacks Consensus Estimate of $1.67 per share.

It expects the customer base from the water segment to expand 2-3% on the back of acquisitions and organic customer growth.

The company plans to invest $550 million in the regulated water segment and $450 million in the regulated gas segment in 2021. This capital expenditure is part of its total investment plan of $3 billion through 2023.

Zacks Rank

Currently, Essential carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

American Water Works Company (AWK - Free Report) posted first-quarter 2021 earnings of 73 cents per share, on par with the Zacks Consensus Estimate.

American States Water Company (AWR - Free Report) reported first-quarter 2021 operating earnings of 52 cents per share, which surpassed the Zacks Consensus Estimate of 48 cents by 8.3%.

California Water Service (CWT - Free Report) incurred first-quarter 2021 loss of 6 cents per share, wider than the Zacks Consensus Estimate of a loss of 3 cents.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?

Last year’s 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2021 today >>