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Essential (WTRG) Q3 Earnings and Revenues Lag Estimates

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Essential Utilities Inc. (WTRG - Free Report) reported third-quarter 2021 earnings per share of 19 cents, which lagged the Zacks Consensus Estimate of 22 cents by 13.6%.

The reported earnings figure was 17.4% lower than 23 cents per share recorded in the year-ago quarter.

Total Revenues

Third-quarter revenues of $361.9 million were up 3.8% year over year. The year-over-year improvement in total revenues was due to recovery of purchased gas costs, customer growth and new rate increases in the regulated water segment.

Revenues for the reported quarter lagged the Zacks Consensus Estimate of $367 million by 1.4%.

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 acquisitions. The pipeline of potential water and wastewater municipal acquisitions, when completed, will add another 234,075 customers to its existing customer base.

Year to date, the regulated water segment has received rate awards in different jurisdictions, which led to an increase in annualized revenues by $31 million. Essential’s regulated natural gas segment has received rate awards or infrastructure surcharges in Pennsylvania and Kentucky, which are estimated to increase annualized revenues by $1.3 million. The company currently has proceedings pending for the water and gas segment, which, on approval, is estimated to add $116.6 million to annual revenues.

Operation and maintenance expenses increased 2.4% year over year to $139.4 million.

Operating income for the reported quarter was $101.5 million, up 3.5% year over year.

Interest expenses increased 4.4% to $52.1 million from $49.9 million in the year-ago quarter.

Financial Highlights

Current assets were $352.5 million as of Sep 30, 2021 compared with $380.2 million on Dec 31, 2020. Long-term debt was $5,598.7 million as of Sep 30, 2021, higher than $5,507.8 million on Dec 31, 2020.

Essential invested $675.8 million in the first nine 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 upgrade its natural gas utility infrastructure.

Guidance

The company reaffirmed its 2021 earnings guidance at $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. Essential expects earnings per share growth of 5-7% from 2020 through 2023.

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

Essential aims to invest $3 billion through 2023 to strengthen water and natural gas operations.

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

California Water Service (CWT - Free Report) recorded third-quarter 2021 earnings of $1.20 per share, outperforming the Zacks Consensus Estimate of 79 cents by 51.9%.

Middlesex Water Company (MSEX - Free Report) reported third-quarter 2021 earnings of 65 cents per share, lagging the Zacks Consensus Estimate of 78 cents by 16.7%.

American States Water Company (AWR - Free Report) reported third-quarter 2021 operating earnings of 76 cents per share, which lagged the Zacks Consensus Estimate of 77 cents by 1.3%.