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Essential (WTRG) Q4 Earnings Miss, Sales Meet Estimates

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Essential Utilities Inc. WTRG — formerly Aqua America, Inc. — reported fourth-quarter 2019 earnings per share of 34 cents, lagging the Zacks Consensus Estimate by a penny. The reported earnings were 9.7% higher than 31 cents per share recorded in the year-ago quarter.

Total Revenues

Fourth-quarter revenues of $226 million were on par with the Zacks Consensus Estimate. Total revenues were up 9.8% year over year. The year-over-year improvement in total revenues was due to positive impact from rate increases, surcharges, volume, and customer growth.

Essential Utilities, Inc. Price, Consensus and EPS Surprise

Aqua America, Inc. Price, Consensus and EPS Surprise

Highlights of the Release

In 2019, the company invested $59.7 million to acquire eight water and wastewater systems. These acquisitions added 12,000 new customers to the company’s customer base. Essential increased its customer base by 2.1% year over year with 21,114 new customer connections. This year, the company completed the purchase of the City of Campbell’s water system, which serves 3,200 customer connections in Ohio.

In 2019, its subsidiaries in New Jersey, North Carolina, Ohio and Pennsylvania received rate awards or infrastructure surcharges totaling an estimated increase to annualized revenues of $58.2 million. The company currently has rate proceedings pending in Indiana, North Carolina, Virginia and New Jersey worth $8.3 million.

In January 2020, it received approval from the Pennsylvania Public Utility Commission. Essential now expects to close the Peoples acquisition on Mar 16, 2020.

Operation and maintenance expenses decreased 7.8% year over year to $85.3 million.

Interest expenses increased 25.4% to $33.1 million from $26.4 million in the year-ago quarter.

Financial Highlights

Current assets were $2,012.7 million as of Dec 31, 2019, up from $147.1 million in the corresponding period of 2018. Long-term debt was $2,943.3 million as of Dec 31, 2019, higher than $2,398.5 million in the comparable period of 2018.

Guidance

Essential provided its 2020 earnings guidance in the range of $1.53-$1.58 per share. It expects customer base to expand 2-3% in 2020, depending on regulatory approval. The company plans to invest $550 million in 2020. This is part of its investment plan of $2.8 billion through 2022.

Other Water Utility Releases

Here are some other players from the water utility space that have reported fourth-quarter earnings:

American Water Works Company AWK reported in-line earnings, and American States Water Company AWR and SJW Group SJW beat the Zacks Consensus Estimate by 9.8% and 4.6%, respectively.

Zacks Rank

Currently, Essential carries a Zacks Rank #4 (Sell).

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

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