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Essential (WTRG) Beats Q1 Earnings Estimates, Adds Customers

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Essential Utilities Inc. (WTRG - Free Report) — formerly Aqua America, Inc. — reported first-quarter 2020 earnings per share of 60 cents, beating the Zacks Consensus Estimate by 9.1%. The reported earnings were 114.3% higher than 28 cents per share recorded in the year-ago quarter.

Total Revenues

First-quarter revenues of $255.6 million beat the Zacks Consensus Estimate by 23.5%. Total revenues were up 27.1% year over year. The year-over-year improvement in total revenues was due to positive impact from rate increases, customer growth and contribution from the acquired natural gas assets.

Segment Details

The Regulated Water segment contributed $216.2 million to total revenues in the first quarter. Revenues from this segment improved 8% year over year.

The Regulated Natural Gas segment contributed $38.5 million to total revenues between Mar 16 and Mar 31.

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

During the quarter, the company closed the acquisition of Peoples, which expanded its operation in the natural gas business. The company continues to acquire other water utility service providers to expand water operations. The completed acquisitions and organic growth of water utilities during the quarter helped Essential to register customer growth of 0.6%.

Year to date, the regulated water segment has received rate awards in different jurisdictions that led to an increase in annualized revenues of the company by $5.2 million and the regulated natural gas segment has received rate awards that boosted annualized revenues by $977,000. The company currently has rate proceedings pending in Indiana, North Carolina, Ohio and New Jersey worth $10.1 million.

Operation and maintenance expenses increased 34.4% year over year to $106.6 million. This was attributed to an increase in Peoples transaction-related costs, and the regulated natural gas segment’s operations and maintenance expenses.

Interest expenses increased 25.8% to $33.1 million from $35.1 million in the year-ago quarter.

Financial Highlights

Current assets were $368 million as of Mar 31, 2020 compared with $2,015.1 million on Dec 31, 2019. Long-term debt was $4,729.1 million as of Mar 31, 2020, higher than $2,943.3 million on Dec 31, 2019.

Essential invested $118.7 million in the first three months of 2020 to improve regulated water and natural gas infrastructure systems.

Guidance

Essential continues to monitor the impact of COVID-19 and will update its guidance if necessary. The company reiterated its 2020 earnings guidance in the range of $1.53-$1.58 per share. It expects the customer base from the water segment to expand 2-3% in 2020, depending on regulatory approval.

The company plans to invest $550 million in the regulated water segment and $400 million in the regulated gas segment in 2020. This capital expenditure is part of its total 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 first-quarter earnings:

While American Water Works Company (AWK - Free Report) and Middlesex Water Company (MSEX - Free Report) beat the Zacks Consensus Estimate by 3.1% and 15.8%, respectively, American States Water Company (AWR - Free Report) missed estimates by 5%.

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.

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