• GAAP Earnings Per Share (EPS): $2.17 for the full year 2024.
• Non-GAAP Earnings Per Share (EPS): $1.97 for the full year 2024.
• Operating Revenue Increase: Driven by rates and surcharges, increased water volume, offset by lower natural gas commodity prices.
• Operating Expenses Growth: 2% year-over-year increase.
• Capital Expenditure: $1.3 billion completed in 2024; planned $1.4 billion to $1.5 billion in 2025.
• Dividend Increase: 6% in 2024.
• Rate Cases and Surcharges: $148 million increase in 2024; $86.5 million increase in 2025 so far.
• Weather Normalization Impact: $8.2 million returned to customers due to cold weather in January 2025.
• PFAS Mitigation Investment: $27 million in 2024, targeting $450 million over four years.
• Infrastructure Investment Plan: $7.8 billion over the next five years.
• Projected EPS Growth: 5% to 7% annually through 2027.
• Equity Raise: $315 million planned through ATM program in 2025.

• Warning! GuruFocus has detected 12 Warning Signs with WTRG.

Release Date: February 27, 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 GAAP earnings per share of $2.17 for 2024, aligning with their guidance of 5% to 7% growth.
• The company successfully completed two large rate cases in Pennsylvania, enhancing revenue and reducing financing needs.
• Operating expenses were controlled, with only a 2% increase year-over-year, supporting affordability and shareholder earnings.
• The Board raised the dividend by 6% in 2024, continuing a 30+ year track record of dividend growth.
• Essential Utilities Inc (NYSE:WTRG) is actively engaged in PFAS mitigation, investing $27 million in 2024, with a goal to mitigate approximately 300 plants over four years.

Negative Points

• The company faced challenges with receiverships in Pennsylvania, taking over neglected and undercapitalized water and wastewater systems.
• Stock performance in the water industry, including Essential Utilities Inc (NYSE:WTRG), was disappointing despite being the strongest performing water stock in 2024.
• The macro challenge of low growth in the water industry compared to the electric utility industry remains a concern.
• Weather volatility impacted financial results, although a weather normalization mechanism has been implemented to mitigate future impacts.
• The acquisition of DELCORA is delayed and not expected to close in the current year, affecting long-term planning.

Q & A Highlights

Q: With M&A activity picking up, how do you think about the cadence of your $1 billion long-term equity plan? Is it still closely tied to wrapping up DELCORA, or are there new factors now driving it? A: Daniel Schuller, Executive Vice President and CFO, explained that the $1 billion equity program is flexible and could be exhausted sooner if the acquisition program accelerates, including the potential closing of DELCORA. Currently, DELCORA is not expected to close this year, and the equity plan is set to last about three years, but this could change with increased acquisition activity.

Q: Can you expand on the timeline for a permanent nomination for the Consumer Advocate in Pennsylvania and its impact on regulatory matters? A: Christopher Franklin, Chairman and CEO, noted that the acting Consumer Advocate has similar powers to a confirmed one. The timeline for a permanent nomination is uncertain as the Attorney General is taking time to make a decision. The current acting advocate, Darryl, has been with the office for 25 years, and the company maintains a good relationship with him.

Q: Regarding PFAS mitigation, are there any changes in strategy or capital plans due to developments in Washington, D.C.? A: Christopher Franklin stated that there are no anticipated slowdowns in PFAS mitigation efforts, and the company is proceeding with its $450 million plan. They are actively seeking state and federal funds to offset costs and are confident in recovering investments through regulatory channels.

Q: Could you provide more details on the potential revenue generation from your patent-pending PFAS solution? A: Daniel Schuller highlighted that the modular approach of their PFAS solution is cost-effective and suitable for small systems. They are in discussions with other utilities about this technology, which could become a revenue generator. The focus is on driving down costs and exploring opportunities for broader application.

Q: Can you elaborate on the potential opportunities with data centers and how they might impact Essential Utilities? A: Christopher Franklin explained that data center opportunities could take various forms, such as increased natural gas throughput or capital projects for line extensions. The company is open to exploring on-site generation projects, similar to past CHP projects, to provide low-cost power solutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.