{"id":523557,"date":"2021-08-04T16:33:55","date_gmt":"2021-08-04T20:33:55","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/essential-utilities-reports-financial-results-for-q2-2021\/"},"modified":"2021-08-04T16:33:55","modified_gmt":"2021-08-04T20:33:55","slug":"essential-utilities-reports-financial-results-for-q2-2021","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/essential-utilities-reports-financial-results-for-q2-2021\/","title":{"rendered":"Essential Utilities Reports Financial Results for Q2 2021"},"content":{"rendered":"

<\/p>\n

Essential Utilities Reports Financial Results for Q2 2021<\/b><\/p>\n

Earns $0.32 earnings per share; reaffirms annual earnings guidance<\/i><\/p>\n

Publishes 2020 ESG report<\/i><\/p>\n

BRYN MAWR, Pa.–(BUSINESS WIRE<\/a>)–
\nEssential Utilities Inc. (NYSE: WTRG) (\u201cEssential\u201d), today reported results for the second quarter ended June 30, 2021.\n<\/p>\n

\n\u201cWe delivered strong earnings in the first half of the year while continuing to provide essential services across our 10-state footprint,\u201d said Essential Chairman and Chief Executive Officer Christopher Franklin. \u201cWe remain focused on our mission as we continue to make significant investments in infrastructure and remain confident in our ability to reaffirm our 2021 earnings guidance range of $1.64 to $1.69 per share.\u201d\n<\/p>\n

Operating Results<\/b><\/p>\n

\nEssential reported net income of $80.9 million for the second quarter 2021, an 8.4% increase compared to $74.6 million reported for the same quarter 2020. Earnings per share were $0.32 for the quarter compared to $0.29 per share for the second quarter 2020. Rates and surcharges and increased volume in the regulated water segment were the primary drivers of the increase in earnings.\n<\/p>\n

\nEssential\u2019s revenues for the quarter were $397.0 million, an increase of 3.3% compared to $384.5 million in the second quarter of 2020. Rates and surcharges, increased volume and growth from the regulated water segment, and higher purchased gas prices were the largest contributors to the increase in revenues for the quarter. Operations and maintenance expenses decreased slightly to $127.5 million for the second quarter of 2021 compared to $128.6 million in the second quarter of 2020.\n<\/p>\n

\nEssential\u2019s regulated water segment reported revenues for the quarter of $248.2 million, an increase of 6.0% compared to $234.1 million in the second quarter of 2020. Rates and surcharges, customer growth, and increased volume were the largest contributors to the increase in revenues for the period. Operations and maintenance expenses for Essential\u2019s regulated water segment increased 1.5% to $77.8 million for the second quarter of 2021 compared to $76.6 million.\n<\/p>\n

\nEssential\u2019s regulated natural gas segment reported revenues for the quarter of $141.6 million, a decrease of 3.6% compared to $146.9 million in the second quarter of 2020. Lower gas volume was the largest driver in the decrease, resulting from warmer weather in the early part of the second quarter of 2021 as compared to the same period of 2020. Operations and maintenance for the same period for Essential\u2019s regulated natural gas segment increased to $52.3, or 2.9% from $50.9 million in the second quarter of 2020. Purchased gas costs were $39.8 million for the quarter as compared to $41.6 million for the same quarter in 2020. The second quarter of 2021 represents the first quarter of comparable results for the regulated natural gas segment since closing on the Peoples transaction on March 16, 2020.\n<\/p>\n

\nAs of June 30, 2021, Essential reported year-to-date net income of $264.6 million or $1.04 per share (GAAP) compared to $126.4 million or $0.50 per share (GAAP) reported through the same period of 2020. Year-over-year comparisons were impacted by the Peoples transaction, which closed on March 16, 2020. Results for the first half of 2021 include the full six months of operating results of Peoples, which comprises the company\u2019s regulated natural gas segment. For the first half of 2020, adjusted income and adjusted income per share (both non-GAAP financial measures) excluded Peoples-related transaction expenses and included a normalized pro forma adjustment for the Peoples operating results for the period Jan. 1, 2020 to March 15, 2020 to provide the basis for a 2020 full-year run rate of operating results. Adjusting for those items, Essential\u2019s adjusted income in the first six months of 2020 was $228.3 million (non-GAAP), or $0.90 per share (non-GAAP). When compared to the adjusted income in the first six months of 2020, earnings in the first half of 2021 increased 15.9%. Please refer to the reconciliation of GAAP to non-GAAP financial measures later in this press release for additional information on Essential\u2019s use of non-GAAP financial measures as a supplement to its GAAP results.\n<\/p>\n

\nFor the first six months of 2021, the company reported revenues of $980.6 million, an increase of 53.2% compared to $640.1 million in the first half of 2020. Operations and maintenance expenses for the first half of 2021 were $252.6 million compared to $235.2 million in 2020.\n<\/p>\n

Dividend <\/b><\/p>\n

\nOn July 2, 2021, Essential\u2019s board of directors declared a quarterly cash dividend of $0.2682 per share of common stock. This increase represents a 7% increase to the quarterly dividend rate and is the company\u2019s 31st<\/sup> increase in the last 30 years. This dividend will be payable on Sept. 1, 2021 to shareholders of record on Aug. 13, 2021. Essential has paid a consecutive quarterly cash dividend for 76 years.\n<\/p>\n

Environmental, Social and Governance <\/b><\/p>\n

\nEssential is publishing its 2020 Environmental, Social and Governance (ESG) report on Aug. 5, 2021. The updated report fully incorporates the natural gas segment and is aligned with a number of leading reporting frameworks and principles, including those set by the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), the CDP climate change survey (CDP), and the United Nations Sustainable Development Goals (UN SDGs).\n<\/p>\n

\n\u201cWe are proud to be able to share our ESG efforts, progress and commitments with our customers, shareholders, employees and the communities we serve. We believe this to be among the most comprehensive and accessible ESG reporting in the utility industry. The strength of our company is not only measured by our financial performance, but also by our commitment to environmental stewardship, sustainable business practices, employee safety, diversity and inclusion, customer experience and community engagement,\u201d Franklin added. \u201cThese principles are ingrained in our 135-year-old company, and they drive our decision-making when it comes to our growth and our future.\u201d\n<\/p>\n

\nEssential\u2019s ESG report is published as an interactive microsite at ESG.Essential.co.\n<\/p>\n

Financing <\/b><\/p>\n

\nIn August 2020, Essential announced an offering of 6.7 million shares of common stock via a forward equity sale agreement. The company expects to fully settle the transaction on or before Aug. 10, 2021. Assuming full physical settlement at the forward equity agreement price, the company would receive approximately $300 million in proceeds, which is net of expenses for interest and dividends during the term of the agreement. The proceeds are expected to be used to fund general corporate purposes, including water and wastewater acquisitions in the company\u2019s pipeline.\n<\/p>\n

Water utility acquisition growth<\/b><\/p>\n

\nEssential\u2019s continued acquisition growth allows the company to provide safe and reliable water and wastewater service to an even larger customer base. On Aug. 2, 2021, Essential Utilities closed its first fair market value acquisition transaction in Texas. The Commons Water Supply, Inc. water treatment and distribution system in Huffman, Texas serves approximately 1,000 customer connections.\n<\/p>\n

\nThe company currently has seven signed purchase agreements for additional water and wastewater systems that are expected to serve approximately 233,000 equivalent retail customers or equivalent dwelling units and add approximately $458.5 million in rate base in two of our existing states. This includes the recently signed agreement to acquire the water system from the Borough of Shenandoah for $12 million, which serves approximately 3,000 customers in Pennsylvania. Also included is the company\u2019s agreement to acquire the Delaware County Regional Water Quality Control Authority (DELCORA) for $276.5 million. DELCORA, a Pennsylvania sewer authority, serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs.\n<\/p>\n

\nThe pipeline of potential water and wastewater municipal acquisitions the company is actively pursuing represents approximately 390,000 total customers or equivalent dwelling units. On average, the company remains on track to annually increase customers between 2 and 3% through acquisitions and organic customer growth.\n<\/p>\n

Capital expenditures<\/b><\/p>\n

\nEssential invested approximately $404.6 million in the first half of the year to improve its regulated water and natural gas infrastructure systems and to enhance its customer service across its operations. The company remains on track to invest approximately $1 billion in 2021 to replace and expand its water and wastewater utility infrastructure and to replace and upgrade its natural gas utility infrastructure, leading to significant reductions in methane emissions that occur in aged gas pipes. In total, infrastructure investments of approximately $3 billion are expected through 2023 to improve water and natural gas systems and better serve our customers through improved information technology. The capital investments made to rehabilitate and expand the infrastructure of the communities Essential serves are critical to its mission of safely and reliably delivering Earth\u2019s most essential resources. The company\u2019s plan to accelerate the replacement of aged gas pipe at Peoples continues, thereby enabling significant reduction in methane emissions.\n<\/p>\n

Rate activity <\/b><\/p>\n

\nTo date in 2021, the company\u2019s regulated water segment received rate awards or infrastructure surcharges in New Jersey, North Carolina, Ohio, Pennsylvania, Illinois, Indiana, and Virginia of $16.7 million. The company currently has a rate proceeding pending in Ohio for its regulated water segment, which would add an estimated $8.7 million in incremental revenue. Additionally, the company\u2019s regulated natural gas segment has received rate awards or infrastructure surcharges in Pennsylvania and Kentucky totaling an estimated increase to annualized revenues of $1.3 million. The company currently has a rate proceeding pending in Kentucky for its regulated natural gas segment, which would add an estimated $9.1 million in incremental revenue.\n<\/p>\n

Reaffirms 2021 Essential Guidance <\/b><\/p>\n

\nEssential continues to monitor the effects of the COVID-19 pandemic on its customers, employees and the business and will update guidance impacts from the pandemic in the future if needed. The following is the company\u2019s 2021 full-year guidance:\n<\/p>\n