Essential Utilities Reports Record Financial Results for 2022
Earnings per share of
Record infrastructure investments of
Closed three acquisitions, adding
“During a year that included rising interest rates, inflation and supply chain challenges, we upheld our long tradition of operational excellence, strong growth, and record investment in infrastructure, leading to improved quality, safety, and reliability for the communities we serve,” said Essential Chairman and Chief Executive Officer
“I am confident that as we look forward to 2023, we will be presented with an opportunity to positively impact our employees, customers, the communities we serve, the environment and our shareholders.”
Full-year 2022 Operating Results
Essential reported total operating revenues of
Operations and maintenance expenses were
Essential’s net income of
Essential’s regulated water segment reported revenues of
Essential’s regulated natural gas segment reported revenues of
Fourth Quarter 2022 Operating Results
Essential reported net income of
Revenues increased to
Dividend
As previously announced in 2022, Essential’s board of directors declared a quarterly cash dividend of
Water Utility Growth by Acquisition
Essential’s continued growth by acquisition allows the company to provide safe and reliable water and wastewater service to an even larger customer base than it could from only organic customer growth alone. In 2022, Essential acquired three water and wastewater systems and added approximately
The company has eight signed purchase agreements for nine additional water and wastewater systems in
The pipeline of potential water and wastewater municipal acquisitions the company is actively pursuing represents over 400,000 total customers.
Capital Expenditures
In 2022, Essential invested a record amount of over
Financing
At year-end 2022, Essential’s weighted average cost of fixed-rate long-term debt was 3.78%, and the company had
Rate Activity
In 2022, the company’s regulated water segment received rate awards or infrastructure surcharges in
To date in 2023, the company’s regulated water segment received rate awards or infrastructure surcharges in
Environmental, Social and Governance
As announced in January, Essential reaffirmed its ESG commitments. As of year-end 2022, the company reached an estimated 23% scope 1 and 2 emissions reduction towards its 60% reduction target, 16% of employees are people of color towards its 17% target, and over 15% supplier diversity, achieving its 15% target. Essential also reaffirmed its industry-leading, multi-year plan to ensure that finished water does not exceed 13 parts per trillion (ppt) of PFOA, PFOS, and PFNA compounds across all states served by its regulated water segment.
Essential’s 2023 Financial and Growth Guidance
On
-
In 2023, net income per diluted common share will be
$1.85 to$1.90 -
Through 2025, earnings per share will grow at a compounded annual growth rate of 5 to 7%, based off the company’s 2022 earnings per share of
$1.77 -
Through 2025, we will make regulated infrastructure investments of approximately
$1.1 billion annually, weighted towards the regulated water segment; an increase of approximately$100 million annually from the prior plan. - Through 2025, the regulated water segment rate base will grow at a compounded annual growth rate of 6 to 7%
- Through 2025, the regulated natural gas segment rate base will grow at a compounded annual growth rate of 8 to 10%
- The regulated water customer base (or equivalent dwelling units) of the business will grow at an average annual growth rate of between 2 and 3% from acquisitions and organic customer growth
-
Excluding the planned divestiture of
West Virginia , the regulated natural gas customer base of the business will be stable for 2023.
ESG Guidance and Commitments
- Reduction of Scope 1 and Scope 2 greenhouse gas emissions by 60% by 2035 from the company’s 2019 baseline
- Multiyear plan to ensure that finished water does not exceed 13 parts per trillion (ppt) of PFOA, PFOS, and PFNA compounds
- Multiyear plan to increase diverse supplier spend to 15%
- Multiyear plan to reach 17% employees of color
Essential reaffirms its commitment to substantially reduce Scope 1 and 2 greenhouse gas emissions by 2035. The company plans to achieve these reductions through extensive gas pipeline replacement, the purchase of renewable energy, accelerated methane leak detection and repair, and various other planned initiatives. Essential also reaffirms its commitment to diversity, equity, and inclusion efforts to ensure the diversity of its employees and suppliers reflects the diversity of its customer population.
Assumptions
The earnings per share, infrastructure investment and rate base guidance includes the signed municipal water and wastewater acquisitions for which the company has entered into signed purchase agreements as of the date the guidance was announced but does not include other potential municipal acquisitions from the company’s list of acquisition opportunities that currently represents over 400,000 customer equivalents. The average annual regulated water segment growth guidance announced today reflects the company’s proven acquisition track record of adding nearly 118,000 customers or equivalent dwelling units and over
The guidance is also based on the company’s expectation that it will continue to issue equity on an as needed basis to support acquisitions and capital investment plans.
The company’s guidance does not include any impact from the recently announced agreement to sell its
Fourth Quarter and Full Year 2022 Earnings Call Information
Date:
Time:
Webcast and slide presentation link: https://www.essential.co/events-and-presentations/events-calendar
Confirmation code: 7366261
The company’s conference call with financial analysts will take place on
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates,” and similar expressions. The Company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent its views only as of today and should not be relied upon as representing its views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, among others: the guidance range of net income per diluted common share; the continuation of the three-year period of earnings growth; the anticipated amount of capital investment; the anticipated amount of capital investment; the reduction of Scope 1 and Scope 2 greenhouse gas emissions by 60% by 2035 from the company’s 2019 baseline; its multi-year plan to ensure that finished water does not exceed 13 parts per trillion of PFOA, PFOS, and PNFA compounds, that the company’s municipal growth pipeline is strong; that the company will be able to positively impact the company’s employees, customers, communities it serves, the environment, and its shareholders; the company’s ability to increase diverse supplier spend to 15%; the company’s ability to achieve 17% employees of color; and, the anticipated closing of the sale of its
About Essential
Operating as the Aqua and Peoples brands, Essential serves approximately 5.5 million people across 10 states. Essential is one of the most significant publicly traded water, wastewater service and natural gas providers in the
Selected Operating Data | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Quarter Ended | Year Ended | |||||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Operating revenues |
$ |
705,383 |
$ |
535,687 |
$ |
2,288,032 |
$ |
1,878,144 |
||||||||
Operations and maintenance expense |
$ |
184,726 |
$ |
158,635 |
$ |
613,649 |
$ |
550,580 |
||||||||
Net income |
$ |
114,932 |
$ |
116,506 |
$ |
465,237 |
$ |
431,612 |
||||||||
Basic net income per common share |
$ |
0.44 |
$ |
0.45 |
$ |
1.77 |
$ |
1.68 |
||||||||
Diluted net income per common share |
$ |
0.44 |
$ |
0.44 |
$ |
1.77 |
$ |
1.67 |
||||||||
Basic average common shares outstanding |
|
262,711 |
|
261,749 |
|
262,246 |
|
257,487 |
||||||||
Diluted average common shares outstanding |
|
263,317 |
|
262,217 |
|
262,868 |
|
258,180 |
Consolidated Statement of Operations | |||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||||||
Operating revenues |
$ |
705,383 |
|
$ |
535,687 |
|
$ |
2,288,032 |
|
$ |
1,878,144 |
|
|||||||||
Cost & expenses: | |||||||||||||||||||||
Operations and maintenance |
|
184,726 |
|
|
158,635 |
|
|
613,649 |
|
|
550,580 |
|
|||||||||
Purchased gas |
|
247,099 |
|
|
137,724 |
|
|
601,995 |
|
|
340,262 |
|
|||||||||
Depreciation |
|
80,037 |
|
|
75,184 |
|
|
315,811 |
|
|
292,191 |
|
|||||||||
Amortization |
|
888 |
|
|
1,145 |
|
|
5,366 |
|
|
5,761 |
|
|||||||||
Taxes other than income taxes |
|
22,672 |
|
|
23,422 |
|
|
90,024 |
|
|
86,641 |
|
|||||||||
Total |
|
535,422 |
|
|
396,110 |
|
|
1,626,845 |
|
|
1,275,435 |
|
|||||||||
Operating income |
|
169,961 |
|
|
139,577 |
|
|
661,187 |
|
|
602,709 |
|
|||||||||
Other expense (income): | |||||||||||||||||||||
Interest expense |
|
68,771 |
|
|
52,772 |
|
|
238,116 |
|
|
207,709 |
|
|||||||||
Interest income |
|
(732 |
) |
|
(1,094 |
) |
|
(3,675 |
) |
|
(2,384 |
) |
|||||||||
Allowance for funds used during construction |
|
(5,863 |
) |
|
(6,870 |
) |
|
(23,665 |
) |
|
(20,792 |
) |
|||||||||
Gain on sale of other assets |
|
(214 |
) |
|
(353 |
) |
|
(991 |
) |
|
(976 |
) |
|||||||||
Other |
|
3,060 |
|
|
(1,455 |
) |
|
494 |
|
|
(2,848 |
) |
|||||||||
Income before income taxes |
|
104,939 |
|
|
96,577 |
|
|
450,908 |
|
|
422,000 |
|
|||||||||
Provision for income taxes benefit |
|
(9,993 |
) |
|
(19,929 |
) |
|
(14,329 |
) |
|
(9,612 |
) |
|||||||||
Net income |
$ |
114,932 |
|
$ |
116,506 |
|
$ |
465,237 |
|
$ |
431,612 |
|
|||||||||
Net income per common share: | |||||||||||||||||||||
Basic |
$ |
0.44 |
|
$ |
0.45 |
|
$ |
1.77 |
|
$ |
1.68 |
|
|||||||||
Diluted |
$ |
0.44 |
|
$ |
0.44 |
|
$ |
1.77 |
|
$ |
1.67 |
|
|||||||||
Average common shares outstanding: | |||||||||||||||||||||
Basic |
|
262,711 |
|
|
261,749 |
|
|
262,246 |
|
|
257,487 |
|
|||||||||
Diluted |
|
263,317 |
|
|
262,217 |
|
|
262,868 |
|
|
258,180 |
|
Condensed Consolidated Balance Sheets | |||||
(In thousands of dollars) | |||||
(Unaudited) | |||||
|
2022 |
|
2021 |
||
Net property, plant and equipment |
$ |
11,130,946 |
$ |
10,251,866 |
|
Current assets |
|
658,159 |
|
437,795 |
|
Regulatory assets and other assets |
|
3,930,002 |
|
3,968,617 |
|
$ |
15,719,107 |
$ |
14,658,278 |
||
Total equity |
$ |
5,377,386 |
$ |
5,184,450 |
|
Long-term debt, excluding current portion, net of debt issuance costs |
|
6,371,057 |
|
5,779,504 |
|
Current portion of long-term debt and loans payable |
|
427,856 |
|
197,146 |
|
Other current liabilities |
|
594,013 |
|
477,917 |
|
Deferred credits and other liabilities |
|
2,948,795 |
|
3,019,261 |
|
$ |
15,719,107 |
$ |
14,658,278 |
WTRGF
View source version on businesswire.com: https://www.businesswire.com/news/home/20230224005438/en/
Media:
Vice President, Communications
Media Hotline: 1.877.325.3477
Media@Essential.co
Investor:
Vice President, IR and Treasurer
O: 610.645.1191
BJDingerdissen@Essential.co
Source: