Essential 2025 Q1 Earnings Strong Performance with 6.8% Net Income Growth
Tuesday, May 13, 2025 5:04 am ET
56min read Essential Utilities (WTRG) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company reported a 6.8% increase in net income, demonstrating strong earnings growth. Essential Utilities reaffirmed its 2025 earnings per share guidance, aligning with expectations. The company plans to invest significantly in infrastructure, maintaining its trajectory for future growth. The continued growth in earnings and dividends, combined with operational achievements, positions Essential Utilities favorably for the upcoming fiscal year.
Revenue
Essential's total revenue rose by 28.0% to $783.63 million in Q1 2025, compared to $612.07 million in Q1 2024. The regulated water segment generated $300.85 million, while the regulated natural gas segment contributed $470.80 million. Other and eliminations accounted for $11.98 million, culminating in a consolidated revenue of $783.63 million.
Earnings/Net Income
Essential's EPS increased by 6.2% to $1.03 in Q1 2025 from $0.97 in Q1 2024, alongside a net income rise to $283.79 million, a 6.8% improvement from $265.77 million in Q1 2024. This performance indicates a stable and positive earnings trajectory.
Post-Earnings Price Action Review
The post-earnings strategy of purchasing WTRG stocks when revenues exceeded forecasts and holding them for 30 days resulted in a poor outcome. The approach led to a significant loss of -7.83% and a Sharpe Ratio of -0.07, signaling a lack of positive returns and risk-adjusted benefits. The maximum drawdown of -42.93% highlights the high risk associated with this strategy, making it an unfavorable option for investors. The results emphasize the need for reassessing the investment strategy to mitigate risks and achieve better financial outcomes in the future.
CEO Commentary
Chris Franklin - Chairman and CEO: "We posted strong results this quarter, $3 GAAP earnings per share, a 6% increase over last year's quarter results. Both our water and gas businesses performed well as expected. Our operational achievements, such as a 99.8% water quality compliance rate, reflect our commitment to service. We are reaffirming our 2025 earnings per share guidance range of $2.07 to $2.11. I continue to be impressed by what the team has achieved, and our consistent year-after-year growth in earnings and dividends positions us well for future success."
Guidance
We are reaffirming our 2025 earnings per share guidance range of $2.07 to $2.11 and plan to invest between $1.4 billion and $1.5 billion in infrastructure improvements. We expect our combined utility rate base will grow at a compounded annual growth rate of 8%, with regulated water segment growth at about 6% and regulated natural gas segment growth at about 11%.
Additional News
In recent weeks, Essential Utilities has been active in mergers and acquisitions, enhancing its footprint in the utility sector. The company completed the acquisition of the Greenville Sanitary Authority's wastewater utility assets in Pennsylvania for $18 million, adding approximately 2,300 customers. Additionally, Essential acquired the Village of Midvale's water system in Ohio, serving around 1,000 customers for approximately $3 million. These acquisitions underscore Essential's strategic focus on expanding its customer base through targeted purchases. Furthermore, the company has five other purchase agreements pending, expected to serve over 210,000 customers in Pennsylvania and Texas, totaling approximately $340 million. These moves align with Essential's growth strategy and commitment to providing reliable utility services across its operational regions.
Revenue
Essential's total revenue rose by 28.0% to $783.63 million in Q1 2025, compared to $612.07 million in Q1 2024. The regulated water segment generated $300.85 million, while the regulated natural gas segment contributed $470.80 million. Other and eliminations accounted for $11.98 million, culminating in a consolidated revenue of $783.63 million.
Earnings/Net Income
Essential's EPS increased by 6.2% to $1.03 in Q1 2025 from $0.97 in Q1 2024, alongside a net income rise to $283.79 million, a 6.8% improvement from $265.77 million in Q1 2024. This performance indicates a stable and positive earnings trajectory.
Post-Earnings Price Action Review
The post-earnings strategy of purchasing WTRG stocks when revenues exceeded forecasts and holding them for 30 days resulted in a poor outcome. The approach led to a significant loss of -7.83% and a Sharpe Ratio of -0.07, signaling a lack of positive returns and risk-adjusted benefits. The maximum drawdown of -42.93% highlights the high risk associated with this strategy, making it an unfavorable option for investors. The results emphasize the need for reassessing the investment strategy to mitigate risks and achieve better financial outcomes in the future.
CEO Commentary
Chris Franklin - Chairman and CEO: "We posted strong results this quarter, $3 GAAP earnings per share, a 6% increase over last year's quarter results. Both our water and gas businesses performed well as expected. Our operational achievements, such as a 99.8% water quality compliance rate, reflect our commitment to service. We are reaffirming our 2025 earnings per share guidance range of $2.07 to $2.11. I continue to be impressed by what the team has achieved, and our consistent year-after-year growth in earnings and dividends positions us well for future success."
Guidance
We are reaffirming our 2025 earnings per share guidance range of $2.07 to $2.11 and plan to invest between $1.4 billion and $1.5 billion in infrastructure improvements. We expect our combined utility rate base will grow at a compounded annual growth rate of 8%, with regulated water segment growth at about 6% and regulated natural gas segment growth at about 11%.
Additional News
In recent weeks, Essential Utilities has been active in mergers and acquisitions, enhancing its footprint in the utility sector. The company completed the acquisition of the Greenville Sanitary Authority's wastewater utility assets in Pennsylvania for $18 million, adding approximately 2,300 customers. Additionally, Essential acquired the Village of Midvale's water system in Ohio, serving around 1,000 customers for approximately $3 million. These acquisitions underscore Essential's strategic focus on expanding its customer base through targeted purchases. Furthermore, the company has five other purchase agreements pending, expected to serve over 210,000 customers in Pennsylvania and Texas, totaling approximately $340 million. These moves align with Essential's growth strategy and commitment to providing reliable utility services across its operational regions.
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