Essential Utilities Reports Mixed Q3 Results, Revenue Growth Offset by Decreased Net Income

Essential Utilities, Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period.

For the three months ended September 30, 2024, operating revenues increased to $435.3 million, up from $411.3 million in the same period of 2023, marking a 5.8% rise. This growth was driven primarily by higher revenues from the Regulated Water segment, which saw an increase of $23.9 million, attributed to rate hikes and increased consumption. However, net income for the quarter decreased to $69.4 million from $80.1 million year-over-year, reflecting a net income margin of 15.9%, down from 19.5% in Q3 2023.

For the nine-month period, total operating revenues fell to $1.48 billion from $1.57 billion in 2023, a decrease of 5.9%. Despite this decline, net income rose to $410.6 million, compared to $362.8 million in the prior year, resulting in a net income margin of 27.7%, up from 23.0%. The increase in net income was supported by a significant reduction in total operating expenses, which decreased from $1.06 billion to $950.7 million.

The Regulated Natural Gas segment reported a slight revenue increase for Q3 2024, totaling $96.7 million, but experienced a net loss of $30.7 million, worsening from a loss of $9.8 million in Q3 2023. For the nine-month period, revenues from this segment dropped significantly to $549.3 million from $675.1 million, primarily due to lower gas usage and reduced purchased gas costs.

Strategically, Essential Utilities has been active in acquisitions, including the purchase of wastewater utility assets in Indiana and Illinois, and has pending acquisitions expected to close in 2025. The company also sold its regulated natural gas utility assets in West Virginia for approximately $41.2 million and recognized a gain of $91.2 million from the sale of non-utility projects.

Financially, the company’s total assets increased to $17.56 billion as of September 30, 2024, up from $16.84 billion at the end of 2023. Total stockholders' equity rose to $6.18 billion, reflecting a solid capital position. However, long-term debt also increased to $7.31 billion from $6.94 billion, indicating a higher leverage level.

In terms of cash flow, net cash from operating activities decreased to $622.5 million from $804.6 million in the previous year, while cash and cash equivalents rose to $8.4 million from $4.6 million. The company continues to navigate macroeconomic pressures, including inflation and interest rates, while focusing on compliance with new environmental regulations and infrastructure improvements.