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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON DC 20549

FORM 10-Q

(Mark One) 

S QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. 

For the quarterly period ended March 31, 2024

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. 

For the transition period from_______________ to _______________

Commission File Number 1-6659 

ESSENTIAL UTILITIES, INC. 

(Exact name of registrant as specified in its charter) 

Pennsylvania

23-1702594

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

762 W. Lancaster Avenue, Bryn Mawr, Pennsylvania

19010 -3489

(Address of principal executive offices)

(Zip Code)

 

(610) 527-8000

(Registrant’s telephone number, including area code)

N/A

(Former Name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S  No £

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes S  No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12(b)-2 of the Exchange Act.:  

Large Accelerated Filer S

Accelerated Filer £

Non-Accelerated Filer £

Smaller Reporting Company £

Emerging Growth Company £

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £  No S

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.50 par value

WTRG

New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 26, 2024: 273,523,533


Table of Contents

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Page

Part I – Financial Information

Item 1. Financial Statements:

Consolidated Balance Sheets (unaudited) – March 31, 2024 and December 31, 2023

2

Consolidated Statements of Operations and Comprehensive Income (unaudited) –
Three Months Ended March 31, 2024 and 2023

4

Consolidated Statements of Capitalization (unaudited)
March 31, 2024 and December 31, 2023

5

Consolidated Statements of Equity (unaudited) –
Three Months Ended March 31, 2024

6

Consolidated Statements of Equity (unaudited) –
Three Months Ended March 31, 202
3

7

Consolidated Statements of Cash Flow (unaudited) –
Three Months Ended March 31, 2024 and 2023

8

Notes to Consolidated Financial Statements (unaudited)

9

Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

27

Item 3. Quantitative and Qualitative Disclosures About Market Risk

38

Item 4. Controls and Procedures

38

 

Part II – Other Information

 

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

39

Item 5. Other Information

39

Item 6. Exhibits

40

Signatures

41

1


Table of Contents

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 

(In thousands of dollars, except per share amounts) 

(UNAUDITED)

 

March 31,

December 31,

Assets

2024

2023

Property, plant and equipment, at cost

$

15,208,072 

$

14,977,021 

Less: accumulated depreciation

2,952,487 

2,879,949 

Net property, plant and equipment

12,255,585 

12,097,072 

Current assets:

Cash and cash equivalents

35,200 

4,612 

Accounts receivable, net

164,638 

144,300 

Unbilled revenues

102,793 

101,436 

Inventory - materials and supplies

48,947 

47,494 

Inventory - gas stored

17,849 

65,173 

Prepayments and other current assets

34,619 

99,884 

Regulatory assets

15,488 

29,080 

Total current assets

419,534 

491,979 

Regulatory assets

1,899,984 

1,766,892 

Deferred charges and other assets, net

97,865 

102,388 

Funds restricted for construction activity

1,391 

1,381 

Goodwill

2,340,733 

2,340,738 

Operating lease right-of-use assets

35,739 

37,416 

Intangible assets

3,513 

3,593 

Total assets

$

17,054,344 

$

16,841,459 

The accompanying notes are an integral part of these consolidated financial statements

2


Table of Contents

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands of dollars, except per share amounts) 

(UNAUDITED)

 

ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod

March 31,

December 31,

Liabilities and Equity

2024

2023

Stockholders' equity:

Common stock at $0.50 par value, authorized 600,000,000 shares, issued 276,878,103 and 276,595,228 as of March 31, 2024 and December 31, 2023

$

138,438 

$

138,297 

Capital in excess of par value

4,142,610 

4,137,696 

Retained earnings

1,888,521 

1,706,675 

Treasury stock, at cost, 3,354,887 and 3,299,191 shares as of March 31, 2024 and December 31, 2023

(88,442)

(86,485)

Total stockholders' equity

6,081,127 

5,896,183 

Long-term debt, excluding current portion

6,903,544 

6,870,593 

Less: debt issuance costs

47,415 

44,508 

Long-term debt, excluding current portion, net of debt issuance costs

6,856,129 

6,826,085 

Commitments and contingencies (See Note 14)

 

 

Current liabilities:

Current portion of long-term debt

67,247 

67,415 

Loans payable

87,500 

160,123 

Accounts payable

161,210 

221,191 

Book overdraft

10,938 

13,358 

Accrued interest

86,512 

53,084 

Accrued taxes

36,911 

40,641 

Regulatory liabilities

14,216 

31,270 

Dividends payable

83,999 

83,929 

Other accrued liabilities

130,073 

126,916 

Total current liabilities

678,606 

797,927 

Deferred credits and other liabilities:

Deferred income taxes and investment tax credits

1,733,947 

1,628,324 

Customers' advances for construction

125,191 

128,755 

Regulatory liabilities

838,084 

820,910 

Asset retirement obligations

851 

848 

Operating lease liabilities

32,415 

34,425 

Pension and other postretirement benefit liabilities

37,363 

38,850 

Other

23,699 

24,086 

Total deferred credits and other liabilities

2,791,550 

2,676,198 

Contributions in aid of construction

646,932 

645,066 

Total liabilities and equity

$

17,054,344 

$

16,841,459 

The accompanying notes are an integral part of these consolidated financial statements

3


Table of Contents

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 

(In thousands of dollars, except per share amounts) 

(UNAUDITED)

 

Three Months Ended

March 31,

2024

2023

Operating revenues

$

612,069

$

726,450

Operating expenses:

Operations and maintenance

136,900

137,994

Purchased gas

129,675

256,315

Depreciation

88,716

82,923

Amortization

1,088

871

Taxes other than income taxes

25,024

22,878

Total operating expenses

381,403

500,981

Operating income

230,666

225,469

Other expense (income):

Interest expense

73,273

72,668

Interest income

(989)

(819)

Allowance for funds used during construction

(4,681)

(5,688)

Gain on sale of other assets

(91,625)

(249)

Other

(442)

(240)

Income before income taxes

255,130

159,797

Income tax benefit

(10,642)

(31,637)

Net income

$

265,772

$

191,434

Comprehensive income

$

265,772

$

191,434

Net income per common share:

Basic

$

0.97

$

0.72

Diluted

$

0.97

$

0.72

Average common shares outstanding during the period:

Basic

273,377

264,192

Diluted

273,738

264,751

The accompanying notes are an integral part of these consolidated financial statements

4


Table of Contents

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CAPITALIZATION 

(In thousands of dollars, except per share amounts) 

(UNAUDITED)

 

 

 

March 31,

December 31,

2024

2023

Stockholders' equity:

Common stock, $0.50 par value

$

138,438

$

138,297

Capital in excess of par value

4,142,610

4,137,696

Retained earnings

1,888,521

1,706,675

Treasury stock, at cost

(88,442)

(86,485)

Total stockholders' equity

6,081,127

5,896,183

Long-term debt of subsidiaries (substantially collateralized by utility plant):

Interest Rate Range

Maturity Date Range

0.00% to 0.99%

2024 to 2033

2,885

2,935

1.00% to 1.99%

2024 to 2039

7,352

7,538

2.00% to 2.99%

2024 to 2058

207,403

207,917

3.00% to 3.99%

2024 to 2056

1,312,241

1,313,932

4.00% to 4.99%

2024 to 2059

1,242,557

1,245,727

5.00% to 5.99%

2024 to 2061

313,406

312,745

6.00% to 6.99%

2026 to 2036

31,000

31,000

7.00% to 7.99%

2025 to 2027

28,061

28,125

8.00% to 8.99%

2025

1,086

1,289

9.00% to 9.99%

2026

11,800

11,800

3,157,791

3,163,008

Notes payable to bank under revolving credit agreement, variable rate, due 2027

258,000

720,000

Unsecured notes payable:

Notes at 2.40% due