Essential Utilities, Inc. Q1 FY2025 earnings call

• Strong Q1 results with $3 GAAP earnings per share, a 6% increase from last year. Reaffirmed 2025 EPS guidance of $2.07 to $2.11. - Plan to invest $1.4 billion to $1.5 billion in infrastructure in 2025, with $270.5 million already invested by March 31. - Water quality compliance at 99.8%, PFOS work on track to meet 4 ppt MCL by 2028 with $450 million capital spend. - Texas House passed future test year bill, Ohio rate case legislation set deadlines, Virginia expanded water/wastewater infrastructure surcharge. - Intelis meter program moving to full implementation for safety features. - Data center opportunities in Pittsburgh region with potential to increase distribution system utilization.

The water and gas businesses performed well. Revenues for the first quarter increased 28% to $783.6 million from $612.1 million the previous year. Regulatory recoveries, higher purchased gas costs, and higher regulated natural gas segment volumes were primary revenue drivers. The water quality compliance rate was industry-leading at 99.8% over the last 12 months. The gas segment: Peoples Gas is the largest natural gas LDC in Pennsylvania with over 700,000 customers and over $4 billion of rate base as of end-2024; implemented Intelis meter pilot program, weather normalization adjustment to combat weather volatility, and has discussions with data center developers for potential power generation opportunities.

• Reaffirmed 2025 EPS guidance range of $2.07 to $2.11. - Plan to invest $1.4 billion to $1.5 billion in infrastructure in 2025. - Reaffirmed 5% to 7% multiyear earnings per share guidance through 2027. - Payout ratio to remain at 60% to 65%.

• Weather volatility could impact earnings. - Regulatory uncertainties in rate cases in various states. - Challenges in PFAS remediation and potential additional costs. - Market volatility affecting equity issuance plans.

Q: On the Beaver Falls case, take on ALJ decisions and when it could come before PUC?

A: Uncertain why ALJs in Pennsylvania return cases; hopeful for favorable outcome at PUC; expected to be on PUC agenda in June.