Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Earnings per share increased to $0.95 in Q1 2024 from $0.91 in the previous year, indicating solid financial performance.
- Successful long-term debt issuance of $1.4 billion aligns with the company's 2024 financing plan, supporting capital growth.
- Dividend increased by 8.1% to $0.765 per share, continuing a trend of consistent dividend growth over the past five years.
- Invested over $600 million in infrastructure during the quarter, demonstrating commitment to maintaining and improving service quality.
- Affirmed long-term targets for earnings and dividend growth at 7% to 9%, reflecting confidence in sustained financial health and operational success.
Negative Points
- Increased operating and maintenance costs by $0.07 per share due to higher fuel, power, and chemical costs, as well as rising employee-related expenses.
- Depreciation and long-term financing costs increased, reflecting higher expenses associated with investment growth.
- Challenges related to PFAS regulations, including potential impacts of new EPA rules and ongoing litigation risks.
- Regulatory pressures and scrutiny, particularly in Pennsylvania, where there is significant discussion about rate cases and fair market value revisions.
- Higher interest rates pose challenges for financing, although the company is actively managing these through strategic debt issuance.
Q & A Highlights
Q: Can you hear me?
A: (M. Susan Hardwick - President, CEO & Director) Yes, we can.
Q: With the Pennsylvania rate case, is settlement still an option or is litigating the path to close out? Also, do you see the 1.68 cap in fair market value revisions limiting willingness to sell at all?
A: (M. Susan Hardwick - President, CEO & Director) Settlement is unlikely at this stage. We expect some activity by the Commission in the next several weeks. Regarding fair market value, we need to wait and see how it impacts community interest in selling, but many communities need help, and we're confident in our ability to assist.
Q: Regarding the new circular designations, how do you view litigation risk under these new classifications?
A: (M. Susan Hardwick - President, CEO & Director) We're proactive in resolving CERCLA designation issues and confident in our compliance plans. We don't see this as a huge risk. (Cheryl D. Norton - Executive VP & COO) We're working on legislative fronts to secure protections from CERCLA rules for water and wastewater systems.
Q: Can you discuss the sensitivity around the Pennsylvania rate case and its impact on your capital investments and rate case strategy?
A: (M. Susan Hardwick - President, CEO & Director) We remain confident in our investment plans and regulatory processes. The pace of our filings is driven by the need for infrastructure improvement. We continue to focus on investments that enhance service quality.
Q: What are the steps and expected timeline for the PFAS legislation you are advocating for?
A: (Cheryl D. Norton - Executive VP & COO) Legislation has been filed in both the Senate and House. We are engaging with legislators on both sides to educate them on the issues. The timeline is uncertain due to the political process, but we are pushing for swift movement.
Q: How does the presence of data centers impact your growth and are there any constraints related to this?
A: (Cheryl D. Norton - Executive VP & COO) We haven't seen a significant increase in water demand related to data centers, so the impact is minimal compared to our electric utility peers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
