Most US water utilities exceed Street expectations in Q1 2024

Two-thirds of select investor-owned water utilities in the US covered by S&P Global Market Intelligence surpassed analysts' expectations in the first quarter of 2024.

During the first quarter, three rate proceedings in Indiana, Maine and West Virginia were completed across the water utility sector.

Among water utilities with large market caps, Bryn Mawr, Pa.-headquartered Essential Utilities Inc. beat analyst estimates by 27.6%. Essential had a market cap of $10.1 billion as of March 28.

The company reported net income for the first quarter of $265.8 million, includes a one-time gain of $91.2 million for the $165 million sale of three energy projects in Pennsylvania.

Camden, NJ-headquartered American Water Works Co. Inc., with a market cap of $23.8 billion, fell short of Street expectations by 3.1% in the recently ended quarter.

The pure-play water utility booked higher operation and maintenance expenses year over year primarily due to increased fuel, power and chemicals costs, as well as higher employee-related costs.

San Jose, Calif.-headquartered SJW Group fell short of analyst expectations by 7.7%, while Phoenix-headquartered Global Water Resources Inc. missed estimates by 25%.

San Jose-headquartered California Water Service Group (Cal Water) abundantly exceeded analyst estimates by 830.8%, as the water utility reported net income attributable to the group of $69.9 million in the first quarter, swinging from a net loss of $22.2 million in the same period in 2023.

On March 7, the California Public Utilities Commission issued a ruling on the 2021 general rate case for Cal Water which increased adopted revenues and authorized the company to invest approximately $1.2 billion from 2021 through 2024 in water system infrastructure projects.

Middlesex Water Co., which operates in New Jersey and Delaware, increased its net income 82% year over year and surpassed Wall Street expectations by 31.1%.

The company attributed most of the increase to the recovery of operating and carrying costs associated with the prior-period construction and operation of the water treatment facilities at Middlesex's Park Avenue Wellfield.

The New Jersey Board of Public Utilities voted unanimously in February to approve a settlement authorizing Middlesex a $15.4 million rate increase.

Cal Water and Middlesex had missed analyst estimates for all quarters of 2023.

Other water utilities that beat analyst expectations during the period were The York Water Co. in York, Pa.; American States Water Co. in San Dimas, Calif.; and Artesian Resources Corp. which serves in Delaware, Maryland and Pennsylvania.