Financial Performance Overview

The financial report provides an overview of the company’s financial performance and position during the first quarter of 2024.

Revenue Trends

The company’s total operating revenues for the first three months of 2024 were $358.4 million, which is $14.1 million or 4.1% higher than the total operating revenues for the same period in 2023. This increase was primarily driven by:

• Higher water revenues of $5.3 million due to an increase in rates.
• Higher wastewater revenues of $3.6 million from increased rates and organic growth.
  
• An increase in customer water consumption.

These factors indicate positive revenue trends for the company.

Revenue (Millions)	Q1 2024	Q1 2023	Change
Water	$233.2	$227.9	+$5.3
Wastewater	$97.1	$93.5	+$3.6
Total Revenues	$358.4	$344.3	+$14.1

Profit Trends

The company’s net income for Q1 2024 was $75.1 million, which represents a 7.9% increase compared to net income of $69.6 million in Q1 2023.

Key drivers of higher profits were:

• Increased revenues as discussed above.
• Ongoing cost management.

This demonstrates the company’s ability to grow profits year-over-year through top-line growth and cost control initiatives.

Metric (Millions)	Q1 2024	Q1 2023	Change
Net Income	$75.1	$69.6	+$5.5

Strengths and Opportunities

Key strengths for the company that represent opportunities going forward include:

• Stable customer base: The company serves an essential need and has long-term contracts with customers. This provides resilient and predictable revenue streams.
• Pricing power: The ability to raise rates in a regulated utility market gives the company pricing power to drive revenue growth.
  
• Cost management: Ongoing initiatives to manage costs through efficiency improvements remain a priority.

The company is well-positioned to continue leveraging these strengths to drive growth in profits and shareholder value over time.

Risks and Challenges

The company also faces some risks and challenges that should be monitored and managed:

• Interest rate risk: The company has long-term fixed rate debt as well as some variable rate debt facilities. Rising interest rates could increase borrowing costs.
• Commodity price risk: Fluctuations in prices for electricity, chemicals, and other commodities could negatively impact profit margins.
• Cybersecurity threats: Like all businesses, the company faces cyber risks that require ongoing monitoring and investment.

However, the report notes that the company has strategies in place to mitigate many of these risks. And most risks would not materially impact the overall financial strength and stability of the business.

Outlook

In the report, management expresses confidence in the company’s positive momentum and financial performance continuing through 2024. The utility services market remains stable and growing across the company’s operating territory.

If the company stays focused on driving efficiency gains, managing risks, and leveraging core strengths around its stable customer base and pricing power, then the outlook remains bright. The company appears well-positioned for continued success.