{ "docId": "019dd923-622c-750b-8b99-5499dc38e401", "docSlug": "0ce9434f48c5", "documentTitle": "Essential Utilities, Inc. (WTRG)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2023-03-08 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 47, "pageCount": 91, "prevPage": 46, "nextPage": 48, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "Uses direct quotes from SEC filings to expose business risks.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-5499dc38e401/47", "deckHref": "/decks/019dd923-622c-750b-8b99-5499dc38e401", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-5499dc38e401.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-5499dc38e401#slide-47", "components": [ { "bbox": { "h": 0.04, "w": 0.92, "x": 0.04, "y": 0.31 }, "kind": "callout", "text": "Updated Risk Factor", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "47ed6724-7836-49fa-88da-441ff8e94a25", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.92, "x": 0.04, "y": 0.72 }, "kind": "callout", "text": "Updated Competition", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ef3c5fed-1dce-44c6-9ea0-2495f06b6c2d", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "This is particularly true for industrial customers who have the ability to switch to alternative fuels.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6ed-775b-bcb7-26c47546c337", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.92, "x": 0.04, "y": 0.17 }, "kind": "paragraph", "text": "We previously illustrated that WTRG's water business is under long-term pressures from declining volumes as a result of greater appliance efficiency and conservation measures. WTRG's expansion into the natural gas business faces similar long-term issues and is being pressured by alternative energy adoption, with industrial clients leading the way according to an updated statement made in the competition section of WTRG's newly filed 10-K.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "465931a1-f19e-437e-aee9-f4c37e008965", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.16, "w": 0.92, "x": 0.04, "y": 0.76 }, "kind": "paragraph", "text": "Although our natural gas subsidiaries are not currently in significant direct competition with any other distributors of natural gas in its service areas, we do compete with suppliers of other forms of energy such as fuel oil, electricity, propane, coal, wind, and solar. Competition can be intense among the energy sources with price being the primary consideration. This is particularly true for industrial customers who have the ability to switch to alternative fuels. Natural gas generally benefits from a competitive price advantage over oil, electricity, and propane. Competition from renewable energy sources such as solar and wind is likely to increase as the political environment currently favors these energy sources through incentives or by placing restrictions on emissions from the burning of fossil fuels.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b20beb09-9f5c-4bf3-b227-cd1c36268596", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.31, "w": 0.92, "x": 0.04, "y": 0.35 }, "kind": "paragraph", "text": "Decreased residential customer water and natural gas usage as a result of conservation efforts, and the impact of more efficient appliances and furnaces, may harm demand for our utility services and may reduce our revenues and earnings. There has been a general decline in water usage per residential customer as a result of an increase in conservation awareness, and the impact of an increased use of more efficient plumbing fixtures and appliances. These gradual, long-term changes are normally taken into account by the utility commissions in setting rates, whereas short-term changes in water usage, if significant, may not be fully reflected in the rates we charge. We are dependent upon the revenue generated from rates charged to our residential customers for the volume of water used. If we are unable to obtain future rate increases to offset decreased residential customer water consumption to cover our investments, expenses, and return for which we initially sought the rate increase, our business, financial condition, and results of operations may be harmed. In addition, over time, average customer gas consumption has declined, as more energy efficient appliances and furnaces have been installed and conservation programs have been implemented. If we are unable to compete effectively or if customers further reduce their gas needs, we may lose existing customers, sell less gas to our customers and/or fail to acquire new customers, which could have a material adverse effect on our business, financial condition, and results of operations.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e7b736cb-b60a-47c4-9fc2-4eede57ed2aa", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Decreased residential customer water and natural gas usage as a result of conservation efforts, and the impact of more efficient appliances and furnaces, may harm demand for our utility services and may reduce our revenues and earnings. — Essential Utilities 10-K", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6ed-775b-bcb7-2a89692016d4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.5, "x": 0.04, "y": 0.67 }, "kind": "source-note", "text": "Source: 8-K/A filed April 19, 2019, 2019 10-K filed Feb 28, 2020 vs. 10-K filed March 1, 2021", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3c44e017-5404-4af4-8ae1-6ccfb967b7c8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.04, "y": 0.93 }, "kind": "source-note", "text": "Source: 2022 10-K, p. 11", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7f832289-cefd-492d-aef7-b0be988ea1e8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.31, "y": 0.04 }, "kind": "title", "text": "Double Whammy: Now Water And Gas Are Declining While WTRG Acknowledges More Competition...", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "278a5d75-20db-453e-86c6-4cb0e717c950", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "c8ae64fc-2b54-4546-923a-3ee6387d7cac", "evidence": "Using company's own 10-K filings to contradict their growth narrative.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }