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  "documentTitle": "Essential Utilities, Inc. (WTRG)",
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  "authorName": "Spruce Point Capital Management",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2023-03-08 00:00:00",
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      "kind": "callout",
      "text": "EBITDA margins have contracted by 530bps (pre-acquisition to 2022) and 1,130bps (Q1 2020 to 2022) Net Income margin dragged down by performance and incremental interest expense",
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      "text": "EBITDA margins have contracted by 530bps (pre-acquisition to 2022) and 1,130bps (Q1 2020 to 2022)",
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      "text": "EBITDA margin: 1,130bps",
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      "text": "Spruce Point analyzed the performance of the transformational Peoples acquisition post-closing by WTRG on March 16, 2020. WTRG reports results in the Regulated Natural Gas Segment (below “Segment”). In addition, in the year post-closing, it reported revenue and net income contributed in the “Acquisitions” section (below: “Footnotes”) to the financial statements. When reviewing the financial reporting, we find evidence of potential financial misstatement identified in the red boxes below. For example, for FY 2020, there is a revenue discrepancy of $14.4m ($521.0 - 506.6m). Another observation we make is that EBITDA margins have contracted by approximately 530bps (pre-closing to 2022) and 1,130bps (Q1 2020 closing quarter to 2022).",
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      "text": "Source: 2019 Pro Forma 8-K; 2020 Q1, Q2, Q3 10-Qs and 10-K; 2021 10-K; 2022 10-K (1) Operating income adds back transaction expenses, removes sponsor management fees, and reclassifies certain expenses to conform to WTRG's reporting",
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      "text": "Revenue Anomalies And Falling Margins Post People's Acquisition",
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