Segment Information

6 Months Ended

Jun. 30, 2020

Note 14 – Segment Information

On March 16, 2020, the Company completed the Peoples Gas Acquisition, marking the Company’s entrance into the regulated natural gas business. The operating results of Peoples are included in the consolidated financial statements for the period since the acquisition date. As a result, the Company now has twelve operating segments and two reportable segments. The Regulated Water segment is comprised of eight operating segments representing its water and wastewater regulated utility companies, which are organized by the states where the Company provides water and wastewater services. The eight water and wastewater utility operating segments are aggregated into one reportable segment, because each of these operating segments has the following similarities: economic characteristics, nature of services, production processes, customers, water distribution or wastewater collection methods, and the nature of the regulatory environment. The Regulated Natural Gas segment is comprised of one operating segment representing natural gas utility companies, acquired in the Peoples Gas Acquisition, for which the Company provides natural gas distribution services.

In addition to the Company’s two reportable segments, we include three of our operating segments within the Other category below. These segments are not quantitatively significant and are comprised of our non-regulated natural gas operations, Aqua Infrastructure, and Aqua Resources. Our non-regulated natural gas operations consist of utility service line protection solutions and repair services to households and the operation of gas marketing and production entities. Aqua Infrastructure provides non-utility raw water supply services for firms in the natural gas drilling industry. Aqua Resources manages a water system operating and maintenance contract and offers, through a third-party, water and sewer service line protection solutions and repair services to households. In addition to these segments, Other is comprised of business activities not included in the reportable segments, including corporate costs that have not been allocated to the Regulated Water and Regulated Natural Gas segments and intersegment eliminations. Corporate costs include general and administrative expenses, and interest expense. The Company reports these corporate costs within Other as they relate to corporate-focused responsibilities and decisions and are not included in internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments.

The following table presents information about the Company’s reportable segments, including the operating results and capital expenditures of the Regulated Natural Gas segment for the period since the completion of the Peoples Gas Acquisition on March 16, 2020:



	Three Months Ended								Three Months Ended
	June 30, 2020								June 30, 2019
	Regulated Water		Regulated Natural Gas		Other		Consolidated		Regulated Water		Other		Consolidated
Operating revenues	$	234,086	$	146,880	$	3,502	$	384,468	$	218,006	$	886	$	218,892
Operations and maintenance expense		76,645		50,876		1,083		128,604		74,082		12,363		86,445
Purchased gas		-		41,593		1,827		43,420		-		-		-
Depreciation and amortization		42,748		25,727		1,417		69,892		36,412		218		36,630
Operating income (loss)		99,794		24,693		(1,368)		123,119		93,112		(12,163)		80,949
Interest expense, net		25,970		9,334		16,166		51,470		24,067		(758)		23,309
Allowance for funds used during construction		1,911		319		-		2,230		3,611		-		3,611
Change in fair value of interest rate swap agreements		-		-		-		-		-		(11,040)		(11,040)
Equity earnings in joint venture		-		-		470		470		-		1,240		1,240
Provision for income taxes (benefit)		7,194		(2,399)		(4,333)		462		1,780		(3,951)		(2,171)
Net income (loss)		68,995		17,999		(12,365)		74,629		69,579		(14,676)		54,903

	Six Months Ended								Six Months Ended
	June 30, 2020								June 30, 2019
	Regulated Water		Regulated Natural Gas		Other		Consolidated		Regulated Water		Other		Consolidated
Operating revenues	$	450,283	$	184,915	$	4,855	$	640,053	$	418,226	$	1,798	$	420,024
Operations and maintenance expense		150,339		59,533		25,369		235,241		148,420		17,339		165,759
Purchased gas		-		53,966		2,224		56,190		-		-		-
Depreciation and amortization		84,259		30,234		1,644		116,137		75,671		369		76,040
Operating income (loss)		186,300		36,530		(26,214)		196,616		165,765		(17,377)		148,388
Interest expense, net		51,505		11,926		18,126		81,557		47,725		3,434		51,159
Allowance for funds used during construction		4,823		355		-		5,178		7,667		-		7,667
Change in fair value of interest rate swap agreements		-		-		-		-		-		23,742		23,742
Equity earnings in joint venture		-		-		343		343		-		1,783		1,783
Provision for income taxes (benefit)		10,321		(5,820)		(11,163)		(6,662)		2,731		(13,072)		(10,341)
Net income (loss)		128,929		31,535		(34,054)		126,410		121,520		(49,693)		71,827
Capital expenditures		217,373		75,458		259		293,090		269,171		-		269,171


	June 30,		December 31,
	2020		2019
Total assets:
Regulated water	$	7,563,782	$	7,269,404
Regulated natural gas		5,156,642		-
Other		307,984		2,092,581
Consolidated	$	13,028,408	$	9,361,985