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United States securities and exchange commission logo
December 8, 2022
Daniel J. Schuller
Chief Financial Officer
Essential Utilities, Inc.
762 W. Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
Re: Essential
Utilities, Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2021
Filed March 1, 2022
File No. 001-06659
Dear Daniel J. Schuller:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2021
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Regulated Natural Gas Segment, page 53
1. We note that you
subtract purchased gas expenses from revenues to arrive at your non-
GAAP measure, "gross
margin (non-GAAP)" and that you have identified operating
revenues as the most
directly comparable GAAP measure. Given this
calculation subtracts
an expense from revenues, it appears that your non-GAAP measure
is more akin to a
margin type measure that should be reconciled to gross margin as
defined in GAAP. Please
tell us why you have not identified gross margin as defined by
GAAP as the most
directly comparable GAAP measure and revise to provide a
corresponding
reconciliation that complies with Item 10(e)(1)(i)(B) of Regulation S-K.
Item 8. Financial Statements and Supplementary Data
Daniel J. Schuller
Essential Utilities, Inc.
December 8, 2022
Page 2
Notes to Consolidated Financial Statements
Note 18 - Segment Information, page 121
2. We note you disclose operating income, income before income taxes and
net income
(loss) for each of your reportable segments. Considering you disclose
more than one
measure of segment profit or loss, please revise to disclose only one
measure that you
believe is determined in accordance with the measurement principles
most consistent with
those used in measuring the corresponding amount in the consolidated
statements of
operations. Refer to ASC 280-10-50-28. In addition, to the extent that
the measures that
are not identified as the segment measure of profit or loss under ASC
280 are presented
outside the consolidated financial statements, please label them as
non-GAAP financial
measures and provide the required disclosures under Item 10(e) of
Regulation S-K.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Steve Lo at 202-551-3394 or Craig Arakawa at
202-551-3650 with any
questions.
FirstName LastNameDaniel J. Schuller Sincerely,
Comapany NameEssential Utilities, Inc.
Division of
Corporation Finance
December 8, 2022 Page 2 Office of Energy &
Transportation
FirstName LastName