Essential Utilities Reports Q1 2026 Results

Key Terms

non-gaap financial

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

compound annual growth rate financial

The compound annual growth rate (CAGR) shows how much an investment or value has grown, on average, each year over a specific period. It considers the effect of growth that compounds or builds upon itself, similar to how interest accumulates in a savings account. Investors use CAGR to compare different investments’ long-term performance and to understand how steady or consistent their growth has been over time.

pfas medical

PFAS are a group of human-made chemicals used in many everyday products, such as non-stick cookware, water-repellent clothing, and food packaging, because they resist heat, water, and grease. They are often called "forever chemicals" because they do not break down easily in the environment or the human body, potentially leading to health concerns. For investors, the presence of PFAS-related risks can impact companies’ reputations, legal liabilities, and future costs.

senior notes financial

Senior notes are a type of loan that a company borrows from investors, promising to pay it back with interest. They are called "senior" because in case the company faces financial trouble, these lenders are paid back before others. This makes senior notes safer for investors compared to other types of loans or bonds.

infrastructure surcharges financial

Infrastructure surcharges are extra fees added to customer bills to recover the cost of building, maintaining or upgrading physical networks and facilities—think of an added line on a utility or shipping bill intended to pay for roads, pipes, power lines or data networks. For investors they matter because these charges can boost short-term revenue and margins but also signal cost pressures, customer resistance or regulatory risk that can affect long-term growth and pricing power.

rate base financial

Rate base is the dollar value of the physical assets and capital a regulated utility uses to deliver its service — things like power plants, pipes, or equipment. Regulators use that value as the starting point to set prices the utility can charge by allowing a specific percentage return on that base, so a larger or higher-valued rate base usually means higher permitted revenues and therefore directly affects investor earnings and the company's ability to raise capital.

public utility commission regulatory

A public utility commission is a government agency that regulates providers of essential services such as electricity, gas, water and telecommunications by approving rates, service standards and major investments. Think of it as a referee and budget overseer for utilities—its decisions determine how much customers pay and which projects companies can build, so rulings directly affect revenue, profits and investment risk for shareholders.

maximum contaminant level regulatory

A maximum contaminant level is the highest amount of a specific pollutant that regulators allow in drinking water or other regulated products to protect health, set like a legal safety limit. For investors, it signals compliance thresholds that businesses must meet: exceeding the limit can lead to fines, costly cleanup or plant upgrades, product restrictions, and reputational damage, much like a speed limit that, if broken, triggers penalties and repair bills.

Affirms Financial and Growth Guidance

• GAAP Earnings of $0.79 per share for Q1 2026 and adjusted earnings per share of $0.83 (non-GAAP); Q1 2026 non-GAAP results exclude $0.04 of transaction costs associated with the pending merger with American Water
• Affirms anticipated growth in earnings per share at a compound annual growth rate of 5 to 7%
• Invested $269 million in infrastructure in the first three months of the year; on track to invest $1.7 billion in 2026
• Received order from Kentucky Public Service Commission approving merger with American Water
• Closed on $18 million purchase of the Greenville Municipal Water Authority in Mercer County, PA

BRYN MAWR, Pa.--(BUSINESS WIRE)-- Essential Utilities Inc. (NYSE: WTRG) today reported results for the first quarter ended March 31, 2026.

Company Highlights

“Through continued strong operating performance, a focus on cost control, and making investments designed to improve customer experience, we expect another strong year in 2026. While our team is preparing for our merger with American Water, expected to close in the first quarter of 2027, our primary focus remains on operating the company with excellence,” said Essential Utilities Chairman and Chief Executive Officer Christopher Franklin. “We are excited by the combination of American and Essential because of the expected benefits for customers and shareholders. Equally as exciting is the commitment, made by both companies, to continued strong robust investment in our infrastructure that makes us among the top performers in safety and reliability in the nation while working to provide affordable service for all customers,” Franklin added.

“The regulatory approval processes for our merger with American Water continue to progress. Two weeks ago, we received our first approval of the merger from the Kentucky Public Service Commission. As a reminder, we have filed in all pertinent states. At the special shareholder meeting to approve the merger, approximately 95% of the voted shares were cast in favor of the transaction. This overwhelming mandate supports what we have believed from the start: that this combination creates a premier, multi-state utility with a high growth profile,” Franklin added.

First Quarter 2026 Operating Results

Essential reported GAAP net income of $224.4 million and earnings per share of $0.79 for the first quarter of 2026, compared to GAAP net income of $283.8 million and earnings per share of $1.03 for the same period in 2025. The first quarter of 2025 included the benefit of non-recurring items, including the release of an income tax reserve regulatory liability resulting from a rate order, proceeds from an insurance carrier reimbursing expenses related to a legal proceeding, and rate recovery of a regulated asset associated with bad debt.

Essential reported Q1 2026 non-GAAP EPS of $0.83, which reflects business results without the impact of merger-related expenses incurred in the quarter.

Revenues for the quarter were $861.8 million compared to $783.6 million in the first quarter of 2025, an increase of 10%. Additional revenues from regulatory recoveries and purchased gas costs were the main revenue drivers. Operations and maintenance expenses increased to $175.8 million for the first quarter of 2026, compared to $137.8 million in the first quarter of 2025, primarily due to increases in employee-related costs, including increases in overtime pay and outside service costs due to activities related to the cold weather in January and February, water production expenses, and merger-related expenses of $16.3 million.

Essential’s regulated water segment reported revenues for the quarter of $323 million, an increase of 7.4% compared to $300.8 million in the first quarter of 2025. Regulatory recoveries and increased volume were the largest contributors to the increase in revenues for the period. Operations and maintenance expenses for Essential’s regulated water segment increased to $103.1 million for the first quarter of 2026 compared to $89.4 million in the first quarter of 2025, driven by increased employee-related costs, increases in bad debt expense, and an increase in contractor services due to higher main break activity given the abnormal weather. Excluding the one-time items and the impact of abnormal weather, operations and maintenance expenses for the full year are expected to be in line with historic norms.

Essential’s regulated natural gas segment reported revenues for the quarter of $529.4 million, compared to $470.8 million in the first quarter of 2025, driven primarily by an increase in purchased gas costs, higher regulatory recoveries and an offset due to the weather normalization adjustment. Operations and maintenance expenses for Essential’s regulated natural gas segment increased slightly to $56.2 million for the first quarter of 2026 compared to $55.7 million in the first quarter of 2025.

Dividend

As previously announced on February 17, 2026, Essential’s board of directors declared a quarterly cash dividend of $0.3426 per share of common stock. This dividend will be payable on June 1, 2026, to shareholders of record on May 12, 2026.

Financing

On March 9, 2026, the Company issued $500 million of senior notes due March 15, 2036, with an interest rate of 5.125%. The Company used the net proceeds from the issuance to repay a portion of its commercial paper borrowings and for general corporate purposes.

As of March 31, 2026, Essential’s weighted average cost of fixed-rate long-term debt was 4.16%, and the company had $1.035 billion available on its credit lines.

Rate Activity

Thus far in 2026, the Company’s regulated water segment received rate awards or infrastructure surcharges that will increase annual revenues in Illinois, Indiana, Pennsylvania, and Ohio by $5.7 million, and its regulated natural gas segment received rate awards or infrastructure surcharges in Kentucky and Pennsylvania of $9.4 million.

The Company currently has base rate cases or infrastructure surcharges pending in Texas, Ohio, North Carolina, Virginia, and New Jersey for its regulated water and wastewater segment for an estimated $101.9 million in incremental annual revenues. The company currently has a base rate case pending in Pennsylvania for its natural gas segment with a requested revenue increase of $163.2 million to support its Long-Term Infrastructure Improvement Plan, which involves the replacement and retirement of aging gas mains and the associated reduction of greenhouse gas emissions.

Capital Expenditures

Essential invested approximately $269 million in the first three months of 2026 to improve its regulated water and natural gas infrastructure systems and to enhance customer service across its operations. The Company continues to be a leader in the United States at replacing miles of aged underground utility pipes and is committed to maintaining elevated levels of infrastructure investment. Essential is on track to invest $1.7 billion in needed infrastructure investments in 2026.

Water Utility Growth by Acquisition

Essential’s continued growth by acquisition allows the company to provide safe and reliable water and wastewater service to a larger customer base than it could from organic customer growth alone.

On March 4, 2026, Essential announced that it had closed on its $18 million purchase of the Greenville Municipal Water Authority in Mercer County, PA. The system serves more than 2,900 customers in Greenville Borough as well as Hempfield and West Salem Townships. The Pennsylvania Public Utility Commission (PUC) approved the transaction on January 15, 2026.

Since 2015, Essential has acquired approximately $570 million in rate base and added more than 138,000 new customers or equivalent dwelling units to the company’s footprint.

The company has signed purchase agreements for additional water and wastewater systems in Pennsylvania, Texas, North Carolina and New Jersey that are pending closing and are expected to serve over 201,000 customers or equivalent dwelling units and total approximately $285 million in purchase price. The Company’s $276.5 million agreement to acquire the Delaware County Regional Water Quality Control Authority (DELCORA), a Pennsylvania sewer authority that serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs, is included among these signed purchase agreements.

The pipeline of potential water and wastewater municipal acquisitions the Company is actively pursuing represents approximately 400,000 total customers.

Merger with American Water Works Company, Inc.

The Company is continuing to progress through the process of obtaining the consents and approvals needed to successfully consummate the proposed merger with American Water. On February 10, 2026, shareholders of both companies voted overwhelmingly in favor of merger-related proposals. In 2025, Essential submitted applications for required regulatory approval in all states where applicable. On April 20, 2026, we received an order from the Kentucky Public Utility Commission approving the merger. The merger remains on track for closing in the first quarter of 2027.

Financial and Growth Guidance

The Company’s latest expectations are the following:

• Anticipated growth in long-term earnings per share at a compound annual growth rate of 5% to 7% from the adjusted 2024 earnings per share of $1.97 (non-GAAP) for the three-year period through 2027.
• In 2026, regulated infrastructure investments are expected to be $1.7 billion.
• Multiyear plan to ensure that finished water does not exceed the federal maximum contaminant level of the six EPA-regulated PFAS chemicals.

Guidance Assumptions

Essential Utilities does not guarantee future results of any kind. Guidance is subject to risks and uncertainties, including, without limitation, those factors outlined in the “Forward Looking Statements” of this release and the “Risk Factors” section of the company’s annual and quarterly reports filed with the Securities and Exchange Commission. The earnings per share and infrastructure investment include the municipal water and wastewater acquisitions for which the company has entered into signed purchase agreements as of the date the guidance was announced, but do not include DELCORA or other potential acquisitions from the company’s list of acquisition opportunities that currently represents over 400,000 customer equivalents. While the company remains confident in its ability to close DELCORA, for guidance purposes, DELCORA has been removed from all guidance metrics. The company’s guidance includes the expectation that the company will continue to issue equity and debt on an as-needed basis to support acquisitions and capital investment plans.

Essential Utilities believes that the non-GAAP financial measure “adjusted earnings per share” used for 2024 and identified as part of its multi-year financial and growth guidance supplements investors the ability to measure the company’s financial operating performance for 2024, including by adjustment, as compared to the Company’s operating performance in 2024.

1Q 2026 Earnings Call Information

Date: May 7^th, 2026
Time: 11 a.m. EDT (please dial in by 10:45 a.m.)
Webcast and slide presentation link: https://www.essential.co/events-and-presentations/events-calendar

The call and presentation will be webcast live so interested parties may listen over the internet by logging on to Essential.co and following the link for Investors. The conference call will be archived in the Investor Relations section of the company’s website following the call.

About Essential

Essential Utilities, Inc. (NYSE: WTRG) delivers safe, clean, reliable services that improve quality of life for individuals, families, and entire communities. With a focus on water, wastewater, and natural gas, Essential is committed to sustainable growth, operational excellence, a superior customer experience, and premier employer status. We are advocates for the communities we serve and are dedicated stewards of natural lands, protecting thousands of acres of forests and other habitats throughout our footprint.

Operating as the Aqua and Peoples brands, Essential serves approximately 5.5 million people across nine states. Essential is one of the most significant publicly traded water, wastewater service and natural gas providers in the U.S. Learn more at www.essential.co.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates,” and similar expressions. The Company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent its views only as of today and should not be relied upon as representing its views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, among others: the anticipated receipt of regulatory approvals for, and closing of, the company’s proposed merger with American Water, the company’s belief that it will comply with the finalized EPA PFAS rules, the guidance range of net income per diluted common share; the anticipated amount of infrastructure investment in 2026; the Company’s anticipated use of equity and debt financing and, that the Company has a multiyear plan to ensure that finished water does not exceed the federal maximum contaminant level for the six EPA regulated PFAS chemicals. There are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including: the expected timing and likelihood of completion of our proposed Merger with American Water; changes in the EPAs regulations; changes in the United States’ governmental policies, including those from the Executive Branch; disruptions in the global economy; potential disruptions in the supply chain for raw and finished materials; the continuation of the company's growth-through-acquisition program; general economic business conditions; the company’s ability to successfully execute any equity or debt financing transactions, including on an as needed basis; housing and customer growth trends; unfavorable weather conditions; the success of certain cost-containment initiatives; changes in regulations or regulatory treatment; the company’s ability to successfully close municipally owned systems presently under agreement and successfully complete other acquisitions and dispositions; and other factors discussed in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, which are filed with the Securities and Exchange Commission. For more information regarding risks and uncertainties associated with Essential's business, please refer to Essential's annual, quarterly, and other SEC filings. Essential is not under any obligation - and expressly disclaims any such obligation - to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.

Essential Utilities, Inc. and Subsidiaries
Selected Operating Data
(In thousands, except per share amounts)
(Unaudited)
	Quarter Ended
	March 31,
	2026			2025
Operating revenues	$	861,759		$	783,626
Operations and maintenance expense	$	175,795		$	137,824
Net income	$	224,392		$	283,789
Basic net income per common share	$	0.79		$	1.03
Diluted net income per common share	$	0.79		$	1.03
Basic average common shares outstanding		283,181			275,194
Diluted average common shares outstanding		283,636			275,687

Essential Utilities, Inc. and Subsidiaries
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
	Quarter Ended
	March 31,
	2026				2025
Operating revenues	$	861,759			$	783,626
Cost & expenses:
Operations and maintenance		175,795				137,824
Purchased gas		238,615				184,641
Depreciation		107,109				96,764
Amortization		3,620				2,613
Taxes other than income taxes		25,980				22,879
Total		551,119				444,721
Operating income		310,640				338,905
Other expense (income):
Interest expense		87,307				82,065
Interest income		(1,611	)			(229	)
Allowance for funds used during construction		(5,760	)			(5,832	)
Other, net		(75	)			(293	)
Income before income taxes		230,779				263,194
Income tax expense (benefit)		6,387				(20,595	)
Net income	$	224,392			$	283,789
Net income per common share:
Basic	$	0.79			$	1.03
Diluted	$	0.79			$	1.03
Average common shares outstanding:
Basic		283,181				275,194
Diluted		283,636				275,687

Essential Utilities, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars)
(Unaudited)
	March 31,		December 31,
	2026		2025
Net property, plant and equipment	14,441,097		14,263,682
Current assets	622,630		610,396
Regulatory assets and other assets	4,716,388		4,590,767
	19,780,115		19,464,845
Total equity	6,893,209		6,857,456
Long-term debt, excluding current portion, net of debt issuance costs and unamortized discount on debt	8,361,623		8,110,167
Current portion of long-term debt and loans payable	62,054		171,961
Other current liabilities	592,392		592,522
Deferred credits and other liabilities	3,870,837		3,732,739
	19,780,115		19,464,845

Essential Utilities, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(In Thousands, except per share amounts)
The Company is providing disclosure of the reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures. The Company believes that the non-GAAP financial measures "adjusted income" and "adjusted diluted income per common share" provide investors the ability to measure the Company's financial operating performance by adjustment, which is more indicative of the Company's ongoing operating performance. The Company further believes that the presentation of these non-GAAp financial measures is useful to investors as a more meaningful way to compare the Company's operating performance against its guidance range for 2024.
This reconciliation inludes a presentation of the non-GAAP financial measures "adjusted income" and "adjusted diluted income per common share" and have been adjsted for the following items:
(1) During the first quarter of 2024, the Company completed the sale of its interest in three non-utility local microgrids and distributed energy projects and recognized a gain of $91,236, net of transaction expenses. In October 2023, the Company completed the sale of its regulated natural gas utility assets in West Virginia. In 2024, the Company received additional proceeds from the sale of regulated natural gas utility assets in West Virginia and post-transaction activities.
(2) Estimated impact to Peoples Natural Gas (PNG) operating revenues from warmer than normal weather conditions during 2024 and nonrecurring usage. These impacts are partially offset by favorable water consumption in 2024 due to drier than normal weather conditions
(3) The income tax impact of the non-GAAP adjustments described above
These financial measures are measures of the Company's operating performance that do not comply with U.S. generally accepted accounting principles (GAAP), and are thus considered to be "non-GAAP financial measures" under applicable Securities and Exchange Commission regulations. These non-GAAP financial measures are derived from our consolidated financial information, if available, and is provided to supplement the Company's GAAP measures, and should not be considered as a substitute for measures of financial performance prepared in accrodance with GAAP
The following reconciles our GAAP results to the non-GAAP information we disclose:
		Year Ended December 31, 2024
Net Income (GAAP financial measure)		$	595,314
	Adjustments:
	(1) Gain on sales of assets and related transaction activities	(94,024		)
	(2) Adjustments for estimated effects of unfavorable weather (addback)	18,749
	(3) Income tax effect of non-GAAP adjustments	20,859
Adjusted income (Non-GAAP financial measure)		$	540,898
Net income per common share (GAAP financial measure (Earnings per share)):
	Basic	$	2.17
	Diluted	$	2.17
Adjusted income per common share (Non-GAAP financial measure (Adjusted Earnings per share)):
	Basic	$	1.97
	Diluted	$	1.97
Average common shares outstanding:
	Basic		273,914
	Diluted		274,421

Essential Utilities, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts)
(Unaudited)
The Company is providing disclosure of the reconciliation of adjusted earnings per share, a non-GAAP financial measures referenced in this release, to the most comparable GAAP financial measure. Adjusted earnings per share does not comply with U.S. generally accepted accounting principles (GAAP), and is thus considered to be a “non-GAAP financial measures” under applicable SEC regulations.
Adjusted earnings per share is one of the primary metrics used by management to evaluate the Company’s financial performance and compare it to that of its peers, evaluate the effectiveness of the Company’s business strategies, and in connection with executive compensation decisions. This measure is also frequently used by analysts, investors, and others to evaluate industry peers. Further, the Company believes adjusted earnings per share is helpful in highlighting trends in the Company’s results because it allows for more consistent comparisons of performance between periods by excluding gains and losses that are non-operational in nature or outside the control of management. The Company further believes that this non-GAAP financial measure is useful to investors as a more meaningful way to compare the Company’s operating performance against its guidance. This non-GAAP measure does, however, have certain limitations and should not be considered as an alternative to earnings per share or any other performance.
Adjusted earnings per share adjusts for the following items:
(1) costs associated with the pending merger with American Water; and
(2) the income tax impact of the non-GAAP adjustment described above.
	Three Months Ended
	March 31, 2026
Net income (GAAP financial measure)	$	224,392
Adjustments:
(1) Costs associated with the pending merger with American Water		16,300
(2) The income tax impact of the non-GAAP adjustment described above		(4,388	)
Adjusted income (Non-GAAP financial measure)	$	236,304
Net income per common share (GAAP financial measure):
Basic	$	0.79
Diluted	$	0.79
Adjusted income per common share (Non-GAAP financial measure):
Basic	$	0.83
Diluted	$	0.83
Average common shares outstanding:
Basic		283,181
Diluted		283,636

 

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Media Contact:
David Kralle
Vice President of Public Affairs
Media Hotline: 1.877.325.3477
Media@Essential.co

Investor Contact:
Brian Dingerdissen
Vice President, Treasurer, FP&A, and IR
O: 610.645.1191
BJDingerdissen@Essential.co

Source: Essential Utilities Inc.