American Water — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP diluted earnings per share (EPS) were $1.94 for the three months ended September 30, 2026, compared to $1.94 in the same period in 2025; year-to-date GAAP EPS were $4.56 for the nine months ended September 30, 2026, compared to $4.47 in 2025.
• Adjusted (non-GAAP) diluted EPS were $2.00 for the three months ended September 30, 2026, compared to $1.89 in 2025; year-to-date adjusted EPS were $4.63 for the nine months ended September 30, 2026, compared to $4.40 in 2025.
• Operating revenues were $1,510 million for the three months ended September 30, 2026, an increase of $60 million from $1,451 million in 2025; year-to-date operating revenues were $4,072 million, an increase of $212 million from $3,869 million in 2025.
• Operating expenses were $869 million for the three months ended September 30, 2026, an increase of $30 million from $837 million in 2025; year-to-date operating expenses were $2,498 million, an increase of $103 million from $2,395 million in 2025.
• Net income attributable to shareholders was $387 million for the three months ended September 30, 2026, compared to $379 million in 2025; year-to-date net income was $898 million, compared to $873 million in 2025.
• Interest expense was $167 million for the three months ended September 30, 2026, an increase of $9 million from $158 million in 2025; year-to-date interest expense was $497 million, an increase of $32 million from $453 million in 2025.
• Depreciation expense was $245 million for the three months ended September 30, 2026, an increase of $18 million from $226 million in 2025; year-to-date depreciation was $722 million, an increase of $60 million from $663 million in 2025.
• Long-term debt was $13,987 million as of September 30, 2026, compared to $12,777 million as of December 31, 2025.
• Total assets were $37,227 million as of September 30, 2026, compared to $35,442 million as of December 31, 2025.
• Property, plant and equipment, net, was $32,692 million as of September 30, 2026, compared to $30,576 million as of December 31, 2025.

Guidance and Future Outlook:

• 2026 adjusted EPS guidance narrowed to $6.07 to $6.12 from the previous range of $6.02 to $6.12.
• 2026 adjusted EPS guidance excludes transaction costs related to the proposed merger with Essential Utilities, weather impacts, and incremental interest income through February 13, 2026, related to the 2024 amendment of the Homeowner Services Group secured seller note.
• Initiated standalone 2027 adjusted EPS guidance range of $6.53 to $6.63, representing 8% EPS growth at the midpoint compared to the 2026 adjusted EPS guidance range.
• Affirmed long-term targets: EPS growth of 7-9%, rate base growth of 8-9% (including acquisitions), acquired customer addition growth of 2%, and dividend per share growth of 7-9%.
• Updated standalone capital investment plan to $20+ billion for 2026-2030 and $48+ billion for 2026-2035.
• 2027 standalone capital investment plan established at $4.1 billion.
• 2026 capital investment plan of $3.7 billion remains on track.

Business Segments and Product Lines:

• Regulated Businesses net income was $407 million for the three months ended September 30, 2026, compared to $383 million in 2025; year-to-date Regulated Businesses net income was $946 million, compared to $872 million in 2025.
• Since January 1, 2026, the company has been authorized additional annualized revenues of $284 million, comprising $179 million from general rate cases and $105 million from infrastructure surcharges.
• The company has general rate cases in progress in five jurisdictions and has filed for infrastructure surcharges in two jurisdictions, reflecting a total annualized incremental revenue request of $360 million.
• Approximately 81,000 customer connections were added from acquisitions through September 30, 2026, including the Nexus Water systems.
• During the first nine months of 2026, the company invested $2.8 billion in infrastructure improvements and growth, including $437 million for regulated acquisitions.
• Operating revenues increased due to authorized revenue increases from completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments, as well as incremental revenue from closed acquisitions.
• Revenue growth was partially offset by higher depreciation and financing costs to support the capital investment plan and increased operating costs.
• Operating expenses increased due to higher production costs from purchased water and usage, and increased purchased power and chemicals costs, partially offset by decreases in technology-related operating supplies and services costs and maintenance materials and supplies costs.

Market and Competitive Landscape:

• American Water is the largest regulated water and wastewater utility company in the United States, serving approximately 14 million people with regulated operations in 14 states and on 19 military installations.
• The company operates with a national scale and history dating back to 1886.

Risks and Challenges:

• Forward-looking statements are subject to risks including regulatory decisions on customer rates, capital structure, and authorized returns on equity.
• Risks include changes in customer demand, water supply limitations, drought, or abnormally high rainfall.
• Potential loss of large industrial or commercial customers due to adverse economic conditions.
• Risks associated with the proposed merger with Essential Utilities, including the inability to obtain required governmental and regulatory approvals, potential imposition of burdensome conditions, and financial impacts on earnings and share price.
• Risks related to the acquisition of systems formerly owned by Nexus Water Group, Inc., including final rate base amounts and post-closing purchase price adjustments.
• Exposure to environmental laws and regulations, including contaminants of emerging concern such as PFAS, lead, and copper.
• Risks related to aging infrastructure, cyber attacks, supply chain constraints, and labor actions.
• Risks associated with the company's ability to control operating expenses and achieve operating efficiencies.

Management Commentary and Tone:

• John Griffith, President and CEO, stated the company delivered solid results in 2026, including key regulatory outcomes providing a reasonable and timely return on investments.
• Management expressed full confidence in consistent execution of plans for 2027 and beyond.
• Management noted continued progress on the merger with Essential Utilities, with three states having approved the merger and settlements reached in Pennsylvania, North Carolina, and Texas.
• Management anticipates closing the merger with Essential Utilities by the end of the first quarter of 2027.

Other Key Points:

• On October 27, 2026, the Board of Directors declared a quarterly cash dividend of $0.8950 per share, payable on December 1, 2026, to shareholders of record as of November 12, 2026.
• The company has reached settlement agreements in Pennsylvania, North Carolina, and Texas regarding the proposed merger with Essential Utilities.
• The company's 2024 amendment of the former Homeowner Services Group secured seller note generated incremental interest income through February 13, 2026.
• The company recognized its websites as key channels for distribution to public investors to comply with SEC Regulation FD.
• A conference call to discuss the results and guidance is scheduled for Thursday, October 29, 2026, at 9 a.m. Eastern Time.