American Water — Third Quarter 2026 Earnings Summary

Financial Performance

• GAAP diluted earnings per share (EPS) were $1.94 for the third quarter of 2026, unchanged from $1.94 in the same period in 2025; year-to-date (YTD) GAAP EPS were $4.56 for 2026 compared to $4.47 in 2025.
• Adjusted (non-GAAP) diluted EPS were $2.00 for the third quarter of 2026, up from $1.89 in 2025; YTD adjusted EPS were $4.63 for 2026 compared to $4.40 in 2025.
• Consolidated 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; YTD revenues were $4,072 million for 2026 compared to $3,869 million in 2025.
• Net income attributable to common shareholders was $387 million for the three months ended September 30, 2026, compared to $379 million in 2025; YTD net income was $898 million for 2026 compared to $873 million in 2025.
• Regulated Businesses net income was $407 million for the third quarter of 2026, up from $383 million in 2025; YTD Regulated Businesses net income was $946 million compared to $872 million in 2025.
• Operating expenses increased by $30 million for the three months and $103 million for the nine months ended September 30, 2026, compared to 2025, driven by higher production costs, purchased power, chemicals, and depreciation.
• Interest expense increased by $9 million for the three months and $32 million for the nine months ended September 30, 2026, compared to 2025, due to incremental short and long-term debt funding capital investments and acquisitions.
• Total assets were $37,227 million as of September 30, 2026, compared to $35,442 million as of December 31, 2025.
• Long-term debt was $13,987 million as of September 30, 2026, compared to $12,777 million as of December 31, 2025.
• Total capitalization was $25,921 million as of September 30, 2026, compared to $23,617 million as of December 31, 2025.

Guidance and Future Outlook

• 2026 adjusted EPS guidance range narrowed to $6.07 to $6.12 from the previous range of $6.02 to $6.12.
• Standalone 2027 adjusted EPS guidance range initiated at $6.53 to $6.63, representing 8% EPS growth at the midpoint compared to the 2026 guidance range.
• Long-term targets affirmed: 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 of $20+ billion for 2026-2030 and $48+ billion for 2026-2035.
• 2027 standalone capital investment plan set at $4.1 billion.
• The 2026 adjusted EPS guidance excludes transaction costs related to the Essential Utilities merger, weather impacts, and incremental interest income from the amended HOS seller note.

Business Segments and Product Lines

• The company added approximately 81,000 customer connections from acquisitions through September 30, 2026, including the Nexus Water systems.
• 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.
• General rate cases are in progress in five jurisdictions, and infrastructure surcharge filings have been made in two jurisdictions, representing a total annualized incremental revenue request of $360 million.
• YTD 2026 capital investment totaled $2.8 billion, including $437 million for regulated acquisitions, with a full-year 2026 plan of $3.7 billion.
• Operating revenues increased due to authorized revenue increases from completed general rate cases and infrastructure proceedings for capital and acquisition investment recovery, as well as incremental revenue from closed acquisitions.
• The company serves approximately 14 million people with regulated operations in 14 states and on 19 military installations.

Market and Competitive Landscape

• American Water is the largest regulated water and wastewater utility company in the United States.
• Significant regulatory execution occurred in Pennsylvania and New Jersey, with new rates effective in the third quarter.
• The company is making progress on the proposed merger with Essential Utilities, with three states having approved the merger and settlements reached in Pennsylvania, North Carolina, and Texas.
• The company aims to close the merger with Essential Utilities by the end of the first quarter of 2027.

Risks and Challenges

• Forward-looking statements are subject to risks including regulatory decisions on rates, capital structure, and tax laws; changes in customer demand due to conservation or economic conditions; and water supply limitations from drought or regulatory restrictions.
• Risks include potential contamination of water supplies, infrastructure aging, cyber attacks, and supply chain constraints affecting costs and project timelines.
• Specific risks related to the Essential Utilities merger include the inability to obtain required approvals, imposition of burdensome conditions, litigation, and financial impacts on earnings and share price.
• Risks associated with the Nexus Water acquisition include final rate base amounts, purchase price adjustments, and impacts on operations and guidance.
• Environmental and health regulations regarding contaminants like lead, copper, and PFAS pose potential compliance costs and liabilities.
• Weather variability, including droughts, floods, and extreme temperatures, can impact operating revenues and costs.

Management Commentary and Tone

• John Griffith, President and CEO, stated the company delivered solid results in 2026 with key regulatory outcomes providing reasonable and timely returns on investments.
• Management expressed full confidence in consistent execution of plans for 2027 and beyond.
• Management noted encouragement regarding progress in the Essential Utilities regulatory approval process and merger integration planning.

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 filed for infrastructure surcharges in two jurisdictions as part of its regulatory execution.
• The 2026 adjusted EPS guidance excludes transaction costs for the Essential Utilities merger, weather impacts, and incremental interest income from the 2024 HOS seller note amendment.
• The company operates 7,000 professionals across its footprint to support its national scale.