Essential Utilities — Q2 2026 Earnings Summary

Financial Performance

• Reported GAAP net income of $105.7 million ($0.37 per share) for Q2 2026, compared to $107.8 million ($0.38 per share) in Q2 2025.
• Reported non-GAAP adjusted earnings per share of $0.38 for Q2 2026, excluding $1.2 million in merger-related expenses.
• Total operating revenues for Q2 2026 were $530.9 million, a 3% increase from $514.9 million in Q2 2025, driven by regulatory recoveries and purchased gas costs.
• Operations and maintenance expenses for Q2 2026 were $153.6 million (3.5% increase vs. Q2 2025), primarily due to $5.9 million in increased employee-related costs and $2.3 million in higher production costs, partially offset by $4.9 million in lower insurance expenses and $2.9 million in reduced bad debt.
• For the first six months of 2026, revenues totaled $1,392.6 million (7.2% increase YoY), while net income was $330.1 million ($1.16 per share) compared to $391.6 million ($1.41 per share) in the same period of 2025.
• As of June 30, 2026, the weighted average cost of fixed-rate long-term debt was 4.16%, with $960 million available on credit lines.
• Long-term debt excluding current portion was $8.42 billion as of June 30, 2026, up from $8.11 billion as of December 31, 2025.

Guidance and Future Outlook

• Affirmed anticipated long-term earnings per share growth at a compound annual growth rate of 5% to 7% from the adjusted 2024 EPS of $1.97 (non-GAAP) through 2027.
• Expects regulated infrastructure investments of $1.7 billion for the full year 2026.
• Maintains a multiyear plan to ensure finished water does not exceed the federal maximum contaminant level for six EPA-regulated PFAS chemicals.
• Guidance includes municipal water and wastewater acquisitions with signed purchase agreements but excludes the DELCORA acquisition and other potential opportunities from guidance metrics.

Business Segments and Product Lines

• Regulated water segment revenues reached $357.5 million in Q2 2026, a 7.6% increase from $332.3 million in Q2 2025, driven by regulatory recoveries and increased volume.
• Regulated natural gas segment revenues were $169.3 million in Q2 2026, down from $177.3 million in Q2 2025, due to lower volumes from warm weather, partially offset by higher rates and surcharges.
• Regulated natural gas segment operations and maintenance expenses remained essentially flat at $49.9 million in Q2 2026 compared to $49.8 million in Q2 2025.
• Acquired Integra Water Texas, LLC's wastewater system in Bastrop County, Texas, in May 2026 for approximately $4.9 million.
• Signed purchase agreements for additional systems in Pennsylvania, Texas, North Carolina, and New Jersey expected to serve over 200,000 customers at a total purchase price of approximately $282 million, including the $276.5 million agreement for the Delaware County Regional Water Quality Control Authority (DELCORA).

Market and Competitive Landscape

• Received regulatory approvals for the merger with American Water from the Public Utilities Commission of Ohio (May 14) and the Virginia State Corporation Commission (June 22), following prior approval from the Kentucky Public Service Commission.
• Approximately 95% of voted shares approved the merger at a special shareholder meeting in February 2026.
• Received rate awards or infrastructure surcharges in 2026 increasing annual revenues by $43.9 million for the regulated water segment (PA, IL, OH, NC, IN) and $12.7 million for the regulated natural gas segment (KY, PA).
• Has base rate cases or infrastructure surcharges pending in TX, VA, IL, IN, and NJ for the water segment estimated at $79.7 million in incremental annual revenues.
• Has a base rate case pending in PA for the natural gas segment requesting a $163.2 million revenue increase to support the Long-Term Infrastructure Improvement Plan.

Risks and Challenges

• Forward-looking statements are subject to risks including the timing and likelihood of completing the merger with American Water.
• Risks include changes in EPA regulations, US governmental policies, global economic disruptions, and supply chain disruptions for raw materials.
• Potential impacts from unfavorable weather conditions, housing and customer growth trends, and the ability to successfully close municipal acquisitions.
• Guidance assumes the company will continue to issue equity and debt as needed, which carries execution risks.

Management Commentary and Tone

• Chairman and CEO Christopher Franklin expressed confidence in driving strong performance for 2026 through operational efficiency and proactive cost optimization.
• Management stated the organization remains steadfast in driving peak operational performance while transitioning toward the targeted Q1 2027 merger with American Water.
• Franklin highlighted that the combination with American Water will bring exciting new opportunities and deliver significant benefits to customers and shareholders through smart capital deployment.
• Management emphasized a shared focus on measurable reliability and quality service to uphold safety metrics while delivering affordable utility solutions.

Other Key Points

• The Board of Directors increased the quarterly cash dividend by 5.25% to $0.3606 per share, payable on September 1, 2026, to shareholders of record on August 11, 2026.
• Essential Utilities has paid consecutive quarterly cash dividends for over 80 years and has increased the dividend 36 times in the last 35 years.
• The company invested $662.2 million in infrastructure during the first six months of 2026 and is on track to invest $1.7 billion for the full year.
• Since 2015, the company has acquired approximately $570 million in rate base and added over 138,000 new customers.
• The current pipeline of potential municipal acquisitions represents approximately 400,000 total customers.
• The company serves approximately 5.5 million people across nine states under the Aqua and Peoples brands.