エッセンシャル・ユーティリティーズ（WTRG）2026年第3四半期決算説明会：EPSは9%増、合併は順調に進展

重要ポイント

• エッセンシャル・ユーティリティーズが発表した2026年第3四半期のGAAP基準EPS（1株当たり利益）は0.36ドルとなり、前年同期の0.33ドルから9%増加した。合併関連費用を除いた調整後非GAAP EPSは0.38ドルだった。
• 規制に基づく費用回収およびサーチャージが1株当たり0.06ドルのプラス要因となり、その利益の約65%を水道事業部門が占めた。また、水供給量の増加がさらに1株当たり0.01ドルの押し上げ要因となった。
• 年初来の設備投資額は約11億ドルに達した。経営陣は、2026年のインフラ投資額が過去最高となる17億ドルに向けて順調に進捗していると述べた。
• 経営陣によると、アメリカン・ウォーターとの合併計画は2027年第1四半期末までの完了に向けて順調に進んでいる。ケンタッキー州、オハイオ州、バージニア州ではすでに承認を取得しており、ペンシルベニア州、ノースカロライナ州、テキサス州における和解案は最終承認を待つ段階にある。
• エッセンシャル・ユーティリティーズは、約20万8,000件の顧客への供給が見込まれる事業網を対象に、総額約2億9,000万ドルの上下水道資産買収契約を締結した。同社が現在進めている買収パイプラインは、約40万件の潜在的な新規顧客に相当する。
• 同社は、進行中の合併手続きと、統合後の資金調達方法を巡る不確実性を理由に、長期的なEPSガイダンスの再確認を行わなかった。経営陣は、今後5年間で少なくとも87億ドルの設備投資を行うとの見通しを維持した。

主要財務データ

事業および営業実績

運営・保守（O&M）費用の減少が四半期決算を下支えした。O&M費用は約0.6%減少したが、これは規制対象のガス事業部門における保険金の受取や貸倒費用の減少を反映したものであり、合併関連費用によって一部相殺された。

医療ストップロス保険の払い戻しを含む従業員福利厚生費は、約350万ドル減少した。経営陣は、この減少の大半がストップロス保険金の受取によるものだと説明した。

規制当局関連の動きは引き続き収益の主因となった。エッセンシャル・ユーティリティーズは2026年中に、年換算で7,050万ドルの増収に相当する料金改定やサーチャージを確定させ、その約75%を上下水道事業が占めた。

上下水道事業部門では5州で料金改定またはサーチャージの審査が進行中であり、年換算で7,850万ドル超の引き上げを求めている。ペンシルベニア州の天然ガス子会社は1億6,320万ドルの基本料金引き上げを申請しているが、行政法判事は約1億500万ドルの引き上げを勧告した。

買収活動も進展した。10月中、同社はテキサス州、ノースカロライナ州、ペンシルベニア州において小規模な上下水道資産の買収案件を複数完了または発表した。締結された買収契約は総額約2億9,000万ドルに達し、約20万8,000件の顧客にサービスを提供する事業網が加わる見込みである。

経営陣の業績見通し（ガイダンス）

経営陣は、アメリカン・ウォーターとの合併が2027年第1四半期末までに完了すると見込んでいる。確定した日程は示されていないものの、同社はノースカロライナ州とテキサス州で2026年末までに最終決定が下されると予想している。

ペンシルベニア州について、経営陣は11月下旬頃に行政法判事の勧告決定が出され、その後2027年の年明け早々に公益事業委員会（PUC）による決定が下される可能性が高いと予想している。ニュージャージー州での和解協議は建設的であると説明され、イリノイ州では州の法定スケジュールに基づき近く委員会命令が出される見通しである。

エッセンシャル・ユーティリティーズの2026年におけるインフラ投資は、過去最高の17億ドルに向けて順調に進んでいる。経営陣はまた、今後5年間で少なくとも87億ドルを投資する見通しを改めて示した。

同社は長期的なEPSガイダンスを提示しなかった。経営陣は、将来の業績見通しや資金調達に関する判断は、合併完了後に統合会社の経営陣および取締役会によって行われることが望ましいと説明した。

リスク要因と注視すべき点

• アメリカン・ウォーターとの取引には、ペンシルベニア州、ノースカロライナ州、テキサス州など複数の州で規制当局による最終承認が依然として必要である。
• ペンシルベニア州のガス料金改定案件は、依然として委員会による最終命令を待つ状況にある。同社が申請した1億6,320万ドルの引き上げ額は、行政法判事による約1億500万ドルの勧告額を上回っている。
• 経営陣は、インフラ投資および適正なリターンと、顧客の負担可能性とのバランスを取る必要性を強調した。
• DELCORAの買収取引はチェスター市の破産に関連して連邦破産裁判所判事により手続きが停止されたままであるが、経営陣はこの売却契約はアメリカン・ウォーターに引き継ぐことが可能であると述べた。
• 経営陣は、選挙後の政治情勢の変化を引き続き見極めている段階であり、新たに言及された3M社を巡るPFAS人身被害訴訟の和解がもたらす影響についてはまだ評価していないと述べた。

アナリスト質疑応答の要点

アナリストからは、合併承認の進捗、長期ガイダンスの欠如、費用の動向、規制当局の手続き日程などに質問が集中した。

合併に関して経営陣は、ノースカロライナ州とテキサス州の和解案について年内に最終判断が下される可能性があると述べた。ペンシルベニア州の対応は2027年初頭頃に見込まれ、ニュージャージー州での協議は和解の可能性に向けて引き続き進展している。

ガイダンスについて経営陣は、2027年初頭の合併完了が見込まれることや、統合会社としての将来の資金調達判断を踏まえると、単独ベースでのEPS予想はもはや適切ではないと説明した。設備投資計画は維持された。

経営陣はまた、当四半期が医療ストップロス保険の払い戻しによる恩恵を受けたと説明した。約490万ドルの合併関連費用が発生したにもかかわらず、全体のO&M費用は前年同期比で約90万ドル減少した。

自治体からの事業買収について経営陣は、選挙結果が進行中または潜在的な取引、特にペンシルベニア州の案件に重大な懸念をもたらしてはいないと述べた。

決算説明会の全文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to the Essential Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Ed Vallejo, Director of Investor Relations. Ed, please go ahead.

Edward Vallejo

Thank you, and good morning, everybody. Thank you for joining us for our third quarter 2026 earnings call. If you did not receive a copy of our press release, you can find the release on our Investor Relations website. The earnings call slides will also be found there alongside a webcast of the event.

During this conference call, both in our prepared remarks and in answers to your questions, we may make forward-looking statements that represent our expectations regarding future events and our future financial performance. These statements are predictions based upon our expectations, estimates and assumptions. However, as these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties as discussed in detail in our documents filed with the SEC, including our most recently filed Forms 10-K and 10-Q.

During this call and in our third quarter 2026 earnings press release, we refer to GAAP and non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non-GAAP financial measures is included in our third quarter 2026 earnings press release available on our Investor Relations website.

We will begin with Chris Franklin, our Chairman and CEO, who will provide an update on the company. Then Dan Schuller, our Chief Financial Officer, will provide an overview of the financial results.

And with that, I will turn it over to Chris.

Christopher Franklin

Thanks, Ed, and good morning, everyone. Let's start on Page 5 with a few corporate updates. We'll start with our pending merger with American Water. Our regulatory approval process continues to progress nicely. We've reached constructive settlement agreements in Pennsylvania, North Carolina and Texas, all of which remain subject to final approvals from the respective state public utility commissions. We've already secured regulatory approvals in Kentucky, Ohio and Virginia, which marked major milestones as we progress toward closing the merger. With all of these positive developments, we continue to expect the merger to close by the end of the first quarter in 2027.

At the same time, our integration planning is moving at a full speed. Our integration teams have been busy collaborating across everything from organizational design to operational and financial processes, to IT systems and branding. It's been incredibly gratifying to see the teams from both Essential and American Water working so collaboratively and side-by-side to shape our future of the company.

Turning now to the quarterly results. We reported GAAP earnings per share of $0.36, an increase of 9% over last year. These GAAP EPS results include about $0.02 of merger-related expenses, bringing our non-GAAP EPS to $0.38 for the quarter.

Overall, it was a solid quarter that underscores the steady, consistent growth we are driving across both our water and gas businesses, as well as responsible expense management. A key driver of that performance is our ongoing commitment to system reliability and customer service. Year-to-date, we've invested about $1.1 billion of capital, keeping us on track to invest a record $1.7 billion in needed infrastructure improvements and upgrades in 2026.

All right. Now, on the regulatory front, we currently have rate cases or infrastructure surcharges pending in Texas, Virginia, Illinois, Indiana and New Jersey, along with our natural gas rate case in Pennsylvania. We recently received a proposed decision from the ALJ in the natural gas case recommending a revenue increase of approximately $105 million.

Now we continue to engage constructively with the Pennsylvania Public Utility Commission, the Governor's office and the various stakeholders regarding the state's regulatory environment. Related to this, you may have seen that Chairman DeFrank recently established an ROE working group, and we will be meeting over the coming months to evaluate options for establishing the cost of capital used in rate cases and DSIC filings. We are optimistic that the process will yield some improvements in the regulatory process and, frankly, a greater understanding by all the parties of the capital needs and the overall focus on affordability.

And finally, reinforcing our long-standing commitment to shareholder value, on October 21, our Board of Directors declared a quarterly dividend payment on December 1, 2026, to shareholders of record on November 10, 2026. Essential Utilities has paid consecutive quarterly cash dividends for over 80 years and has increased the dividend 36x in the last 35 years, a record we are very proud of.

And, Dan, on that note, I'll hand it over to you for a deeper look at our quarterly numbers.

Daniel Schuller

Thanks, Chris, and good morning, everyone. Today, my remarks will focus on our strong financial performance and the primary drivers of our results. Let's turn to Slide 8 to review our year-over-year EPS bridge, beginning with our Q3 2025 earnings of $0.33 per share. In terms of positive drivers, earnings per share this quarter benefited from a $0.06 increase in regulatory recoveries and surcharges, with about 65% of this coming from our water segment, and $0.01 from higher water volumes. These gains were partially offset by $0.02 from increased depreciation and amortization and another $0.02 from higher interest and lower AFUDC. This brings us to GAAP earnings per share of $0.36 for the quarter.

Now you'll see the details of our operations and maintenance expenses when you see our 10-Q, but let me give you some color here. O&M decreased by approximately 0.6%, or about $900,000. This decrease was primarily driven by insurance recoveries, as well as a decrease in bad debt expense in our regulated gas segment, offset by merger-related expenses.

Coming back to earnings. If we adjust our GAAP earnings per share of $0.36 to exclude the nonrecurring merger-related costs, our adjusted non-GAAP earnings per share were $0.38. A full reconciliation is available in our earnings release and in the appendix to this presentation.

Turning to Slide 9, let me provide an update on our regulatory activity. Thus far in 2026, we have finalized rate cases or surcharges representing $70.5 million in incremental annualized revenue. Approximately 75% of this total is derived from our water and wastewater operations, with the remainder coming from our gas business.

Looking ahead, our regulatory pipeline remains on track. Our water and wastewater segment currently has cases or surcharge proceedings pending in 5 states representing over $78.5 million in requested annualized increases. Our natural gas subsidiary has a base rate case pending here in Pennsylvania for $163.2 million. And as Chris mentioned, the ALJ has recommended a revenue increase of approximately $105 million.

This rate case filing is essential to supporting our long-term infrastructure improvement plan, which enhances system safety and reliability while continuing to drive emissions reductions. We expect a final order in this case in December. And as always, we manage these filings carefully to ensure we continue delivering safe, reliable service and earn a fair return on our invested capital while remaining highly sensitive to customer affordability.

And with that, I'll turn the call over to Chris. Chris?

Christopher Franklin

Well, thanks, Dan. Let's move to Slide 11, and we'll summarize our acquisition activity. Here, we show a selection of our business development opportunities, and our business development group had a very busy October. We started the month by completing the $1.1 million acquisition of Dril-Quip, a small water and wastewater system in Harris County, Texas. We also entered into an asset purchase agreement to acquire the North Carolina water and wastewater assets of Central States Water Resources. These assets serve approximately 4,100 customers, and we paid about $3.5 million.

Then on October 28, we entered into an asset purchase agreement for the acquisition of the water and wastewater assets of the Buckingham Springs system in Pennsylvania. These systems serve 1,300 customers, and we are paying $2.8 million for that acquisition. Finally, on that same day, we entered into an asset purchase agreement for the acquisition of the wastewater assets of the Hempfield Township Municipal Authority in Pennsylvania, which serves about 1,200 customers, for $2.2 million.

The company has also signed purchase agreements for additional water and wastewater systems in North Carolina and Virginia. In total, we've signed asset purchase agreements totaling approximately $290 million in purchase price, which are expected to serve approximately 208,000 customers.

Now this includes our DELCORA transaction, which remains under a stay put in place by a federal bankruptcy judge related to the bankruptcy of the city of Chester. And I'll remind you that the fully enforceable agreement of sale with DELCORA is assumable by American Water. Our active pipeline of potential water and wastewater acquisitions represents approximately 400,000 potentially new customers to the company.

And with that, I'll wrap things up and hand it back to the operator so we can take your questions.

Operator

[Operator Instructions] Your first question comes from the line of Travis Miller with Morningstar Inc.

質疑応答

Travis Miller

I'm going to intentionally leave this one a little open here, but thoughts on the election? You're obviously operating in some key states that were featured in the election yesterday. Affordability, also an issue. Municipal M&A, potentially an issue. So I would just leave this open for any of your thoughts there.

Christopher Franklin

Yes. I'll tell you, it's a lot to digest, Travis. As you might imagine, there's some pretty big changes in the states where we operate. I will say this, though, just for starters. We are a 140-year-old utility. I've been at this company for nearly 35 years. My team has been with me for over a decade plus. And we have relationships on both sides of the aisle in all of our states. We work very hard at that, not only on the regulatory side but also the legislative side.

And so we'll have to meet some new people, get to know them. We'll have to get to know what is important to them in terms of their issues and then assess our work from there. But I think we're -- like so many people today, we're just in a digestion period at the moment.

Travis Miller

Okay. That's fair. Just real quick, municipal M&A, anything you saw from the election locally that might impact that either way, either existing pending or potential?

Christopher Franklin

I don't think so. A lot of the municipal folks in Pennsylvania, where we sit today, were not up for election. So, not as much on the municipal side that we see in terms of change, positive or negative, for municipal M&A. I think the transactions we have in the works, there doesn't seem to be any particular concerns about those. So I feel like business as usual in the largest part on our relationships with potential deals.

Operator

Your next question comes from the line of Paul Zimbardo with Jefferies.

Paul Zimbardo

Just one first for me. Just on the -- I noticed that long-term guidance was not included in the new press release. Just -- is it a change in the outlook? Or just could you give any color on why not reaffirm the plan with the update today?

Christopher Franklin

I think as we look forward, the reality is that -- and I think we've communicated this as best we could over the last year here, that we -- to give earnings per share guidance just doesn't make a whole lot of sense. We feel very confident that the transaction will close early in the new year. And how the business is financed will be largely up to the combined team, the combined Board and management team. So I think we decided here that earnings guidance going forward is best described by our -- the successor team here.

I will say this, though, Paul. We continue to feel strongly that we're going to invest capital. We've said we're going to be over at least $8.7 billion over the next 5 years in capital spend invested in our systems. So I don't think you should expect a great variation from the work we've been doing over the last decade plus.

Paul Zimbardo

Okay. Understood. And then one small one. Could you quantify what that insurance recovery item was during the quarter?

Daniel Schuller

Yes, Paul, I think you'll see this in the 10-Q that comes out. The insurance recovery is really tied to stop-loss insurance. So you think about health insurance cases that are significant claims. Last quarter, we noted that those claims were high because we hadn't yet had the stop-loss reimbursement. But this quarter, we're seeing that reimbursement come back through the income statement and sort of bringing those employee-related costs down. So you'll see in the Q that employee benefits, including that medical claim stop-loss reimbursement, decreased thus by about $3.5 million, most of that really being driven by that stop-loss recovery.

Paul Zimbardo

Okay. Got it. So the $3.5 million is net of the recoveries. Got it.

Daniel Schuller

Yes. So I think it's important to say in terms of the quarter, we had the positive benefit there. We had the benefit in terms of lower bad debt. But we also had about $4.9 million of merger-related expenses. And you'll see in the Q that O&M is still down by about $900,000. So even with the merger-related expenses, other costs came in, in line or lower than sort of typical or lower than we had last year. So very strong quarter from an O&M perspective here at the company.

Operator

Your next question comes from the line of Gregg Orrill with UBS.

Gregg Orrill

Two questions there. First, what are your expectations around converting the Texas and North Carolina settlements to final approvals? When does that occur, and what's involved there?

And secondly, I guess there was a significant PFAS settlement yesterday around personal injury in 3M. And just wondering if there are any implications for the company?

Christopher Franklin

Yes. Let's take the first one. So North Carolina and Texas, we believe those are on track. As you know, we have settlements in each of our states. And although it's not a defined schedule, we would expect that we would see adjudication in both states before the end of the year. So I think we feel comfortable with that.

On the PFAS, listen, I'm happy to get back to you on that. I'm not sure we're -- we have any thoughts on any new news from yesterday yet, but happy to reconnect with you on that, Gregg.

Operator

Your next question comes from the line of Davis Sunderland with Baird.

Davis Sunderland

Congrats. I'm sure it's been a very long process getting to where you are in the merger, and 2027 is right around the corner. So congrats on everything you guys have accomplished so far.

Most of my questions have been taken. I guess maybe I'll just round out Gregg's question. Obviously, you touched, Chris, on North Carolina, on Texas. If you could also just address Pennsylvania and New Jersey and the time lines and what to expect before year-end? Or even if things, I guess, carry into Q1, what your guys' latest expectations are and how that may have accelerated or pushed out from what you guys thought a quarter ago?

Christopher Franklin

Sure, sure. Yes. So in Pennsylvania, we're waiting for the administrative law judge to come across with the recommended decision. We'd expect that could be before Thanksgiving, could be a little after, but that's a reasonable time frame. And then it would go to the Public Utility Commission for their action. And as we've said, I think, all along, we'd expect that sometime probably right after the first of the year.

New Jersey, always good discussions there. And I would hope we'd have some news there to share soon. But discussions toward a settlement are, I think, constructive and in a good place. So hopefully, we'll be able to share some news on that one soon. And as I said in my earlier comments, really feel good about a first quarter close here.

Daniel Schuller

And then maybe the one we didn't cover, Davis, was Illinois. And in Illinois, we have a statutory time frame there. So in that statutory time frame, we would expect to hear something quite soon in Illinois in terms of a commission order.

Operator

There are no further questions at this time. I will now turn the call back to Chris Franklin, CEO, for closing remarks.

Christopher Franklin

Thanks again, everyone, for joining us. As always, we stand ready to answer your questions. Feel free to follow up with Dan, myself or Ed, and you have a wonderful day. Thank you.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.