에센셜 유틸리티즈(WTRG) 2026년 3분기 실적 발표 컨퍼런스 콜: EPS 9% 상승, 합병 순항

핵심 요약

• 에센셜 유틸리티스는 2026년 3분기 GAAP 기준 EPS가 0.36달러로 전년 동기(0.33달러) 대비 9% 증가했다고 발표했다. 합병 관련 비용을 제외한 비일반회계기준(Non-GAAP) 조정 EPS는 0.38달러였다.
• 규제 요금 회수 및 부가요금이 주당 0.06달러의 기여를 했으며, 해당 이익의 약 65%는 수도 부문에서 발생했다. 물 사용량 증가 역시 주당 0.01달러의 추가 기여를 했다.
• 연초 이후 누적 자본투자는 약 11억 달러에 달했다. 경영진은 회사가 2026년 사상 최대인 17억 달러 규모의 인프라 투자를 차질 없이 집행할 수 있는 궤도에 머물러 있다고 밝혔다.
• 경영진에 따르면 아메리칸 워터와의 합병은 2027년 1분기 말 완료를 목표로 순조롭게 진행되고 있다. 켄터키, 오하이오, 버지니아주에서는 승인을 확보한 반면, 펜실베이니아, 노스캐롤라이나, 텍사스주의 합의안은 최종 승인을 기다리고 있다.
• 에센셜 유틸리티스는 약 20만 8,000명의 고객에게 서비스를 제공할 것으로 예상되는 시설을 대상으로 총 약 2억 9,000만 달러 규모의 상하수도 자산 인수 계약을 체결했다. 회사가 적극적으로 추진 중인 인수 파이프라인의 잠재 신규 고객 수는 약 40만 명에 이른다.
• 회사는 진행 중인 합병과 합병 법인의 자금 조달 방식에 대한 불확실성을 들어 장기 EPS 가이던스를 재확인하지 않았다. 다만 경영진은 향후 5년간 최소 87억 달러의 자본투자가 집행될 것이라는 전망은 유지했다.

주요 재무 데이터

사업 및 운영 실적

운영 및 유지보수(O&M) 비용 감소가 분기 실적을 뒷받침했다. O&M 비용은 약 0.6% 감소했는데, 합병 관련 비용으로 일부 상쇄되기는 했으나 보험금 회수와 규제 대상 가스 부문의 대손상각비 감소가 반영된 결과다.

의료 스톱로스(손실제한) 보험 환급금을 포함한 임직원 복리후생비는 약 350만 달러 감소했다. 경영진은 감소분의 대부분이 스톱로스 보험금 회수에 기인했다고 설명했다.

규제 관련 조치는 여전히 주요 수익 창출 요인으로 작용했다. 에센셜 유틸리티스는 2026년 중 연간 환산 기준 7,050만 달러의 추가 매출에 해당하는 요금 인가 및 부가요금을 확정했으며, 이 중 약 75%는 상하수도 사업에서 발생했다.

상하수도 부문은 5개 주에서 연간 7,850만 달러 이상의 인상을 요구하는 요금 인가 또는 부가요금 절차를 진행 중이다. 펜실베이니아 천연가스 자회사는 1억 6,320만 달러의 기본 요금 인상을 추진하고 있으며, 행정법 판사는 약 1억 500만 달러를 권고했다.

인수합병 활동 역시 진전을 보였다. 10월 중 회사는 텍사스, 노스캐롤라이나, 펜실베이니아주에서 소규모 상하수도 거래 여러 건을 완료하거나 발표했다. 체결된 계약은 총 약 2억 9,000만 달러 규모로, 약 20만 8,000명의 고객을 담당하는 시설이 추가될 것으로 예상된다.

경영진 가이던스

경영진은 아메리칸 워터와의 합병이 2027년 1분기 말까지 완료될 것으로 예상하고 있다. 확정된 일정은 제시되지 않았으나, 회사는 노스캐롤라이나와 텍사스주에서 2026년 말 이전에 최종 결정이 내려질 것으로 전망했다.

펜실베이니아주에서는 11월 말경 행정법 판사의 권고 결정이 나오고, 이어 2027년 초 직후 공공사업위원회(PUC)의 조치가 있을 것으로 경영진은 예상했다. 뉴저지주의 합의 논의는 건설적인 것으로 평가되었으며, 일리노이주 위원회의 명령은 주의 법정 일정에 따라 곧 나올 것으로 예상됐다.

에센셜 유틸리티스는 2026년 인프라에 사상 최대인 17억 달러를 투자한다는 계획을 차질 없이 추진하고 있다. 경영진은 향후 5년간 최소 87억 달러를 투자하겠다는 전망도 재차 강조했다.

회사는 장기 EPS 가이던스를 제시하지 않았다. 경영진은 향후 실적 가이던스와 자금 조달 결정은 합병 후 통합 경영진과 이사회에서 다루는 것이 더 적절할 것이라고 설명했다.

위험 요인 및 주시 분야

• 아메리칸 워터와의 거래는 펜실베이니아, 노스캐롤라이나, 텍사스 등 여러 주에서 여전히 최종 규제 승인을 필요로 한다.
• 펜실베이니아주 가스 요금 인가 건은 여전히 위원회의 최종 명령을 남겨두고 있다. 회사가 요청한 1억 6,320만 달러 인상안은 행정법 판사가 권고한 약 1억 500만 달러를 웃돈다.
• 경영진은 인프라 투자 및 적정 수익률과 고객의 요금 부담 능력 간의 균형을 맞출 필요성을 강조했다.
• 체스터시 파산과 관련해 연방 파산 법원 판사에 의해 DELCORA 거래의 효력이 정지된 상태이나, 경영진은 해당 매각 계약을 아메리칸 워터가 승계할 수 있다고 밝혔다.
• 경영진은 선거 이후의 정치적 변화를 여전히 평가 중이며, 최근 언급된 3M 관련 과불화화합물(PFAS) 인체 상해 합의의 영향에 대해서는 아직 평가하지 않았다고 밝혔다.

애널리스트 질의응답(Q&A) 하이라이트

애널리스트들은 합병 승인, 장기 가이던스 부재, 비용 추세 및 규제 승인 시점에 주목했다.

합병과 관련해 경영진은 노스캐롤라이나와 텍사스 합의안에 대해 연내 최종 결정이 내려질 수 있다고 밝혔다. 펜실베이니아의 조치는 2027년 초경으로 예상되며, 뉴저지 논의는 잠재적 합의를 향해 계속 진전되고 있다.

가이던스와 관련해 경영진은 2027년 초 합병 완료 전망과 합병 법인의 향후 자금 조달 결정을 고려할 때 단독 기준의 EPS 전망은 더 이상 적절하지 않다고 설명했다. 자본투자 계획은 유지됐다.

경영진은 또한 이번 분기가 의료 스톱로스 보험 환급금의 혜택을 받았다고 설명했다. 약 490만 달러의 합병 관련 비용에도 불구하고 총 O&M 비용은 전년 동기 대비 약 90만 달러 감소했다.

지자체 자산 인수와 관련해 경영진은 선거 결과가 특히 펜실베이니아주를 비롯해 진행 중이거나 잠재적인 거래에 중대한 우려를 야기하지 않았다고 밝혔다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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.

질의응답

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.