Essential Utilities Q3 EPS Rises to $0.36 on Rate Recoveries

Essential Utilities (NYSE: WTRG) reported third-quarter 2026 diluted GAAP earnings of $0.36 per share, up from $0.33 a year earlier, as rate increases and surcharges more than offset other negative items. Excluding costs related to its pending merger with American Water, adjusted diluted earnings were $0.38 per share.

Net income for the three months ended September 30 was $103.8 million. Essential recorded $4.9 million of merger-related costs, resulting in adjusted income of $107.4 million after the associated tax effect.

The year-over-year earnings bridge showed that rates and surcharges added $0.06 per share and gas volumes contributed $0.01. Other items reduced earnings by $0.04 per share. The exclusion of pre-merger expenses added $0.02 per share to the adjusted result.

For the first nine months of 2026, diluted GAAP earnings were $1.53 per share, compared with $1.73 in the same period of 2025. Rates and surcharges contributed $0.20 per share, while water volumes and water customer growth added $0.02 and $0.01, respectively. Those gains were outweighed by a $0.02 impact from gas volumes, an $0.11 impact from expenses and a $0.30 impact from other items. Adjusted diluted earnings were $1.58 per share after excluding merger-related costs. Nine-month net income was $434.0 million, while adjusted income was $450.4 million.

Regulatory recoveries and infrastructure spending

Essential said it remains on track to invest $1.7 billion in infrastructure improvements during 2026. Completed regulatory proceedings and surcharges during the year provided $70.5 million of annualized revenue increases, including $53.6 million in the water segment and $16.9 million in the gas segment.

As of early November, the company had pending requests totaling $241.7 million in annualized revenue increases. Water and wastewater cases in Texas, Virginia, New Jersey, Indiana and Illinois accounted for $78.5 million, while a Pennsylvania gas rate case represented $163.2 million.

The presentation also noted that a Pennsylvania administrative law judge issued a recommended decision for $105 million in the Peoples Gas case. The recommendation is part of the regulatory process and does not represent a final approved recovery.

Acquisitions and merger process

Essential continued to highlight acquisitions as part of its water and wastewater growth strategy. Since 2015, the company has acquired more than 138,000 water and wastewater customer equivalents and approximately $570 million of rate base. Selected pending transactions represent about 208,000 customer equivalents and roughly $290 million in purchase price.

The largest transaction listed was the proposed acquisition of DELCORA, a Pennsylvania wastewater system serving an estimated 198,000 customer equivalents, for $276.5 million. Other transactions presented included water and wastewater systems in Pennsylvania and privately owned utilities.

Management said progress continues toward the proposed merger with American Water but did not provide a closing date or additional transaction milestones in the presentation. Completion remains subject to regulatory approvals and other closing conditions.

Essential also declared a quarterly dividend payable December 1, 2026, though the presentation did not specify the payment amount.

The company cautioned that actual results could differ from its expectations because of uncertainty surrounding the timing and completion of the American Water merger, changes in environmental and other regulations, government policy shifts, economic or supply-chain disruptions, financing conditions, weather, customer growth, cost-containment efforts and the ability to complete acquisitions and dispositions.