Essential Utilities tops Q3 profit and revenue estimates

Essential Utilities (WTRG) topped third-quarter profit estimates and beat on revenue, the company said in a regulatory filing.

Shares were little changed in regular trading as of 11:11 a.m. ET, from $44.46 before the filing. The results were released on Nov. 3.

Adjusted earnings per share were 38 cents, against the 36-cent consensus estimate. Revenue was $508.3 million, against the $459.45 million consensus estimate.

Here's how the company did:

• Adjusted EPS: 38 cents vs. 36 cents expected
• GAAP EPS: 36 cents vs. 33 cents a year earlier
• Revenue: $508.3 million vs. $477.0 million a year earlier, $459.45 million expected

Revenue rose 6.6% from a year earlier, mainly on regulatory recoveries and higher purchased gas costs.

GAAP net income was $103.8 million, up from $92.1 million a year earlier.

Operations and maintenance expenses fell 0.6% to $152.2 million from $153.1 million, mainly on insurance recoveries.

Segment results

Water revenue rose 4.5% to $380.6 million from $364.1 million, helped by regulatory recoveries and a larger customer base.

Water operations and maintenance costs fell to $104.8 million from $105.7 million, on lower employee benefits tied to insurance recoveries.

Gas revenue was $122.6 million, against $108.5 million, driven by higher rates and surcharges, purchased gas costs and customer usage.

Gas operations and maintenance costs fell to $43.0 million from $47.5 million, on lower bad debt expense and insurance recoveries.

Guidance and capital spending

The company expects full-year operations and maintenance expenses, excluding one-time items and abnormal weather, to be in line with historic norms.

Essential invested $1.1 billion in the first nine months and is on track to invest $1.7 billion in 2026.

Nine-month revenue was $1.90 billion, up 7.1% from $1.78 billion. Net income was $434.0 million, or $1.53 per share, against $483.7 million, or $1.73 per share, a year earlier. Adjusted diluted EPS was $1.58.

“Our strong performance this quarter highlights the consistent earnings growth generated by both our water and natural gas divisions,” Essential Utilities Chairman and Chief Executive Officer Christopher Franklin said.

Merger with American Water

Essential expects to close its merger with American Water in the first quarter of 2027.

Regulators in Kentucky, Ohio and Virginia have approved the merger.

Settlement agreements have been reached with regulators in Pennsylvania, North Carolina and Texas, and each remains subject to review and approval by the applicable public utility commission.

Merger-related costs were $4.9 million in the quarter and $22.5 million for the first nine months.

Rate cases and acquisitions

Rate awards and surcharges received so far in 2026 will raise annual water revenue by $53.6 million and gas revenue by $16.9 million.

A Pennsylvania gas base rate case seeks a $163.2 million revenue increase to support the company's Long-Term Infrastructure Improvement Plan.

In October the company completed the acquisition of Dril-Quip, Inc., a water and wastewater system in Harris County, Texas, for about $1.1 million.

Essential has signed asset purchase agreements totaling about $290 million, which are expected to serve more than 208,000 customers.

That total includes a $276.5 million agreement to acquire the Delaware County Regional Water Quality Control Authority, or DELCORA, a Pennsylvania sewer authority serving about 198,000 equivalent dwelling units.

Dividend and financing

On Oct. 21 the board declared a quarterly dividend of 36.06 cents per share, payable Dec. 1 to holders of record on Nov. 10.

The company has increased its dividend 36 times in the last 35 years.

As of Sept. 30, the weighted average cost of its fixed-rate long-term debt was 4.14%, and it had $759 million available on its credit lines.