Financial Performance - Essential Utilities, Inc. reported a full-year net income of $616.4 million, or $2.20 per share, an increase from $595.3 million, or $2.17 per share, in 2024 [1] - The company's sales reached $2.47 billion, reflecting an 18.6% increase from $2.09 billion [1] - In the fourth quarter, net income was $132.7 million, or $0.47 per share, down from $184.8 million, or $0.67 per share, year-over-year, while quarterly revenue increased by 15.7% to $699.1 million from $604.4 million [1] Revenue Breakdown - The regulated water division generated $1.33 billion in annual revenue, an 8.6% increase from $1.22 billion [2] - The regulated natural gas division contributed $1.12 billion, showing a significant growth of 32.6% from $843 million [2] Investments and Dividends - The company invested over $1.4 billion in infrastructure in 2025, amidst rising operations and maintenance costs in its water and gas businesses [1] - Essential Utilities announced quarterly dividends of $0.3426 per share, payable on March 2 and June 1, 2026 [2] Corporate Structure - Essential Utilities, Inc. operates as a holding corporation with subsidiaries that provide water, wastewater, and natural gas services, functioning through two segments: regulated water and regulated natural gas [3] Merger Activity - On February 10, 2026, the company received shareholder approval for its planned merger with American Water Works Company, expected to close in the first quarter of 2027 [2]

Core Insights - Essential Utilities Inc. has been recognized on Newsweek's list of America's Most Charitable Companies, highlighting its commitment to corporate philanthropy through the Essential Foundation [1] Company Overview - The recognition signifies that the company's mission extends beyond utility services, emphasizing its leadership in the industry regarding charitable contributions [1] - CEO and Chairman Chr. stated that the company fulfills basic needs by providing clean water and heating homes for its customers [1]

Core Insights - Essential Utilities, Inc. (WTRG) has completed the acquisition of Greenville Municipal Water Authority for $18 million, adding over 2,900 new customers [1][9] - The company plans to invest nearly $10 million over the next decade to upgrade the acquired water assets [2][9] - Essential Utilities has made seven water and wastewater acquisitions in the past 24 months, increasing its customer base by 9,655 [3][9] - The U.S. water infrastructure is aging, with a significant investment of $1.25 trillion needed over the next 20 years to maintain and expand services [4] - The U.S. water industry is highly fragmented, with over 50,000 community water systems, many of which lack the financial capacity for necessary upgrades [5][6] Investment and Growth Strategy - Essential Utilities is pursuing a merger agreement with American Water Works, expected to close in Q1 2027, creating a utility company valued at $40 billion [3] - Other companies in the industry, such as American Water Works and Middlesex Water Company, are also making significant investments to strengthen their operations, with planned expenditures of $19-20 billion and $506 million respectively [7] - California Water Service Group plans to invest $760 million and $690 million in 2026 and 2027 for infrastructure development [8] Market Performance - WTRG's stock has gained 7.4% over the past month, slightly outperforming the industry growth of 7.3% [10]

Company Overview - Essential Utilities serves approximately 5.5 million people across multiple states, with Aqua Pennsylvania accounting for about 57% of operating revenues and 72% of income in the Regulated Water segment for 2025[14]. - The consolidated operating revenues for the year ended December 31, 2025, totaled $2,474,615,000, with the Regulated Water segment contributing $1,326,629,000 (53.6%) and the Regulated Natural Gas segment contributing $1,117,875,000 (45.2%)[16]. - The Company experienced a utility customer growth rate of 0.8% in 2025, with an increase of 14,707 customers, bringing the total utility customer base to 1,884,013 by December 31, 2025[23]. Merger and Acquisition Activities - The Merger Agreement with American Water Works Company, Inc. will result in Essential shareholders receiving 0.305 shares of American Water common stock for each share of Essential common stock, with an estimated closing by the end of Q1 2027[15]. - The proposed Merger with American Water is expected to be completed in the first quarter of 2027, pending regulatory approvals and other closing conditions[120]. - Each outstanding share of the company's common stock will be converted into the right to receive 0.305 shares of American Water Common Stock upon completion of the Merger[119]. - The company is actively exploring growth ventures, including a project to develop a gas-fired plant for a data center in Greene County, PA, through its subsidiary Aqua Infrastructure[29]. - The fragmented nature of the water and wastewater utility industries presents numerous acquisition opportunities, with over 14,000 community water systems identified in the U.S.[26]. Financial Performance and Projections - The Company plans to invest approximately $8.7 billion from 2026 through 2030 to improve water and natural gas systems and enhance information technology[32]. - The company has budgeted approximately $54 million for capital improvements related to dam safety between 2026 and 2030[84]. - The company has allocated approximately $174 million for lead and galvanized service line replacements over the next five years[86]. - The company anticipates significant costs related to the Merger, including a potential termination fee of $370 million if the agreement is terminated[126]. - Inflation and higher interest rates have negatively impacted financial conditions and operating results, with potential for further cost increases[144]. Environmental and Regulatory Compliance - The Company is committed to adhering to environmental, health, and safety regulations, integrating these requirements into all operational activities[70]. - The Company is involved in Multi-District Litigation against PFAS manufacturers to hold them accountable for contamination of public water supply systems[79]. - The Company is subject to stringent regulations under the Safe Drinking Water Act and the Clean Water Act, ensuring compliance with national quality standards for drinking water and wastewater discharges[71][81]. - The Company has identified over 300 sites requiring PFAS remediation, with approximately $60 million already invested to remediate PFAS at 100 sites as of December 31, 2025[76]. - The company is required to maintain pipeline integrity testing programs and establish a Distribution Integrity Management Program, which may incur significant capital and operating expenditures[183]. Operational Challenges and Risks - The company faces risks from drought conditions and government-imposed water use restrictions, which could affect its ability to serve customers and harm financial performance[166]. - The company may face challenges in maintaining adequate natural gas supplies if local producers cease production or if regulations limit drilling activities, which could adversely affect customer service and financial results[151]. - The company relies on third-party service providers for a portion of its natural gas supply, which may be affected by federal regulations and interstate pipeline capacity, potentially leading to a loss of customers and adverse financial impacts[150]. - The company faces risks related to climate change, including increased frequency of severe weather events, which could lead to higher operational costs and impact service delivery[193]. - Cybersecurity attacks pose a risk to the company's information technology systems, potentially leading to significant remediation costs and operational disruptions[159]. Customer and Revenue Management - The Company has a revenue stability mechanism in place that allows it to recognize revenue based on a target amount established in the last rate case, which can result in either a refund or payment from customers[59]. - The company has adopted a revenue stability mechanism effective October 2024 to mitigate weather impacts on cash flow, adjusting customer billings based on temperature variances[162]. - Decreased residential customer water and natural gas usage due to conservation efforts and more efficient appliances may harm demand for utility services, impacting revenues and earnings[163]. - The company achieved a 28% reduction in Scope 2 greenhouse gas emissions from its 2019 baseline by the end of 2024[95]. Workforce and Labor Relations - The company has a total of 3,303 full-time employees as of December 31, 2025[98]. - Approximately 51% of the workforce in the Regulated Water and Regulated Natural Gas segments is unionized under 23 labor contracts, which expire at various times up until 2029[178]. - The voluntary attrition rate for 2025 was 6.3%, a decrease from 6.7% in the previous year[104]. Capital Expenditures and Investments - The Company estimates capital expenditures of approximately $175 million, or 3.8% of expected total water and wastewater capital expenditures over the next five years (2026-2030), to address outstanding environmental compliance issues[72]. - The company has made substantial investments in information technology systems to enhance customer satisfaction and productivity, which may involve replacing legacy systems and adopting new technologies[156]. - The company may incur increased bad debt expenses due to higher gas prices, potentially reducing earnings and impacting financial stability[190]. Debt and Financial Stability - As of December 31, 2025, the company's aggregate long-term and short-term debt balance was $8,331,987,000, which may complicate debt refinancing and increase operational costs[209]. - The inability to recover increased borrowing costs through rates may harm the company's financial condition and cash flows[213]. - The net carrying value of goodwill amounted to $2,348,559,000, representing 12.1% of total assets as of December 31, 2025[192].

Core Insights - Essential Utilities Inc. (WTRG) reported fourth-quarter 2025 operating earnings per share (EPS) of 47 cents, exceeding the Zacks Consensus Estimate of 36 cents by 30.56%, although this represents a 29.85% decrease from 67 cents in the same quarter last year [1] - The company's operating revenues reached $699.1 million, surpassing the Zacks Consensus Estimate of $589 million by 18.69%, and increased by 15.67% from $604.4 million in the prior-year quarter [2] - Total revenues for WTRG in 2025 amounted to $2.47 billion, reflecting an 18.62% rise from $2.09 billion in 2024 [2] Revenue Segments - The regulated water segment generated revenues of $329.4 million, an 8% increase from $305 million in the fourth quarter of 2024, driven by higher water and wastewater rates [3] - The regulated natural gas segment reported quarterly revenues of $361.3 million, marking a 23% increase from $293.7 million in the fourth quarter of 2024 [3] Financial Performance - Operation and maintenance expenses were $200.2 million, up 22.45% from $163.5 million in the previous year, attributed to increased purchased gas costs and higher rates [4] - Operating income totaled $227 million, reflecting a slight increase of 0.17% year over year [4] - Interest expenses rose by 7.11% to $84.9 million from $79.3 million in the prior-year quarter [4] Growth Initiatives - The company expanded its operations by adding 12,700 customers through organic growth and completed three acquisitions of water and wastewater systems in 2025 [5] - New water and natural gas rate approvals in 2025 are expected to increase annual revenues by $92.6 million and $8.9 million, respectively [5] - Additional rate approvals received in early 2026 are projected to increase annual revenues by $4.6 million and $7.6 million, respectively [6] Financial Position - Current assets as of December 31, 2025, were $610.4 million, compared to $485.9 million as of December 31, 2024 [7] - Long-term debt increased to $8.11 billion as of December 31, 2025, up from $7.37 billion as of December 31, 2024 [9] - The company invested $1.4 billion in 2025 to enhance its regulated water and natural gas infrastructure systems [9] Merger Update - Essential Utilities is advancing its merger with American Water Works, having secured necessary regulatory approvals, with the merger expected to close by the end of Q1 2027 [10]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $2.20 for 2025, exceeding the guidance range of $2.07-$2.11, marking a significant increase from the non-GAAP EPS of $1.97 in 2024 [7][19] - Revenues increased by $388.5 million, or 18.6%, from approximately $2.1 billion in the previous year to nearly $2.5 billion [12][13] - Operating and maintenance (O&M) expenses rose by about $52.3 million, or 8.9% year-over-year [14] Business Line Data and Key Metrics Changes - The water business executed a $450 million PFAS capital plan, deploying over 50 advanced treatment systems [9] - The natural gas segment achieved the installation of its 100,000th Intelis meter in 2025 [9] - The company completed three municipal acquisitions in 2025, adding over 12,700 new customers [21] Market Data and Key Metrics Changes - Regulatory recoveries totaled $101.5 million in 2025, with $92.6 million related to the water and wastewater business [20] - Customer growth contributed an additional $5.6 million to revenue, although lower water volumes due to wetter weather offset this by $8.6 million [13] Company Strategy and Development Direction - The company aims for a 5%-7% EPS growth from 2024 to 2027, excluding non-recurring items from 2025 [24] - The merger with American Water is expected to create a premier multi-state utility with low risk and first quartile growth [4] - The company is committed to maintaining a strong balance sheet and improving cash flow while delivering consistent dividend growth [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in closing the merger transaction in the first quarter of 2027, pending regulatory approvals [5] - The company emphasized its commitment to sustainability and affordability for customers amid ongoing discussions about customer bills [11][25] - Management highlighted the importance of responsible investments in infrastructure to support customer affordability while sustaining financial performance [11] Other Important Information - The company was recognized as one of Newsweek's America's Most Responsible Companies for the fifth consecutive year [10] - The company plans to invest $1.7 billion in regulated infrastructure in 2026 [25] Q&A Session Questions and Answers Question: Did you quantify what the non-GAAP 2025 would be if you made those adjustments? - The company did not specify the number but indicated that favorable non-recurring items would still place them above the guidance range [31] Question: Could you describe the timing for the next round of Pennsylvania rate cases? - The company plans to follow a two-year cadence for filings, suggesting that filings will occur relatively soon [32] Question: Is there any chance to combine regulatory activity with the merger sign-off? - The company clarified that these are considered separate dockets and will be adjudicated separately [41]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $2.20 for 2025, exceeding the guidance range of $2.07-$2.11, marking a significant increase from the previous year's non-GAAP EPS of $1.97 [7][12][18] - Revenues increased by 18.6%, rising from approximately $2.1 billion to nearly $2.5 billion, with regulatory recoveries contributing $177.6 million to this growth [12][13] - Operating and maintenance (O&M) expenses rose by 8.9% year-over-year, totaling an increase of $52.3 million [15] Business Line Data and Key Metrics Changes - The water business executed a $450 million PFAS capital plan, deploying over 50 advanced treatment systems [9] - The natural gas segment achieved the installation of its 100,000th Intelis meter in 2025 [9] - The company completed three municipal acquisitions in 2025, adding over 12,700 new customers [21] Market Data and Key Metrics Changes - Customer growth contributed $5.6 million to revenue, while lower water volumes due to wetter weather offset revenue growth by $8.6 million [13] - The company reported a favorable regulatory recovery totaling $101.5 million in incremental annualized revenue, with $92.6 million related to water and wastewater business [20] Company Strategy and Development Direction - The company aims to maintain a long-term goal of delivering 5%-7% EPS growth from 2024 through 2027, excluding non-recurring items [19][24] - The merger with American Water is expected to create a premier multi-state utility with low risk and first quartile growth, with regulatory approvals anticipated to close in the first quarter of 2027 [4][5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory relationships built over the years, which are expected to facilitate a constructive outcome for the merger [5] - The company remains committed to balancing responsible investments in infrastructure with customer affordability amid ongoing discussions about utility costs [11] Other Important Information - The company was recognized as one of Newsweek's America's Most Responsible Companies for the fifth consecutive year and named to USA Today's America's Climate Leaders for the third consecutive year [10] - The company plans to invest $1.7 billion in regulated infrastructure in 2026 [25] Q&A Session Summary Question: What would the non-GAAP 2025 be with adjustments? - Management did not specify the number but indicated that favorable non-recurring items would still place results above the guidance range [30][31] Question: Timing for the next round of Pennsylvania rate cases? - Management indicated that filings would follow a historical two-year cadence, suggesting a relatively quick timeline [32] Question: Could regulatory activity be combined with the merger sign-off? - Management clarified that these would be considered separate dockets and adjudicated separately [41][42]

Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $2.20 for 2025, exceeding the guidance range of $2.07-$2.11, and representing significant growth from the previous year's non-GAAP EPS of $1.97 [6][12][18] - Revenues increased by 18.6%, rising from approximately $2.1 billion in 2024 to nearly $2.5 billion in 2025, with regulatory recoveries contributing $177.6 million to this increase [12][13] - Operating and maintenance (O&M) expenses rose by 8.9% year-over-year, totaling an increase of $52.3 million, driven by higher employee-related costs and increased production costs [14] Business Line Data and Key Metrics Changes - The water business executed a $450 million PFAS capital plan, deploying over 50 advanced treatment systems across Pennsylvania and North Carolina [9] - The natural gas segment achieved the installation of its 100,000th Intelis meter in 2025, contributing to operational efficiency [9] - The company completed three municipal acquisitions in 2025, adding over 12,700 new customers and showcasing its growth strategy [21] Market Data and Key Metrics Changes - The company experienced customer growth that added $5.6 million in revenue, although lower water volumes due to wetter weather offset this growth by $8.6 million [13] - Regulatory recoveries totaled $101.5 million in 2025, with $92.6 million related to the water and wastewater business [20] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet, improving cash flow, and delivering consistent dividend growth while keeping the payout ratio between 60% and 65% [24] - The merger with American Water is expected to close in the first quarter of 2027, with the company optimistic about leveraging combined resources for business development [5][21] - The company reaffirmed its long-term goal of delivering 5%-7% EPS growth from 2024 through 2027, excluding non-recurring items [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory relationships built over the years, which are expected to facilitate a constructive outcome for the merger [5] - The company emphasized its commitment to sustainability and affordability, balancing investments in infrastructure with customer bill impacts [11][25] - Management highlighted the importance of maintaining high-quality service while managing operating costs amid national discussions on affordability [11] Other Important Information - The company was recognized as one of Newsweek's America's Most Responsible Companies for the fifth consecutive year and named to USA Today's America's Climate Leaders for the third consecutive year [10] - The company plans to invest $1.7 billion in regulated infrastructure in 2026, reflecting its commitment to enhancing service reliability [25] Q&A Session Summary Question: What would the non-GAAP 2025 be with adjustments? - Management did not specify the exact number but indicated that the results remained favorable to the guidance range [30][31] Question: Timing for the next round of Pennsylvania rate cases? - Management suggested that filings would occur relatively quickly, following a historical two-year cadence [32] Question: Could regulatory activity be combined with merger sign-off? - Management clarified that rate cases and regulatory activities are considered separate dockets and will be adjudicated separately [40][41] Question: Options for the bankruptcy exit for Chester? - Management discussed the implications of the Supreme Court ruling and potential negotiations regarding assets related to the Chester Water Authority [44][46]

NYSE LISTED WTRG February 2024 Brian Dingerdissen Vice President Treasury, FP&A and Investor Relations 2 Forward Looking Statement This presentation contains in addition to historical information, forward looking statements based on assumptions made by management regarding future circumstances over which the company may have little or no control, that involve risks, uncertainties and other factors that may cause actual results to be materially different from any future results expressed or implied by such f ...

Financial Performance - Essential Utilities reported a net income of $616.4 million or $2.20 per share for the full year of 2025, an increase from $595.3 million and $2.17 per share in 2024[2][5]. - Revenues for 2025 were $2,474.6 million, representing an 18.6% increase from $2,086.1 million in 2024[6]. - Operating revenues for Q4 2025 reached $699,111,000, a 15.7% increase from $604,383,000 in Q4 2024[34]. - Net income for Q4 2025 was $132,676,000, down 28.2% from $184,755,000 in Q4 2024[34]. - Basic net income per common share for Q4 2025 was $0.47, a decrease of 30% compared to $0.67 in Q4 2024[34]. - Total operating expenses for the year ended December 31, 2025, were $1,553,664,000, an increase of 16.9% from $1,328,445,000 in 2024[34]. - Operating income for the year ended December 31, 2025, was $920,951,000, up 21.5% from $757,668,000 in 2024[34]. - Long-term debt as of December 31, 2025, was $8,110,167,000, an increase from $7,368,381,000 in 2024[42]. - Total equity increased to $6,857,456,000 as of December 31, 2025, compared to $6,198,809,000 in 2024[42]. - Adjusted income for the year ended December 31, 2024, was $540,898,000, reflecting adjustments for asset sales and weather impacts[40]. Revenue Segments - The regulated water segment generated revenues of $1,326.6 million in 2025, an 8.6% increase compared to $1,221.9 million in 2024[7]. - The regulated natural gas segment reported revenues of $1,117.9 million for 2025, a 32.6% increase from $843.0 million in 2024[8]. Investments and Acquisitions - Essential invested a record $1.4 billion in infrastructure improvements during 2025[4][19]. - In 2026, regulated infrastructure investments are expected to reach $1.7 billion[26]. - Essential completed three acquisitions in 2025, adding over 12,700 new customers, and has signed agreements for additional acquisitions expected to serve over 200,000 customers[20][21]. - The company has a pipeline of potential acquisitions representing approximately 400,000 total customers[22]. Future Projections - Anticipated long-term earnings per share growth is projected at a compounded annual growth rate of 5 to 7% from the adjusted 2024 earnings per share of $1.97[26]. - The company secured shareholder approval for its merger with American Water, which is expected to close in the first quarter of 2027[3][23]. Share Information - The average diluted common shares outstanding for Q4 2025 was 283,598,000, compared to 275,161,000 in Q4 2024[34].