Core Insights - Essential Utilities reported strong second quarter 2025 results, with earnings per share (GAAP) at $0.38, exceeding the analyst estimate of $0.30, and revenue at $514.9 million, surpassing the forecast of $469.75 million, indicating robust business performance and strategic execution [1][2] Financial Performance - EPS (GAAP) increased by 35.7% year-over-year from $0.28 in Q2 2024 to $0.38 in Q2 2025 [2] - Revenue (GAAP) rose by 18.5% year-over-year from $434.4 million in Q2 2024 to $514.9 million in Q2 2025 [2] - Operating income reached $185.3 million, a 27.5% increase from $145.3 million in Q2 2024 [2] - Net income grew by 43.0% year-over-year, from $75.4 million in Q2 2024 to $107.8 million in Q2 2025 [2] Business Overview - Essential Utilities operates in regulated water, wastewater, and natural gas services across several states, including Pennsylvania, Ohio, North Carolina, and New Jersey, serving millions of customers [3] - The company focuses on two main segments: Regulated Water and Regulated Natural Gas [3] Strategic Initiatives - The company secured $92.6 million in new base water segment rate awards and $8.2 million in natural gas rate approvals as of July 31, 2025, with additional pending rate cases potentially adding $96.5 million in annual revenue [5] - Infrastructure investment is a priority, with $613 million invested in the first half of 2025 and a target of $1.4 to $1.5 billion for the full year [6] - The company plans to invest $7.8 billion from 2025 to 2029, focusing on aging infrastructure and compliance with new EPA regulations on PFAS [6] Acquisition Strategy - In July 2025, the company acquired the Beaver Falls wastewater system for $37.75 million, expanding its customer base [7] - Year-to-date acquisitions serve approximately 10,300 customers for a total purchase price of $58 million, with a pipeline representing about 400,000 potential new customers [7] Segment Performance - Regulated Water segment revenue grew by 9.9%, while the Regulated Natural Gas segment saw a 38.3% increase in revenue, driven by higher rates and surcharges [8] - Overall operating income rose by 27.5% and net income increased by 43.0% year-over-year, supported by rate increases across both segments [8] Future Outlook - Management raised its 2025 EPS guidance, now expecting it to exceed the previous range of $2.07 to $2.11, with a long-term goal of 5 to 7% compound annual EPS growth through 2027 [9] - The capital plan remains unchanged, with continued growth expected in water and gas rate bases at approximately 6% and 11% compound annual rates, respectively [9]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $0.38, a 35% increase compared to the same quarter last year [6] - Revenues increased by 18.5% year-over-year, rising from $434.4 million to $514.9 million [26] - Net income for the gas business was $17.5 million for the quarter [7] - The company expects GAAP earnings per share to exceed the guidance range of $2.07 to $2.11 for the year [7] Business Line Data and Key Metrics Changes - The gas business showed strong performance with significant revenue growth attributed to favorable rate case outcomes and increased gas volume [26] - The water business is expected to see annual rate base growth of 6% through 2029, not including acquisitions [18] - O&M expenses increased by 4.2% year-over-year, driven by higher employee-related costs and bad debt expenses [29] Market Data and Key Metrics Changes - The company is experiencing a wet summer, which has decreased water consumption in several states [28] - The Texas market has seen a 16% population increase and a corresponding 30% GDP growth, contributing to the company's growth in that region [23] Company Strategy and Development Direction - The company is reaffirming its capital investment plans with a target of approximately $1.4 billion in infrastructure investment for 2025 [7] - The focus remains on growing the water and wastewater business through acquisitions, with recent purchases totaling approximately $58 million for systems serving about 10,300 customers [34] - The company aims to maintain a strong balance sheet and improve cash flow while delivering consistent dividend growth [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong growth potential in both water and gas platforms [36] - The company is committed to addressing PFAS issues and sees regulatory changes as potential growth opportunities [22][76] - Management noted that the engagement with regulatory bodies has been positive, indicating a constructive relationship moving forward [55] Other Important Information - The Board of Directors approved a 5.25% increase in the dividend, continuing a 30-year tradition of dividend growth [12] - The company has been recognized for its community engagement efforts, being named one of Greater Philadelphia's most community-minded businesses [14] Q&A Session Summary Question: Insights on quarterly earnings guidance - Management indicated that GAAP earnings are expected to exceed the guidance range due to strong revenue in gas and favorable tax items [41][44] Question: Cash flow trends and PFAS settlements - The company expects to receive approximately $45 million in PFAS proceeds this year, with $7.1 million already received [49] Question: Regulatory environment in Pennsylvania - Management noted a positive engagement with the new consumer advocate and expressed hope for constructive relationships with all advocates [55][56] Question: Fair market value in acquisitions - Management stated they might consider paying above the reasonable review ratio if significant rate base growth is anticipated [59] Question: Tax rate modeling - Management suggested a low single-digit benefit for 2025 and a low single-digit expense for 2026, indicating a crossover in tax impacts [62]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $0.38, a 35% increase compared to the same quarter last year [4] - Net income for the gas business was $17,500,000, contributing to strong overall performance [5] - Revenues increased by 18.5% year-over-year, rising from $434,400,000 to $514,900,000 [24][25] - Earnings per share increased by 35.7% year-over-year, driven by favorable rate case outcomes and increased gas volume [24] Business Line Data and Key Metrics Changes - The water business is expected to see annual rate base growth of 6% through 2029, not including acquisitions [15] - The gas business experienced strong revenue growth due to higher gas usage and favorable rate outcomes [24] - The water business contributed $2,100,000 to revenue growth, although lower water volumes offset some gains [25] Market Data and Key Metrics Changes - The company serves over a million customers with a rate base exceeding $7,000,000,000 across eight states [15] - In Texas, the company has grown by nearly 25,000 connections over the last ten years, with another 90,000 under contract or negotiation [21] Company Strategy and Development Direction - The company is reaffirming its capital investment plans with a target of approximately $1,400,000,000 in infrastructure investment for 2025 [5] - The focus remains on growing the water and wastewater business through acquisitions, with recent purchases totaling approximately $58,000,000 [32] - The company aims to maintain a strong balance sheet and deliver consistent dividend growth while keeping the payout ratio between 60-65% [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, particularly in Pennsylvania due to low energy costs attracting hyperscalers [7][70] - The company is committed to addressing PFAS regulations and sees potential for acquisition growth as municipalities begin to comply with new standards [20][74] - Management expects GAAP earnings per share to exceed the guidance range of $2.07 to $2.11, driven by strong performance and non-recurring benefits [5][46] Other Important Information - The Board of Directors approved a 5.25% increase in the dividend, continuing a 30-year tradition of dividend growth [10] - The company has been recognized for its community engagement efforts, being named one of Greater Philadelphia's most community-minded businesses [12] Q&A Session Summary Question: Clarification on quarterly earnings guidance - Management confirmed that GAAP earnings are expected to be above the guidance range due to strong revenue and some positive tax items [41][46] Question: Trends in cash flow and PFAS settlements - Management indicated a target for funds from operations (FFO) to be above 12% and expects to receive approximately $45,000,000 in PFAS proceeds this year [48][49] Question: Insights on Pennsylvania's regulatory environment - Management noted a positive engagement with the new consumer advocate and expressed hope for constructive relationships with all advocates [54][55] Question: Fair market value and acquisition strategy - Management stated they might consider paying above the reasonable review ratio if significant rate base growth is anticipated [58] Question: Tax rate modeling for future years - Management advised to expect a low single-digit benefit for 2025 and a low single-digit expense for 2026 [61]

Financial Performance - Q2 2025 EPS was $0.38, with 2025 EPS guidance set at $2.07 - $2.11[9] - Operating revenues for Q2 2025 increased by 18.5% to $514.9 million, compared to $434.4 million in Q2 2024[41] - Net income for Q2 2025 increased by 43.0% to $107.8 million, compared to $75.4 million in Q2 2024[41] - YTD 2025 operating revenues increased by 24.1% to $1,298.5 million, compared to $1,046.5 million in YTD 2024[75] - YTD 2025 net income increased by 14.8% to $391.6 million, compared to $341.2 million in YTD 2024[75] Investments and Growth - Infrastructure investments for 2025 are projected to be $1.4 billion - $1.5 billion[9] - The company anticipates approximately $7.8 billion in infrastructure investments from 2025-2029[20] - The company targets a rate base CAGR of approximately 6% through 2029 for Aqua[23] - The company targets a rate base CAGR of approximately 11% through 2029 for Peoples[65] Regulatory and Acquisitions - Completed regulatory recoveries in 2025 are expected to increase annualized revenue by $92.6 million for the water segment and $8.2 million for the gas segment[53] - Pending regulatory recoveries are expected to increase annualized revenue by $96.6 million for the water segment[53] - Over 135,000 water and wastewater customers and approximately $550 million in rate base have been acquired through M&A since 2015[60]

[Q2 2025 Earnings Release](index=1&type=section&id=Essential%20Utilities%20Reports%20Strong%20Second%20Quarter%202025%20Results) Essential Utilities delivered strong Q2 and H1 2025 results, driven by financial growth, strategic investments, and a positive future outlook [Financial Performance](index=1&type=section&id=Operating%20Results) Essential Utilities achieved significant financial growth in Q2 and H1 2025, driven by increased net income and revenue from rate adjustments | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $107.8 million | $75.4 million | +43.0% | | Diluted EPS | $0.38 | $0.28 | +35.7% | | Revenues | $514.9 million | $434.4 million | +18.5% | | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $391.6 million | $341.2 million | +14.8% | | Diluted EPS | $1.41 | $1.25 | +12.8% | | Revenues | $1,298.5 million | $1,046.5 million | +24.1% | - Primary drivers for the quarterly earnings increase were rate hikes in both business segments, which were partially offset by higher depreciation, interest, and operations and maintenance expenses[5](index=5&type=chunk)[6](index=6&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Both regulated water and natural gas segments reported robust Q2 2025 revenue growth, primarily due to new rates and higher purchased gas costs | Regulated Water Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $332.3 million | $302.5 million | +9.9% | | O&M Expenses | $100.1 million | $95.6 million | +4.7% | | Regulated Natural Gas Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $177.3 million | $128.2 million | +38.3% | | O&M Expenses | $49.8 million | - | Relatively flat | [Shareholder Returns & Financing](index=2&type=section&id=Shareholder%20Returns%20%26%20Financing) The company increased its quarterly dividend by 5.25% and maintains a stable financial position with available credit lines - The board of directors declared a **5.25% increase** in the quarterly cash dividend to **$0.3426 per share**[11](index=11&type=chunk) - This marks the **35th dividend increase** in the last **34 years** and continues an **80-year streak** of consecutive quarterly cash dividends[11](index=11&type=chunk) - As of June 30, 2025, the company's weighted average cost of fixed-rate long-term debt was **4.03%**, with **$802 million** available on its credit lines[12](index=12&type=chunk) [Operational Highlights & Strategy](index=2&type=section&id=Operational%20Highlights%20%26%20Strategy) Essential Utilities advanced its strategy through substantial infrastructure investments, strategic acquisitions, and successful rate adjustments - Invested **$613 million** in the first half of 2025 and is on track to invest over **$1.4 billion** for the full year[7](index=7&type=chunk)[14](index=14&type=chunk) - Long-term capital plan includes investing approximately **$7.8 billion** from 2025 through 2029 to improve water and gas systems, address PFAS, and reduce methane emissions[14](index=14&type=chunk) - Closed the acquisition of the City of Beaver Falls wastewater system for **$37.75 million**, serving approximately **7,000 customers** and equivalent dwelling units (EDUs)[17](index=17&type=chunk) - The company has four signed purchase agreements pending for additional systems, expected to serve over **200,000 customers**, and is actively pursuing a pipeline representing approximately **400,000 total customers**[18](index=18&type=chunk)[19](index=19&type=chunk) - As of July 31, 2025, the company received rate awards and surcharges totaling **$100.8 million** (**$92.6 million** for water, **$8.2 million** for gas) and has pending cases for an additional **$96.5 million** in annual revenue[13](index=13&type=chunk) [Future Outlook & Guidance](index=3&type=section&id=Multi-Year%20Financial%20and%20Growth%20Guidance) The company updated its 2025 EPS guidance upward and reaffirmed long-term growth targets, including significant rate base CAGR and emission reduction goals - For 2025, the company expects to achieve GAAP earnings per share above the guidance range of **$2.07-$2.11** due to non-recurring benefits[7](index=7&type=chunk)[20](index=20&type=chunk) | Long-Term Guidance (through 2029 unless noted) | Target | | :--- | :--- | | EPS CAGR (through 2027) | 5% to 7% | | 2025 Regulated Infrastructure Investments | $1.4 to $1.5 billion | | Total Regulated Infrastructure Investments | ~$7.8 billion | | Regulated Water Segment Rate Base CAGR | ~6% | | Regulated Natural Gas Segment Rate Base CAGR | ~11% | | Combined Regulated Utility Rate Base CAGR | >8% | - Reaffirms commitment to reduce Scope 1 and 2 greenhouse gas emissions by **60% by 2035** from a 2019 baseline[21](index=21&type=chunk)[25](index=25&type=chunk) - Guidance assumptions exclude the potential DELCORA acquisition and assume the company will continue to issue equity to support capital plans[22](index=22&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) Unaudited financial statements detail Q2 2025 operating results and the company's financial position, showing growth in income and assets | Selected Operating Data (Q2 Ended June 30, in thousands, except per share data) | 2025 | 2024 | | :--- | :--- | :--- | | Operating revenues | $514,907 | $434,406 | | Net income | $107,827 | $75,385 | | Diluted net income per common share | $0.38 | $0.28 | | Condensed Balance Sheet Data (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Net property, plant and equipment | $13,579,450 | $13,143,476 | | Total Assets | $18,554,285 | $18,026,554 | | Long-term debt (net) | $7,622,994 | $7,368,381 | | Total equity | $6,720,202 | $6,198,809 |

Core Insights - Essential Utilities Inc. (WTRG) reported second-quarter 2025 operating earnings per share (EPS) of 38 cents, exceeding the Zacks Consensus Estimate of 29 cents by 31% and reflecting a year-over-year increase of 35.7% [1][7] - Total operating revenues reached $515 million, surpassing the Zacks Consensus Estimate of $473 million by 8.8% and showing an 18.7% increase year over year, driven by higher rates and purchased gas costs [2][7] Revenue Breakdown - The regulated water segment generated revenues of $332.3 million, a 9.9% increase from $302.5 million in the second quarter of 2024, primarily due to higher water and wastewater rates [3] - The regulated natural gas segment reported revenues of $177.3 million, a significant 38.3% increase from $128.2 million in the same quarter last year, driven by higher purchased gas costs and increased rates and surcharges [4] Expense and Investment Highlights - Operation and maintenance expenses were $148.5 million, up 4.2% from $142.5 million in the prior year [5] - Operating income totaled $185.3 million, reflecting a 27.5% year-over-year increase [5] - The company invested $613 million in the first half of 2025 to upgrade its regulated water and natural gas infrastructure [5] Strategic Acquisitions and Future Guidance - Essential Utilities acquired systems serving nearly 10,300 customers for approximately $58 million in 2025, with new water and gas rate approvals expected to increase annual revenues by $92.6 million and $8.2 million, respectively [6] - The company reaffirmed its 2025 EPS guidance in the range of $2.07-$2.11, with a long-term annual earnings growth forecast of 5% to 7% through 2027 [9] - Planned investments for infrastructure in 2025 are projected to be between $1.4 billion and $1.5 billion, with a total of $7.8 billion planned from 2025 to 2029 [10]

Over the last four quarters, the company has surpassed consensus EPS estimates four times. Essential Utilities, which belongs to the Zacks Utility - Water Supply industry, posted revenues of $514.91 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 8.76%. This compares to year-ago revenues of $434.41 million. The company has topped consensus revenue estimates four times over the last four quarters. Essential Utilities (WTRG) came out with quarterly earnings of $0.38 per sha ...

Company Overview - Essential Utilities (WTRG) is headquartered in Bryn Mawr and operates in the Utilities sector [3] - The stock has experienced a price change of 2.42% since the beginning of the year [3] Dividend Information - Essential Utilities currently pays a dividend of $0.33 per share, resulting in a dividend yield of 3.5% [3] - The Utility - Water Supply industry's average yield is 2.64%, while the S&P 500's yield is 1.48% [3] - The company's annualized dividend of $1.30 has increased by 2.8% from the previous year [4] - Over the last 5 years, the company has raised its dividend 5 times, averaging an annual increase of 6.53% [4] - The current payout ratio is 58%, indicating that the company paid out 58% of its trailing 12-month EPS as dividends [4] Earnings Growth - The Zacks Consensus Estimate for 2025 earnings is $2.10 per share, reflecting a year-over-year growth rate of 6.60% [5] Investment Appeal - Essential Utilities is considered a compelling investment opportunity due to its attractive dividend and strong Zacks Rank of 2 (Buy) [6]

Core Insights - Essential Utilities (WTRG) has a strong track record of beating earnings estimates, particularly in the last two quarters with an average surprise of 15.13% [1][5] - The most recent earnings report showed a surprise of 28.75%, with actual earnings of $0.80 per share against an expectation of $1.03 [2] - The previous quarter also saw a positive surprise of 1.52%, with actual earnings of $0.67 per share compared to a consensus estimate of $0.66 [2] Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Essential Utilities, indicated by a positive Earnings ESP (Expected Surprise Prediction) of +6.90% [5][8] - The combination of a positive Earnings ESP and a Zacks Rank 1 (Strong Buy) suggests a high likelihood of another earnings beat in the upcoming report [8] - Historically, stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of beating consensus estimates [6][8] Earnings ESP Metric - The Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7] - A negative Earnings ESP reduces predictive power but does not necessarily indicate an earnings miss [9] - Companies often beat consensus EPS estimates for various reasons, and the Earnings ESP is a crucial metric to consider before earnings releases [10]

Company Overview - Essential Utilities (WTRG) is based in Bryn Mawr and operates in the Utilities sector, with a year-to-date share price change of 2.78% [3] - The company currently pays a dividend of $0.33 per share, resulting in a dividend yield of 3.49%, which is higher than the Utility - Water Supply industry's yield of 2.53% and the S&P 500's yield of 1.52% [3] Dividend Performance - The current annualized dividend of Essential Utilities is $1.30, reflecting a 2.8% increase from the previous year [4] - Over the past five years, the company has increased its dividend five times, achieving an average annual increase of 6.53% [4] - The current payout ratio is 58%, indicating that the company paid out 58% of its trailing 12-month earnings per share as dividends [4] Earnings Growth and Investment Appeal - The Zacks Consensus Estimate for 2025 projects earnings of $2.10 per share, which represents a year-over-year earnings growth rate of 6.60% [5] - Essential Utilities is considered an attractive investment opportunity due to its strong dividend yield and a Zacks Rank of 2 (Buy), suggesting favorable market conditions for the stock [6]