Essential Utilities Reports Solid Q3 2026 Results
Essential Utilities, Inc. (WTRG) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Essential Utilities Reports Solid Q3 2026 Results Progress Continues on Proposed Merger with American Water · GAAP Earnings of $0.36 per share for Q3 2026 and adjusted earnings per share of $0.38 (non-GAAP), which exclude transaction costs associated with the pending
How this was made
The 30-second read
Why it matters
Earnings beat and dividend increase provide fresh positive data; merger progress adds longer-term upside potential.
Market read
Strong earnings and dividend raise may lift WTRG and influence peer utilities.
What to watch
Pending merger with American Water could introduce integration costs not reflected yet.
Essential Utilities Reports Solid Q3 2026 Results Progress Continues on Proposed Merger with American Water
Third-quarter operating revenues increased 6.6%, GAAP net income increased to $ 103,835 from $ 92,077, and both regulated segments reported revenue growth. Operating income increased to $ 192,699 from $ 169,771, while merger-related costs reduced reported and adjusted earnings diverged. Nine-month GAAP net income and diluted EPS were below the prior-year period despite higher revenue.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 operating revenues (In thousands)GAAP | $508.3M | – | 6.6% |
| Q3 2026 operations and maintenance expense (In thousands)GAAP | 152.2M | – | decrease of 0.6% |
| Q3 2026 purchased gas expense (In thousands)GAAP | 25.38M | – | – |
| Q3 2026 depreciation expense (In thousands)GAAP | 110.6M | – | – |
| Q3 2026 amortization expense (In thousands)GAAP | 3.71M | – | – |
| Q3 2026 taxes other than income taxes (In thousands)GAAP | 23.71M | – | – |
| Q3 2026 total cost and expenses (In thousands)GAAP | 315.6M | – | – |
| Q3 2026 operating income (In thousands)GAAP | 192.7M | – | – |
| Q3 2026 interest expense (In thousands)GAAP | 91.32M | – | – |
| Q3 2026 interest income (In thousands)GAAP | −894K | – | – |
| Q3 2026 allowance for funds used during construction (In thousands)GAAP | −6.06M | – | – |
| Q3 2026 other, net (In thousands)GAAP | −2.14M | – | – |
| Q3 2026 income before income taxes (In thousands)GAAP | 110.5M | – | – |
| Q3 2026 income tax expense (benefit) (In thousands)GAAP | 6.64M | – | – |
| Q3 2026 net income (In thousands)GAAP | $103.8M | – | – |
| Q3 2026 basic net income per common shareGAAP | $ 0.37 | – | – |
| Q3 2026 diluted net income per common shareGAAP | $ 0.36 | – | – |
| Q3 2026 adjusted income (In thousands)non-GAAP | $107.4M | – | – |
| Q3 2026 adjusted basic income per common sharenon-GAAP | $ 0.38 | – | – |
| Q3 2026 adjusted diluted income per common sharenon-GAAP | $ 0.38 | – | – |
| First nine months of 2026 operating revenues (In thousands)GAAP | $1.90B | – | 7.1% |
| First nine months of 2026 operations and maintenance expense (In thousands)GAAP | 481.6M | – | – |
| First nine months of 2026 purchased gas expense (In thousands)GAAP | 310.2M | – | – |
| First nine months of 2026 depreciation expense (In thousands)GAAP | 327.3M | – | – |
| First nine months of 2026 amortization expense (In thousands)GAAP | 11.05M | – | – |
| First nine months of 2026 taxes other than income taxes (In thousands)GAAP | 74.14M | – | – |
| First nine months of 2026 total cost and expenses (In thousands)GAAP | 1.20B | – | – |
| First nine months of 2026 operating income (In thousands)GAAP | 696.6M | – | – |
| First nine months of 2026 net income (In thousands)GAAP | $434.0M | – | – |
| First nine months of 2026 basic net income per common shareGAAP | $ 1.53 | – | – |
| First nine months of 2026 diluted net income per common shareGAAP | $ 1.53 | – | – |
| First nine months of 2026 adjusted income (In thousands)non-GAAP | $450.4M | – | – |
| First nine months of 2026 adjusted diluted income per common sharenon-GAAP | $ 1.58 | – | – |
| Q3 2026 regulated water segment operations and maintenance expensesother | $104.8M | – | – |
| Q3 2026 regulated natural gas segment operations and maintenance expensesother | $43M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Regulated water segmentRegulatory recoveries and additional revenues associated with a larger customer base were the largest contributors to the increase in revenues for the period. | $380.6M | – | 4.5% |
| Regulated natural gas segmentHigher rates and surcharges, an increase in purchased gas costs, and an increase from volumes delivered as a result of a favorable increase in customer usage during the quarter. | $122.6M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
2026 outlook
- Operating expensesExcluding the one-time items and the impact of abnormal weather, operations and maintenance expenses for the full year are expected to be in line with historic norms.
- NoteThe Company is on track to invest $1.7 billion in needed infrastructure investments in 2026.
- NoteWe continue to expect the merger to close in the first quarter of 2027.
Capital returns
- On October 21, 2026, Essential’s board of directors declared a quarterly dividend of $0.3606 per share of common stock.
- This dividend will be payable on December 1, 2026, to shareholders of record on November 10, 2026.
What drove it
- Additional revenues from regulatory recoveries and purchased gas costs were the main revenue growth drivers for the quarter.
- Quarterly consolidated operations and maintenance expense declined primarily due to insurance recoveries recognized during the current quarter and a decrease in bad debt expense in the regulated natural gas segment, partially offset by other expense categories.
- The water segment's operations and maintenance expense declined because of lower employee benefits primarily due to insurance recoveries, partially offset by additional operating costs associated with recently acquired water and wastewater systems.
- The natural gas segment's operations and maintenance expense declined due to lower bad debt expenses and a beneficial impact from insurance recoveries.
- In 2026, regulated water rate awards or infrastructure surcharges will increase annual revenues by $53.6 million, while regulated natural gas rate awards or infrastructure surcharges will increase annual revenues by $16.9 million.
Concerns
- First nine months of 2026 GAAP net income was $ 433,952, compared to $ 483,693 for the same period of 2025.
- First nine months of 2026 diluted GAAP net income per common share was $ 1.53, compared to $ 1.73 for the same period of 2025.
- Operations and maintenance expenses for the first nine months of 2026 included $22.5 million of merger-related expenses through 3Q 2026.
- The company has a Pennsylvania natural gas base rate case pending with a requested revenue increase of $163.2 million.
- Merger settlement agreements in Pennsylvania, North Carolina and Texas remain subject to review and approval by the applicable public utility commission.
What to watch
- Progress toward the expected first-quarter 2027 closing of the merger with American Water.
- Approvals of pending water and wastewater rate cases or infrastructure surcharges in Texas, Virginia, Illinois, Indiana, and New Jersey for an estimated $78.5 million in incremental annual revenues.
- The pending Pennsylvania natural gas rate case requesting a $163.2 million revenue increase.
- Execution of the $1.7 billion 2026 infrastructure investment plan.
- Closing of signed water and wastewater asset purchase agreements totaling approximately $290 million in purchase price and expected to serve over 208,000 customers or equivalent dwelling units.
Balance sheet and cash flow
- As of September 30, 2026, Essential’s weighted average cost of fixed-rate long-term debt was 4.14%.
- As of September 30, 2026, the company had $759 million available on its credit lines.
- Net property, plant and equipment was 15,082,322 as of September 30, 2026, compared to 14,263,682 as of December 31, 2025 (In thousands of dollars).
- Total equity was 7,127,920 as of September 30, 2026, compared to 6,857,456 as of December 31, 2025 (In thousands of dollars).
- Long-term debt, excluding current portion, net of debt issuance costs and unamortized discount on debt was 8,030,165 as of September 30, 2026, compared to 8,110,167 as of December 31, 2025 (In thousands of dollars).
- Current portion of long-term debt and loans payable was 670,328 as of September 30, 2026, compared to 171,961 as of December 31, 2025 (In thousands of dollars).
- Essential invested approximately $1.1 billion in the first nine months of 2026 to improve its regulated water and natural gas infrastructure systems and to enhance customer service across its operations.
Analysis
Essential reported third-quarter operating revenues of $ 508,257, compared with $ 476,971 in the prior-year quarter, with the release citing regulatory recoveries and purchased gas costs as the principal consolidated drivers. GAAP net income increased to $ 103,835 from $ 92,077, while diluted GAAP earnings per share increased to $ 0.36 from $ 0.33. Adjusted diluted earnings per share were $ 0.38 after excluding costs associated with the pending merger with American Water and the related income-tax impact.
Management, verbatim
Our strong performance this quarter highlights the consistent earnings growth generated by both our water and natural gas divisions.
Christopher Franklin, Chairman and Chief Executive Officer
These results demonstrate our team’s dedication to operational excellence and strategic infrastructure investment. As we work toward closing our merger with American Water in Q1 2027, we remain focused on the meaningful benefits our combined organization can bring to the communities we serve and to our shareholders.
Christopher Franklin, Chairman and Chief Executive Officer
Not in the filing
stated, not guessed- Gross profit and gross margin
- Operating cash flow
- Free cash flow
- Cash and cash equivalents
- Share repurchases
- Effective income tax rate
- Prior-quarter comparisons for reported operating results
- Prior-year non-GAAP adjusted income and adjusted earnings per share comparisons
- Previous-release outlook for comparison with actual results
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Essential Utilities is progressing toward a merger with American Water, with Q3 results reflecting merger-related expenses.
Ticker impact
Essential Utilities reported Q3 2026 earnings with GAAP EPS $0.36 and adjusted EPS $0.38, revenue up 6.6% and declared a $0.3606 dividend.
likely modest upside as investors price in earnings beat and dividend increase
Earnings exceed prior period, revenue growth and dividend raise provide fresh positive catalyst.
Market effects
Utility sector may see modest rally on strong earnings and infrastructure spending.
North-East US utilities could benefit from similar rate award trends.
Limited, primarily US utility investors.
Counterpoint
Higher earnings may already be priced in; focus on merger integration risk.
Key entities
- CompanyEssential Utilities Inc.
US-listed utility company reporting Q3 2026 results.
- CompanyAmerican Water
Merger partner of Essential Utilities.
