Essential Utilities, Inc.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 7 May 2026: press release. Guidance figures: 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Earnings per share fell year over year: GAAP diluted EPS was $0.79 against $1.03 a year earlier. Net income was $224.4 million against $283.8 million. Source
• Adjusted EPS excludes merger costs: Non-GAAP adjusted EPS was $0.83. The adjustment removes $16.3 million of merger-related costs, net of a $4.4 million tax effect. Source
• Revenue rose 10% on recoveries: Revenues were $861.8 million against $783.6 million. Regulatory recoveries and purchased gas costs were the main revenue drivers. Source
• Gas revenue rose on purchased gas: Regulated natural gas revenues were $529.4 million against $470.8 million, mainly from higher purchased gas costs and regulatory recoveries, partly offset by weather normalization. Source
• Consolidated O&M rose 28%: Operations and maintenance expense was $175.8 million against $137.8 million. Cold weather in January and February drove overtime and outside service costs. Source
• Q1 infrastructure spend of $269 million: Invested about $269 million in the first three months to improve regulated water and natural gas systems. The company remains on track for $1.7 billion in 2026. Source
• Rate awards so far in 2026: Water rate awards and surcharges add $5.7 million of annual revenue in Illinois, Indiana, Pennsylvania and Ohio. Gas awards add $9.4 million in Kentucky and Pennsylvania. Source
• Pending water rate cases worth $101.9 million: Base rate cases or surcharges are pending in Texas, Ohio, North Carolina, Virginia and New Jersey, for an estimated $101.9 million of incremental annual revenue. Source
• Shareholders approved the merger: Shareholder votes at the special meeting approved the merger, with about 95% of voted shares cast in favor, according to the chairman. Source
• Kentucky regulator approved the merger: An order from the Kentucky commission approving the merger was received on April 20, 2026, the first state approval reported. Source
• Signed deals total about $285 million: Signed purchase agreements pending closing cover about 201,000 customers or equivalent dwelling units, at a total purchase price of about $285 million. Source
• EPS growth guidance affirmed: Guidance for 5% to 7% compound annual EPS growth from adjusted 2024 EPS of $1.97 through 2027 was affirmed in this release. Source

“Through continued strong operating performance, a focus on cost control, and making investments designed to improve customer experience, we expect another strong year in 2026.”

Christopher Franklin, Chairman and Chief Executive Officer

Guidance

What changed from last quarter

• Guidance kept: EPS growth guidance of 5% to 7% compound annual growth was affirmed with no change from the prior release. Source
• Guidance kept: The 2026 infrastructure investment figure of $1.7 billion was unchanged from the prior release. Source
• New: Issued $500 million of 5.125% senior notes due 2036 on March 9, 2026. Source
• New: Closed the $18 million purchase of the Greenville Municipal Water Authority, which serves more than 2,900 customers in Mercer County, PA. Source
• New: A base rate case is pending in Pennsylvania for the natural gas segment, requesting $163.2 million of additional revenue. Source

Quarterly results and earnings

• Earnings per share fell year over year: GAAP diluted EPS was $0.79 against $1.03 a year earlier. Net income was $224.4 million against $283.8 million. Source
• Adjusted EPS excludes merger costs: Non-GAAP adjusted EPS was $0.83. The adjustment removes $16.3 million of merger-related costs, net of a $4.4 million tax effect. Source
• Revenue rose 10% on recoveries: Revenues were $861.8 million against $783.6 million. Regulatory recoveries and purchased gas costs were the main revenue drivers. Source
• Prior-year one-time items did not recur: The first quarter of 2025 included an income tax reserve release, an insurance reimbursement of legal costs, and rate recovery of a bad debt regulatory asset. Source

Segments and revenue drivers

• Water revenue rose 7.4%: Regulated water revenues were $323 million, up 7.4% from $300.8 million. Regulatory recoveries and higher volume were the largest contributors. Source
• Gas revenue rose on purchased gas: Regulated natural gas revenues were $529.4 million against $470.8 million, mainly from higher purchased gas costs and regulatory recoveries, partly offset by weather normalization. Source
• Gas operating costs were flat: Gas operations and maintenance expense was $56.2 million against $55.7 million, a slight increase. Source

“This overwhelming mandate supports what we have believed from the start: that this combination creates a premier, multi-state utility with a high growth profile,”

Christopher Franklin, Chairman and Chief Executive Officer

Operating costs and merger expense

• Consolidated O&M rose 28%: Operations and maintenance expense was $175.8 million against $137.8 million. Cold weather in January and February drove overtime and outside service costs. Source
• Water operating costs rose on main breaks: Water operations and maintenance rose to $103.1 million from $89.4 million, on employee costs, bad debt expense and contractor work after main breaks. Source
• Merger costs of $16.3 million: Merger-related expenses of $16.3 million were included in operations and maintenance expense and excluded from adjusted EPS. Source

Capital investment and rate activity

• Q1 infrastructure spend of $269 million: Invested about $269 million in the first three months to improve regulated water and natural gas systems. The company remains on track for $1.7 billion in 2026. Source
• Rate awards so far in 2026: Water rate awards and surcharges add $5.7 million of annual revenue in Illinois, Indiana, Pennsylvania and Ohio. Gas awards add $9.4 million in Kentucky and Pennsylvania. Source
• Pending water rate cases worth $101.9 million: Base rate cases or surcharges are pending in Texas, Ohio, North Carolina, Virginia and New Jersey, for an estimated $101.9 million of incremental annual revenue. Source

“Equally as exciting is the commitment, made by both companies, to continued strong robust investment in our infrastructure that makes us among the top performers in safety and reliability in the nation”

Christopher Franklin, Chairman and Chief Executive Officer

Merger with American Water

• Shareholders approved the merger: Shareholder votes at the special meeting approved the merger, with about 95% of voted shares cast in favor, according to the chairman. Source
• Kentucky regulator approved the merger: An order from the Kentucky commission approving the merger was received on April 20, 2026, the first state approval reported. Source
• Filings made in all pertinent states: Applications for regulatory approval were filed in all pertinent states, and the approval processes continue to progress in those states. Source

Financing, dividend and liquidity

• Debt cost and credit lines reported: Weighted average cost of fixed-rate long-term debt was 4.16% at March 31, 2026, against 4.10% at year-end 2025. Credit lines had $1.035 billion available. Source
• Note proceeds repaid commercial paper: Net proceeds from the $500 million notes were used to repay part of commercial paper borrowings and for general corporate purposes. Source
• Quarterly dividend of $0.3426 declared: The board declared a quarterly cash dividend of $0.3426 per share, payable June 1, 2026, to holders of record on May 12, 2026. Source

Acquisitions and growth

• Signed deals total about $285 million: Signed purchase agreements pending closing cover about 201,000 customers or equivalent dwelling units, at a total purchase price of about $285 million. Source
• DELCORA agreement at $276.5 million: The $276.5 million agreement to acquire DELCORA, a Pennsylvania sewer authority, is among the signed purchase agreements. It serves about 198,000 equivalent dwelling units. Source
• Acquisition pipeline near 400,000 customers: Potential municipal water and wastewater acquisitions being pursued represent approximately 400,000 total customers. Source
• Acquisitions added rate base since 2015: Since 2015, acquisitions have added about $570 million of rate base and more than 138,000 customers or equivalent dwelling units. Source

Guidance and PFAS compliance plan

• EPS growth guidance affirmed: Guidance for 5% to 7% compound annual EPS growth from adjusted 2024 EPS of $1.97 through 2027 was affirmed in this release. Source
• Guidance covers signed deals only: Guidance includes signed municipal acquisitions but excludes DELCORA and other pipeline acquisitions, which total over 400,000 customer equivalents. Source
• Multiyear PFAS compliance plan: The company has a multiyear plan to keep finished water below the federal maximum contaminant level for six EPA-regulated PFAS chemicals. Source

Figures management reported

Risks management discussed

• Regulatory: Merger approvals remain under review in other states, with the Kentucky order the only approval reported in the release. Source

Earlier plans management reported on

• On track: Management states the company is on track to invest $1.7 billion in infrastructure in 2026. Source
• On track: Management states the merger remains on track for closing in the first quarter of 2027. Source
• Not stated: Excluding one-time items and abnormal weather, full-year operations and maintenance expense is expected in line with historic norms. Source
• Not stated: Management states the company is committed to maintaining elevated levels of infrastructure investment. Source

Other quarters

• Q2 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.