Essential Utilities Keeps American Water Merger on a First-Quarter 2027 Track

The Tip Desk · November 4, 2026 · 4 min read

Third-quarter revenue was $508.3 million, up 6.6% from a year earlier, as GAAP earnings reached $0.36 a share.

Essential Utilities Inc. (WTRG) reported GAAP net income of $103.8 million, or $0.36 a share, for the third quarter ended September 30, 2026, compared with $92.1 million, or $0.33 a share, a year earlier. Adjusted earnings, which exclude merger-related costs tied to the pending combination with American Water, were $0.38 a share.

Revenue was $508.3 million, up 6.6% from $477.0 million in the third quarter of 2025. The company said additional revenues from regulatory recoveries and purchased gas costs were the main growth drivers.

Operations and maintenance expenses were $152.2 million, down 0.6% from $153.1 million a year earlier, primarily because of insurance recoveries and lower bad debt in the regulated natural gas segment. Excluding merger-related costs, O&M decreased by $5.9 million.

The regulated water segment posted revenue of $380.6 million, up 4.5% from $364.1 million a year earlier. Essential said regulatory recoveries and a larger customer base were the largest contributors. Water O&M was $104.8 million, down from $105.7 million a year earlier, due to lower employee benefits from insurance recoveries, partly offset by costs from recently acquired systems.

Regulated natural gas revenue was $122.6 million, compared with $108.5 million a year earlier, driven by higher rates and surcharges, higher purchased gas costs, and a favorable increase in customer usage. Natural gas O&M was $43.0 million, down from $47.5 million a year earlier, due to lower bad debt and insurance recoveries. The company said that excluding one-time items and abnormal weather, full-year O&M is expected to be in line with historic norms.

Chairman and Chief Executive Officer Christopher Franklin said the quarter highlighted consistent earnings growth in both water and natural gas and that the company remains focused on closing the American Water merger in the first quarter of 2027.

The company continues to expect that close. It said it has received merger approvals from regulatory commissions in Kentucky, Ohio and Virginia, and has reached settlement agreements with regulators in Pennsylvania, North Carolina and Texas, each still subject to public utility commission approval.

For the first nine months of 2026, revenue was $1,900.9 million, up 7.1% from $1,775.5 million, primarily from regulatory recoveries, higher purchased gas costs, and higher natural gas volumes. Nine-month net income was $434.0 million, or $1.53 a share, compared with $483.7 million, or $1.73 a share, in the same period of 2025. Diluted non-GAAP EPS for the nine months was $1.58. O&M for the nine months totaled $481.6 million, including $22.5 million of merger-related expenses through the third quarter.

Essential invested about $1.1 billion in infrastructure in the first nine months of 2026 and said it is on track to invest $1.7 billion for the full year. As of September 30, the weighted average cost of fixed-rate long-term debt was 4.14%, with $759 million available on credit lines.

Thus far in 2026, water rate awards or infrastructure surcharges will increase annual revenues by $53.6 million in Pennsylvania, Indiana, Illinois, Ohio, North Carolina and New Jersey, and natural gas awards in Pennsylvania and Kentucky by $16.9 million. Pending water cases in Texas, Virginia, Illinois, Indiana and New Jersey are estimated at $78.5 million in incremental annual revenues. A pending Pennsylvania natural gas base rate case requests a $163.2 million revenue increase to support the Long-Term Infrastructure Improvement Plan.

On October 21, the board declared a quarterly dividend of $0.3606 a share, payable December 1 to shareholders of record on November 10. The company said it has paid consecutive quarterly cash dividends for over 80 years.

In October, Essential completed the Dril-Quip water and wastewater acquisition in Harris County, Texas, for about $1.1 million, and signed asset purchase agreements totaling about $290 million that are expected to serve over 208,000 customers or equivalent dwelling units. Among those is a $276.5 million deal for the DELCORA sewer authority in the Philadelphia suburbs, which serves approximately 198,000 equivalent dwelling units. Operating as the Aqua and Peoples brands, Essential serves approximately 5.5 million people across nine states.