BRYN MAWR, PA — Essential Utilities Inc. (NYSE: WTRG) reaffirmed its long-term earnings and infrastructure investment outlook after first-quarter profit declined amid merger-related costs tied to its pending acquisition by American Water.
The utility company reported first-quarter net income of $224.4 million, or $0.79 per share, compared with $283.8 million, or $1.03 per share, a year earlier. Adjusted earnings, which excluded merger-related expenses, were $0.83 per share.
Revenue increased 10% to $861.8 million from $783.6 million in the prior-year quarter, driven primarily by higher regulatory recoveries and increased purchased gas costs.
Operations and maintenance expenses rose to $175.8 million from $137.8 million, reflecting higher labor costs, weather-related operational spending and $16.3 million in merger-related expenses associated with the company’s proposed combination with American Water Works Company, Inc..
Essential said the merger remains on track to close in the first quarter of 2027 after receiving approval from the Kentucky Public Service Commission. Shareholders of both companies approved the transaction in February.
“We expect another strong year in 2026,” Chairman and Chief Executive Officer Christopher Franklin said, adding that the company remains focused on operations while preparing for the merger.
Essential reaffirmed its expectation for long-term earnings-per-share growth of 5% to 7% through 2027 and said it remains on pace to invest $1.7 billion in infrastructure during 2026.
The company invested $269 million during the first quarter to upgrade water and natural gas infrastructure systems.
Essential’s regulated water segment reported quarterly revenue of $323 million, up 7.4% from a year earlier, helped by regulatory recoveries and increased water usage volumes. Water segment operating expenses increased due to labor costs, contractor expenses tied to higher main break activity and increased bad debt expense following severe winter weather conditions.
The regulated natural gas segment generated revenue of $529.4 million, compared with $470.8 million a year earlier, driven largely by higher purchased gas costs and regulatory recoveries.
In March, Essential completed its $18 million acquisition of the Greenville Municipal Water Authority in Mercer County, Pennsylvania, adding more than 2,900 customers.
The company said it continues pursuing additional municipal water and wastewater acquisitions across Pennsylvania, Texas, North Carolina and New Jersey. Pending transactions represent approximately $285 million in purchase price and are expected to add more than 201,000 customer equivalents.
Essential also continues pursuing its proposed $276.5 million acquisition of the Delaware County Regional Water Quality Control Authority, though the company excluded the transaction from current financial guidance.
During the quarter, Essential issued $500 million in senior notes due 2036 with an interest rate of 5.125%, using proceeds to repay commercial paper borrowings and for general corporate purposes.
The company declared a quarterly cash dividend of $0.3426 per share payable June 1, 2026, to shareholders of record as of May 12, 2026.
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