BRYN MAWR, PA — Essential Utilities Inc. (NYSE: WTRG) maintained its earnings-growth and $1.7 billion infrastructure investment outlook after second-quarter revenue rose 3%, while its proposed merger with American Water secured additional regulatory approvals in Virginia and Ohio.
Essential reported second-quarter net income of $105.7 million, or 37 cents per share, compared with $107.8 million, or 38 cents per share, a year earlier. Adjusted earnings were 38 cents per share after excluding costs associated with the pending American Water transaction.
Revenue increased to $530.9 million from $514.9 million, driven primarily by regulatory recoveries and purchased-gas costs.
Operating and maintenance expenses increased 3.5% to $153.6 million from $148.5 million. The increase reflected higher employee and water-production costs, partly offset by insurance recoveries, lower bad-debt expense and reduced customer-assistance surcharge costs.
Excluding merger-related costs, operating and maintenance expenses increased 2.6%.
Essential’s regulated water business generated $357.5 million in quarterly revenue, up 7.6% from $332.3 million in the prior-year period, as regulatory recoveries and higher volumes boosted results.
Water-segment operating and maintenance expenses rose to $109.4 million from $100.1 million, reflecting higher employee costs, purchased water and chemical expenses and operating costs associated with acquired systems.
The regulated natural gas business generated $169.3 million in revenue, down from $177.3 million a year earlier. Higher rates and surcharges were outweighed by lower purchased-gas costs and reduced volumes caused by warmer weather.
Natural gas operating and maintenance expenses were essentially unchanged at $49.9 million.
For the first six months of 2026, Essential’s revenue increased 7.2% to $1.39 billion from $1.30 billion. Net income declined to $330.1 million, or $1.16 per share, from $391.6 million, or $1.41 per share.
First-half operating and maintenance expenses increased to $329.4 million from $286.3 million, including $17.5 million of merger-related expenses.
The company invested $662.2 million in water and natural gas infrastructure during the first half and continues to expect approximately $1.7 billion of regulated infrastructure investment for the full year.
Essential also maintained its projection for long-term earnings-per-share growth of 5% to 7% annually through 2027, measured from adjusted 2024 earnings of $1.97 per share.
The outlook comes as Essential moves toward its planned combination with American Water Works Co. The Virginia State Corporation Commission approved the transaction June 22, following approval from the Public Utilities Commission of Ohio on May 14 and an earlier approval from Kentucky regulators.
Shareholders of both companies approved merger-related proposals in February, with about 95% of the shares voted at Essential supporting the transaction. Essential continues to expect the merger to close in the first quarter of 2027.
“The regulatory approval processes for our merger with American Water continue to progress,” Chairman and Chief Executive Officer Christopher Franklin stated.
Essential’s acquisition strategy remains active ahead of the merger. In May, the company acquired Integra Water Texas LLC’s wastewater system in Bastrop County for approximately $4.9 million.
The company also has signed agreements for water and wastewater systems in Pennsylvania, Texas, North Carolina and New Jersey representing more than 200,000 customers or equivalent dwelling units and approximately $282 million in purchase price.
That total includes Essential’s $276.5 million agreement to acquire the Delaware County Regional Water Quality Control Authority, or DELCORA, which serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs.
Essential has excluded DELCORA from its financial guidance despite continuing to expect the acquisition to close. Its broader pipeline of potential municipal water and wastewater acquisitions represents approximately 400,000 customers.
Since 2015, Essential has acquired approximately $570 million in rate base and added more than 138,000 customers or equivalent dwelling units through water and wastewater acquisitions.
Regulatory rate activity is also supporting revenue growth. Essential’s water operations have received rate awards or infrastructure surcharges in Pennsylvania, Illinois, Ohio, North Carolina and Indiana that are expected to increase annual revenue by $43.9 million.
Its natural gas operations have received rate awards or infrastructure surcharges in Kentucky and Pennsylvania worth another $12.7 million in annual revenue.
Pending water and wastewater rate proceedings in Texas, Virginia, Illinois, Indiana and New Jersey seek an estimated $79.7 million in additional annual revenue.
Essential’s Pennsylvania natural gas business also has a pending rate case seeking a $163.2 million annual revenue increase to support replacement and retirement of aging gas mains.
The company’s board separately increased its quarterly dividend 5.25% to 36.06 cents per share. The dividend is payable Sept. 1 to shareholders of record Aug. 11.
As of June 30, Essential’s weighted-average cost of fixed-rate long-term debt was 4.16%, and the company had $960 million available under its credit lines.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.