Essential Utilities Inc

Essential Utilities, Inc. affirmed its long-term financial guidance while navigating regulatory approvals for its pending merger with American Water. The company reported second-quarter 2026 GAAP earnings of $0.37 per share, which included $0.01 in merger-related costs, resulting in non-GAAP earnings of $0.38 per share. Operating revenues rose 3% year over year to $530.9 million, driven by higher regulatory recoveries and purchased gas costs. Essential Utilities remains on track to invest a record $1.7 billion in infrastructure in 2026, with $662.2 million invested through the first six months. The board approved a 5.25% increase in the quarterly dividend to $0.3606 per share, extending an 80-year streak of consecutive payouts. Regulatory approvals for the merger have been secured in Kentucky, Ohio, and Virginia, with the Illinois process expected to conclude by November 2026, and the company continues to target a first-quarter 2027 closing.

Essential Utilities reported second-quarter 2026 GAAP earnings of $0.37 per share, down from $0.38 a year earlier, while adjusted non-GAAP earnings were $0.38 per share excluding merger-related costs. Chairman and CEO Chris Franklin said the company remains confident in achieving 5% to 7% annual earnings-per-share growth from a 2024 adjusted baseline of $1.97. CFO Dan Schuller detailed that earnings benefited from a $0.06-per-share increase in regulatory recoveries and surcharges, a $0.02 gain from higher water volumes, and a $0.01 boost from water customer growth, partly offset by $0.02 in higher operating expenses, a $0.02 impact from lower gas volumes, and $0.06 of other costs including increased depreciation and interest. The company has received regulatory approvals for its planned merger with American Water in Kentucky, Ohio and Virginia and continues to expect a first-quarter 2027 close, with proceedings ongoing in other states. Essential invested $662 million in regulated infrastructure in the first half and remains on track for a record $1.7 billion in full-year spending, while its board approved a 5.25% dividend increase payable September 1, 2026.

American Water Works reported adjusted earnings per share of $1.61 for the second quarter of 2026, up from $1.49 a year earlier, and affirmed its full-year adjusted EPS guidance of $6.02 to $6.12. The company cited higher revenues from authorized rate increases and flat operations and maintenance costs as key drivers. Capital investments reached $1.8 billion year-to-date, and the company closed the Nexus Water Group acquisition ahead of schedule, adding 47,000 customer connections. A Pennsylvania rate case resulted in a $75 million annualized revenue increase, while new rate filings in Kentucky and Missouri seek additional annual revenues of $18 million and $179 million, respectively. The pending merger with Essential Utilities remains on track to close by the end of the first quarter of 2027, with state approvals already secured in Kentucky, Ohio, and Virginia.

The Virginia State Corporation Commission has approved the proposed merger of American Water Works Company and Essential Utilities, marking the third favorable regulatory action toward completing the combination. The companies previously received merger approval from the Kentucky Public Service Commission on April 21, 2026, and from the Public Utilities Commission of Ohio on May 13, 2026. The all-stock merger, announced October 27, 2025, will create a combined company serving more than 4.7 million water and wastewater customer connections and more than 740,000 gas customer connections, operating under the American Water name and headquartered in Camden, New Jersey. The merger is expected to close by the end of the first quarter of 2027, pending remaining regulatory approvals and clearance under the Hart-Scott-Rodino Act.

American Water Works is benefiting from new rate implementations and a strategic acquisition plan that are driving revenue and earnings growth. The company finalized 18 acquisitions in 2025, adding nearly 20,900 customers, and completed its purchase of the Nitro wastewater system in West Virginia for $20 million in March 2026. AWK and Essential Utilities have entered into an all-stock merger creating a publicly traded water utility valued at approximately $40 billion, with the merged entity operating under the American Water name across 17 states and 18 military installations, expected to close in the first quarter of 2027 pending regulatory approvals. Revised rates implemented on January 1, 2026, will contribute an additional $89 million to 2026 annual revenues, and the company targets long-term earnings and dividend-per-share growth of 7-9%. AWK plans to invest $3.7 billion in 2026 and $19-$20 billion through 2030, though these figures may change after the Essential Utilities merger, while regulatory risks and aging infrastructure remain headwinds.