Essential Utilities (WTRG) Q4 2025 earnings summary

Executive summary

• Achieved overwhelming shareholder approval (95%) for merger with American Water, creating a leading U.S. water and wastewater utility with operations in 17 states and 18 military installations, serving 4.7M connections; transaction expected to close in Q1 2027.

• Delivered FY25 EPS of $2.20, exceeding guidance, with net income of $616.4 million, and increased quarterly dividend by 5.25%, marking 35 increases in 34 years and 80 consecutive years of payments.

• Invested a record $1.4 billion in regulated infrastructure, focusing on PFAS mitigation and gas meter upgrades, and completed three municipal acquisitions, adding over 12,700 new customers.

• Recognized for sustainability leadership, named to Newsweek's and USA Today's responsible and climate leader lists, and deployed over 50 advanced PFAS treatment systems.

Financial highlights

• Revenues rose 18.6% year-over-year to $2.47 billion, driven by regulatory recoveries, higher gas prices, and increased gas usage; operating income up 21.6% to $921.0 million.

• O&M expenses increased 8.9% year-over-year to $639.6 million, mainly due to higher employee costs, Universal Service rider, and water production costs.

• Q4 2025 operating revenues grew 15.7% to $699.1 million, but net income fell 28.2% to $132.7 million and EPS dropped 29.9% to $0.47.

• Regulatory recoveries in 2025 totaled $101.5 million in incremental annualized revenue; $92.6 million from water/wastewater, remainder from gas.

Outlook and guidance

• Reaffirmed 5%-7% multi-year EPS growth guidance through 2027, based on 2024 adjusted EPS of $1.97.

• Expects $1.7 billion in regulated infrastructure investments in 2026.

• Guidance excludes DELCORA acquisition but includes other signed municipal deals; three signed purchase agreements in Pennsylvania and Texas expected to close in H1 2026.

• DELCORA transaction remains stalled due to bankruptcy proceedings, but optimism remains for future consolidation opportunities.