Essential Utilities reported second-quarter financial results on August 4 that presented a mixed picture for the water and gas utility company. The regulated water segment generated revenue of $357.5 million, representing a 7.6% increase from $332.3 million in the prior year period. The company’s first-half revenue climbed 7.2% to nearly $1.4 billion. State regulators approved $43.9 million in new annual water revenue across Pennsylvania, Illinois, Ohio, North Carolina and Indiana, while the gas business gained $12.7 million in approved revenue in Kentucky and Pennsylvania. Additional rate requests totaling $79.7 million for water and $163.2 million for gas in Pennsylvania remained under regulatory review.
Essential continued expanding its customer base through acquisitions. The company closed a $4.9 million wastewater transaction in Bastrop County, Texas, and signed agreements valued at approximately $282 million to add over 200,000 customers across Pennsylvania, Texas, North Carolina and New Jersey. The purchase of Philadelphia-area sewer authority DELCORA for $276.5 million represented a significant transaction. Since 2015, acquisitions have added more than 138,000 customers to the utility’s base. The company’s pending merger with American Water, which cleared Virginia and Ohio regulators earlier in the year following shareholder approval in February, is expected to create a substantially larger multi-state utility by early 2027.
The company raised its dividend by 5.25% to $0.3606 per share, marking the 36th consecutive annual increase over 35 years. However, profitability metrics presented a less favorable trend. Second-quarter net income declined to $105.7 million from $107.8 million year-over-year, while GAAP earnings per share fell to $0.37 from $0.38. On an adjusted basis excluding merger costs, the company reported $0.38 per share earnings. First-half results showed sharper declines, with net income dropping to $330.1 million, or $1.16 per share, compared to $391.6 million, or $1.41 per share, in the first half of 2025.
Operating expenses increased at a faster pace than revenue growth. Operations and maintenance expenses rose 3.5% to $153.6 million in the quarter, with the water segment alone rising from $100.1 million to $109.4 million due to higher employee and production costs. The natural gas segment experienced revenue contraction, declining to $169.3 million from $177.3 million, as warmer weather reduced consumption. Institutional interest in the company increased, with hedge fund holdings rising to 40 from 34 in the most recent quarter, while short sellers held just 2.10% of the float. Shares traded at 17.45 times forward earnings as of September 4. The company maintained guidance for 5% to 7% annual earnings growth through 2027, excluding DELCORA and potential acquisition customers in its pipeline.
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