10-Q · May 7, 2026
Essential Utilities, Inc. reported strong revenue growth in Q1 2026, with revenues rising 10.0% to $861.8 million, significantly outperforming estimates. However, EPS fell short of expectations, coming in at $0.79…
Earnings analysis · 10-Q
WTRG earnings analysis
Filed November 4, 2026 · Our reading of the company's report
The latest report
Essential Utilities delivered a solid Q3, with revenue up 6.6% year over year to $508.257 million, diluted EPS increasing to $0.36, and operating margin expanding to 37.9%. Water benefited from rate increases and…
Read full summary
Essential Utilities delivered a solid Q3, with revenue up 6.6% year over year to $508.257 million, diluted EPS increasing to $0.36, and operating margin expanding to 37.9%. Water benefited from rate increases and customer growth, while gas revenue increased and its segment loss narrowed. Offsetting concerns are negative implied nine-month free cash flow of $279.549 million, cash of only $9.320 million, higher debt and current maturities, and year-to-date net income down to $433.952 million from $483.693 million. No numeric financial guidance was provided; merger closing remains targeted for the end of Q1 2027.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.36
- Operating margin
- 37.9%
What stood out
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Revenue and EPS increased year over year
Q3 operating revenue increased to $508.257 million from $476.971 million, up 6.6% year over year, while diluted EPS rose to $0.36 from $0.33. Sequentially, revenue declined from $531 million in Q2 2026 and EPS declined from $0.37.
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Operating margin expanded
Operating income was $192.699 million on $508.257 million of revenue, implying a 37.9% operating margin versus approximately 35.6% in Q3 2025 and 36.4% in Q2 2026.
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Water growth led by rate increases
Regulated Water revenue increased 4.5% to $380.616 million, primarily reflecting $15.514 million of higher rates and $1.203 million from customer growth and acquisitions, partly offset by a $0.755 million volume decline.
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Gas profitability improved
Regulated Natural Gas revenue grew 13.0% to $122.555 million, while operations and maintenance expense fell 9.4% to $42.978 million; segment net loss narrowed to $17.146 million from $24.831 million.
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Operating cash flow improved
Operating cash flow increased to $818.229 million for the first nine months from $804.347 million, up $13.882 million, primarily due to working-capital changes and new rates.
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Infrastructure investment remains substantial
The company invested $1.098 billion in property, plant and equipment during the first nine months, up from $983.089 million, while net property, plant and equipment rose to $15.082 billion from $14.264 billion at December 31, 2025.
What to watch
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Negative free cash flow and low cash
The company reported $9.320 million of cash at September 30, 2026, down from $34.778 million at December 31, 2025. Nine-month capital expenditures of $1.098 billion exceeded operating cash flow of $818.229 million, producing implied free cash flow of negative $279.549 million.
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Debt maturity and refinancing exposure
Total long-term debt increased to $8.612 billion from $8.182 billion at December 31, 2025, including $530.728 million classified as current debt versus $21.822 million previously; commercial paper borrowings were $487.000 million with a weighted-average remaining term of 10 days.
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Merger approval and execution risk
The American Water merger remains subject to governmental and public utility commission approvals despite shareholder approval and HSR clearance; the company incurred $4.934 million of merger costs in Q3 and $22.455 million year to date, and estimates closing by the end of Q1 2027.
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Year-to-date earnings deterioration
Nine-month net income declined to $433.952 million from $483.693 million and diluted EPS fell to $1.53 from $1.73, despite revenue growth of 7.1%; interest expense increased $22.188 million and income tax expense shifted from a $11.724 million benefit to a $16.414 million expense.
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Litigation and acquisition uncertainty
The company identifies $21.600 million of accrued loss contingencies as of September 30, 2026, while the DELCORA acquisition remains subject to ongoing litigation and regulatory approval and has a purchase price of $276.500 million.
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No formal risk-factor update; liquidity dependence
The 10-Q states that no changes to the risk factors from the December 31, 2025 Form 10-K were identified. However, the company had $498.697 million available under its $1.000 billion revolving facility and $260.400 million available under $400.000 million of short-term lines, with no assurance that facilities will be renewed on comparable terms.
Management's outlook
No numeric EPS or revenue guidance was provided. Management expects the American Water merger to close by the end of Q1 2027; it also expects additional PFAS settlement payments over the next 10 years and anticipates final orders in several pending rate cases during Q4 2026.
Earlier filings 4
10-K · February 26, 2026
Essential Utilities reported consolidated operating revenues of $2,474,615,000 and net income of $616,369,000 (diluted EPS $2.20) for 2025, driven by Regulated Water revenues of $1,326,629,000 (53.6%) and Regulated…
10-Q · November 5, 2025
Essential Utilities reported operating revenues of $476,971,000 and net income of $92,077,000 for the three months ended September 30, 2025, up versus the year‑ago quarter (revenues $435,255,000; net income…
10-Q · May 12, 2025
Essential Utilities reported Q1 2025 operating revenues of $783,626,000 and diluted EPS of $1.03, up vs. the year‑ago quarter (revenues $612,069,000; EPS $0.97). Operating income rose to $338,905,000 (operating margin…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.