Essential Utilities Tops EPS Guidance, Records $1.4B Capex and Secures Merger Approval
Essential Utilities delivered 2025 EPS of $2.20, topping guidance of $2.07–$2.11, and reported revenue up 18.6% year-over-year to nearly $2.5B. Shareholders approved 95% of votes for the American Water merger, management completed seven state filings, and 2025 capex reached a record $1.4B (guiding $1.7B for 2026).
1. Earnings Beats and Financial Results
Essential reported 2025 EPS of $2.20, surpassing the guidance range of $2.07 to $2.11, with revenue rising 18.6% to nearly $2.5 billion. The gain reflected $388.5 million in higher top-line drivers, including $177.6 million from regulatory recoveries, $126.8 million from purchased gas expenses, and $57.2 million from increased gas volumes, partially offset by elevated O&M, depreciation, interest, and tax expenses.
2. Merger Advancement and Regulatory Filings
Shareholders cast nearly 95% of votes in favor of the proposed merger with American Water, securing approval in record time. Essential completed seven state regulatory filings by year-end 2025 and expects the transaction to close in Q1 2027, though timelines vary by jurisdiction and regulatory reviews may extend beyond shareholder approval.
3. Record Infrastructure Investment and PFAS Plan
The company invested a record $1.4 billion in regulated infrastructure during 2025, replacing over 400 miles of main across its business segments, and has guided $1.7 billion for 2026. Management is executing a $450 million PFAS treatment program, deploying more than 50 advanced treatment systems to meet federal contaminant standards within EPA timelines.
4. Dividend Raise and Long-Term Outlook
Essential increased its quarterly dividend by 5.25%, marking 35 raises in 34 years and 80 consecutive years of payments. Management reaffirmed a 5% to 7% EPS growth target for 2024–2027, emphasizing growth off adjusted 2024 non-GAAP EPS of $1.97 to account for one-time items in 2025.