Essential Utilities, Inc. Q4 FY2025 earnings call

• Shareholder approval: Nearly 95% of shares voted in favor of merger with American Water, secured in record speed. - Regulatory filings: Completed seven state filings by year end 2025, on track to close merger in first quarter of 2027. - 2025 achievements: Delivered earnings per share of $2.20 above guidance, increased quarterly dividend by 5.25%, invested record $1.4 billion in regulated infrastructure, completed three municipal acquisitions, water business executed PFAS plan, natural gas segment had 100,000th meter installation, replaced over 400 miles of main. - Sustainability: Named Newsweek's America's most responsible company and USA Today's America's Climate Leaders for consecutive years. - Water wastewater acquisitions: Completed three in 2025, have three signed purchase agreements for 2026, Pennsylvania Public Utility Commission approved one acquisition, Del Cora transaction stalled by bankruptcy court stay.

In 2025, revenues increased 18.6% to nearly $2.5 billion from about $2.1 billion a year ago. O&M expenses were up about $52.3 million or 8.9% year-over-year. Water wastewater acquisitions in 2025 totaled approximately $58 million with over 12,700 new customers. The natural gas segment had 100,000th Intellis meter installation. Water business executed on $450 million PFAS capital plan with over 50 advanced treatment systems deployed. Revenue increase was partially offset by lower water volumes due to wetter weather. O&M drivers included employee-related costs, gas business's universal services rider, water production costs, etc.

• Reaffirmed 5% to 7% multiyear earnings per share guidance through 2027 from adjusted non-GAAP 2024 earnings per share of $1.97, includes acquisitions expected in 2026 but excludes Delcorra. - Committed to maintaining strong balance sheet, improving cash flow and debt metrics, delivering consistent dividend growth with payout ratio between 60 - 65%. - 2026 regulated infrastructure investments expected to be $1.7 billion. - Continuing PFAS commitments to ensure finished water meets EPA standards.

• Regulatory approval phase for merger may not proceed as quickly as shareholder approval. - Del Cora transaction stalled by federal bankruptcy court stay related to City of Chester's bankruptcy. - Weather conditions can impact water volumes and revenue, as seen with lower water volumes due to wetter weather affecting revenue in 2025. - Merger-related expenses and other one-time items can impact financial results. - Credit metrics could be affected if not maintaining favorable FFO to debt ratios.

Q: Did you quantify what the non-GAAP 2025 would be if you made those adjustments?

A: No, specifically gave non-recurring items both positive and transaction costs, and noted still favorable to guidance range.

Q: Broadly on the regulatory strategy, could you describe what's the timing for the next round of Pennsylvania rate cases?

A: Historically on a two-year cadence for PNG and Veracruz, Pennsylvania, so would file relatively quickly.

Q: Any read into the small tweak on the language on the credit metrics?

A: Feels good about credit metrics as should be above 12% threshold for Moody's and S&P.

Q: On the merger, is there any chance that you could combine some of your plans, regulatory activity with regulatory sign off for the merger?

A: They're all considered separate dockets and will be adjudicated separately.

Q: Take me through some of the options for the overall solution to the bankruptcy exit for Chester?

A: Supreme Court ruled Chester Water Authority is owned by itself, receiver and court need to figure exit, opportunity to pay for reversionary portion of Del Cora contract to help city exit bankruptcy