Essential Utilities profit declines despite revenue growth and dividend increase
Essential Utilities reported higher second-quarter revenue and a dividend increase driven by rate hikes and acquisitions, but net income fell as merger costs weighed on profitability ahead of its consolidation with American Water.
Essential Utilities reported a decline in second-quarter net income and earnings per share, even as top-line revenue expanded and the board raised its dividend. The water and wastewater provider posted GAAP earnings of $0.37 per share, down from $0.38 a year earlier, while net income slipped to $105.7 million from $107.8 million.
Management relied on adjusted metrics to mask the earnings contraction, reporting a flat $0.38 per share only after stripping out merger-related expenses. The profitability squeeze was even more pronounced over the first six months of the year, with net income falling to $330.1 million, or $1.16 per share, compared to $391.6 million, or $1.41 per share, in the same period of 2025.
Despite the bottom-line pressure, the company successfully expanded its regulated revenue base through state approvals. Regulators authorized $43.9 million in new annual water revenue across five states and $12.7 million for gas operations, pushing second-quarter regulated water revenue up 7.6 percent to $357.5 million from $332.3 million. First-half revenue advanced 7.2 percent to nearly $1.4 billion, with an additional $242.9 million in pending rate cases still working through the regulatory process.
Essential Utilities is also aggressively scaling its customer footprint through acquisition activity. The company recently closed a $4.9 million wastewater deal in Texas and secured roughly $282 million in agreements to add more than 200,000 customers, highlighted by the $276.5 million purchase of the DELCORA sewer authority. These recent deals build on a long-term strategy that has added more than 138,000 customers to the base since 2015.
These organic and inorganic growth levers are setting the stage for the company’s pending consolidation with American Water, which cleared key regulatory hurdles in Virginia and Ohio following February shareholder approval. By raising its dividend 5.25 percent to $0.3606 per share, the 36th increase in 35 years, the board is signaling confidence in the durability of its cash flows as it transitions into a larger multi-state utility by early 2027.
