Overview

• U.S. water and gas utility's Q1 revenue rose 10% yr/yr, driven by regulatory recoveries

• GAAP EPS fell to $0.79 from $1.03

• Adjusted EPS for Q1 was $0.83, excluding merger-related costs

Outlook

• Essential Utilities anticipates EPS growth at a compound annual rate of 5-7%

• Company expects regulated infrastructure investments of $1.7 bln in 2026

• Essential Utilities has a multiyear plan to comply with EPA PFAS regulations

Result Drivers

• REGULATORY RECOVERIES - Co said additional revenues from regulatory recoveries and purchased gas costs were main revenue drivers

• HIGHER OPERATING COSTS - Operations and maintenance expenses rose due to increased employee-related costs, overtime, outside services from cold weather, and merger-related expenses

• INFRASTRUCTURE INVESTMENT - Co invested $269 mln in infrastructure in Q1 as part of ongoing capital improvement plans

Company press release: ID:nBwbHmLtKa

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Revenue	Beat	$861.76 mln	$782.90 mln (1 Analyst)
Q1 EPS		$0.79
Q1 Net Income		$224.39 mln
Q1 Operating income		$310.64 mln
Q1 Pretax Profit		$230.78 mln

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 4 "hold" and 1 "sell" or "strong sell"

• Wall Street's median 12-month price target for Essential Utilities Inc is $42.50, about 13.2% above its May 6 closing price of $37.54

• The stock recently traded at 16 times the next 12-month earnings vs. a P/E of 17 three months ago

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