2025 Essential Annual Report

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) (In thousands of dollars, except per share amounts)

labor disputes;

 increasing difficulties in obtaining insurance and increased cost of insurance;  cost overruns relating to improvements to, or the expansion of, our operations;  inflation and potential impact of new or sustained changes to tariffs on the availability and costs of goods and services;  the effect of natural gas price volatility, including the potential impact of high commodity prices on usage or rate case outcomes;  civil disturbance or terroristic threats or acts;  changes to the rules or our assumptions underlying our determination of what qualifies for an income tax deduction for qualifying utility asset improvements;  changes in, or unanticipated, capital requirements;  changes in our credit rating or outlook of credit rating agencies with respect to our Company and subsidiaries, or the market price of our Common Stock;  changes in valuation of strategic ventures;  changes in accounting pronouncements;  litigation and claims;  restrictions on our subsidiaries’ ability to make dividend payments and other distributions; and  in addition to the foregoing, various risks and other uncertainties associated with the Company’s merger agreement with American Water Works Company, Inc. Given these risks and uncertainties, you should not place undue reliance on any forward-looking statements. You should read this Annual Report completely and with the understanding that our actual future results, performance and achievements may be materially different from what we expect. These forward-looking statements represent assumptions, expectations, plans, and beliefs only as of the date of this Annual Report. Except for our ongoing obligations to disclose certain information under the federal securities laws, we are not obligated, and assume no obligation, to update these forward-looking statements, even though our situation may change in the future. For further information or other factors which could affect our financial results and such forward-looking statements, see Item 1A – Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

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