A Word From Our Chairman & CEO
Dear Shareholders, As I reflect on 2025, and my thirty-third year as an employee of the company, it is with mixed emotions that I address you. The merger with American Water marks the end of a 140-year era as an independent company. However, it also marks the beginning of a new era with expanded opportunities for shareholders to see their investment grow, for customers to realize even greater economies of scale in this era of “affordability,” and for employees to find even more opportunities to grow and develop. The combined company, post-merger, will have a stronger balance sheet, greater liquidity, lower risk (beta), and a higher growth rate. Importantly, we will join American Water in the S&P 500, which provides strong buoyancy for the stock and, when coupled with a robust growth rate, should deliver enhanced shareholder returns. It is rewarding to work alongside a management team and employee base that continues to produce excellence in operating both the water and natural gas utilities. Some companies would allow themselves to be distracted by a major transaction and lose focus on the core business. Instead, Essential Utilities has continued to post some of the strongest operating results in its history. We remain committed to excellence in operating our utilities — and we always will. It seems appropriate that our theme this year is Excellence is Essential , which reflects both our commitment and our results. “The Pursuit of Excellence” is one of our three core values, and in 2025, we didn’t just pursue it — we achieved it through meticulous execution, strategic investments, and the dedication of our 3,000+ employees. Excellence Delivers Results Our disciplined approach to operations and capital deployment produced strong financial results. We achieved earnings per share above our guidance range and increased our dividend 35 times in the last 34 years — 2025 marked the 80 th consecutive year we've paid shareholders a dividend. We invested $1.4 billion in critical infrastructure across our water, wastewater, and natural gas systems. Our capital deployment and regulatory recovery mechanisms performed with near-perfect efficiency, ensuring consistent returns and strong operational performance. Tackling Pressing Challenges We continued addressing the most pressing challenges facing our industry and communities. We advanced significant PFAS treatment projects, accelerated lead service line replacements, and modernized natural gas pipelines to reduce emissions. Our smart meter deployment enhances safety and efficiency while positioning
our natural gas business for long-term success. In 2025, we launched our Office of Continuous Improvement to empower employees at every level to identify improvements and drive consistent performance. This framework is already delivering measurable results across our operations. A Transformative Milestone In October, we announced the transformative merger with American Water Works Company, to create one of the largest, most effective utilities in the United States. This combination capitalizes on operating and financial strengths of both companies and creates a platform for enhanced long-term shareholder value through increased scale, enhanced capabilities, and expanded growth opportunities. Key to our merger with American Water is our shared mission and values. Together, the company will remain committed to sustainable growth and long-term stability— delivering value to our shareholders while ensuring future generations benefit from our operations and strategies. None of this would be possible without our dedicated team, strong partnerships with communities and regulators, and the trust of our customers.
To learn more about the specific achievements that made 2025 a year defined by excellence, I invite you to watch my video message by scanning this QR code.
To our shareholders, thank you for your continued confidence and investment. With gratitude,
Christopher H. Franklin Chairman and Chief Executive Officer Essential Utilities, Inc.
2025 ANNUAL REPORT | 5
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