2025 Essential Annual Report

ESSENTIAL UTILITIES, INC. AND SUBSIDIARIES Notes to Consolidated Statements of Cash Flows (In thousands of dollars, except per share amounts)

Years ended December 31,

2025

2024

2023

Cash flows from operating activities: Net income

$

616,369 $

595,314 $ 498,226

Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization

417,471 (3,178) 22,227 12,855 (1,325) (85,432) 14,299 (3,945)

369,552 (27,756)

343,695 (79,845)

Deferred income taxes

Provision for doubtful accounts Stock-based compensation

21,865

23,209 11,323

9,785

Gain on sale of utility system and other assets

(92,224) (103,335) 26,963 (9,394) (20,427) 770,343

(65)

Net change in receivables, deferred purchased gas costs, inventory and prepayments Net change in payables, accrued interest, accrued taxes and other accrued liabilities

189,989 (14,559) (20,343) (18,043) 933,587

Pension and other postretirement benefits contributions

Other, net

21,118

Net cash flows from operating activities

1,010,459

Cash flows from investing activities: Property, plant and equipment additions, including the debt component of allowance for funds used during construction of $7,975, $7,372 and $5,241

(1,429,980)

(1,329,747) (1,199,103)

Acquisitions of utility systems, net

(57,004)

(665)

(45,303)

Proceeds from the sale of utility systems and other assets

1,548

167,470

41,758

Convertible note investment

(25,125)

-

-

Other, net

(183)

(339)

(19,080)

Net cash flows used in investing activities

(1,510,744)

(1,163,281) (1,221,728)

Cash flows from financing activities: Customers' advances and contributions in aid of construction

28,255 (8,073) (36,403) 567,448

19,563 (8,564) 26,418

23,982 (8,471) (68,377)

Repayments of customers' advances

Net proceeds (repayments) of short-term debt Net proceeds from commercial paper program

-

-

Proceeds from other long-term debt Repayments of other long-term debt Change in cash overdraft position

1,318,887 (1,262,822)

1,649,546 (1,027,473)

1,207,619 (876,379)

(22,220) 15,301 300,117

34,356 15,476 36,134

(15,336) 16,005 322,983

Proceeds from issuance of common stock under dividend reinvestment plan Proceeds from issuance of common stock from at-the-market sale agreement

Proceeds from exercised stock options Repurchase of common stock Dividends paid on common stock

956

2,471

287

(2,284)

(4,048)

(3,981)

(373,821)

(346,392)

(316,806)

Other, net

566

(5)

(171)

Net cash flows from financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

525,907 25,622

397,482

281,355

4,544 4,612

(6,786) 11,398

9,156

$

34,778 $

9,156 $ 4,612

Cash paid during the year for: Interest, net of amounts capitalized

$ $

310,921 $

275,898 $ 272,532 6,698 $ 7,839

Income taxes

9,080 $

Non-cash investing activities: Property, plant and equipment additions purchased at the period end, but not yet paid for $

144,987 $ 34,349 $

135,331 $ 102,770 38,840 $ 56,297

Non-cash utility property contributions

$

See accompanying notes to consolidated financial statements.

Refer to Note 15 – Employee Stock and Incentive Plan for a description of non-cash activities Refer to Note 20 – Other Supplemental Cash Flow Information for details on cash paid for income taxes

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