Essential Utilities, Inc.

Our regulated water and gas business is capital intensive and requires a significant level of capital spending. The liquidity required to fund our working capital, capital expenditures and other cash needs is provided from a combination of internally generated cash flows and external debt and equity financing. The Company’s condensed consolidated balance sheet historically has had a negative working capital position whereby our current liabilities routinely exceed our current assets. Management believes that internally generated funds along with existing credit facilities, and the proceeds from the issuance of commercial paper notes, long-term debt and equity will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements for at least the next twelve months.

Net cash flows from operating activities were $818,229 for the first nine months of 2026, compared to $804,347 for the first nine months of 2025. Operating cash flow increased by $13,882, primarily driven by working capital changes, including the impact of new rates implemented in the current nine-month period compared to the prior period.

Net cash flows used in investing activities increased by $40,638, primarily due to the Company’s continued investment in replacing aging infrastructure, contaminant mitigation and emissions reductions, among others.

Net cash flows from financing activities increased by $4,057 during the nine months ended September 30, 2026, compared to the prior period, primarily due to increased debt issuances, partially offset by higher dividend payments and lower equity issuances.

On June 16, 2026, the Company amended its $1,000,000 unsecured long-term revolving credit facility to extend the maturity date of the facility by another year, to December 2028, and eliminate one of its sustainability performance targets applicable to interest rates and commitment fees. On October 16, 2026, the Company further amended the facility to waive the change in control provision in connection with the merger with American Water and eliminate remaining sustainability targets. All other terms of the facility remained unchanged.

On May 1, 2026, Aqua Pennsylvania and Peoples Natural Gas Companies amended their respective $100,000 and $300,000 revolving credit agreements, extending the maturity date by another 364-day period. The funds borrowed under these revolving credit agreements are classified as loans payable and are used to provide working capital.

On March 9, 2026, the Company issued $500,000 of senior notes, less expenses of $5,140, due on March 15, 2036, with an interest rate of 5.125%. The Company used the proceeds from the issuance of the senior notes to repay a portion of its commercial paper borrowings and for general corporate purposes. In addition to the senior notes issued by the Company, during the nine months ended September 30, 2026, the Company’s regulated water subsidiaries obtained in the aggregate $35,180 of low-interest government loans to fund capital projects, with interest rates ranging from 0.00% to 1.743% and maturity dates ranging from 2030 to 2049.

The Company has a commercial paper program (the “CP Program”) that allows it to issue, through private placement, short-term, unsecured commercial paper notes (the “CP Notes”) in an aggregate principal amount not to exceed $1,000,000. The Company utilizes the proceeds from the sale of the CP Notes for general corporate purposes, which may include working capital, capital expenditures, water and wastewater utility acquisitions, and repaying outstanding indebtedness, including under the Company’s revolving credit facility or the revolving credit facilities of its subsidiaries. As of September 30, 2026, outstanding borrowings under the Company’s CP Program were $487,000, net of unamortized discount on issuance of $511, with a weighted average interest rate of 4.14%and weighted average remaining term of 10 days.

During the three months ended September 30, 2026, we issued 2,479,036 shares of common stock for net proceeds of approximately $101,300 under the Company’sat-the-market equity sales program(“2024 ATM”). During the nine months ended September 30, 2026, we issued 2,787,692 shares of common stock for net proceeds of approximately $113,800 under the 2024 ATM. As of September 30, 2026, the 2024 ATM had approximately $546,000 of equity available for issuance. The Company used the net proceeds from the sales of shares through the 2024 ATM for working capital, capital expenditures, water and wastewater utility acquisitions, and repaying a portion of outstanding indebtedness.

At September 30, 2026, we had $9,320 of cash and cash equivalents compared to $34,778 at December 31, 2025. During the first nine months of 2026, we used the proceeds from long-term debt, the proceeds from the issuance of commercial paper, and the proceeds from issuance of common stock, as well as internally generated funds, for capital expenditures, repayment of existing indebtedness, payment of dividends, and general corporate purposes.

At September 30, 2026, our $1,000,000 unsecured revolving credit facility had $498,697 available for borrowing (net of $487,000 of capacity designated for outstanding principal borrowings under our commercial paper program and $14,303 letter of credit usage). Additionally, at September 30, 2026, we had short-term lines of credit of $400,000, primarily used for working capital, of which $260,400 was available for borrowing. Although we believe we will be able to renew these facilities, there is no assurance that they will be renewed, or what the terms of any such renewal will be.

Credit Risk

The Company and its subsidiaries’ access to capital markets and costs of financing are influenced by its credit ratings. Below summarizes the Company and its subsidiaries’ issuer and security credit ratings as of September 30, 2026:

The Company’s ability to maintain its credit rating depends, among other things, on adequate and timely rate relief, its ability to fund capital expenditures in a balanced manner using both debt and equity, and its ability to generate cash flow. A material downgrade of our credit rating may result in the imposition of additional financial and/or other covenants, impact the market prices of equity and debt securities, increase our borrowing costs, and adversely affect our liquidity, among other things. Management continues to enhance our regulatory practices to address regulatory lag and recover capital project costs and increases in operating costs efficiently and timely through various rate-making mechanisms.