0001410636-26-000063
SEC filingOperating income grew on rate increases and infrastructure investment, but net income fell on higher costs, with free cash flow deeply negative due to elevated capex.
Operating income increased to $391.0M from $371.0M in the prior year quarter, a 5.4% improvement. This growth was primarily supported by annualized incremental revenues from general rate case authorizations that became effective during 2026, reflecting the company's ongoing investment in water and wastewater infrastructure. However, net income declined to $196.0M from $205.0M, a decrease of 4.4%, as higher operating costs and financing expenses outpaced revenue gains. Diluted earnings per share fell to $1.00 from $1.05.
Capital expenditures surged to $659.0M, up from $548.0M in the prior year quarter, as the company continued to invest in system reliability, regulatory compliance, and growth. Net cash provided by operating activities was $305.0M, down from $331.0M, resulting in negative free cash flow of $354.0M. The company maintains access to debt and equity capital markets, a revolving credit facility, and cash flows from operations to fund short-term requirements. Management may delay certain capital investments or pursue alternative financing to preserve liquidity if needed.
The company anticipates that pending acquisitions will close by or before June 30, 2026. Key risks include the ability to obtain timely rate relief, cost inflation, and the impact of weather on demand. The company's ability to access capital markets and generate operating cash flows remains critical to funding its investment program.