Essential Utilities (WTRG) risk factors, FY2025 10-K

Other

1. 01The Merger may cause suppliers, strategic partners, certain customers, or others to delay or defer decisions regarding our business, and may adversely affect our ability to effectively manage our business
2. 02We may be the target of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Merger from being completed
3. 03If completed, the Merger may not achieve its anticipated results, and American Water may not be able to integrate our operations and/or operate the combined company in the manner expected
4. 04The companies may incur substantial and/or unexpected transaction fees and Merger-related costs in connection with the Merger
5. 05The shares of American Water Common Stock to be received by our shareholders upon completion of the Merger will have different rights from shares of our common stock
6. 06Current shareholders of each company will have reduced ownership and voting interests in their respective companies after the Merger
7. 07If the Merger does not qualify as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986 (the “Code”), the U.S. holders of Essential Common Stock may be required to pay additional U.S. federal income taxes
8. 08The Merger may not be accretive to the combined company’s earnings and may adversely affect the combined company’s earnings per share, which may negatively affect the market price of the combined company’s common stock
9. 09Uncertainties associated with the Merger may cause a loss of management personnel and other key employees, and American Water and Essential may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the future business and operations of the combined company
10. 10The future results and market value of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following the completion of the Merger or the combined company fails to successfully execute its business strategy and objectives

Risks Related to the Operation and Regulation of our Business

1. 11General economic conditions may affect our financial condition and results of operations
2. 12a decline in the number of active customers due to housing vacancies
3. 13Inflation, and the potential impact of new or sustained changes to tariffs, could adversely impact our ability to control costs, including operating expenses and capital costs
4. 14Changes in our earnings per share may differ from changes in our rate base
5. 15Any failure of our water and wastewater treatment plants, network of water and wastewater pipes, or water reservoirs could result in damages that may harm our business, financial condition, and results of operations
6. 16Our facilities could be the target of a possible terrorist or other deliberate attack which could harm our business, financial condition and results of operations
7. 17hurricanes, fires, floods, earthquakes and other natural disasters
8. 18disruption in normal system operations
9. 19Our business is impacted by weather conditions and is subject to seasonal fluctuations, which could harm demand for water and natural gas services and our business, financial condition, and results of operations
10. 20Decreased residential customer water and natural gas usage as a result of conservation efforts, and the impact of more efficient appliances and furnaces, may harm demand for our utility services and may reduce our revenues and earnings
11. 21Drought conditions and government-imposed water use restrictions may impact our ability to serve our current and future customers, and may impact our customers’ use of our water, which may harm our business, financial condition, and results of operations
12. 22The failure of, or the requirement to repair, upgrade or dismantle any of our dams or reservoirs may harm our business, financial condition, and results of operations
13. 23Our operations are geographically concentrated in Pennsylvania, which make us susceptible to risks affecting Pennsylvania
14. 24Federal and state environmental laws and regulations impose substantial compliance requirements on our operations. Our operating costs could be significantly increased in order to comply with new or stricter regulatory standards imposed by federal and state environmental agencies
15. 25Our water or wastewater utility systems may be subject to condemnations or other methods of taking by governmental entities
16. 26the right of purchase given or reserved under the law of the state in which the subsidiary was incorporated or from which it received its permit
17. 27The final determination of our income tax liability may be materially different from our income tax provision
18. 28Wastewater operations entail significant risks and may impose significant costs
19. 29Work stoppages and other labor relations matters could harm our operating results
20. 30Workforce-related risks, including risks due to uncertainties created by the proposed Merger, may affect our results of operations
21. 31Significant or prolonged disruptions in the supply of important goods or services from third parties could harm our business, financial condition, and results of operations
22. 32new or sustained changes to tariffs could result in supply chain disruptions
23. 33We depend significantly on the services of the members of our management team, and the departure of any of those persons could cause our operating results to suffer
24. 34We may incur significant costs and liabilities resulting from pipeline integrity and other similar programs and related repairs
25. 35implement preventative and mitigating action
26. 36Our liquidity and, in certain circumstances, results of operations may be adversely affected by the cost of purchasing natural gas during periods in which natural gas prices are rising significantly
27. 37An impairment in the carrying value of our goodwill could negatively impact our consolidated results of operations and net worth

Risks Related to Health and Safety and Environmental Concerns

1. 38Worsening weather conditions, natural disasters, public health threats, or other catastrophic events, could negatively affect our business, outlook, financial condition, results of operations and liquidity
2. 39delays in our supply chain and our ability to complete maintenance, repairs, and capital programs, which could result in disruptions and increased costs
3. 40Climate change laws and regulations have been passed and are being proposed that require compliance with greenhouse gas emissions standards, as well as other climate change initiatives and reporting, which could impact our business, financial condition or results of operations
4. 41Climate change and other sustainability matters are increasingly important to many investors, and we may fail to provide information desired by all investors or achieve our sustainability goals
5. 42possible deliberate or terrorist attacks
6. 43Transporting, distributing and storing natural gas involves numerous risks that may result in accidents and other operating risks and costs

Risks Related to the Company’s Capital Needs and Common Stock

1. 44We have substantial indebtedness, as a result, it may be more difficult for the Company to pay or refinance its debts or take other actions, and the Company may need to divert cash to fund debt service payments. In addition, the proposed Merger may make it more difficult to raise significant debt and equity capital
2. 45Our inability to comply with debt covenants under our loan and debt agreements could result in prepayment obligations
3. 46The price of our common stock may be volatile. This volatility may affect the price at which one could sell our common stock, and the sale or resale of substantial amounts of our common stock could adversely affect the market price of our common stock

Risks Related to Acquisitions

1. 47exposure to unknown or unexpected risks and liabilities
2. 48The integration of acquisitions can be a multi-year activity depending upon the complexity and significance of the acquisition