10-QPeriod: Q2 FY2009

American Water Works Company, Inc. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 6, 2009For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported a net income of $52.0 million for the three months ended June 30, 2009, a significant increase from $45.5 million in the prior year's same quarter. This improvement was primarily driven by higher revenues in its Regulated Businesses, largely due to rate increases, which offset a slight decline in Non-Regulated Businesses. However, for the six-month period ending June 30, 2009, the company reported a substantial net loss of $361.1 million, compared to a net loss of $687.0 million in the prior year. This significant loss is largely attributable to goodwill impairment charges of $450.0 million recognized in the first quarter of 2009, a decrease from $750.0 million in the prior year, reflecting ongoing market volatility and the company's stock price performance. Despite the reported net loss for the six-month period, the company highlights strong operating revenue growth and positive cash flow from operations, suggesting underlying operational resilience.

Financial Highlights

30 data points
Beta

Revenue

$612.74M

Net Income

$51.99M

8.5% Net Margin

EPS (Diluted)

$0.32

Cash & Equivalents

$9.01M

Free Cash Flow

-$171.47M

Financial Statements
Beta
Revenue$612.74M
Operating Expenses$455.55M
Operating Income$157.19M
Interest Expense$73.69M
Net Income$51.99M
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)163.23M
Shares Outstanding (Diluted)163.30M

Key Highlights

  • 1Q2 2009 net income increased by 14.3% year-over-year to $52.0 million, driven by regulated revenue growth from rate increases.
  • 2Six-month 2009 net loss narrowed to $361.1 million from $687.0 million in the prior year, primarily due to a reduction in goodwill impairment charges.
  • 3Goodwill impairment charges recognized in the first half of 2009 totaled $450 million, down from $750 million in the same period of 2008.
  • 4Operating revenues increased by 4.0% for Q2 2009 and 6.1% for the first six months of 2009, largely due to rate increases in regulated businesses.
  • 5The company completed a significant equity offering in June 2009, raising $242.3 million to repay short-term debt, reducing its reliance on short-term financing.
  • 6Despite reporting a net loss for the six-month period, cash flows from operating activities increased significantly to $228.7 million from $141.3 million year-over-year.
  • 7The company continues to invest in capital expenditures, with $400.2 million spent in the first half of 2009, primarily on regulated utility plant projects.

Frequently Asked Questions

For the three months ended June 30, 2009, American Water Works Company, Inc. reported a net income of $52.0 million, an increase from $45.5 million in the prior year. However, for the six months ended June 30, 2009, the company reported a net loss of $361.1 million, which is an improvement from the $687.0 million net loss in the same period of 2008. The six-month loss is heavily influenced by goodwill impairment charges.

Revenue growth is primarily driven by rate increases obtained through general rate cases and infrastructure surcharges in the company's Regulated Businesses. For the three months ended June 30, 2009, regulated revenues increased by 5.5% year-over-year, while for the six-month period, they increased by 7.8%.

The company recognized significant goodwill impairment charges in both periods. For the six months ended June 30, 2009, a $450 million impairment charge was recorded, a reduction from $750 million in the prior year. These charges, driven by stock market volatility and declining market prices relative to carrying values, significantly contributed to the net loss reported for the six-month period.

The company relies on a combination of internally generated cash flow, external debt and equity markets for its capital needs. In June 2009, it raised $242.3 million through an equity offering to repay short-term debt. Despite market disruptions, the company maintained access to its revolving credit facilities and continues to invest in capital projects, indicating confidence in its liquidity position.