01—Abstract
Summary
Summary of the 10-Q filed November 9, 2009. Cited figures are marked; the original filing is the authoritative source.
American Water Works Company, Inc. (AWK) filed its Form 10-Q for the period ending September 30, 2009.
The company reported net income of $91.6 milliona for the third quarter, an increase from $88.2 million in the prior year's quarter. However, for the first nine months of the year, AWK reported a net loss of $269.5 million, a significant improvement from a net loss of $598.8 million in the same period of 2008. This improvement is largely attributable to a reduction in goodwill impairment charges.
Revenues saw a modest increase for both the quarter and the nine-month period, primarily driven by rate increases in its Regulated Businesses segment, which were partially offset by decreased customer usage due to weather and economic conditions. The company also highlighted its ongoing financing activities, including a significant equity offering in June 2009 that generated proceeds used to repay short-term debt, and ongoing efforts to manage its debt structure. Despite a challenging economic environment, AWK continues to invest in its infrastructure and pursue strategic acquisitions.
02—Key points
Key Highlights
- Third-quarter net income rose to $91.6 million from $88.2 million year-over-year, driven by rate increases and operational management.
- Nine-month net loss narrowed significantly to $269.5 million from $598.8 million in the prior year, primarily due to a $450 million reduction in goodwill impairment charges.
- Total revenues increased by 1.2% for the third quarter and 4.2% for the nine months, primarily from rate adjustments in regulated operations.
- Customer usage declined due to unfavorable weather and economic conditions, impacting revenues, though rate increases helped offset this.
- The company successfully raised approximately $242.3 million in net proceeds from a common stock offering in June 2009 to reduce short-term debt.
- Goodwill impairment charges decreased substantially to $450 million for the nine months ended September 30, 2009, from $750 million in the comparable period of 2008.
- AWK continues to invest in capital expenditures, with $592.9 million used for investing activities during the nine months ended September 30, 2009, primarily for construction projects.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed November 9, 2009Financial Statements
| Revenue | $679.96M |
| Operating Expenses | $465.55M |
| Operating Income | $214.41M |
| Interest Expense | $74.12M |
| Net Income | $91.64M |
| EPS (Basic) | $0.52 |
| EPS (Diluted) | $0.52 |
| Shares Outstanding (Basic) | 174.59M |
| Shares Outstanding (Diluted) | 174.69M |
05—Questions
Frequently Asked Questions
What were the key drivers of the company's financial performance in the third quarter of 2009?
The company's third-quarter performance was driven by an increase in operating revenues, primarily due to rate increases granted by regulatory agencies in its Regulated Businesses segment. This was partially offset by decreased customer usage due to wet and cool weather conditions and the general economic downturn. Operating expenses also saw an increase, particularly in depreciation and maintenance.
How did the company address the significant goodwill impairment charges?
AWK experienced significant goodwill impairment charges in both 2008 and 2009. The charge for the nine months ending September 30, 2009, was $450 million, a substantial reduction from $750 million in the same period of 2008. This reduction was primarily due to a decrease in stock market volatility and the company's market price improving from its lowest points in early 2009.
What is the company's liquidity position and outlook?
AWK believes it has sufficient liquidity. It relies on internally generated cash flows from operations, supplemented by external financing through debt and equity offerings. As of November 5, 2009, the company had approximately $802.9 million available under its revolving credit facilities and capacity for commercial paper issuance. The company anticipates ongoing capital expenditures and expects to fund maturities of long-term debt through a combination of external financing and operational cash flow.
Are there any significant legal or regulatory matters impacting the company?
The company is involved in routine legal proceedings. Notably, California-American Water Company received a Cease and Desist Order regarding water diversions from the Carmel River, which AWK is appealing. The outcome and potential costs are uncertain. Additionally, the company is actively engaged with regulators regarding the recovery of increased pension and postretirement benefit costs.
06—Continue