10-QPeriod: Q2 FY2015

American Water Works Company, Inc. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported its financial results for the second quarter and first half of 2015. The company demonstrated revenue growth across both its Regulated Businesses and Market-Based Operations segments, driven by rate increases, infrastructure charges, and increased demand in regulated operations, and growth in military contracts and homeowner services in market-based operations. For the six months ended June 30, 2015, net income increased to $203.1 million from $177.4 million in the prior year, leading to diluted earnings per share of $1.13, up from $0.99 in the same period of 2014. The company's liquidity remains strong, supported by its revolving credit facility and ongoing cash flows from operations. AWK also continued its strategic growth initiatives through acquisitions and infrastructure investments, with a significant capital expenditure of approximately $514.9 million in the first half of the year and plans for substantial investment in the remainder of 2015.

Financial Highlights

48 data points
Beta

Revenue

$782.12M

Net Income

$123.00M

15.7% Net Margin

EPS (Diluted)

$0.68

Total Assets

$16.60B

Cash & Equivalents

$145.00M

Free Cash Flow

-$259.62M

Financial Statements
Beta
Revenue$782.12M
Operating Expenses$504.00M
Operating Income$278.00M
Interest Expense$75.42M
Net Income$123.00M
EPS (Basic)$0.69
EPS (Diluted)$0.68
Shares Outstanding (Basic)180.00M
Shares Outstanding (Diluted)180.00M

Key Highlights

  • 1Revenue increased by 3.6% to $782.1 million for the three months ended June 30, 2015, and by 3.2% to $1.48 billion for the six months ended June 30, 2015, compared to the respective prior year periods.
  • 2Net income for the six months ended June 30, 2015, rose to $203.1 million, a 14.5% increase from $177.4 million in the prior year.
  • 3Diluted earnings per share from continuing operations for the six months ended June 30, 2015, were $1.13, an increase from $1.00 in the comparable period of 2014.
  • 4Capital expenditures for the first six months of 2015 were $478.8 million, primarily for infrastructure improvements in regulated businesses, with full-year 2015 capital investment expected between $1.2 to $1.3 billion.
  • 5The company completed several acquisitions, adding approximately 4,500 water and 13,800 wastewater customers.
  • 6Operating and Maintenance (O&M) expense for the regulated businesses decreased by 4.5% for the six months ended June 30, 2015, contributing to an improved O&M efficiency ratio of 35.9% compared to 37.7% in the prior year.
  • 7The revolving credit facility expiration date was extended to June 2020, providing continued financial flexibility.

Frequently Asked Questions

American Water reported a 3.6% increase in operating revenues to $782.1 million for the three months ended June 30, 2015, and a 3.2% increase to $1.48 billion for the six months ended June 30, 2015, compared to the respective prior year periods. This growth was attributed to rate increases, infrastructure charges, and increased demand in its Regulated Businesses, along with growth in military contracts and homeowner services in its Market-Based Operations segment.

Net income for the six months ended June 30, 2015, increased by 14.5% to $203.1 million, compared to $177.4 million in the same period of 2014. Diluted earnings per share from continuing operations for the six-month period were $1.13, up from $1.00 in the prior year, reflecting strong operational performance.

Growth is driven by infrastructure improvements within its regulated utilities, strategic acquisitions, and investments in new businesses. The company invested approximately $473.6 million in infrastructure improvements and $41.3 million in acquisitions during the first half of 2015. Full-year capital investment is projected between $1.2 to $1.3 billion, with a significant portion allocated to infrastructure and additional funds for acquisitions.

American Water demonstrated improved operational efficiency, particularly in its Regulated Businesses segment. The O&M efficiency ratio for the twelve months ended June 30, 2015, improved to 35.9% from 37.7% in the prior year. This was achieved through continued cost management, lower production costs, and the impact of rate case outcomes.