10-QPeriod: Q1 FY2020

American Water Works Company, Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 6, 2020For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported solid financial results for the first quarter ended March 31, 2020. The company demonstrated a sequential increase in operating revenues to $844 million from $813 million in the prior year's quarter, driven primarily by rate increases and acquisitions within its Regulated Businesses segment. Net income attributable to common shareholders rose to $124 million, or $0.68 per diluted share, compared to $113 million, or $0.62 per diluted share, in the same period last year. This growth reflects the company's ongoing infrastructure investments and strategic acquisitions. The company also proactively managed its liquidity in response to the evolving COVID-19 pandemic, securing substantial financing through a new $750 million term loan facility and a $1 billion debt offering. While the pandemic's full impact remains uncertain, AWK has not experienced material negative impacts on its financial results to date and continues to monitor supply chain and capital market access. The company's regulated nature and infrastructure investment strategy provide a stable outlook, supported by consistent capital expenditures and a focus on operational excellence.

Financial Highlights

48 data points
Beta

Revenue

$834.00M

Net Income

$124.00M

14.9% Net Margin

EPS (Diluted)

$0.68

Total Assets

$23.55B

Cash & Equivalents

$556.00M

Free Cash Flow

-$228.00M

Financial Statements
Beta
Revenue$834.00M
Operating Expenses$605.00M
Operating Income$239.00M
Net Income$124.00M
EPS (Basic)$0.69
EPS (Diluted)$0.68
Shares Outstanding (Basic)181.00M
Shares Outstanding (Diluted)181.00M

Key Highlights

  • 1Operating revenues increased to $844 million for Q1 2020, up from $813 million in Q1 2019, driven by rate increases and acquisitions.
  • 2Net income attributable to common shareholders rose to $124 million ($0.68/diluted share) in Q1 2020, up from $113 million ($0.62/diluted share) in Q1 2019.
  • 3The company invested $457 million in capital expenditures during Q1 2020, primarily in its Regulated Businesses, for infrastructure improvements and replacements.
  • 4AWK secured significant liquidity by drawing $500 million on a new $750 million term loan facility and completing a $1 billion debt offering in April 2020.
  • 5Assets held for sale related to the New York subsidiary were $579 million as of March 31, 2020, as the company continues to progress towards its sale, anticipated by early 2021.
  • 6The adjusted regulated O&M efficiency ratio improved to 34.5% for the twelve months ended March 31, 2020, from 35.5% in the prior year, indicating enhanced operational efficiency.
  • 7Despite the COVID-19 pandemic, the company has not experienced material negative impacts on its financial results for the first quarter of 2020.

Frequently Asked Questions

American Water's growth strategy primarily focuses on continued capital investment in infrastructure within its Regulated Businesses to provide reliable water and wastewater services. It also pursues regulated acquisitions to expand its customer base and selectively grows its Market-Based Businesses by leveraging its core competencies.

In response to potential impacts of the COVID-19 pandemic on capital markets, American Water proactively strengthened its liquidity. This included entering into a $750 million term loan facility and immediately borrowing $500 million, as well as completing a $1 billion debt offering in April 2020. The company continues to monitor market conditions and its liquidity needs.

The New York subsidiary's assets and liabilities have been classified as held for sale, totaling $579 million in assets as of March 31, 2020. The company expects the sale to Liberty Utilities Co. for approximately $608 million to be completed no later than early 2021.

American Water focuses on operational excellence and efficiency, largely through technology. Its adjusted regulated O&M efficiency ratio improved to 34.5% for the twelve months ended March 31, 2020, compared to 35.5% in the prior year, indicating progress in managing operating costs relative to revenues.