10-QPeriod: Q1 FY2021

American Water Works Company, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 3, 2021For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported solid financial results for the first quarter of 2021, with diluted earnings per share of $0.73, an increase from $0.69 in the prior year. The company continues to invest heavily in its infrastructure, with approximately $342 million invested in the first three months of the year, primarily in its Regulated Businesses. Strategic growth remains a focus, with several acquisitions in progress or recently completed, including the significant wastewater asset acquisition in York City, Pennsylvania. The company also continues to progress towards the divestiture of its New York American Water operations, though regulatory approvals are pending. While the company experienced some financial impacts from the COVID-19 pandemic, such as increased uncollectible accounts expense, it has secured regulatory approval for cost recovery in many jurisdictions, mitigating the overall impact.

Financial Highlights

47 data points
Beta

Revenue

$878.00M

Net Income

$133.00M

15.1% Net Margin

EPS (Diluted)

$0.73

Total Assets

$24.52B

Cash & Equivalents

$69.00M

Free Cash Flow

-$163.00M

Financial Statements
Beta
Revenue$878.00M
Operating Expenses$659.00M
Operating Income$229.00M
Net Income$133.00M
EPS (Basic)$0.73
EPS (Diluted)$0.73
Shares Outstanding (Basic)181.00M
Shares Outstanding (Diluted)182.00M

Key Highlights

  • 1Diluted EPS increased to $0.73 from $0.69 year-over-year, driven by growth in regulated businesses.
  • 2Capital expenditures for the quarter totaled $342 million, primarily directed towards infrastructure improvements in regulated operations.
  • 3The company is actively pursuing growth through acquisitions, with significant deals in Pennsylvania and New Jersey, and has agreements for pending acquisitions adding approximately 86,000 customers.
  • 4The divestiture of New York American Water operations is progressing, with an expected closing by the end of 2021, subject to regulatory approvals.
  • 5The company has secured regulatory approvals for deferred accounting or cost recovery for COVID-19 related financial impacts in 11 out of 14 jurisdictions.
  • 6Available liquidity as of March 31, 2021, stood at $1.128 billion, providing ample financial flexibility.
  • 7The adjusted regulated O&M efficiency ratio improved slightly to 34.1% for the twelve months ended March 31, 2021, from 34.5% in the prior year, indicating ongoing cost management efforts.

Frequently Asked Questions

American Water experienced financial impacts from the COVID-19 pandemic, including lower revenues from suspended late fees and foregone reconnect fees, increased operation and maintenance expenses, higher uncollectible accounts expense, and additional debt costs. However, the company has secured regulatory approval for deferred accounting or cost recovery in many jurisdictions, mitigating these impacts. As of March 31, 2021, the company recorded $43 million in regulatory assets and $5 million in regulatory liabilities related to pandemic impacts.

American Water's primary growth strategies involve continued capital investment in infrastructure within its Regulated Businesses to ensure safe, clean, and reliable services, and pursuing regulated acquisitions to expand its customer base. Additionally, the company aims to grow its Market-Based Businesses by leveraging its core competencies.

The sale of New York American Water to Liberty Utilities Co. is progressing, with an expected closing by the end of 2021, subject to customary closing conditions and regulatory approvals. The assets and related liabilities of the New York subsidiary were classified as held for sale as of March 31, 2021. The company remains confident in the completion of the transaction.

American Water plans to invest approximately $1.9 billion in 2021 across its operations. In the first quarter of 2021, capital expenditures totaled $342 million. The company maintains strong liquidity, with $1.128 billion in total available liquidity as of March 31, 2021, consisting of cash and cash equivalents and availability on its revolving credit facility, which it believes is sufficient to meet its foreseeable cash requirements.