10-QPeriod: Q3 FY2021

American Water Works Company, Inc. Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 2, 2021For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported solid financial results for the nine months ended September 30, 2021, with diluted earnings per share of $3.40, an increase of $0.29 compared to the prior year. This growth was primarily driven by the Regulated Businesses segment, benefiting from infrastructure investments, acquisitions, and organic growth. The company continues to prioritize capital investment in its infrastructure, with plans to invest approximately $1.9 billion in 2021, with a significant portion already deployed in the first nine months. Operationally, the company is managing the impacts of the COVID-19 pandemic, securing regulatory approvals for deferred accounting or cost recovery in most jurisdictions. A significant development is the impending sale of its Homeowner Services Group for approximately $1.275 billion, which is expected to close in the fourth quarter of 2021. This strategic divestiture will allow AWK to redeploy capital into its core Regulated Businesses, primarily focusing on infrastructure improvements and regulated acquisitions.

Financial Highlights

47 data points
Beta

Revenue

$1.09B

Net Income

$278.00M

25.4% Net Margin

EPS (Diluted)

$1.53

Total Assets

$25.33B

Cash & Equivalents

$70.00M

Free Cash Flow

$56.00M

Financial Statements
Beta
Revenue$1.09B
Operating Expenses$675.00M
Operating Income$417.00M
Net Income$278.00M
EPS (Basic)$1.53
EPS (Diluted)$1.53
Shares Outstanding (Basic)182.00M
Shares Outstanding (Diluted)182.00M

Key Highlights

  • 1Diluted EPS increased to $3.40 for the nine months ended September 30, 2021, up from $3.11 in the prior year, driven by growth in Regulated Businesses.
  • 2Capital expenditures for the nine months ended September 30, 2021, totaled $1.2 billion, with continued investment in infrastructure improvements and replacements.
  • 3The company plans to sell its Homeowner Services Group for approximately $1.275 billion, a strategic move to focus on its core regulated operations.
  • 4While managing COVID-19 impacts, AWK has secured regulatory approval for cost recovery or deferred accounting in most jurisdictions, mitigating financial impacts.
  • 5Long-term debt increased to $10.35 billion as of September 30, 2021, mainly due to new debt offerings to fund operations and capital expenditures.
  • 6The company maintains a strong liquidity position with $1.56 billion in total available liquidity as of September 30, 2021.
  • 7Annualized incremental revenues from general rate cases and infrastructure surcharges totaled $99 million and $46 million, respectively, for the nine months ended September 30, 2021, reflecting successful rate adjustments to support investments.

Frequently Asked Questions

The primary driver of American Water's earnings growth was the performance of its Regulated Businesses segment. This growth was fueled by significant capital investments in infrastructure, successful acquisitions of new water and wastewater systems, and organic growth within existing operations.

American Water is strategically divesting its Homeowner Services Group for approximately $1.275 billion. This sale allows the company to concentrate its resources and capital on its core Regulated Businesses. The proceeds will be reinvested into infrastructure improvements and regulated acquisitions, sharpening the focus of its Market-Based Businesses primarily on its Military Services Group.

American Water is actively managing the financial impacts of the COVID-19 pandemic by working with regulatory bodies. As of the reporting date, the company had secured commission orders authorizing deferred accounting or cost recovery for these impacts in 11 of 14 jurisdictions, with proceedings pending in two others. This approach helps to mitigate adverse revenue and expense effects.

The company plans to continue significant capital investments, with approximately $1.9 billion earmarked for 2021, primarily directed towards infrastructure improvements and replacements within its Regulated Businesses. Growth is expected to be driven by ongoing capital deployment and strategic regulated acquisitions, expanding its customer base and service areas.