01—Abstract
Summary
Summary of the 10-Q filed November 2, 2021. Cited figures are marked; the original filing is the authoritative source.
American Water Works Company, Inc. (AWK) reported solid financial results for the nine months ended September 30, 2021, with diluted earnings per share of $3.40a, 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 billionb 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 billionc, 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.
02—Key points
Key Highlights
- Diluted 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.
- Capital expenditures for the nine months ended September 30, 2021, totaled $1.2 billion, with continued investment in infrastructure improvements and replacements.
- The company plans to sell its Homeowner Services Group for approximately $1.275 billion, a strategic move to focus on its core regulated operations.
- While managing COVID-19 impacts, AWK has secured regulatory approval for cost recovery or deferred accounting in most jurisdictions, mitigating financial impacts.
- Long-term debt increased to $10.35 billion as of September 30, 2021, mainly due to new debt offerings to fund operations and capital expenditures.
- The company maintains a strong liquidity position with $1.56 billion in total available liquidity as of September 30, 2021.
- Annualized 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.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed November 2, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $1.09B$1.07B | +1.9% |
| Operating Expenses | $675.00M$646.00M | +4.5% |
| Operating Income | $417.00M$433.00M | −3.7% |
| Net Income | $278.00M$264.00M | +5.3% |
| EPS (Basic) | $1.53$1.46 | +4.8% |
| EPS (Diluted) | $1.53$1.46 | +4.8% |
| Shares Outstanding (Basic) | 182.00M181.00M | +0.6% |
| Shares Outstanding (Diluted) | 182.00M182.00M | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of American Water's earnings growth in the first nine months of 2021?
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.
What is the company's strategy regarding its Market-Based Businesses, specifically the Homeowner Services Group?
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.
How is American Water managing the financial impacts of the COVID-19 pandemic?
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.
What is the outlook for capital investments and growth for American Water?
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.
06—Continue