10-QPeriod: Q3 FY2022

American Water Works Company, Inc. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 31, 2022For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported solid financial results for the nine months ended September 30, 2022, demonstrating continued growth and operational stability. Diluted Earnings Per Share (EPS) increased to $3.70, up from $3.40 in the prior year period, driven by rate increases in regulated businesses, acquisitions, and organic growth. The company has maintained a strong focus on capital investment, deploying $1.9 billion in the first nine months of 2022, primarily in infrastructure improvements and replacements within its Regulated Businesses segment. Strategic acquisitions also contributed to customer growth. The company also successfully managed divestitures, including the sale of its New York operations and the Homeowner Services Group, which provided significant proceeds and is generating interest income from a seller note. The company reaffirmed its commitment to infrastructure investment, planning to invest approximately $2.5 billion in 2022. Despite inflationary pressures and higher interest costs, AWK's regulated operations continue to perform well, supported by new rate authorizations and infrastructure surcharges across various states. Liquidity remains robust, with significant availability under its revolving credit facility, providing confidence in the company's ability to meet its financial commitments and fund future capital expenditures. AWK also continues to advance its Environmental, Social, and Governance (ESG) initiatives, setting ambitious goals for greenhouse gas emission reductions.

Financial Highlights

47 data points
Beta

Revenue

$1.08B

Net Income

$297.00M

27.6% Net Margin

EPS (Diluted)

$1.63

Total Assets

$27.13B

Cash & Equivalents

$77.00M

Free Cash Flow

-$34.00M

Financial Statements
Beta
Revenue$1.08B
Operating Expenses$643.00M
Operating Income$439.00M
Net Income$297.00M
EPS (Basic)$1.63
EPS (Diluted)$1.63
Shares Outstanding (Basic)182.00M
Shares Outstanding (Diluted)182.00M

Key Highlights

  • 1Diluted EPS increased to $3.70 for the nine months ended September 30, 2022, up from $3.40 in the prior year, driven by rate increases and growth initiatives.
  • 2Capital expenditures totaled $1.9 billion in the first nine months of 2022, primarily focused on infrastructure improvements and replacements in Regulated Businesses.
  • 3The company completed several strategic acquisitions, adding approximately 65,300 customers to its Regulated Businesses.
  • 4Operating revenues for the Regulated Businesses segment increased by $90 million (excluding divested New York operations) for the nine months ended September 30, 2022, compared to the prior year, supported by rate increases and infrastructure surcharges.
  • 5The company maintains a strong liquidity position with $1.6 billion in total available liquidity as of September 30, 2022.
  • 6Interest income from the seller note related to the Homeowner Services Group sale contributed $38 million for the nine months ended September 30, 2022.
  • 7American Water Works Company has set ambitious ESG goals, including achieving net-zero Scope 1 and 2 greenhouse gas emissions by 2050.

Frequently Asked Questions

Revenue growth is primarily driven by capital investments in infrastructure, authorized rate increases and infrastructure surcharges granted by state regulatory commissions, and regulated acquisitions that expand customer base. The company is strategically investing in its Regulated Businesses segment to ensure reliable service and accommodate growth.

American Water Works is managing inflationary pressures through operational efficiencies and by seeking rate increases in its regulated jurisdictions to recover higher production costs. The company also refinanced debt and has a robust liquidity position, including a significant revolving credit facility, to manage interest rate fluctuations and meet financial commitments.

The sale of HOS in December 2021 generated significant proceeds and resulted in a $720 million seller promissory note. This note is contributing to interest income for American Water Works, providing an additional revenue stream and demonstrating effective capital allocation strategies following the divestiture of non-core assets.

The company's capital allocation priorities are focused on maintaining and upgrading existing infrastructure, funding strategic regulated acquisitions, and returning capital to shareholders through dividends. They plan to invest approximately $2.5 billion in 2022, primarily in their Regulated Businesses.