10-QPeriod: Q1 FY2023

American Water Works Company, Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 26, 2023For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported solid financial results for the first quarter of 2023, with diluted earnings per share (EPS) of $0.91, an increase from $0.87 in the prior year period. This growth was primarily driven by the implementation of new rates in its Regulated Businesses segment, which helped offset inflationary pressures on operating costs and higher interest expenses. The company continues to execute its growth strategy through significant capital investments in infrastructure, with approximately $2.9 billion planned for 2023. In the first quarter, AWK invested $538 million, primarily in infrastructure improvements. Furthermore, AWK is actively pursuing regulated acquisitions, with 27 agreements in place to add approximately 48,200 customers, demonstrating a commitment to expanding its service footprint. The company also successfully completed a significant common stock offering, raising $1,688 million, which was used to repay short-term debt and for general corporate purposes, strengthening its financial position.

Financial Highlights

47 data points
Beta

Revenue

$925.00M

Net Income

$170.00M

18.4% Net Margin

EPS (Diluted)

$0.91

Total Assets

$28.29B

Cash & Equivalents

$213.00M

Free Cash Flow

-$241.00M

Financial Statements
Beta
Revenue$925.00M
Operating Expenses$643.00M
Operating Income$295.00M
Net Income$170.00M
EPS (Basic)$0.91
EPS (Diluted)$0.91
Shares Outstanding (Basic)186.00M
Shares Outstanding (Diluted)186.00M

Key Highlights

  • 1Diluted EPS increased to $0.91 for Q1 2023 from $0.87 in Q1 2022, driven by rate increases.
  • 2Operating revenues grew by 11.4% to $938 million for Q1 2023 compared to $842 million in Q1 2022.
  • 3Capital investments totaled $538 million in Q1 2023, with a full-year investment plan of $2.9 billion.
  • 4The company raised approximately $1,688 million through a common stock offering to repay short-term debt and for general corporate purposes.
  • 5AWK has 27 pending acquisitions expected to add approximately 48,200 customers.
  • 6The company reported strong liquidity with $2.885 billion in available liquidity as of March 31, 2023.

Frequently Asked Questions

The primary driver of the increase in diluted EPS to $0.91 for the first quarter of 2023 was the implementation of new rates in the Regulated Businesses segment. These rate increases allowed for the recovery of capital and acquisition investments, which helped to offset inflationary pressures on production costs and higher interest expenses.

AWK is funding its growth through a combination of sources. This includes significant capital investments in infrastructure, regulated acquisitions, cash flows from operations, and the successful completion of a $1.688 billion common stock offering in March 2023. The company plans to invest approximately $2.9 billion in 2023 and has numerous pending acquisitions to expand its customer base.

American Water Works Company maintained a strong liquidity position as of March 31, 2023, with $213 million in cash and cash equivalents and $2.672 billion in availability on its revolving credit facility, totaling $2.885 billion in available liquidity. This robust liquidity provides the company with financial flexibility to meet its short-term needs and manage potential disruptions in capital markets.

The company is actively engaged in regulatory processes, including general rate cases and infrastructure surcharge filings, which are crucial for recovering investment costs and ensuring revenue growth. Additionally, AWK is monitoring proposed EPA regulations for PFAS in drinking water and is evaluating potential capital expenditures for treatment technologies. The company is also involved in legal proceedings, including class action litigations and a potential condemnation action for its Monterey water system assets, which are being closely managed.