10-QPeriod: Q2 FY2024

American Water Works Company, Inc. Quarterly Report for Q2 Ended Jun 30, 2024

Filed July 31, 2024For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) reported its second-quarter 2024 financial results, showing steady performance driven by regulated operations and ongoing infrastructure investment. Revenue saw an increase primarily due to authorized rate adjustments and strategic acquisitions, offsetting some weather-related impacts. The company continues to focus on its long-term growth strategy, emphasizing capital investment in its infrastructure and expansion through regulated acquisitions. Financially, AWK maintained a solid balance sheet with increased property, plant, and equipment, reflecting its capital expenditure program. While interest expenses rose due to increased long-term debt to fund these investments, the company's liquidity remains strong, supported by its revolving credit facility and operational cash flows. Investors will note the company's continued commitment to dividends, with a recent declaration and an ongoing focus on shareholder returns.

Financial Highlights

48 data points
Beta

Revenue

$1.14B

Net Income

$277.00M

24.3% Net Margin

EPS (Diluted)

$1.42

Total Assets

$31.21B

Cash & Equivalents

$48.00M

Free Cash Flow

-$325.00M

Financial Statements
Beta
Revenue$1.14B
Operating Expenses$700.00M
Operating Income$449.00M
Net Income$277.00M
EPS (Basic)$1.42
EPS (Diluted)$1.42
Shares Outstanding (Basic)195.00M
Shares Outstanding (Diluted)195.00M

Key Highlights

  • 1Operating revenues increased by 4.8% for the three months ended June 30, 2024, to $1.149 billion, driven by rate increases and acquisitions.
  • 2Net income attributable to common shareholders was $277 million for the three months ended June 30, 2024, slightly down from $280 million in the prior year, resulting in diluted EPS of $1.42, consistent with the prior year.
  • 3Capital expenditures for the six months ended June 30, 2024, totaled $1.279 billion, a significant increase from $1.153 billion in the same period of 2023, reflecting ongoing investment in infrastructure.
  • 4The company's long-term debt increased to $12.553 billion as of June 30, 2024, from $11.715 billion at the end of 2023, to support its growth and capital investment plans.
  • 5Several general rate cases were authorized in 2024, collectively contributing approximately $176 million in annualized incremental revenues, with further applications pending in multiple states.
  • 6AWK continues to advocate for policies that hold polluters accountable for PFAS contamination and is participating in multi-district litigation and other lawsuits.
  • 7The company declared a quarterly cash dividend of $0.7650 per share, payable in September 2024, demonstrating a continued commitment to shareholder returns.

Frequently Asked Questions

Revenue growth in the second quarter of 2024 was primarily driven by authorized rate increases from general rate cases and infrastructure surcharges across various states, which contributed significantly to incremental revenues. Additionally, water and wastewater acquisitions and organic customer growth in existing systems also positively impacted revenue.

American Water is funding its capital investment program through a combination of sources. This includes cash flows from operations, public and private debt offerings, and equity issuances. The company recently completed a $1.4 billion debt offering in February 2024 to support these investments and other corporate purposes.

American Water continues to pursue regulated acquisitions as part of its growth strategy. As of June 30, 2024, the company had entered into 22 agreements for pending acquisitions representing approximately 59,000 customers. While some have received commission approval, the remaining acquisitions require regulatory approval to complete.

American Water is investing approximately $1.0 billion over five years to install additional treatment facilities to comply with the new EPA National Primary Drinking Water Regulation for six PFAS compounds. The company also estimates annual operating expenses of up to $50 million for testing and treatment, with most of these costs starting after the April 2029 compliance deadline. AWK is also actively advocating for policies that hold polluters accountable for PFAS contamination.