- First quarter 2024 earnings were $0.95 per share, compared
to $0.91 per share in 2023; results as expected
- 2024 earnings per share guidance range of $5.20 to $5.30
affirmed
- 2024 capital investment plan of $3.1 billion on track; March
closing of Granite City, IL, acquisition of $86 million
- Announced quarterly cash dividend of $0.7650 per share of
common stock payable in June, an increase of 8.1%
- Completed 2024 financing; issued $1.4 billion of senior
notes in February, $700 million of 5.150% due 2034 and $700 million
of 5.450% due 2054
American Water Works Company, Inc. (NYSE: AWK) today reported
results for the quarter ended March 31, 2024, of $0.95 per share,
compared to $0.91 per share for the same quarter in 2023.
“We are off to a solid start to 2024 as we continue to execute
on our regulated strategy,” said M. Susan Hardwick, president and
CEO of American Water. “Early in 2024 we completed our key
financing objective with the successful $1.4 billion debt issuance,
which helps fund our robust infrastructure investment program.
These needed infrastructure investments include addressing the
final PFAS rule, our on-going lead and copper replacement programs
and making our own systems more resilient as we help communities
address their water and wastewater challenges.”
2024 EPS Guidance and Long-Term Financial Targets
Affirmed
The company affirms its 2024 earnings per share guidance range
of $5.20 to $5.30, which includes approximately $0.10 per share of
increased interest income resulting from the early 2024 amendment
to the terms of the secured seller note receivable from the 2021
sale of the former Homeowner Services Group (“HOS”). The Company
also affirms its long-term financial targets, including its
long-term EPS and dividend growth rate targets of 7-9%. The
company’s earnings forecasts are subject to numerous risks and
uncertainties, including, without limitation, those described under
“Cautionary Statement Concerning Forward-Looking Statements” below
and under “Risk Factors” in its annual, quarterly, and current
reports filed with the Securities and Exchange Commission (“SEC”).
All statements related to earnings and earnings per share refer to
diluted earnings and earnings per share.
Consolidated Results
For the three months ended March 31, 2024, earnings per share
were $0.95 compared to $0.91 per share in the same period in 2023.
The increase was primarily driven by the implementation of new
rates in the Regulated Businesses from its capital and acquisition
investments, offset somewhat by increased production and employee
related costs, higher financing costs to fund the capital
investment plan, including the 2023 equity issuance, and $0.05 per
share of net unfavorable one-time items year-over-year. Results for
the three months ended March 31, 2024, include additional interest
income of $0.02 per share, resulting from the early 2024 amendment
to the secured seller note from the sale of the former HOS
business.
The company is on track to meet its capital investment plan for
the year with investments of $720 million in the first three months
of 2024, including $634 million for infrastructure improvements and
replacements, primarily in the Regulated Businesses, and $86
million for the closing of the wastewater treatment plant
acquisition from Granite City, Illinois. The company plans to
invest a total of approximately $3.1 billion across its footprint
in 2024.
Regulated Businesses
In the first quarter of 2024, the Regulated Businesses’ net
income was $185 million, compared to $174 million for the same
period in 2023.
Operating revenues increased $68 million for the three months
ended March 31, 2024, as compared to 2023. The increase in
operating revenues was primarily a result of authorized revenue
increases from completed general rate cases and infrastructure
proceedings for the recovery of incremental capital and acquisition
investments.
Since January 1, 2024, the company has been authorized
additional annualized revenues of $43 million from general rate
cases. Further, $55 million of additional annualized revenues from
infrastructure surcharges have been authorized and are effective.
The company has general rate cases in progress in eight
jurisdictions and has filed for infrastructure surcharges in one
jurisdiction, reflecting a total annualized revenue request of $636
million.
Operation and maintenance (“O&M”) expenses were higher by
$21 million for the three months ended March 31, 2024, as compared
to 2023, primarily due to increased production costs from increased
fuel, power and chemicals costs, as well as increased employee
related costs. Depreciation expense was higher by $15 million in
the same period due to the growing capital investment.
Long-Term Debt Offering
On February 23, 2024, the company completed a $1.4 billion debt
offering of $700 million aggregate principal amount of 5.150%
senior notes due 2034 and $700 million aggregate principal amount
of 5.450% senior notes due 2054. The proceeds from the offering
were used primarily to find the company’s capital investment
program.
Dividends
On March 1, 2024, the Company paid a quarterly cash dividend of
$0.7075 per share to shareholders of record as of February 8,
2024.
On May 1, 2024, the company’s Board of Directors declared a
quarterly cash dividend payment of $0.7650 per share of common
stock, payable on June 3, 2024, to shareholders of record as of May
14, 2024, an increase of 8.1%.
2024 First Quarter Earnings Conference Call
The conference call to discuss first quarter 2024 earnings, 2024
earnings guidance, and long-term targets will take place on
Thursday, May 2, 2024, at 9 a.m. Eastern Daylight Time. Interested
parties may listen to an audio webcast through a link on the
company’s Investor Relations website at ir.amwater.com.
Presentation slides that will be used in conjunction with the
earnings conference call will also be made available online in
advance at ir.amwater.com. The company recognizes its website as a
key channel of distribution to reach public investors and as a
means of disclosing material non-public information to comply with
its obligations under SEC Regulation FD.
Following the earnings conference call, a replay of the audio
webcast will be available for one year on American Water’s investor
relations website at ir.amwater.com/events.
About American Water
American Water (NYSE: AWK) is the largest regulated water and
wastewater utility company in the United States. With a history
dating back to 1886, We Keep Life Flowing® by providing safe,
clean, reliable and affordable drinking water and wastewater
services to more than 14 million people with regulated operations
in 14 states and on 18 military installations. American Water’s
6,500 talented professionals leverage their significant expertise
and the company’s national size and scale to achieve excellent
outcomes for the benefit of customers, employees, investors and
other stakeholders.
For more information, visit amwater.com and join American Water
on LinkedIn, Facebook, X and Instagram.
Throughout this press release, unless the context otherwise
requires, references to the “company” and “American Water” mean
American Water Works Company, Inc. and all of its subsidiaries,
taken together as a whole.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements in this press release including, without
limitation, 2024 earnings guidance, the company’s long-term
financial, growth and dividend targets, the ability to achieve the
company’s strategies and goals, customer affordability and acquired
customer growth, the outcome of the company’s pending acquisition
activity, the amount and allocation of projected capital
expenditures, and estimated revenues from rate cases and other
government agency authorizations, are forward-looking statements
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and the Federal securities
laws. In some cases, these forward-looking statements can be
identified by words with prospective meanings such as “intend,”
“plan,” “estimate,” “believe,” “anticipate,” “expect,” “predict,”
“project,” “propose,” “assume,” “forecast,” “outlook,” “likely,”
“uncertain,” “future,” “pending,” “goal,” “objective,” “potential,”
“continue,” “seek to,” “may,” “can,” “will,” “should” and “could”
and or the negative of such terms or other variations or similar
expressions. These forward-looking statements are predictions based
on American Water’s current expectations and assumptions regarding
future events. They are not guarantees or assurances of any
outcomes, financial results, levels of activity, performance or
achievements, and readers are cautioned not to place undue reliance
upon them. The forward-looking statements are subject to a number
of estimates and assumptions, and known and unknown risks,
uncertainties and other factors. Actual results may vary materially
from those discussed in the forward-looking statements included in
this press release as a result of the factors discussed in the
company’s Annual Report on Form 10-K for the year ended December
31, 2023, and subsequent filings with the SEC, and because of
factors such as: the decisions of governmental and regulatory
bodies, including decisions to raise or lower customer rates; the
timeliness and outcome of regulatory commissions’ and other
authorities’ actions concerning rates, capital structure,
authorized return on equity, capital investment, system
acquisitions and dispositions, taxes, permitting, water supply and
management, and other decisions; changes in customer demand for,
and patterns of use of, water and energy, such as may result from
conservation efforts, or otherwise; limitations on the availability
of the company’s water supplies or sources of water, or
restrictions on its use thereof, resulting from allocation rights,
governmental or regulatory requirements and restrictions, drought,
overuse or other factors; a loss of one or more large industrial or
commercial customers due to adverse economic conditions, or other
factors; present and future proposed changes in laws, governmental
regulations and policies, including with respect to the environment
(such as, for example, potential improvements to existing Federal
regulations with respect to lead and copper service lines and
galvanized steel pipe), health and safety, data and consumer
privacy, security and protection, water quality and water quality
accountability, contaminants of emerging concern (including without
limitation per- and polyfluoroalkyl substances (“PFAS”)), public
utility and tax regulations and policies, and impacts resulting
from U.S., state and local elections and changes in federal, state
and local executive administrations; the company’s ability to
collect, distribute, use, secure and store consumer data in
compliance with current or future governmental laws, regulations
and policies with respect to data and consumer privacy, security
and protection; weather conditions and events, climate variability
patterns, and natural disasters, including drought or abnormally
high rainfall, prolonged and abnormal ice or freezing conditions,
strong winds, coastal and intercoastal flooding, pandemics
(including COVID-19) and epidemics, earthquakes, landslides,
hurricanes, tornadoes, wildfires, electrical storms, sinkholes and
solar flares; the outcome of litigation and similar governmental
and regulatory proceedings, investigations or actions; the risks
associated with the company’s aging infrastructure, and its ability
to appropriately improve the resiliency of or maintain, update,
redesign and/or replace, current or future infrastructure and
systems, including its technology and other assets, and manage the
expansion of its businesses; exposure or infiltration of the
company’s technology and critical infrastructure systems, including
the disclosure of sensitive, personal or confidential information
contained therein, through physical or cyber attacks or other
means, and impacts from required or voluntary public and other
disclosures related thereto; the company’s ability to obtain
permits and other approvals for projects and construction, update,
redesign and/or replacement of various water and wastewater
facilities; changes in the company’s capital requirements; the
company’s ability to control operating expenses and to achieve
operating efficiencies, and the company’s ability to create,
maintain and promote initiatives and programs that support the
affordability of the company’s regulated utility services; the
intentional or unintentional actions of a third party, including
contamination of the company’s water supplies or the water provided
to its customers; the company’s ability to obtain and have
delivered adequate and cost-effective supplies of pipe, equipment
(including personal protective equipment), chemicals, power and
other fuel, water and other raw materials, and to address or
mitigate supply chain constraints that may result in delays or
shortages in, as well as increased costs of, supplies, products and
materials that are critical to or used in the company’s business
operations; the company’s ability to successfully meet its
operational growth projections, either individually or in the
aggregate, and capitalize on growth opportunities, including, among
other things, with respect to acquiring, closing and successfully
integrating regulated operations, including without limitation the
company’s ability to (i) obtain required regulatory approvals for
such acquisitions, (ii) prevail in litigation or other challenges
related to such acquisitions, and (iii) recover in rates the fair
value of assets of the acquired regulated operations, the company’s
Military Services Group entering into new military installation
contracts, price redeterminations, and other agreements and
contracts with the U.S. government, and realizing anticipated
benefits and synergies from new acquisitions; risks and
uncertainties following the completion of the sale of the company’s
Homeowner Services Group (“HOS”), including the company’s ability
to receive amounts due, payable and owing to the company under the
amended secured seller note when due, and the ability of the
company to redeploy successfully and timely the net proceeds of
this transaction into the company’s Regulated Businesses; risks and
uncertainties associated with contracting with the U.S. government,
including ongoing compliance with applicable government procurement
and security regulations; cost overruns relating to improvements in
or the expansion of the company’s operations; the company’s ability
to successfully develop and implement new technologies and to
protect related intellectual property; the company’s ability to
maintain safe work sites; the company’s exposure to liabilities
related to environmental laws and regulations, including those
enacted or adopted and under consideration, and the substances
related thereto, including without limitation lead and galvanized
steel, PFAS and other contaminants of emerging concern, and similar
matters resulting from, among other things, water and wastewater
service provided to customers; the ability of energy providers,
state governments and other third parties to achieve or fulfill
their greenhouse gas emission reduction goals, including without
limitation through stated renewable portfolio standards and carbon
transition plans; changes in general economic, political, business
and financial market conditions; access to sufficient debt and/or
equity capital on satisfactory terms and as needed to support
operations and capital expenditures; fluctuations in inflation or
interest rates, and the company’s ability to address or mitigate
the impacts thereof; the ability to comply with affirmative or
negative covenants in the current or future indebtedness of the
company or any of its subsidiaries, or the issuance of new or
modified credit ratings or outlooks by credit rating agencies with
respect to the company or any of its subsidiaries (or any current
or future indebtedness thereof), which could increase financing
costs or funding requirements and affect the company’s or its
subsidiaries’ ability to issue, repay or redeem debt, pay dividends
or make distributions; fluctuations in the value of, or assumptions
and estimates related to, its benefit plan assets and liabilities,
including with respect to its pension and other post-retirement
benefit plans, that could increase expenses and plan funding
requirements; changes in federal or state general, income and other
tax laws, including (i) future significant tax legislation or
regulations (including without limitation impacts related to the
Corporate Alternative Minimum Tax); and (ii) the availability of,
or the company’s compliance with, the terms of applicable tax
credits and tax abatement programs; migration of customers into or
out of the company’s service territories and changes in water and
energy consumption resulting therefrom; the use by municipalities
of the power of eminent domain or other authority to condemn the
systems of one or more of the company’s utility subsidiaries,
including without limitation litigation and other proceedings with
respect to the water system assets of the company’s California
subsidiary located in Monterey, California, or the assertion by
private landowners of similar rights against such utility
subsidiaries; any difficulty or inability to obtain insurance for
the company, its inability to obtain insurance at acceptable rates
and on acceptable terms and conditions, or its inability to obtain
reimbursement under existing or future insurance programs and
coverages for any losses sustained; the incurrence of impairment
charges, changes in fair value and other adjustments related to the
company’s goodwill or the value of its other assets; labor actions,
including work stoppages and strikes; the company’s ability to
retain and attract highly qualified and skilled employees and/or
diverse talent; civil disturbances or unrest, or terrorist threats
or acts, or public apprehension about future disturbances, unrest,
or terrorist threats or acts; and the impact of new, and changes to
existing, accounting standards.
These forward-looking statements are qualified by, and should be
read together with, the risks and uncertainties set forth above,
and the risk factors included in American Water’s annual, quarterly
and other SEC filings, and readers should refer to such risks,
uncertainties and risk factors in evaluating such forward-looking
statements. Any forward-looking statements American Water makes
speak only as of the date of this press release. American Water
does not have or undertake any obligation or intention to update or
revise any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise,
except as otherwise required by the federal securities laws. New
factors emerge from time to time, and it is not possible for the
company to predict all such factors. Furthermore, it may not be
possible to assess the impact of any such factor on the company’s
businesses, either viewed independently or together, or the extent
to which any factor, or combination of factors, may cause results
to differ materially from those contained in any forward-looking
statement. The foregoing factors should not be construed as
exhaustive.
AWK-IR
American Water Works Company, Inc. and
Subsidiary Companies
Consolidated Statements of Operations
(Unaudited)
(In millions, except per share data)
For the Three Months Ended
March 31,
2024
2023
Operating revenues
$
1,011
$
938
Operating expenses:
Operation and maintenance
416
393
Depreciation and amortization
188
172
General taxes
81
78
Total operating expenses, net
685
643
Operating income
326
295
Other (expense) income:
Interest expense
(124
)
(115
)
Interest income
24
14
Non-operating benefit costs, net
9
9
Other, net
7
11
Total other (expense) income
(84
)
(81
)
Income before income taxes
242
214
Provision for income taxes
57
44
Net income attributable to common
shareholders
$
185
$
170
Basic earnings per share:
Net income attributable to common
shareholders
$
0.95
$
0.91
Diluted earnings per share:
Net income attributable to common
shareholders
$
0.95
$
0.91
Weighted-average common shares
outstanding:
Basic
195
186
Diluted
195
186
American Water Works Company, Inc. and
Subsidiary Companies
Consolidated Balance Sheets
(Unaudited)
(In millions, except share and per share
data)
March 31, 2024
December 31, 2023
ASSETS
Property, plant and equipment
$
32,780
$
32,189
Accumulated depreciation
(6,757
)
(6,751
)
Property, plant and equipment, net
26,023
25,438
Current assets:
Cash and cash equivalents
584
330
Restricted funds
42
34
Accounts receivable, net of allowance for
uncollectible accounts of $49 and $51, respectively
323
339
Income tax receivable
26
86
Unbilled revenues
316
302
Materials and supplies
115
112
Other
181
186
Total current assets
1,587
1,389
Regulatory and other long-term assets:
Regulatory assets
1,117
1,106
Secured seller promissory note from the
sale of the Homeowner Services Group
795
720
Operating lease right-of-use assets
90
86
Goodwill
1,143
1,143
Other
331
416
Total regulatory and other long-term
assets
3,476
3,471
Total assets
$
31,086
$
30,298
American Water Works Company, Inc. and
Subsidiary Companies
Consolidated Balance Sheets
(Unaudited)
(In millions, except share and per share
data)
March 31, 2024
December 31, 2023
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock ($0.01 par value; 500,000,000
shares authorized; 200,273,523 and 200,144,968 shares issued,
respectively)
$
2
$
2
Paid-in-capital
8,561
8,550
Retained earnings
1,844
1,659
Accumulated other comprehensive loss
(8
)
(26
)
Treasury stock, at cost (5,451,187 and
5,414,867 shares, respectively)
(392
)
(388
)
Total common shareholders' equity
10,007
9,797
Long-term debt
12,566
11,715
Redeemable preferred stock at redemption
value
3
3
Total long-term debt
12,569
11,718
Total capitalization
22,576
21,515
Current liabilities:
Short-term debt
—
179
Current portion of long-term debt
557
475
Accounts payable
231
294
Accrued liabilities
636
791
Accrued taxes
89
67
Accrued interest
131
93
Other
213
252
Total current liabilities
1,857
2,151
Regulatory and other long-term
liabilities:
Advances for construction
367
352
Deferred income taxes and investment tax
credits
2,742
2,717
Regulatory liabilities
1,460
1,481
Operating lease liabilities
78
73
Accrued pension expense
256
262
Other
195
196
Total regulatory and other long-term
liabilities
5,098
5,081
Contributions in aid of construction
1,555
1,551
Commitments and contingencies
Total capitalization and liabilities
$
31,086
$
30,298
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501999711/en/
Investor Contact: Aaron Musgrave Vice President, Investor
Relations 856-955-4029 aaron.musgrave@amwater.com
Media Contact: Maureen Duffy Senior Vice President,
Communications and External Affairs 856-955-4163
maureen.duffy@amwater.com
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