American Water Works Company, Inc. · NYSE:AWK
American Water Works — Investor Presentation (December 2014)
28 slides from American Water Works's investor presentation, Dec 24, 2014
Slide 1: 2015 Guidance Call
NYSE: AWK Exhibit 99.2 2015 Guidance Call December 15, 2014
Slide 2: Ed Vallejo, Vice President of Investor Relations
NYSE: AWK Ed Vallejo Vice President of Investor Relations
Slide 3: Today's Agenda and Speakers
NYSE: AWK www.amwater.com 4 Today’s Agenda and Speakers: Strategy Overview: Susan Story Regulated Operations: Walter Lynch Market Based Operations: Sharon Cameron 2015 Earnings Guidance: Linda Sullivan
Slide 4: Strategy Overview
NYSE: AWK Strategy Overview Susan Story President and Chief Executive Officer
Slide 5: American Water: The Premier Water Services Provider in North America
NYSE: AWK www.amwater.com 6 American Water: The Premier Water Services Provider in North America The largest publicly traded water and wastewater service provider in the United States ~ $9.5 Billion Market Capitalization Our Business lines: Regulated Business o ~90% of Total Revenues o Provide water
Slide 6: Our Past: Strong performance over the past years (2010–2014)
NYSE: AWK www.amwater.com 7 Our Past: Strong performance over the past 5 years (2010–2014) 2010-2014 ~15% EPS Growth *O&M Efficiency ratio comparison of 2010 vs LTM Sep 2014 **Source: Thomson Reuters, Time Period: 2009 – 2013 Dividend Paid CAGR Peer companies include: AWR, WTR, CWT, ATO, GAS, WGL, G
Slide 7: Our Present: FY 2015 Guidance from continuing operations
NYSE: AWK www.amwater.com 8 Our Present: FY 2015 Guidance from continuing operations *Adjusted non-GAAP measure excluding $0.14 EPS impact of debt tender offer in 2013 **Adjusted 2014 guidance excludes Freedom Industries chemical spill EPS impact of $0.04 in West Virginia
Slide 8: Our Future: Our commitment over the next 5 years
NYSE: AWK www.amwater.com 9 *Anchored from FY 2013 Our Future : Our commitment over the next 5 years
Slide 9: II. Regulated Operations
NYSE: AWK II. Regulated Operations Walter Lynch President and Chief Operating Officer Regulated Operations
Slide 10: American Water's Regulated Presence
NYSE: AWK www.amwater.com 11 We manage more than 370 individual water systems across the country* 16 regulated states American Water’s Regulated Presence Every day we operate and manage: • 47,000 miles of distribution and collection mains • surface water treatment plants • groundwater treatment plan
Slide 11: Regulated Business: Focus Areas
NYSE: AWK www.amwater.com 12 Infrastructure Investment Efficiency & Water Energy Nexus Growth Constructive Regulatory Frameworks Regulated Business: Focus Areas
Slide 12: Regulatory Capital Investment of $5.2 billion over next five years
NYSE: AWK www.amwater.com 13 Regulatory Capital Investment of $5.2 billion over next five years Note (1) Regulatory Mechanisms include DSIC, SIC and Future Test Years Investments covered by Regulatory Mechanisms 2015 – 2019 Average Capital Expenditures by Purpose
Slide 13: O&M Efficiency Ratio Stretch Target of 34% by 2020
NYSE: AWK www.amwater.com 14 Incremental Revenue Requirement* -Increases Attributable to Opex vs. Capex- O&M Efficiency Ratio Stretch Target of 34% by 2020 Cost containment and timely return on our investments will drive added Capital Expenditures Note: O&M Efficiency Ratio - Non GAAP Measure – See
Slide 14: III. Market-Based Operations
NYSE: AWK III. Market-Based Operations Sharon Cameron President, American Water Enterprises
Slide 15: Lines of Business
NYSE: AWK www.amwater.com 16 Lines of Business • Homeowner Services (HOS) • Contract Operations • Military Services Group (MSG) • Municipal/Industrial (CSG) “Regulated Like” • Capitalizes on AW strengths • Strong/consistent margins • Controllable risk • Growing markets Market based businesses genera
Slide 16: Under-penetrated Market Opportunity as Municipal Players Open to Partnerships
NYSE: AWK www.amwater.com 17 Under-penetrated Market Opportunity as large Municipal Players are Increasingly Open to Partnerships Homeowner Services • Protect homeowners from unexpected high repair costs • Manage approximately 700k customers and 1.4m contracts • Municipal partnerships • New York Cit
Slide 17: Military Services: Overall Growth Strategy
NYSE: AWK www.amwater.com 18 Military Services: Overall Growth Strategy
Slide 18: IV. 2015 Earnings Guidance: Summary
NYSE: AWK IV. 2015 Earnings Guidance: Summary Linda Sullivan Senior Vice President and Chief Financial Officer
Slide 19: Earnings guidance for 2015 is $2.55 - $2.65 per share
NYSE: AWK www.amwater.com 20 Note: *Adjusted 2014 guidance excludes $0.04 EPS impact of Freedom industries chemical spill in West Virginia **Regulated investment category includes $0.02 projected EPS impact due to Freedom industries chemical spill in West Virginia Earnings guidance for 2015 is $2.55
Slide 20: 2015 growth largely driven by regulated investment
NYSE: AWK www.amwater.com 21 • Capital investment of $1. 2 billion in 2015; regulated investment $1.1 billion • Continued growth strategy in 2014; closing of recently announced acquisitions expected mid-2015 • Steady and significant growth continues in Market Based • Shale opportunities developing 2
Slide 21: 2015 Guidance and Major Variables
NYSE: AWK www.amwater.com 22 • Guidance range includes a certain amount of variability, with weather representing the largest variable • Guidance range expected to cover normal weather variability; weather extremes outside of the band are not included • Weather impacts will be quantified and disclos
Slide 22: Long Term Plan: Consistent growth drivers
NYSE: AWK www.amwater.com 23 Drivers: • Market demand • Environmental Regulations • Investment Risk Profile Drivers: • Timing of Acquisitions • Legislation • Regulatory Treatment Drivers: • Market Penetration rate: HOS • Military Award Timing • New Regulated Like products and services Drivers: • Cap
Slide 23: Why American Water is the right investment for you
NYSE: AWK www.amwater.com 24 Why American Water is the right investment for you *Source : Thomson Reuters **Source: Thomson Reuters, Time Period: 2009 – 2013 Dividend Paid CAGR Peer companies include: AWR, WTR, CWT, ATO, GAS, WGL, GXP, WR, OGE, AEE, POR, LNT, EDE, SCG, POM, HE, IDA, TE, CMS, UNS, PN
Slide 24: In Summary
NYSE: AWK In Summary Susan Story President and Chief Executive Officer
Slide 25: Our future results are anchored on 5 central themes
NYSE: AWK www.amwater.com 26 SAFETY PEOPLE TECHNOLOGY & OPERATIONAL EFFICIENCY GROWTH CUSTOMERS Our future results are anchored on 5 central themes with customers at the center of all we do • Very satisfied customers • Know our customers’ needs and deliver value • Proud and engaged people who are al
Slide 26: Investor Relations Team
NYSE: AWK www.amwater.com 27 Investor Relations Team: Durgesh Chopra Director – Investor Relations Durgesh.chopra@amwater.com Ed Vallejo Vice President – Investor Relations Edward.vallejo@amwater.com Tel: 856-566-4005 Fax: 856-782-2782
Slide 27: Appendix
NYSE: AWK Appendix
Slide 28: Reconciliation Table – Regulated O&M Efficiency Ratio
NYSE: AWK www.amwater.com 29 FY FY FY FY LTM Ended Sep Adjusted Regulated Operations and Maintenance Expense (a) $966,198 $963,013 $980,457 $961,204 $ 945,618 Adjusted Regulated operating revenues (b) $2,185,822 $2,269,883 $2,411,376 $2,497,936 $2,567,244 Regulated O&M Efficiency Ratio (a)/(b) 44.2%
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