American Water Works Company, Inc. · NYSE:AWK
American Water Works — Q3 2020 Earnings Presentation
31 slides from American Water Works's earnings presentation, Nov 5, 2020
Slide 1: 2020 Third Quarter Earnings Conference Call
2020 Third Quarter Earnings Conference Call November 5, 2020
Slide 2: Ed Vallejo, Vice President, Investor Relations
Ed Vallejo Vice President, Investor Relations 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements Safe Harbor This presentation includes 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. They are not guarantees or assurances of any outcomes, financial resu
Slide 4: Walter Lynch, President and Chief Executive Officer
Walter Lynch President and Chief Executive Officer 4
Slide 5: Year-to-Date and Q3 2020 Financial Performance and Growth
Year-to-Date and Q3 2020 Financial Performance and Growth Regulated Investment Earnings Per Share* • ≈$1.38 billion total capex invested • Organic growth ≈10,900 customer connections as of September 30, 2020 • 34.2%** O&M efficiency ratio LTM $3.11 $2.89 $1.33 $1.46 * Regulated Acquisitions • Closed
Slide 6: The Execution of Our Strategy Continues
The Execution of Our Strategy Continues Long-term EPS growth expected in the 7-10%* target range Clear investment thesis provides confidence in EPS CAGR guidance through 2024 long-term strategy Decades of investment needed Market-Based Businesses 1-2% Line of sight to $20 - $22 billion of 10-year ca
Slide 7: Regulated Business Update
Regulated Business Update Regulatory Legislative Indiana (HB254 & HB1131) • Authorizes recovery without full rate case for service enhancements • Settlement agreement approved by for above ground infrastructure, and exempts relocation from DSIC BPU October 28,2020 recovery caps • Capital Investment
Slide 8: Regulated Acquisitions Update
Regulated Acquisitions Update Under Agreement* Agreement Process ≈19,000** Customer Connections 25 Acquisitions CA: 4 IN: 2 PA: 7 WV: 2 IL: 4 MO: 5 TN: 1 Regulatory * As of 11/3/2020; does not reflect the announced pending sale of NYAW. ** This includes an IL acquisition, which represents 1,110 tota
Slide 9: Disciplined Focus on Operating Costs
Disciplined Focus on Operating Costs Regulated O&M Efficiency Ratio* 46.1% 2024 O&M Efficiency Target remains at 31.3%** 41.0% 39.1% Adjusted O&M Expenses from 36.6% 35.6% 2010 to LTM 2020 increased only 34.8% 34.2% 0.9% CAGR* Added ≈317,000*** customer connections since 2010 2010 2012 2014 2016 201
Slide 10: Susan Hardwick, Chief Financial Officer
Susan Hardwick Chief Financial Officer 10
Slide 11: Continued Execution of Company Strategy
Continued Execution of Company Strategy EPS Contribution by Business Three Months Ended Three Months Ended Third Quarter 09/30/2020 09/30/2019 Change Regulated $1.44 $1.30 $0.14 2020 Results Market Based $0.12 $0.12 $0.00 Parent Interest & Other ($0.10) ($0.09) ($0.01) Total EPS $1.46 $1.33 $0.13 EP
Slide 12: Third Quarter EPS Detail by Business
Third Quarter EPS Detail by Business Regulated $0.11 Parent 12
Slide 13: Year-to-Date EPS Detail by Business
Year-to-Date EPS Detail by Business Regulated $0.32 MBB $0.04 Parent ($0.12) * * 2019 GAAP results include $0.01 per share benefit related to the Freedom Industries chemical spill reduction in liability 13
Slide 14: Rate Filings Completed and Awaiting Final Order
Rate Filings Completed and Awaiting Final Order ($ in millions) Rate Filings Requested Revenue in Pending Completed* Base Rate Proceedings** $8 $212 $204 $70 $127 $57 Rate Cases Infrastructure Total Rate Cases Infrastructure Total (Step Increases) Charges Charges *Annualized Revenue Increase for Rat
Slide 15: 2020 EPS and Long-Term Guidance
2020 EPS and Long-Term Guidance 2020 – 2024 Long-Term EPS CAGR Guidance** 2020 EPS Guidance 7-10% ** CAGR 2020 EPS Guidance 2019 Adjusted EPS (GAAP EPS $3.43)* Increased 2018 Adjusted EPS $3.87 - $3.93 (GAAP EPS $3.15)* $3.93 $3.87 $3.61* $3.30* 2018 2019 2020 2024 * Adjusted EPS is a non-GAAP Measu
Slide 16: Delivering Value
Delivering Value AWK Shareholder Value Value Drivers Adjusted Consolidated Return on Equity* Regulated 10.6% Wt Avg authorized • Consistent Earnings Growth 10.4% ROE is 9.8% • Smooth Capital Deployment LTM LTM • Disciplined Approach to Acquisitions September 30, 2019 September 30, 2020 Dividend Grow
Slide 17: Supporting Our Veterans
Supporting Our Veterans "There is no greater honor than serving our great country and supporting the men and women who have served and continue to serve our country. We are proud and privileged to have them on our team, as we continue to keep life flowing, by providing essential services to nearly 1
Slide 18: Q&A Session
Q&A Session 18
Slide 19: Investor Relations Contacts
Investor Relations Contacts Ed Vallejo Upcoming Events Vice President, Investor Relations edward.vallejo@amwater.com November 9-10, 2020: EEI Financial Conference Michael Tavani February 2021: Senior Manager, Investor Relations 2020 Year-End Earnings Call and Presentation of michael.tavani@amwater.c
Slide 20: Appendix
Appendix 20
Slide 21: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including, without limitation, with respect to: earnings per share guidance; dividen d growth guidance; the timing and outcome of pending or future acquisition activity and the completion of the announced sale of New York American W
Slide 22: American Water's COVID-19 Response
American Water’s COVID-19 Response Employees Customers and Communities • Suspended all work-related air and rail travel as of March 3 & • Suspended billing-related service shutoffs and restored suspended participation in sponsored events and public service to customers who were previously shut off f
Slide 23: 2020 Closed Acquisitions
2020 Closed Acquisitions* As of November 3, 2020 NUMBER OF WATER CUSTOMER WASTEWATER CUSTOMER TOTAL CUSTOMER STATE SYSTEMS CONNECTIONS CONNECTIONS CONNECTIONS California 2 6,300 - 6,300 Hawaii 1 - 200 200 Iowa 2 250 - 250 Illinois 10 5,200 18,500 23,700 Indiana 1 - 400 400 Missouri 1 - 50 50 New Jer
Slide 24: Acquisitions Under Agreement as of November 3, 2020
Acquisitions* Under Agreement as of November 3, 2020 NUMBER OF WATER CUSTOMER WASTEWATER CUSTOMER TOTAL CUSTOMER STATE SYSTEMS CONNECTIONS CONNECTIONS CONNECTIONS California 4 6,200 - 6,200 Illinois** 4 1,700 400 2,100 Indiana 2 100 100 200 Missouri 5 50 1,400 1,450 Pennsylvania 7 1,700 6,200 7,900
Slide 25: Rate Base Calculation
Rate Base Calculation* ($ in billions) $14.6 Estimated Rate Base* $13.7 As of $12.5 9/30/2020 $11.7 Net Utility Plant $19.6 $10.7 Less Advances for Construction $0.3 CIAC - Contributions in Aid of Construction $1.4 Net Deferred income taxes $3.3 $5.0 As of As of As of As of As of 12/31/2016 12/31/20
Slide 26: Rates Effective Since January 1, 2020
Rates Effective Since… January 1, 2020 Annualized Revenue Increases Annualized Revenue Increases Rate Cases & Step Increases Date Effective Infrastructure Charges Date Effective Effective in 2020 Effective in 2020 California (Step Increase) 1/1/2020 $5 West Virginia (DSIC) 1/1/2020 $3 Indiana (Step
Slide 27: Pending Rate Case Filings
Pending Rate Case Filings Rate Cases Filed Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base Virginia Case No. PUR-2018-00175 11/2/2018 $5 (a) 10.8% $196 California Case No. A.19-07-004 7/1/2019 26 (b) 689 Docket R-2020-3019369 (W) & Pennsylvania 4/29/2020 92 (c) 10.8%
Slide 28: Regulatory Information
Regulatory Information CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $498,135 $883,386 $1,182,170 $443,654 $1,249,293(b) Authorized ROE 9.20%(a) 9.79% 9.80% 9.70% 10.00%(e) Authorized Equity 55.39%(a) 49.80% 53.41%(c) 48.90% 52.80%(d) Effective Date of Rate Case 1/1/2018(a) 1/1
Slide 29: Reconciliation Table: Regulated Segment O&M Efficiency Ratio
Reconciliation Table: Regulated Segment O&M Efficiency Ratio Regulated Segment O&M Efficiency Ratio FY FY FY FY FY LTM LTM (A Non-GAAP Unaudited Number) 2010 2012 2014 2016 2018 9/30/2019 9/30/2020 ($ in millions) Total operations and maintenance expense $1,291 $1,330 $1,350 $1,504 $1,479 $1,526 $1,
Slide 30: Reconciliation Table: Consolidated Adjusted EPS
Reconciliation Table: Consolidated Adjusted EPS For the Twelve Months Consolidated Adjusted EPS Ended December 31, 2019 2018 Diluted earnings per share (GAAP): Net income attributable to common shareholders $3.43 $3.15 Adjustments: Loss on sale of Keystone 0.24 - Income tax impact (0.05) - Net adjus
Slide 31: Reconciliation Table: Adjusted Consolidated Return on Equity
Reconciliation Table: Adjusted Consolidated Return on Equity LTM LTM Adjusted Consolidated Return on Equity September 30, 2019 September 30, 2020 Net Income $635 $662 Adjustments: Keystone Sale - 44 Tax Impact for items above - (9) Re-measurement from Tax Reform 12 - Adjusted Net Income from Continu
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