American Water Works Company, Inc. · NYSE:AWK
American Water Works — Q1 2024 Earnings Presentation
31 slides from American Water Works's earnings presentation, May 2, 2024
Slide 1: 2024 First Quarter Earnings Conference Call
2024 First Quarter Earnings Conference Call May 2, 2024
Slide 2: Aaron Musgrave, Vice President, Investor Relations
Aaron Musgrave 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: M. Susan Hardwick, President & CEO
M. Susan Hardwick President & Chief Executive Officer 4
Slide 5: Solid First Quarter 2024 Results; On Plan
Solid First Quarter 2024 Results; On Plan Earnings Per Share Q1/YTD Highlights $0.95 2024 Q1 EPS of $0.95 driven by higher revenue on increased rate base $0.91 $0.02 • Results include $0.02 of interest income from amended HOS seller note Issued $1.4 billion in senior notes in February Invested
Slide 6: Long-Term Targets Affirmed
Long-Term Targets Affirmed Strong and Sustainable Growth Outlook for the Future LONG-TERM FINANCIAL TARGETS Drivers of Sustainable Shareholder Return EPS Dividend Per Customer ESG Growth Share Growth Affordability Leadership 7-9% 7-9% + + Additional Supportive Targets Dividend Debt to Payout Ratio C
Slide 7: Top Tier Dividend Growth Continues in 2024
Top Tier Dividend Growth Continues in 2024 8.1% Increase Aligns with Long-Term Target AWK’s Strong and Consistent Dividend Growth* ($ rounded) $3.00 $2.78 $2.57 $2.36 $2.15 $1.96 2019 2020 2021 2022 2023 2024E 7 * Future dividends are subject to approval of the American Water Board of Directors
Slide 8: Cheryl Norton, Executive VP & Chief Operating Officer
Cheryl Norton Executive VP & Chief Operating Officer 8
Slide 9: U.S. EPA PFAS Rule Announced on April 10, 2024
U.S. EPA PFAS Rule Announced on April 10, 2024 Largely unchanged from proposed rule Final Federal PFAS Rule Recap Drinking water limits of 4.0 parts per trillion (ppt) for PFOA and PFOS unchanged vs. proposed rule • Limits set for three additional PFAS Five years to comply versus three years in
Slide 10: General Rate Case and Legislative Updates
General Rate Case and Legislative Updates Rate Cases in Progress 2024 Completed Rate Cases State Filed Capital Rates Expected State Additional Authorized Subsidiary Investment Effective Date Subsidiary Type Revenue Rates Effective Date Iowa 5/1/24 ~$157 million 2nd Quarter 2025 $25 million February
Slide 11: Annualized Revenue from Rate Proceedings
Annualized Revenue from Rate Proceedings ($ in millions) Rate Filings Completed* Requested Revenue in Pending Rate Proceedings Effective since January 1, 2024 $616 $20 $636 $55 $98 $43 Rate Cases Infrastructure Total Rate Cases** Infrastructure Total (Includes Charges Charges Step Increases) * Annua
Slide 12: Continued Focus on Customer Affordability
Continued Focus on Customer Affordability Monthly Water Bill as % of $ Median Household Income* Values Around Affordability 0.90% Focused on keeping customer bills affordable 0.80% compared to income (wallet share) 0.70% • Goal for AW average residential water customer bills: 1% or less of median
Slide 13: Investments Drive Continued Rate Base Growth
Investments Drive Continued Rate Base Growth Foundational to Overall Growth Regulated Capital Investments Capital Recovery Capital by Purpose (Includes Acquisitions) (2024-2028 Plan) (2024-2033) 2024E 3-5% 4-6% Q1 2024 ~70% Infrastructure Surcharge 5-7% Mechanisms 6-8% Q1 2023 ~45% $3.1B 9-11% $720M
Slide 14: John Griffith, Executive VP & Chief Financial Officer
John Griffith Executive VP & Chief Financial Officer 14
Slide 15: Details of First Quarter 2024 EPS
Details of First Quarter 2024 EPS 0.24 (0.07) (0.06) 0.07 0.02 $0.95 $0.93 $0.91 (0.05) (0.11) Q1 2023 Revenue O&M Depreciation LT Financing ST Financing Other, net Q1 2024 Interest from Q1 2024 Sub-Total Amended HOS Reported Seller Note Investment Growth 15
Slide 16: $517 Million of Acquisitions Under Agreement
$517 Million of Acquisitions Under Agreement Pipeline Balanced Across Many States Granite City, IL Under Agreement Pennsylvania FMV Update Wastewater Treatment Plant As of March 31, 2024 ~66,800 Customer Connections Commission voted 5-0 on Feb. 1, $86 million purchase price 26 Acquisitions in 7 St
Slide 17: Successfully Completed 2024 Financing Plan
Successfully Completed 2024 Financing Plan Successfully completed our long-term debt financing for the Successfully Executed $1.4 Billion Senior Note Offering Issuer American Water Capital Corp. year with issuance of Senior Notes Pricing Date February 20, 2024 Issuance Tenor 10yr & 30yr Senior U
Slide 18: Continued Strong Balance Sheet & Credit Ratings
Continued Strong Balance Sheet & Credit Ratings AWK Long-Term Senior Unsecured Ratings Total Debt to Total Capital S&P Global Moody’s A Baa1 As of Long-Term (Stable Outlook) (Stable Outlook) March 31, 2024 Target Ratings and Stable Outlook Low risk business profile 56% <60% Strong regulatory aff
Slide 19: Q&A Session
Q&A Session 19
Slide 20: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Aaron Musgrave, CPA Jack Quinn, CPA Vice President, Investor Relations Senior Manager, Investor Relations aaron.musgrave@amwater.com jack.quinn@amwater.com Janelle McNally Kelley Uyeda Senior Manager, Investor Relations & ESG Analyst, Investor Relations & ESG janelle.mcna
Slide 21: Appendix
Appendix 21
Slide 22: Forward Looking Statements
Forward Looking Statements Certain statements made, referred to or relied upon in this presentation 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
Slide 23: 2024 EPS Guidance of $5.20 to $5.30
2024 EPS Guidance of $5.20 to $5.30 Feb. increase of $0.10 per share due to amended seller note restructuring 2024 Growth Drivers • Revenue growth in base rates and in infrastructure mechanisms from capital investment • Focus on customer affordability by continuing to drive effective and efficient c
Slide 24: Reconciliation of Estimated Rate Base
Reconciliation of Estimated Rate Base ($ in billions) Estimated Rate Base* ~8-9% CAGR for Rate Base (Includes Acquisitions) Estimated Rate Base* ($ in billions) As of 3/31/2024 $20.2 $19.7 Net Utility Plant $25.9 $17.8 $15.0 $16.3 $12.5 $13.7 Less Advances for Construction $0.4 CIAC – Contributions
Slide 25: Lead Service Lines Remain in Focus
Lead Service Lines Remain in Focus Review of U.S. EPA’s Proposed Lead and Copper Rule Improvements On November 30, 2023, the United States Environmental Protection Agency (EPA) announced proposed Lead and Copper Rule Improvements (LCRI). American Water submitted oral and written comments to the
Slide 26: State Legislation & Regulation Enable Growth
State Legislation & Regulation Enable Growth Fair Consolidated Future Hybrid Infrastructure Value Tariffs Test Year Test Year Mechanism CA MO CA MO CA KY MD NJ IA NJ IA NJ IA NJ HI PA MO WV IL PA IL PA IL PA IA TN IN TN IN VA IN VA IL VA KY VA KY WV KY WV IN MO WV MD MD 11 11 9 4 10 Water Quality Ac
Slide 27: Closed Acquisitions
Closed Acquisitions March 31, 2024 NUMBER WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS STATE TOTAL CUSTOMER CONNECTIONS OF SYSTEMS Illinois 1 - 26,000 26,000 Total 1 - 26,000 26,000 27
Slide 28: Acquisitions Under Agreement
Acquisitions Under Agreement March 31, 2024 NUMBER STATE WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS OF SYSTEMS Approved* 4 2,400 16,400 18,800 Pennsylvania 12 7,700 15,400 23,100 Illinois 3 500 6,000 6,500 California 2 300 - 300 New Jersey 3 2,300 6,100 8,4
Slide 29: Rates Effective Since January 1, 2024
Rates Effective Since… January 1, 2024 ($ in millions) Date Annualized Date Annualized Revenue Rate Cases & Step Increases Infrastructure Charges Effective Revenue Increases Effective Increases Indiana, Step Increase 2/21/2024 $25(a) Illinois (QIP) 1/1/2024 $5 Missouri (WSIRA) 1/20/2024 26 West Virg
Slide 30: Pending Rate Case Filings
Pending Rate Case Filings ($ in millions) Rate Cases Filed Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base California (a) Case No. A.22-07-001 7/1/2022 $37 NA $921 Kentucky (b) Case No. 2023-00191 6/30/2023 26 10.75% 588 Virginia (h) Case No. PUR-2023-00194 11/1/2023
Slide 31: Regulatory Information – Top States
Regulatory Information – Top 10 States CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $667,632(g) $1,642,200 $1,628,439 $443,654 $2,318,849(c) ROE 10.20%(a) 9.78% 9.65% 9.70% 9.75%(d) Equity 57.04%(a) 49.00% 56.22%(b) 48.90% 50.00%(e) Effective Date of Rate Case 1/1/2021(g) 1/1/
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