American Water Works Company, Inc. · NYSE:AWK
American Water Works — Q2 2022 Earnings Presentation
31 slides from American Water Works's earnings presentation, Jul 28, 2022
Slide 1: 2022 Second Quarter Earnings Conference Call
2022 Second Quarter Earnings Conference Call July 28, 2022
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: Susan Hardwick, President and CEO
Susan Hardwick President and Chief Executive Officer 4
Slide 5: Solid 1H 2022: Successfully Executing the Plan
Solid 1H 2022: Successfully Executing the Plan Earnings Per Share Q2/YTD Highlights • Achieved solid EPS growth vs. 2021 driven by higher $2.07 revenue due to new rates, mechanisms, and acquisitions $1.87 • Invested $1.25 billion of capital in regulated infrastructure improvements and acquisitions •
Slide 6: Mid-Year Review of Macroeconomic Environment
Mid-Year Review of Macroeconomic Environment Disciplined Focus on Managing Costs Continues Managing Rising Costs Headwinds • Constructive labor cost outcomes • Chemical cost increases likely to persist in 2H 2022 • Purchased power agreements limit price spikes • Higher interest cost environment • Bu
Slide 7: John Griffith, Executive VP & CFO
John Griffith Executive VP & Chief Financial Officer 7
Slide 8: 2022 Second Quarter EPS Detail by Business
2022 Second Quarter EPS Detail by Business * * Includes $0.04 of post-close adjustments from the sale of Homeowner Services Group (“HOS”). 8
Slide 9: 2022 Year-To-Date EPS Detail by Business
2022 Year-To-Date EPS Detail by Business * * Includes $0.08 EPS of post-close adjustments from the sale of Homeowner Services Group and ($0.02) EPS loss on sale of the Company’s New York subsidiary. 9
Slide 10: 2022 EPS Guidance Affirmed: $4.39 to $4.49
2022 EPS Guidance Affirmed: $4.39 to $4.49 Long-Term Targets also Affirmed Solid 1H 2022 EPS 2H 2022 vs. 2021 Outlook $2.07 $1.87 • 2H 2022 EPS results will be lower compared to 2H 2021 due to New York AW sale • $0.09 operating EPS in Q3 2021 • $0.02 operating EPS in Q4 2021 • 2H 2022 results will a
Slide 11: Good Momentum in 2022, including Acquisitions Under Agreement
Good Momentum in 2022, including Acquisitions Under Agreement now at 29,200 Customers Growing Opportunity for Closed Over Five- Customer Connections Under Agreement As of June 30, 2022 As of June 30, 2022 Year Outlook Closed May 27, ≈29,200 Customer Connections 2022 ≈51,000 Customer Connections 9 Ac
Slide 12: Strong Balance Sheet and Credit Ratings; Limited Refinancing Needs thru 2026
Strong Balance Sheet and Credit Ratings; Limited Refinancing Needs thru 2026 AWK Long-Term Issuer Ratings Total Debt to Total Capital S&P Global Moody’s As of June Long-Term A Baa1 30, 2022 Target (Stable Outlook) (Stable Outlook) 61% ≤ 60% Ratings affirmed at both Low risk business profile agenci
Slide 13: Cheryl Norton, Executive VP & COO
Cheryl Norton Executive VP & Chief Operating Officer 13
Slide 14: Military Services Group Wins Navy Contract
Military Services Group Wins Navy Contract Currently Serving Naval Station Mayport, FL 18 Military Installations 12 Army Awarded our first Navy contract effective on July 1, 2022 Military Services Group Contract is for the ownership, Regulated-like earnings operation, maintenance and 5 Air Force rep
Slide 15: Rate Case and Legislative Updates
Rate Case and Legislative Updates Rate Cases filed in 2022 Open Rate Case filed in 2021 • Rate case filed January 14, 2022 • Rate case filed November 15, 2021 • Capital Investment of ≈$985 million • Capital Investment of ≈$138 million • Avg. water customer bill increase of $7/mo. (at full ask) • 10.
Slide 16: Rate Filings Summary
Rate Filings Summary ($ in millions) Rate Filings Requested Revenue in Completed* Pending Base Rate Effective since January 1, 2022 Proceedings $30 $598 $568 Rate Cases Infrastructure Total Charges 16 * Annualized revenue increase for rates effective since January 1, 2022; excludes agreed to revenue
Slide 17: Strong Cap Ex Growth in 1H 2022, as Planned
Strong Cap Ex Growth in 1H 2022, as Planned AWK Growth Outlook Regulated Investment CAPEX 7-9% EPS CAGR Target (2022-2026 Plan) ($ in billions) 2022E Military Services ~0.5% ~1% ≈0.2% Group Regulated Acquisitions 2-3% 1.5-2.5% 1H 2022 1H 2021 $2.0 Regulated Regulated Regulated 5-7% Investment 5-7% I
Slide 18: Cap Ex Investments Drive Continued Rate Base Growth
Cap Ex Investments Drive Continued Rate Base Growth – Foundational to Overall Growth ($ in billions) Long-Term Target ≈8-9% CAGR for Rate Base Estimated Rate Base** As of 6/30/2022 Net Utility Plant $22.0 Less Advances for Construction $0.3 CIAC – Contributions in Aid of Construction $1.5 Net Deferr
Slide 19: New Jersey American Water Partnering on the Largest U.S. Floating Solar Array
New Jersey American Water Partnering on the Largest U.S. Floating Solar Array ESG at AWK Impact Story New Jersey American Water is partnering with NJR Clean Energy Ventures to construct this solar array, which will help offset power costs at the Canoe Brook Water Treatment Plant • 8.9 megawatt solar
Slide 20: Q&A Session
Q&A Session 20
Slide 21: 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 22: Appendix
Appendix 22
Slide 23: Forward-Looking Statements
Forward-Looking Statements Certain statements made, referred to or relied upon in this presentation including, without limitation, with respect to 2022 earnings guidance, the Company’s long-term financial, growth and dividend targets, future capital needs, the ability to achieve the Company’s strate
Slide 24: Non-GAAP Financial Information
Non-GAAP Financial Information This presentation includes adjusted regulated O&M efficiency ratios, both historical and forward-looking, which exclude from their calculation (i) estimated purchased water and other revenues and purchased water expenses, (ii) the impact of the Freedom Industries chemi
Slide 25: Financing Recap – May 2022 Debt Offering
Financing Recap – May 2022 Debt Offering Successfully Executed $800 Million Senior Note Offering Consolidated Debt Maturity Profile 5 Year Total ≈$1.8 Billion as of June 30, 2022 (Rounded) Issuer American Water Capital Corp. $600 $475 $450 Pricing Date May 2, 2022 $275 Issue Type 10yr Senior Unsecur
Slide 26: Closed Acquisitions
Closed Acquisitions June 30, 2022 NUMBER WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER STATE WATER CUSTOMER CONNECTIONS OF SYSTEMS CONNECTIONS Illinois 3 700 400 1,100 Missouri 3 400 1,100 1,500 Pennsylvania 2 - 47,300 47,300 Virginia 1 1,100 - 1,100 Total 9 2,200 48,800 51,000 26
Slide 27: Acquisitions Under Agreement
Acquisitions Under Agreement June 30, 2022 NUMBER WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER STATE WATER CUSTOMER CONNECTIONS OF SYSTEMS CONNECTIONS California 3 3,450 - 3,450 Iowa 3 150 850 1,000 Illinois 5 2,350 1,400 3,750 Indiana 1 150 - 150 Missouri 11 5,050 4,950 10,000 New Jersey 3 1,600
Slide 28: Rates Effective Since…
Rates Effective Since… ($ in millions) January 1, 2022 Date Annualized Date Annualized Rate Cases & Step Increases Infrastructure Charges Effective Revenue Increases Effective Revenue Increases Illinois (QIP) 1/1/2022 $6 Pennsylvania, Step Increase (a) 1/1/2022 $20 Missouri (WSIRA) 2/1/2022 12 Calif
Slide 29: Pending Rate Case Filings
Pending Rate Case Filings ($ in millions) Rate Cases Filed Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base Virginia (a) Case No. PUR-2021-00255 11/15/2021 $15 10.9% $287 New Jersey (b) Docket No. WR22010019 1/14/2022 110 10.5% 4,267 Illinois (c) Docket No. 22-0210 2/
Slide 30: Regulatory Information – Top States
Regulatory Information – Top 10 States CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $667,632 $883,386 $1,182,170 $443,654 $1,703,170(c) ROE 9.20%(a) 9.79% 9.80% 9.70% 9.55%(d) Equity 55.39%(a) 49.80% 53.41%(b) 48.90% 50.00%(e) Effective Date of Rate Case 1/1/2021(a) 1/1/2017 5
Slide 31: Reconciliation Table: Regulated Segment O&M Efficiency Ratio
Reconciliation Table: Regulated Segment O&M Efficiency Ratio Regulated Segment O&M Efficiency Ratio FY FY FY FY FY FY LTM LTM (A Non-GAAP Unaudited Number) 2010 2012 2014 2016 2018 2020 6/30/2021 6/30/2022 ($ in millions) Total operations and maintenance expense $1,291 $1,330 $1,350 $1,504 $1,479 $1
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