Slide 1: 2024 Third Quarter Earnings & 2025 Outlook Conference Call
2024 Third Quarter Earnings & 2025 Outlook Conference Call October 31, 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: John Griffith, President
4 AMERICAN WATER John Griffith President
Slide 5: Strong Third Quarter 2024 Results
Strong Third Quarter 2024 Results 2024 EPS Guidance of $5.25 to $5.30 Affirmed* Earnings Per Share Q3/YTD Highlights 2024 Q3 EPS of $1.80 driven by higher revenue on increased rate base $4.17 • Revenue increases from new effective rates driving stronger 2H 2024 $4.03 financial results $1.80 • Q3 2
Slide 6: 2025 Guidance Initiated, Long-Term Targets Affirmed
2025 Guidance Initiated, Long-Term Targets Affirmed Strong and Sustainable Growth Outlook for the Future 2025 EPS Guidance Initiating 2025 Guidance at $5.65-5.75* 8% EPS Growth Higher revenues from investments over weather-normalized 2024 EPS in rate base while proactively guidance, midpoint to midp
Slide 7: EPS Guidance: Affirming 2024, Initiating 2025
EPS Guidance: Affirming 2024, Initiating 2025 Consistent Future Earnings Growth Within 7-9% Range 2025 EPS Guidance of 7-9% EPS $5.65 - $5.75 2024 EPS CAGR Target Guidance* of $0.10 incremental 2025 EPS Guidance $5.25 - $5.30 interest from amended HOS $5.65 - $5.75 2023 EPS seller note $0.10 increme
Slide 8: David Bowler, EVP & Chief Financial Officer
David Bowler Executive Vice President & Chief Financial Officer 8
Slide 9: Details of Year-To-Date 2024 EPS
Details of Year-To-Date 2024 EPS 0.84 (0.19) (0.06) (0.21) 0.07 $4.17 0.01 $4.10 $4.03 (0.28) (0.04) Sept. YTD 2023 Weather* Revenue O&M General Tax - Depreciation Long-Term Other, net Sept. YTD 2024 Interest from Sept. YTD 2024 Property and Financing Subtotal Amended HOS Reported Gross Receipts Not
Slide 10: General Rate Case Update
General Rate Case Update 2024 Completed Rate Cases Rate Cases in Progress State Additional Authorized State Filed Capital Rates Expected Subsidiary Type Revenue Rates Effective Date Subsidiary Investment Effective Date $25 million February 21, 2024 Hawaii 8/2/24 $41 million Mid-2025 Indiana General
Slide 11: Considerations for 2025 Outlook
Considerations for 2025 Outlook Initiating 2025 EPS Guidance of $5.65 to $5.75** 2025 Growth Drivers 8% EPS growth in 2025 (at midpoint) vs. 2024 on a weather-normalized basis Revenue growth in base rates and in infrastructure mechanisms from capital investment Focus on customer affordability
Slide 12: Continued Strong Balance Sheet & Credit Ratings
Continued Strong Balance Sheet & Credit Ratings AWK Long-Term Senior Unsecured Ratings Total Debt to Total Capital S&P Global Moody’s A Baa1 As of Long-Term (Stable Outlook) (Stable Outlook) September 30, 2024 Target Ratings and Stable Outlook Low risk business profile 56% <60% Strong regulatory
Slide 13: Funding the 2025-2029 Capital Investment Plan
Funding the 2025-2029 Capital Investment Plan ($ in millions) Financing Plan: 2025-2029 Operating Cash Flows $13,000 Debt Financing $10,500 Equity Issuances $2,500 Sale Proceeds (HOS) $795 Total Sources: ~$27 Billion $2.5B equity issuance in 2025-2029 plan, driven by capital investment needs and c
Slide 14: Cheryl Norton, EVP & Chief Operating Officer
Cheryl Norton Executive Vice President & Chief Operating Officer 14
Slide 15: Five- and Ten-Year Capital Plans: Investments to Support System Needs
Five- and Ten-Year Capital Plans: Investments to Support System Needs Capital Plan ($ in billions) ~$1 billion increase in 5-year capital plan • $0.6 billion to meet compliance requirements for EPA’s Lead & Copper Rule Improvements (LCRI) • $0.4 billion related to rolling forward the plan one year
Slide 16: Timely Recovery of Capital Investments
Timely Recovery of Capital Investments Cap Ex Driven by Infrastructure Renewal, Resiliency, and Water Quality Capital Recovery Capital by Purpose Outlook (2025-2034) ~3% ~70% Infrastructure Surcharge ~6% ~5% Infrastructure Renewal Mechanisms Resiliency ~45% ~8% Water Quality, Including PFAS ~30% ~10
Slide 17: Investments Drive Continued Rate Base Growth
Investments Drive Continued Rate Base Growth Estimated Rate Base* (Includes Acquisitions) $ in billions ~8-9% CAGR for Rate Base Estimated Rate Base* As of 9/30/2024 Net Utility Plant $26.9 Less Advances for Construction $0.4 $19.7 $21.1 CIAC – Contributions in Aid of Construction $1.6 $16.3 $17.8 $
Slide 18: Continued Focus on Customer Affordability
Continued Focus on Customer Affordability Spotlight on Affordability Residential Water Bill as % of $ Median Household Income* Pennsylvania American Water recently expanded its H2O Help to Others program, to include customers with household incomes up to 250% of the Federal Poverty Income Guidelin
Slide 19: $349 Million of Acquisitions Closed through Oct.
$349 Million of Acquisitions Closed through Oct. Growing Acquisition Pipeline, Balanced Across Many States Closed Under Agreement* Silver Creek, IN As of September 30, 2024 As of October 30, 2024 Water 6 ~33,400 Customer Connections ~43,400 Customer Connections IL 3 4 5 Acquisitions in 3 States, $11
Slide 20: M. Susan Hardwick, Chief Executive Officer
M. Susan Hardwick Chief Executive Officer 20
Slide 21: Investing in AWK as a Premium, Pure-Play U.S. Regulated Water and Wastewater Utility
Investing in AWK as a Premium, Pure-Play U.S. Regulated Water and Wastewater Utility Near and Long-Term Top Tier Earnings and Customer Affordability Why American Dividend Growth Advantage Water Deserves a Premium Multiple Geographic and Increase Wastewater Regulatory Within and Adjacent to Diversity
Slide 22: Q&A Session
Q&A Session 22
Slide 23: 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 Director, Sustainability Analyst, Investor Relations & ESG janelle.mcnally@amwater.com
Slide 24: Appendix
Appendix 24
Slide 25: Forward Looking Statements
Forward Looking Statements Certain statements made, referred to or relied upon in this presentation including, without limitation, 2024 and 2025 earnings guidance, the Company’s long-term financial, growth and dividend targets, the ability to achieve the Company’s strategies and goals, customer affo
Slide 26: 2024 and 2025 Earnings Guidance (Non-GAAP)
2024 and 2025 Earnings Guidance (Non-GAAP) This presentation includes a description of American Water’s 2024 and 2025 earnings guidance ranges, and its expected 2024 dividend payout ratio, excluding the incremental $0.10 per share of interest to be recognized from the amended HOS seller note. This i
Slide 27: Details of Third Quarter 2024 EPS
Details of Third Quarter 2024 EPS 0.40 (0.09) (0.03) (0.08) 0.03 $1.80 (0.06) $1.77 (0.03) $1.66 - Q3 2023 Weather* Revenue O&M General Tax - Depreciation Long-Term Other, net Q3 2024 Interest from Q3 2024 Property and Financing Subtotal Amended HOS Reported Gross Receipts Note * Includes weather of
Slide 28: 2024 EPS Guidance of $5.25 to $5.30 Affirmed at Top Half of Previous Range
2024 EPS Guidance of $5.25 to $5.30 Affirmed at Top Half of Previous Range 2024 Outlook Continue to expect 8.5% EPS growth in 2024 (at midpoint) vs. 2023 on a weather-normalized basis as a result of lower than expected declines in customer usage • Incremental $0.10 per share of interest income is
Slide 29: Top Tier Dividend Growth Continued in 2024
Top Tier Dividend Growth Continued in 2024 8.1% Increase Aligns with Long-Term Target AWK’s Strong and Consistent Total Dividend Payout Ratio Dividend Growth* ($ rounded) Projected as of Long-Term December 31, 2024 Target $3.00 58% 55-60% $2.78 Note: Annual 2024 cash dividends per share of $3.00 ove
Slide 30: 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 31: State Legislation & Regulation Enable Growth
State Legislation & Regulation Enable Growth Fair Consolidated Future Hybrid Infrastructure Affordability Value Tariff Test Year Test Year Mechanism Tariffs/Programs CA MO CA MO CA KY MD NJ IA NJ CA MO IA NJ IA NJ HI PA MO WV IL PA IA NJ IL PA IL PA IA TN IN TN IL PA IN VA IN VA IL VA KY VA IN TN KY
Slide 32: 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 33: Lead Service Lines Remain in Focus
Lead Service Lines Remain in Focus Review of U.S. EPA’s Lead and Copper Rule Improvements Rule On October 8, 2024, the United States Environmental Protection Agency (EPA) announced final Lead and Copper Rule Improvements (LCRI). The LCRI includes requirements related to (1) achieving lead replac
Slide 34: Military Services Group Provides Strategic Value
Military Services Group Provides Strategic Value Currently Serving 70 Additional Installation 18 Military Installations Opportunities 12 Army 15 Army Military Services Group 5 Air Force 23 Air Force Regulated-like earnings Favorable ROI opportunity Capital light / cash flow positive Positive
Slide 35: Closed Acquisitions
Closed Acquisitions September 30, 2024 NUMBER WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS STATE TOTAL CUSTOMER CONNECTIONS OF SYSTEMS New Jersey 2 2,300 2,300 4,600 Virginia 2 1,400 1,400 2,800 Illinois 1 - 26,000 26,000 Total 5 3,700 29,700 33,400 Oct. 1 – Oct. 30, 2024 NUMBER WATER
Slide 36: Acquisitions Under Agreement
Acquisitions Under Agreement October 30, 2024 NUMBER STATE WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS OF SYSTEMS Pennsylvania 12 8,300 9,100 17,400 California 4 1,600 - 1,600 Indiana 1 8,000 - 8,000 Illinois 1 - 5,700 5,700 West Virginia 1 - 4,600 4,600 New
Slide 37: 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 $23 $375 $90 $346 $352 $256 Rate Cases Infrastructure Total Rate Cases** Infrastructure Total (Includes Charges Charges Step Increases) * Ann
Slide 38: Rates Effective Since January 1, 2024
Rates Effective Since… January 1, 2024 ($ 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 $5 Missouri (WSIRA) 1/20/2024 26 West Virg
Slide 39: Pending Rate Case Filings
Pending Rate Case Filings ($ 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 Illinois (c) Docket No. 24-0097 1/25/2024 140 10.75% 2,215 Iowa (d) Docket No. RPU-2024-0002 5/1/2024 2
Slide 40: Regulatory Information – Top States
Regulatory Information – Top 10 States CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $667,632(g) $1,642,200 $1,723,927 $489,426 $2,318,849(c) ROE 10.20%(a) 9.78% 9.65% 9.70% 9.75%(d) Equity 57.04%(a) 49.00% 54.77%(b) 52.22% 50.00%(e) Effective Date of Rate Case 1/1/2021(g) 1/1/