American Water Works Company, Inc. · NYSE:AWK
American Water Works — Q2 2023 Earnings Presentation
30 slides from American Water Works's earnings presentation, Jul 27, 2023
Slide 1: 2023 Second Quarter Earnings Conference Call
2023 Second Quarter Earnings Conference Call July 27, 2023
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 and CEO
M. Susan Hardwick President and Chief Executive Officer 4
Slide 5: Strong Q2 and 1H 2023 Results
Strong Q2 and 1H 2023 Results EPS Growth Driven by Regulatory Execution, Favorable Weather Earnings Per Share Q2/YTD 2023 Highlights 2023 Q2 EPS of $1.44 driven by higher revenue on increased rate base; favorable impact due to weather of ~$0.07 $2.37* $2.07 1H 2023 includes new rates effective i
Slide 6: 2023 EPS Guidance and Long-Term Targets Affirmed
2023 EPS Guidance* and Long-Term Targets Affirmed AWK EPS Growth Triangle 2023 EPS Guidance 7-9% EPS CAGR Target Affirming 2023 EPS Guidance Range of $4.72 to $4.82, on a weather-normalized basis Business Mix • Higher revenues from investments in rate base 100% Military while managing operating co
Slide 7: John Griffith, Executive VP & Chief Financial Officer
John Griffith Executive VP & Chief Financial Officer 7
Slide 8: Successfully Completed 2023 Financing Plan
Successfully Completed 2023 Financing Plan ~$1.7 Billion Common Stock Issuance Closing Date March 3, 2023 Executed on our plan to issue a significant Size 12,650,000 Shares portion of expected $2B of equity need in Five-Year Plan (2023-2027) Public Offering Price $135.50/Share Use of Proceeds Repaid
Slide 9: Strong Balance Sheet and Credit Ratings
Strong Balance Sheet and 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) June 30, 2023 Target 54% ≤ 60% Ratings and StableOutlook Low risk business profile affirmed at S&P / Moody’s St
Slide 10: Details of Second Quarter 2023 EPS
Details of Second Quarter 2023 EPS 0.47 (0.13) (0.06) $1.44 (0.11) 0.07 $1.20 Q2 2022 Weather in Q2 2023 Revenue O&M Depreciation LT Financing * Q2 2023 ~75% of inflationary costs incl. in Investment Growth revenue from recent rate cases *Reflects $(0.10) per share of share count dilution, which als
Slide 11: Details of Year-To-Date 2023 EPS
Details of Year-To-Date 2023 EPS 0.79 (0.25) (0.12) $2.37 (0.13) (0.04) (0.02) 0.07 $2.07 June YTD Weather in Q2 2023 Revenue O&M Depreciation LT Financing * ST Debt Financing Other, net June YTD 2022 2023 ~75% of inflationary costs incl. in Investment Growth revenue from recent rate cases *Reflects
Slide 12: 2023 EPS Guidance Affirmed
2023 EPS Guidance Affirmed 1.35-1.45 (0.38-0.42) (0.24-0.26) 0.02-0.04 $4.72-$4.82* (0.36-0.38) (0.08-0.10) $4.45* 2022 Actual Revenue O&M Depreciation LT Financing ** ST Debt Financing, net Other, net 2023 Guidance of Interest Income ~75% of inflationary costs incl. in Investment Growth revenue fro
Slide 13: Strong Outlook for Acquisitions in 2023 and Beyond
Strong Outlook for Acquisitions in 2023 and Beyond Growing Opportunity for Butler Area Sewer Authority, PA Closed Over Five- Customer Connections Under Agreement Wastewater As of June 30, 2023 As of June 30, 2023 6 Year Outlook NJ 3 4 3 $232 million purchase 3 price 3 ≈7,100 Customer Connections ≈74
Slide 14: Cheryl Norton, Executive VP & Chief Operating Officer
Cheryl Norton Executive VP & Chief Operating Officer 14
Slide 15: Strong Cap Ex Growth in 1H 2023, as Planned
Strong Cap Ex Growth in 1H 2023, as Planned Drives Improved Water Quality, Reliability, and Earnings Growth AWK EPS Growth Triangle Capital Investment 7-9% EPS CAGR Target Business Mix $2.9B 100% Military Regulated Regulated and ~0.5% ~1% Services ≈0.2% $0.4B Acquisitions Regulated-Like Earnings Gro
Slide 16: General Rate Case and Regulatory Updates
General Rate Case and Regulatory Updates Rate Cases in Progress Federal PFAS Recap • Rate case filed 7/1/22 On March 14, 2023, the United States Environmental Protection Agency (EPA) • Will establish rates for the period 2024-2026 announced the proposed National Primary Drinking Water Regulations
Slide 17: New Sustainability Report and Disclosures
New Sustainability Report and Disclosures Highlights AWK’s ESG Leadership and Commitment to Transparency American Water 2021-2022 Sustainability Report • Highlights our commitment to excellent water quality, customer affordability, and investing in infrastructure, among other key topics identified i
Slide 18: Q&A Session
Q&A Session 18
Slide 19: 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 20: Appendix
Appendix 20
Slide 21: Forward-Looking Statements
Forward-Looking Statements Certain statements made, referred to or relied upon in this presentation including, without limitation, with respect to 2023 earnings guidance, the Company’s long-term financial, growth and dividend targets, the ability to achieve the Company’s strategies and goals, includ
Slide 22: Sustainability Highlights
SUCCESSFUL TRANSITION OF OWNERSHIP OF WASTEWATER UTILITY SYSTEM ASSETS AT NAVAL STATION MAYPORT AMERICAN WATER EARNED THE 2023 VETS INDEXES 3-STAR EMPLOYER DESIGNATION AND 2023 TOP RESERVIST FRIENDLY Mit : HIGHLIGHTS Sie a RECOGNIZED BY 50/50 WOMEN ON BOARDS™ FOR ITS GENDER-BALANCED BOARD OF DIRECTO
Slide 23: State Legislation & Regulation Enable Growth
State Legislation & Regulation Enable Growth Fair Value 11 Consolidated Tariffs 11 Forward Looking Test Year 9 Infrastructure Mechanisms 10 CA MO CA MO CA KY IA NJ IA NJ IA NJ HI PA 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 Water Quality Accountability Legislat
Slide 24: Closed Acquisitions
Closed Acquisitions June 30, 2023 NUMBER WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS STATE TOTAL CUSTOMER CONNECTIONS OF SYSTEMS Missouri 4 600 600 1,200 New Jersey 2 1,600 1,400 3,000 Illinois 2 1,300 1,300 2,600 Indiana 1 200 - 200 Pennsylvania 1 100 - 100 Total 10 3,800 3,300 7,100
Slide 25: Acquisitions Under Agreement
Acquisitions Under Agreement June 30, 2023 NUMBER STATE WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS OF SYSTEMS Pennsylvania 9 1,800 29,600 31,400 Missouri 4 1,000 900 1,900 Illinois 4 600 26,400 27,000 West Virginia 3 3,700 500 4,200 Virginia 3 1,600 1,400 3
Slide 26: Timely Recovery of Capital and Operating Costs
Timely Recovery of Capital and Operating Costs American Water’s Jurisdictions Capital Recovery As of 2010 As of 2022 (2023-2027 Plan) 11 11 10 10 9 ≈70% ≈65% Infrastructure Surcharge 7 Mechanisms 6 ≈45% 5 5 ≈30% Forward Test Traditional 2 Years Recovery 1 1 ≈30% ≈25% Revenue Infrastructure Expense C
Slide 27: Rate Filings Summary
Rate Filings Summary ($ in millions) Rate Filings Requested Revenue in Completed* Pending Base Rate Effective since January 1, 2023 Proceedings $67 $340 $273 $151 $4 $155 Rate Cases Infrastructure Total Rate Cases** Infrastructure Total (Includes Charges Charges Step Increases) * Annualized revenue
Slide 28: Rates Effective Since January 1, 2023
Rates Effective Since… January 1, 2023 ($ in millions) Date Annualized Date Annualized Rate Cases & Step Increases Infrastructure Charges Effective Revenue Increases Effective Revenue Increases West Virginia (DSIC) 1/1/2023 $7 Illinois 1/1/2023 $67(a) Pennsylvania (DSIC) 1/1/2023 3 California, Step
Slide 29: Pending Rate Case Filings
Pending Rate Case Filings ($ in millions) Rate Cases Filed Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base California (a) Case No. A.22-07-001 7/1/2022 $37 NA $921 Indiana (b) Cause No. 45870 3/31/2023 43 10.60% 1,614 West Virginia (c) Docket No. 23-0383-W-42T 5/1/20
Slide 30: Regulatory Information – Top 10 States
Regulatory Information – Top 10 States CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $667,632(g) $1,642,200 $1,182,170 $443,654 $2,318,849c) ROE 9.50%(a) 9.78% 9.80% 9.70% 9.75%(d) Equity 57.04%(a) 49.00% 53.41%(b) 48.90% 50.00%(e) Effective Date of Rate Case 1/1/2021(g) 1/1/20
American Water Works Company — Q2 2023 Earnings Presentation on 6ix