Slide 1: 2021 First Quarter Earnings Conference Call
DRAFT V7 4/30/21 2021 First Quarter Earnings Conference Call May 4, 2021
Slide 2: Ed Vallejo, Vice President, Investor Relations
DRAFT V7 4/30/21 Ed Vallejo Vice President, Investor Relations 2
Slide 3: Forward-Looking Statements
DRAFT Forward-Looking Statements V7 4/30/21 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 outcome
Slide 4: Walter Lynch, President and Chief Executive Officer
DRAFT V7 4/30/21 Walter Lynch President and Chief Executive Officer 4
Slide 5: Executing on Our Regulated Strategy
DRAFT Executing on Our Regulated Strategy V7 4/30/21 Announced Agreements: • Expanding operations in Pennsylvania • Exiting New York & Michigan • Focusing our resources where we can: • Leverage scale • Drive efficiencies • Improve customer experience • Grow through acquisitions Expanded state Exitin
Slide 6: Acquisition of City of York, Pa. Wastewater System
DRAFT Acquisition of City of York, Pa. Wastewater System V7 4/30/21 Strategic Benefits City of York, PA Wastewater • Acquisition of customers near existing water footprint allows Pennsylvania American Water to Largest acquisition in Pennsylvania achieve operating efficiencies American Water History
Slide 7: Regulated Acquisitions Update
DRAFT Regulated Acquisitions Update V7 4/30/21 Egg Harbor City, NJ Under Agreement Water & Wastewater as of May 1, 2021 Number of Total Number of State Systems Customer Connections First sale being executed through New California 4 6,200 Jersey’s Water Infrastructure Illinois 4 2,400 Opportunities T
Slide 8: Solid First Quarter Results
DRAFT Solid First Quarter Results V7 4/30/21 Affirming 2021 EPS Guidance Range: $4.18 - $4.28 Earnings Per Share* Regulated Investment • Advance infrastructure improvement through five-year capital investment plan of approximately $10.4 billion • Drive O&M efficiency through strategic approach to ma
Slide 9: Regulated Business Update
DRAFT Regulated Business Update V7 4/30/21 Completed Rate Cases Pending Rate Cases • Effective as of January 28, 2021 • Additional authorized revenues of • Rate case filed August 28, 2020 $90 million over two steps (2021 and • Capital Investment of ≈$87 million 2022), excluding reduction for tax • 1
Slide 10: Regulated Business Update
DRAFT Regulated Business Update V7 4/30/21 Legislative Indiana Kentucky House Enrolled Act 1287 House Bill 465 • Creates a mechanism that reduces the • Allows for acquisition price above net book upfront cost to new customers to extend value when certain criteria are met service to underserved areas
Slide 11: Managing Customer Bill Impact with a Disciplined Focus on Operating Costs
Managing Customer Bill Impact with a Disciplined DRAFT V7 4/30/21 Focus on Operating Costs Regulated O&M ** Efficiency Ratio* Added ≈327,000*** Adjusted O&M Expenses from customer connections 2010 to LTM 2021 increased only since 2010 1.1% CAGR* * Non-GAAP Measure – See appendix for reconciliation.
Slide 12: Susan Hardwick, Chief Financial Officer
DRAFT V7 4/30/21 Susan Hardwick Chief Financial Officer 12
Slide 13: Continued Execution of Strategy
DRAFT Continued Execution of Strategy V7 4/30/21 First Quarter EPS Contribution by Business 2021 Results Three Months Ended Three Months Ended 3/31/2021 3/31/2020 Change Regulated $0.74 $0.68 $0.06 Market-Based $0.09 $0.12 ($0.03) Parent Interest & Other ($0.10) ($0.12) $0.02 Total EPS $0.73 $0.68 $
Slide 14: First Quarter 2021 EPS Detail by Business
DRAFT First Quarter 2021 EPS Detail by Business V7 4/30/21 Regulated $0.06 MBB ($0.03) Other $0.02 Note: Results for Q1 2020 & Q1 2021 both included a $0.01 per share benefit from depreciation not recorded as required by assets held for sale accounting 14
Slide 15: Rate Filings Summary
DRAFT Rate Filings Summary V7 4/30/21 ($ in millions) Rate Filings Requested Revenue in Completed* Pending Base Rate Effective since January 1, 2021 Proceedings * Annualized Revenue Increase for Rates Effective Since January 1, 2021; excludes a reduction in revenues from tax savings passed back to c
Slide 16: Superior Dividend Growth
DRAFT Superior Dividend Growth V7 4/30/21 Dividend Growth AWK 5-Year Dividend Growth Significantly Outperforms (Calendar Basis) DJUA & PHLX Utility Indexes * Future dividends are subject to approval of the American Water Board of Directors ** Source: Factset as of 4/28/21; 2021 consensus estimate 16
Slide 17: Inclusion & Diversity
DRAFT Inclusion & Diversity V7 4/30/21 Am e rican Wate r Co mmunity He aling Discussion 17
Slide 18: Q&A Session
DRAFT V7 4/30/21 Q&A Session 18
Slide 19: Investor Relations Contacts
DRAFT Investor Relations Contacts V7 4/30/21 Ed Vallejo Upcoming Events Vice President, Investor Relations edward.vallejo@amwater.com May 12, 2021 American Water’s 2021 Annual Shareholders Meeting Michael Tavani, CFA Senior Manager, Investor Relations michael.tavani@amwater.com Abbey Barksdale Senio
Slide 20: Appendix
DRAFT V7 4/30/21 Appendix 20
Slide 21: Forward-Looking Statements
DRAFT Forward-Looking Statements V7 4/30/21 Statements made, referred to or relied upon in this presentation, including, without limitation, with respect to: earnings per share guidance; dividend growth guidance; the timing and outcome of pending or future acquisition activity; our future financial
Slide 22: Non-GAAP Financial Information
DRAFT Non-GAAP Financial Information V7 4/30/21 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
Slide 23: 2021 Closed Acquisitions
DRAFT 2021 Closed Acquisitions* V7 4/30/21 As of May 1, 2021 NUMBER OF WATER CUSTOMER WASTEWATER CUSTOMER TOTAL CUSTOMER STATE SYSTEMS CONNECTIONS CONNECTIONS CONNECTIONS Illinois 1 150 - 150 Missouri 3 50 300 350 West Virginia 1 400 - 400 Total 5 600 300 900 *Customer Connections are rounded and ma
Slide 24: Acquisitions Under Agreement as of May 1, 2021
DRAFT Acquisitions* Under Agreement as of May 1, 2021 V7 4/30/21 NUMBER OF WATER CUSTOMER WASTEWATER CUSTOMER TOTAL CUSTOMER STATE SYSTEMS CONNECTIONS CONNECTIONS CONNECTIONS California 4 6,200 - 6,200 Illinois 4 1,200 1,200 2,400 Indiana 3 4,100 100 4,200 Missouri 8 4,700 5,800 10,500 New Jersey 2
Slide 25: Investment in Rate Base is the Foundation of Our Growth
DRAFT Investment in Rate Base is the Foundation of Our Growth V7 4/30/21 ($ in billions) ≈7-8%* Rate base CAGR expected through 2025 Estimated Rate Base** As of 3/31/2021 Net Utility Plant $20.3 Less Advances for Construction $0.3 CIAC - Contributions in Aid of Construction $1.4 Net Deferred income
Slide 26: Rates Effective Since January 1, 2021
DRAFT Rates Effective Since… V7 4/30/21 January 1, 2021 Date Annualized Date Annualized Rate Cases & Step Increases Infrastructure Charges Effective Revenue Increases Effective Revenue Increases Pennsylvania 1/28/21 $70(a) West Virginia (DSIC) 1/1/2021 $5 Missouri 5/28/21 22(b) Pennsylvania (DSIC) 1
Slide 27: Pending Rate Case Filings
DRAFT Pending Rate Case Filings V7 4/30/21 Rate Cases Filed Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base California Case No. A.19-07-004 7/1/2019 $26(a) $689 Iowa Case No. RPU-2020-0001 8/28/2020 3(b) 10.5% 145 Case No. 21-0369-W-42T & West Virginia 4/30/21 32(c)
Slide 28: Regulatory Information
DRAFT Regulatory Information V7 4/30/21 CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $498,135 $883,386 $1,182,170 $443,654 $1,703,170(b) ROE 9.20%(a) 9.79% 9.80% 9.70% 9.55%(e) Equity 55.39%(a) 49.80% 53.41%(c) 48.90% 50.00%(d) Effective Date of Rate Case 1/1/2018(a) 1/1/2017
Slide 29: Fair Market Value Legislation in American Water Footprint
DRAFT Fair Market Value Legislation in American Water FootprintV7 4/30/21 State Legislation Eligibility Requirements Fair Market Determination California California Fair Market Value Legislation Greater than 25 connections • Highest price on date of valuation, a buyer would pay and seller would (199
Slide 30: Reconciliation Table: Regulated Segment O&M Efficiency Ratio
Reconciliation Table: DRAFT V7 4/30/21 Regulated Segment O&M Efficiency Ratio Regulated Segment O&M Efficiency Ratio FY FY FY FY FY LTM LTM (A Non-GAAP Unaudited Number) 2010 2012 2014 2016 2018 3/31/2020 3/31/2021 ($ in millions) Total operations and maintenance expense $1,291 $1,330 $1,350 $1,504
Slide 31: Reconciliation Table: Adjusted Consolidated Return on Equity
Reconciliation Table: DRAFT V7 4/30/21 Adjusted Consolidated Return on Equity LTM LTM Adjusted Consolidated Return on Equity March 31, 2020 March 31, 2021 Net Income $632 $718 Adjustments: Keystone Sale $44 $0 Tax Impact for items above ($9) $0 Adjusted Net Income from Continuing Operations (a) $667