American Water Works Company, Inc. · NYSE:AWK
American Water Works — Q2 2024 Earnings Presentation
33 slides from American Water Works's earnings presentation, Aug 1, 2024
Slide 1: 2024 Second Quarter Earnings Conference Call
2024 Second Quarter Earnings Conference Call August 1, 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, Chief Executive Officer
M. Susan Hardwick Chief Executive Officer 4
Slide 5: Solid Second Quarter 2024 Results
Solid Second Quarter 2024 Results 2024 EPS Guidance Narrowed to Top Half of Range, now $5.25 to $5.30 from $5.20 to $5.30 Earnings Per Share Q2/YTD Highlights 2024 Q2 EPS of $1.42 driven by higher revenue on increased rate base and $2.37* $2.37 favorable impact due to weather of ~$0.03, offset by
Slide 6: Only Pure Play, Large-Cap Water Utility in the U.S.
Only Pure Play, Large-Cap Water Utility in the U.S. Diverse Footprint Across Constructive Regulatory Environments Regulated Customer Count* 11.2% 22.5% Pennsylvania 4.9% New Jersey 5.6% Missouri 3.5M Total Customer Illinois 9.6% Connections Indiana 20.9% California 10.7% West Virginia Other 14.6% *
Slide 7: 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 8: Cheryl Norton, Executive VP & Chief Operating Officer
Cheryl Norton Executive VP & Chief Operating Officer 8
Slide 9: General Rate Case and Regulatory Update
General Rate Case and Regulatory Update 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 Missouri 7/1/24 ~$1.5 billion Mid-2025 $25 million February 21, 20
Slide 10: Annualized Revenue from Rate Proceedings
Annualized Revenue from Rate Proceedings ($ in millions) Rate Filings Completed* Requested Revenue in Pending Rate Proceedings Effective since January 1, 2024 $542 $4 $546 Rate Cases** Infrastructure Total Charges * Annualized revenue increase for rates effective since January 1, 2024 ** Excludes re
Slide 11: Continued Focus on Customer Affordability
Continued Focus on Customer Affordability Spotlight on Affordability Monthly Water Bill as % of $ Median Household Income* The Missouri rate case filed on 7/1/24 includes a proposed income-based rate for customers facing financial hardship. Missouri American Water also offers assistance through it
Slide 12: 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 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% ~70% Infrastructure Surcharge 5-7% Mechanisms 1H 2024 6-8% ~45% 1H 2023 $3.1B 9-11% Years
Slide 14: John Griffith, President
SHE AMERICAN WATER John Griffith President
Slide 15: Details of Second Quarter 2024 EPS
Details of Second Quarter 2024 EPS 0.20 (0.03) $1.44 (0.07) 0.02 $1.42 0.03 0.01 $1.40 (0.07) (0.11) Q2 2023 Weather in Weather in Revenue O&M Depreciation Long-Term Other, net Q2 2024 Interest from Q2 2024 Q2 2023 Q2 2024 Financing Subtotal Amended HOS Reported Note 15
Slide 16: Details of Year-To-Date 2024 EPS
Details of Year-To-Date 2024 EPS 0.44 (0.10) (0.13) $2.37 0.04 $2.37 0.03 0.01 $2.33 (0.07) (0.22) June YTD 2023 Weather in Weather in Revenue O&M Depreciation Long-Term Other, net June YTD 2024 Interest from June YTD 2024 Q2 2023 Q2 2024 Financing Subtotal Amended HOS Reported Note 16
Slide 17: $483 Million of Acquisitions Under Agreement
$483 Million of Acquisitions Under Agreement Pipeline Balanced Across Many States Closed Under Agreement Pennsylvania FMV Update As of June 30, 2024 As of June 30, 2024 ~33,400 Customer Connections ~59,000 Customer Connections The Commission voted 5-0 on June 5 Acquisitions in 3 States, $119M 22 A
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) June 30, 2024 Target Ratings and Stable Outlook Low risk business profile 56% <60% Strong regulatory affi
Slide 19: 2024 EPS Guidance Narrowed to Top Half of Range
2024 EPS Guidance Narrowed to Top Half of Range, now $5.25 to $5.30 from $5.20 to $5.30 2024 Outlook Now expecting 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 • Additional $0.10 per share of interest inc
Slide 20: Q&A Session
Q&A Session 20
Slide 21: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS Aaron Musgrave, CPA Jack Quinn, CPA Vice President, Investor Relations Senior Manager, Investor Relations aaron.musgrave@amwater.com jack.quinn@amwater.com Janelle McNally Kelley Uyeda Senior Manager, Investor Relations & ESG Analyst, Investor Relations & ESG janelle.mcna
Slide 22: Appendix
Appendix 22
Slide 23: Forward Looking Statements
Forward Looking Statements Certain statements made, referred to or relied upon in this presentation including, without limitation, 2024 earnings guidance, the Company’s long-term financial, growth and dividend targets, the ability to achieve the Company’s strategies and goals, customer affordability
Slide 24: Top Tier Dividend Growth Continues in 2024
Top Tier Dividend Growth Continues in 2024 8.1% Increase Aligns with Long-Term Target AWK’s Strong and Consistent Dividend Growth* ($ rounded) $3.00 $2.78 $2.57 $2.36 $2.15 $1.96 2019 2020 2021 2022 2023 2024E 24 * Future dividends are subject to approval of the American Water Board of Directors
Slide 25: Successfully Completed 2024 Financing Plan
Successfully Completed 2024 Financing Plan Successfully completed our long-term debt financing for the Successfully Executed $1.4 Billion Senior Note Offering Issuer American Water Capital Corp. year with issuance of Senior Notes Pricing Date February 20, 2024 Issuance Tenor 10yr & 30yr Senior U
Slide 26: Reconciliation of Estimated Rate Base
Reconciliation of Estimated Rate Base ($ in billions) Estimated Rate Base* ~8-9% CAGR for Rate Base (Includes Acquisitions) Estimated Rate Base* ($ in billions) As of 6/30/2024 Net Utility Plant $26.4 $19.7 $20.7 $16.3 $17.8 $13.7 $15.0 Less $12.5 Advances for Construction $0.4 CIAC – Contributions
Slide 27: U.S. EPA PFAS Rule Announced on April 10, 2024
U.S. EPA PFAS Rule Announced on April 10, 2024 Largely unchanged from proposed rule Final Federal PFAS Rule Recap Drinking water limits of 4.0 parts per trillion (ppt) for PFOA and PFOS unchanged vs. proposed rule • Limits set for three additional PFAS Five years to comply versus three years in
Slide 28: Lead Service Lines Remain in Focus
Lead Service Lines Remain in Focus Review of U.S. EPA’s Proposed Lead and Copper Rule Improvements On November 30, 2023, the United States Environmental Protection Agency (EPA) announced proposed Lead and Copper Rule Improvements (LCRI). American Water submitted oral and written comments to the
Slide 29: Closed Acquisitions
Closed Acquisitions June 30, 2024 NUMBER WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS STATE TOTAL CUSTOMER CONNECTIONS OF SYSTEMS New Jersey 2 2,300 2,300 4,600 Virginia 2 1,400 1,400 2,800 Illinois 1 - 26,000 26,000 Total 5 3,700 29,700 33,400 29
Slide 30: Acquisitions Under Agreement
Acquisitions Under Agreement June 30, 2024 NUMBER STATE WATER CUSTOMER CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS OF SYSTEMS Approved* 2 1,000 15,000 16,000 Pennsylvania 12 7,700 15,400 23,100 California 3 600 - 600 Illinois 1 - 5,700 5,700 New Jersey 1 - 3,800 3,800 Indi
Slide 31: Rates Effective Since January 1, 2024
Rates Effective Since… January 1, 2024 ($ 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 $5 Missouri (WSIRA) 1/20/2024 26 West Virg
Slide 32: Pending Rate Case Filings
Pending Rate Case Filings ($ 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 Virginia (b) Case No. PUR-2023-00194 11/1/2023 20 10.95% 364 New Jersey (c) Docket No. WR24010056 1/19/
Slide 33: 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% 57.44%(b) 52.22% 50.00%(e) Effective Date of Rate Case 1/1/2021(g) 1/1/
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