American Water Works (AWK) Q3 Earnings call transcript Oct 31, 2024
AInvestFriday, Nov 1, 2024 10:17 am ET
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AWK --

In American Water's third quarter 2024 earnings call, the company highlighted its strong financial performance and outlined its plans for future growth, with a focus on capital investments, regulatory compliance, and customer affordability. Here are the key takeaways from the call.

Financial Performance and Guidance American Water reported strong financial results for the third quarter and the year-to-date periods, with earnings per share (EPS) of $1.80 for the quarter and $4.17 for the first nine months of 2024. The company's results reflect the successful execution of its strategic plan, which has contributed to its narrowed EPS guidance for 2024 to $5.25 to $5.30 per share. For 2025, American Water is targeting EPS growth of 8%, with an earnings guidance range of $5.65 to $5.75 per share.

Capital Investments and Regulatory Compliance American Water is investing heavily in capital projects to meet regulatory requirements and address aging infrastructure, particularly in relation to lead and copper rule improvements (LCRI) and per- and polyfluoroalkyl substances (PFOS). The company expects to invest approximately $40 billion in its regulated systems and acquisitions over the next decade, with a focus on timely capital recovery to ensure consistent customer service and affordability.

Growth through Acquisitions and Customer Affordability American Water is actively pursuing growth through acquisitions, with recent deals totaling $349 million and adding almost 50,000 new customers. The company is also expanding its business development teams and has increased its focus on acquiring customer connections, with a pipeline of potential acquisitions totaling $169 million. In addition, American Water is committed to maintaining customer affordability, with programs like H2O Help to Others, which provides discounted services to low-income customers.

Cybersecurity Incident and Liquidity American Water acknowledged a recent cybersecurity incident, but assured investors that none of its water or wastewater facilities were impacted. The company also highlighted its strong liquidity position, with a total debt-to-capital ratio of 56% and a diversified banking relationship network. American Water is confident in its access to capital for future growth and has extended the maturity of its revolving credit facility to October 2029.

Conclusion American Water's third quarter earnings call underscored its commitment to financial performance, capital investments, and customer affordability. The company's focus on growth through acquisitions, regulatory compliance, and timely capital recovery positions it well for future success. American Water's strong financial position, coupled with its strategic investments and acquisitions, bodes well for its long-term growth prospects.

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