Sep 9, 2025 3:36 PM Eastern Daylight Time California American Water Celebrates Groundbreaking of New Headquarters in West Sacramento Share WEST SACRAMENTO, Calif.--(BUSINESS WIRE)--California American Water held a groundbreaking for its new headquarters facility at 700 Riverpoint Drive in West Sacramento. This milestone showcases the company's ongoing commitment to delivering exceptional water and wastewater services throughout California and Hawaii, underscored by continuous investments in infrastructure a ...

CAMDEN, N.J.--(BUSINESS WIRE)-- #AmericanWater--The American Water Charitable Foundation, a philanthropic non-profit organization established by American Water (NYSE: AWK), the largest regulated water and wastewater utility company in the U.S., announced today that it awarded a combined total of more than $750,000 to 32 organizations supporting communities served by American Water through the 2025 Workforce Readiness and STEM (science, technology, engineering, math) Education Grant Programs. "We are incredi ...

Core Viewpoint - American Water Works reported mixed Q2 2025 earnings, with EPS slightly below estimates but revenues exceeding expectations, indicating a need for investors to assess future performance trends [3][4]. Financial Performance - Q2 2025 operating EPS was $1.48, missing the Zacks Consensus Estimate of $1.49 by 0.7%, but improved 4.2% year-over-year from $1.42 [3]. - Total revenues reached $1.27 billion, surpassing the Zacks Consensus Estimate of $1.15 billion by 10.6% and increasing 11% from $1.14 billion in the previous year [4]. - Regulated businesses' net revenues were $1.17 billion, up 11.4% year-over-year, while other revenues were $92 million, up 6.5% [5]. Operating Expenses and Income - Total operating expenses for Q2 were $787 million, a 12.4% increase from $700 million in the prior year, primarily due to higher operating and maintenance costs [6]. - Operating income was $489 million, reflecting an 8.9% increase from $449 million year-over-year [6]. Growth and Expansion - The company added 7,600 customers through seven acquisitions as of June 30, 2025, with 20 more pending acquisitions expected to add 40,650 customers [7]. - New rates effective January 1, 2025, are projected to increase revenues by $270 million for the full year, with pending rate cases potentially adding another $126 million if approved [7]. Financial Position - Cash and cash equivalents were $94 million as of June 30, 2025, slightly down from $96 million at the end of 2024, with total liquidity at $1.17 billion [8]. - Total long-term debt decreased to $12.28 billion, down 1.9% from $12.51 billion at the end of 2024 [8]. Cash Flow and Investment - Cash flow from operating activities in the first half of 2025 was $632 million, compared to $727 million in the same period last year [9]. - The company invested $1.3 billion in the first half of 2025 to enhance its operations [9]. Guidance and Future Plans - American Water Works narrowed its 2025 EPS guidance to $5.70-$5.75, with the Zacks Consensus Estimate at $5.71, slightly below the midpoint of the guidance [11]. - The company reiterated long-term earnings and dividend growth expectations of 7-9% and plans to invest nearly $3.3 billion in 2025 [11]. - Long-term capital expenditure is projected to be between $17-$18 billion for 2025-2029 and $40-$42 billion for 2025-2034 [12]. Analyst Sentiment - Analysts have not made any earnings estimate revisions in the past two months, indicating a period of stability in expectations [13]. - The stock currently holds a subpar Growth Score of D and a Momentum Score of B, with an overall VGM Score of D, placing it in the bottom 40% for value investors [14].

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Core Insights - American Water Works Company (AWK) reported second-quarter 2025 operating earnings per share (EPS) of $1.48, slightly below the Zacks Consensus Estimate of $1.49, but up 4.2% from $1.42 in the same quarter last year [1][7] - Total revenues for the quarter reached $1.27 billion, exceeding the Zacks Consensus Estimate of $1.15 billion by 10.6% and representing an 11% increase from $1.14 billion year-over-year [2][7] Revenue and Segment Performance - Regulated businesses generated net revenues of $1.17 billion, reflecting an 11.4% year-over-year increase, while other segments contributed $92 million, up 6.5% year-over-year [3] - Total operating expenses increased to $787 million, a 12.4% rise from $700 million in the previous year, primarily due to higher operating and maintenance costs [3] Growth and Acquisitions - AWK expanded its customer base by adding 7,600 customers through seven completed acquisitions as of June 30, 2025, with 20 additional pending acquisitions expected to add 40,650 customers [4] - New rates implemented on January 1, 2025, are projected to increase revenues by $270 million for the full year, with pending rate cases potentially adding another $126 million if approved [4] Financial Position - As of June 30, 2025, cash and cash equivalents stood at $94 million, with total liquidity of $1.17 billion, sufficient to meet near-term obligations [5] - Total long-term debt decreased to $12.28 billion, down 1.9% from $12.51 billion at the end of 2024 [5] Cash Flow and Investment - Cash flow from operating activities for the first half of 2025 was $632 million, compared to $727 million in the same period last year, with $1.3 billion invested to strengthen operations [6] Guidance and Long-Term Outlook - AWK narrowed its 2025 EPS guidance to a range of $5.70-$5.75, with the Zacks Consensus Estimate at $5.71, slightly below the midpoint of the guidance [7] - The company reaffirmed its long-term earnings and dividend growth target of 7-9% and plans to invest nearly $3.3 billion in 2025, with capital expenditures projected at $17-$18 billion for 2025-2029 and $40-$42 billion for 2025-2034 [8]

Financial Data and Key Metrics Changes - Earnings per share (EPS) for Q2 2025 were $1.48, up from $1.42 in Q2 2024, while year-to-date EPS was $2.53, compared to $2.37 in the same period of 2024 [5][11] - The company expects to achieve the top half of its initial EPS guidance range for 2025, now narrowed to $5.7 to $5.75 per share [6][17] - Total debt to capital ratio was 58%, within the target of less than 60% [18] Business Line Data and Key Metrics Changes - The company invested $1.3 billion in capital projects year-to-date, reflecting strong execution by teams [6][20] - Operating and maintenance costs increased by $0.17 per share, primarily due to employee-related expenses and technology costs [10][11] Market Data and Key Metrics Changes - Revenue increases were driven by authorized rate increases and organic customer growth, with a revenue increase of $0.50 per share year-over-year [9][11] - Weather had an unfavorable impact estimated at $0.06 per share due to wet conditions in 2025 [10] Company Strategy and Development Direction - The company aims for long-term earnings and dividend growth of 7% to 9%, supported by a capital growth plan focused on water and wastewater infrastructure [8][18] - The company is pursuing acquisitions to expand its customer base, with 87,000 customer connections under agreement totaling over $500 million [7][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving consistent EPS growth within the 7% to 9% range through 2029 and beyond [18] - The company noted strong customer usage and regulatory execution as key drivers of performance in 2025 [17][53] Other Important Information - The company has several active rate cases in progress across multiple jurisdictions, including West Virginia and California, seeking significant revenue increases [12][15] - A decoupling bill related to water utilities has passed out of the California Senate and is awaiting action in the Assembly [16][44] Q&A Session Summary Question: How is the company managing stakeholder relationships in Pennsylvania ahead of the next rate case? - Management has been actively engaging with stakeholders and providing excellent customer service to maintain positive relationships [25][26] Question: Is the company considering forward equity issuance for 2026 needs? - The company is evaluating all options but plans to issue equity in 2026 [27][28] Question: What is the earnings potential of the Nexus acquisition compared to municipal M&A? - The Nexus acquisition is seen as a strategic opportunity to expand the customer base in existing states, with no expected negative impact on profitability [31][32][35] Question: What is the landscape for fair market value deals in Pennsylvania? - The company anticipates more fair market value deals and is actively managing a pipeline of acquisitions [37][41] Question: Can you elaborate on the decoupling bill in California? - The bill aims to facilitate full decoupling for California water utilities, pending further legislative approval [43][46]

Financial Data and Key Metrics Changes - Earnings per share (EPS) for Q2 2025 were $1.48, up from $1.42 in Q2 2024, while year-to-date EPS was $2.53, an increase from $2.37 in the same period of 2024 [5][11] - The company expects to achieve the top half of its initial EPS guidance range for 2025, now narrowed to $5.7 to $5.75 per share [6][16] - Total debt to capital ratio was 58%, within the target of less than 60% [17] Business Line Data and Key Metrics Changes - Consolidated revenues increased by $0.50 per share due to authorized rate increases and organic customer growth [9] - Operating and maintenance (O&M) costs rose by $0.17 per share, primarily due to employee-related expenses and technology costs [10] - Capital investments totaled $1.3 billion year-to-date, with a goal of approximately $3.3 billion for 2025 [19] Market Data and Key Metrics Changes - The company reported unfavorable weather impacts estimated at $0.06 per share year-over-year, with wet weather in 2025 affecting revenues [10][11] - The company has 87,000 customer connections under agreement, totaling over $500 million across its business development platform [6][20] Company Strategy and Development Direction - The company aims for long-term earnings and dividend growth of 7% to 9%, driven by 8% to 9% rate base growth [7][17] - The acquisition of NEXUS Water Group systems is expected to add nearly 47,000 customer connections and approximately $200 million to the rate base [6][20] - The company is pursuing regulatory execution and infrastructure investments to enhance shareholder returns [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving consistent EPS growth within the 7% to 9% range through 2029 and beyond [17] - The company anticipates continued revenue increases year-over-year in several states through Q3 2025 [16] - Management highlighted the importance of stakeholder relationships in Pennsylvania ahead of the next rate case application [25][26] Other Important Information - The company has filed general rate cases in multiple jurisdictions, including West Virginia, Kentucky, and California, seeking additional annual revenue [12][14][15] - A decoupling bill related to water utilities has passed out of the California Senate and is awaiting action in the Assembly [15][46] Q&A Session Summary Question: How is the company managing stakeholder relationships in Pennsylvania? - The company has been actively engaging with stakeholders and providing excellent customer service to maintain positive relationships ahead of the next rate case application [25][26] Question: Is the company considering forward issuance for equity needs in 2026? - The company is evaluating all options for equity issuance but plans to issue equity in 2026 [28] Question: What is the earnings power of the Nexus acquisition compared to municipal M&A? - The Nexus acquisition is seen as a strategic opportunity to expand the customer base in existing service areas, with no expected negative impact on profitability [32][36] Question: What is the landscape for fair market value deals in Pennsylvania? - The company expects more fair market value deals to emerge, indicating ongoing consolidation needs in the region [42] Question: What are the goals of the decoupling bill in California? - The bill aims to close gaps in the regulatory framework for decoupling, with hopes for it to pass through the legislature [46][47] Question: What drove the strength in 2025 guidance? - Strong customer usage and consistent regulatory execution were the primary drivers for the improved guidance [53][54]

Financial Performance & Guidance - 2025 YTD EPS reached $2.53, driven by increased revenue from higher rate base and rate case outcomes, showing a 9.4% increase compared to 2024 on a weather-normalized basis[12] - The company narrowed its 2025 EPS guidance to the top half of the range, now expecting $5.70 to $5.75, reflecting an 8.6% EPS growth at the midpoint on a weather-normalized basis[9, 27, 28, 29] - The company affirms long-term financial targets of 7-9% EPS growth and 7-9% dividend per share growth, with a dividend payout ratio target of 55-60% and a debt to capital ratio of less than 60%[13, 15] - The company's projected dividend payout ratio for 2025 is 58%, based on projected cash dividends per share of $3.2475 and EPS guidance midpoint of $5.625, excluding $0.10 incremental interest from amended HOS seller note[56, 57] Capital Investments & Acquisitions - The company invested $1.3 billion in infrastructure improvements and acquisitions through June 30, 2025[12] - The company agreed to purchase Nexus Water Group systems in eight states for $315 million, adding nearly 47,000 customers[12] - The company anticipates ~$1 billion of capital expenditure related to PFAS treatment and up to ~$50 million annually for operating expenses in its 2025-2029 plan[71] Regulatory & Rate Cases - New rates became effective in 2025 in IL, CA, TN, VA, IN, MO, and IA; general cases were filed in KY, WV, and CA[12] - The company completed rate filings that are effective since January 1, 2025, which are expected to generate $232 million in additional annualized revenue from rate cases and $38 million from infrastructure charges, totaling $270 million[82, 83, 86] - The company has pending rate case filings requesting a total revenue increase of $123 million and pending infrastructure surcharges filings requesting $3 million, totaling $126 million[88]

Core Insights - American Water Works (AWK) reported quarterly earnings of $1.48 per share, slightly missing the Zacks Consensus Estimate of $1.49 per share, but showing an increase from $1.42 per share a year ago, resulting in an earnings surprise of -0.67% [1] - The company achieved revenues of $1.28 billion for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 10.54% and up from $1.15 billion year-over-year [2] - American Water Works has outperformed the S&P 500, with shares increasing by approximately 13.2% since the beginning of the year compared to the S&P 500's gain of 8.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.89 on revenues of $1.32 billion, and for the current fiscal year, it is $5.71 on revenues of $4.88 billion [7] - The estimate revisions trend for American Water Works was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Utility - Water Supply industry, to which American Water Works belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]