American Water Works pany(AWK) - 2024 Q4 - Annual Report

Liquidity and Debt Management - The company relies on a $2.75 billion revolving credit facility and a$ 2.60 billion commercial paper program to meet liquidity needs[183]. - As of December 31, 2024, the company had $880 million of commercial paper outstanding and$ 82 million in outstanding letters of credit[183]. - The company’s consolidated debt cannot exceed 70% of its consolidated capitalization under the terms of its revolving credit facility[186]. - The company plans to issue a combination of short-term and long-term debt, as well as additional equity over the next five years to meet capital expenditure needs[187]. - In June 2023, American Water Capital Corp. issued $1,035 million of 3.625% Exchangeable Senior Notes due 2026, which may adversely affect liquidity if the conditional exchange feature is triggered[188]. Financial Risks - The company is exposed to interest rate risk due to its long-term debt strategy, which may affect financial condition and cash flows[181]. - The company may need to refinance existing debt or reduce capital investments if cash flows are insufficient to meet obligations[182]. - The company’s financial performance is influenced by external factors such as economic conditions and interest rate fluctuations[18]. - Market volatility may increase funding requirements for pension and postretirement benefit plans, affecting financial position and cash flows[193]. - Changes in accounting standards could materially impact how the company reports its financial results and condition[197]. Regulatory and Compliance Risks - The company faces risks related to regulatory decisions that could impact customer rates and capital investment[13]. - The company must comply with evolving environmental regulations, which may impact operational costs and strategies[15]. - The company’s operations are subject to risks associated with contracts with the U.S. government, including potential early termination and compliance issues[196]. Operational and Market Risks - The company is subject to various risks including changes in customer demand and limitations on water supply availability[13]. - The company’s ability to achieve operational growth projections is contingent on successful acquisitions and integration of regulated operations[15]. - The company faces risks related to employee misconduct, which could result in substantial liability and reputational harm[200]. - The company may face challenges in attracting and retaining skilled employees, which could adversely impact business operations and financial results[199]. Financial Condition and Commitments - As of December 31, 2024, the company had$ 1.1 billion of goodwill and $218 million of total assets measured at fair value, which may require future impairments affecting financial condition[192]. - The company has approximately$ 8.1 billion in remaining performance commitments related to contracts, with $1.2 billion guaranteed by the parent company, which may impact financial condition[194]. - The company’s ability to pay dividends is dependent on subsidiaries' ability to pay upstream dividends, which may be restricted by regulatory obligations[189].