American Water Works pany(US:AWK)2025-07-30 20:28Part I. Financial Information This section covers the company's consolidated financial statements, management's discussion, market risk, and internal controls Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements for American Water Works Company, Inc. as of June 30, 2025, and for the three and six-month periods then ended Consolidated Balance Sheets As of June 30, 2025, total assets were $33.91 billion, an increase from $32.83 billion at year-end 2024, primarily driven by a rise in net property, plant, and equipment Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $33,913 | $32,830 | | Property, plant and equipment, net | $28,932 | $28,038 | | Total current assets | $1,399 | $1,215 | | Total Liabilities | $23,231 | $22,498 | | Long-term debt (including current portion) | $13,397 | $13,155 | | Short-term debt | $1,589 | $879 | | Total Common Shareholders' Equity | $10,682 | $10,332 | Consolidated Statements of Operations For the six months ended June 30, 2025, operating revenues increased to $2.42 billion from $2.16 billion year-over-year, with net income attributable to common shareholders rising to $494 million Statement of Operations Summary (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $1,276 | $1,149 | $2,418 | $2,160 | | Operating Income | $489 | $449 | $860 | $775 | | Net Income Attributable to Common Shareholders | $289 | $277 | $494 | $462 | | Diluted Earnings Per Share | $1.48 | $1.42 | $2.53 | $2.37 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was $632 million, while net cash used in investing activities was $1.34 billion, resulting in a net decrease in cash of $5 million Cash Flow Summary for the Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $632 | $727 | | Net cash used in investing activities | $(1,340) | $(1,471) | | Net cash provided by financing activities | $703 | $478 | | Net decrease in cash, cash equivalents and restricted funds | $(5) | $(266) | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies, regulatory activities, acquisitions, debt structure, contingencies, and segment performance, including $232 million in annualized revenue from 2025 general rate cases Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for the second quarter and first half of 2025, highlighting that diluted EPS for the six months ended June 30, 2025, increased to $2.53 from $2.37 year-over-year, driven by new rates from capital investments - Diluted EPS for the six months ended June 30, 2025, was $2.53, up from $2.37 in 2024, primarily driven by new rates in the Regulated Businesses, partially offset by an estimated unfavorable weather impact of $0.06 per share178 - The company plans to invest approximately $3.3 billion in growth strategies in 2025, having invested $1.3 billion in Regulated Businesses for infrastructure and $21 million for acquisitions adding approximately 7,600 customers in the first six months179181 - On May 19, 2025, the Company entered into an agreement to acquire Nexus Regulated Utilities for approximately $315 million in cash, expected to add nearly 47,000 customer connections and an estimated $200 million in rate base, with closing anticipated by or before August 2026180182 - The company received an initial settlement payment of $34 million (net) from 3M Company related to the PFAS multi-district litigation, recorded as a regulatory liability for customer benefit pending PUC approval139187 Results of Operations Consolidated operating revenues for the six months ended June 30, 2025, increased by $258 million to $2.42 billion, primarily from authorized rate increases in the Regulated Businesses segment, partly offset by increased operating and depreciation expenses Regulated Businesses Revenue Change Drivers (Six Months Ended June 30, 2025 vs 2024) | Driver | Change (in millions) | | :--- | :--- | | Authorized Rate Increases (incl. surcharges) | +$213 | | Acquisitions and Organic Growth | +$25 | | Unfavorable Weather Impact | -$17 | | Total Revenue Increase | ~$242 | - Regulated Businesses' O&M expenses for the first six months of 2025 increased by $94 million year-over-year, driven by higher employee-related costs, technology-related services, production costs, and customer uncollectible expense212 - Depreciation and amortization for the Regulated Businesses increased by $57 million for the six months ended June 30, 2025, due to additional utility plant placed in service and higher depreciation rates from recent rate cases213 Regulatory Matters In 2025, the company received authorizations for $232 million in annualized incremental revenues from general rate cases and $38 million from infrastructure surcharge mechanisms, with several general rate cases pending 2025 General Rate Case Authorizations (in millions) | State | Annualized Revenue | Effective Date | | :--- | :--- | :--- | | Illinois | $105 | Jan 1, 2025 | | Missouri | $63 | May 28, 2025 | | Indiana (Step) | $17 | May 14, 2025 | | California (Step) | $17 | Jan 1, 2025 | | Virginia | $15 | Feb 24, 2025 | | Iowa | $13 | Aug 1, 2025 | | Other | $2 | Various | | Total | $232 | | - The company received authorizations for $38 million in annualized incremental revenues from infrastructure surcharges effective in 2025, with the largest amounts from New Jersey ($15 million) and Missouri ($17 million)204 - Pending general rate cases include a request in California for a $111 million total increase over 2027-2029, a $27 million request in Kentucky, and a $48 million request in West Virginia201202203 Liquidity and Capital Resources As of June 30, 2025, the company had total available liquidity of $1.17 billion, down from $1.88 billion at year-end 2024, primarily due to increased commercial paper borrowings, while maintaining compliance with debt covenants Available Liquidity (in millions) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $94 | $96 | | Availability on Revolving Credit Facility | $1,075 | $1,788 | | Total Available Liquidity | $1,169 | $1,884 | - Cash flows from operating activities decreased by $95 million for the first six months of 2025 compared to 2024, primarily due to a CAMT liability payment and higher customer receivables243 - The company's debt-to-capitalization ratio was 0.58 to 1.00 as of June 30, 2025, well within the covenant requirement of not more than 0.70 to 1.00248 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that it is exposed to market risks, including changes in commodity prices, equity prices, and interest rates, with no significant changes since December 31, 2024 - There have been no significant changes to the Company's exposure to market risk since December 31, 2024255 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting identified - The CEO and CFO concluded that as of June 30, 2025, the Company's disclosure controls and procedures were effective at a reasonable level of assurance257 - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting258 Part II. Other Information This section provides updates on legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits Item 1. Legal Proceedings This section provides updates on key legal matters, including a denied petition challenging the coastal development permit for the Water Supply Project, preliminary court approval for a class action settlement, and a $34 million initial settlement payment related to PFAS litigation - Regarding the Monterey Peninsula Water Supply Project, a court denied a petition challenging the coastal development permit, and the CPUC authorized an $11 million increase to the cost cap for certain extraction wells261263 - A proposed class action settlement agreement in the Dunbar, West Virginia litigation received preliminary court approval on May 5, 2025, with a final approval hearing scheduled for September 11, 2025266 - As of June 30, 2025, the Company received an initial settlement payment of $34 million (net) from 3M Company in the PFAS multi-district litigation, with additional payments anticipated in 2025267 Item 1A. Risk Factors The company reports that there have been no material changes from the risk factors that were previously disclosed in its Annual Report on Form 10-K - There have been no material changes from the risk factors previously disclosed in the Company's Form 10-K268 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On May 28, 2025, the company issued 48,381 shares of common stock from treasury stock as consideration for the acquisition of Audubon Water Company, and did not repurchase any shares during the quarter - The Company issued 48,381 shares of its common stock on May 28, 2025, as consideration for the acquisition of Audubon Water Company269 - No common stock was repurchased during the three months ended June 30, 2025, with an aggregate of 5,140,000 shares remaining available for repurchase under the anti-dilutive stock repurchase program271 Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None272 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable273 Item 5. Other Information During the second quarter of 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement - During the three months ended June 30, 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements274 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including agreements related to acquisitions, debt instruments, compensation plans, and certifications by the CEO and CFO