American Water Works' Q2 Earnings Lag, Revenues Beat Estimates

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]