On July 31, 2024, American Water Works Co Inc (AWK, Financial) released its 8-K filing for the second quarter of 2024. American Water Works is the largest investor-owned U.S. water and wastewater utility, serving approximately 3.5 million customers in 16 states. The company provides water and wastewater services to residential, commercial, and industrial customers, operating predominantly in regulated markets, with a nonregulated business segment offering water services for military bases under long-term contracts.
Quarterly Performance and Challenges
American Water Works Co Inc (AWK, Financial) reported earnings per share (EPS) of $1.42 for Q2 2024, slightly below the analyst estimate of $1.46 and a decrease from $1.44 in Q2 2023. Year-to-date EPS remained flat at $2.37 compared to the same period in 2023. The company attributed a net unfavorable weather impact of approximately $0.04 per share to these results.
Despite the slight dip in quarterly EPS, the company narrowed its 2024 EPS guidance range to $5.25 to $5.30 from the previous $5.20 to $5.30, citing lower than expected declines in customer usage and an estimated $0.10 per share increase in interest income. The company also affirmed its long-term EPS and dividend growth rate targets of 7-9%.
Financial Achievements and Industry Significance
American Water Works Co Inc (AWK, Financial) invested $1.4 billion in the first half of 2024, with the majority dedicated to infrastructure improvements. This included $119 million in acquisitions in Illinois, New Jersey, and Virginia, which are included in their respective current rate cases. The company plans to invest a total of approximately $3.1 billion across its footprint in 2024.
Operating revenues increased by $52 million and $120 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. This increase was primarily due to authorized revenue increases from completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments.
Income Statement, Balance Sheet, and Cash Flow Highlights
For Q2 2024, the Regulated Businesses’ net income was $274 million, compared to $278 million in Q2 2023. For the first six months of 2024, net income was $459 million, up from $452 million in the same period in 2023. Operating expenses increased by $37 million and $76 million for the three and six months ended June 30, 2024, respectively, primarily due to higher production costs, employee-related costs, and general taxes associated with increased capital investment.
Interest expense rose by $12 million and $22 million for the three and six months ended June 30, 2024, respectively, to fund capital investments. The company declared a quarterly cash dividend of $0.7650 per share, payable on September 4, 2024, to shareholders of record as of August 13, 2024.
Leadership Changes and Future Outlook
Effective August 1, 2024, American Water Works Co Inc (AWK, Financial) announced leadership changes, with John C. Griffith named President, Cheryl Norton expanding her role as COO to include Business Development, David Bowler named CFO, and Nicholas Furia named Treasurer. CEO M. Susan Hardwick remains in her role and on the Board of Directors.
"We are excited about our leadership news with key internal leaders taking expanded roles. Building strong talent and exceptional teams within our company is an important strength and differentiator of American Water," said Hardwick.
American Water Works Co Inc (AWK, Financial) continues to focus on infrastructure improvements and regulatory execution, with new rates effective in multiple states and additional rate cases in progress. The company remains committed to its long-term financial targets and capital investment plans, aiming to enhance service reliability and customer satisfaction.
Explore the complete 8-K earnings release (here) from American Water Works Co Inc for further details.
