American Water Works Company, Inc. Q3 FY2024 earnings call

• John Griffith noted strong third quarter and year-to-date results, affirmed 2024 EPS guidance of $5.25 to $5.30 per share, and closed a $230 million acquisition of the Wastewater System Assets of Butler Area Sewer Authority in Pennsylvania. • David Bowler discussed year-to-date financial results, general rate case updates, 2025 outlook, and 5-year financing plan, including details on regulatory activity, operating costs, and financing components. • Cheryl Norton discussed the new capital investment plan, including impact of EPA's lead and copper rule improvements, customer affordability initiatives, and acquisition activity. • Susan Hardwick emphasized the company's competitive advantages as a premium regulated utility, its mission to provide safe and reliable services, and its long-term investment thesis.

No specific product segment breakdown provided. Overall, third quarter earnings were $1.80 per share compared to $1.66 in the same period last year. Year-to-date 2024 earnings were $4.17 per share compared to $4.03 in the same period last year. Revenue contributions and absolute financials discussed in detail by management but no distinct product segment revenue contribution % given.

• Affirmed 2024 EPS guidance of $5.25 to $5.30 per share. • Initiated 2025 earnings guidance of $5.65 to $5.75 per share, representing 8% EPS growth compared to weather-normalized 2024 EPS guidance. • Affirmed long-term targets of 7% to 9% EPS and dividend compounded annual growth rates, expecting 8% to 9% rate base growth over the next decade.

• Cybersecurity incident: Unauthorized activity in computer networks and systems, though not expected to have material effect on the company. • Regulatory risks: Uncertainties in rate case outcomes, potential slippage in rate case filings, and impact of regulatory decisions on earnings. • Interest rate risks: Impact of interest rate fluctuations on long-term financing costs. • Operational risks: Challenges in capital recovery and managing operating costs, especially in relation to customer affordability.

Q: Richard Sunderland asked about the financing plan, specifically the $1.5 billion equity increase vs. $1 billion CapEx increase and timing factors.

A: Susan Hardwick and David Bowler discussed that it's tied to the growing investment plan and focus on strong balance sheet, with David noting that even without increasing the plan, equity would still be raised periodically to fund the robust capital plan.

Q: Durgesh Chopra inquired about strategy in Pennsylvania, CapEx in the state, and rate case filing strategy.

A: Susan Hardwick stated the capital planning is risk-based, with significant investment in Pennsylvania continuing, and David Bowler mentioned expecting to be a full cash taxpayer in 2025 with cash tax payments in the range of $100 million plus or minus a year.

Q: Angie Storozynski asked about electricity procurement plans, growth beyond 2026, and rate case frequency.

A: David Bowler mentioned multiple long-term electricity contracts mitigate electricity cost risk, John Griffith explained that the gap left by losing interest income is bridged by equity injection and incremental regulated earnings, and Susan Hardwick stated that rate case cycling is driven by investment need rather than just hitting a rate of return.