American Water Works ((AWK)) has held its Q2 earnings call. Read on for the main highlights of the call.
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American Water Works’ recent earnings call conveyed a positive sentiment, highlighting strong financial results and strategic growth initiatives. The company demonstrated resilience despite challenges, showcasing confidence in its future plans.
Increased Earnings Per Share
The company reported an increase in earnings per share (EPS) to $1.48 for the second quarter, up from $1.42 in the same period last year. Year-to-date earnings also saw an uptick, reaching $2.53 per share compared to $2.37 previously. This growth underscores the company’s strong financial performance.
Capital Investment and Acquisition Growth
American Water Works invested $1.3 billion in capital projects year-to-date and announced new acquisition agreements, including the Nexus Water Group systems. These acquisitions are set to add nearly 47,000 customer connections, reflecting the company’s commitment to expanding its customer base and infrastructure.
Regulatory Success
The company achieved new rates effective in several states and filed new cases to reflect infrastructure investments. Notable regulatory successes were reported in Missouri, Iowa, and Hawaii, which are expected to contribute positively to the company’s revenue.
Strong Revenue Growth
Revenue increased by $0.50 per share year-over-year, driven by authorized rate increases and strategic acquisitions. This growth highlights the company’s ability to enhance its financial standing through effective operational strategies.
Positive Guidance and Shareholder Returns
American Water Works narrowed its 2025 EPS guidance to $5.70 to $5.75, expecting an 8.6% EPS growth at the midpoint. The company affirmed its long-term earnings and dividend growth targets of 7% to 9%, demonstrating a commitment to delivering value to shareholders.
Unfavorable Weather Impact
The company faced unfavorable weather conditions, which impacted earnings by an estimated $0.06 per share year-over-year. Despite these challenges, the company remains optimistic about its growth trajectory.
Higher Operating Costs
Operating and maintenance costs rose by $0.17 per share, driven by employee-related expenses, increased maintenance, technology costs, and costs related to prior acquisitions. These increased costs are part of the company’s strategic investments in growth and efficiency.
Increased Depreciation and Financing Costs
Depreciation increased by $0.10 per share and financing costs by $0.08 per share, both as expected due to investment growth. These costs reflect the company’s ongoing investment in expanding its infrastructure and capabilities.
Forward-Looking Guidance
During the earnings call, American Water Works provided updated guidance, highlighting expectations to achieve the top half of its initial 2025 EPS guidance, narrowing the range to $5.70 to $5.75 per share. The company projects capital investments for the year to reach approximately $3.3 billion. Significant acquisition activity is anticipated to add 87,000 customer connections and $535 million in deals, including the acquisition of Nexus Water Group systems. The company reaffirmed its long-term targets for earnings and dividend growth of 7% to 9%.
In summary, American Water Works’ earnings call reflected a positive outlook with strong financial results and strategic growth initiatives. Despite challenges such as unfavorable weather and increased costs, the company remains confident in its ability to deliver value to shareholders through continued growth and investment.