American Water Works Company, Inc. (AWK) 2024 Q2 Earnings Call Summary
August 1, 2024 
American Water Works Company, Inc. (AWK)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
Raised 2024 EPS Guidance: American Water raised its 2024 EPS guidance to $5.25 to $5.30 per share, reflecting lower-than-expected declines in customer usage and several revenue increases effective in Q2 and Q3.
Solid Financial Results: Reported solid financial results for Q2 and the first half of 2024, with earnings of $1.42 per share for the quarter.
Capital Investment and Customer Growth: Invested $1.4 billion in capital projects year-to-date and added 43,000 customers from acquisitions and organic growth.
Regulatory Successes: Completed four rate cases in 2024 in Indiana, West Virginia, Kentucky, and Pennsylvania, authorizing 100% of the capital investments made.
Sustainability Report Published: Released the company's latest sustainability report, highlighting its commitment to providing safe, clean, reliable, and affordable water and wastewater service.
Pessimistic Highlights
Pennsylvania ROE Concerns: The Pennsylvania Commission's order resulted in a lower-than-requested ROE of 9.45%, impacting revenue by $71 million. This has led to considerations of reallocating capital investment among states.
Operational Challenges: Acknowledged temporary aesthetic disturbances in water quality in Pennsylvania, emphasizing compliance with all state and federal regulations.
Company Outlook
Continued Investment and Growth: Despite regulatory challenges, American Water plans to continue its robust capital investment strategy across its 14 states, focusing on infrastructure improvement and resiliency.
Leadership Changes: Announced leadership changes, including John being named President, to support the execution of strategies and daily operations.
Regulatory Strategy Evaluation: Evaluating the allocation of capital in Pennsylvania following the recent ROE decision but remains committed to investing in the state's water infrastructure.
Q & A Highlights
Q: How does the Pennsylvania rate case impact your regulatory strategy in the state? (Durgesh Chopra, from Evercore ISI)
A: The need for investment in Pennsylvania remains, but the company will evaluate how much capital to allocate to the state relative to others, considering the lower ROE result. Overall capital plans are not expected to change. (Susan Hardwick)
Q: Is there a potential slowdown in the pace of acquisitions in Pennsylvania? (Richard Sunderland, from JPMorgan)
A: The company's approach to acquisitions in Pennsylvania remains unchanged, though the process for approval may impact the pace. (Susan Hardwick)
Q: Can you detail the guidance changes within the subcomponents? (Paul Zimbardo, from Jefferies)
A: The guidance change is primarily driven by lower-than-expected declines in customer usage. (John Griffith)
Q: What's the status of the legal challenge related to Butler and the [indiscernible] deal in Pennsylvania? (Jonathan Reeder, from Wells Fargo)
A: The Butler challenge is awaiting a decision from the Commonwealth Court, and the [indiscernible] deal is moving forward with the approval process but has not yet been filed with the PUC. (Susan Hardwick and John Griffith)
Q: Are there any updates on the PFAS multi-district litigation? (Aditya Gandhi, from Wolfe Research, LLC)
A: The company has submitted all required data for determining the payout and is awaiting the calculation of the payout amount. (Cheryl Norton)