American Water Works Company (AWK) Q2 2024 earnings summary

Executive summary

• Q2 2024 EPS was $1.42, with year-to-date EPS at $2.37, both flat or slightly down year-over-year, reflecting a net unfavorable weather impact and higher financing costs.

• 2024 EPS guidance raised and narrowed to $5.25–$5.30, now at the top half of the previous range, reflecting strong performance and lower-than-expected customer usage declines.

• $1.4 billion invested in capital projects and acquisitions year-to-date, with 43,000 customer connections added through acquisitions and organic growth.

• Leadership changes effective August 1, 2024, including a new President, expanded COO role, and new CFO and Treasurer appointments as part of succession planning.

• Affirmed long-term EPS and dividend growth targets of 7%-9% over the next five years.

Financial highlights

• Q2 2024 operating revenues were $1,149 million, up from $1,097 million in Q2 2023; net income for Q2 was $277 million, with year-to-date net income at $462 million.

• Rate cases and acquisitions drove increased revenues, while O&M and interest expenses rose due to wage increases and new debt issuances.

• Dividend per share growth of 8.1% in 2024, with a quarterly dividend of $0.7650 per share declared for September.

• $0.02 per share of additional interest income from a seller note amendment related to the HOS sale.

• Gross margin for Q2 2024 was approximately 39%.

Outlook and guidance

• 2024 EPS guidance raised and narrowed to $5.25–$5.30, reflecting 8.5% EPS growth at the midpoint on a weather-normalized basis.

• Plans to invest approximately $3.1 billion in 2024 for infrastructure and acquisitions.

• Long-term EPS and dividend growth targets of 7–9% reaffirmed; rate base growth target of 8–9% including acquisitions.

• Dividend payout ratio targeted at 55–60%; debt to capital target below 60%.

• Additional $0.10 per share of interest income expected annually in 2024–2026.