American Water Works (AWK) 28 Apr 222022 Q1 Earnings call transcript

Good morning, and welcome to American Water's First Quarter 2022 Earnings Conference Call.

As a reminder, this call is being recorded and is also being webcast with an accompanying slide presentation through the company's Investor Relations website. The audio webcast archive will be available for one year on American's Investor Relations website. I'd now like to introduce your host for today's call, Mr. Aaron Musgrave, Senior Director of Investor Relations. Mr. begin. now may you Musgrave,

your Thank you, joining of thank for call everyone, prepared Good for today's morning for the us open end we and call. remarks, you will Nick. questions. At our the

Let assumptions. regarding we statements be Today, harbor on will are performance future current go or me estimates our events. making our expectations predictions These over statements first represent safe language. some that our forward-looking and other expectations, future based

event, future factors they subject since actual these implied with However, statements. risk, from other deal known by numerous and results different unknown or that are and results materially statements to cause indicated the such to uncertainties be may

executive I'll Water closing management then comment turn before our ESG long-term American CFO, over first on With quarter. of some in call review regarding and this Susan information uncertainties will XXXX Additional these per our results our to earnings and XX-Q, to earnings well the share. and and and President and Susan SEC. regulatory risk, team, regarding with as we Vice filed exciting related answering other the Form yesterday and in strategy, and XX, proceedings regulated President principles. is and financial discuss XXXX guidance the earnings your as Cheryl March including Executive commitment statements CFO earnings important diluted news growth COO, presentation by on detailed each to CEO CEO shared Hardwick. and our will our earnings provided information during to first factors our and earnings financials Norton, then and release President Hardwick, refer our quarter will yesterday questions. analysis the All Susan that, the capital investments per more share

good Aaron, everyone. Thanks and morning,

what a to just thrilled said, be I years. saying the privilege But announced CFO say as three executive our been to my also minutes I a But want further that about Aaron the call has CFO. few start must As serve team. will recent last comment in as company's I'll past this by to additions these it I'm

to covering Let's and XXXX, six late of financial share interest as of completed flat of earnings both for the in proceedings compared were market business in regulated essentially turn depreciation business increase share the the XXXX, were the drove and by costs then to in year. agreements quarter HOS period offset from place start several from results share, in $X.XX the chemicals production those sharing from the million, quarter and loss on and results XXXX. results XXXX, based with prices. was sale in businesses mechanism Regulator earnings were revenue infrastructure share highlights filings. first same by But due a similar higher partially quarter in to XXXX. slide per the first some year. of other by last first of Results quarter share some as well share per to mostly the and and per of $X.XX those of per results, XXXX the the HOS the compared These as from our pressures to of period and while result periods. offset $X.XX earnings income I'll higher XXXX early based in and were results rate and $X energy start inflationary Market revenues or of per five XXXX, revenue as $X.XX and in the general same other In all business XXXX increases $X.XX reflect in of for a increased

they other, the receivable from reflecting currently business. received investment. note the in results driven the do regulated And of really will redeployed capital the share and contributions are once more the we're proceeds even While so represent interest sale by regulated income and revenue into

will that easy so pieces to it's We track. to separately these continue report

services our expect MSG and bid similar Finally, this had continues results on in Florida group announcement Naval both military an summer. Mayport, our quarters to Station the team

$X.X strong investment to In plan, general a investment take in puts sound return addition already like which investment. projects announced in to spending great the two a cases and time this here. business five rate general years filed of the year XXXX. goal record Pennsylvania in in tomorrow to is $X New critical and earnings cases to meet seeking We're rate three general the in I invested our regulated the our every continue we Illinois acquisitions execution on of and larger regulatory year, the to XXXX, and next the the to next And rates talked of filings of this investments a This regulatory with in But before proceeding year earlier us Clearly, ramp follows over case We'll week year, as earn states. expected. quarter billion pace growth, a case we of to our we've million start when being California is up in statutory filing to case that and Jersey to cycle the our capital are We've levels cycle years. plans. announced billion in our our about In will expect to capital in be success there. file aggregate, may which broken six over $XXX on recovery during rates. last see in now next stepped will those as capital it increasing few quarter. said we've up

make me Let on more I one before our investment progress on. comment move

the will March the we're acquisitions agreement for demonstrate XX XX. quite of the XXXX wastewater plan We're York's of you acquisition as across about. acquisition includes also several excited about have that of though is anticipated pipeline the we very They As million the recall, system other under investment billion $XXX strong. capital total $X.X city that excited states

are to of X, slide our to a guidance $X.XX Turning per affirming XXXX we $X.XX per after strong range to year, share. share the start

we our earnings reflects shared $X.XX in February, in regulated levels XXXX in several of expected jurisdictions. authorized $X.XX new to growth As range rate

increase revenue year, of saw of expected, increase to rates new which of January much we recorded this as from increase first last base as including year. As the Pennsylvania, that related in quarter rate X XXXX, in of a the full well step effective quarter the

of ‘XX to expect that about share We quarter also of timing the reverse experienced first favorability operating we later $X.XX quarters. in per costs for in

see and previously, sale mentioned material the from and earnings will the HOS. contribution I've will from prior on New HOS from share earnings the But redeployment the XXXX from earnings from of utility annual the in any expected revenue the note the agreements not nearly As offset loss seller interest proceeds we of York.

reiterate XXXX. X, slide EPS we in on the long-term November, set just I'll X% we to Finally, that growth confident X% targets financial in for are including forth

slide at share, increase, including from on of we high increased Board most quarterly important to our as have our X, years, the per dividend $X.XXXX a we XX% cash significantly annual X% end this dividend peers. our our nearly to announced grow as the yesterday, several that outpacing is $X.XXXX increase, year's payment share we We and of expected Moving to Directors growth per grown compound utility range company's of shareholders. to rate last of of know X.X% at to the plan many over X% the dividend the

our to made we to related a industry building our commitment inclusive This will I our turn ESG. strides advancing I few Annual Second have in and important Cheryl, workplace. report points May, to and want efforts Diversity Before an we undertaken issue the Equity cover highlight to Coming the Inclusion, in call have plan over leadership the report. we to

ESG our action practices, report, on statement the of disclosure for you feedback shareholders data our American data XXXX Based Within we a X This this recently on will annually commitment. disclosing begin in from and deliver filed that and in find consolidated EEO thereafter. made proxy first will best to commitment Water.

page be to for our second May and one toward XXXX, and scope The scope, year in installment emissions target. data two be summary reduction of publishing metrics website. summary sustainability the data calendar share our Relations which progress We also the annual emissions including of will are will found numerous on our pleased gas ESG Investor greenhouse

great has American Water of position our utility we in of emission years, reductions to of large last relative decade. emission significant majority are many greenhouse the the peers. over a a the to achieved our reductions over As our gas business nature Due and

by our year. emissions and current and the to a our tons. annual we Cheryl gas in a with detail later in with of is of call footprint our the process. example, with we alignment And process today about management targets. team of our other demonstrate findings I This millions the of year, more began For including expects Agreement. industry. this cover utilities XXXXs talk for tons, greenhouse team The and ’XX. strategies metric potential to and most parallel this able to the metric commitment of evaluation the results with underway to large came closer achieving the our functional cross update hundreds to turn one is of analysis you that and its to transparency and top the addition scope Last emission we're on evaluating new Cheryl? three focused talk leaders board potential running terms to well me ESG to operating are recommendations as in diligent in let whereas of and Paris goal, wanted share study over emissions to present They planning

Thanks, morning Susan, good everyone. and

our great took capital the and in compared safely $XXX year. regulated last of regulated capital on drove XX, and our pace approximately on plan. billion quarter and first $X efficiently significant our their the result to investment period dozens did investment projects of the a of to us that hit nearly Turning a business deliver same increased in This capital improved keeps slide It our teams spending higher million to the executing quarter effort leaders job XXXX. by goal in to systems

to filings shown is summary here case our slide XX, Turning of legislative and rate updates.

confirmation recovery The some sound, pieces front, constructive Indiana the We to state of of of investor taxes, two And important legislation challenges. so legislative there wastewater are provide safety they of have this you asset and owned believe specific benefit Bill in for far is customers the utilities state. Indiana standalone as our legislative serve. the seek the the appendix in proceedings two around practices three options capital management in more key Virginia. use find of bills property water and utilities. give passed ratemaking states outcomes can that year, our of an one by and legislative and presentation, in Virginia our as The promoting structure On we communities a efforts to in all as solutions summary today's in well outcomes

the dozens at Pennsylvania we'll You XX customers more as can wastewater nearly investments and year, totaling and in investments already $X file general acquisitions over wells, XXXX slide includes filter critical of states, aging New we people, Susan case of water as rate we've quality quality water project also to since be on installation recovery Illinois, lining of miles throughout XXX facilities water X were of improve previously pumping made in Jersey, the a this filed And to and the to filings three role New serving Jersey. We the These combined. since as of a see serving to Raritan more replacement, pipelines, this more indicated, where last case. including very In cases cases include of million seeking rolling near is New expect approximately the the as Illinois. rehabilitation of $X last as as at millstone billion of In plant billion projects driven in other extensive rate improve busy two four the well recovery general mentioned, those and investments. this cases. cases stations well tomorrow, capital than year two for in Jersey Susan by XX than

rate forecasted general with Next week, case which and will seek the to to several in in nearly state's is be keeping we'll and will acquisitions. making of year initial California, million investments pending $XXX California cycle, recover our also an closed capital include filing related the three case

conclusion that be we bring this will have year. Service Missouri you we we addition, plan that XXXX Public In mid-year. to to expect And with active file the filing tomorrow to case a three finally, from notice by know, Commission cases as we

in Moving cases, new surcharge million request includes revenue two have already $XX million step since to of a the slide agreed revenues infrastructure and XX. income excluding January rates deferred To which from date, pending is total proceedings, revenues in $XXX infrastructure we from annualized rate $XX million in taxes million This of and excess general includes in increases, cases XXXX. surcharges. for accumulated reduction annualized $XX

the we and to to acquisitions For cases. general expect of remainder infrastructure the cases last roll investment in additional file year, since the rate

we're As focused regulatory these is for remain to on we working investments always, priorities outcomes. on in key confident always, plan growth. customer and dedicated very as constructive on our have prudent Because and execution make very these cases, skilled earnings And employees we affordability.

customers. percentage our of customer continued cost growth income on efforts deliver have affordable most a bills very for with emphasis coupled efficiencies, of as household to Our and our capital

strategies programs across of Plan to the in These our continue continued addition our our and American programs, funding. support low to customers by Act. to funded who implementing our assistance challenged customers, the designed footprint assist rate we're efforts XXXX programs our support historical of millions their income dollars to already as Rescue also provided well we with as have are evolve affordability. We customer around These

our Turning approved excited for purchase wastewater that growth value under thrilled of on XX, the signed the history Public Commission to million, just in year soon acquisition the legislation. expect to by fair we our city ago, XX,XXX customers Pennsylvania to announce one Water’s of serving executed be the and being York approximately Utility application slide We're mid-June. we to largest XX as piece acquisition $XXX April market triangle, York's is there, Pennsylvania to system and Pennsylvania's before municipal close acquisition American the and were or

New Act. acquisition the New the Protection Harbor Egg Water under Infrastructure Another first is Jersey, under agreement which transaction City, is Jersey

a legislation by to we on the this and connections, acquisition us issues. partner believe Egg Importantly, to this address represents this it as will expect provider allows also challenges benefit about swiftly in customer this close with with we operating year. other communities municipalities future, to significant City later Harbor like X,XXX

acquiring Virginia Finally, acquisition months. fair of are important in Virginia expect water first system value front, is under we still a from but the in was finalized acquisition Waverly, next town we few This one the to the legislation market on that the XXXX. our the smaller October close of represents that in

military on The as Force in American the result, the from coming we as with reducing closing another project Water’s through to XX, to the MSG focused construct is net of and investment. Hill emissions on center efficiency work pending process enhance a with illustrates milestone a zero services for energy partnered an time important impact our this As result the first some Base XX group a of the Susan? it in usage After slide state. power country panels. reduce design that Utah I'll only to all Air there. many of building power I'll military that sides a a ESG example for energy supply environmental met operation close for both just serves us for back it Susan completion, needs, sent creates all. of an project its grid. to installations financial across turn closing both with win but energy the usage is offsetting example This the MSG one With solar projects win over also undertakes also project back not and now the and remarks. that, building at

Cheryl. Thanks

want on hiring Turning the begin a our final announcement before our to Q&A, slide, we further CFO. of And comment slide I to XX. of

yesterday, American President XX. its Executive personally of industry May Griffith Financial and from capabilities, know knowledge years right bring America and us Vice Chief American to very joining effective Bank superior he and and to time of announced XX Water comes the financial we execution, Water sure than and results. strategic will I Officer our at be help you will delivery talented that and transactional as I'm continue right expertise. of his the skills saw more journey John of is and John John As brings

is our us, joins senior executive John fully in place. As team now

Counsel XX Jim you If brings and Jim integrating is Gallegos, X of President General counsel Vice on us years expertise nearly and joined year, our of into nicely regulated already Executive April the recall, general this organization.

and thrilled on to John We have board both Jim are now.

and basis here office in we'll beyond. As to achieve I've begin take the in serve, corporate confident place and plan the place states to questions. have be at said operator I'll our before, that, I'm it in turn to confident business. the right in our with to our goals grow Q&A that your And teams this we over and XXXX I'm have our back happy we to we And in throughout

[Operator question Instructions] Sachs. First from Goldman Yuan, Rebecca comes

Hi, thanks. Good morning.

any question, there timing changes plans, of in to both are five terms $X.X issuance in first your range? billion So equity and the the of year the middle magnitude

No, morning. changes that no plan. Good to expected

Munis question, Are inflationary Okay, accelerate tuck-ins? sell or you great. to that opportunities more willing second potential utilities? of my given the current environment, any then some to are their And seeing

we certainly that face. is to to will that think Well, contribute going municipals issues

factors assessment know from and because But analysis American their these opportunities We on those any Cheryl, your will some that specific that. Water. are And sell to seen that. of to heavily haven't and weigh opportunity perspective we their communities pop-up do anything on of of that add to

Susan. No, not really,

we're them scope we that. our But of are lot As related do the are anybody and you real of specifically to pressures very struggle Municipals size haven't those going said, a able manage with and because where seen we come know forward that. to to

Ryan Greenwald of Bank from comes question The next America. of

on morning, hiring. everyone. new good Congratulations Hey,

just your quarter out about expectations? are kind O&M guy’s you pretty particular considerations after around of timing. a a talk that in how the Any quarter strong the start Can to shook bit So place appreciate year guidance relative to what more other you appears guys be hold the color making the here?

Well, Ryan, quarter was this on I to relative target. think expectations right

As items, regulatory drove of the the quarter the And we call, you is that material. not couple said, XX was in of if largest associated what a timing that January have of that rate did executing. process been increase with in terribly of But XXXX. really recall, we've proceedings piece effective Pennsylvania we the the revenue the was all

reflects course, quarter. big revenues that So a And this the year-over-year for driver was worth increase. of full quarters with obviously, of year, that a associated

the again, was a it We're on So met expectations. as we year good the our very for our for us full the execution our our plan quarter ability very really laid deliver expectations we for ‘XX. but one, remain have plan, same. reflected And confident about to and the out said, on

then levels Chester provide from guy And the things process, update resolution, point can your conviction an to Excellent. vantage the in on you transaction? where are close timeline overall just

Yes, from Cheryl not a much new on there. our couple Not lot that. whole make But side to add. let a I'll comments

kind you of if in courts, up held Yes, will. the so obviously,

anticipate months it's be but think don't out for going this probably to I possible anything year, we're, I seeing it's sure.

Our next question Pourreza comes from Guggenheim. of Shar

Hey, Chen actually guys, a morning. Shar. Good it's for

is build It target. So to ahead I of customer looks for the year like off the question. wanted a just connections guess prior little the

increasing some of Just competition you more broadly, acquisitions? these muni are for seeing

our provider And transactions in are have in the are to territory the I'd should really a service situations. scope best all provider that competition we the issues that, be, yes. necessary believe demonstrated we've the municipals these seen to that fact, that the our certainly proves scale of certain the and northeast, say of In here in continue have these preferred face. expertise we of more generally, in have throughout number we many the address of we we that jurisdictions, we and

So our for But services we remain deliver that these certainly some very more of ability in communities help. confident to competition. needed the need

think the as building in seen way rest for at think other well, that of chain on that about Excellent. gives as anything the or we Anything or one we should look the about year? O&M you we as on caution supply it's of you've the the quarter And just that like one the just rest year. side, prior first the

good immune lots that. economy. of are Yes, it's there's not And a still certainly being question. Obviously, to we throughout impacts the felt

an we and I of a in than and some products scale need. that supply say the would better we've improvement Although, are our position use, say supply. bottlenecks, around There sort our just given certain size we actually most seen chain mass we're to ability I'd in of a items purchase that but bit

that items, bit, actually of those given which those of a slow some is focus increases, do been ultimately, we've to able start help impacts to through continue rate we'll to increases just sign. and we've and we certainly size critical seen so down far. to a all And scale, those And positive customers. can but things seen the price manage impacts mitigate And the we've again, on our to

Excellent, thanks.

just and Ryan I'll say new echo hires. So congrats on the

will question from Orrill of be UBS. Next Gregg

about that's there? Or California, right Yes, continuing trend? into if we're to of now you and above already you of sort your have backlog sort think you what was when X% that Or to even think is wondering that and to there could thank of kind target, earnings take I X% it-- of growth momentum build you put is outstanding, you of that could expecting? relative do rate is what's context, cases you. sort Pennsylvania the

Yes, current it's our would question. a good our you regulatory according just or is tell schedule, plan. that to I really activity

And time I our think reflective, regularly. be expect some would of be And for to also expect larger capital general in level regulatory to you I two arena that think stage, two just the rate signaled, every years, of have in for increases to that's we spending. can to three us on the three every We years. certainly

last in update our in know, November. did trajectory plan we As you spend we have this increased

cycle our again, on So and regulatory recovery, that. that underscores the just to we which execute approach will

our from sort coming recovered note mechanisms, somewhere mechanisms for an in plan think the to many side, regulatory that certainly gets it's jurisdictions. helps of earnings think range of lag on spend we're in which have the XX% better also helps so the we customer or way. effective I our important And think, those I and of their perspective, I through rate increases very

take we as to those all use execute strategy. advantage the we as things and So can of effectively on those

is, and the Now, to is to we've execute plan, according answer long answer continued according to that it your question. plan. to Short

It attending concludes the the you session, question-and-answer and conference. also Thank for presentation. today's concludes

may You disconnect. now