American Water Works pany(AWK) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated reported earnings were $5.39 per share in 2024, an increase of$0.49 per share compared to 2023, reflecting an 8% EPS growth [25][26][19] - Earnings in 2024 benefited from $0.12 per share due to favorable weather and$0.09 per share from incremental interest income [16][25] - Operating costs increased by $0.22 per share, primarily due to employee-related costs and other growth-related expenses [26] Business Line Data and Key Metrics Changes - The company invested over$3 billion in 2024 to support infrastructure investments and customer service [17][18] - Nearly 70,000 customer connections were added through acquisitions, meeting the 2% compounded annual growth target [18][51] Market Data and Key Metrics Changes - The company operates across 14 states, benefiting from regulatory diversity and a low-risk business model [20][38] - The average residential water bill is expected to remain at or below 1% of median household income throughout the ten-year plan [50] Company Strategy and Development Direction - The company is focused on a capital investment program aimed at infrastructure renewal, with a long-term rate base growth target of 8% to 9% [20][49] - The company plans to achieve consistent EPS growth within the 7% to 9% range through 2029 and beyond [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing plans for 2025 and beyond, emphasizing the importance of addressing aging infrastructure and water quality challenges [22][22] - The company remains committed to providing safe, clean, and reliable services while maintaining affordability for customers [55][50] Other Important Information - Susan Hardwick announced her retirement effective May 14, 2025, with John Griffith set to succeed her as CEO [7][8] - The company has a strong balance sheet with a total debt to capital ratio of 57%, well within the target of less than 60% [38] Q&A Session Summary Question: Changes in strategy regarding PFAS investments - Management confirmed no changes to capital plans related to PFAS, emphasizing the need to meet regulatory requirements [63] Question: Should the $0.10 from loan remarketing be included in EPS growth models? - Management advised to exclude the$0.10 from the base EPS growth calculations [65] Question: Details on acquisition capabilities and growth - Management highlighted the addition of staffing in business development to enhance growth across multiple states [72][74] Question: Disruptions in procurement for capital projects - Management reported no disruptions in procurement, maintaining a robust supply chain for capital investments [84] Question: Update on the Missouri rate case - Management expressed optimism about reaching a settlement prior to the start of hearings in Missouri [94] Question: Impact of economic development on customer growth - Management noted that while there are opportunities for growth, water demand remains stable with excess capacity in the industry [98] Question: Consideration of hybrid financing options - Management indicated that hybrids are not seen as cost-effective compared to traditional equity financing [105] Question: Update on Missouri legislative efforts - Management is actively working to improve the regulatory environment in Missouri, focusing on future test year legislation [128]