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American Water Works Company, Inc. (AWK)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered regulated-utility style strength: revenue rose 9.7% YoY to $1.451B and diluted EPS increased 7.8% YoY to $1.94 as base rate increases and acquisitions offset higher depreciation, taxes and financing costs .
  • Results exceeded S&P Global consensus: EPS $1.88* vs actual $1.94 and revenue $1.326B* vs actual $1.451B; management affirmed 2025 EPS guidance of $5.70–$5.75 and initiated 2026 EPS guidance of $6.02–$6.12 (≈8% growth at midpoint) . Values retrieved from S&P Global*
  • Capital plan was stepped up to $19–$20B for 2026–2030 (and $46–$48B over 2026–2035) with increased PFAS/LCRI compliance spend; forward equity agreements (~$1.15B) de‑risk 2026 financing .
  • Strategic catalyst: announced all‑stock merger with Essential Utilities; expected close Q1 2027, subject to approvals. Exchange ratio 0.305 AWK shares per WTRG share; pro forma EV ≈$63B, AWK holders ≈69% of combined company .

What Went Well and What Went Wrong

What Went Well

  • Robust regulated revenue growth: Q3 operating revenues +$124M YoY on authorized rate increases, infrastructure mechanisms and acquisitions; Regulated Businesses’ net income up to $383M from $356M .
  • Clear capital and financing roadmap: 2026–2030 capex lifted to $19–$20B (PFAS ≈$2B; LCRI ≈$1.5B); forward equity (~$1.15B) and intact credit profile (58% debt/cap) support funding .
  • Management confidence and execution: “The company delivered strong results…we consistently execute on the plans we set,” said CEO John Griffith, while affirming 2025 EPS and initiating 2026 guidance at +8% growth midpoint .

What Went Wrong

  • Cost headwinds: O&M, depreciation and general taxes increased YoY (O&M +$27M; D&A +$26M; taxes +$3M) tied to growth investment and tech/employee costs; interest expense +$26M YoY on incremental funding .
  • Weather volatility: Q3 weather estimated $0.03/sh favorable vs $0.04/sh favorable in Q3’24; YTD weather flat vs 2024’s $0.07/sh favorable, reducing comparability .
  • Regulatory cadence requires continued precision: multiple active GRCs (WV, KY, CA, MD) and infrastructure surcharges filed; execution necessary to maintain earnings glidepath and manage affordability optics .

Financial Results

Summary Financials and Trend

MetricQ3 2024Q2 2025Q3 2025
Operating Revenues ($B)$1.323 $1.276 $1.451
Operating Income ($B)$0.543 $0.489 $0.614
Net Income ($B)$0.350 $0.289 $0.379
Diluted EPS ($)$1.80 $1.48 $1.94

Q3 2025 vs. S&P Global Consensus

MetricConsensus (Q3 2025)Actual (Q3 2025)Surprise
Revenue ($B)$1.326*$1.451 Beat
EPS ($)$1.884*$1.94 Beat
Values retrieved from S&P Global*

Segment Performance (Q3)

SegmentQ3 2024 Revenue ($M)Q3 2025 Revenue ($M)Q3 2024 Net Income ($M)Q3 2025 Net Income ($M)
Regulated Businesses1,219 1,343 356 383
Other (incl. MSG, corporate, HOS note interest)104 108 -6 -4
Total1,323 1,451 350 379

KPIs and Operating Drivers

KPIQ2 2025Q3 2025
Capital Investment YTD ($B)$1.3 $2.2
Annualized Revenues Authorized Since Jan 1 ($M)$270 $275
Customer Connections Under Agreement (approx.)~87,000 ~106,700 (22 deals = 60.1k; Nexus = 46.6k)
Quarterly Dividend Declared ($/sh)$0.8275 (payable Sep 3, 2025) $0.8275 (payable Dec 2, 2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Weather‑normalized EPSFY 2025$5.70–$5.75 (narrowed in Q2 from $5.65–$5.75) $5.70–$5.75 (includes ~$0.10/sh HOS note interest) Maintained
EPSFY 2026—$6.02–$6.12 (assumes HOS note repaid ~YE25; +8% vs 2025 midpoint, excl. transaction costs) Initiated
Capital Plan2026–2030$17–$18B (prior plan) $19–$20B (PFAS ≈$2B; LCRI ≈$1.5B) Raised
Long‑term targetsMulti‑yearEPS & DPS CAGR 7–9% EPS & DPS CAGR 7–9% affirmed Maintained
Balance sheetOngoingDebt/Cap <60% 58% at 9/30; target <60% affirmed Maintained

Earnings Call Themes & Trends

TopicQ1 2025 (prior-2)Q2 2025 (prior-1)Q3 2025 (current)Trend
Regulatory execution & rate casesAffirmed 2025 EPS; noted $161M annualized revenues authorized YTD Authorized revenues since Jan 1 reached $270M; active cases progressing $275M authorized YTD; active GRCs in WV/KY/CA/MD; infrastructure surcharge filings in MO/WV Steady progress
Capital plan & compliance (PFAS/LCRI)Capex plan ≈$3.3B for 2025 2025 capex on track; Nexus acquisition announced 2026–2030 plan raised to $19–$20B; PFAS ≈$2B; LCRI ≈$1.5B Upward
Financing strategy$800M 5.25% notes due 2035 Narrowed EPS to top half; plan intact Forward equity (~$1.15B mid‑2026); D/C 58%; ratings stable De‑risking
HOS note & non‑GAAP framingNoted incremental interest income in EPS Continued to call out HOS interest income 2026 EPS assumes early HOS repayment; exclude merger costs in non‑GAAP discussion Transitioning off HOS income
CA decoupling & affordability——Prepared remarks note decoupling pursuit; affordability focus (avg bill <1% MHI) Constructive
Strategic M&A—Nexus systems purchase agreements Essential Utilities merger announced; expected Q1 2027 close Step‑change

Management Commentary

  • “The company delivered strong results to date in 2025…we are fully confident in our ability to continue to deliver on our near‑term and long‑term growth and capital plans.” — John Griffith, President & CEO .
  • “We expect 8% EPS growth in 2026 (midpoint) vs. 2025 on a weather‑normalized basis…assumes HOS note repayment around year‑end 2025 and mid‑year 2026 forward equity settlement.” — Prepared remarks .
  • “Our total debt to capital…remains at 58 percent and within our target of less than 60 percent.” — Prepared remarks .

Q&A Highlights

  • Regulatory cadence and California decoupling: management reiterated pursuit of full decoupling in CA and constructive rate mechanisms to balance affordability and recovery .
  • Financing mix and dilution: clarified forward‑equity settlement timing (mid‑2026) and plan to manage modest dilution within growth outlook .
  • HOS note normalization: reiterated 2026 EPS plan excludes incremental HOS interest and still achieves ~8% growth .
  • Market color: third‑party call summary noted Q&A on decoupling progress and drivers behind guidance posture (usage/regulatory execution) .

Estimates Context

  • S&P Global consensus for Q3 2025: EPS $1.8836* on 9 estimates and revenue $1.326B* on 2 estimates; AWK reported $1.94 EPS and $1.451B revenue, a clean beat on both lines . Values retrieved from S&P Global*
  • Given affirmation of 2025 EPS guidance and the 2026 guide at +8% growth, Street models likely bias up modestly on regulated revenue trajectory, partly offset by higher D&A/financing and exclusion of HOS interest beyond 2025 .

Key Takeaways for Investors

  • Regulated growth intact: broad‑based authorized revenue increases and acquisitions are flowing through; Regulated Businesses net income rose to $383M (+7.6% YoY) .
  • Visibility extended: 2026 EPS guide ($6.02–$6.12) and a larger 5‑/10‑year capex plan provide multi‑year earnings runway with affirmed 7–9% EPS/DPS CAGRs .
  • Funding plan credible: forward equity (~$1.15B) plus balance sheet at 58% debt/cap positions AWK to fund PFAS/LCRI and renewal programs while sustaining dividend growth .
  • Merger optionality: Essential Utilities combination (expected Q1 2027 close) could broaden scale and efficiency—watch regulatory milestones and synergy framing over 2026 .
  • Near‑term trading lens: beats vs consensus and guidance affirmation are supportive; investor focus likely on capex/regulatory throughput and cadence of CA/WV/KY/MD rate outcomes .
  • Medium‑term thesis: rate‑base CAGR of 8–9% with expanding compliance spend supports sustained earnings/dividend growth; affordability discipline mitigates regulatory risk .

Appendix: Additional Quantitative Detail

Regulated Revenue Disaggregation (Q3)

ItemQ3 2024 ($M)Q3 2025 ($M)
Water services (Residential/Commercial/Fire/Industrial/Public & other)1,106 1,212
Wastewater services (Residential/Commercial/Industrial/Public & other)97 117
Other operating (misc. utility charges, fees, rents)16 14
Total Regulated Businesses1,219 1,343

Balance Sheet Snapshot

  • Total assets $34.748B; Long‑term debt $13.022B; Equity $10.907B (as of 9/30/25) .

Dividend

  • Quarterly dividend declared $0.8275/sh (payable Dec 2, 2025; record Nov 13) .

Sources: Company 8‑K/press release, Q3 2025 10‑Q, prepared remarks and investor presentation as cited above.