American Water Works Company (AWK) reported fourth-quarter 2023 operating earnings per share (EPS) of 88 cents, surpassing the Zacks Consensus Estimate of 84 cents by 4.8%. This marked an 8.6% improvement from the year-ago quarter’s earnings of 81 cents.
The company’s 2023 EPS was $4.90, reflecting an 8.6% increase from $4.51 reported in 2022. The growth was primarily driven by favorable impacts of the implementation of new rates in Regulated businesses, partially offset by increased operating costs. Notably, these results exceeded the 2023 EPS guidance of $4.72-$4.82.
Exceeding Revenue Expectations
Total quarterly revenues of $1.03 billion surpassed the Zacks Consensus Estimate of $0.96 billion by 7.6%. The top line exhibited a strong uptick, increasing by 10.8% from the year-ago figure of $0.9 billion.
American Water’s 2023 revenues of $4.2 billion were up 11.7% from $3.8 billion in 2022, reflecting robust growth.
Segmental Performance
Regulated businesses’ revenues in 2023 increased by 11.8% year over year to $3.9 billion. This growth was primarily driven by completed general rate cases and infrastructure proceedings, facilitating the recovery of incremental capital and acquisition investments.
Other revenues in 2023 amounted to $314 million compared with $287 million in the previous year.
Operational Highlights
Total operating expenses for the fourth quarter amounted to $733 million, up 9.4% from the year-ago quarter’s $670 million, primarily due to an increase in operating and maintenance expenses.
American Water continues to enhance its operations through both acquisitions and organic means. The company closed 23 acquisitions in eight states in 2023, adding 18,100 customers to its base as of Dec 31, 2023. Additionally, it has 25 pending acquisitions, poised to add another 88,1300 customers upon completion.
Financial Metrics
Cash and cash equivalents amounted to $330 million as of Dec 31, 2023, compared with $85 million as of Dec 31, 2022.
The total long-term debt was $11.7 billion as of Dec 31, 2023, reflecting a 7.2% increase from $10.9 billion as of Dec 31, 2022.
Cash flow from operating activities was $1.87 billion during 2023, compared with $1.1 billion in the prior year.
Guidance and Outlook
American Water raised its 2024 EPS guidance to a range of $5.20-$5.30 from the previous expectation of $5.10-$5.20. The company intends to invest nearly $3.1 billion across its footprint in 2024 and has outlined plans to invest $16-$17 billion and $34-$38 billion in the 2024-2028 and 2024-2033 periods, respectively. Additionally, it reiterated long-term earnings and dividend growth in the range of 7-9%.
Analyst Rankings
American Water currently carries a Zacks Rank #2 (Buy). The company’s robust performance is lauded by analysts, making it an attractive investment option.
