American Water Works Company, Inc. Q1 FY2026 earnings call

Good morning, everyone. American Water started 2026 with financial results on track to achieve full-year earnings guidance, with adjusted earnings of $1.01 per share for the quarter. The Board of Directors approved an 8.2% increase in the quarterly cash dividend to 89.5 cents per share, with plans to grow the dividend at 7% to 9% per year. The company achieved a milestone in the merger with Essential Utilities, with Kentucky approving the merger and expecting decisions in Virginia in June. There were regulatory activities in states like West Virginia, Maryland, Virginia, California, Illinois, New Jersey, and Pennsylvania, with rate cases in progress and investments in infrastructure. Priority legislation in states like Iowa, Indiana, Maryland, and Virginia was passed, and the company continues to be well-positioned for growth through acquisitions with 105,000 customer connections under agreement from deals totaling $565 million, including the acquisition of the Nitro wastewater system in West Virginia and progress in the Nexus Water Group systems regulatory approval.

Affirmed 2026 adjusted EPS guidance range of $6.02 to $6.12 per share, expecting 8% EPS growth in 2026. Expect to achieve consistent EPS and dividend growth within the 7% to 9% range through 2030 and beyond. Merger with Essential Utilities expected to close by the end of the first quarter, 2027.

Q: Touch on the 2026 guide and ROE in PA.

A: Feel good about the merits of the PA case, expect recommended decision from ALJ in May, and fundamentals of the case are well recognized.

Q: Remind on merger process.

A: Need approvals in all states where required, 7 states need PUC approvals, received approval in Kentucky, expect decisions in Virginia and Illinois this year.

Q: Engagement in PA stakeholder conversations.

A: Active with governor's office and stakeholders, see alignment in position on affordability and investment.

Q: Impact of corporate alternative minimum tax in NJ.

A: There is a cash benefit, filed for refund of about $84 million expected this year, and prior to the change had $100 million or so of CAMT payment annually.

Q: Customer benefits from essential merger in PA and NJ.

A: Made filings in states, going through public hearing processes, feel good about position on affordability and customer service.

Q: Timing of debt issuance.

A: Issued $700 million of long-term debt on April 1st, expect to take equity proceeds around mid-year, and have another debt issuance in Q3, early Q4.

Q: Approach to PA rate case and confidence in outcome.

A: Feel good about prospects for balanced outcome, worked purposefully on prudent investment and affordability, confident in process and look forward to ALJ's recommended decision in May.

Q: Incorporation of CMT benefit into plan.

A: Will incorporate the change into the plan when refreshing in Q3 and evaluate equity need at that time