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American Water's (AWK) Q1 Earnings on Par With Estimates

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American Water Works Company AWK posted first-quarter 2021 earnings of 73 cents per share, on par with the Zacks Consensus Estimate.

The bottom line improved 8.9% year over year on the back of strong contributions from Regulated businesses. The encouraging quarterly earnings reflect favorable impact of infrastructure investments, acquisitions and organic growth.

Total Revenues

Total revenues of $888 million surpassed the Zacks Consensus Estimate of $878 million by 1.4% and improved 5.2% from the year-ago figure of $844 million.

American Water Works Company, Inc. Price, Consensus and EPS Surprise

American Water Works Company, Inc. Price, Consensus and EPS Surprise
American Water Works Company, Inc. Price, Consensus and EPS Surprise

American Water Works Company, Inc. price-consensus-eps-surprise-chart | American Water Works Company, Inc. Quote

Highlights of the Release

Total operating expenses for the quarter were $659 million, up 8.9% from the year-ago period.

Operating income was $229 million, 4.2% lower than the year-ago figure. New rates effective since Jan 1, 2021 will add $123 million to annual revenues. The pending rate case, if approved without any change, will further increase the top line by $61 million.

The company continues to expand operations through acquisitions and organic means. Till May 1, 2021, it successfully closed five acquisitions, which added 900 customers to the customer base and expanded operations in the United States. Its pending 32 acquisitions (as of May 1), when completed, will add another 86,000 customers to the customer base.

For the 12-month period ended Mar 31, O&M efficiency improved to 34.1% from 34.5% in the year-ago period. The improvement was due to persistent focus on operating costs and an increase in operating revenues from Regulated businesses.

Segment Details

Regulated businesses’ net income was $135 million compared with $123 million in the year-ago quarter. The company continues to expand operations through acquisitions and organic initiatives.

Market-Based businesses’ net income was $17 million compared with $22 million in the year-ago period.

Financial Highlights

Cash and cash equivalents amounted to $69 million as of Mar 31, 2021, down from $547 million on Dec 31, 2020.

Total long-term debt was $9,325 million as of Mar 31, 2021, marginally lower than $9,329 million at 2020-end.

Cash flow from operating activities for first-quarter 2021 was $179 million compared with $180 million in the year-ago period. For the same period, capital expenditure was $342 million compared with $408 million in the year-ago period.

Guidance

American Water expects 2021 earnings in the range of $4.18-$4.28 per share. The company’s long-term earnings growth is expected in the range of 7-10% for the 2021-2025 period.

It aims to invest $10.4 billion over the 2021-2025 time frame. Its O&M efficiency target remains at 30.4% for 2025.

Zacks Rank

American Water currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Essential Utilities Inc. WTRG is scheduled to report first-quarter 2021 earnings on May 5. The Zacks Consensus Estimate for earnings for the quarter is pegged at 66 cents per share.

Global Water Resources GWRS is scheduled to report first-quarter 2021 earnings on May 6. The Zacks Consensus Estimate for the bottom line for the quarter is pegged at a loss of 1 cent per share.

Primo Water Corporation PRMW is scheduled to report first-quarter 2021 earnings on May 6. The Zacks Consensus Estimate for quarterly earnings is pegged at 6 cents per share.

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