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American Water Works Company, Inc. (NYSE:AWK) reported first quarter 2025 earnings per share of $1.05, representing a 10.5% increase from $0.95 in the same period last year, according to the company’s May 1, 2025 earnings presentation. The water utility giant also reaffirmed its full-year 2025 EPS guidance of $5.65-$5.75, targeting 8% growth over weather-normalized 2024 results.
The stock closed at $145.86 on April 30, 2025, and traded higher at $148.00 in after-hours trading following the earnings release, suggesting a positive market reaction to the results.
Quarterly Performance Highlights
American Water’s first quarter EPS growth was primarily driven by higher revenue resulting from an increased rate base and favorable outcomes from 2024 rate cases. The company invested $518 million in infrastructure improvements and acquisitions during the quarter, continuing its capital deployment strategy.
As shown in the following chart breaking down the components of Q1 2025 EPS performance, revenue contributed positively (+$0.44) while increased operating expenses (-$0.15), depreciation (-$0.11), and financing costs (-$0.10) partially offset these gains:
"Our first quarter results are on track with our expectations for 2025," said John Griffith, President of American Water. "We continue to successfully execute our regulatory strategy, with new rates becoming effective in Illinois, Tennessee, Virginia, and California, and a constructive settlement filed in our Missouri rate case."
The company also highlighted its financial strength, having issued $800 million in senior notes in February 2025, while maintaining strong investment grade credit ratings (S&P:A, Moody’s: Baa1).
Strategic Growth Initiatives
American Water continues to pursue a dual growth strategy focused on infrastructure investment and strategic acquisitions. The company’s estimated rate base reached $22.4 billion in Q1 2025, representing an 8-9% compound annual growth rate since 2020.
The following chart illustrates how the company’s investments are driving continued rate base growth while maintaining customer affordability:
On the acquisition front, American Water has 18 acquisitions under agreement across six states, representing approximately 37,400 customer connections with a combined value of $162 million. Additionally, the company closed three acquisitions in the first quarter, adding about 2,150 customer connections for $8 million.
"Our acquisition pipeline remains robust," noted Cheryl Norton, Executive Vice President and Chief Operating Officer. "A highlight is our agreement to acquire South Orange Village, NJ Water, which includes approximately 5,000 equivalent customer connections for a $20 million purchase price, with an additional $50 million of follow-on capital planned over the next decade."
The acquisition strategy is supported by favorable regulatory environments in multiple states, as illustrated in the company’s acquisition outlook:
Infrastructure Investment and Regulatory Environment
American Water emphasized the critical need for water infrastructure investment across the United States, citing the American Society of Civil Engineers’ 2025 Infrastructure Report Card, which gave drinking water infrastructure a C- grade and wastewater systems a D+ grade.
The EPA has determined that U.S. water infrastructure needs stand at $625 billion over the next 20 years, creating significant opportunities for American Water’s growth strategy:
The company continues to benefit from supportive state legislation and regulatory mechanisms. During the first quarter, American Water saw positive legislative developments in Missouri, Indiana, and Virginia related to future test years, water utility infrastructure, and infrastructure replacement programs.
"We’re successfully executing our regulatory strategy," said David Bowler, Executive Vice President and Chief Financial Officer. "Our approach focuses on timely recovery of investments through a combination of infrastructure surcharge mechanisms, future test years, and traditional rate cases."
Forward Outlook and Long-Term Targets
American Water reaffirmed its 2025 EPS guidance of $5.65-$5.75, representing 8% growth at the midpoint compared to weather-normalized 2024 EPS of $5.27. The following chart breaks down the components expected to drive this growth:
Looking beyond 2025, the company affirmed its long-term targets, including:
- 7-9% EPS compound annual growth rate
- 7-9% dividend growth
- 55-60% dividend payout ratio
- Debt to capital ratio below 60%
The company’s long-term capital investment plan includes $17-$18 billion from 2025-2029 and $40-$42 billion from 2025-2034, with 68% allocated to infrastructure renewal:
Dividend Growth and Financial Position
In April 2025, American Water announced an 8.2% increase in its quarterly dividend, aligning with its long-term target of 7-9% annual dividend growth. The dividend payout ratio is projected to be 58% by the end of 2025, within the company’s target range of 55-60%.
The following chart illustrates American Water’s consistent dividend growth trajectory:
The company maintains a strong balance sheet with a total debt to total capital ratio of 58%, supporting its significant capital investment plans while maintaining financial flexibility. American Water’s $2.75 billion revolving credit facility provides ample liquidity for ongoing operations and strategic initiatives.
"We remain committed to our balanced approach of investing in infrastructure, pursuing strategic acquisitions, and delivering value to shareholders through dividend growth, all while maintaining our focus on customer affordability," concluded Griffith.
American Water’s Q1 2025 results demonstrate the company’s continued execution of its regulated utility strategy, with steady progress on both financial performance and strategic initiatives despite the challenges of an aging national water infrastructure system.
Full presentation:
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