American Water Works Q2 2025 slides: EPS up 4.2%, guidance narrowed upward

American Water Works (NYSE:AWK) reported second-quarter 2025 earnings per share of $1.48, up 4.2% from $1.42 in the same period last year, according to the company’s earnings presentation delivered on July 31. Year-to-date EPS reached $2.53, representing a 9.4% increase compared to 2024, despite unfavorable weather impacts.

Quarterly Performance Highlights

American Water Works narrowed its 2025 EPS guidance to the top half of its previous range, now targeting $5.70 to $5.75, up from the prior range of $5.65 to $5.75. This adjustment reflects the company’s confidence in achieving 8.6% EPS growth in 2025 compared to 2024 on a weather-normalized basis.

As shown in the following chart, the company’s quarterly performance remained strong despite weather challenges:

A detailed breakdown of Q2 2025 EPS reveals that revenue growth of $0.50 per share was partially offset by increased operations and maintenance expenses ($0.17), higher depreciation ($0.10), and increased financing costs ($0.08). The company also faced a $0.06 per share negative impact from weather compared to Q2 2024.

Similarly, the year-to-date EPS performance shows revenue growth of $0.94 per share, partially offset by increased operations and maintenance expenses ($0.32), higher depreciation ($0.21), and increased financing costs ($0.18).

Strategic Growth Initiatives

American Water Works continues to execute its acquisition strategy, with approximately 87,000 customer connections under agreement, totaling $535 million. This includes the Nexus Water Group systems announced in May 2025, which will add approximately 46,600 customer connections across 60 systems in 8 states.

The company’s acquisition strategy is illustrated in this breakdown of customer connections under agreement:

To support its growth strategy, American Water Works invested $1.3 billion in regulated capital during the first half of 2025. The company’s investment plan is designed to drive continued rate base growth at a compound annual growth rate of 8-9%.

As shown in the following chart, these investments support water quality, reliability, and earnings growth:

Regulatory and Environmental Updates

American Water Works continues to make progress on regulatory matters, with several general rate cases in progress and others completed in 2025. The company filed rate cases in California, Kentucky, and West Virginia during the first half of 2025, with investments totaling $1.26 billion across these states.

The company’s PFAS treatment plans remain on track following the EPA’s final federal PFAS rule, which maintains drinking water limits of 4.0 parts per trillion for PFOA and PFOS. American Water estimates capital spending of approximately $1 billion and operating expenses of up to $50 million annually for its 2025-2029 plan to address PFAS treatment requirements.

The following diagram illustrates the company’s approach to PFAS treatment within its water distribution system:

Long-Term Financial Targets

American Water Works reaffirmed its long-term financial targets, including 7-9% EPS growth, 7-9% dividend growth, and continued focus on customer affordability and sustainability leadership.

The company’s long-term growth strategy is outlined in this chart:

Looking ahead, the company provided this visual representation of its consistent future earnings growth trajectory:

Financial Position and Capital Plans

American Water Works maintains a strong balance sheet with credit ratings of A (Stable Outlook) from S&P and Baa1 (Stable Outlook) from Moody’s. The company’s total debt to total capital ratio stood at 58% as of June 30, 2025, below its long-term target of less than 60%.

The company’s financial strength is highlighted in this summary:

In February 2025, American Water successfully executed an $800 million senior note offering with a 10-year tenor and an annual interest rate of 5.250%. The company’s 2025 financing plan includes a total of $1.5-2.0 billion in long-term debt financing.

American Water Works continues to deliver top-tier dividend growth, with an 8.2% increase in 2025 aligning with its long-term target. The dividend payout ratio is projected to be 58% as of December 31, 2025, within the company’s target range of 55-60%.

The company’s five- and ten-year capital plans outline investments of $17-18 billion for 2025-2029 and $40-42 billion for 2025-2034, primarily focused on regulated system investments and acquisitions.

Following the earnings release, American Water Works’ stock declined 1.38% in after-hours trading to $139.00, according to market data. The stock has traded between $118.74 and $155.50 over the past 52 weeks.

Full presentation:

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