AWK - Earnings call 4 2023 | American Water Works Company, Inc.

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Operator

Good morning, and welcome to the American Water's Fourth Quarter and Year-End 2023 Earnings Conference Call.

As a reminder, this call is being recorded and is also being webcast with an accompanying slide presentation through the company's Investor Relations website. The audio webcast archive will be available for 1 year on American Water's Investor Relations website. I would now like to introduce your host for today's call, Aaron Musgrave, Vice President of Investor Relations. Mr. begin. may you Musgrave,

Aaron Musgrave

questions. Good today's and of call. will for remarks, Dave. joining our you us we your call the for At open morning, you, thank everyone, for prepared Thank the end

we Let me first performance expectations making our over predictions some or our expectations, other statements represent and our These current will statements based language. that are safe forward-looking regarding be harbor go Today, assumptions. future future estimates events. on

subject with may by deal the known future to statements to these are and that numerous or such unknown they factors be since cause uncertainties risks, implied However, results indicated from and events, results statements. materially other different actual

and presentation fourth Form XX-K, Additional and uncertainties as SEC. and factors information Susan XXXX per more well quarter during remarks, in close these this and all questions. CEO, is our to yesterday filed as by to our turn call American answering and And and earnings risks, provided in With we'll over share. diluted important diluted finally, earnings other statements President Water's prepared information then the our your earnings After release the refer share I'll detailed the with regarding financials each per that, Hardwick. a related analysis of to earnings earnings

M. Hardwick

Aaron. Thanks, Good morning, everyone.

were As we announced on plan. right strong that yesterday, with results XXXX we finished financial very

included year, which As $X.XX per Slide we the year. in share which of $X.XX earlier the on favorable shown X, were most discussed earnings share for weather, of per

XXXX. I'm want our through which safely guidance execute back gave on year, few people consistently the share ability of and we And confidently earnings the especially resilient safely had million to we our of past for weather at businesses estimated communities. I'm per past we season months employees cold events range to in across service very numerous homes, the active thank January on customers shared reliable in XXXX. their serve serving proud company's and of the during impact, this country. service our focused deliver ability the we storm the reliably plan to Excluding the I for proud and XX us stay originally and providing to the economic were a over November also of $X.XX midpoint of the

top that can in of some our today key very see we amid an takeaway coupled John XXXX macro demonstrates list in execution we our the Water's long-term plans our beyond great in backdrop, Cheryl with XXXX. we Overall, in the with is the to XXXX remarks. have You and clear accomplishments confident from these XXXX, on strong execute momentum Slide here add will challenging believe plan. our on abbreviated I'm American our X, tier ability will growth deliver and to and their investors for plan of

X. Turning Slide to

over specific utility and stocks versus perform utility fell as performance. not to other of XXXX, As We're XX so. Relative the see, outperformance dampened in valuations significant want return compares in stocks this that very regard stock an you though, our S&P S&P we've the utilities. general proud excellent including and nearly acknowledge, of I past XXX as of the history, years, favorably well which the XXX total our without dividend record can we over delivered or growing last increases. X to which have to did had decade shareholder the

growth do across want to level across well-being across XXXX I in by our yesterday. outcomes, and including the years are believe with combination serves installations and and drivers our we the by growth. Later, we shareholder our X-year through infrastructure leave work to is very the returns will our value we that. This, of to military picture, long, we investments receive we begin targets we'll runway top military continues growth in company's all X. for strategies recap X% believe that XXXX, significant course, we to All announced the And Big The laid John very of certainly The the water to American of will dividend growth and targets EPS performance. to critical regulatory communities though, the wastewater the these EPS of citizens coupled fundamentals strong total to service increase at affirmation the and the of EPS for and very guidance for to keen November, in while confident driven country. an long-term XX we successfully takes that, range record our capital plan low-risk on plan, as to and share us and to our us thought One that investors final are the track continue state with and today country. federal in I'm by be continues achieving the serve. of guidance states beyond dividend financial shareholder to highlighted service plan, the continued organically, our improve support produce largely of for I'll Slide and for continue in of come, X% affordability. remind XXXX. on including XX to that, focus execution our proud affordability of comments we Water leadership acquisitions, you the you our making and a ESG services impact our our we is which distinguishes and tremendous other that that utilities our all from rewarded out constructive grow of superior business we in are sector. competitive last our with this are is

Policymakers solving frequently in customers. growing, their and you encourage this our solving our told time, And at business times, our issues, keep very includes affordable investing we've keep efficiencies infrastructure leadership driving are many Pennsylvania, same to states. where the to we market water believe As problems proposal remain the while value enhancements committed fair local public enhance to the in keep to to consistency, Utility procedural support We implementation wastewater systems. greater the and to on Commission's the all of of applaud consolidation we common the spirit February of is wealth, of legislation. increase in awareness the Public around X and much-needed establish process

While the to including the doubt have these can services times received we overwhelmingly to turn at our business, we more Cheryl? about lead as business we stakeholders and company's recent positive construct, do over in from Cheryl support the it about news of no plan the around providing way regulatory lines. talk mission. With some that, base I'll critical growth, enhancements in service we to pursue regulatory lead our rate

Cheryl Norton

Thanks, Susan, good and morning, everyone.

of where consistent the We and the our graphs long-term nature to illustrate course, of X believe to thesis. combined plan, our low-risk execution continued rate of with capital base Slide positions capital to fundamental rate of plan, will uniquely American turning the earnings by drive start investment regulated our growth. of that investment X% sector plan utility X%. with to is degree our successful in investment is the high visibility Water growing me base these our growth, succeeding Let Rate in

evidentiary in to In our beginning filed filed Slide and recently in our XX. with the most regulatory November rate states, cases. are we a Turning latest seeking I'll case Pennsylvania, activity cover general that With case proceeding scheduled and February still August. billion is of planned, hearings as testimony investments. be $X including The are of expected for effective rates recovery to in and March.

in through rate treatment Jersey, of As state. case over in This all In filed investments case purposes. a infrastructure Pennsylvania uses New projects year XXXX. forward we water a the plants December seven test reminder, seeking are includes, a January billion example, general surface improvement our recovery for of for ratemaking and at of $X.X

We the this later to sometime case New Jersey expect fall. completed be

We last over in case also a filed invested case. have since we last $XXX where rate our million general Illinois, month

Virginia Our related progressing and general California, West the In California, request. partial to revenue are a cases all in settlement rate case the as expected. November Virginia, we and in reached well in

the upon topics agreement We design to CPUC's the stabilization January retroactively settlement will prepare outstanding XXXX, and rates implement and X, the related to decision new receiving mechanisms. on to revenue rate

the May filing the just granted, Our order a very cost and Indiana, received we request looks of pushing final a yesterday, capital to In it next X-year extension XXXX. constructive. on for out of was also

two, evaluating are currently share overall, we Kentucky, it, we're or We in pleased. finally, and very final but generally we'll And receive day order the a in key soon. to next takeaways expect

larger on again these general Because jurisdictions. dedicated did in investments in cases, we a constructive our As skilled we every obtaining XXXX in rate X years we're expect prudent make and cases XXXX. very and working reminder, confident outcomes we employees in have to as about file

the by recover utilities Environmental health. Charge includes capital mechanism regulatory timely in for and compliance, that to a safety capital Jersey, New manner, Resiliency capital public in in environmental investments front, short, was was legislative wastewater The spending new to related the RESIC, in passed investment enable related resiliency, to remediation. System supporting This a will signed water PFAS and and legislation new and January. Investment or establishes On governor more

states step is we're investments under $XXX since we see existing can million believe magnitude To our million in This general in XXXX. show environmental annualized fit execution that fact, we cases will have In January million most PFAS mechanisms There and where new of proactively the XX $XXX for surcharges. or PFAS advocating our infrastructure increases and of present. you from $XXX mechanisms. such rates either that on regulatory efforts, includes revenues rate are from Slide of

$XXX of request also revenue We million pending. total have annualized

spend and we American all reduces investments which reminder, we're affordability Water As the or extremely operating on through focused remain regulatory forward a about mechanisms XX% years, capital making, our efficiently. of customer of infrastructure overall recovers test lag. Alongside greatly

to with strategies our to programs continuing are customers are affordability. rate around We who assist challenged our design evolve and

service as Like cover management U.S. our clear copper proposed also be focus across regulatory important water of for stakeholders all Slide are the especially consistently customer copper Rule capital and thing customer continuing rules But on to of footprint -- lead the and proposed customers. I'd the are all program. On regarding our meets believe including and water as costs needed efficiencies should standards risk recent all and owned announcements right also lines related lead of rule and technology, investment rule and rules and and our of proposed by demand health copper rule believes to are the the and the lines with were we likely to is American like we like will that lead identify the the in over deliver think understand do improvements for and and XX, the PFAS, and Water time improvements EPA's to enforced for service all must Copper to replace removing Lead Improvements. our lines the lead to on EPA such understated. The providers. safety the the lines PFAS lines, quality cost We our systems. PFAS lead cost require the scale service increases unknown estimates material XXXX, all affordability, significant drive galvanized associated on

currently longer, affordable so capital the developing American rule. We the water line and proposed are more the based reliable expected on be Improvements though, Lead Unlike impact PFAS complying on with safe, and will preliminary much Copper time Rule Providing spend business. estimates Water's gradual. for is the is

the the the any protect ensure EPA, to that general standards with and Congress, public. work to and continue final policymakers regulators community of customers, implementation We

capital lead from replacements. PFAS service X-year As can our unchanged has for on is $XXX billion that which million approximately XX, I close line for plan, Slide November, and you $X see

least have expect period proactively or and now continue beyond. Depending final XXXX several We in on through for EPA's investing that to million per $XXX service year replace and requirements lead lines about at years been the as Lead Copper level the to over Rule to level the awaiting EPA likely a such are final time. be need lines, still on service annual longer Also, revised our we U.S. from of for Improvements PFAS. may rule and investment customer-owned a

November last rule, compliance. will any material proposed and announced have to to or our be continue no changes expect We not the that to changed related plans we PFAS of estimates there

are manner continue to for party early PFAS continue there In XM this for of most issued we DuPont of manufacturers against MDL we the rule to or federal treat in to We once the a is to in two from state damages. remain District decide recouping compliance full partly deadlines and whether the customers. the PFAS for certain Carolina new compliance regulations On to remain expedient manufacturers, Court final that to DuPont for our Court and we X, December, with multi-district District settlement. the dollars South believe path lawsuit We settlements U.S. to of MDL optimal PFAS like the possible released. Previously, in to have with prepare the manufacturers potential the were disclosed or litigation, its and approval February both settlements. we with a not did party for

investors states We begin understand for X. to responsibility and the that, in industry on these great and The within example. over well from is the hearing John those by deliver reliable others. It's also affordable sets environment own the bring solve detail. change for our closing, settlement held process this John? challenges to expertise important is XM to claims In the we under to period of further operate regulatory results February on its communities. This settlement that services related clean, now it's these to apart the our cybersecurity, but layering to PFAS, with hand changes financial to a including Each effect is I'll dramatic. matter even more and across table ever-changing on significant and challenges, will to where issues provided and a customers it privilege lead leading safe, recognized like the and us of we plans but cover the to perfecting all significant, our was With pending. the MDL. A is remains time fairness

John Griffith

Cheryl, good and Thank everyone. you, morning,

Slide to Turning XX.

states. in a weather-normalized to were early continue up by in provide are $X.XX by general additional and per Let details and revenues cases These rate share on investments per driven quarter and share for share results basis. driven XXXX. earnings $X.XX details Consolidated more Increased appendix fourth completed made larger revenues systems. late a make The significant also XXXX on compared the in XXXX, $X.XX per in were to XXXX has our me we our XXXX we've EPS. few up of financial

completed additional share footprint. Supporting tank related $X.XX increased across months. pressures other conditions, by dry at inflationary in through in $X.XX being share per to part share as the we increased Missouri, As recovered noted, and disposal, in our favorable waste to higher weather per $X.XX and about $X.XX share, to the investment we last net and Pennsylvania. estimated costs related [indiscernible] general of per third higher in XX primarily had net dry repairs, revenues This painting earnings compares which per costs warm of expense costs share, conditions and dilution. quarter related the looking of are were about due share an in and warm depreciation $X.XX primarily per of sought maintenance share, $X.XX New costs, our share and of per including financing weather XXXX per equipment third pension large $X.XX fourth the proactively to rate operating about in chemical of In of in XXXX the cost Jersey expense result second, also to quarter, cases XX long-term we higher growth, to Jersey. And quarters higher count in increased fourth and a New

As cash year EPS the year. March. all XXXX I of this interest balance in in higher reflects equity HOS the sales added interest EPS. benefit earning in March impact mentioned post-closing the which Other acquisition primarily adjustments An was from New income the offset the held is back we been York, to share from have issuance our of from have equity the realized count by early since from issuance on additional the avoided year,

XX. Slide Turning to

million We strong across You'll XXXX. growth acquisitions. XX acquisitions through totaling states up eight on see in set for to closed we continue that $XX be

across have at in We the connections. Area total XX Illinois. system plant agreement $XXX under Sewer totaling treatment Butler and million the seven both XX,XXX transactions customer states year-end, Pennsylvania also This City wastewater Granite includes and in wastewater Authority

service already wastewater but provide will acquisitions take positive, We to environment regulatory necessary completing briefly where the time ultimately for is sort we think close customers. In which relating are out. change, discussed, we XX,XXX undergoing Granite to City Pennsylvania, a and is approximately as collection of to acquisition, very period Susan the

Act We strong value have will confident continue remain very fair and that support. XX market to legislation are place in

approved As we In that that in previously acquisition are worked regulatory the close likely and implementation be current usual. now. to the time is is Butler soon. be of the needs through meantime, the often legislation will our is case, clear, will to arena, happening transactions of what take more closing But confident pending than

need are continued communities who reliable regulated the deserve driven acquisition and of wastewater and for in upgrading service. Pennsylvania, to opportunities We water continuing consolidation the benefit safe in system invest for and by Pennsylvania in

know, closing acquisitions. a strong we you track have As record of

closed nearly customer connections. years, acquisitions past the XXX,XXX XX totaling states, Over over X we've new XXX across

to continuous. we transactions, as our course, acquisition and Of the refill build close is work pipeline

pipeline with connections our platform growth that a be base this continues across customer outlook. strong of million indicator to Our rate supports of more than piece from meaningful our leading X.X contributions

in long-term This of on As on from based our per count target equates shown year to Slide X.X you recall, introduced November, annual growth customer approximately about million XX,XXX we current customers. acquired acquisitions of as X. our X% customer customers

X% proactively are system-wide bolster long-term confident our contribution in support capabilities to acquisitions target. growth to investing this to across in platform and our our are meeting We our

Slide to Turning XX.

of of we Here, yesterday, growth $X.XX. that XXXX that share of reflects the due receive $X.XX weather-normalized the to solely annually the EPS we is from and of to buildup we midpoint which guidance per from from XXXX introduced receive secured to The seller an note show XXXX increase $X.XX additional range guidance buildup per is which the X% XXXX terms we HOS. announced EPS from amended through now sale the $X.XX November, range, $X.XX Working to of XXXX to the income $X.XX actual interest in last at increase same will share. our expect to

in filed million American X-K City has been on increased by Water board. the satisfies of we to million of $XXX water owed X, the contingent payment of HOS's extension agreement described we New the million to with February which $XXX As York service from note balance the triggered the consideration $XX

of has X% In require ownership, rate and option American including under been to New see interest the from a at is the business market Water's extension future as HOS, its continued contract the pleased increased HOS's rates be well annual current owners. as service City announced the from HOS to will addition, note acquisition new the interest the new by removal date, which with equity Water prepayment funded with the note of of York reflecting to XX%. American on growth recently significant

this relates it As will its when the able regulated November, that the strategy to summary it strong financial earnings seller the additional further be of the associated condition, before be be American for secured a to of income we EPS year continued guidance will EPS in important Water interest up, XXXX. sure note investors guidance. To forward to guidance, our solidified in income. ongoing from additional from track is XX each future growth Slide to note wrap with we interest provide Therefore, which we core

BaaX solid and stable Just affirmed noted credit last month, rating improved our and debt outlook ratio. FFO to our Moody's investment-grade

support to our current continue ratings. ratios We our will credit are to confident debt FFO

roughly comfortably is XX, of hand as our net cash of of million within than December which target XX%. $XXX ratio of long-term less is XX%, debt-to-capital our total Our on

having current rate higher moderated challenging. be to interest While the environment continues somewhat,

on with position we in in November, fronts dealing number said challenge. though, strength in I a As this a of of are

our managing the holding will level over shareholders. With of capital we take of a of questions to debt issuing low and begin operator best to our and issuances any and back have. our strategy may advantage I'll remain turn Our company to and that, cost take of customers allows to you pricing it Q&A in scale risk us proactive at achieving and the debt

Operator

Our first Partners. comes Instructions] with [Operator Shahriar Pourreza question Guggenheim from

Shahriar Pourreza

saw essentially it's with news lead off M&A, timely about maybe but sort yesterday. you Northeast to the an the appetite any And usually John talking for of don't and the geographic know in specifically, Eversource where of put light prepared question, yesterday the your we given they Can remarks. that obviously, loves in the block. developments And Aquarion inorganic aversions I on M&A speak I to larger opportunities?

M. Hardwick

question. certainly any John comment Obviously, M&A all, I'd we as say, that Shahriar, of don't more. comment I saw think the it's of of well. news course, on And the a can first we nature. in space great activity

us, we've I standards be it that to think shared. for continues our

the We to have grow. ability to confident be in

to at. environments, policy, currently in may in have jurisdiction or regulatory confidence support in looking any have jurisdictions confidence that we we're We be other

gate at I that's opportunities. we which the So evaluate think always

that, I'd comments just John, your probably say So from additional any side?

John Griffith

said. Well

Shahriar Pourreza

of still you obviously, give think current through about then ins would I with plan? general spend the even lead just in copper be Is us of out and on there rule. saw spend upside it And your and of Perfect. would some Or could update. you're a to kind -- follow-on. the a last amount know like CapEx view outs PFAS working additive some the shift the sort we spend with out to

M. Hardwick

me it. then Yes, Shahriar, and Cheryl add to can again of let generally answer sort

additional plan. all, be guidance I around our early overall -- of impacts any first too able to of give sort think to to it's it's

I over what time period seeing we're example. here much important with PFAS think the a it thing rules, is to of longer the is for than remember

plan, So other more us to sort more to -- to impacts it here time of the give at move to projects for maybe will actual accommodate the spend think give incremental us look out are figure what us. whatever opportunity we to opportunity around

give that? clearer remarks, impact shorter-term our Again, prepared can Cheryl Cheryl, time significant. the PFAS, through we So her example. for and as have said then windows for I saw on plan add bit a guidance. with we will in know we to be to like will just it anything sort you don't dramatic think need a it probably little more it to we want

Cheryl Norton

thing good we where a in add, progress be I and service we'll would customer lead continue have that, as is making longer the lines is inclusive removing more only But to focused been that And that of really said, exist. this space. just lead time. is a they on period our The service rule over Shahriar, Susan Yes. line

So continue to at can we'll we in. look that how layer

M. Hardwick

Yes.

sort on punch and made lines, line material, owns. the Cheryl in it unknown prepared again and service is of that to is just one, customer comment remarks, her unknown this think I about about

So been now own working program of as we've customer the through replacing and have pipe lines, requirement added our we service our to look unknown at lines.

So it, that's also time think, with then why note long-term And again, bigger. it to the horizon important gets is keep I of. deal to

Operator

The with next question Evercore comes from Durgesh ISI. Chopra

Durgesh Chopra

of to a been I -- the getting go of on know limited you can in going But hate ton to to kind we've Just you're what M&A. questions I say. very be this. back

And Connecticut that to company. to clear you're M&A assets they attractive? say peers don't as that but I your would growth be put something. want have opportunities Are just markets characterize those would that rate the right, assets, assets? often these is as still organic In hurdle organic a extremely CapEx how I in see it. words you you to come versus high about rate, want don't seat, Or about the one-of-a-kind want thinking the your So to a your opportunity I -- mouth, have? with hurdle M&A How the just large high water generally describe ones a you

M. Hardwick

going go because with Durgesh, you're a to whole I'm at answer be I'll into the my detail outset, not not happy you to of lot sort here. Yes. of tell going

be states. I of And you and there know, just on significant in. we're in and think opportunities operate that. states the communities to focus XX are number on going continues our We we're as to -- a that in focus to we states, different the continue currently those think

the that at climate As an that business critical expect again, to our to going environment, environment, legislative always screens look we'll you opportunity take would, grow everyone the Regulatory are but look to of do, opportunities ability anyone thing you at as focus I think, on. and and from should this we're kind would perspective. a

Durgesh Chopra

Maybe then that. talk on gears. December, appreciate case that, schedule. case, suspended came the rate Maybe the next I Can commission, does the think out what Susan, please? Pennsylvania just have I steps in are us just that the think, you may update rate mean? they What Understood. I there, to switching

M. Hardwick

details the size Cheryl, We've think Yes. laid disclosed out case, of cetera. et I the the timing. around

big picture for this case. me Sort on of

of and driven this the for just with investment. cases is X, rate years the been the continue roughly today. We've this through our probably quite for for X-year expectation all file been the that really some that's no is our needs to cases case a I do are on it's we'll now strategy process. work investment. with years pace investment, As approach. for in by the to think case address again say really serve. our that number we of on perspective. we indications this that policy program. what jurisdictions, There tricky in communities have -- signaling spend of trying increasing regulatory any general I associated is is and And issues to of about our on X and we our that case capital been through of think, no the This exist changes the about consistent with all We're Pennsylvania cases We've to all general not we've is really that we'll saying these And all significant have be cycle. the our the simply it's in work I'd rate time that stay this, continuation process, now, all plan in as any our investment the that from path. progress, of continue we to on cases, generally about that of anything That's this case

state So through continue constructive terms in to Pennsylvania work we'll And Pennsylvania to again, confident we're state, there we than like our and our process the is of in a and it, to ability that other very think do. different is work any case. no approach always we

Durgesh Chopra

it. Got

Susan, that pause? all testimony -- like procedure the is like maybe intervenor if... do of not might that that there, as in follow-up Just I have a steps stuff. with Or does on terms pause. Does rate along on testimony, case suspension? the in I'm the and sure quick you that planned something the -- seen go

M. Hardwick

change. and It's normal on change. on no Yes, process. No, no schedule the

Operator

The Storozynski Angie Seaport. from with next question comes

Agnieszka Storozynski

mean I'm the side we electric going ask I on the regulatory states. outcomes, outcomes bad and very about in some to Illinois first. gas have

it. where already You around case some noise seeing have we're there a

investor-owned from I'm and just that lesson on utilities beyond just -- what the that how compliance we're PFAS, current if risk. secondly, so requirements, you've been you into on that So December in of wondering back in mentioned wondering happened against lawsuits how I'm And you've PFAS. seeing but you've is going learned if manage the any this I incorporated timing? some there understand then and

M. Hardwick

word, Yes. Again, Illinois, let On take my and me I off here. start answer sort the would Illinois. to insert of Pennsylvania

obviously lot just confident in work Illinois, about then might that if investment And always only, through are the We PFAS. to there there well. On as is PFAS, gas like. think, is There's significant and Cheryl, there. we issues electric they continue are here, like we'll to to we're It Certainly, in you on to want about that proceeding a going on on process case case our We that different are and and scheduled noise would. you no cases cases investment, again, our continue around too. as that ability with in case. actually comment industry

anything want that's all angle you're is environment to litigation these But seeing. probably what the referring mostly sorts surprising. either and probably here. looking around an Cheryl, we're of think not of I plaintiffs' I be There'll add And you on think topics? to for attorneys what this

Cheryl Norton

We the you strong Yes. based We're case investment going Illinois. on I we on completely capital built to that through process. we the were Susan, go say, way just would just accurate there, would. and process normally the good really a case about and feel

the and been our compliance with do are some stuff, for accountable we're for CERCLA working water are and U.S. as try the there, be we believe waters I there we're rules utilities really you treat across ], that being working us, But out we to everything in the the But seen coming we've that EPA all possibly all that to also in far proactive federal as doing As because Julien to level we've approach. polluted we're shouldn't there believe protections make lawsuits sure to out we to the get that that mentioned. [ at working held hard both with PFAS on designation pollutant. we're that that can -- for

should we And think be that from so we that. protected

that vein and from place. to being going of in we're to step So to space. the that that in MDL, that's part in the caused first process work pollution And one the who in the continue get people recovery

Operator

America. Dumoulin-Smith Bank Julien from of from comes question Next

Julien Dumoulin-Smith

And on bump to actually, nicely done say. I to here. that on guidance, the Maybe point guidance given here, the got

Or is will? through Just the forecast with the that respect I 'XX to forward, X-year 'XX. the resetting 'XX -- a more goes CAGR to 'XX this statement here, forecast you higher this could Implicitly, to going we period? this specific want confidence if period, just recognize of is nuance through say to

M. Hardwick

Yes.

comment tried sort we've Julien, do to ]. the John, want on we'll you I of duration clear, of on this NOL interest further? be But [ to additional on have this think the

John Griffith

period increase our you've but for tried strategy as that back It's that's Yes, think made I from -- got November? ongoing to comments from it we've -- in regulated our And 'XX. right, original our changes through Julien. we not guidance the of think this over as describe guidance in on an

Julien Dumoulin-Smith

pieces Right. to obviously, there, a to clear. here, certain little a some that customers factors, bit other can mitigation of some what case Yes, rate this we Illinois? instance. Illinois wanted out respect offset could that about help for any case other attention. maybe comment understood. to to increases you've factors of the rate degree here, there's in extra that and Can clarify you I just speak the circumstances around of got And With mitigating

M. Hardwick

on Yes. I'll strategy of on overall sort point. comment that

in that that those done said, as done our issues same and on actually, across other I very Illinois, our impact and our we've via the regulatory done of lessen things, other the we cost costs think sort not structures focused many pension Cheryl other good case. been we as of treat and really direct mitigate that just of that states. Illinois deferrals, sort embedded trackers, we've or across we've than no of frankly, will via mean jurisdictions, mechanisms to approaches territory. No, do and solutions inflationary amount help a rate we of that. I have experiencing and with different that already And in dealt we're we've currently

finish to have we Now obviously it.

get have anticipating come different procedural of there. materially through We rest And we're that through issues and any may But up. the anything the work schedule. to not

Julien Dumoulin-Smith

in were Excellent. just growth. It the M&A visible to terms in you hearing growth you needs back going making you accretive want point pretty I'm about sure element just the lastly, a provide be ingredient. clear make to key Yes. there about I were this. earlier. I and/or robust thought of piece then right And to

M. Hardwick

-- you're know Well, I to talking has be that I it you guess I said accretive. M&A don't Are piece. the about

again, repeat think, I'll just I it.

a look view is regulatory, would from footprint business sort And growth, I apply us And to for meaningful to that referring that productive, you for legislative jurisdictions, financial I has really, our of environment. opportunity was at obviously, think new be there. I too. contribution growth guess, to the and it

we've into always we've always So It's dialogue it's expansion the same the potential on territories. had. screens had same other

about this So how anything feel in about particular other situation jurisdictions. don't changes I think growth we

Julien Dumoulin-Smith

clarity the protracted. that that lastly to commented back here, there. extensible bit you on on little time going just you And And just piece, but about it. talked being Got more line FMV guys a getting

get expanding least from are resolution some this we a on prospects stand. from does far of even where as then given finally process there, it how as at to concerned? you perspective, guys sort And Just

M. Hardwick

to Well, Julien, me. help to going you're have

question, I'm not On the your referring of part first sure you're to. what

Julien Dumoulin-Smith

Well, potentially of value taking yes, the little market bit just a indeed. in longer fair on just terms

M. Hardwick

Yes, exactly I seen about strategy commissions that commission to what what legislation. have bit, And where work in I we I pieces and I've John quite regulatory applaud of doing larger said, taking that that's think the And of situations helpful. as part. And to of the or the got in of in and legislation the XX many in the I've a the the done as being a importance through hear got years that, I've and expanded Commonwealth. many my experience enacted, I really Pennsylvania actually the didn't this on remarks, last it is we're for I seen thoughtful implementation world so. just think said you. I and over here. we understanding lot legislation first the think this PUC approach has

So steps that I think good the are taken sense. make being

we said to we'll have all productively a to having employed. just it's guidelines more those But for framework And to work we how do helpful. work of continue -- may be that, to ultimately be think us able through in. give Now

way Now our that currently, to to it's do impacting bit having to in and clear said out of we've number Pennsylvania but expect that that here. and what back terms a we be and it of timing, have get obviously regulatory through also, soon in acquisitions able on that working on sort the a got process, means we and cases, approval we're

Operator

Crowdell Next from Mizuho. Anthony Comes question with

Anthony Crowdell

Julien. after question housekeeping quick a Just

more income, earnings You talked in HOS that's note about number. -- about clear and or ongoing very not that, you're of the an the much

should about that trajectory linear? a $X.XX additional talked keep that linear $X in just rate backfills base rolls we I -- but is When about to does XXXX. earnings some move growth forward very on it pretty number that know rate? small, Or think and you their think off more maybe and we of a post something 'XX, backfill I maybe

M. Hardwick

Yes.

it, cash I this have. The think We contingent additional the extension perspective. is have material. is now had to certainty on associated think to interest think that the that great you It's we the with Anthony, a a at on the York flow end. is there helpful terribly hit -- secured. We nice New not contract benefit payment from quite

think restructuring things material a there's sense of a impact about we made for plan. just translate of into our us that any that don't the overall variety to necessarily So lot

very a in of fill question, your to that that not this there finding answer additional would we need long sort be hole to create. capital expect $X.XX minor So will for to

Anthony Crowdell

Great. And comments more. unfortunately, like been Q&A Cheryl's -- And by has I Eversource of most and it's just question. it one the looks sidetracked could to if squeeze it's earlier

So asking question. I'm Eversource an not

bolt-on of a being was that that are the systems, are requirements that about was the these come -- that, may at increased Just think on maybe just needs acquisitions frequency the when foreshadow Cheryl is because where of water that smaller talked on you that systems, requirements smaller put a the compliance greater being cybersecurity, to that headed? maybe

M. Hardwick

Yes.

of was area as is mean, think having, as perspective I an not these and I last the community to an think, tried a to longer, been have need for able signal, to PFAS difficult to really think example. been the opportunity area an shorter several kinds that from sort great an this example. very those expertise communities for and solve deal an some needs. on that from acquisition perspective, or is be problems. list define is with. And work gets longer, focused that again, to another for we of have standpoint And us just standpoint. that probably these for we've discussions as communities we've investment what list what the Cyber manage, that may those and gets our more to of dialogue it an be as to I trying satisfy is always for perspective, prompted just from M&A as creates with helping rates We example. I another smaller great even another well Interest both to systems see have

move. impact our it a and make sort have before for water think communities to a strategy. impacts a we I longer-term term. them acquisition yes, they it think So a time takes Tsunami it's though issues It's to determine upside of these of wrestle to sort not to are of ready to use probably bit does much a with probably

again, of we kinds in these So use our issues discussions.

it think these take any time we impact issues. related I measurable before see to some will directly

Operator

from comes Wolfe question with next Fleishman The Research. Steven

Steven Fleishman

question. M&A an Not

of a the changes. on things So HOS couple the --

for note in the XX%, shift soon the seller the get I prepayment. about thinking great. rate is -- a the on of pretty rate interest guess to which just that's to high the -- rid So I mean and X%, pay the

think do And I wondering paid making getting back so I of seller that, just just that paid. -- about sure guess how in terms I'm getting

M. Hardwick

to do John, you Steve. Yes. want question, take this Great question?

John Griffith

credit HOS credit company The is significantly Sure. close has their the cash currently improved. lender, And a on move my new as a is acquisition as constantly funding owners the From comments, a in fact, evolved, has the we York well business. and with the as balance business. sheet. in their we're an from very to company New as with partner. stay perspective, contract Extending positive We're, making touch equity in credit the I mentioned

when So fact, ever we And They've it look But taken do it's the as compliance have covenants. we've than remained covenants covenants. to has. well. underlying business, you the in at the frankly with opportunity tighten doing in better

credit here. So we feel about very underlying the very, good

Steven Fleishman

back is the firm owner, back just it paying to? the Or does the private Does does business Okay. it -- the rest? up the up

John Griffith

owner was the backs trying to that's and say. I No, what it Yes. up,

this to that's who from make APAC fresh the coming there's owns equity business coming acquisition, when into business. the So to

Steven Fleishman

made And or that -- kind business. sharing it. too know income then you part mechanism, much have us say, you yeah. I just on the XXXX mechanism Could the let's you -- of just maybe for in, let sharing Got know how

M. Hardwick

jurisdictions the we in Aaron had I up don't Is if is to know you separate to I you it. that point disclosed. with back XX-K? it But the it. Steve, it Yes. think Steve, they're follow state to, which Yes. in referring revenue the work have can we to is in you're of you yes. I'll point the mechanism doing we we night. have this revenue-sharing XX-K, that's Yes, that from last the various filed our warranty [indiscernible]. collect share generated obviously, where the we And where

Aaron So [indiscernible]. will

Steven Fleishman

sent I'm case, normal two think Pennsylvania characterize you would of is for the at cases? sure letter of that your a beginning I commissioners case, would of you it. Or that? abnormal Pennsylvania the the is on framing Last that say? not just kind How the --

M. Hardwick

case. a $X on case that worth think We mean in little it's Yes, again, see, probably really we under again, big it I and billion say case. customary, just not a but years ago investment we should. would of issues don't is this this I here. were any necessarily It's it's proceeding X as

So again, we investment material. serve And the the driven communities by solely in jurisdictions we it's there. that or that -- certainly

Operator

Next from Jonathan with question comes Reeder Wells Fargo.

Jonathan Reeder

via legislature PA to ] to market bills do will just value the changes stuff, of you the that in and fair [ fair the come wanted back think the anticipate market to finish process? come I all the will value the Or you line? make it some commission the do across

M. Hardwick

Yes.

best this implement view of where charged Pennsylvania. is effectively step specific talking commission happens experience, is legislation. in that not fair commissions and market what exactly to this what a saying and and resolve here think you're the XX likely just is the this it. years able And path the normal of is of fairly doing, Our sort the to and about I issues I'm to that's Pennsylvania. my value And path I applying very I practice. around speaking be regularly normal I'm this proactive in do think provisions are Again, they issues the resolve took to interpreting to legislation with think

with problem value well, -- that do. what think one few was say conceptual there's to probably market no I shouldn't no I intended one. a are There legislation have fair

of I the consolidation the is mechanism the allow state, for to that think this to and good understanding occur. in for a there's need

do So it the effectively sure make commission think to and stands, implemented. will and that is work necessary the legislation the enacted think I I

Jonathan Reeder

Yes.

you're in your very mean PA much saying opinion, of I fully is, So consolidation. continued promotion behind

M. Hardwick

Yes.

a I as as believe state, that yes. statement, I true Commonwealth, a a think is

Jonathan Reeder

would deliver you the sort Okay. think M&A do make impact it proposed RRR of say activity? deal to will the have CapEx what on for will you on placeholders? tougher it AWK And the

M. Hardwick

I'd impact opportunities material from outcomes ultimately, generally ultimately plays gets having see no. say, a on we'll a how worked do standpoint. But have it then the speaking, think and transactions. not to it out I we procedural and see how it on available

Jonathan Reeder

for I rate decoupling question don't me. case, New least Okay. then in at that and were Jersey Do last something it's made, that new filings Illinois Or those is just typically in requests that possibly, case the too. that pursuing? PA revenue the get and make them? requests decoupling you're you And saw

M. Hardwick

a with can mechanisms impacts and part and or responsibility it what I'd good what work particular work it's in staffs and understand across don't say work about commissions comfortable their job inform is each educate our of And to are. commission to our also again, it's is varies what here various and mechanisms part Yes, question. really jurisdictions. a how jurisdiction. of to And the

of across that And we over So been I years. regard do that more proactive really we the have jurisdictions. couple think last our in

think so will that and inform we education that And we where dialogue, propose what as I do mechanisms. it

So say every broad it's in what The In necessarily accordingly. always work a we and application. decoupling jurisdictions think mechanisms jurisdiction, I wouldn't it's list. is our best I on all circumstantial. What work

Jonathan Reeder

Okay. proposals? New new say, have But been and, for Or in there they case, your recent PA are these Jersey, too? most

M. Hardwick

new to is cases. actually back in go I ground on if look breaking them recall. those these proposals. see have specifically again, wouldn't But necessarily of I I'd this had Yes. don't either to think we and

Operator

next Gregg comes The question UBS. from Orrill with

Gregg Orrill

you. Yes. Thank

settlements. PFAS a on Just the question

PFAS just following of thanks is your XM sort the outcome around of one? I'm expectation curious legacy liability changed settlement the additional on Just company's view if updates. if your And the up there. there the of for on anything's to sort

M. Hardwick

Yes.

fairness On process would proceeding. the settlement occurred, allocation had process the has approved. the settlement approved claim that process. really it settlement and other and just submittals and begins we of Gregg, we the outcomes. first get And through then expected hearing to is one ultimately going And question, around Obviously, one expect

to early will the indication you expect, financially. the it think through as We for on for of it's of Cheryl best these will quite said and cost we has. is along, to behalf overall customer of we any don't able think said settlement, dollars reduce dollar the us customer be all to outcomes avenue, terms be obviously, But give But of recovered amounts we've in in the on to as what So be too important the obligation obviously, recovery. exposure cents the full the remarks, her here. to collect the cover be to the

process. involved We've to good in a happy been it's it. be So

in leading here. here much think, changes. legacy that around and this I second sort team, of your getting question exposure I on the is quite favorable. To how effort a courts outcomes of of getting Our our lot are the view through ways, we think do work don't view

basis. on and are from terms confident earlier, of go-forward for to go-forward perspective. view said, different ability looking As be is be But will any as our we've an [indiscernible]. and attorneys are our larger ultimately we through Cheryl exposure, litigation said worked in to where than this legacy the will we're had and gets we we around process plaintiff's treating the multi-district the how MDL, that environment here all don't there that have to a an a like yet Again, opportunity in a we're basis, do on preparing treat, that

Operator

This conference Thank session. concludes The question-and-answer concluded. has attending. for now our you

now disconnect. may You

American Water Works (AWK) 15 Feb 242023 Q4 Earnings call transcript