American Water Works NYSE: AWK opened 2026 with first-quarter results that management said were “right on track” to achieve full-year targets, while also providing updates on regulatory activity, infrastructure investments, acquisition growth and progress on its proposed merger with Essential Utilities.
First-quarter results track full-year guidance
President and CEO John Griffith said the company began the year with adjusted earnings of $1.01 per share, which he described as reflecting “a successful execution of our plan so far in 2026.” Griffith said the company expects to deliver 8% EPS growth in 2026 and reaffirmed full-year earnings guidance as well as long-term targets.
CFO David Bowler said consolidated earnings were $1.00 per share and “in line with our expectations.” Bowler attributed higher revenue to authorized rate increases tied to investment recovery across the company’s states, while noting that operating and maintenance costs, depreciation and financing costs rose “as expected.”
Bowler also cautioned that the company expects the bulk of its earnings-per-share growth to come later in the year. “The majority of our EPS growth will occur in the second half of the year, with revenue increases in key states expected to go into effect in Q3,” he said.
Dividend raised; long-term growth targets reiterated
Griffith said the board approved an 8.2% increase in the quarterly cash dividend to $0.895 per share. He said American Water has “grown our dividend consistently over the last decade,” and reiterated expectations for 7% to 9% annual dividend growth aligned with the company’s 7% to 9% EPS growth target.
Merger process with Essential Utilities advances
Griffith said the company received its first state approval for the proposed merger with Essential Utilities, noting that Kentucky approved the transaction last week. He said the next expected decision is in Virginia in June, and that proceedings in Pennsylvania and New Jersey are following planned procedural schedules through summer and early fall.
Griffith added that American Water expects to file the Hart-Scott-Rodino notification “late this summer” and continues to expect the merger to close by the end of the first quarter of 2027.
During Q&A, Griffith told JPMorgan’s Aidan Kelly that approvals are needed “in all of the states where approvals are required,” adding that public utility commission approvals are required in seven states.
Asked by Wells Fargo’s Andrew Covato about customer benefits highlighted to regulators in Pennsylvania and New Jersey, Griffith said the company has made its filings and that public hearing processes are underway. He said it is “still early days,” but added that the company believes there is “good broad support” and said it looks forward to demonstrating benefits in Pennsylvania, which he described as “an affirmative public benefit state.”
Regulatory updates: West Virginia, Maryland orders; Pennsylvania and New Jersey remain key
Bowler said American Water received final orders in West Virginia and Maryland during the first quarter, describing them as “reasonable outcomes in terms of revenues and ROEs balanced with our continued focus on affordability.” He added that West Virginia American Water now has “over $1 billion of rate base.”
He said general rate cases are in progress in five jurisdictions, including Virginia, California and Illinois, which he said are “progressing as expected” and entering key phases of their procedural schedules.
In New Jersey, Bowler said the next major step is Rate Counsel and intervener testimony due June 22. He said the company expects new rates for the current case to go into effect “later this fall.”
In Pennsylvania, Bowler said briefs from all parties were filed earlier in the month and that a recommended decision from the administrative law judge is expected in May. While the company did not reach a settlement before the procedural deadline of April 6, Bowler said management is “encouraged by the tone of the case” and expects a final order in July, with new rates effective in August.
In response to questions on Pennsylvania’s rate case, Griffith said the company “feel[s] good about the merits of our case” and pointed to “the types and amount of water and wastewater investment that are required in the state,” including investments related to PFAS remediation and lead and copper. He also said the company sees “a lot of alignment” with stakeholders around the need for both affordability and infrastructure investment.
Capital investments, legislation, acquisitions and financing
EVP and COO Cheryl Norton said the company invested in capital projects in the first quarter focused primarily on:
- Pipe replacement
- Above-ground treatment facilities, including PFAS remediation
- Lead service line removal
- Updated technologies such as smart meters
Norton also highlighted legislative activity in several states. She said Iowa passed an infrastructure recovery mechanism expected to take effect July 1 to enable timelier recovery of certain investments outside general rate cases. In Indiana, she said legislation will allow the company to adjust for power and chemical costs if they change by more than 3% during a defined period, also effective July 1. Norton added that Maryland and Virginia passed affordability-related bills intended to benefit low-income customers.
On acquisitions, Norton said American Water has 105,000 customer connections under agreement from deals totaling $565 million. She said the company completed the acquisition of the Nitro Regional Wastewater Utility in West Virginia for $20 million, and plans to invest more than $40 million over the next five years while serving 4,600 customer connections. Norton also said approvals for the Nexus Water Group systems have been received in seven of eight required states, and that the company now expects that closing to occur by June 30.
American Water also discussed customer-related initiatives tied to water quality costs. Griffith said the company has secured approximately $185 million of net payments from PFAS manufacturers that will be passed on to customers or offset PFAS remediation costs.
On financing and liquidity, Bowler said the company’s total debt-to-capital ratio was 58% as of March 31, improving from year-end after repayment of a $795 million HOS note in February. He also said the company completed a $700 million long-term debt issuance on April 1 at 5.2%, and that the 2026 financing plan continues to contemplate settling roughly $1 billion of equity forward proceeds around midyear. In Q&A, Bowler said another long-term debt issuance is planned for the “latter half of the year,” suggesting Q3 or early Q4.
Bowler also addressed a New Jersey corporate alternative minimum tax (CAMT) update, telling Jefferies analyst Paul Zimbardo that the company expects a refund of about $84 million related to 2024 returns. Bowler said that prior to the change, CAMT payments were expected to be “about $100 million a year,” which he described as a meaningful cash benefit going forward. He later told Wolfe Research’s Aditya Gandhi that the company will incorporate the change into its plan refresh in Q3 and will evaluate potential implications for equity needs at that time.
American Water reaffirmed full-year 2026 adjusted EPS guidance of $6.02 to $6.12 and reiterated expectations for consistent earnings and dividend growth “well within the 7%-9% range through 2030 and beyond,” Bowler said.
About American Water Works NYSE: AWK
American Water Works Company, Inc NYSE: AWK is a publicly traded utility company that provides water and wastewater services in the United States. Its core business is the operation, management and maintenance of regulated water and wastewater systems that deliver potable water, collect and treat wastewater, and provide related customer services to residential, commercial and industrial customers as well as municipalities. The company's operations include water treatment and distribution, wastewater collection and treatment, meter reading and billing, emergency repairs, and long-term infrastructure planning and capital project execution.
In addition to its regulated utility operations, American Water offers complementary nonregulated services and solutions that support system reliability and customer needs.
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