American Water's Revenue Jumps 11.1%, Assets Grow to $34.7B

TL;DR

**AWK is flowing strong with solid revenue growth and asset expansion, making it a stable bet despite merger uncertainties.**

AI Summary

American Water Works Company, Inc. (AWK) reported a robust financial performance for the nine months ended September 30, 2025, with operating revenues increasing to $3,869 million, up from $3,483 million in the prior year, representing a 11.1% increase. Net income also saw a significant rise, with retained earnings growing from $2,112 million as of December 31, 2024, to $2,662 million as of September 30, 2025. The company's total assets expanded to $34,748 million from $32,830 million, driven primarily by an increase in net property, plant and equipment to $29,612 million from $28,038 million. Key business changes include increased capital expenditures, reflected in the $1,857 million increase in net property, plant and equipment. Risks highlighted include the potential impacts of the proposed merger with Essential Utilities, Inc., including a fixed exchange ratio and limitations on pursuing alternatives, as well as uncertainties surrounding the acquisition of Nexus Water Group, Inc. systems. The strategic outlook emphasizes continued investment in regulated businesses and managing financing costs amidst rising interest rates.

Why It Matters

This strong performance by American Water Works Company, Inc. signals stability and growth in the essential utilities sector, which is crucial for investors seeking defensive plays. The company's significant capital expenditures and asset growth indicate continued investment in infrastructure, benefiting customers through improved service reliability and potentially creating jobs. For the broader market, AWK's expansion, including potential acquisitions like Nexus Water Group, Inc., could lead to further consolidation in the water utility space, impacting competitive dynamics and regulatory oversight. The proposed merger with Essential Utilities, Inc. could reshape the competitive landscape for water services.

Risk Assessment

Risk Level: medium — The risk level is medium due to significant merger-related uncertainties, including a fixed exchange ratio with Essential Utilities, Inc. that won't adjust for stock price fluctuations, and the potential for a termination fee if the Nexus Water Group, Inc. acquisition fails. Additionally, the company faces risks from increased financing costs and interest rates, as explicitly mentioned in the forward-looking statements.

Analyst Insight

Investors should monitor the progress and terms of the proposed Essential Utilities, Inc. merger and the Nexus Water Group, Inc. acquisition closely, as these events will significantly impact future financial performance and shareholder value. Given the strong asset growth and revenue, AWK remains a solid long-term hold for those seeking stability in the utility sector, but be aware of potential short-term volatility from M&A news.

Financial Highlights

debt To Equity

1.19

revenue

$3,869M

total Assets

$34,748M

total Debt

$13,025M

cash Position

$166M

revenue Growth

+11.1%

Key Numbers

• $3,869M — Operating revenues (Increased from $3,483 million for the nine months ended September 30, 2024)
• $34,748M — Total assets (Increased from $32,830 million as of December 31, 2024)
• $29,612M — Property, plant and equipment, net (Increased from $28,038 million as of December 31, 2024)
• $2,662M — Retained earnings (Increased from $2,112 million as of December 31, 2024)
• 195,123,565 — Common Stock Shares Outstanding (As of October 20, 2025)
• $795M — Secured seller promissory note (From the sale of the Homeowner Services Group, unchanged from December 31, 2024)
• $13,022M — Long-term debt (Increased from $12,518 million as of December 31, 2024)

Key Players & Entities

• American Water Works Company, Inc. (company) — registrant
• Essential Utilities, Inc. (company) — merger partner
• Nexus Water Group, Inc. (company) — acquisition target
• U.S. Securities and Exchange Commission (regulator) — filing recipient
• New York Stock Exchange (regulator) — stock exchange
• Carmel River (other) — water supply source for California subsidiary
• Monterey, California (other) — location of Cal Am water system assets

FAQ

Risk Factors

• Proposed Merger with Essential Utilities, Inc. [high — legal]: The proposed merger with Essential Utilities, Inc. presents significant risks, including a fixed exchange ratio that could be disadvantageous if AWK's stock price underperforms. Furthermore, the agreement limits AWK's ability to pursue alternative transactions, potentially foregoing more favorable opportunities.
• Acquisition of Nexus Water Group, Inc. Systems [medium — operational]: The acquisition of Nexus Water Group, Inc. systems introduces integration risks and operational uncertainties. The success of this acquisition is contingent on effective integration and the realization of expected synergies, which may not materialize as planned.
• Rising Interest Rates and Financing Costs [medium — financial]: The company faces risks associated with rising interest rates, which will increase the cost of financing its capital expenditures and debt. This could negatively impact profitability and cash flow available for dividends and investments.
• Regulatory Environment and Rate Cases [medium — regulatory]: AWK operates in a highly regulated environment. Adverse decisions in rate cases or changes in regulatory policy could impact revenue, profitability, and the ability to recover costs, affecting financial performance.

Industry Context

American Water Works operates in the essential utility sector, characterized by stable demand but significant regulatory oversight. The industry is capital-intensive, requiring continuous investment in infrastructure to maintain and upgrade aging systems. Trends include consolidation, increasing focus on water quality and resilience, and the adoption of advanced technologies for operational efficiency.

Regulatory Implications

AWK's operations are heavily influenced by state and local regulatory bodies that approve rates and service standards. Changes in regulatory frameworks, adverse rate case outcomes, or new environmental regulations pose significant risks. The company must navigate these complexities to ensure cost recovery and maintain profitability.

What Investors Should Do

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Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported operating revenues of $3,869 million, an 11.1% increase year-over-year, indicating strong top-line growth.
• 2025-09-30: Consolidated Balance Sheet as of September 30, 2025 — Total assets grew to $34,748 million, with net property, plant and equipment increasing to $29,612 million, reflecting significant capital investments.
• 2025-09-30: Consolidated Balance Sheet as of September 30, 2025 — Retained earnings increased to $2,662 million, up from $2,112 million at year-end 2024, demonstrating improved profitability.
• 2024-12-31: Balance Sheet as of December 31, 2024 — Provided the prior year-end baseline for comparison of asset and liability growth.

Glossary

Property, plant and equipment, net

The value of a company's tangible assets used in operations, after deducting accumulated depreciation. (This is a core asset for AWK, reflecting its infrastructure investments. The increase to $29,612 million from $28,038 million indicates significant capital expenditure.)

Retained earnings

The cumulative amount of net income that a company has retained over time, rather than distributing as dividends. (The growth from $2,112 million to $2,662 million signifies increasing profitability and the company's ability to reinvest earnings.)

Secured seller promissory note

A debt instrument issued by a seller as part of an asset sale, often secured by the assets being sold. (The $795 million note from the sale of the Homeowner Services Group remains unchanged, indicating a stable financing component from a past divestiture.)

Long-term debt

Financial obligations that are due more than one year from the balance sheet date. (The increase to $13,022 million from $12,518 million reflects ongoing financing for capital projects, a key aspect of AWK's growth strategy.)

Regulatory assets

Costs that have been incurred by a regulated utility but have not yet been recovered through customer rates, expected to be recovered in the future. (The balance of $1,179 million indicates costs that are subject to future regulatory approval for recovery, impacting future earnings.)

Regulatory liabilities

Obligations that a regulated utility has to its customers, often related to amounts collected that are subject to future regulatory review or refund. (The $1,467 million balance represents potential future outflows or adjustments based on regulatory decisions.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, American Water Works Company, Inc. reported a notable 11.1% increase in operating revenues to $3,869 million compared to the prior year. Total assets expanded to $34,748 million, driven by a $1,574 million increase in net property, plant and equipment, reflecting substantial capital investments. Retained earnings also saw a healthy rise to $2,662 million, indicating improved profitability. New risks related to the proposed merger with Essential Utilities and the acquisition of Nexus Water Group systems have emerged, alongside the ongoing concern of rising interest rates impacting financing costs.

Key Financial Figures

• $0.01 — ich registered Common stock, par value $0.01 per share AWK New York Stock Exchange

Filing Documents

• awk-20250930.htm (10-Q) — 1872KB
• a2025q3ex-109xsuttonevpchr.htm (EX-10.9) — 15KB
• a2025q3ex-221xguaranteedse.htm (EX-22.1) — 9KB
• a2025q3ex-311.htm (EX-31.1) — 8KB
• a2025q3ex-312.htm (EX-31.2) — 8KB
• a2025q3ex-321.htm (EX-32.1) — 4KB
• a2025q3ex-322.htm (EX-32.2) — 4KB
• image_0.jpg (GRAPHIC) — 71KB
• image_1.jpg (GRAPHIC) — 85KB
• 0001410636-25-000173.txt ( ) — 10355KB
• awk-20250930.xsd (EX-101.SCH) — 69KB
• awk-20250930_cal.xml (EX-101.CAL) — 93KB
• awk-20250930_def.xml (EX-101.DEF) — 331KB
• awk-20250930_lab.xml (EX-101.LAB) — 774KB
• awk-20250930_pre.xml (EX-101.PRE) — 554KB
• awk-20250930_htm.xml (XML) — 1711KB

Forward-Looking Statements

Forward-Looking Statements 1

Financial Information

Part I. Financial Information

Consolidated Financial Statements

Item 1. Consolidated Financial Statements 5

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 41

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 56

Controls and Procedures

Item 4. Controls and Procedures 56

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 58

Risk Factors

Item 1A. Risk Factors 59

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 65

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 65

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 65

Other Information

Item 5. Other Information 65

Exhibits

Item 6. Exhibits 65

Signatures

Signatures 68 * * * Throughout this Quarterly Report on Form 10-Q ("Form 10-Q"), unless the context otherwise requires, references to the "Company" and "American Water" mean American Water Works Company, Inc. and all of its subsidiaries, taken together as a whole. References to the "parent company" mean American Water Works Company, Inc., without its subsidiaries. The Company maintains a website at https://amwater.com and an Investor Relations website at https://ir.amwater.com . Information contained on the Company's websites shall not be deemed incorporated into, or to be a part of, this report, and any website references included herein are not intended to be made through active hyperlinks. i Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS Statements included in Part I, Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words with prospective meanings such as "intend," "plan," "estimate," "believe," "anticipate," "expect," "predict," "project," "propose," "assume," "forecast," "likely," "uncertain," "outlook," "future," "pending," "goal," "objective," "potential," "continue," "seek to," "may," "can," "should," "will" and "could" or the negative of such terms or other variations or similar expressions. Forward-looking statements may relate to, among other things: the Company's future financial performance, liquidity and cash flows; the timing and amount of rate and revenue adjustments, including through general rate case filings, filings for infrastructure surcharges and other governmental agency authorizations and proceedings, and filings to address regulatory lag; the Company's ability to execute its current and long-term business, operational, capital expenditures and growth plans and strategies; the timing and outcome of pending or future acquisition activity (including, without limitation, the merger agreement with Essential Utilities, Inc. ("Essential") and the proposed acquisition of systems owned indirectly by Nexus Water Group, Inc.), and the ability to achieve organic customer growth; the ability of the Company's California subsidiary to obtain adequate alternative water supplies in lieu of diversions from the Carmel River; the amount, allocation and timing of projected capital expenditures and related funding requirements; the Company's ability to

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS American Water Works Company, Inc. and Subsidiary Companies Consolidated Balance Sheets (Unaudited) (In millions, except share and per share data) September 30, 2025 December 31, 2024 ASSETS Property, plant and equipment $ 36,895 $ 35,059 Accumulated depreciation ( 7,283 ) ( 7,021 ) Property, plant and equipment, net 29,612 28,038 Current assets: Cash and cash equivalents 166 96 Restricted funds 11 29 Accounts receivable, net of allowance for uncollectible accounts of $ 58 and $ 53 , respectively 459 416 Income tax receivable 3 25 Unbilled revenues 437 315 Materials and supplies 109 103 Other 367 231 Total current assets 1,552 1,215 Regulatory and other long-term assets: Regulatory assets 1,179 1,150 Secured seller promissory note from the sale of the Homeowner Services Group 795 795 Operating lease right-of-use assets 87 89 Goodwill 1,151 1,144 Other 372 399 Total regulatory and other long-term assets 3,584 3,577 Total assets $ 34,748 $ 32,830 The accompanying notes are an integral part of these Consolidated Financial Statements. 5 Table of Contents American Water Works Company, Inc. and Subsidiary Companies Consolidated Balance Sheets (Unaudited) (In millions, except share and per share data) September 30, 2025 December 31, 2024 CAPITALIZATION AND LIABILITIES Capitalization: Common stock ($ 0.01 par value; 500,000,000 shares authorized; 200,576,637 and 200,371,701 shares issued, respectively) $ 2 $ 2 Paid-in-capital 8,630 8,598 Retained earnings 2,662 2,112 Accumulated other comprehensive income 4 12 Treasury stock, at cost ( 5,453,167 and 5,451,216 shares, respectively) ( 391 ) ( 392 ) Total common shareholders' equity 10,907 10,332 Long-term debt 13,022 12,518 Redeemable preferred stock at redemption value 3 3 Total long-term debt 13,025 12,521 Total capitalization 23,932 22,853 Current liabilities: Short-term debt 1,005 879 Current portion of long-term debt 1,269 6