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American Water (AWK) Q4 Earnings Match, Sales Beat Estimates

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American Water Works Company AWK posted fourth-quarter 2019 earnings of 73 cents per share, on par with the Zacks Consensus Estimate. The bottom line improved 5.8% year over year on the back of strong contributions from Regulated and Market-based businesses.

GAAP earnings came in at 54 cents compared with 62 cents in the year-ago quarter. The primary reason for the difference in GAAP and operating earnings in the reported quarter was a one-time loss on the sale of Keystone operations.

Total Revenues
 
Total revenues of $902 million beat the Zacks Consensus Estimate of $898 million by 0.5% and improved 6.1% from the year-ago figure of $850 million.

Highlights of the Release

Total operating expenses in the quarter were $678 million, up 12.6% from the year-ago period. The decline was due to higher operation and maintenance expenses.

Operating income was $224 million, 9.7% lower than the year-ago figure.

Interest expenses in the reported quarter totaled $98 million compared with $91 million in the prior-year period.

Segment Details
 
Regulated businesses’ net income was $152 million compared with $118 million in the year-ago quarter. In 2019, this segment added 53,100 customers through acquisitions. Notably, acquisitions, organic growth and additional authorized revenues to support infrastructure investments boosted income.

The company expects to add an additional 44,200 customer connections through pending acquisitions.

Market-Based businesses’ net income was $17 million compared with $14 million in the year-ago quarter. This is attributable to organic growth at its Homeowner Services Group.

Financial Highlights

Cash and cash equivalents amounted to $60 million as of Dec 31, 2019, down from $130 million on Dec 31, 2018.

Long-term debt was $8,639 million as of Dec 31, 2019, higher than $7,576 million at 2018-end.

Cash flow from operating activities in 2019 was $1,383 million compared with $1,386 million in 2018.

Guidance

American Water reaffirmed its guidance for 2020 earnings in the range $3.79-$3.89 and long-term EPS compound annual growth rate within 7-10%, anchored off of 2018 adjusted EPS.

The company has plans to invest $20-$22 billion capital over the next 10 years.

Zacks Rank

American Water Works currently carries a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Water Utility Releases

American States Water Co. (AWR - Free Report) is set to release fourth-quarter 2019 results on Feb 24. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 41 cents.

SJW Group SJW is scheduled to release fourth-quarter 2019 results on Feb 26. The Zacks Consensus Estimate for earnings for the to-be-reported quarter is pegged at 33 cents per share.

California Water Service Group CWT is slated to release fourth-quarter 2019 financial numbers on Feb 27. The Zacks Consensus Estimate for quarterly earnings stands at 33 cents.

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