American Water Works Company, Inc. (AWK): Results of Operations and Financial Condition
American Water Works Company, Inc. (AWK) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 July 29, 2026 Investor Contact: Aaron Musgrave Vice President, Investor Relations 856-955-4029 aaron.musgrave@amwater.com Media Contact: Maureen Duffy Executive Vice President, Communications and External Affairs 856-955-4163 maureen.duffy@amwater.com AMERICAN WATER
How this was made
The 30-second read
Why it matters
Traders can update expectations for 2026 earnings trajectory based on affirmed adjusted EPS range and the timing of Pennsylvania rates effective Aug 13, while also monitoring merger approvals and integration planning progress.
Market read
Primary earnings and guidance confirmation with specific regulatory timing and merger milestone updates, providing actionable inputs for near-term positioning.
What to watch
The filing highlights higher operating expenses (purchased water, power, chemicals) and higher interest expense tied to capital funding, which could pressure margins even with rate recovery.
AMERICAN WATER REPORTS SOLID SECOND QUARTER 2026 RESULTS AFFIRMS 2026 EPS GUIDANCE AND LONG-TERM TARGETS
Second-quarter GAAP and adjusted EPS increased from 2025, Regulated Businesses net income rose, and the company affirmed 2026 adjusted EPS guidance and long-term targets. Revenue growth from new rates and acquisitions was partly offset by higher operating, depreciation, and financing costs.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Diluted earnings per share, net income attributable to shareholders, three months ended June 30GAAP | $1.61 per share | – | – |
| Adjusted diluted earnings per share, three months ended June 30non-GAAP | $1.61 per share | – | – |
| Diluted earnings per share, net income attributable to shareholders, six months ended June 30GAAP | $2.61 per share | – | – |
| Adjusted diluted earnings per share, six months ended June 30non-GAAP | $2.62 per share | – | – |
| Estimated impact of weather, three months ended June 30non-GAAP | (0.01) | – | – |
| Estimated impact of weather, six months ended June 30non-GAAP | (0.01) | – | – |
| Incremental interest income from amended HOS seller note, three months ended June 30non-GAAP | — | – | – |
| Incremental interest income from amended HOS seller note, six months ended June 30non-GAAP | (0.01) | – | – |
| Transaction costs associated with the pending merger with Essential Utilities, three months ended June 30non-GAAP | 0.01 | – | – |
| Transaction costs associated with the pending merger with Essential Utilities, six months ended June 30non-GAAP | 0.04 | – | – |
| Total net adjustments, three months ended June 30non-GAAP | — | – | – |
| Total net adjustments, six months ended June 30non-GAAP | 0.01 | – | – |
| Regulated Businesses net income, second quarterGAAP | $331 million | – | – |
| Regulated Businesses net income, first six monthsGAAP | $539 million | – | – |
| Operating revenues increase, three months ended June 30, 2026GAAP | $90 million | – | – |
| Operating revenues increase, six months ended June 30, 2026GAAP | $152 million | – | – |
| Operating expenses increase, three months ended June 30, 2026GAAP | $29 million | – | – |
| Operating expenses increase, six months ended June 30, 2026GAAP | $73 million | – | – |
| Depreciation expense increase, three months ended June 30, 2026GAAP | $21 million | – | – |
| Depreciation expense increase, six months ended June 30, 2026GAAP | $42 million | – | – |
| Interest expense increase, three months ended June 30, 2026GAAP | $11 million | – | – |
| Interest expense increase, six months ended June 30, 2026GAAP | $23 million | – | – |
| Infrastructure improvements and growth investment, first six months of 2026other | $1.8 billion | – | – |
| Regulated acquisitions investment, first six months of 2026other | $346 million | – | – |
| Additional annualized revenues authorized since January 1, 2026other | $216 million | – | – |
| Additional annualized revenues authorized from general rate cases since January 1, 2026other | $111 million | – | – |
| Additional annualized revenues authorized from infrastructure surcharges since January 1, 2026other | $105 million | – | – |
| Annualized incremental revenue request from rate cases and infrastructure surchargeother | $494 million | – | – |
2026 outlook
- NoteAdjusted earnings per share guidance range of $6.02 to $6.12 (non-GAAP).
- NoteLong-term EPS and dividend growth rate targets of 7-9%.
- NoteThe company plans to invest a total of approximately $3.7 billion across its footprint in 2026, including acquisitions.
Capital returns
- On July 29, 2026, the Board of Directors declared a quarterly cash dividend payment of $0.8950 per share, payable on September 1, 2026, to shareholders of record as of August 11, 2026.
- During June 2026, the Company elected to physically settle an aggregate of 3,403,756 shares under Forward Sale Agreements.
- The total net proceeds received by the Company from these settlements were $476 million.
What drove it
- Operating revenue growth was primarily driven by authorized revenue increases from completed general rate cases and infrastructure proceedings for recovery of incremental capital and acquisition investments, plus incremental revenue from closed acquisitions.
- The company has general rate cases in progress in six jurisdictions and has filed for an infrastructure surcharge in one jurisdiction.
- Approximately 52,000 customer connections were added from acquisitions through June 30, including the Nexus Water systems.
- Three states have approved the proposed merger with Essential Utilities, a settlement in principle was reached in Texas, and integration planning is progressing.
Concerns
- Higher purchased water cost and usage, purchased power costs, and chemicals costs increased operating expenses.
- Higher depreciation expense reflects increased capital investment.
- Higher interest expense reflects incremental short- and long-term debt used primarily to fund capital investments.
- 2026 adjusted EPS guidance excludes transaction costs related to the proposed merger with Essential Utilities, weather impacts, and incremental interest income through February 13, 2026 related to the amended HOS secured seller note.
What to watch
- New Pennsylvania rates are scheduled to go into effect August 13.
- Progress and outcomes for general rate cases in six jurisdictions and the infrastructure surcharge filing in one jurisdiction.
- Execution of the approximately $3.7 billion 2026 capital investment plan, including acquisitions.
- Additional regulatory approvals, the Texas settlement process, integration planning, and transaction costs associated with the proposed merger with Essential Utilities.
- Settlement of the remaining 4,694,836 shares available under the Forward Sale Agreements by December 31, 2026.
Balance sheet and cash flow
- In August 2025, the Company entered into Forward Sale Agreements relating to an aggregate of 8,098,592 shares of common stock at an initial forward price of $139.657 per share.
- As of June 30, 2026, 4,694,836 shares of the Company’s common stock remain available for future settlement under the remaining Forward Sale Agreements.
- The Company intends to use any net cash proceeds from future settlement of the Forward Sale Agreements for general corporate purposes.
- Interest expense was higher as a result of incremental short and long-term debt primarily to fund capital investments.
Analysis
American Water reported second-quarter diluted GAAP earnings per share of $1.61 per share, compared with $1.48 per share in 2025. Adjusted diluted EPS was also $1.61 per share, compared with $1.49 per share. For the first six months, GAAP EPS was $2.61 per share versus $2.53 per share, while adjusted EPS was $2.62 per share versus $2.51 per share. The limited difference between GAAP and adjusted EPS in the quarter reflects offsetting weather and merger-transaction adjustments.
Regulated Businesses net income increased to $331 million in the second quarter from $288 million in the prior-year period, and to $539 million for the first six months from $489 million. Operating revenues increased $90 million in the quarter and $152 million in the first half, primarily from authorized revenue increases tied to completed rate cases and infrastructure proceedings, recovery of capital and acquisition investments, and revenue from closed acquisitions. Since January 1, 2026, the company has been authorized $216 million of additional annualized revenues.
Cost pressure remained material. Operating expenses were higher by $29 million in the quarter and $73 million in the first half, driven partly by purchased water, purchased power, and chemicals costs. Depreciation expense was higher by $21 million and $42 million, respectively, due to the capital investment program. Interest expense rose $11 million in the quarter and $23 million in the first half as incremental short- and long-term debt funded capital investments.
Capital deployment continued at a substantial pace, with $1.8 billion invested in infrastructure improvements and growth in the first six months, including $346 million for regulated acquisitions. The company stated that its approximately $3.7 billion 2026 investment plan remains on track. It also settled 3,403,756 shares under its Forward Sale Agreements in June, receiving $476 million of total net proceeds, while 4,694,836 shares remained available for future settlement as of June 30, 2026.
Management affirmed 2026 adjusted EPS guidance of $6.02 to $6.12 and its long-term EPS and dividend growth rate targets of 7-9%. The forward outlook excludes merger transaction costs, weather impacts, and specified incremental interest income. Regulatory execution, including Pennsylvania rates scheduled to take effect August 13, additional pending rate actions, capital-plan execution, and progress on the Essential Utilities merger are the central reported variables for the balance of 2026.
Management, verbatim
The company has delivered solid results for the first half of the year and we are pleased to have received a constructive decision in our Pennsylvania general rate case to begin the second half of 2026.
John Griffith, President and CEO of American Water
We are also encouraged with the continuing progress we and Essential Utilities are making in merger integration planning and have received three state regulatory approvals for the merger so far.
John Griffith, President and CEO of American Water
Not in the filing
stated, not guessed- Consolidated total operating revenue for the second quarter and first six months
- Consolidated gross profit and gross margin
- Consolidated operating income
- Consolidated net income in dollars
- Total operating expenses for the second quarter and first six months
- Cash and cash equivalents
- Total debt
- Operating cash flow
- Free cash flow
- Share repurchases
- Guidance for revenue, gross margin, operating expenses, and tax rate
- GAAP EPS guidance range
- Prior-quarter comparisons for reported metrics
- Percentage year-over-year and quarter-over-quarter changes for reported metrics
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The 8-K (Item 2.02) includes an investor press release on Q2 2026 results, reaffirmed 2026 EPS guidance and long-term targets, and updates on regulatory execution and a proposed merger with Essential Utilities.
Ticker impact
American Water reports Q2 2026 GAAP EPS $1.61 and affirms 2026 adjusted EPS guidance $6.02 to $6.12, plus Pennsylvania rate-case decision.
Moderately positive bias for the next few sessions as traders price in affirmed EPS range and regulatory momentum; volatility possible around merger execution and transaction-cost assumptions.
The filing is a primary earnings and guidance disclosure (8-K with press release) including specific EPS prints, affirmed guidance, and concrete regulatory milestones (PA rates effective Aug 13, multiple state approvals for Essential Utilities merger).
Market effects
Reinforces the regulated-utility read-across that rate-case outcomes and infrastructure surcharges can stabilize earnings and support guidance credibility.
Pennsylvania regulatory execution (rates effective Aug 13) is a direct regional earnings driver for AWK.
Limited global spillover; primarily US regulated-water utility sentiment and M&A execution expectations.
Counterpoint
Affirmed guidance may already be priced in; the merger-related transaction costs and weather/interest-income exclusions could still create GAAP-to-non-GAAP divergence.
Key entities
- issuerAmerican Water Works Company, Inc.
Reports Q2 2026 results, affirms 2026 adjusted EPS guidance $6.02 to $6.12, and updates regulatory and merger progress.
- merger_targetEssential Utilities, Inc.
Proposed merger counterparty; three states approved and a Texas settlement in principle reached per the release.
- regulatory_eventPennsylvania general rate case
Constructive decision received; new rates to go into effect Aug 13, 2026.
