American Water Works (NYSE:AWK) reported higher second-quarter earnings and reaffirmed its full-year outlook, citing rate increases, cost controls, infrastructure investment and continued acquisition activity.
Adjusted earnings were $1.61 per share in the second quarter of 2026, up from $1.49 per share a year earlier. For the first six months of the year, adjusted earnings were $2.62 per share, compared with $2.51 per share in the first half of 2025.
Rates, Costs and Financing
Executive Vice President and CFO David Bowler said second-quarter revenue rose as authorized rate increases took effect across the company’s state operations. Depreciation, financing costs and general taxes also increased as expected, while operation and maintenance expenses were flat from the prior-year quarter.
Bowler said most of American Water’s EPS growth is expected in the second half of 2026, as revenue increases in key states are expected to take effect later in the third quarter.
As of June 30, the company’s total debt-to-capital ratio was 58%. American Water completed a $500 million long-term debt issuance on May 20 at a 4.625% rate. In June, it settled 3.4 million shares of approximately 8 million shares under equity forward agreements, generating net proceeds of $476 million. The company expects to settle its remaining equity forwards in the fourth quarter.
Regulatory Activity and Capital Recovery
Griffith said American Water completed rate cases in West Virginia, Maryland and Pennsylvania during 2026, with the proceedings authorizing recovery of nearly all capital investments made in those states.
In Pennsylvania, the company received a final order approving a $75 million annualized increase in water and wastewater revenue, compared with its requested $160 million increase. The order authorized a 9.55% return on equity and a 54.2% equity component. New rates are scheduled to take effect Aug. 13.
The company has general rate cases underway in six jurisdictions. It reached a black-box settlement with staff and several intervenors in Virginia in June, along with a partial settlement with California’s Public Advocates Office. American Water said it was in confidential settlement discussions in New Jersey, while its Illinois case is scheduled for evidentiary hearings in August, briefing in September and a proposed order in October.
American Water also filed rate cases in Kentucky and Missouri. The Kentucky filing seeks $18 million in additional annual revenue and reflects $108 million in planned system investments from January through December 2027. The Missouri filing seeks $179 million in additional annual revenue and reflects $1.6 billion in system investments from June 2025 through May 2028.
Bowler said the Missouri proceeding is the company’s first using the state’s fully forecasted future test-year legislation enacted last year.
During the question-and-answer session, Griffith said capital investment is the main driver of the company’s rate-case timing in Pennsylvania. He said the company is exploring a broader distribution system improvement charge mechanism that could provide interim recovery between rate cases and help smooth customer bill increases. Bowler said roughly 40% of the company’s Pennsylvania capital spending currently falls under the DSIC mechanism, and broader eligibility would require legislative changes.
Investment and Acquisitions
American Water invested $1.8 billion in capital projects and acquisitions during the first half of 2026. Chief Operating Officer Cheryl Norton said the spending supported infrastructure renewal, resilience, water-quality work and newly acquired systems.
The company completed its acquisition of systems from Nexus Water Group on June 1, ahead of its original projected timetable. The transaction added 47,000 customer connections and 70 local employees. As of June 30, American Water had approximately 57,000 customer connections under agreement across six states, representing $236 million.
Norton said the company remains focused on balancing investment needs with customer affordability and expects its average monthly residential water bills to remain at or below 1% of median household income for many years.
Essential Utilities Merger Progress
American Water also reported additional regulatory progress on its proposed merger with Essential Utilities. After receiving approval in Kentucky in April, the company said it received approvals in Ohio and Virginia during May and June.
Griffith said merger proceedings in other states were continuing as planned, including progress in Texas, where the company reached a settlement in principle. He said public input hearings in Pennsylvania had shown support for the transaction and that integration planning with Essential Utilities was continuing.
The company continues to expect the merger to close by the end of the first quarter of 2027.
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.
