American Water Works (AWK)

AWK 
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American Water Works Company, Inc. (AWK)

Q4 2008 Earnings Call

February 26, 2009 9:00 am ET

Executives

Edward D. Vallejo – Vice President of Investor Relations

Donald L. Correll – President & Chief Executive Officer

Ellen C. Wolf – Senior Vice President & Chief Financial Officer

Analysts

Maria Karahalis – Goldman Sachs

Debra G. Coy – Janney Montgomery Scott, LLC

Ryan M. Connors – Boenning & Scattergood, Inc.

Timothy Winter – Jesup & Lamont

[Jonathan Reader] – Wachovia Securities

Presentation

Operator

Ladies and gentlemen, good morning and welcome to American Water's 2008 Fourth Quarter and Year End Earnings Conference Call. As a reminder, this call is being recorded and also being webcast with an accompanying slide presentation through the company’s website www.amwater.com.

Following the earnings call, an audio archive of the call will be available at 11:00 AM Eastern Time today, by dialing 800-475-6701 in the U.S. and 320-365-3844 for international callers. The pass code for replay participants is 982411. The call replay and online archive of the webcast are scheduled to be available through March 6, 2009, by accessing the Investor Relations page of the company’s website located at www.amwater.com.

At this time, all participants have been placed in a listen-only mode. Following management’s prepared remarks, we will then open the call for questions. (Operator Instructions). Today’s call is scheduled for one hour including questions and answers. I would now like to introduce your host for today’s call, Ed Vallejo, Vice President of Investor Relations. Mr. Vallejo, you may begin.

Edward D. Vallejo

Thank you. Good morning everyone and welcome to American Water’s fourth quarter and year end earnings conference call. With me on [warranties] are Don Correll, our President and Chief Executive Officer; and Ellen Wolf, our Senior Vice President and Chief Financial Officer.

We released our earnings announcement last night and we anticipate filing our 10-K shortly. If you did not receive a copy of the earnings release, you can find it by visiting our website at www.amwater.com. As usual, we will keep our call to about an hour. At the end of our prepared remarks, we will have time for questions.

Before we begin, I would like to remind everyone that in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, we are advising you that certain matters to be discussed by members of management during this call may constitute forward-looking statements. Such statements are subject to numerous risks, uncertainties and other factors that may cause the actual performance of American Water to be materially different from the performance indicated or implied by such statements. Such risk factors are set forth in company’s SEC filings.

I would like to turn the call over to Don Correll.

Donald L. Correll

Thank you, Ed, and good morning everyone. I want to thank everyone for joining us today and for your interest in American Water. It’s with great pleasure that I am able to comment on our fourth quarter and our year-end results. This time last year, we still not had our initial public offering, but what a difference a year makes. American Water has been a public company since April 2008. We’ve had many accomplishments that the entire company can point to with pride for this past year.

But before I comment on the highlights of our fourth quarter and year-end results, I think it’s fair to say that even at the time of American Water’s initial public offering in April, few would have predicted the economic downturn that would soon follow. Having said that, I think that our results for the year show that despite all of the external conditions. American Water strategy is proved to be a solid one that has allowed our business to weather these times and stay the course to provide our customers with high quality drinking water and reliable water and wastewater services.

These strategies include investing in our infrastructure, earning an appropriate rate of return and growing through acquisitions and public private partnerships. Although, the country has seen credit and investment scarcity, American Water managed through the credit crunch that reached its peak in the fall of 2008 by accessing our $840 million unsecured back-up credit lines without a problem.

This past November, the company successfully completed a debt offering of $75 million aggregate principle amount, 10% Senior Monthly Notes. We closed a similar debt offering this month of $75 million aggregate principal amount of 8.25% senior monthly notes.

Despite the harsh stock market conditions as I mentioned in the last earnings call, the American Water share price continued to outperform both the Dow Jones and the S&P 500 indices, since our IPO in April this sell through the fourth quarter and year end. I should also mention American Water was added some multiple Dow Jones Wilshire Indexes and to the Large-Cap Russell 1000 Index since going public.

2008 was also a solid year for the company financially. Revenues for the quarter ending December 31, 2008 rose 2.7%, and revenues for the year increased 5.5%. Excluding goodwill impairment charges earnings per share for the fourth quarter 2008 totaled $0.23 per share, compared to $0.17 per share for fourth quarter in 2007, an increase of 35.3%.

For the year, again excluding goodwill impairment charges, earnings per share grew from $0.99 per share to a $1.10 per share and 11% year-over-year increase. Ellen will discuss our financial results in more detail a little later.

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