8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 11, 2017

American Water Works Company, Inc.

(Exact name of registrant as specified in its charter)

Commission File Number: 001-34028

Delaware	51-0063696
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

1025 Laurel Oak Road

Voorhees, NJ 08043

(Address of principal executive offices, including zip code)

(856) 346-8200

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 7.01. Regulation FD.

On December 11, 2017, American Water Works Company, Inc. (the “Company”) issued a press release announcing the Company’s earnings per share guidance for the 2018 fiscal year and reaffirming its adjusted earnings per share guidance range for the 2017 fiscal year. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

On December 11, 2017, the Company is holding a conference call to discuss the Company’s guidance for the 2018 fiscal year and other matters. The conference call will be accessible via dial-in conference call and pursuant to prior notice announced by a Company press release issued on November 27, 2017. A copy of the slide presentation to be used in connection with the conference call is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

The information furnished in response to this Item 7.01, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall they be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits.

The following exhibits have been furnished herewith:

Exhibit Number	Description
99.1	Press Release, dated December 11, 2017, issued by American Water Works Company, Inc.
99.2	American Water Works Company, Inc. 2018 Guidance Conference Call Presentation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AMERICAN WATER WORKS COMPANY, INC.
Dated: December 11, 2017	By:	/s/ LINDA G. SULLIVAN
		Linda G. Sullivan
		Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

December 11, 2017

Ed Vallejo

Vice President, Investor Relations

856-566-4005

edward.vallejo@amwater.com

Maureen Duffy

Vice President, Communications and Federal Affairs

856-309-4546

Maureen.Duffy@amwater.com

AMERICAN WATER ANNOUNCES 2018 EARNINGS GUIDANCE

• Setting 2018 diluted earnings per share (EPS) guidance range of $3.22 to $3.32

• Maintaining our five year adjusted EPS compound annual growth rate of 7 to 10 percent anchored off 2016 adjusted EPS

• Investing $7.2 billion in regulated infrastructure over the next five years, an increase of $1.3 billion over 2017 five year plan

• Affirming narrowed 2017 adjusted earnings guidance range

VOORHEES, N.J., Dec. 11, 2017 – American Water Works Company, Inc. (NYSE: AWK), the largest publicly traded U.S. water and wastewater utility company, today announced its 2018 EPS guidance, estimated long-term (five year) adjusted EPS growth rate, and increases in infrastructure investment, and affirmed its previously narrowed EPS adjusted guidance range for the year ending December 31, 2017.

American Water estimates its 2018 diluted EPS to be in the range of $3.22 to $3.32.

“The 2018 guidance and our confidence in our long-term growth is based on the continued execution of our strategic goals,” said Susan Story, president and CEO of American Water. “We will continue to provide safe, clean, affordable and reliable water services for our customers. Our regulated business will remain the primary driver of growth through the investment of much needed capital for infrastructure replacement and an increasing customer base.

“We plan to invest more than $8 billion in the next five years to ensure our customers have the best service possible. This level of investment will be balanced by our use of technology, commitment to operational and capital efficiency, and cost management to reduce the impact on our customers’ bills,” said Story.

The company also affirmed its narrowed 2017 earnings guidance GAAP range of $3.05 - $3.11 per diluted share and an adjusted (non-GAAP) range of $3.00 - $3.06 per diluted share. The adjusted range excludes a $0.07 per diluted share benefit from the insurance settlement related to the Freedom Industries chemical spill and a $0.02 per diluted share charge from early extinguishment of debt at the parent company.

PRESS RELEASE www.amwater.com

AMERICAN WATER ISSUES 2018 EARNINGS GUIDANCE

American Water will host its 2018 earnings guidance call and audio webcast with investors, analysts and other interested parties on Monday, Dec. 11, 2017, at 9 a.m. Eastern Time.

Interested parties may listen over the Internet by logging on to the Investor Relations page of the company’s website at www.amwater.com.

Following the conference call, an audio archive of the call will be available through Dec. 18, 2017 by dialing 1-877-344-7529 for U.S. and 1-412-317-0088 for international callers. The access code for replay is 10114605. The online archive of the webcast will be available through Jan. 11, 2018, by accessing the Investor Relations page of the company’s website located at www.amwater.com.

Non-GAAP Financial Measures

This press release includes presentations of adjusted earnings per diluted share as earnings guidance (“Adjusted EPS”) and the Company’s five-year adjusted EPS compound annual growth rate. These items constitute “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures are derived from American Water’s consolidated financial information but are not presented in its financial statements prepared in accordance with GAAP. Adjusted EPS is defined as GAAP diluted net income and earnings per diluted common share, respectively, excluding (1) the impact in the third quarter of 2017 of the insurance settlement related to the Freedom Industries chemical spill, and (2) the early extinguishment of debt at the parent company in the third quarter of 2017. The Company’s five-year adjusted EPS compound annual growth rate was determined by reference to the Company’s 2016 Adjusted EPS, which excludes the impact in the third quarter of 2016 of the binding global agreement in principle to settle claims related to the Freedom Industries chemical spill. These non-GAAP financial measures supplement the company’s GAAP disclosures and should not be considered an alternative to the GAAP measure.

Management believes that the presentation of these non-GAAP financial measures are useful to American Water’s investors because they provide an indication of its baseline future performance excluding items that are not considered by management to be reflective of ongoing operating results. Although management uses these non-GAAP financial measures internally to provide forecasted financial information, management does not intend such guidance excluding the adjustments to represent results as defined by GAAP, and the reader should not consider them as indicators of future performance. The company’s definition of Adjusted EPS or its long-term adjusted EPS compound annual growth rate may not be comparable to the same or similar measures used by other companies, and, accordingly, these non-GAAP financial measures may have significant limitations on their use.

PRESS RELEASE 2 www.amwater.com

AMERICAN WATER ISSUES 2018 EARNINGS GUIDANCE

Set forth in this release is a table that reconciles Adjusted EPS to the most directly comparable GAAP financial measure.

About American Water

With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly-traded water and wastewater utility company. The company employs more than 6,800 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 47 states and Ontario, Canada. More information can be found by visiting amwater.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release including, without limitation, 2018 earnings guidance, projected long-term earnings growth, and the Company’s projected long-term infrastructure expenditure forecast, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. 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,” “outlook,” “future,” “pending,” “goal,” “objective,” “potential,” “continue,” “seek to,” “may,” “can,” “will,” “should” and “could” and or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on American Water’s current expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, financial results of levels of activity, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in the forward-looking statements included in this press release as a result of the factors discussed in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2016, and subsequent filings with the SEC, and because of factors such as: the decisions of governmental and regulatory bodies, including decisions to raise or lower rates; the timeliness and outcome of regulatory commissions’ actions concerning rates, capital structure, authorized return on equity, capital investment, permitting, and other decisions; changes in laws, governmental regulations and policies, including environmental, health and safety, water quality, and public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections; potential costs and liabilities of American Water for environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers, including, for example, water management solutions focused on customers in the natural gas exploration and production market; the outcome of litigation and similar government actions, including matters related to the Freedom Industries chemical spill in West Virginia, and the preliminarily approved global class action settlement related to this chemical spill; weather conditions, and events, climate change patterns, and natural disasters, including drought or abnormally high rainfall, strong winds,

PRESS RELEASE 3 www.amwater.com

AMERICAN WATER ISSUES 2018 EARNINGS GUIDANCE

coastal and intercoastal flooding, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms and solar flares; changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts; its ability to appropriately maintain current infrastructure, including its operational and information technology (“IT”) systems, and manage the expansion of its business; its ability to obtain permits and other approvals for projects; changes in its capital requirements; its ability to control operating expenses and to achieve efficiencies in its operations; the intentional or unintentional acts of a third party, including contamination of its water supplies or water provided to its customers; exposure or infiltration of its critical infrastructure, operational technology and IT systems, including the disclosure of sensitive or confidential information contained therein, through physical or cyber-attacks or other disruptions; its ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for its operations; its ability to successfully meet growth projections and capitalize on growth opportunities, including its ability to, among other things, acquire and integrate water and wastewater systems into its regulated operations and enter into contracts and other agreements with, or otherwise obtain, new customers in its Market-based Businesses; cost overruns relating to improvements in or the expansion of its operations; its ability to maintain safe work sites; risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations; changes in general economic, political, business and financial market conditions; access to sufficient capital on satisfactory terms and when and as needed to support operations and capital expenditures; fluctuations in interest rates; restrictive covenants in or changes to the credit ratings on its current or future debt that could increase its financing costs or funding requirements or affect its ability to borrow, make payments on debt or pay dividends; fluctuations in the value of benefit plan assets and liabilities that could increase its financing costs and funding requirements; changes in Federal or state income, general and other tax laws, including tax reform, the availability of tax credits and tax abatement programs, and the ability to utilize its U.S. and state net operating loss carryforwards; migration of customers into or out of its service territories; the use by municipalities of the power of eminent domain or other authority to condemn its systems; difficulty in obtaining, or the inability to obtain, insurance at acceptable rates and on acceptable terms and conditions; its ability to retain and attract qualified employees; labor actions including work stoppages and strikes; the incurrence of impairment charges related to American Water’s goodwill or other assets; civil disturbances, terrorist threats or acts, or public apprehension about future disturbances or terrorist threats or acts; and the impact of new accounting standards or changes to existing standards.

These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the risk factors included in the company’s annual and quarterly SEC filings, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking statements speak only as of the date of this press release. The company does not have or undertake any obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as otherwise required by the Federal securities laws. Furthermore, it may not be possible to assess the impact of any such factor on the company’s businesses, either viewed independently or together, or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The foregoing factors should not be construed as exhaustive.

PRESS RELEASE 4 www.amwater.com

EX-99.2

American Water 2018 Guidance Conference Call

NYSE: AWK

Exhibit 99.2

NYSE: AWK

www.amwater.com

2

Forward-Looking Statements

Ed Vallejo

Vice President, Investor Relations

NYSE: AWK

December 2017

www.amwater.com

3

Forward-Looking Statements and Other Information

Certain statements in this presentation including, without limitation, 2017 and 2018 earnings guidance, projected long-term earnings growth, the outcome of new and pending

acquisition activity, O&M efficiency ratio targets, estimated revenues from rate cases and other government agency authorizations, the level of future capital expenditures and rate

base growth, future dividend growth, estimates regarding the company’s projected financial condition and net operating loss position, and the outcome and impact of proposed tax

reform legislation, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Federal securities

laws. 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,” “outlook,” “future,” “pending,” “goal,” “objective,” “potential,” “continue,” “seek to,” “may,” “can,” “will,” “should”

and “could” and or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on American Water’s current

expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, financial results of levels of activity, performance or achievements,

and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates and assumptions, and known and unknown

risks, uncertainties and other factors. Actual results may differ materially from those discussed in the forward-looking statements included in this press release as a result of the

factors discussed in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2016, and subsequent filings with the SEC, and because of factors such as: the decisions

of governmental and regulatory bodies, including decisions to raise or lower rates; the timeliness and outcome of regulatory commissions’ actions concerning rates, capital structure,

authorized return on equity, capital investment, permitting, and other decisions; changes in laws, governmental regulations and policies, including environmental, health and safety,

water quality, and public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections; potential costs and liabilities of American Water for

environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers, including, for example, water management

solutions focused on customers in the natural gas exploration and production market; the outcome of litigation and similar government actions, including matters related to the

Freedom Industries chemical spill in West Virginia, and the preliminarily approved global class action settlement related to this chemical spill; weather conditions and events, climate

change patterns, and natural disasters, including drought or abnormally high rainfall, strong winds, coastal and intercoastal

flooding, earthquakes, landslides, hurricanes, tornadoes,

wildfires, electrical storms and solar flares; changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts; its ability to appropriately

maintain current infrastructure, including its operational and information technology (“IT”) systems, and manage the expansion of its business; its ability to obtain permits and other

approvals for projects; changes in its capital requirements; its ability to control operating expenses and to achieve efficiencies in its operations; the intentional or unintentional acts

of a third party, including contamination of its water supplies or water provided to its customers; exposure or infiltration of its critical infrastructure, operational technology and IT

systems, including the disclosure of sensitive or confidential information contained therein, through physical or cyber-attacks or other disruptions; its ability to obtain adequate and

cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for its operations; its ability to successfully meet growth projections and

capitalize on growth opportunities, including its ability to, among other things, acquire and integrate water and wastewater systems into its regulated operations and enter into

contracts and other agreements with, or otherwise obtain, new customers in its Market-based Businesses; cost overruns relating to improvements in or the expansion of its

operations; its ability to maintain safe work sites; risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable

government procurement and security regulations; changes in general economic, political, business and financial market conditions; access to sufficient capital on satisfactory terms

and when and as needed to support operations and capital expenditures; fluctuations in interest rates; restrictive covenants in or changes to the credit ratings on its current or

future debt that could increase its financing costs or funding requirements or affect its ability to borrow, make payments on

debt or pay dividends; fluctuations in the value of

benefit plan assets and liabilities that could increase its financing costs and funding requirements; changes in Federal or state income, general and other tax laws, including tax

reform, the availability of tax credits and tax abatement programs, and the ability to utilize its U.S. and state net operating loss carryforwards; migration of customers into or out of

its service territories; the use by municipalities of the power of eminent domain or other authority to condemn its systems; difficulty in obtaining, or the inability to obtain, insurance

at acceptable rates and on acceptable terms and conditions; its ability to retain and attract qualified employees; labor actions

including work stoppages and strikes; the incurrence of

impairment charges related to American Water’s goodwill or other assets; civil disturbances, terrorist threats or acts, or public apprehension about future disturbances or terrorist

threats or acts; and the impact of new accounting standards or changes to existing standards.

These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above

and the risk factors included in the company’s

annual and quarterly SEC filings, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking statements

speak only as of the date of this press release. The company does not have or undertake any obligation or intention to update

or

revise any forward-looking statement, whether as a

result of new information, future events, changed circumstances or otherwise, except as otherwise required by the Federal securities laws. Furthermore, it may not be possible to

assess the impact of any such factor on the company’s businesses, either viewed independently or together, or the extent to which any factor, or combination of factors, may cause

results to differ materially from those contained in any forward-looking statement. The foregoing factors should not be construed as exhaustive.

NYSE: AWK

www.amwater.com

4

Strategy Overview

Susan Story

President and Chief Executive Officer

NYSE: AWK

December 2017

www.amwater.com

5

Headlines from Today’s Call

Maintaining 7 –

10%* five-year EPS CAGR, affirming narrowed 2017

adjusted

EPS

range,

and

setting

2018

EPS

Guidance

at

$3.22

-

$3.32

Investing an expected $8.0 -

$8.6 billion over the next 5

years with continuing focus on customer affordability

Reinforcing that our market-based businesses provide growth,

strategic value and positive cash flow

Delivering a more regulated business mix and risk profile

Expecting

to

grow

our

dividend

at

high

end

of

the

long-term

7

–

10%*

adjusted EPS growth

* Anchored off of 2016 Adjusted EPS (a non-GAAP measure).

2018-2022 Plan

NYSE: AWK

December 2017

www.amwater.com

6

As Things Change…

The More Things Change…the More Our Story Works!

•

Interest Rates: A New Normal?

•

Tax Reform-

What’s In and Out?

•

Infrastructure Replacement –

Show Me

the Federal Funding!

Our Story Works…

Continued Investment

Continued Growth plus Strong Dividend

Growth

More investment without affecting

customer bills

Business model that works under any

scenario

•

Water Quality Concerns –

Is my Water

Safe?

Industry leader in water R&D

Dedicated scientists to emerging

contaminants

Largest national investor in water projects

•

Regulatory Imperatives –

Striking a

Balance

Leader in finding ways to balance

investment, service, and affordability

•

Higher Customer Expectations –

I Want

“What” I Want, “When” and “How” I Want

It!

Working toward “Amazon-like” customer

experience

Industry leading water quality

•

Technology Breakthroughs –

A Better

World

Operational and capital efficiency focus

Integrated workforce planning initiatives

NYSE: AWK

December 2017

Our Company is a Perfect Fit for ESG Investors

www.amwater.com

7

AWK Members of:

Environmental

•Investing five-year $7.2 billion regulated

cap ex over 5 years to:  address aging

infrastructure; reduce/eliminate leaks;

improve cyber/physical security; and

increase resiliency of critical assets to

climate variability

•Setting goal of reducing GHG emissions

40% by 2025 from 2007 baseline, after

achieving 25% reduction through 2017

•Reducing annual water use by 3.5 billion

gallons

through conservation

•Recycling over 2 billion gallons water

annually and producing reuse water at

more than 39 facilities

•Prioritizing R&D efforts in water quality

and technology with 15 scientists

dedicated to research

Social Responsibility

•

60,000 hours of annual employee safety training

•Top Quartile Customer Satisfaction

in the water

industry

•$387 million annual spend w/ Tier 1 Diverse

Suppliers; Supply Chain dedicated to Human

Rights

•More than

4,000 hours

of company-sponsored

community service annually by employees

•Donating around $750,000 annually to

communities we serve from company-funded

American Water Charitable Foundation

•Ensuring a diverse, inclusive culture

characterized by respect and dignity of every

employee through “tone at the top”

and

required training

•Frequent employee engagement surveys

with

formalized employee action teams

•As of November 1, 2017, 48%

of workforce is in

jobs represented by unions

•88%

of diverse job candidate pools in 2016 with

62% of transfers/promotions filled by minority,

female, veteran or disabled individuals

Governance

•Achieving gender parity:

highest number

of female board members among S&P

500 companies in 2016; currently at 57%

female

•Ensuring independence:

board is led by

an independent, non-executive chair

•Refreshing board a priority:

average

director tenure is 7.2 years as of

November 30, 2017

•Engaging board sufficiently:

board met

13 times in 2016

•Educating and developing board:

formal

director education program with

dedicated funding

•Engaging investors:

robust program for

management and board leadership

•Executive and director stock ownership

requirements:  align with long-term

interests of our stockholders

NYSE: AWK

December 2017

American Water will Continue to be a High Growth Utility

www.amwater.com

8

Long Term Adjusted Earnings Per Share Growth CAGR Target of 7-10%**

continues through 2022

$3.32

$3.22

$2.84

2018

Guidance

$3.06

$3.00

2017 Adjusted

Guidance (GAAP

Guidance

$3.05

–

3.11)*

7-10%**

CAGR Range

* Adjusted EPS is a Non-GAAP measure. Please see appendix for reconciliation and further information.

** Anchored off of 2016 Adjusted EPS (a non-GAAP measure).

2016 Adjusted

EPS (GAAP

EPS $2.62)*

NYSE: AWK

www.amwater.com

9

The Regulated Business

Walter Lynch

Chief Operating Officer

NYSE: AWK

December 2017

www.amwater.com

10

Our Story Works…

Our Regulated Story Works…and We Execute on Our

Strategies!

•

Continued Infrastructure Investment

•

Drive Legislation & Regulation to Enable

Acquisitions

•

Leader in Balancing Investment, Service,

and Affordability

We Execute…

$7.2 Billion Five Year Regulated Capital

Plan

$1.3 Billion increase to better serve

customers, address emerging

contaminants and climate variability, while

keeping customer bill increase to ~3.2%

Provides Competitive advantage

Expands wastewater footprint where we

serve water

$0.6 -

$1.2 Billion for Regulated

Acquisitions

New 32.0%* O&M Efficiency Target by

2022

Working Towards “Amazon-like”

experience

Customer focused technology

•

Industry Leader in Water Quality

15 R&D scientists (includes 8 PhDs)

Growing partnership in emerging

contaminants

Source water monitoring

*Non-GAAP measure.  O&M Efficiency Ratio = Adjusted Regulated O&M Expenses (O&M Expenses is most comparable GAAP measure) / Adjusted Regulated Operating Revenues (Operating Revenues is most comparable GAAP measure).  This

calculation

assumes

purchased

water

revenues

approximate

purchased

water

expenses.

A

reconciliation

to

a

most

comparable

forward-looking

GAAP

measure

is

not

available

without

unreasonable

effort.

NYSE: AWK

December 2017

The Leading Investor Owned Water Utility Company

www.amwater.com

11

•

16 Regulated States

•

3.3 Million Total Customer

Connections

Our Regulated Footprint

•

1,600 Communities Served

•

1 Billion Gallons of Water Treated and

Delivered Daily

Total Customer Connections

As of December 31, 2016

(in Thousands)

2016 Regulated

Revenues

(in Millions)

Pennsylvania,

709

New Jersey,

671

Missouri,

476

Illinois,

315

Indiana,

300

California,

176

West Virginia,

168

Other,

497

Pennsylvania,

$639

New Jersey,

$730

Missouri,

$288

Illinois,

$275

Indiana,

$212

California,

$211

West Virginia,

$142

Other,

$374

NYSE: AWK

December 2017

U.S. Water & Wastewater Infrastructure Faces Multi-Decade

Investment Needs

www.amwater.com

12

2018-2022 Plan

NYSE: AWK

December 2017

www.amwater.com

13

Regulated Investment: $8.0 -

$8.6 Billion of Investments

from 2018 –

2022; $7.2 Billion for Regulated Systems

2018-2022 Capital Expenditure by Category

(In $ Billions)

Why the Additional

$1.3 Billion of Infrastructure Spend

$8.0 -

$8.6

Regulated

System

Investments

Regulated

Acquisition

Strategic

Capital

$0.2

$0.6 -

$1.2

$7.2

Continue addressing water and

wastewater infrastructure challenges

Increasing water quality complexities with

emerging contaminants

Resiliency and climate variability

Source water protection

Continued Smooth Deployment of Capital

NYSE: AWK

December 2017

O&M

Efficiency

Target

32.0%*

by 2022

Supply

Chain

Cost

Management

www.amwater.com

14

Regulated Investment: Leveraging Our Competencies for

Customer Benefits

*

Non-GAAP measure.  O&M Efficiency Ratio = Adjusted Regulated O&M Expenses (O&M Expenses is most comparable GAAP measure) / Adjusted Regulated Operating Revenues (Operating Revenues is most comparable GAAP

measure).  This calculation assumes purchased water revenues approximate purchased water expenses.  A reconciliation to a most comparable forward-looking GAAP measure is not available without unreasonable effort.

Capital

Efficiency

Technology

Value

Engineering

National

Purchasing

Power

Opportunity to Increase Capex and Minimize

Customer Bill Increases

NYSE: AWK

December 2017

www.amwater.com

15

Regulated Acquisitions:  Highly Fragmented Water Industry

Creates Opportunity

Water

Investor Owned

16%

Public & Other

84%

Wastewater

Investor Owned

2%

Public & Other

98%

Industry Opportunity

American Water Footprint

Ideal Fit for Industry Consolidation

Opportunities

Target

5k

–

30k

Customer

Connections

Per

Acquisition

Wastewater Focus (Customer Connections

Mix

–

95%

Water

&

5%

Wasterwater)

2018-2022 Plan

NYSE: AWK

December 2017

Regulated Acquisitions: State Legislation that Enables with

Water & Wastewater System Consolidation

www.amwater.com

16

California

1997

Fair Market Value

New Jersey

2015 & 2017

Fair Market  Value

Water Quality

Accountability Act

Pennsylvania

2012 & 2016

Water & Wastewater

Revenue Requirement

Consolidation

Fair Market Value & Post

Acquisition Deferral

Clarifying Combined

Stormwater Systems as

Wastewater

Missouri

2013

Fair Market Value

Illinois

2013

Fair Market Value

Post Acquisition Deferrals

Indiana

2015 & 2016

Fair Market Value

Fair Market Value Expansion

Virginia

2017

Water Rate Consolidation

Wastewater Rate

Consolidation

NYSE: AWK

December 2017

www.amwater.com

17

Selected Upcoming Acquisition Opportunities

Regulated Acquisitions: Adding Customers Through

Acquisitions and Organic Growth

Over

330,000

Customer

Connection

Opportunities

in

Development

Customer Additions from Organic Growth and Closed

Acquisitions 2014 –

2017 (with McKeesport close by year end)*

Approximate

Customers

Target A

30,000

Target B

30,000

Target C

23,200

Target D

20,800

Target E

20,100

Target F

16,500

Target G

14,500

*2017

Organic

growth

through

September

30,

2017

of

10,400

plus

an

estimated

1,100

additional

customers

per

month

for

the

last

3

months

of

2017

** The McKeesport, PA acquisition, represents 22,000 customers, due to bulk contracts.  Connections to the system will be approximately 11,000

We also have ~

23,500

pending customer acquisitions with

McKeesport close by year end

(45,500 without McKeesport close by year end)

**

9,279

12,571

12,546

13,891

2,100

5,700

1,866

19,159

2,400

18,200

40,329

2,156

22,000

13,779

36,471

54,741

57,206

2014

2015

2016

2017

Organic Growth

Water

Wastewater

McKeesport close

NYSE: AWK

www.amwater.com

18

Our Financial Plan

Linda Sullivan

Chief Financial Officer

NYSE: AWK

December 2017

www.amwater.com

19

Our Story Works…

Our Story Works…and We Deliver on Our Strategies!

•

A Business Model that Works

•

A More Regulated Risk Profile

We Deliver…

Affirm 2017 Adjusted EPS Guidance*

Strong 2018 EPS Guidance

Continued 7 –

10%** Long Term EPS CAGR

Regulated: $8.0-$8.6 billion needed

investment drives more regulated

business mix while keeping average

customer bill increase to ~3.2%

Market-based: strong portfolio growth,

capital light and cash flow positive

•

A Strong Balance Sheet

Strong Cash Flow

Plan assumes no new equity under

normal operating conditions

•

Tax Reform Under Review

Lower tax rates could benefit our

customers

•

A Top Quartile Dividend Grower

Five consecutive years with ~10% growth

Expect to grow dividend at top of long

term adjusted EPS growth**

Target payout ratio 50-60% of earnings

* Adjusted EPS is a Non-GAAP measure. Please see appendix for reconciliation and further information.

** Anchored off of 2016 Adjusted EPS (a non-GAAP measure).

NYSE: AWK

December 2017

www.amwater.com

20

Long Term Adjusted Earnings Per Share Growth CAGR

Target of 7-10%** continues through 2022

American Water Continues to be a High Growth Utility

$3.32

$3.22

$2.84

2018

Guidance

Earnings Guidance and Anchor

Affirm 2017 EPS Guidance range

GAAP: $3.05 -

$3.11

Adjusted: $3.00 -

3.06*

2018 EPS Guidance $3.22 -

$3.32

8% growth over midpoint of 2017

adjusted guidance**

Continue Long Term Adjusted EPS

CAGR of 7 –

10%**

Anchor moved to 2016 Adjusted EPS*

$3.06

$3.00

7-10%**

CAGR Range

2017 Adjusted

Guidance (GAAP

Guidance $3.05 –

3.11)*

2016 Adjusted

EPS (GAAP EPS

$2.62)*

* Adjusted EPS is a Non-GAAP measure. Please see appendix for reconciliation and further information.

** Anchored off of 2016 Adjusted EPS (a non-GAAP measure).

2016

2017

2018

2019

2020

2021

2022

NYSE: AWK

December 2017

Our 2018 Guidance and Major Variables Included in

the Range

www.amwater.com

21

*Revised 2017 EPS GAAP guidance $3.05-$3.11.  Adjusted 2017 EPS guidance is a non-GAAP measure. Please see appendix for reconciliation and further information.

2018 Guidance

Major Variables

2018 Guidance

$3.22 -

$3.32 EPS

$3.00 -

$3.06

$3.22 -

$3.32

$0.18 -

$0.20

$0.02 -

$0.04

$0.02

2017 Adjusted Guidance

(Non-GAAP Measure)*

Regulated

Businesses

Market-based

Businesses

Parent & Other

2018 Guidance

($0.01)

($0.02)

($0.03)

($0.07)

$0.01

$0.02

$0.03

$0.07

Keystone

AWE

Regulated

Weather

NYSE: AWK

December 2017

2022 Estimated Earnings Contribution Ratio

4

Regulated 90%

Market-based 10%

Needed Infrastructure Investment Transitions us to an Even

More Regulated Risk Profile

www.amwater.com

22

1

Anchored off of 2015 EPS.

2

Anchored off of 2016 Adjusted EPS (a non-GAAP measure).

3

Based

on

2018

–

2022

plan

and

anchored

off

of

2016

business

line

results.

4

Approximate.

Excludes

parent

and

other.

2017-2021 Plan

7 –

10% CAGR¹

2018-2022 Plan

7 –

10% CAGR²

Continued strong growth at

stand-alone CAGR of 15.5%³

Customer additions remain at

~30-60k per year

Increase of $1.3 billion in needed

capital to better serve our customers

and keep bills affordable

NYSE: AWK

December 2017

www.amwater.com

23

Increased Capital Expenditures Drives Stronger Rate Base

Growth

Enhanced Regulated Risk Characteristics

Rate Base CAGR Based on

$8.0 -

$8.6 Billion Capital Plan

5 –

6%

6.5 –

7.5%

Highlights

Capital increase to better serve customers

results in ~100 basis point increase in rate

base CAGR

Target O&M efficiency ratio of 32.0%* by

2022 helps keep customer bills affordable

*

Non-GAAP measure.  O&M Efficiency Ratio = Adjusted Regulated O&M Expenses (O&M Expenses is most comparable GAAP measure) / Adjusted Regulated Operating Revenues (Operating Revenues is most comparable GAAP

measure).  This calculation assumes purchased water revenues approximate purchased water expenses.  A reconciliation to a most comparable forward-looking GAAP measure is not available without unreasonable effort.

2017 -

2021

Plan

2018 -

2022

Plan

Economy of Scale

Regulatory Diversity

Decades of Capital Needs

Mechanisms Accelerate Investment Recovery

Low Volatility of Capital Deployment

Enabling Legislation

NYSE: AWK

December 2017

www.amwater.com

24

Market-Based Businesses Continue to Provide Strategic

Value

Managed Portfolio Risk

Complementary water and wastewater

services

Leverage core competencies

Capital light, cash positive

Competitive culture

Market-Based Risk Characteristics

Military Services

Group

Homeowners

Services Group

Keystone

Three Primary

Businesses

Highlights

15.5%* Stand Alone Growth CAGR

Cash Flow Positive Businesses Help to

Support Growth

Leverage Size and Scale

* Based

on

2018

–

2022

plan

and

anchored

off

of

2016

business

line

results.

NYSE: AWK

December 2017

www.amwater.com

25

Long Term Plan Utilizes Strong Balance Sheet

Cash Flow from Operations

Debt to Total Capital

$8.0 to $8.6 Billion CapEx Range*

*Includes both fixed rate and short term debt. E denotes estimated.

Cash Flow Remains Strong

Federal NOL of $1.2 billion is

projected by the end of 2017

Federal NOL position continues

through 2021 assuming no tax

reform

Maintain Strong Balance Sheet

Utilize balance sheet

No significant debt maturities

over next five years

Leverage increase to a range of

59% -

60% by 2022

$0.0

$0.5

$1.0

$1.5

2016 A

2017 E

2018 E

2019 E

2020 E

2021E

2022 E

58%

59% -

60%

As of

9/30/2017

2022 E

NYSE: AWK

December 2017

Tax Reform Remains Uncertain

www.amwater.com

26

House Bill

Tax Rate

•

20% corporate tax rate in 2018

•

Normalization of excess deferred

taxes for regulated businesses

Interest Deductibility/ Accelerated

Depreciation

•

Potential interest expense

deduction limits

30% EBITDA test

•

Carve out for regulated utilities

Senate Bill

Tax Rate

•

20% corporate tax rate in 2019

•

Normalization of excess deferred

taxes for regulated businesses

Interest Deductibility/ Accelerated

Depreciation

•

Potential interest expense

deduction limits

30% EBIT test

•

Carve out for regulated utilities

Potential Impacts

Tax Rate

•

Benefits regulated customers

•

Lowers cash flow and FFO/Debt

•

Increases MBB earnings; military

contracts true-up

•

Increases loss at parent

•

Deferred taxes re-measured

Regulated normalized

Rate Base increased

MBB/Parent impacts

earnings

•

Accelerates timing of becoming cash

taxpayer

Interest Deductibility/ Accelerated

Depreciation

•

Regulated carve out keeps interest

deduction, does not allow

accelerated depreciation

•

Parent interest uncertain

NYSE: AWK

December 2017

www.amwater.com

27

$1.09

$1.21

$1.33

$1.47

$1.62

2013

2014

2015

2016

2017

2018 E

A Top Leader in Dividend Growth and Total Shareholder

Return

Five Consecutive Years of ~10% Dividend Growth

1

1

The dividend normally paid in 1Q 2013 was actually accelerated and paid in late December 2012 to allow

shareholders to take advantage of 2012 dividend tax rates. For the purposes of this presentation, this $0.25 dividend

has been deducted from 2012 and added to 2013 to show the more normal dividend trend.

2

Subject to approval by the Board of Directors

3

Anchored off of 2016 Adjusted EPS (a non-GAAP measure)

4

As of 11-01-2017 end date. Source: Bloomberg

5

Bloomberg custom portfolio weighted by market cap. Water Peers: AWR, CTWS, CWCO, CWT, MSEX, SJW, WTR,

YORW

Expect 2018 Dividend to grow at top end of long term EPS

growth CAGR for fifth consecutive year

Targeted Long Term Dividend Growth CAGR at top end of 7-

10% long term adjusted EPS growth³

Target payout ratio 50-60% of earnings

Annualized 5-Year

Total

Shareholder

Return

4

AWK

Water Peers

DJUA

S&P 500

5

2

Highlights

NYSE: AWK

www.amwater.com

28

Wrap Up

Susan Story

President and Chief Executive Officer

NYSE: AWK

December 2017

www.amwater.com

29

American Water Continues to be a High Growth Utility -

Today’s Key Takeaways

Maintaining 7 –

10%* five-year EPS CAGR, affirming narrowed 2017

adjusted

EPS

range,

and

setting

2018

EPS

Guidance

at

$3.22

-

$3.32

Investing an expected $8.0 -

$8.6 billion over the next 5

years with continuing focus on customer affordability

Reinforcing that our market-based businesses provide growth,

strategic value and positive cash flow

Delivering a more regulated business mix and risk profile

Expecting

to

grow

our

dividend

at

high

end

of

the

long-term

7

–

10%*

adjusted EPS growth

* Anchored off of 2016 Adjusted EPS (a non-GAAP measure).

2018-2022 Plan

NYSE: AWK

www.amwater.com

30

“American Water

-

your calm

in the middle of the storms.”

NYSE: AWK

December 2017

31

Q & A Session

NYSE: AWK

www.amwater.com

32

Investor Relations Contacts

Ed Vallejo

Vice President,

Investor Relations

edward.vallejo@amwater.com

Ralph Jedlicka

Director,

Investor Relations

ralph.jedlicka@amwater.com

Upcoming Events:

February 21, 2018

Q4 and Year-End 2017 Earnings Call

December 11, 2018

2018 Analyst Day, New HQ in Camden, NJ

Appendix

NYSE: AWK

NYSE: AWK

December 2017

www.amwater.com

34

Non-GAAP Financial Information

This presentation includes adjusted earnings per diluted common share (“Adjusted EPS”) both as 2017 non-GAAP earnings guidance and as

the 2016 EPS

compound annual growth rate anchor, which constitute “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures are derived

from American Water’s consolidated financial information but are not presented in its financial statements prepared in accordance with GAAP. Adjusted

EPS as 2017 non-GAAP earnings guidance is defined as 2017 GAAP earnings per diluted common share (“GAAP EPS”), excluding the impact in the third

quarter of 2017 of (1) the insurance settlement related to the Freedom Industries chemical spill and (2) the early extinguishment of debt at the parent

company.  Adjusted EPS as the 2016 EPS compound annual growth rate anchor is defined as 2016 GAAP EPS, excluding the impact in the third quarter of

2016 of the binding agreement in principle to settle claims related to the Freedom Industries chemical spill. Adjusted EPS supplements American Water’s

GAAP disclosures and should not be considered as an alternative to the GAAP measure.

Management believes that the presentation of these non-GAAP financial measures are useful to American Water’s investors because they provide an

indication of its baseline performance excluding items that are not considered by management to be reflective of ongoing operating results. Although

management uses these non-GAAP financial measures internally to evaluate American Water’s results of operations, management does

not intend results

excluding the adjustments to represent results as defined by GAAP, and the reader should not consider them as indicators of performance. These items

are derived from American Water’s consolidated financial information but are not presented in its financial statements prepared in accordance with

GAAP. The company’s definitions of Adjusted EPS may not be comparable to the same or similar measures used by other companies, and, accordingly,

these non-GAAP financial measures may have significant limitations on their use.

This presentation also includes regulated O&M efficiency ratios, both historical and forward-looking, which excludes from their calculation for each

period presented one or more items, including estimated purchased water revenues and purchased water expenses, the impact of certain activities

related to the Freedom Industries chemical spill, and the allocable portion of non-O&M support services costs, mainly depreciation and general taxes.

These O&M efficiency ratios constitute “non-GAAP financial measures” under SEC rules. These ratios are derived from American Water’s consolidated

financial information but are not presented in its financial statements prepared in accordance with GAAP. These non-GAAP financial measures

supplement and should be read in conjunction with American Water’s GAAP disclosures and should not be considered an alternative to GAAP measures.

Management believes that the presentation of regulated O&M efficiency ratios is useful to investors because it provides a means of evaluating American

Water’s operating performance without giving effect to items that are not reflective of management’s ability to increase efficiency of American Water’s

regulated operations. In preparing operating plans, budgets and forecasts, and in assessing historical and future performance, management relies, in part,

on trends in American Water’s historical results and predictions of future results, exclusive of these items. American Water’s definition of these ratios

may not be comparable to the same or similar measures used by other companies, and, accordingly, these non-GAAP financial measures may have

significant limitations on their use.  American Water is unable to present a reconciliation of adjustments to the components of its forward-looking O&M

efficiency ratio without unreasonable effort because management cannot reliably predict the nature, amount or probable significance of all the

adjustments for future periods; however, these adjustments may, individually or in the aggregate, cause the non-GAAP financial measure component of

the forward-looking ratio to differ significantly from its most directly comparable GAAP financial measure.

Set forth in this appendix are tables that reconcile Adjusted EPS as 2017 non-GAAP earnings guidance and as the 2016 EPS compound annual growth rate

anchor, each to GAAP EPS, and each of the components of its historical O&M efficiency ratios to its most directly comparable GAAP financial measure.

NYSE: AWK

December 2017

www.amwater.com

35

Our Regulated Infrastructure Investment Five-Year Plan

2018

–

2022

Regulated

System

Investment by Purpose of the $7.2 Billion

53%

7%

10%

8%

7%

7%

6%

2%

Asset Renewal

Asset Renewal-Lead Service Lines

Organic Growth

Regulatory compliance

Reliability/Quality of Service

Efficiency

Operational Support

Other

NYSE: AWK

December 2017

www.amwater.com

36

Our Five-Year Debt Maturity Schedule

$225

$152

$24

$295

$105

$77

$2

$5

2018

2019

2020

2021

2022

Parent

Regulated

$302

$154

$300

Next 5 years

2018-2022

Outstanding

($ in millions)

Avg Remaining Life

(years)

Weighted Avg

Interest Rate

Parent

$85

1.2

5.63%

Regulated

$800

2.5

5.89%

Total

$885

2.4

5.87%

NYSE: AWK

December 2017

www.amwater.com

37

Rate Filings Awaiting Final Order

Rate Cases Filed

Company

Docket / Case Number

Date Filed

Revenue Increase

ROE Requested

Rate Base        

California

Case No. A.16-07-002

7/1/2016

$32

(a)

NA

$494

Missouri

Case No. WR-2017-0285

6/30/2017

$84

(b)

10.80%

$1,345

New Jersey

Case No. WR-17090985

9/15/2017

$129

10.80%

$3,025

$245

$4,864

Infrastructure Charges Filed

New Jersey (DSIC)

10/13/2017

$4

$29

Virgina (WWISC)

10/31/2017

$1

$9

Tennessee (QIIP, EDI, SEC)

11/7/2017

$2

$12

$7

$97

Rate

Case

and

Infrastructue

Settlements

awaiting

Regulatory

Approval

West Virginia (DSIC)

6/15/2017

$3

(c)

$3

Total Awaiting Final Order:

$255

(a) For this final application, Test Year 2018 revenue requirement request is $35 million.  This excludes the step rate and attrition rate increase for 2019 and 2020 of $9 million and

$8 million, respectively.  The total revenue requirement request for the three year rate case cycle is $51 million.  On October 10, 2016, the Company filed an update to our final

general rate case application adjusting the request to $32 million of additional annualized revenues.  It also includes increases in the escalation year 2019 and the attrition year

2020 of $9 million and $8 million, respectively.

(b) The requested increase is $89 million, which includes the original $5 million from the pending ISRS.  This amount is a requested increase of $69 million over the prior authorized revenues,

which is the difference between the filed for $369 million revenue requirement and the previously authorized $295 million revenue requirement, less original $5 million of pending ISRS. 

(c) On October 11, 2017, our West Virginia subsidiary filed a settlement agreement with the Public Service Commission (PSC) of West Virginia, whereby all parties to the proceeding have

agreed to an infrastructure surcharge that would generate $3 million in additional annualized revenues, pending approval by

the PSC.

NYSE: AWK

December 2017

www.amwater.com

38

Regulated Utilities: Rate Base & Authorized Return on Equity

Authorized Rate Base*

$439,448

$883,386

$841,915

(b)

$405,704

(b)

$1,132,843

(b)

Authorized ROE

9.99%

(a)

9.79%

9.75%

9.70%

(e)

9.75%

(e)

Authorized Equity

53.00%

(a)

49.80%

41.55%

(c)

47.36%

(d)

50.04%

(d)

Effective Date of Rate Case

1/1/2015

(a)

1/1/2017

1/29/2015

8/28/2016

7/20 & 7/22/2016

Authorized Rate Base*

$2,386,790

$275,463

$3,162,597

(b)

$155,747

$529,212

Authorized ROE

9.75%

9.10%

10.00%

(e)

9.25%

9.75%

Authorized Equity

52.00%

46.00%

53.75%

(d)

46.09%

45.84%

Effective Date of Rate Case

9/21/2015

6/1/2017

1/1/2018

5/24/2017

(f)

2/25/2016

*Rate Base stated in $000s

Notes:

a) CA received D.15-04-007 on April 9, 2015.  The decision, addressing the revenue requirement, is retroactive to 1/1/2015.  CA has a separate Cost of Capital case

which sets the rate of return outside of a general rate proceeding and is still under the decision issued July 12, 2012.  The next Cost of Capital application,

A.17-04-003 was filed April 3, 2017 with a projected effective date in 2018.

b) The Rate Base listed is the Company's view of the Rate Base allowed in the case, the Rate Base was not disclosed in the Order

or the applicable

settlement agreement.

c) Regulatory capital structure includes cost-free items or tax credit balances at the overall rate of return which lowers the equity percentage as an alternative to the

common practice of deducting such items from rate base.

d) The equity ratio listed is the Company's view of the equity ratio allowed in the case, the actual equity ratio was not disclosed in the Order or the applicable

settlement agreement.

e) The ROE listed is the Company's view of the ROE allowed in the case, the ROE was not disclosed in the Order or the applicable

settlement agreement.

f) Interim rates were effective April 1, 2016 and received final Order May 24, 2017.

Last Rate Case Awarded -

Largest Regulated Subsidiaries

NYSE: AWK

December 2017

How American Water Grows Earnings:  Rate of Return

Regulation in the United States

www.amwater.com

39

Prudent

Investment Drives Need for Rate Cases

Operating

Expenses

Taxes,  Depr &

Amortization

WACC

Establish

Rate

Base

Allowed

Return

Allowed

Return

Revenue

Requirement

Step 2

Step 1

+

+

x

=

=

American Water has experience in securing appropriate rates of return and

promoting constructive regulatory frameworks

NYSE: AWK

December 2017

www.amwater.com

40

How O&M Efficiency Translates to Investment Growth

Saving $1 in opex vs investing $7 in capital at allowed ROE, keeps customer bills neutral and can create $0.35 in

sustainable earnings

a) Revenue Requirement

1.00

$                

1.00

$                 

Expenses

O&M

0.96

-

$                   

Depreciation

-

0.18

$                 

2

Interest Expense

-

0.17

$                 

3

Property & General Taxes

0.04

1

0.08

$                 

4

b) Total Expenses

1.00

0.43

$                 

c) Operating Income (=a-b)

-

0.57

$                 

d) Federal & State Income Taxes

-

0.22

$                 

5

e) Net Income to Shareholder (=c-d)

-

$                  

0.35

$                 

6

1

Assumes 4% taxes on revenue (gross receipts e.g.)

2

Assumes 2.5% depreciation expense

3

Assumes 50.2% debt financing at 4.9%

4

Assumes property taxes on invested capital of 0.5% and revenue taxes of 4%

5

Assumes effective income tax rate of 39.2%

6

Assumes authorized ROE of 9.9% on 49.8% equity

Expense Savings

Invested Capital

$1

> $7

NYSE: AWK

December 2017

www.amwater.com

41

Rate Base Calculation

*

*

An approximation of rate base, which includes Net Utility Plant not yet included in rate base pending rate case filings/outcomes

$8,958

$9,398

$9,987

$10,694

$11,023

FY

2013

FY

2014

FY

2015

FY

2016

As of

9/30/2017

As of

9/30/2017

$15,451

279

1,264

2,862

23

$4,428

TOTAL

$11,023

Rate Base

Net Deferred income taxes

Deferred investment tax credits

Sub Total

Less

Advances for Construction

CIAC –

Contributions in Aid of Construction

Estimated Rate Base

*

Net Utility Plant

($ in millions)

NYSE: AWK

December 2017

www.amwater.com

42

Reconciliation Tables: 2016 Earnings per Share & 2017

Guidance Range

Full Year

2016

Diluted earnings per share (GAAP):

Net income attributable to common stockholders

$      2.62

Non-GAAP adjustments:

Impact of Freedom Industries Binding Global Agreement in Principle

0.36

Income tax impact

(0.14)

Net non-GAAP adjustment

0.22

Total net non-GAAP adjustments

0.22

Adjusted diluted earnings per share (non-GAAP)

$      2.84

Earnings per Share

2017 Adjusted EPS Guidance Range

Low End

High End

Per Diluted Share:

Narrowed earnings guidance range (GAAP)

3.05

$   

3.11

$   

Non-GAAP adjustments:

Impact of Freedom Industries settlement activities

(0.12)

(0.12)

Income tax impact

0.05

0.05

Net non-GAAP adjustment

(0.07)

(0.07)

Early debt extinguishment at the parent company

0.03

0.03

Income tax impact

(0.01)

(0.01)

Net non-GAAP adjustment

0.02

0.02

Total net non-GAAP adjustments

(0.05)

(0.05)

Narrowed adjusted earnings guidance range (non-GAAP)

3.00

3.06

$   

$   

$   

$   

December 2017

NYSE: AWK

www.amwater.com

43

Closed and Pending Acquisitions as of November 30, 2017

*

State

No. of

Acquisitions

Water

Customers

Wastewater

Customers

Total

Customers

California

2

1,764

-

1,764

Indiana

1

1,300

-

1,300

Iowa

1

718

-

718

Illinois

3

700

120

820

Missouri

3

500

434

934

New Jersey

1

11,212

-

11,212

New York

5

360

-

360

West Virginia

1

215

-

215

Total

17

16,769

554

17,323

2017 Closed Acquisitions

State

No. of

Acquisitions

Water

Customers

Wastewater

Customers

Total

Customers

California

4

8,629

-

8,629

Illinois

5

2,448

2,306

4,754

Indiana

2

6,165

-

6,165

Kentucky

1

610

-

610

Pennsylvania

3

-

25,062

25,062

Missouri

4

176

192

368

Total

19

18,028

27,560

45,588

Pending Acquisitions

*This includes the McKeesport, PA acquisition, which represents 22,000 customers, due to bulk contracts.  Connections to the system will be

approximately 11,000.