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.–(BUSINESS WIRE)–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.

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.

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, 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.

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Contacts

American Water
Ed Vallejo
Vice President, Investor Relations
856-566-4005
[email protected]
or
Maureen
Duffy
Vice President, Communications and Federal Affairs
856-309-4546
[email protected]