American Water Works Company, Inc. (NYSE:AWK) Q3 2023 Earnings Call Transcript

Aditya Gandhi: Okay, got it and just one follow-up. Can you just clarify the point you made on your cash taxpayer status? I just wanted to confirm, is there a base for your 7% to 9% EPS CAGR at all, I can find that in the slides or the earnings release.

John Griffith: Yeah, and let me just clarify, Aditya, on the equity that we’ve talked about, to be clear, it will be equity, not another instrument to replace the equity. With regards to our cash taxpayer status, with the Inflation Reduction Act, we do expect that we’ll become subject to the corporate alternative minimum tax in the coming years. Those regulations are not finalized at this point, and there are certain elements that are in play that will dictate the precise timing for when we would become subject to the AMT, but we are expecting that to be the case for us. With regards to the 7% to 9% in a base year, I’d say on that, this is a target that we think of as a long-term target. You’re aware that over the last few years, we reset the capital plan with the sale of HOS and the sale of New York, and we needed time to redeploy those proceeds, which was the case in ’22 and ’23 and as Susan pointed out, our ’24 guidance reflects an 8% EPS CAGR at the midpoint.

So we really think of 7% to 9% as a long-term target driven by the long-term 8% to 9% rate-based growth CAGR.

Aditya Gandhi: Got it. That’s super helpful. Thanks for taking all my questions.

Operator: At this time, we are showing no further questioners in the queue, and this does conclude our question-and-answer session as well as our conference. Thank you for attending today’s presentation and you may now disconnect.