Profile: American Water Works Company Inc (AWK)

American Water Works Company, Inc. (American Water) is a water and wastewater utility company. American Water provides drinking water, wastewater and other water related services to an estimated 15 million people in more than 30 states and in two Canadian provinces. The Company operates in two segments: the Regulated Businesses and the Market-Based Operations. During the year ended December 31, 2011, its Regulated Businesses segment accounted for 88.8% of its total consolidated operating revenue. During 2011, its Market-Based Operations segment accounted for 12.3% of total consolidated operating revenue. In January 2012, the Company announced the sale of operations in Arizona and New Mexico to EPCOR USA. On June 27, 2012, the Company acquired water system from the Town of New Whiteland in central Indiana. In October 2012, its subsidiary, Pennsylvania American Water, acquired the assets of two water systems in southwestern Pennsylvania. In January 2013, the Company’s Pennsylvania American Water announced that it closed a pair of water systems acquisitions in northeast Pennsylvania. In March 2013, the Company announced the acquisition of two water systems in northeast Pennsylvania.

In June 2011, Aqua America, Inc. announced that its Texas subsidiary has completed the purchase of American Water's regulated Texas operations. In August 2011, the Company acquired Roark Water & Sewer, Inc. In May, 2011, it acquired 11 regulated water systems and 48 wastewater systems in Missouri. In addition, in June 2011, it completed the sale of the assets of its Texas regulated subsidiary. On December 31, 2011, it completed the sale of its Applied Water Management, Inc. group (AWM). In May 2012, Aqua America, Inc. purchased its Ohio Operations, and Aqua America sold its New York Operations the Company. In May 2012, Pennsylvania American Water, a wholly owned subsidiary of the Company acquired three water systems in northeast Pennsylvania. In Lackawanna County, Pennsylvania American Water acquired the Lake Spangenberg Water Company in Jefferson Township and the Applewood Water Company in Carbondale Township. The Company also purchased the Wildcat Park Corporation in Walker Township, Schuylkill County.

Regulated Businesses

American Water’s primary business involves the ownership of subsidiaries that provide water and wastewater utility services to residential, commercial, industrial and other customers, including sale for resale and public authority customers. The Company’s Regulated Businesses operate in approximately 1,100 communities in 16 states in the United States. Its primary operating assets include approximately 80 surface water treatment plants, 500 groundwater treatment plants, 1,000 groundwater wells, 100 wastewater treatment facilities, 1,100 treated water storage facilities, 1,200 pumping stations and 90 dams and 46,000 miles of mains and collection pipes. Its Regulated Businesses obtain their water supply from surface water sources, such as reservoirs, lakes, rivers and streams. In addition, it also obtains water from ground water sources, such as wells and purchase water from other water suppliers.

During 2011, residential customers accounted for 91.1% of the customers and 59.0% of the operating revenue of its Regulated Businesses. The Company also serves commercial customers, such as shops and businesses; industrial customers, such as manufacturing and production operations, and public authorities, such as government buildings and other public sector facilities, including schools. It also supplies water to public fire hydrants for fire fighting purposes, to private fire customers for use in fire suppression systems in office buildings and other facilities, as well as providing bulk water supplies to other water utilities for distribution to their own customers. Wastewater services involve the collection of wastewater from customers’ premises through sewer lines. The wastewater is then transported through a sewer network to a treatment facility, where it is treated.

The Company competes with Aqua America Inc., Suez Environnement, American States Water Co. and California Water Services Group.

Market-Based Operations

American Water’s Market-Based Operations include three lines of business: Contract Operations Group, which enters into contracts to operate and maintain water and wastewater facilities for the United States military, municipalities, and the food and beverage industry; Homeowner Services Group, which provides services to domestic homeowners and smaller commercial establishments, and Terratec Environmental Ltd. (Terratec), which primarily provides biosolids management, transport and disposal services to municipal and industrial customers. During 2011, its Market-Based Operations accounted for 12.3% of total operating revenue.

The Company’s Contract Operations Group enters into public/private partnerships, including operations and maintenance (O&M), and Design, Build and Operate (DBO) contracts for the provision of services to water and wastewater facilities for the United States military, municipalities, the food and beverage industry and other customers. During 2011, its Contract Operations Group generated revenue 70.3% of revenue for its Market-Based Operations. The Company’s Homeowner Services Group, through its Service Line Protection Program, provides services to domestic homeowners and smaller commercial establishments. Its LineSaver program involves partnering with municipalities to offer its protection programs to homeowners serviced by the municipalities. Its Homeowner Services Group has approximately 900,000 customer contracts in 17 states. Its Market-Based Operations also includes its biosolids management group, Terratec, which is located in Canada and provides environmentally sustainable management and disposal of biosolids and wastewater by-products.

The Company competes with Veolia Environnement, American States, OMI and Southwest Water.