๐Ÿ“ข New Earnings In! ๐Ÿ”

AWK (2025 - Q2)

Release Date: Jul 31, 2025

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Stock Data provided by Financial Modeling Prep

Current Financial Performance

American Water Q2 2025 Highlights

$1.48
EPS
+4.2%
$2.53
YTD EPS
+6.8%
58%
Debt-to-Capital Ratio

Period Comparison Analysis

EPS

$1.48
Current
Previous:$1.42
4.2% YoY

YTD EPS

$2.53
Current
Previous:$2.37
6.8% YoY

Debt-to-Capital Ratio

58%
Current
Previous:56%
3.6% QoQ

Dividend per Share

$0.8275
Current

Key Financial Metrics

Capital Investment YTD

$1.3B

On pace for $3.3B in 2025

Customer Additions Under Agreement

87,000 connections

Acquisition Deal Value

$535M

EPS Growth Guidance 2025

8.6% at midpoint

Financial Guidance & Outlook

2025 EPS Guidance

Actual:$5.70 to $5.75
Estimate:$5.65 to $5.75
BEAT

Long-term EPS & Dividend Growth

7% to 9%

Driven by 8%-9% rate base growth

Surprises

Earnings Beat

$1.48 per share

Earnings were $1.48 per share for the second quarter compared to $1.42 for the same period last year.

Year-to-Date EPS Growth

+9.4%

9.4%

On a weather-normalized basis, EPS was up 9.4% year-to-date compared to the prior year.

Narrowed 2025 EPS Guidance

$5.70 to $5.75 per share

We are narrowing our 2025 EPS guidance to the top half of the range we first disclosed last October.

Debt-to-Capital Ratio Within Target

58%

Our total debt-to-capital ratio as of the end of the quarter, net of $94 million of cash on hand was 58%, which was within our target of less than 60%.

Unfavorable Weather Impact

$0.06 per share

Weather on the other hand, was unfavorable by an estimated $0.06 per share year-over-year due to wet weather in 2025 and warm/dry conditions in 2024.

Impact Quotes

We have a clear top-tier capital growth plan underpinned by decades of fundamental water and wastewater infrastructure renewal and water quality investment.

On a weather-normalized basis, EPS was up 9.4% year-to-date compared to the prior year.

We are again affirming our long-term targets for both earnings and dividend growth at 7% to 9%, driven by 8% to 9% rate base growth.

We continue to expect these capital investments in infrastructure and in acquisitions will grow regulated rate base at a long-term rate of 8% to 9%.

We are seeing strength in the business across several regulated states so far in 2025, including solid customer usage.

We remain confident in our acquisition pipeline, and we are continuing to invest in regulated acquisition opportunities across our footprint.

We believe our industry-leading EPS and dividend growth, coupled with our affordability position and sustainability leadership, will continue to be highly valued and rewarded by investors.

Our total debt-to-capital ratio as of the end of the quarter, net of $94 million of cash on hand was 58%, which was within our target of less than 60%.

Notable Topics Discussed

  • American Water announced a $315 million acquisition of Nexus Water Group, adding nearly 47,000 customer connections, expected to close by August 2026.
  • The company has 20 acquisitions under agreement worth $220 million, adding about 40,000 customer connections, with progress in Pennsylvania, West Virginia, and other states.
  • The acquisitions are driven by system consolidation, infrastructure upgrades, regulatory compliance, and operational enhancements.
  • The company emphasizes leveraging scale and size to deliver reliable services and expand in existing and new geographies.
  • Recent deals in Pennsylvania are long-term projects, not immediate responses to regulatory rule changes.
  • The company has been actively pursuing municipal and private acquisitions, with ongoing negotiations and pipeline activity.
  • Fair market value deals are part of broader consolidation efforts, with expectations of more deals in the pipeline.
  • Management indicates that these deals are not negatively impacted by goodwill or different treatment of private assets, maintaining profitability.
  • A bill in California aims to require full decoupling for water utilities, closing a previous gap where partial decoupling was allowed.
  • The bill has passed the appropriations committee and is moving through the legislature, awaiting governor's approval.
  • Management views decoupling as a way to promote affordability and conservation, and expects a decision in the coming months.
  • The legislation could significantly influence regulatory treatment and revenue stability in California.
  • The company has secured final orders in Missouri, Iowa, and Hawaii, approving revenue increases based on authorized ROEs and capital structures.
  • Active rate cases in West Virginia, Kentucky, and California aim to reflect $300 million, $212 million, and $111 million in system investments respectively.
  • The company is seeking incremental revenue to support ongoing infrastructure investments, with expected rate adjustments in 2025-2027.
  • Regulatory success and ongoing cases underpin the company's growth and investment strategy.
  • Year-to-date capital investments totaled $1.3 billion, keeping the company on track for a $3.3 billion target in 2025.
  • The capital program includes hundreds of projects, with flexibility to adjust annual CapEx to meet overall goals.
  • Long-term regulated rate base growth is expected at 8-9%, supported by infrastructure investments and acquisitions.
  • The company has a robust pipeline of acquisitions, including 87,000 customer connections under agreement totaling over $500 million.
  • The Nexus acquisition will expand in-state geographies and support long-term growth in customer base and rate base.
  • Additional acquisitions in multiple states are under agreement, emphasizing ongoing consolidation and growth opportunities.
  • The company narrowed its 2025 EPS guidance to $5.70-$5.75, at the top half of the previous range, driven by strong business performance.
  • Expected EPS growth for 2025 is approximately 8.6% at the midpoint.
  • The company plans to issue roughly $1 billion in long-term debt in the second half of 2025 to support growth and capital needs.
  • The company maintains a long-term EPS and dividend growth target of 7-9%, with a focus on industry-leading performance.
  • Strong regulatory and operational execution underpin this growth outlook.
  • The company's geographic diversity and infrastructure renewal efforts differentiate it from other utilities.
  • Unfavorable weather in 2025 impacted earnings by approximately $0.06 per share in the quarter, but overall results remain strong.
  • Weather variations from year to year are acknowledged as a factor, but do not significantly alter the company's growth trajectory.
  • As of the end of the quarter, the debt-to-capital ratio was 58%, within the target of less than 60%.
  • The company plans to issue about $1 billion in debt in the second half of 2025, supporting ongoing investments and growth.

Key Insights:

  • Confidence expressed in ability to execute financial and operating plans while maintaining balance sheet strength.
  • 2025 EPS guidance narrowed to $5.70 to $5.75 per share from previous $5.65 to $5.75 range.
  • Expected to achieve 8.6% EPS growth in 2025 at midpoint of guidance.
  • Long-term targets reaffirmed for earnings and dividend growth at 7% to 9%, driven by 8% to 9% rate base growth.
  • Consistent EPS growth expected through 2029 and beyond.
  • Plan includes another long-term debt issuance of roughly $1 billion in second half of 2025.
  • Invested $1.3 billion in capital projects year-to-date, on pace for approximately $3.3 billion in 2025.
  • Capital program consists of hundreds of individual projects with flexibility to adjust organic CapEx annually.
  • 87,000 customer connections under agreement from acquisitions totaling $535 million.
  • Announced Nexus Water Group acquisition adding nearly 47,000 customer connections and $200 million to rate base, expected to close by August 2026.
  • 20 additional acquisitions in 7 states under agreement for $220 million adding about 40,000 customer connections.
  • Renewed acquisition activity in Pennsylvania including fair market value deals under new commission guidelines.
  • Continued regulatory execution with new rates effective in several states and multiple active general rate cases filed.
  • Seeking full decoupling in California to promote affordable rates and conservation; related bill progressing through legislature.
  • Leadership highlighted importance of stakeholder engagement, especially in Pennsylvania, to support upcoming rate cases.
  • Management confident in acquisition integration and maintaining profitability regardless of acquisition type.
  • Management views consolidation and regionalization as ongoing trends across the water utility sector.
  • CEO John Griffith emphasized the company's unique value proposition combining capital growth, regulatory and operational execution.
  • Affirmed industry-leading EPS and dividend growth driven by geographic and regulatory diversity.
  • CFO David Bowler highlighted strong usage as primary driver of 2025 financial strength and consistent regulatory execution.
  • Cheryl Norton discussed disciplined capital program execution and strategic acquisition pipeline.
  • Strength in 2025 attributed mainly to strong customer usage and consistent regulatory execution across diverse platform.
  • California decoupling bill aims to close regulatory gaps; currently passed appropriations committee and awaiting full legislature and governor approval.
  • Fair market value deals in Pennsylvania are progressing naturally; more deals expected as consolidation continues.
  • Nexus acquisition seen as consistent with other acquisitions; municipal deals remain active and pursued.
  • Equity issuance plans remain targeted for 2026 with all options under consideration but no immediate forward issuance planned.
  • Discussion on Pennsylvania stakeholder relationships and timing of next rate case; management confident in strong customer service and stakeholder engagement.
  • Weather had an unfavorable impact on earnings by $0.06 per share year-over-year due to wet conditions in 2025 and warm/dry conditions in 2024.
  • Regulatory updates include final orders in Missouri, Iowa, and Hawaii with approved revenue increases and ROE in line with expectations.
  • Active rate cases filed in West Virginia, Kentucky, and California seeking significant additional annual revenues tied to system investments.
  • Cost of capital filing extension approved through May 1, 2026, maintaining current authorized cost of capital absent major interest rate changes.
  • Decoupling efforts in California are legislative and regulatory priorities to support affordability and conservation.
  • Capital investments and acquisitions are expected to grow regulated rate base at a long-term rate of 8% to 9%.
  • Regulatory and operational execution are key to maintaining competitive and sustainable shareholder returns.
  • The company is leveraging scale and size to deliver safe, clean, reliable, and affordable water and wastewater services to new customers.
  • The capital program's flexibility allows for adjustment of organic CapEx to meet overall planned capital spend including acquisitions.
  • Acquisition opportunities are driven by system consolidation, infrastructure upgrades, regulatory compliance, and operational enhancements.
  • Management believes their affordability position and sustainability leadership will be highly valued by investors.
  • The company emphasizes its position as the largest and most geographically diverse water and wastewater utility in the U.S.
Complete Transcript:
AWK:2025 - Q2
Operator:
Good morning, and welcome to American Water's Second Quarter 2025 Earnings Conference Call. As a reminder, this call will be recorded and is also being webcast with an accompanying slide presentation through the company's Investor Relations website. The audio webcast archive will be available for 1 year on American Water's Investor Relations website. I would like now to introduce your host for today's call, Aaron Musgrave, Vice President of Investor Relations. Mr. Musgrave, you may begin. Aaron Mu
Aaron Musgrave:
Thank you, Alan. Good morning, everyone, and thank you for joining us for today's call. At the end of our prepared remarks, we will open the call for your questions. Let me first go over some safe harbor language. Today, we will be making forward-looking statements that represent our expectations regarding our future performance or other future events. These statements are predictions based on our current expectations, estimates and assumptions. However, since these statements deal with future events, they are subject to numerous known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results indicated or implied by such statements. Additional information regarding these risks, uncertainties and factors as well as a more detailed analysis of our financials and other important information is provided in the second quarter earnings release and Form 10-Q, each filed yesterday with the SEC. And finally, all statements during this presentation related to earnings and earnings per share refer to diluted earnings and diluted earnings per share. With that, I'll turn the call over to American Water's President and CEO, John Griffith.
John C. Griffith:
Thank you, Aaron, and good morning, everyone. Let's turn to Slide 5, and I'll start by covering some highlights of the second quarter and first half of the year. As we announced yesterday, we delivered solid financial results through the first half of 2025. Earnings were $1.48 per share for the second quarter compared to $1.42 for the same period last year. In the first 6 months of 2025, earnings were $2.53 per share compared to $2.37 per share in the same period of 2024. With this strength across the business, combined with our expectations for the rest of the year, we now expect to achieve the top half of our initial EPS guidance range for 2025, which we've narrowed to $5.70 to $5.75 per share. David will share more about our results and guidance a bit later. Moving on to some of our other key accomplishments so far in 2025. We invested $1.3 billion in capital projects year-to-date, again reflecting great work by our teams responsible for planning and completing these investments. We were also very pleased to announce several new acquisition agreements in the first half of the year, including the Nexus Water Group systems that will add nearly 47,000 customer connections, which we expect to close by August 2026. As Cheryl will discuss, we are continuing to build momentum with our business development platform, with 87,000 customer connections under agreement totaling over $500 million across our platform. And we continued our track record of regulatory execution in the first half of 2025, with new rates effective in several states and new cases filed to reflect investments in infrastructure for the benefit of our customers. Which leads us to Slide 6, which describes the drivers of American Water's very competitive and sustainable shareholder return profile. We have a clear top-tier capital growth plan underpinned by decades of fundamental water and wastewater infrastructure renewal and water quality investment. This, combined with our strong regulatory and operational execution, results in a value proposition that we believe is unique in the utility sector. We are again affirming our long-term targets for both earnings and dividend growth at 7% to 9%, driven by 8% to 9% rate base growth. We expect to consistently grow earnings and dividends at an industry-leading pace over the next 5 years and beyond. With that, I'll hand it over to David to cover our financial results, rate case updates and our 2025 outlook in further detail. David?
David M. Bowler:
Thanks, John, and good morning, everyone. Turning to Slide 8. I'll provide further insights on second quarter results. Consolidated earnings were $1.48 per share, up $0.06 per share versus the same period in 2024. Revenues were higher by $0.50 per share, driven by authorized rate increases to recover investment across our states. Revenues were also higher from recently completed water and wastewater acquisitions and organic customer growth. Weather on the other hand, was unfavorable by an estimated $0.06 per share year-over-year. This was due to wet weather in 2025 across many states, resulting in an unfavorable $0.03 impact, combined with the $0.03 unfavorable weather variance from the warm and dry conditions experienced in the second quarter of 2024. And looking at operating costs, O&M was higher by $0.17 per share, driven primarily by employee-related expense, increased maintenance and technology costs as well as costs related to acquisitions completed in 2024, which we expected. Depreciation increased $0.10 per share and financing costs increased $0.08 per share, both as expected in support of our investment growth. Turning to Slide 9. Year-to-date consolidated earnings were $2.53 per share, up $0.16 per share versus the same period in 2024. On a weather-normalized basis, EPS was up 9.4% year-to-date compared to the prior year. Many of the same drivers I described for the quarter apply to this period as well, including the unfavorable impact of weather. Revenues were higher by $0.94 per share and O&M was higher by $0.32 per share. Depreciation increased $0.21 per share and financing costs increased $0.18 per share, both as expected in support of our investment growth. Turning to Slide 10. I'll cover the latest regulatory activity in our states. First, on completed cases. We received a final order from the Missouri Commission in May approving our settlement agreement which we discussed last quarter. In Iowa, we received a final order from the commission approving an annualized revenue increase of $13 million based on an ROE of 9.6% and an equity layer of 52.57%, in line with the Iowa's approved capital structure in its previous rate case. As a reminder, interim rates were effective on May 11, 2024, in the amount of $5.1 million, and final rates will go into effect tomorrow on August 1. In Hawaii, we received the final order last week from the commission approving an annualized revenue increase of $1.5 million based on an ROE of 9.75% and an equity layer just north of 52%. We expect new rates to go into effect in early August. Turning to active cases. You can see we have general rate cases in progress in 3 jurisdictions. On May 5, we filed a general rate case in West Virginia, reflecting $300 million in system investments covering the period March 2024 through February 2027. We are seeking $48 million of additional annual revenue which would be reflected in 2 steps, in March 2026 and March 2027, and we expect this case to be completed by the end of February 2026. Intervenor testimony is set for October and rebuttal testimony in November. On May 16, we filed a general rate case in Kentucky reflecting $212 million in system investments covering February 2025 through December 2026. We are seeking $27 million of additional annual revenue, and we expect proposed rates to go into effect on an interim basis in December 2025. Intervenor testimony is set for August and rebuttal testimony in September. And finally, on July 1, we filed a general rate case in California, reflecting system investments through 2028. We are seeking $63 million of additional annual revenue in 2027 compared to authorized 2025 revenue and a total increase in revenue over the 2027 to 2029 period of $111 million. If approved by the commission, the new rates would take effect on January 1, 2027, with subsequent increases expected in January 2028 and 2029. As a reminder, our request for a 1-year extension of our cost of capital filing to May 1, 2026, was approved earlier this year, which maintains our current authorized cost of capital through 2026, absent significant movements in interest rates. Another piece of our filing is decoupling. We currently have partial decoupling in California, but again, are requesting full decoupling to promote affordable rates and conservation. On a similar front, on the legislative side, a decoupling bill related to water utilities has passed out of the California Senate and is currently awaiting action in the California Assembly Appropriations Committee. On Slide 11, as John mentioned, yesterday, we announced that we are narrowing our 2025 EPS guidance to the top half of the range we first disclosed last October. The 2025 EPS guidance range is now $5.70 to $5.75 from $5.65 to $5.75 previously on a weather- normalized basis. We are seeing strength in the business across several regulated states so far in 2025, including solid customer usage. Coupled with the fact that we will continue to have revenue increases year-over-year in several states through Q3, we expect the second half of 2025 to deliver financial results to achieve this narrow guidance range. This puts us on track to deliver 8.6% EPS growth in 2025 at the midpoint of the narrowed guidance range. I'm confident in our team's ability to execute on our financial and operating plans, including delivering cost-effective financing while maintaining our balance sheet strength and credit profile. Our total debt-to-capital ratio as of the end of the quarter, net of $94 million of cash on hand was 58%, which was within our target of less than 60%. As a reminder, our 2025 financing plan still includes another long-term debt issuance of roughly $1 billion to be completed in the second half of 2025. And finally, on Slide 12, I want to reemphasize that we continue to expect to achieve consistent EPS growth within the 7% to 9% range through 2029 and beyond. We believe our industry-leading EPS and dividend growth, coupled with our affordability position and sustainability leadership, will continue to be highly valued and rewarded by investors. We believe these aspects of our business and our position as the largest and most geographically diverse water and wastewater utility in the country distinguishes us from all other utilities. With that, I'll turn it over to Cheryl to talk more about our capital program and our recent acquisition activity.
Cheryl D. Norton:
Thank you, David, and good morning, everyone. On Slide 14, our capital program delivered $1.3 billion of investments in the first half of the year. This result keeps us on pace to hit our goal of approximately $3.3 billion of capital investment in 2025. Our low-risk annual capital plan is made up of hundreds of individual projects, which our teams do a really great job of executing. As a reminder, the nature of the program also gives us the ability to flex up or flex down our organic CapEx spending annually in order to achieve our overall planned capital spend, including acquisitions. We continue to expect these capital investments in infrastructure and in acquisitions will grow regulated rate base at a long-term rate of 8% to 9%. Turning to Slide 15. We continue to be well positioned for growth through acquisitions across many states with about 87,000 customer connections under agreement from deals totaling $535 million. In May, we were pleased to announce an agreement with the Nexus Water Group subsidiary to purchase multiple water and wastewater systems located in 8 states for $315 million. This acquisition will add nearly 47,000 customer connections and approximately $200 million to rate base. Through this transaction, we will grow in 8 of our existing regulated states, supporting our long-term growth target of 2% for customer additions. As with other acquisitions, we'll be able to leverage our scale and size to deliver safe, clean, reliable and affordable water and wastewater services to these new customers. We also believe this expansion will help lead to more growth since it will expand some of our in-state geographies. We expect closing will take place by or before August 2026. In addition to the Nexus systems, we currently have 20 acquisitions in 7 states under agreement for $220 million that would add about 40,000 customer connections. This represents significant progress on the business development front, including in West Virginia and Pennsylvania. Importantly, we've seen renewed activity in Pennsylvania, including 4 systems closed so far this year and an additional 8 systems under agreement. The most recent acquisitions announced were the Pittston wastewater system and the Indian Creek Valley Water Authority, where we plan to utilize fair market value under the new guidelines set by the commission. We have negotiated purchase prices that we believe will result in approval by our regulators of transactions at full cost recovery. We remain confident in our acquisition pipeline, and we are continuing to invest in regulated acquisition opportunities across our footprint. In all of our states, the acquisition opportunities are driven by the need for system consolidation, infrastructure upgrades, regulatory compliance and operational enhancements. With that, I'll turn it back over to our operator to begin Q&A and take any questions you may have.
Operator:
[Operator Instructions] Our first question comes from Richard Sunderland of JPMorgan.
Richard Wallace Sunderland:
How are you thinking about Pennsylvania stakeholder relationships and engagements in advance of the next rate case application in the state? Have you been seasoning the timing of an application? And are you seeing recognition of that?
Cheryl D. Norton:
Rich, it's Cheryl. Thanks for the question. We really appreciate it. Yes, we've been doing a whole lot of work in that stakeholder space. First and foremost, we continue to provide really great customer service across the state. And so we know that, that is the ultimate way for us to keep our customers happy. That's what they expect. But also, we have created a stakeholder plan where we continue to reach out and build relationships across all of our stakeholder groups. And we feel like we're in a really good spot in Pennsylvania. We are continuing to plan for our rate filing just as you would normally expect and as we've talked about in the past.
Richard Wallace Sunderland:
Got it. That's helpful color there. And then on the financing side, I know you've been clear on sort of strategy for the equity with [ blocks ]. Curious if you would explore a forward issuance to take care of the '26 equity needs, seeing a lot of peers in the space get ahead of equity.
David M. Bowler:
Rich, this is David. Thanks for that question. Obviously, we keep, I mean, all options on the table and are always evaluating the -- or the options that we have to issue, but our plan is to take proceeds in 2026 and issue the equity in '26.
Operator:
The next question comes from Angie Storozynski of Seaport.
Agnieszka Anna Storozynski:
So I wanted to ask about the Nexus acquisition. Anything you guys can provide as a basis for the earnings power of this asset and how it compares to municipal M&A that you would typically pursue? And what does it say about the availability of larger municipal targets that you guys are going after a private set of assets?
Cheryl D. Norton:
Thanks, Angie, I'll take a stab at that question. We see the Nexus acquisition, it was a great opportunity for us to get a group of customers in states that we already provide service to, but it does help us to expand our footprint in those states. We don't see it being a lot different than most of our acquisitions. We're going to go through the same processes to bring these customers online. We've already started outreach with employees and communities so that we can get to know them and they can get to know us a little bit as we go through the process, which is just typical for what we would do in any acquisition type of scenario. So we don't see this as being any kind of an indication. Regarding municipal deals, those municipal deals are still out there. We're still pursuing them, and we're still getting lots of interest across our footprint. So we think that it's just another step in rightsizing the organizations across the U.S. And this consolidation piece that we've been pushing on and seeing all across the footprint is going to continue, and that will happen in various ways. So we're excited about this deal, but it certainly has not taken our eye off the ball on the municipal systems.
Agnieszka Anna Storozynski:
And it's not going to have diminished profitability because of the goodwill that is being paid and then just a different treatment of privately-owned asset acquisitions?
Cheryl D. Norton:
No, I don't think that it's going to have a negative impact at all. I think it's going to be -- again, we'll just roll them right in and we'll just keep moving forward, and I don't see a negative impact at all.
Operator:
[Operator Instructions] Our next question comes from Jonathan Reeder of Wells Fargo.
Jonathan Garrett Reeder:
Congrats on a solid update. I wanted to start first, I guess, piggybacking off of Angie there and say, congrats on the Nexus deal as well as a resumption of some Pennsylvania fair market value deals. Cheryl, could you just kind of talk a little bit more on the landscape in Pennsylvania on the fair market value front? Were these deals that are kind of already in the pipeline just waiting to get done once the PUC finalized the revisions to the rules? Or is this just kind of more the tip of the iceberg of the backlog of deals that are kind of waiting to come, and we should expect to see a lot more Pennsylvania fair market value activity in the quarters ahead?
Cheryl D. Norton:
Yes. Jonathan, thanks for the question. These deals are all long lead time deals. So we've been working on all these deals for quite some time. Nothing happens overnight in the acquisition space. But I would say these deals have just gone through the natural progression. I don't think they were necessarily waiting in the wings for these rules to get finalized or anything like that. I think the timing is what it is just based on the conversations that we've been having. And we look at each deal to determine, does it make sense to do a fair market value deal or does it make sense to do a more traditional type of deal. And we've had a mixture of those. When you talk about all the deals that are happening in Pennsylvania, they're not all fair market value deals. Do we expect more to come to the table? Absolutely. And we'll continue to manage through those deals. We were glad when the commission gave us guidelines that we can follow along so that it makes that process of getting a deal closed smoother, and hopefully, faster. And so we're going to follow those guidelines with our fair market value deals so that we can really push all these deals forward, whether they're fair market value or not. But yes, we think there's still a lot more deals. There's a lot of consolidation that needs to happen out there.
John C. Griffith:
Jonathan, it's John here. I'll just add to Cheryl's comments, and Cheryl's spot on there in terms of the Pennsylvania landscape. We really are seeing additional contribution from across our entire platform as well. So Pennsylvania remains healthy, but those same dynamics that drive Pennsylvania in terms of the need for investment, economies of scale, which leads to the regionalization, those all apply across our platform, and we're really -- we spent the last couple of years organizing to be able to move on those dynamics broadly across our states.
Jonathan Garrett Reeder:
Awesome. That's great to hear the momentum as broad. One other question I had was on your reference to the bill of -- the decoupling bill in California. Can you kind of expand a little bit more what exactly that says or maybe what's the goals of the bill? Because I believe the legislature in previous year kind of passed the decoupling bill, but it didn't require the commission to adopt decoupling. Does this bill require them to approve decoupling -- full decoupling for the California water utilities?
Cheryl D. Norton:
Yes. Jonathan, this bill was designed to try to close that gap for us. So we're hopeful that it continues to make its way through and that the governor signs off on it, and we're hoping to have a decision over the next few months.
Jonathan Garrett Reeder:
Okay. But at this point, it still needs to pass both chambers before you then go to the governor, is that correct?
David M. Bowler:
Yes. Well, it's -- Jonathan, this is David. It's passed out of the appropriations committee. Now it's going to go to the full legislature. And then once it passes there, it goes to the governor's desk.
Jonathan Garrett Reeder:
Excellent. And again, congrats on a good update.
Operator:
The next question comes from Paul Zimbardo of Jefferies.
Paul Andrew Zimbardo:
I just had one quick one here comprehensive before. Just on the strength in the 2025 pushing up the guidance towards the top end. I know you attributed to some stronger usage and just outperformance across the footprint. Is there anything else in particular that kind of drove that strength? And if we should think about that, those drivers, whatever they may be contributing in 2026 plus?
David M. Bowler:
Paul, this is David. No, I mean, what we disclosed in the call here was really the primary driver. We've just seen strong usage. We saw that last year, a continuation of that, and that's the main driver.
John C. Griffith:
Yes. And Paul, just to add to that. It's a lot of consistent regulatory execution and the strength of our diversified platform geographically as well as from a regulatory perspective.
Operator:
This concludes our question-and-answer session. Our presentation is now finished. You may now disconnect.

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