#1AMERICAN WATER AMERICAN WATER Our Compelling Story: 2021 Investor Day February 25, 2021#2AMERICAN WATER Ed Vallejo Vice President, Investor Relations 2#3Forward-Looking Statements Safe Harbor This presentation includes 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. They are not guarantees or assurances of any outcomes, financial results, 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 presentation. The factors that could cause actual results to differ, including uncertainties, risks and other factors associated with the current novel coronavirus (COVID-19) pandemic, are discussed in the Appendix to this presentation, and in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 24, 2021. Non-GAAP Financial Information This presentation includes non-GAAP financial measures. Further information regarding these non-GAAP financial measures, including a reconciliation of each of these measures to the most directly comparable GAAP measure, is included in the Appendix to this presentation. AMERICAN WATER 3#4Safety Above All Safety is a priority in everything that we do > 1 2 3 4 Bedrock of Zero Injuries Emotional Safety Virtual Culture Investor Day AMERICAN WATER 5 Continued Execution of COVID-19 Safety Measures 4#5AMERICAN WATER Walter Lynch President and Chief Executive Officer 5#6Agenda 9 10 11 12 13 16 17 18 19 20 20 23 23 24 24 30 31 25 25 26 27 22 Vision and Strategy 1 Walter Lynch, President and CEO Growth 2 Bill Varley, Chief Growth Officer 12 11 ESG 3 # 9 10 8 4 AMERICAN WATER Cheryl Norton, Chief Environmental Officer 2020 Results, 2021 Guidance and Business Plan Susan Hardwick, EVP and CFO 5 5 Minute Break 6 Q&A Session 6#7Strategic Focus - Creating Value for the Long Term AMERICAN WATER 1 Vision 2 3 Operate where we can create value for customers, employees and shareholders Develop and invest in our people Champion an inclusive and high performing culture 7#8Our Business at a Glance Regulated Business as of December 31, 2020 53,000+ miles of pipe 609 water treatment plants 150 wastewater facilities 1,100 wells 75 dams Homeowner Services ~3 million contracts serving ~1.5 million customers Military Services Group 17 installations in current footprint Regulated Operations Homeowner Services AMERICAN WATER Regulated Operations & Homeowner Services Military Services Group 8#9Our Compelling Story 2021-2025 Plan 7-10%* EPS CAGR range Market-Based Businesses ~1% Regulated Acquisitions Regulated Investment CAPEX 1.5-2.5% 5-7% *Anchored off 2020 EPS AMERICAN WATER 9#10Increase in Regulated Investment of $1.3 Billion Over the Next 5 Years 2021-2025 Average Regulated Capital Expenditures by Purpose 4% Capital Plan ($ in billions) AMERICAN WATER 2021 - 2030 $22 - $25 Infrastructure Renewal 8% 7% $3 - $4 Operational Efficiency, 2021 - 2025 Technology & Innovation $10.3 - $10.5 2021 8% Water Quality $1.9 $1.4 - $1.6 Resiliency 6% 67% $0.3 System Expansion $19- $21 Other $1.6 $8.9 Regulated Acquisitions Regulated System Investments 10#11Balancing Investment Opportunity & Customer Bill Impact System investment needs ° AMERICAN WATER What can help us do more O&M and capital efficiencies Customer bill impact Regulatory support and constructive legislation Increase customer base 11#12Strategic Approach to Managing Costs AMERICAN WATER TECHNOLOGY Enabling employees Enhancing customer experience Best-in-class operations SUPPLY CHAIN Leverage our scale More competitive pricing/buying power Access to supply Commitment to diverse suppliers CULTURE Strong customer focus Embrace Innovation Continuous execution 12#13Managing Customer Bill Impact with a Disciplined Focus on Operating Costs Regulated O&M Efficiency Ratio* 46.1% AMERICAN WATER 41.0% 39.1% 36.6% 35.6% 34.5% 34.3% ** 30.4% 2010 2012 2014 2016 2018 2019 2020 2025 Target 2025 O&M Adjusted O&M Expenses from Efficiency Target 30.4%** 2010 to 2020 increased only 1.0% CAGR* Added 322,000*** customer connections since 2010 * Non-GAAP Measure - See appendix for reconciliation. 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 *** Includes organic customer connections, acquisitions and closed dispositions 13#14Market-Based Businesses Provide Strategic Value AMERICAN WATER Military Services Group 17 installations in current footprint Opportunity for infrastructure upgrades on existing bases Homeowner Services ~3 million protection plan contracts serving ~1.5 million customers Over 40 different partnerships with municipal water, gas and electric utilities BENEFITS Capital light Enhances customer satisfaction Positive branding Builds relationships Cash flow positive Leverage core competencies 14#15Our Objectives for the Next Five Years 2021-2025 Plan 7-10% EPS CAGR range Market-Based Businesses ~1% Regulated Acquisitions 1.5-2.5% Regulated Investment CAPEX 5-7% AMERICAN WATER Advance infrastructure improvement through five- year capital investment plan of approximately $10.4 billion and expected ten-year plan of $22-$25 billion Accelerate growth through acquisitions Drive O&M efficiency through strategic approach to managing costs Leverage MBBs to enhance customer experience and add cash flow Strengthen position as leading Environmental, Social Responsibility and Governance (ESG) investment 15#16AMERICAN WATER Bill Varley Chief Growth Officer 16#17Highly Fragmented Water Industry Creates Opportunity Water Utilities AMERICAN WATER Electric Utilities Natural Gas Utilities Water Industry opportunity Wastewater 16% Investor owned 2% Investor owned 84% Public & other 98% Public & other Water Utilities Source: EPA SDWIS Federal Reports Search www3.epa.gov/enviro/facts/sdwis American Water footprint • Ideal for Industry consolidation opportunities • Target 5K-50K customer connections per acquisition Wastewater focus (AWK customer connections mix- 93% water & 7% wastewater) Electric Utilities Source: Form EIA-861 detailed data files www.eia.gov/electricity/data/eia8 Gas Utilities Source: EPA F.L.I.G.H.T. Greenhouse Gas Emissions from Large Facilities Ghgdata.epa.gov/ghgp/main.do# 17#18Leveraging Our Competitive Advantage AMERICAN WATER Scale and large customer base Focus on Efficient Operations People with deep utility experience Increase wastewater within and adjacent to water footprint Engagement on Regulatory and Legislative Policy 18#19State Legislation Enables Growth Fair Market Value 10 Consolidated Tariffs 12 Water Quality AMERICAN WATER Accountability Legislation CA MO CA JANA N NJ ΙΑ NJ MD NJ IL NY IL IN IN PA MO MO KY VA VA WV MD WV 3 19#20Strong Pipeline of Opportunities 園 Acquisition Activity Since 2015 Kol Growing Opportunity for Customer Connections Over Five-Year Outlook 106 acquisitions adding over 211,000 customer connections 62 water acquisitions adding a total of 52,000 connections 44 wastewater acquisitions adding a total of 159,000 connections =800,000 =1,230,000 Prior Outlook Current Outlook Agreement Process Regulatory Approval to Close AMERICAN WATER ≈1,230,000 Customer Connections in Pipeline • Opportunity A - 78,000 • Opportunity B-50,000 • • Opportunity C-33,000 Opportunity D-29,300 • Opportunity E-23,500 Close & Customers Served at Existing Rates Rate Case Process to Fully Reflect Acquisitions & Inclusion into Rate Base 20#21Regulated Growth: Strategy 2021-2025 Plan 7-10% EPS CAGR range Market-Based Businesses Regulated Acquisitions ~1% 1.5-2.5% Regulated Investment CAPEX 5-7% AMERICAN WATER Executing Fundamentals Continued focus on acquisitions in the target range of - 5,000 to 50,000 customers - and larger acquisitions where appropriate Leverage water footprint to acquire wastewater systems Continued engagement on legislative/regulatory policy to benefit customers and advance solutions to water and wastewater challenges Continue to build robust pipeline of opportunities 21#22AMERICAN WATER Cheryl Norton Chief Environmental Officer; President, New Jersey American Water 22#23What ESG Means at American Water Stakeholder Engagement Workforce + Activists/ Advocacy Groups Industry Associations Customers The Journey of ESG Board of Directors Yo Infrastructure Environmental Stewardship Regulatory Agencies/ State Utility Commissions ESG engagement Suppliers AMERICAN WATER Investors • Employees Customers S Communities 23#24How We Work AMERICAN WATER H5 Inclusion & Diversity 59% Of Transfers/Promotions were minority, female, veteran or disabled employees Diversity is our STRENGTH Supplier Diversity 27.6% 2021 Goal: Achieve diverse supplier/small business spend, of Tier 1 & 2 suppliers Communities are Better because we are there > Safety 67% Reduction in workplace injuries since 2015 Journey to ZERO injuries People >100k HRS Safety training completed by employees Learning through Best Practices Note: Statistics as of 12/31/20 24#25Environmental Goals AMERICAN WATER Energy & Emissions* Reduce absolute scope 1 and scope 2 greenhouse gas emissions by more than 40% by 2025 from a 2007 baseline Water Use & Efficiency By 2035, meet customer needs while saving 15% in water delivered per customer compared to a 2015 baseline Climate Variability & Water Supply Resilience By 2030, increase our water system resiliency to respond to more extreme events by increasing URI** weighted average by 10% from 2020 baseline. *Clarification of existing goal ** Utility Resilience Index 25#26Water Use & Efficiency Goal By 2035, American Water commits to meet customer needs while saving 15% in water delivered per customer compared to a 2015 baseline 2015 2020 4.3% reduction gained since 2015 區 4.3% Reduction 3 to 5 % Since 2015 Continue and Expand Current Programs 2 to 4% Innovation and New Technology 00000 2035 6 to 8% National Trends Toward Efficient Appliances and Fixtures 15% Reduction by 2035 AMERICAN WATER BENEFITS Environment Energy Savings Avoided Capital Reduce Non-Revenue Water Lower Cost to Customers 26#27Climate Variability & Water Supply Resilience Goal By 2030, increase our water system resiliency to respond to more extreme events by increasing URI* weighted average by 10% from 2020 baseline AMERICAN WATER BENEFITS Availability and reliability of service Robust, comprehensive emergency planning Response to extreme events Customer, employee and public safety Physical, cyber and fiscal security Workforce resiliency *Utility Resilience Index 27#28Climate Variability & Water Supply Resilience Goal AMERICAN WATER URI assesses a utility's ability to absorb and cope with an incident and return to normal operations as quickly as possible. People Power Asset Resiliency Utility Resilience Improved Enhanced Resilient Systems (URI) Capital Emergency Plans Investment Employee Training Resiliency (URI) Community Resilience + STRATEGY H Improvement opportunities Uniform approach to training Quicker and efficient return to normal operations Holistic approach to resiliency. 28#29AMERICAN WATER Susan Hardwick Chief Financial Officer 29#302020 Results Fourth Quarter 2020 Results Full Year 2020 Results EPS Contribution by Business Three Months Ended Three Months Ended 12/31/2020 12/31/2019 Change Regulated $0.85 $0.84 $0.01 Market-Based $0.13 ($0.09) $0.22 Parent Interest & Other ($0.18) ($0.21) $0.03 Total EPS $0.80 $0.54 $0.26 EPS Contribution by Business Year Ended Year Ended 12/31/2020 12/31/2019 Change Regulated $3.94 $3.61 $0.33 Market-Based $0.50 $0.26 $0.24 Parent Interest & Other ($0.53) ($0.44) ($0.09) Total EPS $3.91 $3.43 $0.48 AMERICAN WATER 30#312021 EPS & Long-Term Guidance 2021-2025 LT 7-10%* EPS CAGR Guidance 5m 2021 EPS Guidance $4.18 - $4.28 2020 EPS $3.91 2020 2020 EPS includes $0.07 per share of favorable 2021 EPS Guidance $4.18 weather; $3.84 per share weather normalized $4.28 2021 *Anchored off 2020 EPS I AMERICAN WATER 7-10%* CAGR Range 2025 31#32Investment for Growth in Regulated Acquisitions 2020-2024 Plan 7-10% EPS CAGR range Regulated Market-Based Businesses 1-2% Regulated Acquisitions 1-2% Investment CAPEX 2021-2025 Plan 7-10% EPS CAGR range Market-Based Businesses Regulated Acquisitions AMERICAN WATER ~1% 1.5-2.5% 5-7% Regulated Investment 5-7% CAPEX 32#33Our Capital Plan Drives Rate Base Growth Capital Plan ($ in billions) $22 - $25 $20 - $22 $3 - $4 $2 - $3 $10.3 - $10.5 $8.8 - $9.4 $0.6 - $1.2 $1.4 - $1.6 $1.9 $18 - $19 $19 - $21 $0.3 $8.2 $8.9 $1.6 2021 2020-2024 (Prior Plan) 2021-2025 2020-2029 (Prior Plan) 2021 - 2030 AMERICAN WATER Regulated Acquisitions Regulated System Investments 33#34Investment in Rate Base is the Foundation of Our Growth ($ in billions) ≈7-8%* Rate base CAGR Estimated Rate Base** AMERICAN WATER As of 12/31/2020 $20.1 Net Utility Plant $15.0 Less $13.7 Advances for Construction $0.3 $12.5 $11.7 $10.7 CIAC Contributions in Aid of Construction $1.4 $10.0 Net Deferred income taxes $3.4 $5.1 2015 2016 2017 2018 2019 2020 2025 Total Estimated Rate Base $15.0 *Anchored off 2020 **An approximation of rate base, which includes Net Utility Plant not yet included in rate base pending rate case filings/out comes. Amounts may not sum due to rounding 34#35Financing $1.3 Billion Increase in Regulated Investment Over Prior Plan ($ in millions) AMERICAN WATER Equity Financing Sources ~54% Debt Financing Sources ~46% Total Change in Financing from Prior Plan Change from Prior Plan Change from Prior Plan Operating Cash Flows +$250 + Debt Issuances +$600 $1.3 billion NYAW Sale Proceeds +$250 Equity Issuances* +$200 Total Equity Financing +$700 Total Debt Financing +$600 *2021-2025 Equity Issuances: $500m Prior Plan + $200m Incremental = $700m Total 35#36Rate Filings Completed & Awaiting Final Order ($ in millions) Rate Filings Completed* Effective since January 1, 2020 $56 $95 $151 Rate Cases (Step Increases) Infrastructure Charges Total Requested Revenue in Pending Base Rate Proceedings** AMERICAN WATER $9 $208 $199 Rate Cases Infrastructure Charges Total *Annualized Revenue Increase for Rates Effective Since January 1, 2020 ** Includes revenues originally requested by Pennsylvania-American in its 2019 general rate case filing 36#37Balance Sheet Strength AWK Long-Term Issuer Rating S&P Global Moody's A Baa1 (stable) (stable) Consolidated Debt Maturity Profile 5 years as of December 31, 2020 Debt to Total Capital* AMERICAN WATER 2020 ** 62% 5-year Plan 2025 59-60% Liquidity Available as of year-end *Includes both long-term and short-term debt **Excludes $500 million term loan $1,935 $547 $597 $474 $329 $356 $14 $1,120 $20 Cash $1,388 $1,100 Revolving Credit Facility ($2.25B capacity) 2021 2022 2023 2024 2025 2020 2025 (Projected) 37#38Delivering Value for Our Shareholders Target long term dividend growth CAGR at high end of 7-10%* AMERICAN WATER 5-Year Total Shareholder Return* ** 182% $2.15 $1.96 $1.78 $1.62 $1.47 $1.33 2015 2016 2017 2018 2019 2020 103% 79% American Water PHLX Utility Sector Works Company S&P 500 *Future dividends are subject to approval of the American Water Board of Directors **As of 12/31/20 end date. Source: Factset 38#39AMERICAN WATER Walter Lynch President and Chief Executive Officer 39#40Our Strengths AMERICAN WATER Safety Safety is both a strategy & core company value. Performance Going beyond the minimum requirement to solidify our position as a leader in O&M excellence. People Inclusion & empowerment pave a path for employee & company success. H Solutions Provider Growth enables investment in training, infrastructure, & communities. ESG ESG affirms the values we have upheld for decades. Safety is more than "the right thing to do" Excellence is getting the Fundamentals right Employees are the Heart of our business Providing Water and Wastewater Solutions Leading by Example 40#41Demonstrating Leadership Sustainability BARRON'S 100 AMERICAN WATER Ranked #9 on Corporate Knight's Global 100 Most Sustainable Companies; Top ranked Water company in the world American Water ranked #15 on Barron's 100 Most Sustainable Companies S&P Global Ratings ESG Evaluation (87 out of 100), the highest evaluation score given by S&P in the U.S. and the 2nd highest globally Ranked #75 on Newsweek's list of America's Most Responsible Companies; 2nd highest in Energy/Utility Industry Supplier Diversity TOP CORPORATIONS Ranked as one of America's Top Corporations for Women's Business Enterprises by the Women's Business Enterprise National Council Inclusion & Diversity FOR BEST F 2020 VETS MilitaryTimes SMPLOYERS American Water recognized among the top 100 Best for Vets employers by Military Times MILITARY 2021 GOLD EMPLOYER RIENDLY American Water earns 2021 Military FriendlyⓇ Gold Employer designation DiversityPlus Magazine 2020 Best of the Best Champions of Diversity LITARY SPOUSE M 2021 ENDLY EMPLOYER American Water earns 2021 Military FriendlyⓇ Spouse Employer designation Eastern Minority Supplier Development Council - 2020 National Corporation of the Year Award American Water Joins Army Representatives to Accept U.S. Department of Energy Award Bloomberg Gender-Equality Index 2021 Included in the Bloomberg Gender Equality Index for the 3rd consecutive year 41#42Our Compelling Story 2021-2025 Plan 7-10% EPS CAGR range Market-Based Businesses ~1% Regulated Acquisitions 1.5-2.5% Regulated Investment CAPEX 5-7% AMERICAN WATER Top tier long-term EPS growth at CAGR of 7-10% Regulated growth driven by capital investment of approximately $10.4 billion over the next five years and expected $22 to $25 billion over the next ten years Regulated Businesses comprise 89% of 2025 EPS, supported with cash flow from complementary Market- Based Businesses Dividend growth leader at high end of 7-10% growth range* Top utility sector performer in total shareholder return Inclusive and Diverse high performing culture *Future dividends are subject to approval of the American Water Board of Directors 42#43AMERICAN WATER 5 Minute Break 43#44AMERICAN WATER Q&A Session 44#45Investor Relations Contacts Ed Vallejo Vice President, Investor Relations [email protected] AMERICAN WATER Michael Tavani, CFA Senior Manager, Investor Relations [email protected] Abbey Barksdale Senior Manager, Investor Relations & ESG [email protected] 45#46AMERICAN WATER Appendix 46#47Forward-Looking Statements AMERICAN WATER Statements made, referred to or relied upon in this presentation, including, without limitation, with respect to: earnings per share guidance; dividend growth guidance; the timing and outcome of pending or future acquisition activity; our future financial performance, liquidity and cash flows; our ability to finance our current operations, capital expenditures a nd growth initiatives by accessing the debt and equity capital markets; the impacts to us attributable to the current pandemic health event resulting from the novel coronavirus (COVID-19); the amount and allocation of future capital investments and expenditures; estimated revenues, regulatory recovery and other decisions in general rate cases and other proceedings; estimates regarding our projected rate base, growth, results of operations and financial condition; our projected regulated adjusted operation and maintenance efficiency ratio; the expected timing of the completion of the announced sale of our New York subsidiary and the amount of proceeds or after-taxgain anticipated to be recognized therefrom; trends in the industries in which we operate, including macro trends with respect to our efforts related to customer, technology and work execution; our ability to execute our business and operational strategy; and regulatory, legislative, tax policy or legal developments, 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", "uncertain", "outlook," "future," "pending," "goal," "objective," "potential," "continue," "seek to," "may," "can," "will," "should" and "could" or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on our current expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, financial results, 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, known and unknown risks, uncertainties and other factors. Actual results may vary materially from those discussed in the forward-looking statements included in this presentation as a result of the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 24, 2021, and subsequent filings with the SEC, and because of factors including, without limitation: the decisions of governmental and regulatory bodies and the outcome of regulatory commissions' and other authorities' actions; changes in customer demand for, and patterns of use of, water; limitations on the availability of our water supplies or sources of water, or restrictions on its use thereof; a loss of one or more large industrial or commercial customers; changes in laws, governmental regulations and policies; impacts resulting from U.S., state and local elections; weather conditions and events, climate variability patterns, and natural disasters, including drought or abnormally high rainfall, prolonged and abnormal ice or freezing conditions, strong winds, coastal and intercoastal flooding, pandemics (including COVID-19) and epidemics, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms, sinkholes and solar flares; the outcome of litigation and similar governmental and regulatory proceedings, investigations or actions; risks associated with our aging infrastructure and our ability to appropriately improve the resiliency of or maintain and replace, current or future infrastructure and systems; exposure or infiltration of our technology and critical infrastructure systems through physical or cyber attacks or other means; our ability to obtain permits and other approvals for projects and construction of various water and wastewater facilities; changes in our capital requirements; our ability to control operating expenses and to achieve efficiencies in our operations; the intentional or unintentional actions of a third party, including contamination of our water supplies or the water provided to our customers; our ability to obtain adequate and cost-effective supplies of equipment, chemicals, electricity, fuel, water and other raw materials; our ability to successfully meet growth projections for our businesses and capitalize on growth opportunities; our ability to, among other things, acquire, close and successfully integrate regulated operations and market-based businesses, enter into contracts and other agreements with, or otherwise obtain, new customers in the Company's market-based businesses, and realize anticipated benefits and synergies from new acquisitions; risks and uncertainties associated with contracting with the U.S. government; cost overruns relating to our operations; our ability to successfully develop and implement new technologies; our ability to maintain safe work sites; our exposure to liabilities related to environmental laws and similar matters; changes in general economic, political, business and financial market conditions, including with respect to the COVID-19 pandemic; access to sufficient debt and/or equity capital on satisfactory terms and when and as needed to support operations and capital expenditures; fluctuations in interest rates; our ability to comply with negative and affirmative covenants in our current or future indebtedness; the issuance of new or modified credit ratings or outlooks by credit rating agencies on us or on our current or future debt; fluctuations in the value of benefit plan assets and liabilities; changes in federal or state general, income and other tax laws, including future significant tax legislation, the availability of, or our compliance with, the terms of applicable tax credits and tax abatement programs and the Company's ability to utilize its U.S. federal and state income tax net operating loss carryforwards; the use by municipalities of the power of eminent domain or other authority or the assertion of similar rights by private landowners; our inability to obtain insurance; the incurrence of impairment charges related to goodwill or other assets; labor actions; our ability to attract and retain qualified employees; civil disturbances, unrest or terrorist threats or acts; and other factors as may be set forth in the Company's SEC filings. These and other forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the risk factors and cautionary statements included in our annual, quarterly and other SEC filings, and readers should refer to such risks, uncertainties, risk factors and statements in evaluating such forward-looking statements. Any forward-looking statements speak only as of the date this presentation was first used or given. We do not have and do not 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. New factors emerge from time to time, and it is not possible for us to predict all such factors. Furthermore, it may not be possible to assess the impact of any such factor on our 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. 47#48Non-GAAP Financial Information AMERICAN WATER This presentation includes adjusted regulated segment O&M efficiency ratios, both historical and forward-looking, which, in addition to the pro forma adjustment for the impact of the Tax Cuts and Jobs Act (the "TCJA"), excludes from its calculation (i) estimated purchased water and other revenues and purchased water expenses, (ii) the impact of the Freedom Industries chemical spill in 2014 and certain related settlement activities recognized in 2016, 2018 and 2019, (iii) the estimated impact in 2012 and 2014 of weather, and (iv) the allocable portion of non-O&M support services costs, mainly depreciation and general taxes. Also, an alternative presentation of this ratio has been provided for each of 2010, 2012, 2014 and 2016 which includes the pro forma adjustment for the impact of the TCJA and includes for 2012, 2014 and 2016 the impact of our implementation of Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit, on January 1, 2018. These adjusted O&M efficiency ratios constitute "non-GAAP financial measures" under SEC rules. We evaluate our operating performance using these ratios and believe that the presentation of them is useful to investors because the ratios directly measure improvement in the operating performance and efficiency of our regulated businesses. These ratios are derived from our consolidated financial information but are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures supplement and should be read in conjunction with our GAAP disclosures and should be considered as an addition to, and not a substitute for, any GAAP measure. These ratios (i) are not accounting measures based on GAAP; (ii) are not based on a standard, objective industry definition or method of calculation; (iii) may not be comparable to other companies' operating measures; and (iv) should not be used in place of the GAAP information provided elsewhere in this presentation. Management is unable to present a reconciliation of adjustments to the components of the 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 the most directly comparable GAAP financial measure. Set forth in this appendix are tables that reconcile each of the components of our historical O&M efficiency ratios to its most directly comparable GAAP financial measure. All references throughout this presentation to EPS refer to diluted EPS attributable to common shareholders. 48#49Fourth Quarter 2020 EPS Detail by Business 0.54 0.09 (0.01) Dec QTD 2019 Revenue Weather in Actual * Q4 2019 0.01 Regulated $0.01 (0.04) (0.04) 0.01 AMERICAN WATER 0.02 0.80 0.01 0.02 0.19 MBB $0.22 Other $0.03 Weather in O&M Depreciation MSG Q4 2020 Keystone Loss on Sale 2019 Other American Water Charitable Foundation Contribution in 2019 O&M Reclasses Dec QTD 2020 Actual 2019 49#50Full Year 2020 EPS Detail by Business 3.43 0.07 0.03 0.63 Regulated $0.33 ($0.25) ($0.15) 0.03 0.04 MBB $0.26 0.19 0.01 ($0.03) AMERICAN WATER 3.91 ($0.05) ($0.02) ($0.02) Parent ($0.09) Dec YTD Revenue Weather Weather O&M Depreciation HOS MSG 2019 Actual * in 2019 in 2020 Keystone Loss on Sale 2019 Sale of a Legacy Investment American Water Charitable Interest, net Other in 2019 Foundation Contribution in 2019 Estimated impact of Covid-19, net Dec YTD 2020 Actual 50#512020 Closed Acquisitions* As of December 31, 2020 STATE California Hawaii NUMBER OF SYSTEMS WATER CUSTOMER CONNECTIONS 2 1 AMERICAN WATER WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS 6,300 6,300 200 200 Iowa 2 250 250 Illinois 11 6,500 18,500 25,000 Indiana 1 400 400 Missouri 1 100 100 New Jersey 1 2,800 2,800 Pennsylvania 2 50 2,200 2,250 Tennessee 1 200 200 West Virginia 1 300 Total 300 23 13,600 24,200 37,800 *Customer Connections are rounded and may not sum 51#52Acquisitions* Under Agreement as of January 31, 2020 NUMBER OF WATER CUSTOMER STATE SYSTEMS CONNECTIONS California Illinois 4 6,200 3 900 WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS 6,200 900 Indiana 2 100 100 200 Missouri 6 4,100 5,400 9,500 Pennsylvania 7 1,700 10,300 12,000 West Virginia 2 1,000 1,000 Total 27 14,000 15,800 29,800 *Customer Connections are rounded and may not sum AMERICAN WATER 52#53Timely Recovery Through Regulatory Mechanisms Forward Test Years (36%) 64% Infrastructure Surcharge Mechanisms (28%) 36% Traditional Recovery 2021-2025 Capital Plan (average) AMERICAN WATER 53#54Rates Effective Since... January 1, 2020 Annualized AMERICAN WATER January 1, 2021 Rate Cases & Step Increases California (Step Increase) Date Effective 1/1/2020 Infrastructure Charges Revenue Increases Date Effective Annualized Infrastructure Charges Revenue Increases Date Effective Annualized Revenue Increases Indiana (Step Increase) 5/1/2020 $5 13(a) West Virginia (DSIC) Pennsylvania (W-DSIC) 1/1/2020 $3 1/1/2020 9 West Virginia (DSIC) Pennsylvania (DSIC) 1/1/2021 $5 1/1/2021 8 New Jersey (Rate Case) Virginia (Rate Case) 11/1/2020 39 Pennsylvania (WW-DSIC) 1/1/2020 1 Tennessee (QIIP, EDI, SEC) 1/1/2021 3 11/6/2020 Sub-Total (1)(b) Illinois (QIP) 1/1/2020 7 Illinois (QIP) 1/1/2021 7 $56 New Jersey (DSIC) 1/1/2020 10 2021 Total $23 Tennessee (QIIP, EDI, SEC) 1/1/2020 2 Pennsylvania (DSIC) 4/1/2020 5 Missouri (ISRS) 6/27/2020 10 New Jersey (DSIC) 6/29/2020 10 Kentucky (QIP) 7/1/2020 1 Pennsylvania (DSIC) 7/2/2020 4 Pennsylvania (DSIC) Missouri (ISRS) 10/1/2020 8 12/14/2020 2 Sub-Total $72 2020 Total $128 (a) The overall increase is $17.5 million in revenues combined over two steps, the first step is effective 7/1/2019 in the amount of $4.4 million and the second step became effective 5/1/2020 in the amount of $13.1 pending protest rights to the certified numbers (b) Does not include WWISC revenues of $875,000 rolled into base rates. Water revenues increased by $1.2 million inclusive of WWI SC revenues, and Wastewater revenue decreased by $1.05 million for a net award of $150,000. 54#55Pending Rate Case Filings Rate Cases Filed California Pennsylvania Missouri Iowa Infrastructure Charges Filed New York (SIC) Indiana (DSIC) EA AMERICAN WATER Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base Case No. A.19-07-004 7/1/2019 $26(a) $689 Docket R-2020-3019369 (W) & 4/29/2020 92(b) 10.8% R-2020-3019371 (WW) 3,975 Case No. WR-2020-0344 6/30/2020 78(c) 10.5% 1,823 Case No. RPU-2020-0001 8/28/2020 3(d) 10.5% 145 $199 $6,632 5/29/2020 1/15/2021 $1 8 $9 Total $208 $7 81 $88 (a) On July 1, the company filed for a Test Year 2021 revenue requirement request of $26.0 million which excludes the escalation year and attrition year rate increases for 2022 and 2023 of $9.8 million and $10.8 million, respectively. The Company filed its 100-day update on October 11, 2019, requesting $27.3 million annualized incremental revenues for 2021, and increases of $9.5 million and $10.3 million in the escalation year of 2022 and the attrition year of 2023, respectively (b) The Company reached a settlement with the Commission's Bureau of Investigation and Enforcement providing for an increase of $ 70.5 million over two steps, the first step will be $50.5 million and the second step will be $20 million. This settlement, filed with the Commission on October 30, 2020, is subject to Commission approval. (c) The requested increase is $78.1 million, which excludes $29.4 million from the ISRS (d) The requested increase is $2.9 million, which excludes $1 million from the QIP 55#56Regulatory Information AMERICAN WATER CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI Authorized Rate Base* $498,135 $883,386 $1,182,170 $443,654 $1,249,293(b) Authorized ROE 9.20% (a) 9.79% 9.80% 9.70% 10.00%(e) Authorized Equity 55.39% (a) 49.80% 53.41% (c) 48.90% Effective Date of Rate Case 1/1/2018(a) 1/1/2017 5/1/2020 6/28/2019 52.80%(d) 5/28/2018 NEW JERSEY NEW YORK PENNSYLVANIA VIRGINIA Authorized Rate Base* $3,573,450 $275,463 $3,162,597(b) $194,165 Authorized ROE 9.60% 9.10% 10.00%(e) 9.30%(h) Authorized Equity 54.56% 46.00% 53.75%(d) 40.75% (d) WEST VIRGINIA $652,900(g) 9.75% 48.40% (g) Effective Date of Rate Case 11/1/2020 6/1/2017 1/1/2018 11/6/2020 (f) 2/25/2019 *Rate Base stated in $000s (a) On March 22, 2018, Decision 18-03-035 set the authorized cost of capital for 2018 through 2020. CAW has a separate Cost of Capital case which sets the rate of return outside of a general rate proceeding (b) The Rate Base listed is the Company's view of the Rate Base allowed in the case, the Rate Base was not disclosed in the Order or the applicable settlement agreement (c) The Authorized Equity excludes cost-free items or tax credit balances at the overall rate of return which lowers the equity percentage as an alternative to the common practice of deducting such items from rate base (d) The equity ratio listed is the Company's view of the equity ratio allowed in the case, the actual equity ratio was not disclosed in the Order or the applicable settlement agreement (e) The ROE listed is the Company's view of the ROE allowed in the case; however, the ROE was not disclosed in the Order or the applicable settlement agreement (f) Interim rates were effective April 1, 2016 and received final Order May 24, 2017 (g) The Rate Base and equity ratio listed is the Company's view of what was allowed in the case, as there were multiple versions of each disclosed by the parties in the settlement agreement (h) The ROE listed is the Company's view of the ROE allowed in the case, the ROE was not disclosed in the Order or the applicable settlement agreement, 9.6% is adopted for future earnings test and WWISC filings per the Order 56#57Reconciliation Table: Regulated Segment O&M Efficiency Ratio Regulated Segment O&M Efficiency Ratio FY 2010 FY 2012 FY 2014 FY 2016 FY FY 2018 2019 FY 2020 (A Non-GAAP Unaudited Number) ($ in millions) Total operations and maintenance expense $1,291 $1,330 $1,350 $1,504 $1,479 $1,544 $1,622 Less: Operations and maintenance expense - Market-Based Operations Operations and maintenance expense - Other 257 256 289 372 362 393 389 (61) (56) (51) (44) (42) (31) (25) Total operations and maintenance expense - Regulated Businesses Less: $1,095 $1,130 $1,112 $1,176 $1,159 $1,182 $1,258 Regulated purchased water expense 100 110 122 122 133 135 149 Allocation of non-operation and maintenance expenses 29 35 39 30 31 31 41 Impact of Freedom Industries activities - - 10 65 (20) (4) 0 Estimated impact of weather 5 (2) 0 0 Adjusted operations and maintenance expense - Regulated Businesses (a) $966 $980 $943 $959 $1,015 $1,020 $1,068 Total operating revenues $2,555 $2,854 $3,011 $3,302 $3,440 $3,610 $3,777 Less: Operating Revenues - Market-Based Operations 295 307 355 451 476 539 540 Operating Revenues - Other (26) (17) (18) (20) (20) (23) (18) Total pro forma operating revenues - Regulated Businesses $2,286 $2,564 $2,674 $2,871 $2,984 $3,094 $3,255 Less: Regulated Purchased Water expense* Other revenue 100 110 122 122 133 135 149 (7) Plus: Freedom Industries chemical spill in West Virginia 1 Estimated impact of weather Adjusted pro forma operating revenues-Regulated Businesses (b) $2,186 (47) $2,407 17 $2,570 $2,749 $2,851 $2,959 $3,113 Adjusted O&M efficiency ratio-Regulated Businesses (a)/(b) 44.2% 40.7% 36.7% 34.9% 35.6% 34.5% 34.3% Adjusted operations and maintenance expense - Regulated Businesses Less: $966 $980 $943 $959 Impact of adoption of ASU 2017-07** 39 (8) Adjusted operations and maintenance expense - Regulated Businesses (c) $966 $941 $951 12 $947 Adjusted operating revenues-Regulated Businesses $2,186 $2,407 $2,570 $2,749 Less pro forma adjustment: Pro forma adjustment for impact of the TCJA*** 89 Adjusted pro forma operating revenues-Regulated Businesses (d) $2,097 112 $2,294 137 $2,433 161 $2,588 * Calculation assumes purchased water revenues approximate purchased water expenses **Includes the impact of the Company's adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit, on January 1, 2018 ***Calculation of Estimated tax reform = Revenue Requirement with new Effective Tax Rate (taxes grossed up) - Revenue Requirement with old Effective Tax Rate Adjusted O&M efficiency ratio-Regulated Businesses (c)/(d) 46.1% 41.0% 39.1% 36.6% AMERICAN WATER 57