Net income up 13.3 percent
Municipal acquisitions completed in
Pennsylvania and Illinois
Aqua America, Inc. (NYSE: WTR) today reported results for the
quarter ending March 31, 2015. First quarter income from continuing
operations per share increased to $0.27 compared to $0.24 in the
same period of 2014. Net income was up 13.3 percent to $48.5
million compared to $42.9 million in the first quarter of 2014.
“We are pleased to report another strong quarter of performance
for our customers, employees, and shareholders,” said Aqua
America’s Chairman and CEO Nicholas DeBenedictis. “I believe we are
well on our way to our 16th consecutive year of earnings growth,
and this is reflective of the company’s financial strength and
employee productivity.”
Revenue for the quarter was $190.3 million versus $182.7 million
in the first quarter of the prior year, a 4.2 percent increase.
Operations and maintenance expenses increased just $1.5 million, a
modest 2.1 percent in the first quarter versus the same period in
2014. Aqua America continues to maintain its status as one of the
most efficient utilities in America. Despite another winter with
adverse weather conditions, which caused abnormally high
occurrences of main breaks, management’s long-term focus on
investing capital in our systems allowed the company to reliably
and efficiently serve its customers while maintaining an
industry-leading regulated segment efficiency ratio adjusted for
purchased water (a non-GAAP financial measure) of 34.4 for the
trailing 12-month period.
On April 24, 2015, Aqua’s Board of Directors approved a $0.165
per share dividend, which is payable on June 1, 2015, reflecting an
increase of 8.6 percent compared to the $0.152 per share paid in
the same quarter of 2014. The company has paid consecutive
quarterly dividends for the last 70 years, increasing the dividend
for 23 straight years.
In the first quarter, the company invested $70.3 million in
infrastructure improvements as part of its 3-year, billion-dollar
capital investment program. These capital investments allow the
company to continue to provide reliable service to nearly 3 million
people in the eight states in which it has regulated
operations.
Year-to-date, Aqua’s state subsidiaries have received a total of
nine rate awards or infrastructure surcharges. Together, these
awards are projected to provide $3.8 million in annualized
revenue.
So far in 2015, Aqua America subsidiaries have completed
municipal acquisitions in Illinois and Pennsylvania. On April 30th,
the company acquired the North Maine Utilities (NMU) water and
wastewater systems, which serve more than 44,000 people through
4,700 metered water connections and almost 2,500 wastewater
connections. Under the agreement, which was approved by the
Illinois Commerce Commission on April 1st, Aqua Illinois purchased
the collective municipal systems for $22 million. The NMU
acquisitions represent the largest municipal acquisition Aqua has
completed in 16 years.
Aqua Pennsylvania, the company’s largest subsidiary, today
completed the municipal acquisition of Mt. Jewett’s drinking water
system in the northwestern part of the state. Mt. Jewett’s water
system serves approximately 1,500 people and was purchased for
approximately $1.3 million. The NMU and Mt. Jewett water systems
respectively bring the number of municipal deals the company has
completed to eight in the last two years.
Aqua subsidiaries purchased two other water systems in 2015
including Venter Heights in King William County, Virginia and
Seaview Harbor in Egg Harbor Township, New Jersey. In 2015, the
company expects to complete between 15 and 20 acquisitions
contributing to customer growth of between 1.5 and 2 percent,
providing the greatest customer growth since 2008.
“Our acquisition pipeline is very promising,” said DeBenedictis.
“As mentioned previously, we see acquisition potential among the
privately owned systems and, more recently, the municipal sector,
of which the North Maine Utilities and Mt. Jewett transactions are
great examples. Our expertise, financial strength and
industry-leading position allow Aqua America subsidiaries to
competitively bid for water and wastewater systems, especially
those that have neglected to invest in infrastructure over time.
These opportunities allow us to provide better service for these
customers.”
Additionally, the contributions of the company’s non-regulated
business to its total revenue increased in the first quarter of
2015. Aqua Resources’ revenue increased $5.3 million in the first
three months of 2015, compared to the same period in 2014. The
company’s Aqua Infrastructure Rehabilitation Company (AIRCo)
business unit, formerly known as Tri-State Grouting LLC, which was
acquired in August 2014, provided revenue of $4.6 million. AIRCo
specializes in storm water and wastewater pipeline rehabilitation
services, which are in high demand due to the nation’s rapidly
aging infrastructure. Aqua Resources’ revenue for the full year is
expected to increase to more than $30 million, compared to $23.7
million in 2014. Given the current energy market, the company’s
joint venture to provide water to Marcellus Shale drillers
continues to underperform in the short term and expects to deliver
positive results over the long term.
As of March 31, 2015, Aqua America's weighted average cost of
fixed-rate, long-term debt was 4.84 percent, and the company had
$193 million available on its credit lines. In September 2014,
Standard & Poor's reiterated its A+ credit rating for Aqua
Pennsylvania, Aqua's largest subsidiary. Of the 221 regulated
utilities rated by Standard & Poor's, only one has a higher
rating than Aqua Pennsylvania.
The company’s conference call with financial analysts will take
place on Wednesday, May 6, 2015 at 11 a.m. Eastern Daylight Time.
The call will be webcast live so that interested parties can listen
over the Internet by logging on to AquaAmerica.com and following
the link for Investor Relations. The conference call will be
archived in the investor relations section of the company’s website
for 90 days following the call. Additionally, the call will be
recorded and made available for replay at 2 p.m. on May 6, 2015 for
10 business days following the call. To access the audio replay in
the U.S., dial 888.203.1112 (pass code 5517758). International
callers can dial 719.457.0820 (pass code 5517758).
Aqua America is one of the largest U.S.-based, publicly traded
water utilities and serves nearly 3 million residents in
Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey,
Indiana and Virginia. Aqua America is listed on the New York Stock
Exchange under the ticker symbol WTR. Visit AquaAmerica.com for
more information.
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, among others: the company’s expectation for
year-over-year earnings growth; the company’s continued ability to
adapt itself for the future; the continuation of the company’s
growth-through-acquisition program and the expectations for
customer growth from this program; the company’s expectation to
acquire between 15 and 20 systems and to grow the customer base
between 1.5 percent and 2.0 percent; the company’s ability to
competitively bid for and acquire municipal and private water and
wastewater utilities; the estimated revenues from rate awards
received; the company’s estimated revenue growth for its
non-regulated businesses; the company’s ability to continue to
deliver results; the company’s ability to fund needed
infrastructure due to its financial position; the company’s
continuation of investments in strategic ventures; the company’s
ability to continue to deliver strong results; and, the company’s
ability to grow its dividend and to grow earnings. There are
important factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements including: general economic business conditions; housing
and customer growth trends; unfavorable weather conditions; the
success of certain cost containment initiatives; changes in
regulations or regulatory treatment; availability and access to
capital; the cost of capital; disruptions in the credit markets;
the success of growth initiatives; and other factors discussed in
our Annual Report on Form 10-K, which is on file with the
Securities and Exchange Commission. For more information regarding
risks and uncertainties associated with Aqua America’s business,
please refer to Aqua America’s annual, quarterly and other SEC
filings. Aqua America is not under any obligation – and expressly
disclaims any such obligation – to update or alter its
forward-looking statements whether as a result of new information,
future events or otherwise.
Aqua America, Inc. and Subsidiaries Selected Operating Data
(In thousands, except per share amounts) (Unaudited)
Quarter Ended
March 31,
2015
2014
Operating revenues $ 190,326 $ 182,672 Income from
continuing operations $ 48,545 $ 42,401 Net income
attributable to common shareholders $ 48,545 $ 42,859 Basic
income from continuing operations per common share $ 0.27 $ 0.24
Diluted income from continuing operations per common share $ 0.27 $
0.24 Basic net income per common share $ 0.27 $ 0.24 Diluted
net income per common share $ 0.27 $ 0.24 Basic average
common shares outstanding 176,888 176,839 Diluted average common
shares outstanding 177,792 177,810 Aqua
America, Inc. and Subsidiaries Consolidated Statement of Income (In
thousands, except per share amounts) (Unaudited)
Quarter Ended
March 31,
2015
2014
Operating revenues $ 190,326 $ 182,672 Cost &
expenses: Operations and maintenance 73,189 71,686 Depreciation
30,500 30,981 Amortization 849 1,133 Taxes other than income taxes
14,621 12,102 Total 119,159
115,902 Operating income 71,167 66,770
Other expense (income): Interest expense, net 18,665 19,310
Allowance for funds used during construction (1,182 ) (1,167 )
(Gain) loss on sale of other assets (169 ) 348 Equity loss in joint
venture 714 686 Income from continuing
operations before income taxes 53,139 47,593 Provision for income
taxes 4,594 5,192 Income from
continuing operations 48,545 42,401 Discontinued operations:
Income from discontinued operations before income taxes - 772
Provision for income taxes - 314 Income
from discontinued operations - 458 Net
income attributable to common shareholders $ 48,545 $ 42,859
Income from continuing operations per share: Basic $
0.27 $ 0.24 Diluted $ 0.27 $ 0.24 Income from discontinued
operations per share: Basic $
-
$
-
Diluted $ - $
-
Net income per common share: Basic $ 0.27 $ 0.24 Diluted $
0.27 $ 0.24 Average common shares outstanding: Basic
176,888 176,839 Diluted 177,792
177,810 Aqua America, Inc. and
Subsidiaries Condensed Consolidated Balance Sheets (In thousands of
dollars) (Unaudited) March 31, December 31,
2015
2014
Net property, plant and equipment $ 4,433,144 $ 4,401,990
Current assets 164,225 152,522 Regulatory assets and other assets
880,363 852,240 $ 5,477,732 $ 5,406,752
Total equity $ 1,676,294 $ 1,655,383 Long-term debt, excluding
current portion 1,594,980 1,560,655 Current portion of long-term
debt and loans payable 80,104 77,013 Other current liabilities
125,015 148,322 Deferred credits and other liabilities
2,001,339 1,965,379 $ 5,477,732 $ 5,406,752
Aqua America, Inc. and Subsidiaries Reconciliation of GAAP to
Non-GAAP financial measures for continuing operations (in thousands
of dollars) (GAAP refers to accounting principles generally
accepted in the United States) (Unaudited)
Regulated
segment - Efficiency Ratio adjusted for Purchased Water
Trailing twelve months ended March 31,
2015 Operating revenues (GAAP financial measure) $
758,422 Purchased Water 19,480 Adjusted operating revenues
(Non-GAAP financial measure) $ 738,942 Operations and
maintenance expense (GAAP financial measure) $ 273,316 Purchased
Water 19,480 Adjusted operations and maintenance expense
(Non-GAAP financial measure) $ 253,836
Regulated segment
efficiency ratio (GAAP financial measure) 36.0%
Regulated segment efficiency ratio
adjusted for Purchased Water (Non-GAAP financial measure)
34.4%
Reconciliation of GAAP to Non-GAAP
financial measures - The Company is providing disclosure of
the reconciliation of these non-GAAP financial measures to the most
comparable GAAP financial measures. The Company believes that the
non-GAAP financial measures provide investors the ability to
measure the Company’s financial operating performance by
adjustment, which is more indicative of the Company’s ongoing
performance and is more comparable to measures reported by other
companies.
Regulated segment - Efficiency Ratio is adjusted for Purchased
Water. Information referring to “Purchased Water” refers to expense
related to cost of water purchased from other non-affiliated
utilities. This “Purchased Water” expense amount is deducted from
the operating revenues amount and the operations and maintenance
expense amount to calculate the efficiency ratio adjusted for
Purchased Water.
These financial measures are measures of the Company’s operating
performance that do not comply with U.S. generally accepted
accounting principles (GAAP), and are thus considered to be
“non-GAAP financial measures” under applicable SEC
regulations. These non-GAAP financial measures are derived
from our consolidated financial information, and should only be
used as a supplement to our GAAP disclosures.
WTRF
Aqua America, Inc.Brian Dingerdissen,
610-645-1191BJDingerdissen@AquaAmerica.comorDonna Alston,
610-645-1095Mobile: 484-368-4720DPAlston@AquaAmerica.com
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