- Quarterly cash dividend increased
7.9 percent, to $0.178
- Diluted income from continuing
operations per share increases to $0.32
- Completed eight acquisitions
year-to-date, adding approximately 8,700 customers
- Christopher H. Franklin appointed
chief executive officer
- Richard S. Fox appointed chief
operating officer of regulated operations
- Daniel J. Schuller, Ph.D. appointed
executive vice president, strategy and corporate
development
Aqua America, Inc. (NYSE: WTR) today reported results for the
quarter ending June 30, 2015.
Second Quarter Operating Results
For the second quarter, Aqua America reported income from
continuing operations of $57.4 million, which is up 4.7 percent
from $54.8 million in 2014. Diluted income from continuing
operations per share was $0.32 for the quarter, compared to $0.31
for the same quarter in 2014.
Revenues increased to $205.8 million, or 5.4 percent, compared
to $195.3 million for the second quarter of 2014. Customer growth
in both the regulated and market-based businesses accounted for
approximately 65 percent of the total increase. Rates, surcharges
and consumption contributed to the remainder—approximately 35
percent of the total increase.
Operations and maintenance expenses were $79.7 million for the
second quarter of 2015, compared to $70.4 in the second quarter of
2014. Expenses tied to the leadership transition, Aqua’s
acquisitions of North Maine Utilities and the market-based
business, Tri-State Grouting, and other one-time events accounted
for the majority of the increase. Aqua continues to be the
industry’s most cost-efficient water company with a regulated
segment efficiency ratio adjusted for purchased water (a non-GAAP
financial measure) of 34.2 percent for the trailing 12-month period
ended June 30, 2015.
As of June 30, Aqua reported year-to-date income from continuing
operations of $105.9 million, which is up 9 percent from $97.2
million for the same time frame in 2014. Diluted income from
continuing operations per share rose to $0.60, which is an increase
of 9.1 percent from the $0.55 reported in 2014. Revenues increased
4.8 percent to $396.1 million, and compares favorably to the $378
million reported in 2014. Operations and maintenance expenses
increased to $152.9 million.
“Success in both our regulated and market-based acquisition
strategies accounted for most of the company’s increased revenue
for the second quarter,” said Aqua America’s Chief Executive
Officer Christopher Franklin. “We’re continuing to focus our
efforts on building value by fully optimizing all of our assets,
controlling expenses with ongoing objectives to maintain our
industry-leading adjusted O&M to revenue ratio and bringing our
expertise to new customers through the acquisition of water and
wastewater utilities.”
Dividend
Earlier today, Aqua America’s Board of Directors declared a
quarterly cash dividend of $0.178 per share of common stock, which
represents a 7.9 percent increase over the previous quarter’s
dividend of $0.165. This dividend increase will be payable on
September 1, 2015, to shareholders of record on August 14, 2015.
Aqua has paid a consecutive quarterly dividend for 70 years and
this is the company’s 25th dividend increase in 24 years. The
annualized dividend rate after this increase will equal $0.712 per
share. Over the past 10 years, the company’s annualized dividend
has increased at an annual growth rate of 7.6 percent.
“The Board’s decision to raise the dividend by 7.9 percent is a
reflection of the organization’s financial strength and its
commitment to increase shareholder value,” said Aqua America Board
Chairman Nicholas DeBenedictis. “I am confident that Chris Franklin
and his leadership team will continue to grow the company and build
on the success that our customers, employees and shareholders have
come to expect.”
Corporate Update
Aqua has announced two major organizational changes in the month
of July. On July 16, 2015, the company promoted Richard “Rick” S.
Fox to chief operating officer of regulated operations (COO), the
position held by Franklin, who was named CEO on July 1, 2015. Fox,
a 14-year veteran of the company, previously served as Aqua’s
regional president where he oversaw the operations of five states.
As COO, Fox will be responsible for Aqua’s regulated operations
which include engineering and environmental compliance.
Additionally, Aqua appointed Daniel J. Schuller, Ph.D. to the
new position of executive vice president of strategy and corporate
development. In this role, Schuller will be responsible for
assisting the CEO with developing, communicating, executing, and
sustaining Aqua’s key strategic initiatives. Schuller’s role will
have a strong emphasis on growing the company’s regulated and
market-based activities. Prior to joining Aqua, Schuller worked for
J.P. Morgan Asset Management – Infrastructure Investments Group
where he was an investment principal since 2007.
“Over the past 14 years, I have had the pleasure to work closely
with Rick, who has played a key role in managing and improving the
company’s operational efficiencies, which helped contribute to the
overall success of our business,” said Franklin. “Dan’s experience
and expertise in valuing, acquiring, and managing utilities during
his career makes him an ideal fit in this organization. Both Rick
and Dan will report directly to me, and I am confident that they
will be valuable assets as we look to continue to grow.”
Capital Expenditures
In the first six months of 2015, as part of its capital
investment plan, Aqua has invested approximately $150.1 million to
improve its infrastructure systems. The company expects to invest
more than $325 million by the end of the year, and more than $1
billion over the next three years. The capital investments made in
the infrastructure of the communities Aqua serves are key to
helping the company accomplish its mission of delivering safe,
reliable water and wastewater services to its customers.
Rate Activity
Year-to-date, Aqua America’s regulated subsidiaries received
rate awards and infrastructure surcharges in New Jersey,
Pennsylvania (wastewater), Illinois, North Carolina, Ohio, and
Texas, estimated to increase annualized revenues by approximately
$5.2 million. The company has $4.3 million of rate or surcharge
proceedings pending in Ohio and Virginia. Additionally, Aqua
America’s state subsidiaries are expected to seek rate relief by
filing rate requests or surcharges of approximately $5 million in
the remainder of 2015.
Regulated Operations
On July 1, 2015, Aqua America’s subsidiary, Aqua Virginia,
acquired the Wintergreen Stoney Creek water and wastewater utility
systems. Wintergreen serves more than 500 customers with an
opportunity for 100 additional customers once the community is
fully built-out. Additionally, on August 3, 2015, Aqua North
Carolina completed the acquisition of the Mountain Ridge Estates
water system serving approximately three dozen customers in Watauga
County, North Carolina.
Thus far in 2015, Aqua has completed eight acquisitions in
Illinois, Pennsylvania, New Jersey, Virginia and North Carolina,
growing the customer base by approximately 8,700 connections, which
represents year-to-date customer growth of 0.9 percent. Of these
eight acquisitions, three are municipal systems, the most notable
of which are the North Maine Utilities (NMU) water and wastewater
utilities which closed on April 30, 2015. NMU serves approximately
44,000 people in the city of Glenview, IL. The company has closed
more than a third of all its municipal deals ever completed in the
last four years. Aqua expects to close a total of 15 to 20
acquisitions by year-end. Coupled with organic growth, the company
anticipates that it will achieve overall customer growth of 1.5 to
2 percent in 2015.
“We feel strongly that there are opportunities for us to grow by
acquiring both municipal and privately owned systems, creating a
win-win for the customers and communities we serve,” said Franklin.
“Our financial strength and expertise in the water and wastewater
utility space, allows us to competitively bid on systems that might
be experiencing capital constraints, lack the ability to make
infrastructure improvements or have an owner who wants to focus
resources and attention elsewhere. The company is also adjusting
its approach to acquisitions by more strategically targeting larger
systems where possible. The success of this approach is just
starting to come to fruition. Even with this adjustment of
approach, we will continue to work to solve the problems that
plague small utility systems in the states in which we
operate.”
Market-Based Activities
Aqua’s market-based revenue increased to $8.9 million or 57
percent, compared to $5.7 million reported in the second quarter of
2014, with Tri-State Grouting (acquired in August 2014) being the
main driver of revenue for the business unit. Market-based
operations and maintenance expenses increased by 54.3 percent to
$7.4 million, compared to the same time frame in 2014.
Acquisitions, mostly Tri-State Grouting, were responsible for the
increased market-based operations and maintenance expenses. Revenue
for the business unit is expected to increase to more than $30
million by year-end.
Financial Information
As of June 30, 2015 Aqua America’s weighted average cost of
fixed-rate long-term debt was 4.70 percent and the company had $230
million available on its credit lines. In May, Standard &
Poor’s reiterated the longstanding A+ rating and Stable Outlook for
Aqua’s largest subsidiary, Aqua Pennsylvania.
Earnings Call Information
Date: Wednesday, August 5, 2015Time: 11:00 a.m. ET (please dial
in by 10:45 a.m.)Webcast and Slide Presentation link:
http://ir.aquaamerica.com/events.cfmReplay Dial-In #: 888-203-1112
(U.S.) & +1 719-457-0820 (International)Confirmation code:
7075829
The company’s conference call with financial analysts will take
place on Wednesday, August 5, 2015 at 11 a.m. Eastern Daylight
Time. The call and slide presentation will be webcast live so that
interested parties may listen over the Internet by logging on to
AquaAmerica.com and following the link for Investor Relations. The
webcast 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
August 5, 2015 for 10 business days following the call. To access
the audio replay in the U.S., dial 888.203.1112 (pass code
7075829). International callers can dial +1 719.457.0820 (pass code
7075829).
About Aqua America
Aqua America is one of the largest U.S.-based, publicly traded
water utilities and serves nearly 3 million people 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.
Caution Concerning Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, among others: the company’s continued ability to adapt
itself for the future and build value by fully optimizing company
assets; the company’s ability to control expenses and maintain its
efficiency; 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 potential additional customers that may
be added to the Wintergreen system in the future; the estimated
revenues from rate awards received; the company’s ability to
acquire larger acquisitions and solve the needs of smaller utility
systems; the company’s ability to fund needed infrastructure due to
its financial position and the amount of investment for the year
and the next three years; the company’s continuation of investments
in strategic ventures; the expectations that are created and the
potential value that will be added by recently hired and promoted
management; the expected revenue increase for the year in
market-based activities; the company’s ability to continue to
deliver strong results; and, the company’s ability to grow its
dividend, add shareholder value 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 Six Months Ended
June 30,
June 30,
2015
2014
2015
2014
Operating revenues $ 205,760 $ 195,307 $ 396,086 $ 377,979
Income from continuing operations $ 57,382 $ 54,818 $
105,927 $ 97,219 Net income attributable to common
shareholders $ 57,382 $ 55,569 $ 105,927 $ 98,428 Basic
income from continuing operations per common share $ 0.32 $ 0.31 $
0.60 $ 0.55 Diluted income from continuing operations per common
share $ 0.32 $ 0.31 $ 0.60 $ 0.55 Basic net income per
common share $ 0.32 $ 0.31 $ 0.60 $ 0.56 Diluted net income per
common share $ 0.32 $ 0.31 $ 0.60 $ 0.55 Basic average
common shares outstanding 177,084 177,058 176,987 176,949 Diluted
average common shares outstanding 177,913 178,012
177,818 177,868 Aqua America, Inc. and
Subsidiaries Consolidated Statement of Income (In thousands, except
per share amounts) (Unaudited) Quarter
Ended Six Months Ended
June 30,
June 30,
2015
2014
2015
2014
Operating revenues $ 205,760 $ 195,307 $ 396,086 $ 377,979
Cost & expenses: Operations and maintenance 79,746
70,375 152,935 142,061 Depreciation 31,049 31,226 61,549 62,207
Amortization 924 746 1,773 1,879 Taxes other than income taxes
13,795 13,026 28,416
25,128 Total 125,514 115,373
244,673 231,275 Operating
income 80,246 79,934 151,413 146,704 Other expense (income):
Interest expense, net 18,900 19,093 37,565 38,403 Allowance for
funds used during construction (1,040 ) (937 ) (2,222 ) (2,104 )
Loss (gain) on sale of other assets 1 (140 ) (168 ) 208 Equity loss
in joint venture 84 1,251 798
1,937 Income from continuing operations before
income taxes 62,301 60,667 115,440 108,260 Provision for income
taxes 4,919 5,849 9,513
11,041 Income from continuing operations 57,382
54,818 105,927 97,219 Discontinued operations: Income from
discontinued operations before income taxes - 1,253 - 2,025
Provision for income taxes - 502
- 816 Income from discontinued operations
- 751 - 1,209
Net income attributable to common shareholders $ 57,382
$ 55,569 $ 105,927 $ 98,428
Income from continuing operations per share: Basic $ 0.32 $ 0.31 $
0.60 $ 0.55 Diluted $ 0.32 $ 0.31 $ 0.60 $ 0.55 Income from
discontinued operations per share: Basic $ - $ 0.00 $ - $ 0.01
Diluted $ - $ 0.00 $ - $ 0.01 Net income per common share:
Basic $ 0.32 $ 0.31 $ 0.60 $ 0.56 Diluted $ 0.32 $ 0.31 $ 0.60 $
0.55 Average common shares outstanding: Basic 177,084
177,058 176,987 176,949
Diluted 177,913 178,012
177,818 177,868 Aqua America,
Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In
thousands of dollars) (Unaudited) June
30, December 31,
2015
2014
Net property, plant and equipment $ 4,522,287 $ 4,401,990
Current assets 175,360 152,522 Regulatory assets and other assets
902,631 852,240 Total assets $ 5,600,278 $ 5,406,752
Total equity $ 1,702,927 $ 1,655,383 Long-term debt,
excluding current portion 1,660,526 1,560,655 Current portion of
long-term debt and loans payable 74,809 77,013 Other current
liabilities 128,586 148,322 Deferred credits and other liabilities
2,033,430 1,965,379 Total liabilities and equity $
5,600,278 $ 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
June 30, 2015 Operating revenues (GAAP
financial measure) $ 765,676 Purchased Water 20,524 Adjusted
operating revenues (Non-GAAP financial measure) $ 745,152
Operations and maintenance expense (GAAP financial measure) $
275,186 Purchased Water 20,524 Adjusted operations and maintenance
expense (Non-GAAP financial measure) $ 254,662
Regulated
segment efficiency ratio (GAAP financial measure) 35.9%
Regulated segment efficiency ratio
adjusted for Purchased Water (Non-GAAP financial measure)
34.2%
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
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version on businesswire.com: http://www.businesswire.com/news/home/20150804007020/en/
Aqua America, Inc.Brian DingerdissenChief of StaffO:
610-645-1191BJDingerdissen@AquaAmerica.comorDonna AlstonManager,
CommunicationsO: 610-645-1095M:
484-368-4720DPAlston@AquaAmerica.com
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