Dividend increased 8.6 percent; 24th dividend increase in 23 years;
uptick in municipal acquisition opportunities
BRYN MAWR, Pa.--(BUSINESS WIRE)--
Aqua America, Inc. (NYSE: WTR) today reported results for the quarter
ending June 30, 2014, net income rose to $55.6 million from $53.6
million in 2013. Net income per share was $0.31 for the quarter,
compared to $0.30 for the same period in 2013, on approximately 0.5
percent more shares outstanding. Income from continuing operations for
the quarter increased to $54.8 million from $53 million in the second
quarter of 2013.
Operating revenues for the quarter increased to $195.3 million compared
to $193.9 for the same period in 2013. Operating revenues increased even
though Aqua Pennsylvania (the company's largest subsidiary) experienced
above average rainfall and has not raised water rates since 2012 due to
the strategic implementation of the repair tax accounting change.
Today, the Board of Directors declared a quarterly cash dividend payment
of $0.165 per share payable on September 1, 2014, to all shareholders of
record on August 15, 2014. This represents an 8.6 percent increase over
the same quarter in 2013. Aqua America has paid a consecutive quarterly
dividend for 69 years, and raised the dividend 24 times in the past 23
years. Over the past 10 years, the company's annualized dividend has
increased at a 7.8 percent compound annual growth rate.
"We are proud to continue to deliver positive results, and of the
Board's decision to, once again, significantly raise the dividend,
rewarding our loyal shareholders," said Aqua America Chairman and CEO
Nicholas DeBenedictis. "Management's long-term vision continues to be
driven by our strategic initiatives designed to grow our customer base
through acquisitions, remain one of the most efficient utilities in the
nation, and invest significant capital to develop better infrastructure
that can provide top-tier service to our water and wastewater customers."
Year to date, Aqua has completed seven acquisitions in Virginia,
Illinois, New Jersey, and Pennsylvania, including the Penn Township,
Pennsylvania wastewater system and Summit Lake, New Jersey water system,
marking the twenty-fifth and twenty-sixth municipal acquisitions
completed since 1992. The company's acquisition success is expected to
continue for the rest of the year and should help overall customer
growth exceed 1.5 percent in 2014. This would be the highest growth in
customers served in more than six years.
"We are seeing an uptick in municipal acquisition opportunities," said
DeBenedictis. "In addition to recent operations and maintenance
contracts in Chicago Heights, two in Indiana, and one in Wyalusing
Borough, Pennsylvania, we were also the successful bidders on three
municipal acquisitions including North Maine Utilities (NMU) in
Illinois, Mount Jewett in western Pennsylvania and Sussex Borough in New
Jersey." The agreement to acquire the NMU water and wastewater systems,
which was announced in May, is expected to close in 2015. NMU serves a
densely populated area of more than 44,000 people through 4,700 water
meters and almost 2,500 wastewater connections. The Mount Jewett system
serves approximately 1,500 people in Northwest Pennsylvania, an area
benefiting economically from Marcellus Shale activity. The Sussex
Borough water and sewer system serves approximately 4,000 additional
people in Northern New Jersey and is scheduled to move to a voter
referendum in November.
Yesterday, Aqua announced that its non-regulated subsidiary Aqua
Resources acquired the operations of Tri-State Grouting (TSG), in an
approximate $3 million deal of which part is contingent upon satisfying
certain annual financial growth targets over a three year period. Aqua
Resources, which was formed in 2005, provides a wide array of services
to the wastewater industry including operations and maintenance
contracts, wastewater hauling, and water and wastewater system repairs
and maintenance. TSG will complement these services by adding its
business lines focused on televising, and trenchless cleaning and repair
of, storm and sanitary sewer pipes and appurtenances. The company, which
has been in business since 1976, will continue its wastewater
rehabilitation operations in six states including Pennsylvania. The
American Society of Civil Engineers estimates the U.S. will need to
spend $298 billion on wastewater and storm water systems over the next
20 years, including $28 billion just in Pennsylvania.
Aqua continues to be the industry's most cost-efficient water company
with a regulated segment efficiency ratio adjusted for purchased water
of 34.8 percent for the trailing twelve months ended June 30, 2014 (a
non-GAAP measure). Operations and maintenance expenses were flat for the
second quarter, compared to the same quarter in 2013. The company's
regulated segment operating cost per customer of $294 for the trailing
12 months ended June 30, 2014, and our number of utility customers per
employee of 616 is among the most efficient in the water utility
industry. DeBenedictis said, "We strive to manage rising costs, and
continue to remain focused on being a leader within our industry in
regards to expenses, which saves our customers millions each year."
As part of its capital investment program, the company invested nearly
$132 million in regulated infrastructure improvements in the first half
of 2014. Aqua continues to expect that more than $325 million will be
invested in 2014 and more than $1 billion invested over the next three
years. Due to the company's increasing internal cash generation, all
capital investment projects will be funded entirely internally. These
include pipe replacements to improve our distribution network; plant
upgrades to enhance water quality; and other service reliability
improvements for customers.
In Pennsylvania, the company's largest state, many of these capital
improvements are eligible for tax deduction under the repair tax
accounting change put into effect in 2012. DeBenedictis mentioned, "Aqua
Pennsylvania's decision and the Pennsylvania Public Utility Commission's
approval of the repair tax accounting method is allowing the company to
invest hundreds of millions of dollars while not increasing rates for
our Pennsylvania residents and businesses. Customers in Pennsylvania
have not had an increase in their water bills since 2012 and the company
expects they will not see an increase in 2014, despite the investment of
nearly half a billion dollars since our last rate relief filing."
Thus far in 2014, Aqua America's regulated subsidiaries received rate
awards or infrastructure surcharges in all eight states (including
wastewater in Pennsylvania) with an expected annualized revenue increase
of approximately $6.5 million. Furthermore, the company has $15.4
million of rate cases pending in New Jersey, Ohio, Texas, Virginia and
Illinois. The timing and extent to which rate increases might be granted
by the applicable regulatory agencies will vary by state.
As of June 30, Aqua America's weighted average cost of fixed-rate
long-term debt was 5 percent, and the company had $168 million available
on its credit lines. Aqua Pennsylvania has maintained an A+ rating with
a Stable Outlook from Standard & Poor's for over 10 years.
The company's conference call with financial analysts will take place on
Wednesday, August 6, 2014 at 11 a.m. Eastern Daylight Time. The call
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 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 August 6, 2014 for 10
business days following the call. To access the audio replay in the
U.S., dial 888.203.1112 (pass code 3811613). International callers can
dial 719.457.0820 (pass code 3811613).
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.
This release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, among
others: the continuation of the company's growth-through-acquisition
program and the anticipated pace of customer growth; management's
long-term vision and strategic initiatives to grow the company's
customer base, remain one of the most efficient utilities and invest
significant capital to provide top-tier service to its customers; the
company's observation of an uptick in municipal acquisition
opportunities; the anticipated closing and purchase price for the
aforementioned municipal deals in Mt. Jewett and Sussex Borough; the
approximate purchase price for Tri-State Grouting and the addition of
TriState's business lines to the company's services; the company's
efforts to successfully manage rising costs and to remain a leader
within our industry in regards to expenses which has the potential to
save Aqua customers millions of dollars; the estimated amount of capital
investment by the company planned for 2014 and the next three years, and
the projected impact of such investments; the company's ability to fund
its capital investments internally; the expected use of capital
including pipe replacement, distribution network improvements, plant
upgrades and service reliability improvements; the eligibility of the
aforementioned capital investments in Pennsylvania for tax deductions
under the repair tax accounting change; the continued benefits to Aqua
Pennsylvania and its customers from the repair tax accounting method,
including the company's expectation that Aqua Pennsylvania will not
increase customer water bills in 2014; the estimated revenues from rate
awards received; the company's plans to file future rate increases and
the timing of the impact of such cases; and the expected increase in
cash generation from the company's unregulated joint venture. 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; the extent to which rate increase requests
are granted and the timing of rate awards; 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; the company's ability to remain an industry leader in
operational efficiency, the continuation of the company's
growth-through-acquisition program; the company's ability to provide
reliable service at a reasonable cost; the result of the referendum in
Sussex Borough, New Jersey, 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.
WTRF
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Selected Operating Data
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
Quarter Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
195,307
|
|
$
|
193,943
|
|
$
|
377,979
|
|
$
|
372,495
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
54,818
|
|
$
|
53,004
|
|
$
|
97,219
|
|
$
|
93,868
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders
|
|
$
|
55,569
|
|
$
|
53,586
|
|
$
|
98,428
|
|
$
|
100,151
|
|
|
|
|
|
|
|
|
|
|
|
Basic income from continuing operations per common share
|
|
$
|
0.31
|
|
$
|
0.30
|
|
$
|
0.55
|
|
$
|
0.53
|
|
Diluted income from continuing operations per common share
|
|
$
|
0.31
|
|
$
|
0.30
|
|
$
|
0.55
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
0.31
|
|
$
|
0.30
|
|
$
|
0.56
|
|
$
|
0.57
|
|
Diluted net income per common share
|
|
$
|
0.31
|
|
$
|
0.30
|
|
$
|
0.55
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
Basic average common shares outstanding
|
|
|
177,058
|
|
|
175,983
|
|
|
176,949
|
|
|
175,701
|
|
Diluted average common shares outstanding
|
|
|
178,012
|
|
|
177,078
|
|
|
177,868
|
|
|
176,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
195,307
|
|
|
$
|
193,943
|
|
|
$
|
377,979
|
|
|
$
|
372,495
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost & expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
|
|
70,375
|
|
|
|
70,412
|
|
|
|
142,061
|
|
|
|
138,206
|
|
|
Depreciation
|
|
|
31,226
|
|
|
|
29,311
|
|
|
|
62,207
|
|
|
|
58,356
|
|
|
Amortization
|
|
|
746
|
|
|
|
1,368
|
|
|
|
1,879
|
|
|
|
2,745
|
|
|
Taxes other than income taxes
|
|
|
13,026
|
|
|
|
13,102
|
|
|
|
25,128
|
|
|
|
26,500
|
|
|
Total
|
|
|
115,373
|
|
|
|
114,193
|
|
|
|
231,275
|
|
|
|
225,807
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
79,934
|
|
|
|
79,750
|
|
|
|
146,704
|
|
|
|
146,688
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
19,093
|
|
|
|
19,208
|
|
|
|
38,403
|
|
|
|
38,483
|
|
|
Allowance for funds used during construction
|
|
|
(937
|
)
|
|
|
(490
|
)
|
|
|
(2,104
|
)
|
|
|
(1,042
|
)
|
|
(Gain) loss on sale of other assets
|
|
|
(140
|
)
|
|
|
109
|
|
|
|
208
|
|
|
|
17
|
|
|
Equity loss in joint venture
|
|
|
1,251
|
|
|
|
1,154
|
|
|
|
1,937
|
|
|
|
1,810
|
|
|
Income from continuing operations before income taxes
|
|
|
60,667
|
|
|
|
59,769
|
|
|
|
108,260
|
|
|
|
107,420
|
|
|
Provision for income taxes
|
|
|
5,849
|
|
|
|
6,765
|
|
|
|
11,041
|
|
|
|
13,552
|
|
|
Income from continuing operations
|
|
|
54,818
|
|
|
|
53,004
|
|
|
|
97,219
|
|
|
|
93,868
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income taxes
|
|
|
1,253
|
|
|
|
943
|
|
|
|
2,025
|
|
|
|
9,868
|
|
|
Provision for income taxes
|
|
|
502
|
|
|
|
361
|
|
|
|
816
|
|
|
|
3,585
|
|
|
Income from discontinued operations
|
|
|
751
|
|
|
|
582
|
|
|
|
1,209
|
|
|
|
6,283
|
|
|
Net income attributable to common shareholders
|
|
$
|
55,569
|
|
|
$
|
53,586
|
|
|
$
|
98,428
|
|
|
$
|
100,151
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
|
$
|
0.30
|
|
|
$
|
0.55
|
|
|
$
|
0.53
|
|
|
Diluted
|
|
$
|
0.31
|
|
|
$
|
0.30
|
|
|
$
|
0.55
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.04
|
|
|
Diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
|
$
|
0.30
|
|
|
$
|
0.56
|
|
|
$
|
0.57
|
|
|
Diluted
|
|
$
|
0.31
|
|
|
$
|
0.30
|
|
|
$
|
0.55
|
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
177,058
|
|
|
|
175,983
|
|
|
|
176,949
|
|
|
|
175,701
|
|
|
Diluted
|
|
|
178,012
|
|
|
|
177,078
|
|
|
|
177,868
|
|
|
|
176,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands of dollars)
|
|
(Unaudited)
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
4,233,840
|
|
$
|
4,138,568
|
|
Current assets
|
|
|
201,818
|
|
|
200,854
|
|
Regulatory assets and other assets
|
|
|
755,867
|
|
|
712,395
|
|
Total assets
|
|
$
|
5,191,525
|
|
$
|
5,051,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
1,586,381
|
|
$
|
1,535,043
|
|
Long-term debt, excluding current portion
|
|
|
1,481,449
|
|
|
1,468,583
|
|
Current portion of long-term debt and loans payable
|
|
|
158,478
|
|
|
123,028
|
|
Other current liabilities
|
|
|
119,495
|
|
|
156,851
|
|
Deferred credits and other liabilities
|
|
|
1,845,722
|
|
|
1,768,312
|
|
Total liabilities and equity
|
|
$
|
5,191,525
|
|
$
|
5,051,817
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2014
|
|
|
|
|
|
Operating revenues (GAAP financial measure)
|
|
$
|
748,226
|
|
Purchased Water
|
|
|
19,055
|
|
Adjusted operating revenues (Non-GAAP financial measure)
|
|
$
|
729,171
|
|
|
|
|
|
Operations and maintenance expense (GAAP financial measure)
|
|
$
|
272,872
|
|
Purchased Water
|
|
|
19,055
|
|
Adjusted operations and maintenance expense (Non-GAAP financial
measure)
|
|
$
|
253,817
|
|
|
|
|
|
Regulated segment efficiency ratio (GAAP financial measure)
|
|
|
36.5%
|
|
|
|
|
|
Regulated segment efficiency ratio adjusted for Purchased Water
(Non-GAAP financial measure)
|
|
|
34.8%
|
|
|
|
|
|
|
|
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. The Company further believes that the presentation of
these non-GAAP financial measures is useful to investors as a more
meaningful way to compare the Company's operating performance
against its historical financial results.
|
|
|
|
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.
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Aqua America, Inc.
Brian Dingerdissen
Director, Investor
Relations
O: 610-645-1191
BJDingerdissen@AquaAmerica.com
or
Donna
Alston
Manager, Communications
O: 610-645-1095
M:
484-368-4720
DPAlston@AquaAmerica.com
Source: Aqua America, Inc.
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