- Reported earnings per share of $1.35 vs. $1.32 in 2016
- Tax Cuts and Jobs Act results in $3.1 million charge in 2017
- Invested a record $478 million to improve infrastructure systems
- Announces 2018 guidance range of $1.37 to $1.42 earnings per
diluted common share
BRYN MAWR, Pa.--(BUSINESS WIRE)--Feb. 27, 2018--
Aqua America Inc. (NYSE: WTR) today reported results for the fourth
quarter and year ended Dec. 31, 2017, and announced its earnings
guidance for 2018.
Full-year 2017 Operating Results
Aqua reported total operating revenues of $809.5 million in 2017
compared to $819.9 million in the prior year. Regulated segment revenues
increased to $804.9 million, compared to $800.1 million in 2016. Rates
and surcharges, regulated growth and other items increased regulated
revenue by approximately $14.4 million compared to 2016. A decrease in
water consumption and market-based activities lowered revenue by $9.4
and $15.3 million, respectively.
Operations and maintenance expenses were $287.2 million for 2017,
compared to $304.9 million in 2016. Reduced market-based activities and
lower production costs decreased operations and maintenance expenses by
$21.9 million. Higher costs associated with regulated acquisitions and
other expenses offset the reduction in expenses by $8.0 million.
For the full-year 2017, Aqua reported net income of $239.7 million, or
$1.35 per share, compared to $234.2 million, or $1.32 per share, in
2016. The Tax Cuts and Jobs Act enactment in December 2017 resulted in a
non-cash charge to income tax expense of $3.1 million.
“In 2017, Aqua continued to deliver on our long-term growth strategy by
making significant investment in rehabilitating aged infrastructure and
by building our pipeline of pending municipal acquisitions,” said Aqua
America Chairman and CEO Christopher Franklin. “By focusing on the
company’s core strengths, Aqua continues to be part of the solution to
our nation’s deteriorating infrastructure, while also delivering
long-term value to shareholders.”
Fourth Quarter 2017 Operating Results
Revenues increased to $203.3 million in the fourth quarter compared to
$196.8 million in the same quarter of 2016. Rates and surcharge revenue,
consumption growth, regulated growth and other factors increased revenue
by $8.8 million. Lower revenue from market-based activities offset the
increase by $2.3 million.
Operations and maintenance expenses were $79.2 million for the fourth
quarter of 2017, compared to $77.6 million in the fourth quarter of
2016. Reduced market-based activities and lower production costs
decreased operations and maintenance expenses by $6.0 million.
Increasing costs associated with employee-related expenses, regulated
acquisitions and other factors offset the reduction in expenses by $7.7
million.
For the fourth quarter of 2017, Aqua reported net income of $53.5
million, or $0.30 per share, compared to $49.6 million, or $0.28 per
share, in 2016. Reported results reflect the enactment of the Tax Cuts
and Jobs Act which resulted in a non-cash charge to income tax expense
of $3.1 million in the fourth quarter of 2017.
Capital Expenditures
In 2017, Aqua invested a record of $478 million to improve its
infrastructure systems. The company expects to invest approximately $500
million in 2018 and approximately $1.4 billion from 2018 to 2020. The
capital investments made to rehabilitate and expand the infrastructure
of the communities Aqua serves are paramount to helping the company to
protect and provide Earth’s most essential resource.
Dividend
On Feb. 5, 2018 Aqua America’s board of directors declared a quarterly
cash dividend of $0.2047 per share of common stock. This dividend is
payable on March 1, 2018, to all shareholders of record on Feb. 16,
2018. The March dividend marks the 73rd year Aqua has paid a consecutive
quarterly dividend.
Rate Activity
In 2017, Aqua America’s regulated subsidiaries received rate awards and
infrastructure surcharges in Indiana, Illinois, New Jersey, North
Carolina, Pennsylvania, Ohio, and Virginia, estimated to increase
annualized revenues by approximately $21.6 million.
To date in 2018, the company’s state subsidiaries in Pennsylvania, North
Carolina and Ohio have received rate awards or infrastructure surcharges
totaling $11.1 million. Additionally, the company currently has rate
proceedings pending in Illinois, New Jersey and Virginia of $15.8
million. The timing and extent to which the rate increases might be
granted can vary by the applicable regulatory agency, and the outcome of
these filings are expected to consider the effects of the recently
enacted Tax Cuts and Jobs Act.
Acquisition Growth in Regulated Operations
In 2017, the company invested $5.9 million to acquire four water and
wastewater systems. Acquisitions added approximately 1,000 new customers
to the company’s operating footprint. Coupled with organic growth, the
company increased its customer base by 1 percent with 10,584 new
customer connections. The company currently has six purchase agreements
with municipal systems, which are expected to close in 2018 and
represent more than 16,000 new customers. The company expects overall
customer growth to be between 2 and 3 percent for 2018.
“In 2017, we continued to build on our consistent record of serving more
customers each year, which allows us greater economies of scale
throughout our footprint. The six pending acquisitions along with
organic growth would add more than 25,000 customers to our customer base
in 2018,” said Franklin. “We remain very optimistic about the prospect
of being a water and wastewater solution for an increasing number of
customers.”
Financial Information
At year-end 2017, Aqua America’s weighted average cost of fixed-rate
long-term debt was 4.36 percent and the company had $302 million
available on its credit lines.
Tax Cuts and Jobs Act
In December 2017, the Tax Cuts and Jobs Act, which included a reduction
to the corporate federal income tax rate to 21 percent effective January
1, 2018, was signed into law. As a result, in the fourth quarter of
2017, in accordance with accounting standards Aqua America revalued its
deferred income tax assets and liabilities at the new 21 percent federal
income tax rate. This revaluation resulted in the recognition of both
regulatory liabilities, to the extent that the tax savings over time
will be passed back to customers in utility customer rates, and a
non-cash adjustment was recognized to record additional income tax
expense of $3.1 million to the extent revalued deferred income taxes are
not believed to be recoverable in utility customer rates.
2018 Guidance Highlights
Aqua America has issued the following 2018 full-year guidance and
expects to achieve the following results:
-
Earnings per diluted common share of $1.37 to $1.42
-
Infrastructure investments of approximately $500 million in 2018 for
communities served by Aqua
-
Infrastructure investments of approximately $1.4 billion through 2020
in existing operations to improve and strengthen systems
-
Total customer growth of between 2 and 3 percent
-
Aqua Pennsylvania files a rate case in 2018 with resolution in 2019
“Our 2018 guidance reflects the strong environment for growth that we
are seeing as many municipalities recognize the benefits that can be
attained by partnering with a large, professional water and wastewater
provider,” Franklin said. “We expect this trend to continue as a result
of the adoption of fair market value legislation and the national need
for companies with our scale, expertise and capital to address the
country’s pressing need for infrastucture improvements.”
Aqua America does not guarantee future results of any kind. Guidance is
subject to risks and uncertainties, including, without limitation, those
factors outlined in the “Forward Looking Statements” of this release and
the “Risk Factors” section of the company’s annual and quarterly reports
filed with the Securities and Exchange Commission (SEC).
Earnings and Guidance Event Information
Date: Feb. 28, 2018
Time:
12:15 p.m. EST
Webcast and slide presentation link: http://ir.aquaamerica.com/events.cfm
The 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 and a
transcript 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 4 p.m. on February 28,
2018 for 10 business days following the call. To access the audio replay
in the U.S., dial 888.203.1112 (pass code 4661873). International
callers can dial +1 719.457.0820 (pass code 4661873).
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 expected earnings per share for the fiscal year ending in
2018; the expected increase in customer base for the fiscal year ending
in 2018; and the company’s filing of a Pennsylvania DSIC case in 2018
and a Pennsylvania rate case in 2018 and the expected outcome of the
Pennsylvania rate case in 2019. There are important factors that could
cause actual results to differ materially from those expressed or
implied by such forward-looking statements including: the continuation
of the company's growth-through-acquisition program; the desire of
municipalities to sell their water and/or wastewater systems; the
company's continued ability to adapt itself for the future and build
value by fully optimizing company assets; general economic business
conditions; the company's ability to fund needed infrastructure; housing
and customer growth trends; unfavorable weather conditions; the success
of certain cost containment initiatives; changes in regulations or
regulatory treatment, including a change in federal tax policy;
availability and access to capital; the cost of capital; disruptions in
the credit markets; the success of growth initiatives; the company's
ability to grow its dividend, add shareholder value and to grow
earnings; municipalities willingness to privatize its water and/or
wastewater utilities; the ability of the Company to successfully close
and integrate the 6 municipal acquisitions in 2018; changes in policies
in regulated commissions; changes in law in water and /or wastewater
acquisitions; and other factors discussed in our Annual Report on Form
10-K, which is filed annually 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
The company’s results stated here are unaudited. The final audited
financial statements will be filed with the company's annual report on
Form 10-K. The following statements and tables show selected operating
data for the quarter and year ended December 31, 2017 and 2016 (in
thousands, except per share data) for Aqua America, Inc. and
subsidiaries.
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Selected Operating Data
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
203,312
|
|
$
|
196,799
|
|
$
|
809,525
|
|
$
|
819,875
|
|
Operations and maintenance expense
|
|
$
|
79,243
|
|
$
|
77,550
|
|
$
|
287,206
|
|
$
|
304,897
|
|
|
|
|
|
|
|
|
|
|
Regulated segment:
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
202,564
|
|
$
|
193,784
|
|
$
|
804,905
|
|
$
|
800,107
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
53,473
|
|
$
|
49,649
|
|
$
|
239,738
|
|
$
|
234,182
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
0.30
|
|
$
|
0.28
|
|
$
|
1.35
|
|
$
|
1.32
|
|
Diluted net income per common share
|
|
$
|
0.30
|
|
$
|
0.28
|
|
$
|
1.35
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
Basic average common shares outstanding
|
|
|
177,697
|
|
|
177,365
|
|
|
177,612
|
|
|
177,273
|
|
Diluted average common shares outstanding
|
|
|
178,247
|
|
|
177,880
|
|
|
178,175
|
|
|
177,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Consolidated Statement of Income
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
203,312
|
|
|
$
|
196,799
|
|
|
$
|
809,525
|
|
|
$
|
819,875
|
|
|
|
|
|
|
|
|
|
|
|
Cost & expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
|
|
79,243
|
|
|
|
77,550
|
|
|
|
287,206
|
|
|
|
304,897
|
|
|
Depreciation
|
|
|
34,794
|
|
|
|
33,342
|
|
|
|
136,302
|
|
|
|
130,987
|
|
|
Amortization
|
|
|
64
|
|
|
|
654
|
|
|
|
422
|
|
|
|
2,021
|
|
|
Taxes other than income taxes
|
|
|
12,238
|
|
|
|
13,291
|
|
|
|
56,628
|
|
|
|
56,385
|
|
|
Total
|
|
|
126,339
|
|
|
|
124,837
|
|
|
|
480,558
|
|
|
|
494,290
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
76,973
|
|
|
|
71,962
|
|
|
|
328,967
|
|
|
|
325,585
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
23,217
|
|
|
|
20,458
|
|
|
|
88,341
|
|
|
|
80,594
|
|
|
Allowance for funds used during construction
|
|
|
(4,641
|
)
|
|
|
(2,369
|
)
|
|
|
(15,211
|
)
|
|
|
(8,815
|
)
|
|
(Gain) loss on sale of other assets
|
|
|
(162
|
)
|
|
|
12
|
|
|
|
(484
|
)
|
|
|
(378
|
)
|
|
Equity loss (earnings) in joint venture
|
|
|
71
|
|
|
|
167
|
|
|
|
(331
|
)
|
|
|
(976
|
)
|
|
Income before income taxes
|
|
|
58,488
|
|
|
|
53,694
|
|
|
|
256,652
|
|
|
|
255,160
|
|
|
Provision for income taxes
|
|
|
5,015
|
|
|
|
4,045
|
|
|
|
16,914
|
|
|
|
20,978
|
|
|
Net income
|
|
$
|
53,473
|
|
|
$
|
49,649
|
|
|
$
|
239,738
|
|
|
$
|
234,182
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.30
|
|
|
$
|
0.28
|
|
|
$
|
1.35
|
|
|
$
|
1.32
|
|
|
Diluted
|
|
$
|
0.30
|
|
|
$
|
0.28
|
|
|
$
|
1.35
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
177,697
|
|
|
|
177,365
|
|
|
|
177,612
|
|
|
|
177,273
|
|
|
Diluted
|
|
|
178,247
|
|
|
|
177,880
|
|
|
|
178,175
|
|
|
|
177,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands of dollars)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
5,399,860
|
|
$
|
5,001,615
|
|
Current assets
|
|
|
131,246
|
|
|
128,650
|
|
Regulatory assets and other assets
|
|
|
801,357
|
|
|
1,028,726
|
|
Total assets
|
|
$
|
6,332,463
|
|
$
|
6,158,991
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
1,957,621
|
|
$
|
1,850,068
|
|
Long-term debt, excluding current portion, net of debt issuance costs
|
|
|
2,007,753
|
|
|
1,737,605
|
|
Current portion of long-term debt and loans payable
|
|
|
117,419
|
|
|
157,206
|
|
Other current liabilities
|
|
|
167,069
|
|
|
144,330
|
|
Deferred credits and other liabilities
|
|
|
2,082,601
|
|
|
2,269,782
|
|
Total liabilities and equity
|
|
$
|
6,332,463
|
|
$
|
6,158,991
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180227006391/en/
Source: Aqua America Inc.
Aqua America Inc.
Brian Dingerdissen
Investor Relations
610-645-1191
BJDingerdissen@AquaAmerica.com
or
Stacey
Hajdak
Marketing & Communications
610-520-6309
SMHajdak@AquaAmerica.com
