Aqua America Reports Earnings for Third Quarter 2006
BRYN MAWR, Pa., Nov 01, 2006 (BUSINESS WIRE) -- Despite unfavorable weather conditions and inflationary pressure on production expenses, Aqua America, Inc. (NYSE:WTR) today reported diluted earnings per share for the quarter ended September 30, 2006 of $0.21, compared to $0.21 for the third quarter 2005 on two percent more shares outstanding.
"As with most water utilities, weather continues to be our biggest potential reward as well as our biggest potential risk," said Aqua America Chairman and CEO Nicholas DeBenedictis. "While our revenue increased as a result of favorable rate decisions and continued customer growth, the majority of customers served by Aqua were impacted by consistently wet weather during the summer--a traditionally high-demand period. In addition to above-average rainfall in most of our states, non-essential use was negatively affected as much by the number of rainy days as by the actual amount of rainfall."
Third quarter 2006 operating revenue increased 7.4 percent to $147.0 million from $136.8 million for the same period in 2005, driven primarily by rate increases--including a late second quarter rate settlement at the company's largest operating subsidiary, Aqua Pennsylvania--and customer growth including new acquisitions. Corresponding net income was $27.3 million compared to $27.9 million for the same period in 2005.
For the nine months ended September 30, 2006, diluted earnings per share was $0.50 compared to $0.53 for the same period in 2005. Corresponding net income was $66.3 million for the first nine months of 2006 as compared to $69.0 million for the same period in 2005. The negative impact of regulatory lag--interest and carrying costs of major capital investments prior to needed rate awards--felt in the first and second quarters is easing now as rate awards are being effected, with the late June 2006 Pennsylvania rate award being the largest of those that were expected. Operating revenue for the nine months ended September 30, 2006 was $396.6 million versus $373.9 million for the same period in 2005.
In addition to weather, DeBenedictis said net income was impacted by the increased cost of insurance and pension, interest expense as a result of increased borrowings and higher short-term interest rates, and options expense (which was expensed for the first time in 2006 as required by a new accounting standard). Inflationary increases in purchased water costs as well as water production costs (power, chemicals), also impacted net income. "Outside of our labor and benefits costs, power and chemicals are among our largest expenses. We are continually working to minimize the impact of expenses on our performance," said DeBenedictis.
Aqua America completed five regulated water and wastewater acquisitions during the quarter, along with the acquisition of three new non-regulated septage hauling businesses, bringing the year-to-date total of acquisitions announced during the nine months to 19--17 of which have closed. "During the third quarter, we continued to add bread-and-butter 'tuck-in' acquisitions," said DeBenedictis. "In addition to those deals we've already closed, we hope to close the New York Water Service Corporation acquisition, which serves approximately 45,000 customers in Long Island, New York, as soon as year end."
The company's conference call with analysts will take place on Wednesday, November 1, 2006 at 11:00 a.m. Eastern Standard Time. The call will be webcast live so that interested parties may listen over the Internet by logging on to www.aquaamerica.com. The conference call will be archived in the investor relations section of the company's Web site for 90 days following the call. Additionally, the call will be recorded and made available for replay at 12:00 p.m. on November 1, 2006 for 10 business days following the call. To access the audio replay in the U.S., dial 888.203.1112 (passcode 3288124). For international callers, dial 719.457.0820 (passcode 3288124).
Aqua America, Inc. is the largest U.S.-based publicly-traded water and wastewater utility, serving more than 2.5 million residents in Pennsylvania, Ohio, North Carolina, Illinois, Texas, Florida, New Jersey, Indiana, Virginia, Maine, Missouri, New York, and South Carolina. Aqua America is listed on both the New York and Philadelphia Stock Exchanges under the ticker symbol WTR.
This release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, regarding, among other things, the expected recovery of capital expenditures and expenses in rates, the timing and amounts of rate recoveries, the success of Aqua America's acquisition program, the timing of closing for certain acquisitions, the impact of weather on financial results and the success of cost containment efforts. 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, unfavorable weather conditions, the success of certain cost containment initiatives, changes in regulations or regulatory treatment, availability and the cost of capital, the success of growth initiatives, and other factors discussed in Aqua America's filings with the Securities and Exchange Commission.
WTRF
The following table shows selected operating data for the quarters and nine months ended September 30, 2006 and 2005 (in thousands, except per share data) for Aqua America, Inc. All share and per share data have been restated to reflect the December 1, 2005 four-for-three stock split.
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Operating revenues $ 146,950 $ 136,783 $ 396,648 $ 373,871
===================== =====================
Net income $ 27,331 $ 27,917 $ 66,281 $ 69,006
===================== =====================
Basic net income per share $ 0.21 $ 0.22 $ 0.51 $ 0.54
===================== =====================
Diluted net income per
share $ 0.21 $ 0.21 $ 0.50 $ 0.53
===================== =====================
Average common shares
outstanding:
Basic 131,660 128,246 130,242 127,823
===================== =====================
Diluted 132,666 130,231 131,310 129,635
===================== =====================
Aqua America, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Operating revenues $ 146,950 $ 136,783 $ 396,648 $ 373,871
Cost & expenses:
Operations and
maintenance 59,127 52,666 165,876 150,866
Depreciation 18,334 15,578 52,419 44,890
Amortization 1,126 1,172 3,128 3,627
Taxes other than income
taxes 8,840 8,276 24,991 24,033
---------- ---------- ---------- ----------
Total 87,427 77,692 246,414 223,416
---------- ---------- ---------- ----------
Operating income 59,523 59,091 150,234 150,455
Other expense (income):
Interest expense, net 14,752 13,279 43,668 38,615
Allowance for funds
used during
construction (703) (433) (2,901) (1,497)
Gain on sale of other
assets (91) (77) (834) (582)
---------- ---------- ---------- ----------
Income before income taxes 45,565 46,322 110,301 113,919
Provision for income taxes 18,234 18,405 44,020 44,913
---------- ---------- ---------- ----------
Net income $ 27,331 $ 27,917 $ 66,281 $ 69,006
========== ========== ========== ==========
Net income $ 27,331 $ 27,917 $ 66,281 $ 69,006
Other comprehensive
income, net of tax:
Unrealized holding gain
on certain investments 127 - 326 -
---------- ---------- ---------- ----------
Comprehensive income $ 27,458 $ 27,917 $ 66,607 $ 69,006
========== ========== ========== ==========
Net income per common
share:
Basic $ 0.21 $ 0.22 $ 0.51 $ 0.54
Diluted $ 0.21 $ 0.21 $ 0.50 $ 0.53
Average common shares
outstanding:
Basic 131,660 128,246 130,242 127,823
========== ========== ========== ==========
Diluted 132,666 130,231 131,310 129,635
========== ========== ========== ==========
Aqua America, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars)
(Unaudited)
September 30, December 31,
2006 2005
------------- -------------
Net property, plant and equipment $ 2,417,594 $ 2,279,950
Current assets 108,845 98,277
Regulatory assets and other assets 229,715 256,819
------------- -------------
$ 2,756,154 $ 2,635,046
============= =============
Common stockholders' equity $ 887,327 $ 811,923
Long-term debt, excluding current portion 917,227 878,438
Current portion of long-term debt and
loans payable 151,635 163,150
Other current liabilities 106,316 108,510
Deferred credits and other liabilities 693,649 673,025
------------- -------------
$ 2,756,154 $ 2,635,046
============= =============
SOURCE: Aqua America, Inc.
Aqua America, Inc. Donna Alston, 610-645-1095 dpalston@aquaamerica.com or Terry Maenza, 610-645-1175 tmmaenza@aquaamerica.com
Copyright Business Wire 2006
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