Net Income up 26 percent
BRYN MAWR, Pa.--(BUSINESS WIRE)--
Aqua America, Inc. (NYSE: WTR) today reported results for the quarter
ending September 30, 2013. Net income for the quarter rose to $63.6
million from $50.7 million in the third quarter of 2012. Corresponding
diluted earnings per share for the quarter were $0.36, compared to $0.29
for the same quarter in 2012, an increase of 24 percent.
For the first nine months of 2013, net income increased to $163.8
million from $130.0 million and corresponding diluted earnings per share
increased 26 percent to $0.93 from $0.74 for the same period in 2012.
Revenues for the quarter were impacted by above average rainfall in
several service areas and totaled $204.3 million for the quarter
compared to $214.6 million for the same period in 2012. Revenue
comparisons for 2013 have been adversely affected by above average
rainfall causing lower customer consumption patterns, and the absence of
a DSIC surcharge in Pennsylvania resulting from the company's 2012 rate
settlement. This settlement required adoption of "flow-through"
accounting to reflect the tax benefits of certain tax deductible capital
projects, which have allowed Aqua America to increase earnings while
holding customer rates down and continuing to increase capital
investments. Operating revenues for the first nine months of 2013
totaled $580 million, an increase of $9.7 million from revenues of
$570.3 million for the nine months ending September 30, 2012.
In September, the 9 percent dividend increase that was announced in May
took effect. This increased the quarterly dividend rate to $0.152 per
share on the increased number of shares resulting from the 25 percent
stock distribution or $0.608 per share on an annualized basis. In
October, the Board of Directors also declared a quarterly cash dividend
payment of $0.152 per share payable on December 1, 2013, to all
shareholders of record on November 18, 2013.
Aqua America Chairman and CEO Nicholas DeBenedictis said, "In the third
quarter, Aqua America grew net income 26 percent, while continuing to
invest in infrastructure at near record levels. This was possible due to
management's continued diligence in controlling expenses, rate awards in
several jurisdictions, and the company's ongoing implementation of the
repair tax benefit in its Pennsylvania subsidiary. The 2012 Pennsylvania
rate order provided a 'flow-through' of tax savings in lieu of raising
revenues through rate increases to our customers while enabling the
company to continue investing in needed infrastructure improvements."
To date in 2013, the company has received rate awards and infrastructure
surcharges in New Jersey, Texas, Illinois, Ohio, and Virginia estimated
to increase annualized revenues by approximately $12.3 million. The
company has $10.4 million of rate proceedings pending in Virginia, North
Carolina, Texas and New Jersey. Additionally, Aqua America's state
subsidiaries are expected to seek rate relief by filing rate requests or
surcharges of approximately $7.7 million in the remainder of 2013. The
primary driver of these filings is the recovery of capital
(infrastructure) investments. The timing and extent to which rate
increases might be granted by the applicable regulatory agencies will
vary by state.
In the first nine months of 2013, Aqua America invested $216.1 million
in regulated infrastructure improvements as part of its capital
investment program. A major portion of these capital investments were
for Pennsylvania infrastructure improvements and are tax deductible as
repairs. These investments include: pipe replacement to improve
distribution networks; plant upgrades to enhance water quality; and
other service reliability improvements for its customers. The company's
entire capital program is being funded through internally generated
funds, which totaled $279.1 million through September 30, 2013.
As of October 31, 2013, Aqua America's estimated weighted average cost
of fixed-rate long-term debt was 5 percent, and the company had $237
million out of $310 million available on its credit lines. In October,
Aqua America's Pennsylvania subsidiary closed on $75 million of first
mortgage bonds. The first mortgage bonds were issued by Aqua
Pennsylvania in three series at an average rate of 4.39 percent: $25
million priced at a 3.94 percent coupon and an 18-year maturity; $25
million priced at a 4.61 percent coupon and a 32-year maturity; and $25
million priced at a 4.62 percent coupon and a 33-year maturity. Proceeds
from this transaction will be used to refinance higher coupon bonds, pay
down short-term debt and pay the cost of issuance. Management expects
its weighted average cost of fixed-rate long-term debt to be below 5
percent at year end. In September, Standard & Poor's reiterated its A+
credit rating for Aqua Pennsylvania. Of the 227 electric, gas, and water
utilities rated by Standard & Poor's, only one has a higher rating than
Aqua Pennsylvania.
Operations and maintenance expenses including acquisition growth
increased 1.1 percent in the third quarter to $72.1 million from $71.3
million in the same quarter last year. DeBenedictis said, "I'm proud of
management's ability to control expenses and create operating
efficiencies, ensuring Aqua's spot as one of the nation's most efficient
utilities."
In line with the company's long-term focus on controlling costs, Aqua
Pennsylvania was awarded the National Association of Water Company's
(NAWC) 2013 Management Innovation Award for its pursuit of maximizing
performance in electricity load response programs. Aqua America's cost
saving electricity load response programs, include participation in
PJM's Emergency Demand Response and Constellation's Peak Response
programs. These programs, combined with the company's solar fields at
four of its water facilities, allow the company to reduce its electric
costs by reducing its electric demand on the grid during key high-demand
periods.
This week the Commonwealth of Pennsylvania recognized Aqua's efforts to
convert its vehicle fleet to CNG with a partial grant toward the
purchase of new vehicles. DeBenedictis said, "Being a Pennsylvania-based
company using natural gas is the right thing to do for the environment
while also cutting out vehicle fleet operating costs."
Aqua America has completed the purchase of nine water and wastewater
utility systems to date in 2013, including four in Pennsylvania, three
in North Carolina, and two in Virginia. Aqua Pennsylvania's acquisitions
included the water and wastewater system assets of Total Environmental
Solutions, Inc. (TESI), which serve approximately 6,000 people in the
Treasure Lake community in Sandy Township, Clearfield County for $11.8
million and two municipal systems: the water distribution system assets
that serve 500 people in the Concord Park section of Bensalem Township
from Bucks County Water and Sewer Authority for $399,000; and the water
assets of a community water system from Bristol Township that serves
approximately 1,800 residents in the Newportville-Ferguson area of the
township for $3.4 million. Aqua North Carolina purchased the water
system assets of Knob Creek, a subdivision with about 600 residents in
the town of Pisgah Forest, Transylvania County, for $40,000. Customer
growth from acquisitions and organic growth totaled 10,298 customers in
the first nine months of 2013.
In September, county commissioners in Sarasota County, Florida, voted to
move forward with the purchase of the company's remaining water and
wastewater operations in Sarasota. The price of the systems, which serve
about 12,000 customers, is $36.8 million. The transaction is expected to
close at the end of 2013 or early in the first quarter of 2014. This
transaction would represent the final of five separate transactions to
sell all of Aqua America's operations in Florida at a profit. In March,
Aqua America sold approximately two-thirds of its Florida operations for
$52.3 million. When the final Florida sale is closed, Aqua America will
have concentrated its regulated operations in its eight remaining
states, where it has economies of scale and is poised for growth by
executing its portfolio rationalization strategy. The proceeds will be
used to fund future capital needs of Aqua America.
The company has also signed a letter of intent with the City of Fort
Wayne, Indiana to sell the company's water operation in exchange for an
additional $50.1 million to the $16.9 million already paid by the City
and obtaining wastewater treatment flows from the City, contingent on
receiving regulatory approvals and signing of the necessary definitive
agreements. If this transaction is consummated, the company will expand
its wastewater customer base in Fort Wayne. This transaction is expected
to close in the third quarter of 2014.
The company's non-regulated joint venture investment, Aqua — PVR Water
Services, LLC, was formed in 2011 by operating subsidiaries of Aqua
Americaand Penn Virginia Resource Partners, L.P. to construct and
operate a private pipeline system to supply raw water to certain natural
gas producers drilling in the Marcellus Shale in central Pennsylvania.
It was recently announced that Regency Energy Partners LP ("Regency")
(NYSE: RGP) and PVR Partners, L.P. ("PVR") (NYSE: PVR) approved a
definitive merger agreement, pursuant to which Regency will acquire PVR.
We look forward to working with Regency and expect no change to our
joint venture at this time. The first nine months of 2013 have shown
sluggish Marcellus well drilling activity due to low gas prices, more
production from each well than predicted and restrictive infrastructure
for gas transmission, which has resulted in low sales of water for the
joint venture. However, activity in the third quarter picked up and the
joint venture produced EBITDA of $1.3 million to Aqua America. With
development expected to occur in 2014 and the completion of additional
infrastructure to handle Marcellus gas, this project should see improved
performance in 2014 and beyond.
"The third quarter represents another strong performance for the
company. Management continued to effectively expand our
growth-through-acquisition program, control expenses, approach
completion of the portfolio rationalization started in 2011, and invest
in needed infrastructure improvements while continuing to enhance
shareholder value. The year 2013 is currently poised to become a record
year and management is already looking ahead for ways to improve on our
already best-of-breed status," said DeBenedictis.
The company's conference call with financial analysts will take place on
Friday, November 8, 2013 at 11 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
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 November 8, 2013 for 10
business days following the call. To access the audio replay in the
U.S., dial 888.203.1112 (pass code 9708785). International callers can
dial 719.457.0820 (pass code 9708785).
Aqua America is one of the largest U.S.-based, publicly-traded water
utilities and serves almost 3 million residents in Pennsylvania, Ohio,
North Carolina, Illinois, Texas, New Jersey, Indiana, Virginia, Florida
and Georgia. Aqua America is listed on the New York Stock Exchange under
the ticker symbol WTR. Visit www.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 anticipated impact of the repair tax accounting change; 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;
the projected benefits from the company's capital investment program;
the projected weighted average cost of fixed-rate long-term debt at the
end of 2013; the company's plans to sell its Sarasota, Florida operation
and the expected date of closing; the company's plan to sell its water
operations and the anticipated expansion of the company's sewer customer
base in Fort Wayne, Indiana and the expected date of closing; the
expected continuation of the joint venture after Regency acquires PVR;
the projected increase in performance from the joint venture in 2014 and
beyond; and the projection that 2013 will be a record year for the
company. 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 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 for the period ending December 31, 2012,
which is on file with the SEC. We undertake no obligation to publicly
update or revise any forward-looking statement.
WTRF
|
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Selected Operating Data
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
204,345
|
|
$
|
214,565
|
|
$
|
580,035
|
|
$
|
570,279
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders
|
|
$
|
63,617
|
|
$
|
50,659
|
|
$
|
163,768
|
|
$
|
130,008
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
0.36
|
|
$
|
0.29
|
|
$
|
0.93
|
|
$
|
0.75
|
|
Diluted net income per common share
|
|
$
|
0.36
|
|
$
|
0.29
|
|
$
|
0.93
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
Basic average common shares outstanding
|
|
|
176,483
|
|
|
174,596
|
|
|
175,964
|
|
|
173,981
|
|
Diluted average common shares outstanding
|
|
|
177,575
|
|
|
175,608
|
|
|
176,732
|
|
|
174,688
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Consolidated Statement of Income
|
|
(In thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
204,345
|
|
|
$
|
214,565
|
|
|
$
|
580,035
|
|
|
$
|
570,279
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost & expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
|
|
72,065
|
|
|
|
71,268
|
|
|
|
211,234
|
|
|
|
199,664
|
|
|
Depreciation
|
|
|
30,188
|
|
|
|
28,251
|
|
|
|
88,971
|
|
|
|
82,736
|
|
|
Amortization
|
|
|
1,175
|
|
|
|
1,320
|
|
|
|
3,903
|
|
|
|
3,773
|
|
|
Taxes other than income taxes
|
|
|
13,537
|
|
|
|
13,191
|
|
|
|
40,321
|
|
|
|
34,700
|
|
|
Total
|
|
|
116,965
|
|
|
|
114,030
|
|
|
|
344,429
|
|
|
|
320,873
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
87,380
|
|
|
|
100,535
|
|
|
|
235,606
|
|
|
|
249,406
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
19,350
|
|
|
|
19,597
|
|
|
|
57,834
|
|
|
|
58,384
|
|
|
Allowance for funds used during construction
|
|
|
(426
|
)
|
|
|
(919
|
)
|
|
|
(1,468
|
)
|
|
|
(3,484
|
)
|
|
Gain on sale of other assets
|
|
|
(138
|
)
|
|
|
(320
|
)
|
|
|
(121
|
)
|
|
|
(826
|
)
|
|
Equity (earnings) loss in joint venture
|
|
|
(78
|
)
|
|
|
(682
|
)
|
|
|
1,732
|
|
|
|
(931
|
)
|
|
Income from continuing operations before income taxes
|
|
|
68,672
|
|
|
|
82,859
|
|
|
|
177,629
|
|
|
|
196,263
|
|
|
Provision for income taxes
|
|
|
5,188
|
|
|
|
32,575
|
|
|
|
19,366
|
|
|
|
77,310
|
|
|
Income from continuing operations
|
|
|
63,484
|
|
|
|
50,284
|
|
|
|
158,263
|
|
|
|
118,953
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before income taxes
|
|
|
193
|
|
|
|
819
|
|
|
|
8,524
|
|
|
|
18,813
|
|
|
Provision for income taxes
|
|
|
60
|
|
|
|
444
|
|
|
|
3,019
|
|
|
|
7,758
|
|
|
Income from discontinued operations
|
|
|
133
|
|
|
|
375
|
|
|
|
5,505
|
|
|
|
11,055
|
|
|
Net income attributable to common shareholders
|
|
$
|
63,617
|
|
|
$
|
50,659
|
|
|
$
|
163,768
|
|
|
$
|
130,008
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.36
|
|
|
$
|
0.29
|
|
|
$
|
0.90
|
|
|
$
|
0.68
|
|
|
Diluted
|
|
$
|
0.36
|
|
|
$
|
0.29
|
|
|
$
|
0.90
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
Diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.36
|
|
|
$
|
0.29
|
|
|
$
|
0.93
|
|
|
$
|
0.75
|
|
|
Diluted
|
|
$
|
0.36
|
|
|
$
|
0.29
|
|
|
$
|
0.93
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
176,483
|
|
|
|
174,596
|
|
|
|
175,964
|
|
|
|
173,981
|
|
|
Diluted
|
|
|
177,575
|
|
|
|
175,608
|
|
|
|
176,732
|
|
|
|
174,688
|
|
|
|
|
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands of dollars)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
4,090,373
|
|
$
|
3,936,163
|
|
Current assets
|
|
|
211,556
|
|
|
260,894
|
|
Regulatory assets and other assets
|
|
|
772,169
|
|
|
661,460
|
|
|
|
$
|
5,074,098
|
|
$
|
4,858,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
1,500,037
|
|
$
|
1,385,892
|
|
Long-term debt, excluding current portion
|
|
|
1,439,338
|
|
|
1,543,954
|
|
Current portion of long-term debt and loans payable
|
|
|
191,235
|
|
|
125,421
|
|
Other current liabilities
|
|
|
127,034
|
|
|
148,743
|
|
Deferred credits and other liabilities
|
|
|
1,816,454
|
|
|
1,654,507
|
|
|
|
$
|
5,074,098
|
|
$
|
4,858,517
|
|
|
|
|
|
|
|
|
Aqua America, Inc.
Brian Dingerdissen
Director, Investor
Relations
610-645-1191
bjdingerdissen@aquaamerica.com
or
Donna
Alston
Manager, Communications
610-645-1095
dpalston@aquaamerica.com
Source: Aqua America, Inc.
News Provided by Acquire Media
