- Earnings per share increased to $0.44 vs. $0.43 in Q3 2017
- Following quarter end, announced the acquisition of Peoples, a
Pittsburgh-based natural gas utility with more than 740,000 customers
that provides significant opportunities for infrastructure investment
and growth
- Completed the acquisition of Peotone, Illinois’ water and
wastewater systems with nearly 3,000 customers and signed two
additional municipal acquisitions that total nearly 6,000 new
customers for a total of nearly 33,000 new customers from closed and
signed municipal acquisitions in 2018
- Reached significant milestone of serving one million water and
wastewater customer connections
- 2018 earnings guidance narrowed to the top portion of range
BRYN MAWR, Pa.--(BUSINESS WIRE)--Nov. 5, 2018--
Aqua America Inc. (NYSE: WTR) today reported results for the third
quarter ending Sept. 30, 2018.
Operating results
For the third quarter 2018, net income was $78.2 million, compared to
$76.2 million reported in the same quarter of 2017. Earnings per diluted
common share were $0.44 for the quarter, compared to $0.43 in 2017.
Rates, consumption and regulated growth drove the increase in earnings.
Revenue for the quarter was $226.1 million, an increase of 5.2 percent
compared to $215.0 million in the third quarter of 2017. Rate activity,
largely driven by additional revenue from infrastructure surcharge
mechanisms, and growth in the regulated customer base led to the revenue
increase in the quarter.
Operations and maintenance expenses increased to $68.6 million for the
third quarter of 2018 compared to $66.7 million in the third quarter of
2017. Employee-related costs, production expenses and regulated
acquisitions contributed to the increase in operations and maintenance
expenses, which was in line with expectations for cost control.
“Thanks to the hard work of our employees and management team, 2018 has
been a year with many significant accomplishments. Earlier this month,
we reached the one million water and wastewater customer connection
mark. We recently released our inaugural Corporate Social Responsibility
Report, which provides extensive details about how our sustainable and
environmentally friendly processes provide safe and reliable water and
wastewater services,” said Aqua America Chairman and CEO Chris Franklin.
“Lastly, and most significantly for the long-term future of the company,
we announced our acquisition of Peoples, which will greatly enhance the
scale of our company, combining two highly complementary businesses with
significant growth potential that will benefit all stakeholders. Both
companies share similar corporate values and core competencies.
Combined, Aqua’s and Peoples’ current multi-year capital plans call for
replacement of more than 300 miles of aged water, wastewater and natural
gas mains per year. This important work will contribute to the safety,
health, service reliability and economic well-being of our customers and
the communities we serve.”
For the first nine months of 2018, the company reported revenues of
$632.3 million compared to $606.2 million in the same period of 2017.
Operations and maintenance expenses for the first three quarters of 2018
increased to $216.1 million compared to $204.2 million in 2017.
As of Sept. 30, Aqua reported year-to-date net income of $195.6 million
compared to $186.3 million reported through the same period of 2017, an
increase of 5.0 percent. Earnings per diluted common share were $1.10 in
the first nine months compared to $1.05 in the same period last year, an
increase of 4.8 percent.
Acquisition growth in regulated water and wastewater operations
In July, Aqua completed two wastewater system acquisitions serving an
aggregate of 9,200 customers: the Village of Manteno, Illinois and
Limerick Township, Pennsylvania. Franklin added, “We will remain focused
on providing solutions to municipalities and growing the company’s
customer base. Our inventory of potential municipal acquisitions remains
strong. We closed on the acquisition of the Village of Peotone, Illinois
water and wastewater systems on Oct. 1, and we signed additional
municipal systems, including the wastewater system of East Norriton
Township in Pennsylvania with nearly 5,000 customer connections, and the
water and wastewater systems of a municipality in Illinois with more
than 700 customer connections.”
So far in 2018, Aqua has added nearly 33,000 new water and wastewater
customers from closed and signed municipal acquisitions. When closed
municipal transactions are added to organic growth and private
acquisitions, this totals approximately 2 percent customer growth year
to date.
Peoples Acquisition
On Oct. 23, Aqua America announced an agreement to acquire Peoples, a
natural gas distribution utility, in an all-cash transaction that
reflects an enterprise value of $4.275 billion, which includes the
assumption of approximately $1.3 billion of debt, creating a new
infrastructure company well-positioned for growth. This acquisition
aligns with our stated growth strategy and core competencies of sound
investment in infrastructure, continued regulatory credibility and
operational excellence. Both Aqua and Peoples have over 130 years of
service, and they will remain strongly committed to the customers and
communities that they serve. Peoples is the largest natural gas
distribution company in Pennsylvania, and serves approximately 740,000
customers in Western Pennsylvania, Kentucky and West Virginia.
The resulting company forms a water and gas distribution utility that is
more than 99 percent regulated and will trade under a renamed holding
company. The combination is expected to provide earnings accretion in
the first full year and over the long term, with annual rate base growth
of 7 percent in water and 8-10 percent in natural gas through 2021.
Approximately 77 percent of the combined company’s rate base will be in
Pennsylvania, one of the most constructive regulatory states in the
country. The acquisition is expected to support continued long-term
dividend growth, and the financing will be structured to maintain strong
investment-grade credit ratings. The transaction is expected to close in
mid-2019, due to required state and federal regulatory approvals.
Peoples has multiple compelling avenues for growth. The company’s
primary driver of earnings growth is its capital expenditure program,
which focuses on improving the safety and reliability of its pipe
infrastructure and earning on this capital through accelerated recovery
mechanisms. For example, Peoples has identified over 3,000 miles of bare
steel and cast-iron pipe to be replaced under its Long-Term
Infrastructure Improvement Plan (LTIIP) by 2034 in its Pennsylvania
service territory alone. The company is also pursuing the opportunity to
expand into rural areas of Western Pennsylvania to serve the more than
370,000 potential customers who currently use more expensive and less
environmentally friendly sources of energy such as heating oil and
propane.
With its service area situated above the Utica Shale and Marcellus
Shale, one of the largest natural gas deposits in the country, Peoples
believes it has a notable pricing advantage over average U.S. wholesale
natural gas prices. This abundant, low-cost and clean-burning energy
source creates a competitive advantage for Pittsburgh and the
surrounding region, helping to increase growth across many sectors of
the economy.
Dividend
On Nov. 2, 2018, Aqua America’s board of directors declared a quarterly
cash dividend of $0.219 per share of common stock. This dividend will be
payable on Dec. 1, 2018 to shareholders of record on Nov. 16, 2018. Aqua
has paid a consecutive quarterly cash dividend for more than 73 years.
Capital expenditures
Aqua invested $343.2 million in the first nine months of the year to
improve and expand its infrastructure. The company expects to invest
approximately $500 million in 2018 and more than $1.4 billion through
2020. The capital investments made to rehabilitate and expand the
infrastructure of the communities’ Aqua serves are paramount to helping
Aqua continue to protect and provide Earth’s most essential resource.
The company also recently announced that Aqua’s rate base is expected to
grow 7 percent annually from 2019-2021.
Rate activity
To date in 2018, the company’s state subsidiaries in each of its eight
operating states have received rate awards or infrastructure surcharges
totaling an estimated net increase to annualized revenues of $20 million.
Aqua Pennsylvania filed a water and wastewater rate case in Aug. 2018
and expects resolution in 2019. Additionally, Aqua currently has rate or
surcharge proceedings pending in Indiana, North Carolina and Ohio, with
the collective increase from the four states totaling a net $78.7
million of annual new revenue.
2018 Aqua Guidance
Aqua updates the prior guidance and qualifies its earnings per diluted
common share range to be exclusive of transaction expenses associated
with the Peoples transaction.
-
Earnings per diluted common share of $1.40 to $1.42, excluding
transaction expenses, narrowing guidance towards the top end of
previous range of $1.37-$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 for 2018
-
Aqua Pennsylvania filed a rate case in Aug. 2018 with resolution
expected in 2019
The company announced that it does not plan to provide earnings guidance
for 2019 due to the ongoing Pennsylvania rate case. However, the company
will continue to provide guidance on capital and operating expenses,
rate base and customer growth. After the conclusion of the rate case,
the company will resume providing earnings guidance on the normal cycle.
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.
Earnings Call Information
Date: Nov. 6, 2018
Time: 11
a.m. EST (please dial in by 10:45 a.m.)
Webcast and slide
presentation link: http://ir.aquaamerica.com/events.cfm
Replay
Dial-in #: 888.203.1112 (U.S.) & +1 719.457.0820 (International)
Confirmation
code: 4074714
The company’s conference call with financial analysts will take place on
Tue., Nov. 6, 2018 at 11 a.m. Eastern Standard 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 Nov. 6, 2018 for 10 business days following the call. To
access the audio replay in the U.S., dial 888.203.1112 (pass code
4074714). International callers can dial +1 719.457.0820 (pass code
4074714).
About Aqua America
Aqua America is one of the largest U.S.-based, publicly traded water
utilities and serves over 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.
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 guidance range of earnings per share for the fiscal year
ending in 2018; the projected total customer growth for 2018; the
anticipated amount of capital investment in 2018; the anticipated amount
of capital investment from 2018 through 2020; the company’s resolution
of a Pennsylvania rate case in 2019; the company’s future growth
potential; the company’s ability to replace 300 miles of water,
wastewater, and gas mains in its multi-year capital program; the
Peoples’ acquisition being accretive in the first year; the company
being able to structure the financing of the acquisition of Peoples to
maintain the long-term dividend growth; and, the ability to grow the
water, wastewater, and gas rate base at the expected rates. There are
important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements
including: the company’s ability to successfully close the Peoples’
acquisition, the company’s ability to close the acquisitions that are
signed but not closed, the company’s ability to obtain financing on
favorable terms and conditions, the company’s ability to receive
approvals from all governmental agencies on favorable terms and
conditions, the ability to successfully integrate the Peoples’
operations, the continuation of the company's growth-through-acquisition
program, 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; availability and access to
capital; the cost of capital; disruptions in the credit markets; the
success of growth initiatives; the company’s ability to successfully
close the seven municipally owned systems presently under agreement; the
company’s ability to continue to deliver strong results; the company’s
ability to grow its dividend, add shareholder value and to grow
earnings; municipalities’ willingness to privatize their water and/or
wastewater utilities; the company's ability to control expenses and
create and maintain efficiencies; the company’s success in its
Pennsylvania rate filing; the company’s ability to successfully complete
its Pennsylvania rate filing in a timely manner; and other factors
discussed in our Annual Report on Form 10-K and our Quarterly Report on
Form 10-Q, which is filed 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
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
$
|
226,137
|
|
|
$
|
215,008
|
|
|
$
|
632,344
|
|
|
$
|
606,213
|
|
Operations and maintenance expense
|
|
|
|
$
|
68,624
|
|
|
$
|
66,744
|
|
|
$
|
216,085
|
|
|
$
|
204,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
78,216
|
|
|
$
|
76,225
|
|
|
$
|
195,645
|
|
|
$
|
186,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
|
|
$
|
0.44
|
|
|
$
|
0.43
|
|
|
$
|
1.10
|
|
|
$
|
1.05
|
|
Diluted net income per common share
|
|
|
|
$
|
0.44
|
|
|
$
|
0.43
|
|
|
$
|
1.10
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic average common shares outstanding
|
|
|
|
|
177,923
|
|
|
|
177,660
|
|
|
|
177,876
|
|
|
|
177,583
|
|
Diluted average common shares outstanding
|
|
|
|
|
178,357
|
|
|
|
178,124
|
|
|
|
178,347
|
|
|
|
178,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
$
|
226,137
|
|
|
|
$
|
215,008
|
|
|
|
$
|
632,344
|
|
|
|
$
|
606,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost & expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
|
|
|
|
68,624
|
|
|
|
|
66,744
|
|
|
|
|
216,085
|
|
|
|
|
204,249
|
|
|
Depreciation
|
|
|
|
|
37,457
|
|
|
|
|
34,264
|
|
|
|
|
110,037
|
|
|
|
|
101,508
|
|
|
Amortization
|
|
|
|
|
199
|
|
|
|
|
42
|
|
|
|
|
478
|
|
|
|
|
358
|
|
|
Taxes other than income taxes
|
|
|
|
|
15,564
|
|
|
|
|
15,234
|
|
|
|
|
45,360
|
|
|
|
|
44,390
|
|
|
Total
|
|
|
|
|
121,844
|
|
|
|
|
116,284
|
|
|
|
|
371,960
|
|
|
|
|
350,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
104,293
|
|
|
|
|
98,724
|
|
|
|
|
260,384
|
|
|
|
|
255,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
25,359
|
|
|
|
|
22,411
|
|
|
|
|
72,553
|
|
|
|
|
65,124
|
|
|
Allowance for funds used during construction
|
|
|
|
|
(3,066
|
)
|
|
|
|
(3,914
|
)
|
|
|
|
(8,510
|
)
|
|
|
|
(10,570
|
)
|
|
Gain on sale of other assets
|
|
|
|
|
(261
|
)
|
|
|
|
(43
|
)
|
|
|
|
(598
|
)
|
|
|
|
(322
|
)
|
|
Equity earnings in joint venture
|
|
|
|
|
(215
|
)
|
|
|
|
(593
|
)
|
|
|
|
(1,508
|
)
|
|
|
|
(402
|
)
|
|
Other
|
|
|
|
|
325
|
|
|
|
|
1,238
|
|
|
|
|
1,365
|
|
|
|
|
3,714
|
|
|
Income before income taxes
|
|
|
|
|
82,151
|
|
|
|
|
79,625
|
|
|
|
|
197,082
|
|
|
|
|
198,164
|
|
|
Provision for income taxes
|
|
|
|
|
3,935
|
|
|
|
|
3,400
|
|
|
|
|
1,437
|
|
|
|
|
11,899
|
|
|
Net income
|
|
|
|
$
|
78,216
|
|
|
|
$
|
76,225
|
|
|
|
$
|
195,645
|
|
|
|
$
|
186,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.44
|
|
|
|
$
|
0.43
|
|
|
|
$
|
1.10
|
|
|
|
$
|
1.05
|
|
|
Diluted
|
|
|
|
$
|
0.44
|
|
|
|
$
|
0.43
|
|
|
|
$
|
1.10
|
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
177,923
|
|
|
|
|
177,660
|
|
|
|
|
177,876
|
|
|
|
|
177,583
|
|
|
Diluted
|
|
|
|
|
178,357
|
|
|
|
|
178,124
|
|
|
|
|
178,347
|
|
|
|
|
178,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aqua America, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
(In thousands of dollars)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
|
|
$
|
5,740,801
|
|
|
$
|
5,399,860
|
|
Current assets
|
|
|
|
|
149,277
|
|
|
|
131,246
|
|
Regulatory assets and other assets
|
|
|
|
|
867,023
|
|
|
|
801,357
|
|
Total assets
|
|
|
|
$
|
6,757,101
|
|
|
$
|
6,332,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
$
|
2,045,738
|
|
|
$
|
1,957,621
|
|
Long-term debt, excluding current portion, net of debt issuance costs
|
|
|
|
|
2,266,460
|
|
|
|
2,007,753
|
|
Current portion of long-term debt and loans payable
|
|
|
|
|
129,764
|
|
|
|
117,419
|
|
Other current liabilities
|
|
|
|
|
158,411
|
|
|
|
167,069
|
|
Deferred credits and other liabilities
|
|
|
|
|
2,156,728
|
|
|
|
2,082,601
|
|
Total liabilities and equity
|
|
|
|
$
|
6,757,101
|
|
|
$
|
6,332,463
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181105005997/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
