Pro-Life
13 years ago
Aqua America Reports Record Earnings for Second Quarter
Date : 08/02/2011 @ 7:31PM
Source : Business Wire
Stock : Aqua America, Inc. (WTR)
http://ih.advfn.com/p.php?pid=nmona&article=48670304&symbol=WTR
Aqua America (NYSE:WTR)
Today : Wednesday 3 August 2011
Aqua America, Inc. (NYSE: WTR) today reported record second quarter results for the quarter ending June 30, 2011. For the quarter, net income rose to $37.6 million from $29.9 million in the same quarter of 2010, an increase of 26 percent. Earnings per diluted share for the quarter were $0.27 compared to $0.22 for the second quarter of 2010, on one percent more shares outstanding. Revenues for the quarter were $188.2 million compared to $178.4 million in the same period of 2010, an increase of 5.5 percent. Second quarter net income and cash generation were positively impacted by increased sales, cost controls (improving margins), and the net state tax benefits of $3.5 million from the 100 percent bonus depreciation for the quarter resulting from the regulatory treatment afforded to such items.
Income before the effect of the net state income tax benefits associated with 100 percent bonus depreciation (a non-GAAP financial measure) also increased substantially to $34.1 million, or 14 percent higher than 2010 second quarter earnings. The corresponding earnings per diluted share was $0.25, versus $0.22 in the same period of 2010. The second quarter earnings are a record for the second quarter for the company, before accounting for the state bonus depreciation recognition. A reconciliation of non-GAAP to GAAP financial measures is provided in the accompanying financial tables.
On August 2, 2011, the Board of Directors declared a quarterly dividend increase of $0.01 per share from $0.155 to $.165 per share, an increase of 6.5 percent, for the December 1, 2011 quarterly dividend to all shareholders of record on November 17, 2011. On an annualized basis, this increase is equivalent to $0.66 per share or $0.04 above the current annualized dividend rate of $0.62 per share. This was the 21st dividend increase in 20 years. The Board of Directors also declared the regular quarterly cash dividend payment of $0.155 per share payable on September 1, 2011 to all shareholders of record on August 17, 2011. Aqua has paid a consecutive quarterly dividend for more than 65 years.
Aqua America Chairman and CEO Nicholas DeBenedictis said, âThe Boardâs consistent action of increasing the dividend demonstrates its continued confidence in the companyâs strategic business model.â
DeBenedictis added, âThe Companyâs excellent second quarter results reflect the ability of management to limit operating costs, while at the same time focusing on continued investments for needed infrastructure improvements.â
Operating revenues for the first half of 2011 totaled $359.6 million, an increase of six percent from revenues of $339.0 million for the same period in 2010. For the first two quarters of 2011, net income increased 32 percent to $67.9 million from $51.4 million, and corresponding diluted earnings per share increased to $0.49 from $0.38 for the same period last year. Compared to the first half of 2010, income before the effect of the net state income tax benefits associated with 100 percent bonus depreciation (a non-GAAP financial measure) increased 17 percent to $60.1 million from $51.4 million, and corresponding diluted earnings per share increased to $0.43 from $0.38 for the same period last year.
On July 11, 2011, Aqua America announced an agreement to purchase all of American Water Works Company, Inc.âs (NYSE: AWK) regulated operations in Ohio, acquiring approximately $98 million in additional rate base and 57,000 additional customers (approximately 66 percent customer growth in Ohio), and to simultaneously sell Aquaâs New York regulated operations, which includes approximately $50 million in rate base including 7 water systems, serving approximately 51,000 customers in New York to American Water. The company expects to complete these transactions during the first quarter of 2012 and does not expect to raise new equity to fund the Ohio transaction. Aqua Americaâs sale of its New York operations will conclude its regulated operations in that state. This is the second transaction Aqua America has made with American Water in the last 7 months. In June the company closed its agreement with American Water in which Aqua America purchased American Waterâs regulated Texas operations and sold the bulk of its regulated Missouri operations to American Water.
On July 27, 2011, Aqua America announced an agreement to sell its regulated operations in Maine to Connecticut Water Service, Inc. (NASDAQ:CTWS) for $53.5 million, subject to certain adjustments at closing. Aquaâs Maine operations include 11 systems serving 16,000 customers. This transaction, which is subject to regulatory approval, is expected to close in early 2012.
DeBenedictis said, âThese transactions demonstrate the continued commitment to our growth-through-acquisition strategy, including states like Texas and Ohio where we are building critical mass allowing Aqua America subsidiaries to spread their fixed costs over more customers. This should provide more cost efficiency to help address future rates.â
DeBenedictis added, âOhio and Texas, in addition to our largest state, Pennsylvania, offer opportunities for the water-energy nexus that could have a positive impact on the future of our company. We are prepared to take a responsible and active role in what is becoming the next energy boomânatural gas drilling, which is a very water intensive business that can provide an economic boost well into the future if itâs done right environmentally. We are currently pursuing the growth opportunities provided by the shale drilling industry, and more importantly focusing on the âclean waterâ aspects of the drilling business.â
Aqua America has continued to expand its operations and completed six acquisitions of water or wastewater utility systems this year. These acquisitions not only included approximately 5,300 customers added through the Texas American acquisition, but also included the water and wastewater system assets of Colvard Farms Subdivision in Chatham County, North Carolina which serve approximately 400 people and two water systems in Virginia that serve approximately 375 people in New Kent and Culpeper counties. Tuck-in acquisitions like the ones in North Carolina and Virginia allow the company to grow its customer base and improve economies of scale by expanding operations to areas within, or just outside, of existing service territories.
For the first half of 2011, operations and maintenance expenses increased less than one percent, compared to the same period in 2010. âThrough the first half of 2011, management was diligent in working to control operating costs and they continue to focus on limiting expense growth. I am confident in their ability to continue to improve the operations and maintenance expense to revenue ratio, which at 38.3 percent year-to-date compares favorably to 40.4 percent during the same period of 2010,â said DeBenedictis.
To date in 2011, the company has received water and wastewater rate awards estimated to increase annualized revenues by approximately $18 million in Pennsylvania, Indiana and Ohio, including infrastructure surcharges in various states. The company has approximately $25 million of rate cases pending before seven state regulatory bodies, including rate cases in North Carolina, Texas, and Illinois. The company expects to seek additional rate relief by filing cases and infrastructure surcharges in seven states later in 2011 that are expected to impact 2012 results. The primary driver of these filings is the recovery of capital (infrastructure) investments and increased expenses since the companiesâ previous rate filings. The timing and extent to which rate increases might be granted by the applicable regulatory agencies will vary by state.
As part of its capital investment plan, the company has invested $134.4 million in infrastructure improvements through the first six months of 2011. The company remains on track to invest record levels of approximately $325 million, which is roughly three times depreciation, to improve infrastructure and service reliability for its customers.
As of June 30, 2011, Aqua Americaâs weighted average cost of fixed-rate long-term debt was 5.34 percent, and the company had $63.5 million available on its credit lines. In June Standard and Poorâs reiterated itâs A+ credit rating for Aqua Pennsylvania, Inc., Aqua Americaâs largest subsidiary.
DeBenedictis said, âI am extremely pleased with our strong performance in the second quarter of 2011. The company was able to achieve record financial results, while at the same time working diligently to complete acquisitions and strategically prune operations to enhance our long-term ability to efficiently deliver quality water and wastewater services to our customers. In addition to our investments in the acquisition of new systems we continue to make significant investments in infrastructure which we are able to increasingly fund internally through our increasing cash generation. We look to continue to execute our long-term strategy, which has provided the core for our earnings growth.â
The companyâs conference call with financial analysts will take place on Wednesday, August 3, 2011 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 www.aquaamerica.com and following the link for Investor Relations. The conference call will be archived in the investor relations section of the companyâs Web site for 90 days following the call. Additionally, the call will be recorded and made available for replay at 2 p.m. on August 3, 2011 for 10 business days following the call. To access the audio replay in the U.S., dial 888.203.1112 (pass code 7104800). International callers can dial 719.457.0820 (pass code 7104800).
Pro-Life
13 years ago
Aqua America Completes Major Expansion in Texas with Purchase of Water Systems from American Water
Date : 06/16/2011 @ 9:12AM
Source : Business Wire
Stock : Aqua America, Inc. (WTR)
http://ih.advfn.com/p.php?pid=nmona&article=48092818&symbol=WTR
Aqua America, Inc. (NYSE: WTR), the largest publicly traded water utility in the state of Texas, announced today that its Texas subsidiary has completed the purchase of American Water Works Company, Inc.âs (NYSE: AWK) regulated Texas operations, significantly expanding its customer base in one of its fastest growing and energy-rich states.
Aqua Texas has added 51 water and five wastewater systems, which serve 4,200 water and 1,100 wastewater customers (approximately 16,000 people) from Texas American for approximately $6 millionâthe approximate book value of the assets. The systems, which will be run as a single unit out of Aquaâs Houston office, serve parts of Brazoria, Harris, Liberty, Matagorda and Montgomery counties in the greater Houston metropolitan area. The acquisition follows Aquaâs December 2010 acquisition of water and wastewater system assets of Gray Utility, which served approximately 6,300 people in Chambers, Jefferson and Liberty counties along the Gulf Coast near Baytown, which is about 40 miles from downtown Houston. Collectively in 2010, Aqua Texas purchased 10 systems and increased its customer base by approximately six percent, nearly 90 percent of which was from acquisitions. Since entering the state in 2003, Aqua will have grown its customer base by 50 percent upon closing the Texas American transaction.
âThese transactions demonstrate the success of our growth-through-acquisition strategy,â said Aqua America Chairman and CEO Nicholas DeBenedictis when the deal was announced last year. âWe are proud to be investing while strategically planning and executing our growth efforts in states like Texas where our operations already have critical mass, and is one of the fastest-growing states in the nation. Texas is also one of our areas of operations that offers opportunities for the water-energy nexus that could have a positive impact on the future of our operations.â
Aqua is working to concentrate its customer portfolio in states that demonstrate a positive regulatory environment. Aqua continues to pursue a growth-through-acquisition strategy that spreads weather and regulatory risks and opportunities over a number of states, while leveraging greater economies of scale and customer growth.
In addition to customer growth, energy-rich Texas with its natural gas and energy resources, offers other potential business opportunities for Aqua America. Speaking before the Citi Climate Change and Water Conference last week in London, England, DeBenedictis said that the water-energy nexus will play a larger role in the future of the company with respect to environmental and business opportunities.
âWe are prepared to take a responsible and active role in what is becoming the next energy boom in Texas, Pennsylvania and some other statesânatural gas drilling,â said DeBenedictis. âShale drilling for natural gas is a very water intensive business that can provide an economic boost well into the future if itâs done right environmentally,â said DeBenedictis. âWe are currently focusing on the âclean waterâ aspects of the drilling business and will pursue the growth opportunities provided by the shale drilling industry, which is thought to be at the dawn of its life.â
Pro-Life
13 years ago
Invest Like a Billionaire: Water Is The New Gold
Tatiana Serafin on 4/1/2010
http://www.mint.com/blog/investing/investing-in-water/
.............................................
Last year, legendary investor Warren Buffet bought a water treatment provider, Nalco Holding Company, adding to other water-related investments in his wildly successful portfolio. (As of March 30, 2010, a single share of his company, Berkshire Hathaway, could be bought for $122,459.)
The move sent ripples through the investing community: a clear signal that investing in water is an untapped opportunity. Water, like oil, is finite. There is only so much ocean saltwater, glacier freshwater and water in the air, while global consumption is growing twice as fast as the worldâs population.
Climate change affects how and where this resource is delivered around the world, with more intense rainfalls and dry spells impacting everything from the food cycle to manufacturing to drinking supplies. Climate change is expected to account for about 20% of the global increase in water scarcity in coming years. The World Bank estimates water availability will change dramatically by the middle of this century, leading to what some have called âwater wars.â
New water management technologies are the key to managing water scarcity. Buffetâs investment in Nalco, which had $3.7 billion in sales in 2009, is one example. The company helps its industrial customers reduce water and energy use. For example, it claims it 3D TRASAR® cooling water technology has saved more than 200 billion gallons of water. Nalco is also teaming up with organizations like the World Wildlife Fund to help develop ways to conserve water. The companyâs stock price has doubled over the past year.
Also doing well is Buffetâs investment in General Electric: the companyâs stock price is over 70% over the past year. About a quarter of the companyâs total revenue is in energy infrastructure, which includes wind and oil as well as water, up from 17.8% of revenue just two years ago.
In a recent interview with the nonprofit news site Circle of Blue, General Electric Waterâs director of marketing Jeff Fulgham identified two drivers for GEâs water business: helping manage water demand by creating new supplies through desalination, and water re-use technologies (the company itself has committed to reducing its consumption of water by 25% by 2015), as well as helping improve water quality.
The Worldâs Water Crisis
Water quality is a concern in the U.S. and around the world. The New York Times recently ran a series called âToxic Watersâ that exposed the worsening pollution in U.S. water systems and lax regulatory responses â despite the Clean Water Act, which helps regulate 100 pollutants. The fact remains that most of the pipes in the U.S. are over 100 years old; the American Water Works Association (AWWA) estimates that domestic water utilities will need to invest $330 billion over the next 20 years to replace aging pipes and treatment plants.
The rest of the world faces even direr water problems. China has 21% of the worldâs population but only 7% of the renewable water resources. The countryâs spending on water infrastructure reached $250 billion in 2008. By some accounts, the lack of clean water and sanitation slows the worldâs economic growth by $556 billion each year.
Industry Players With a Future
Companies that can fix broken water systems are set to benefit from President Obamaâs stimulus dollars, which are expected to flow in 2010. âThe plan divides $21.4 billion to water and environmental infrastructure and $30 billion to building infrastructure, which should be allocated within the next four years,â says Michael Gaugler, an equity analyst who covers water for Brean Murray, Carrett & Co. He recommends Tetra Tech for the expected revenue uptick it will get for its consulting, engineering and technical services focused on water. (Buffet, meanwhile, also owns privately-held pump-maker Wayne Water Systems.)
The best opportunity at the moment may be publicly traded water utilities, says John Dickerson who runs Summit Global, a water focused investment fund based in San Diego. âWater utilities are the subject of benign neglect,â he says. â[They] are basically trading at a discount to the regulated asset base.â
Case in point: Aqua America, one of the countryâs largest publicly traded utilities operating in 13 states which has been trading below last yearâs stock price. Meanwhile, American Water Works, with an even larger reach in 19 states and across Canada, is trading around the same price as last year.
âUtilities are cheaper than they have ever been,â Dickerson says.
Invest Like Buffet â On a Budget
To be sure, unless you have a sizeable portfolio and feel comfortable investing in individual stocks, you may simply consider a fund like Dickersonâs, which has been around since 1999. Several new water-focused funds have launched over the past five years as well. Brennan Investment Partnersâ Kinetics Water Infrastructure Fund invests in companies that provide solutions to water industry problems; Credit Agricole Funds Aqua Global and FourWinds Capitalâs Aqua Resources Fund are also on the water scene.
As always, diversification should remain a key part of your investment strategy. Gaugler suggests that 10% to 20% of oneâs portfolio may be invested in water, but depending on your risk tolerance and investment horizon, that may not be the case for you. Many individual investors may be better off dedicating a smaller share to that â or any other â industry. Be sure to consult with your financial planner or adviser (if you have one) before making any radical portfolio moves.
Tatiana Serafin, a former staff writer at Forbes, now heads Global Markets and Ideas - http://www.tatianaserafin.com/
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