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The York Water Company (YORW - Snapshot Report) reported third-quarter 2013 earnings per share of 19 cents, lagging the Zacks Consensus Estimate and the year-ago figure of 22 cents by 13.6%. The downtrend was mainly due to lower customer demand and rising expenses.
 
Revenue
 
The company’s operating revenues were $10.9 million, nominally below the Zacks Consensus Estimate of $11 million. Quarterly revenues also decreased 1.02% year over year due to a downswing in residential and commercial sales volume.
 
Operational Highlights
 
In the quarter under review, York Water Company’s total operating costs were $5.5 million, up 5.7% year over year due to a rise in operation and maintenance expenses, general and administrative costs as well as depreciation and amortization expenses.
 
The rising operating cost led York Water Company to post an operating income decline of 7.2% year over year to $5.4 million in the reported quarter.
 
York Water Company’s interest expenses totaled $1.3 million, flat year over year on account of a flattish debt level.
 
Financial Update
 
As of Sep 30, 2013, York Water Company’s cash & cash equivalents were $6.8 million versus $4.0 million as of Dec 31, 2012.
 
Long-term debt as of Sep 30, 2013 was $84.9 million, flat with the debt level at the end of 2012.
 
Net cash provided by operating activities in the first nine months of 2013 was $13.7 million versus $12.2 million in the first nine months of 2012.
 
Acquisition Update
 
York Water Company inked its second wastewater acquisition agreement for the purchase of wastewater assets of SYC WWTP, L.P in Pennsylvania. The deal is subject to regulatory approvals and is expected to close by the first quarter of 2014. This acquisition will augment the company’s wastewater industrial and commercial customer base. 
 
Other Company Releases
 
American Water Works Company, Inc. (AWK - Snapshot Report) reported third-quarter 2013 earnings from continuing operations of 84 cents per share, missing the Zacks Consensus Estimate by a penny.
 
American States Water Company (AWR - Snapshot Report) reported third-quarter 2013 pro forma earnings of 53 cents per share, beating the Zacks Consensus Estimate of 47 cents by 12.8%.
 
California Water Service Group (CWT - Snapshot Report) announced third-quarter 2013 operating earnings of 61 cents per share, surpassing the Zacks Consensus Estimate by 9 cents.
 
Our View
 
York Water Company registered lackluster earnings results in the third quarter of 2013. The infrastructure modernization drive is proving to be costly for the company. The escalating cost issues need to be addressed promptly by York Water. 
 
However, we believe the introduction of proper regulatory mechanism for water utilities will offer encouraging prospects. In addition, consistent customer additions will further provide an impetus to York Water Company’s future sales momentum. York Water Company currently has a Zacks Rank #3 (Hold).

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