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Water utility Connecticut Water Service, Inc. reported third quarter earnings per share of 86 cents, surpassing the Zacks Consensus Estimate of 69 cents by 24.6%.

Earnings were 28.3% higher than the year-ago figure of 68 cents. The improvement in earnings was primarily attributable to solid performance from its Water Activities segment.

Total Revenue

Third quarter total revenue of $29.6 million was up 11.7% year over year from $26.5 million and also surpassed the Zacks Consensus Estimate of $26 million by 13.8%.

The strong performance from the Water Activities segment lifted the overall revenue in the reported quarter. The increase in revenue from this segment was attributable to the implementation of the revenue adjustment mechanism (RAM) in the third quarter, contribution from the acquisition of Biddeford & Saco Water Company (BSWC) and expansion of the Water Infrastructure and Conservation Adjustment (WICA) surcharge in Connecticut.

Highlights of the Release

Total operating expenses in the reported quarter increased 8% to $11.1 million, primarily due to the inclusion of operating expenses of BSWC.

Operating income in the reported quarter increased 28.8% to $10.3 million.

Interest expenses decreased 23% in the third quarter to $1.7 million from $2.2 million in the year-ago quarter primarily due to the refinancing of existing debts on favorable terms and repayment of debts.

Financial Health

As of Sep 30, 2013, the company’s cash and cash equivalent totaled $1.58 million versus $13.1 million as of Dec 31, 2012.

Connecticut Water Service’s cash flow from operating activities in first nine moths of 2013 was $18.1 million, marginally lower than $18.4 million recorded in the year-ago period.

Long-term debt as of Sep 30, 2013 was $175.5 million, declining from $178.5 million as of Dec 31, 2012.

Other Company Releases

American Water Works Company, Inc. reported third-quarter 2013 earnings from continuing operations of 84 cents per share, missing the Zacks Consensus Estimate by a penny.

California Water Service Group announced third-quarter 2013 operating earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 52 cents by 17.3%.

Aqua America Inc. reported third-quarter 2013 earnings per share of 36 cents, beating the Zacks Consensus Estimate of 35 cents by 2.9%.

Our view

The contribution from the acquired assets and timely implementation of RAM helped the company to register a strong performance. In addition, the $31.3 million construction budget for 2013 will allow Connecticut Water Service to expand its existing operations and boost the long-term performance.

Connecticut Water Service Inc. currently has a Zacks Rank #2 (Buy).
 

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