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Aqua America (WTR) Q2 Earnings In Line, 2016 View Same
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Water utility Aqua America Inc.’s second-quarter earnings of 33 cents per share were on par with the Zacks Consensus Estimate. However, earnings were a penny higher than the year-ago figure.
The year–over-year increase in earnings was attributable to higher earnings at the Regulated business segment and proper management of expenses.
Second-quarter total revenues of $203.9 million missed the Zacks Consensus Estimate of $209 million by 2.4%. Total revenues were 0.9% lower year over year.
Rates, surcharges and acquisitions increased regulated revenue by nearly $5.1 million. However, lower consumption and divestitures in market-based activities offset the increase by $7.2 million, resulting in an overall decrease in revenue of $1.9 million in the second quarter.
Highlights of the Release
Year to date, Aqua America’s state subsidiaries in Illinois, North Carolina, Ohio, Texas and Virginia have received rate awards or infrastructure surcharges, resulting in an annual increase in revenues of $5 million.
Total operating expenses in the reported quarter decreased 7.2% to $74 million. Divestitures in market-based activities, lower production expenses and other non-recurring factors helped in the reduction of operating expenses.
Interest expenses increased 6.4% to $20.1 million from $18.9 million in the year-ago quarter.
Current assets were $132.4 million as of Jun 30, 2016, up from $128.4 million as of Dec 31, 2015.
Long-term debt was $1,775.9 million as of Jun 30, 2016, marginally higher than $1,720.5 million as of Dec 31, 2015.
The company invested nearly $168.6 million in the first half of the year to improve its infrastructure systems.
Guidance
Aqua America reiterated its 2016 earnings guidance in the range of $1.30 to $1.35 per diluted share. The company expects the customer base to expand by 1.5% to 2%.
Ageing infrastructure is a pressing problem for most of the water utilities. For 2016, the company’s capital investment budget is $350 million. It expects to invest nearly $1.1 billion in the 2016 to 2018 time period.
Peer Releases
California Water Service Group’s (CWT - Free Report) second-quarter 2016 operating earnings per share of 24 cents lagged the Zacks Consensus Estimate of 26 cents by 7.69%.
SJW Corp.’s (SJW - Free Report) second-quarter 2016 operating earnings per share of 66 cents surpassed the Zacks Consensus Estimate of 41 cents by 60.98%.
Upcoming Releases
American Water Works Company (AWK - Free Report) is expected to report second-quarter 2016 results after market close on Aug 3. The Zacks Consensus Estimate is pegged at 72 cents.
Our View
Aqua America reported on par earnings in the second quarter as it benefitted from constructive rate decisions in different states.
The company continues its inorganic growth strategy to increase its customer base and expand service territories. Aqua America added nearly 5,400 customer connections through acquisitions in the first half of the year, which increased its customer base by 0.6%. We consider this to be a smart strategy for expansion in the fragmented water utility space.
Aqua America currently has a Zacks Rank #4 (Sell).
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Aqua America (WTR) Q2 Earnings In Line, 2016 View Same
Water utility Aqua America Inc.’s second-quarter earnings of 33 cents per share were on par with the Zacks Consensus Estimate. However, earnings were a penny higher than the year-ago figure.
The year–over-year increase in earnings was attributable to higher earnings at the Regulated business segment and proper management of expenses.
Total Revenues
Second-quarter total revenues of $203.9 million missed the Zacks Consensus Estimate of $209 million by 2.4%. Total revenues were 0.9% lower year over year.
Rates, surcharges and acquisitions increased regulated revenue by nearly $5.1 million. However, lower consumption and divestitures in market-based activities offset the increase by $7.2 million, resulting in an overall decrease in revenue of $1.9 million in the second quarter.
Highlights of the Release
Year to date, Aqua America’s state subsidiaries in Illinois, North Carolina, Ohio, Texas and Virginia have received rate awards or infrastructure surcharges, resulting in an annual increase in revenues of $5 million.
Total operating expenses in the reported quarter decreased 7.2% to $74 million. Divestitures in market-based activities, lower production expenses and other non-recurring factors helped in the reduction of operating expenses.
Interest expenses increased 6.4% to $20.1 million from $18.9 million in the year-ago quarter.
AQUA AMER INC Price, Consensus and EPS Surprise
AQUA AMER INC Price, Consensus and EPS Surprise | AQUA AMER INC Quote
Financial Highlights
Current assets were $132.4 million as of Jun 30, 2016, up from $128.4 million as of Dec 31, 2015.
Long-term debt was $1,775.9 million as of Jun 30, 2016, marginally higher than $1,720.5 million as of Dec 31, 2015.
The company invested nearly $168.6 million in the first half of the year to improve its infrastructure systems.
Guidance
Aqua America reiterated its 2016 earnings guidance in the range of $1.30 to $1.35 per diluted share. The company expects the customer base to expand by 1.5% to 2%.
Ageing infrastructure is a pressing problem for most of the water utilities. For 2016, the company’s capital investment budget is $350 million. It expects to invest nearly $1.1 billion in the 2016 to 2018 time period.
Peer Releases
California Water Service Group’s (CWT - Free Report) second-quarter 2016 operating earnings per share of 24 cents lagged the Zacks Consensus Estimate of 26 cents by 7.69%.
SJW Corp.’s (SJW - Free Report) second-quarter 2016 operating earnings per share of 66 cents surpassed the Zacks Consensus Estimate of 41 cents by 60.98%.
Upcoming Releases
American Water Works Company (AWK - Free Report) is expected to report second-quarter 2016 results after market close on Aug 3. The Zacks Consensus Estimate is pegged at 72 cents.
Our View
Aqua America reported on par earnings in the second quarter as it benefitted from constructive rate decisions in different states.
The company continues its inorganic growth strategy to increase its customer base and expand service territories. Aqua America added nearly 5,400 customer connections through acquisitions in the first half of the year, which increased its customer base by 0.6%. We consider this to be a smart strategy for expansion in the fragmented water utility space.
Aqua America currently has a Zacks Rank #4 (Sell).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>