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American Water Works (AWK) Beats Earnings Estimates in Q2

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American Water Works Company (AWK - Free Report) posted second-quarter 2018 earnings per share of 83 cents, which beat the Zacks Consensus Estimate of 81 cents by 2.5%. The figure improved 13.7% year over year. The uptick was supported by solid growth in the Regulated and Market-Based businesses in the second quarter.

The company reported GAAP earnings of 91 cents, which improved 24.7% from 73 cents in the year-ago quarter.

Total Revenues
 
Total revenues of $853 million missed the Zacks Consensus Estimate of $908 million by 6.1%. However, reported revenues improved 1.2% year over year.

Highlights of the Release
 
Total operating expenses in the quarter were $551 million, up 3.2% from the year-ago quarter’s tally. The increase was primarily led by higher general taxes and higher depreciation & amortization expenses compared with the year-ago quarter’s levels.

Operating income was $302 million, down 2.6% year over year.

American Water Works Price, Consensus and EPS Surprise

 

Segment Details
 
Regulated businesses’ net income was $152 million, up 8.6% from $140 million in the year-ago quarter. Year to date regulated businesses added 10,300 customers through acquisitions and organic growth.

Market-Based businesses’ net income was $13 million compared with $9 million in the year-ago quarter. The year-over-year increase can be attributed to growth in the Homeowner Services Group, supported by customer addition, cost management and the federal income tax rate cut.

Financial Highlights
 
Cash and cash equivalents were $68 million as of Jun 30, 2018, up 23.6% from Dec 31, 2017 level.
 
Long-term debt was $6,345 million as of Jun 30, 2018, lower than $6,490 million as of Dec 31, 2017.

For the first six months of 2018, the company made capital investments of nearly $1.1 billion. The amount includes $713 million primarily allocated toward infrastructure in the Regulated businesses, $363 million toward the Pivotal acquisition and $14 million for regulated acquisitions.  

Guidance

American Water Works reaffirmed the 2018 earnings per share guidance in the range of $3.22-$3.32. The company also provided 2018 earnings guidance GAAP in the range of $3.30-$3.40 per diluted share.

American Water plans to invest $2.0-$2.1 billion, including the acquisition of Pivotal Home Solutions in 2018.

Zacks Rank

American Water Works carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Water Utility Release

Aqua America Inc reported second-quarter 2018 earnings per share of 37 cents, beating the Zacks Consensus Estimate by a penny.

Upcoming Releases

American States Water Company (AWR - Free Report) is expected to report second-quarter 2018 results on Aug 6. The Zacks Consensus Estimate for earnings is pegged at 48 cents.

Consolidated Water Company Ltd (CWCO - Free Report) is likely to report second-quarter 2018 results on Aug 8. The Zacks Consensus Estimate for earnings is pegged at 15 cents.

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