Aqua America, Inc. (NYSE: WTR) reported financial result for the first quarter 2007, which missed analyst estimates by a penny:
Revenue rose 16.4% to $137.3 million and net income rose 2% to $16.9 million compared to Q106. EPA was flat at $0.13 per share on two percent more shares outstanding. Increased revenue was due primarily to recent rate awards, which accounted for an additional $10.3 million in revenue. Revenue from regulated and non-regulated acquisitions accounted for $6.9 million, including the acquisitions of New York Water Service Corporation, which serves water to 135,000 residents on Long Island and added five percent to the company’s customer base, and a septage hauling business acquired last summer.
Net income was up slightly, despite being negatively impacted by higher expenses, due in part to a sharp increase in main breaks associated with the rapid drop in temperatures in Midwest and Mid-Atlantic operating territories during February.
“The above average temperatures we experienced during January swung drastically and February was the coldest on record since 1979,” said Aqua America Chairman and CEO Nicholas DeBenedictis. “Additionally, hurting year-over-year net income comparisons was a one-time, non-recurring item that positively affected the first quarter of 2006 and the effects of increased water production costs such as power and chemicals in the first quarter of 2007.”
Normal operating and maintenance expenses of newly acquired systems as well as increased depreciation expense also affected the first quarter of 2007. “Depreciation expense was up 20 percent as a direct result of the record amounts of capital we invested in 2006 and our new acquisitions. Although depreciation is a non-cash expense, when received in rates it generates cash for future investment,” explained DeBenedictis.
DeBenedictis said that the company is continuing with its core strategy to grow its customer base through acquisitions and invest appropriate amounts of capital to maintain quality service for customers while creating a base to earn a fair return on our investments for shareholders.
“Earlier this week we closed two deals–the Aquarion Water Company of Sea Cliff, Inc. (Sea Cliff), which serves about 13,000 residents located on Long Island just north of our recently acquired New York Water Service operations and the Fairways at Mt. Plymouth water and wastewater system in Lake County, Florida, which provides water and wastewater services to more than 700 residents.”
DeBenedictis said that these two acquisitions coupled with three others completed this year–one each in Virginia, Pennsylvania and North Carolina–bring the year’s completed acquisitions to five.
Aqua America, Inc. is a U.S.-based publicly-traded water and wastewater utility, serving approximately 2.8 million residents in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, New York, Florida, Indiana, Virginia, Maine, Missouri, and South Carolina.
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