Earnings stock to watch: Aqua America Inc (NYSE: WTR)

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Aqua America Inc (NYSE: WTR) stock fell 0.084% on Feb 18th, 2019 (Source: Google finance) after the company in the fourth quarter of FY 18 has reported the revenues of $205.7 million compared to $203.3 million in the same quarter of 2017.

Rates and surcharge revenue, regulated growth and other items increased revenue and were offset by lower consumption. Operations and maintenance expenses were $92.4 million for the fourth quarter of 2018, compared to $78.0 million in the fourth quarter of 2017. The Peoples transaction costs were the largest driver of this increase. For the fourth quarter of 2018, Aqua has reported the adjusted income (non-GAAP) of $55.2 million or $0.31 per share, excluding the impact of the Peoples transaction. The higher earnings from rate cases and regulated growth and lower expenses contributed favorably to earnings growth.

Meanwhile, in FY 18, the company invested over $100 million to acquire six municipal water and wastewater systems. These acquisitions has added more than 13,700 new customers to the company’s operating footprint. Along with organic growth, the company has increased its customer base by 2.3 percent with 22,726 new customer connections. Aqua currently has eight pending water and wastewater acquisitions under an agreement that are expected to close in 2019, totaling approximately 20,000 new customer connections. The company expects overall water and wastewater customer growth to be between 2 and 3 percent for 2019.

In December, Aqua announced the acquisition of East Bradford Township’s wastewater system for $5 million and Treddyfrin Township Municipal Authority’s Valley Creek Trunk Sewer System for $28.3 million. Both systems are in Pennsylvania. The Valley Creek system serves five area municipalities and consists of 49,000 linear feet of gravity sewers, as well as two pump stations and force mains.

On the other hand, during the fourth quarter 2018, Aqua had announced an agreement to acquire Peoples, a natural gas distribution utility, in an all-cash transaction that reflects an enterprise value of $4.275 billion, including the assumption of approximately $1.3 billion of debt. Additionally, In October 2018, Aqua entered into interest rate swap agreements to hedge the underlying interest rate risk associated with the long-term debt for funding a portion of the Peoples transaction.

For FY 19, Aqua expects adjusted income to be in the range of $1.45 to $1.50 per share and total customer growth to be between 2 and 3 percent.

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