Aqua America Reports Increased Earnings for Fourth Quarter and Year Ending 2004; Acquisitions and Rate Awards Contribute to Significantly Higher Revenue and Record Net Income.BRYN MAWR Bryn Mawr (brĭn mär), uninc. town (1990 est. pop. 10,000), Montgomery co., SE Pa., a residential suburb of Philadelphia. It is the seat of Bryn Mawr College (for women), opened in 1885 by the Society of Friends. , Pa. -- Aqua America, Inc. (NYSE NYSE See: New York Stock Exchange : WTR WTR Water WTR Writer WTR Wait To Restore WTR Wireless Technology Research WTR Walker, Texas Ranger (TV show) WTR Western Test Range WTR With-The-Rule Astigmatism WTR Working Time Regulation (UK) ) today reported a 20.0 percent increase in diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to $0.24 for the quarter ended December 31, 2004 up from $0.20 for the same period in 2003. Full year earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share increased 7.6 percent to $0.85 compared to $0.79 in 2003 on 5.6 percent more shares outstanding. Fourth quarter net income grew 20.8 percent to $22.5 million from $18.6 million for the fourth quarter of 2003. Fourth quarter earnings in 2004 includes a $2.3 million pre-tax gain from the sale of the company's Geneva, Ohio Geneva is a city in Ashtabula County, Ohio, United States. The population was 6,595 at the 2000 census. Geography Geneva is located at (41.800098, -80.945784)GR1. water system. Full year net income increased to a record $80.0 million, a 13.0 percent increase from 2003 net income. Citing another year of significant rate awards and customer growth which helped counter adverse weather conditions throughout its service territory during the key water usage months, the company reported full year record revenues of $442.0 million, up 20.4 percent from full year 2003 revenues of $367.2 million. Fourth quarter revenues grew to $115.4 million from $101.2 million in the same period in 2003. "Considering the significant challenges we faced with the integration of our southern state acquisitions, capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of our new systems and the unfavorable weather this year, we are very pleased with our financial results," said Aqua America Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Nicholas DeBenedictis. "Weather conditions in our high-demand period of May to September can have an incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. impact of as much as five to 10 percent (up or down) on earnings. We had another year of above-average customer growth-through-acquisition complemented by several important rate cases. When combined with operational discipline and holding the line on controllable expenses, Aqua America was able to deliver positive financial results." The company reported that 2004 was a significant year for rate adjustments in many of the company's operating states, with more than $27.1 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate awards received this year. "We continue to have an active capital investment program and are always working to improve our service to our customers as well as comply with the EPA's increasingly stringent standards. We are pleased that the regulatory commissions in our various states have recognized our commitment to water quality, as well as customer service, by providing us with fair returns on our investment," said DeBenedictis. In 2004, the company completed 29 acquisitions contributing to more than 11 percent customer growth. Two of the larger acquisitions in mid-year 2004 were Heater Utilities in North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. and 63 Florida systems previously owned by Florida Water Services, collectively added more than 65,000 customers. Further supporting customer growth were the balance of 27 "tuck-in" acquisitions completed by Aqua America subsidiaries throughout the year. "Acquisitions remain at the core of our growth strategy using the regulated model. As we acquire new water and wastewater systems, we are provided with new opportunities to invest needed capital which in turn helps to support our earnings growth," said DeBenedictis. The company reported its increased earnings were due in part to continuing efforts to increase the operating efficiency of its new operations. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. had experienced upward pressure following the acquisition of the AquaSource water systems in July 2003 and similarly increased after the mid-year 2004 acquisitions of Heater and the systems of Florida Water. AquaSource, Heater and Florida Water have smaller, more geographically-dispersed water systems that operate with a higher variable cost structure. "We are pleased with the improved efficiency we achieved during 2004 due to the progress we've made with the successful integration of AquaSource. We plan to continue pursuing efficiency opportunities throughout all of our systems in 2005, particularly the newly-acquired properties where we plan to implement the same model as our AquaSource systems," said DeBenedictis. In November, Standard and Poors (S&P) confirmed an A+ corporate credit rating on Aqua America's largest subsidiary, Aqua Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , and a AA- rating on the company's first mortgage bonds. Due to its excellent credit rating, the company was able to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. existing debt and issue new debt in 2004 at low interest rates, borrowing $132.2 million at an average interest rate of 4.8 percent during 2004. Through its refinancing Refinancing An extension and/or increase in amount of existing debt. and low-interest borrowing efforts, the company was able to reduce its overall weighted average cost of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. from 6.2 percent to 6.0 percent during 2004. The company completed an underwritten secondary offering of 1.955 million shares of common stock at a public offering price of $22.70 on November 12, 2004. The proceeds of the offering were used to repay a portion of Aqua America's short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. with the balance used for working capital and other general corporate purposes ($70 million in short-term debt issued in May was incurred primarily to fund the acquisitions of Heater and Florida Water Services). At its meeting on August 3, 2004, the Board of Directors voted to increase the quarterly common stock cash dividend to shareholders by 8.3 percent to $0.13 per share, an annualized rate of $0.52 per share. This increase was effective with the December 1, 2004 cash dividend payment. On January 28, 2005, the Board of Directors declared a quarterly cash dividend payment of $.13 per share payable on March 1, 2005 to all shareholders of record as of February 14, 2005. The company has paid a dividend for 60 years and has increased its dividend 14 times in the last 13 years. The company's conference call with analysts is today at 10:00 a.m. Eastern Standard Time. The call will be webcast so that interested parties may listen over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by logging on to www.aquaamerica.com. The conference call will be archived in the investor relations Investor relations The process by which the corporation communicates with its investors. section of the company's Web site for 90 days following the call. Additionally, the call will be recorded and made available for replay for 10 business days after the call, beginning at 12:00 p.m. Thursday, February 17, 2005 through Thursday, March 3, 2005. The dial-in telephone number for the audio replay is (877) 519 - 4471 (PIN# 5669173). Aqua America, Inc. is the largest U.S.-based publicly-traded water utility, serving more than 2.5 million residents in Pennsylvania, Ohio, North Carolina, Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Texas, Florida, New Jersey, Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , Maine Maine, ship Maine, U.S. battleship destroyed (Feb. 15, 1898) in Havana harbor by an explosion that killed 260 men. The incident helped precipitate the Spanish-American War (Apr., 1898). Commanded by Capt. Charles Sigsbee, the ship had been sent (Jan. , Missouri, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , and South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. . Aqua America is listed on both the New York and Philadelphia Stock Exchanges Philadelphia Stock Exchange (PHLX) A securities exchange trading American and European foreign currency options on spot exchange rates. under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors WTR. This release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including, among others, the impact of customer growth on revenues, earnings and dividends, increased opportunities to invest and earn on infrastructure improvements, the impact of weather patterns on earnings, opportunities to reduce expenses, the impact and timing of rate cases, compliance with environmental standards, and the growth prospects and effect on operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. levels associated with acquired operations. There are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. including: general economic business conditions, unfavorable weather conditions, the success of certain cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. initiatives, changes in regulations or regulatory treatment, availability and the cost of capital, the success of growth initiatives, and other factors discussed in our filings with the Securities and Exchange Commission The company's results stated here are unaudited. The final audited financial statements will be filed with the company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . The following table shows selected operating data for the quarters and years ended December 31, 2004 and 2003 (in thousands, except per share data) for Aqua America, Inc.
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
-------- -------- -------- --------
Operating revenues $115,442 $101,212 $442,039 $367,233
========= ======== ========= ========
Operating income $ 49,320 $ 39,523 $177,234 $153,561
========= ======== ========= ========
Net income available to common
stock $ 22,474 $ 18,606 $ 80,007 $ 70,785
========= ======== ========= ========
Net income per common share:
Basic $ 0.24 $ 0.20 $ 0.86 $ 0.80
========= ======== ========= ========
Diluted $ 0.24 $ 0.20 $ 0.85 $ 0.79
========= ======== ========= ========
Average common shares
outstanding:
Basic 94,348 92,493 93,247 88,275
========= ======== ========= ========
Diluted 95,464 93,352 94,282 89,244
========= ======== ========= ========
Aqua America, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
------------------- ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Operating revenues $115,442 $101,212 $442,039 $367,233
Cost & expenses:
Operations and maintenance 45,505 42,132 178,345 140,602
Depreciation 13,272 13,083 54,564 48,522
Amortization 1,204 690 4,300 2,941
Taxes other than income
taxes 6,141 5,784 27,596 21,607
-------- -------- -------- --------
Total 66,122 61,689 264,805 213,672
-------- -------- -------- --------
Operating income 49,320 39,523 177,234 153,561
Other expense (income):
Interest expense, net 13,095 11,677 48,679 44,662
Allowance for funds used
during construction (276) (638) (2,304) (2,127)
Gain on sale of other
assets (305) (1,278) (1,272) (5,692)
-------- -------- -------- --------
Income before income taxes 36,806 29,762 132,131 116,718
Provision for income taxes 14,332 11,154 52,124 45,923
-------- -------- -------- --------
Net income 22,474 18,608 80,007 70,795
Dividends on preferred stock - 2 - 10
-------- -------- -------- --------
Net income available to common
stock $ 22,474 $ 18,606 $ 80,007 $ 70,785
======== ======== ======== ========
Net income $ 22,474 $ 18,608 $ 80,007 $ 70,795
Other comprehensive income
(loss), net of tax:
Minimum pension liability
adjustment (1,742) - (1,742) -
Unrealized gain on
securities - 299 59 455
Reclassification adjustment
for gains reported in net
income - (265) (230) (347)
-------- -------- -------- --------
Comprehensive income $ 20,732 $ 18,642 $ 78,094 $ 70,903
======== ======== ======== ========
Net income per common share:
Basic $ 0.24 $ 0.20 $ 0.86 $ 0.80
Diluted $ 0.24 $ 0.20 $ 0.85 $ 0.79
Average common shares
outstanding:
Basic 94,348 92,493 93,247 88,275
======== ======== ======== ========
Diluted 95,464 93,352 94,282 89,244
======== ======== ======== ========
Aqua America, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars)
(Unaudited)
December 31, December 31,
2004 2003
------------ ------------
Net property, plant and equipment $ 2,069,812 $ 1,824,291
Current assets 90,127 83,969
Regulatory assets and other assets 180,309 161,476
------------ ------------
$ 2,340,248 $ 2,069,736
============ ============
Stockholders' equity $ 748,468 $ 659,030
Long-term debt, excluding current portion 784,461 696,666
Current portion of long-term debt and loans
payable 135,310 135,845
Other current liabilities 82,072 96,156
Deferred credits and other liabilities 589,937 482,039
------------ ------------
$ 2,340,248 $ 2,069,736
============ ============
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