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American Water Works' (AWK) Q2 Earnings In Line, Improve Y/Y
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American Water Works Company (AWK - Free Report) posted second-quarter 2019 earnings of 94 cents per share, in line with the Zacks Consensus Estimate. However, the bottom line improved 13.3% year over year on the back of contribution generated from infrastructure investment, acquisitions, and organic growth despite unusually wet weather conditions.
GAAP earnings came in at 94 cents compared with 91 cents in the year-ago quarter.
Total Revenues
Total revenues of $882 million missed the Zacks Consensus Estimate of $897 million by 1.7% but surpassed the year-ago figure of $853 million by 3.4%.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
Total operating expenses in the quarter were $580 million, up 5.3% from the year-ago period. The increase was primarily driven by higher operation and maintenance expenses.
Operating income was $302 million, on par with the figure recorded in the year-ago quarter.
Interest expenses in the reported quarter totaled $94 million compared with $86 million in the prior-year quarter.
Segment Details
Regulated businesses’ net income was $156 million compared with $152 million in the year-ago quarter. Year to date, this segment added 37,200 customers through acquisitions and organic growth. Notably, organic growth and additional authorized revenues to support infrastructure investments boosted income despite the negative impact of wet weather conditions.
The company expects to add additional 38,200 customer connections through pending acquisitions.
Market-Based businesses’ net income was $21 million compared with $13 million in the year-ago quarter. The uptick can be primarily attributed to the Pivotal acquisition by Homeowner Services Group and customer additions under new partnerships.
Financial Highlights
Cash and cash equivalents amounted to $64 million as of Jun 30, 2019, down from $130 million on Dec 31, 2018.
Long-term debt was $8,648 million as of Jun 30, 2019, higher than $7,576 million as of December 2018 end.
Guidance
American Water Works has affirmed its 2019 earnings guidance in the range of $3.54-$3.64 per share.
For capital expenditures and acquisitions, the company plans to invest $1.8-$1.9 billion in 2019.
Furthermore, long-term EPS compound annual growth rate is expected to be in upper end of 7-10% range, based on 2017 EPS.
American States Water Co. (AWR - Free Report) is set to release second-quarter 2019 results on Aug 5. The Zacks Consensus Estimate for earnings in the quarter is pegged at 52 cents.
Aqua America Inc. is slated to release second-quarter 2019 financial numbers on Aug 6. The Zacks Consensus Estimate for earnings in the quarter stands at 39 cents.
Consolidated Water Works Company (CWCO - Free Report) is set to release second-quarter 2019 results on Aug 12. The Zacks Consensus Estimate for earnings in the quarter is pinned at 17 cents.
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American Water Works' (AWK) Q2 Earnings In Line, Improve Y/Y
American Water Works Company (AWK - Free Report) posted second-quarter 2019 earnings of 94 cents per share, in line with the Zacks Consensus Estimate. However, the bottom line improved 13.3% year over year on the back of contribution generated from infrastructure investment, acquisitions, and organic growth despite unusually wet weather conditions.
GAAP earnings came in at 94 cents compared with 91 cents in the year-ago quarter.
Total Revenues
Total revenues of $882 million missed the Zacks Consensus Estimate of $897 million by 1.7% but surpassed the year-ago figure of $853 million by 3.4%.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
American Water Works Company, Inc. price-consensus-eps-surprise-chart | American Water Works Company, Inc. Quote
Highlights of the Release
Total operating expenses in the quarter were $580 million, up 5.3% from the year-ago period. The increase was primarily driven by higher operation and maintenance expenses.
Operating income was $302 million, on par with the figure recorded in the year-ago quarter.
Interest expenses in the reported quarter totaled $94 million compared with $86 million in the prior-year quarter.
Segment Details
Regulated businesses’ net income was $156 million compared with $152 million in the year-ago quarter. Year to date, this segment added 37,200 customers through acquisitions and organic growth. Notably, organic growth and additional authorized revenues to support infrastructure investments boosted income despite the negative impact of wet weather conditions.
The company expects to add additional 38,200 customer connections through pending acquisitions.
Market-Based businesses’ net income was $21 million compared with $13 million in the year-ago quarter. The uptick can be primarily attributed to the Pivotal acquisition by Homeowner Services Group and customer additions under new partnerships.
Financial Highlights
Cash and cash equivalents amounted to $64 million as of Jun 30, 2019, down from $130 million on Dec 31, 2018.
Long-term debt was $8,648 million as of Jun 30, 2019, higher than $7,576 million as of December 2018 end.
Guidance
American Water Works has affirmed its 2019 earnings guidance in the range of $3.54-$3.64 per share.
For capital expenditures and acquisitions, the company plans to invest $1.8-$1.9 billion in 2019.
Furthermore, long-term EPS compound annual growth rate is expected to be in upper end of 7-10% range, based on 2017 EPS.
Zacks Rank
American Water Works currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Water Utility Releases
American States Water Co. (AWR - Free Report) is set to release second-quarter 2019 results on Aug 5. The Zacks Consensus Estimate for earnings in the quarter is pegged at 52 cents.
Aqua America Inc. is slated to release second-quarter 2019 financial numbers on Aug 6. The Zacks Consensus Estimate for earnings in the quarter stands at 39 cents.
Consolidated Water Works Company (CWCO - Free Report) is set to release second-quarter 2019 results on Aug 12. The Zacks Consensus Estimate for earnings in the quarter is pinned at 17 cents.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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