American Water Works Co., Inc. (AWK) reported Monday a rise in third-quarter profit, reflecting higher revenues, despite decrease in volume of water sold. The Water and wastewater utility company's quarterly earnings per share, however, declined from last year on higher share count, and missed the market projections, with revenues also missing Street view.
Third-quarter net income grew to $91.64 million from $88.2 million in the third quarter of 2008. Meanwhile, earnings, on a per share basis, fell to $0.52, based on 174.7 million shares, from $0.55 a year ago, based on 160 million shares.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
The company noted that the decrease in volume of water sold resulted in an estimated decrease of about $23.7 million or $0.14 per share in latest quarter net income.
Operating revenues for the quarter rose 1.2% to $679.96 million from $672.19 million in the year ago quarter, despite wet, cool summer, but missed five Wall street analysts' consensus revenue estimate of $695.90 million. According to the company, lower volume of water sold reduced revenues by $44.2 million.
Operating income was $214.41 million, up from $211.75 million a year ago.
Commenting on the results, Don Correll, president and Chief Executive Officer of American Water, "The results of this quarter were impacted by one of the wetter summers experienced by much of the country. Eleven out of 20 of our regulated state operations experienced either above average rainfall, cooler temperatures, or in most cases, both. Despite the weather, we achieved an increase in both revenues and net income as we continue to execute our core strategies."
In the quarter, revenues from the company's Regulated Businesses increased 2.9% mainly reflecting the recent recognition of prudent investment through rate awards. Total volume of water sold decreased 7.4% for the quarter, or 9.1 billion gallons from the same period in 2008, mainly as a result of weather.
Meanwhile, non-regulated Businesses' revenues decreased 11.7% for the third quarter, primarily attributable to lower revenues in the Contract Operations Group.
In the preceding second quarter, American Water Works reported a 14% increase in net income to $51.99 million or $0.32 per share, boosted by revenues growth of 4% to $612.74 million, as well as successful cost containment initiatives. However, total volume of water sold for the quarter decreased 5.5% or 5.4 billion gallons.
Among peers, Aqua America, Inc. (WTR) last week reported third-quarter net income of $33.5 million or $0.25 per share, compared to $35.4 million or $0.26 per share in the prior year quarter. The Bryn Mawr, Pennsylvania-based company water or wastewater services provider's revenues for the quarter rose 2.1% to $180.8 million from $177.1 million in the previous year quarter.
For the nine months of fiscal 2009, American Water Works' net loss narrowed to $269.45 million or $1.62 per share from loss of $598.83 million or $3.74 per share a year ago. Excluding certain impairment charge, nine-month net income was $173.57 million or $1.05 per share, higher than last year's net income of $139.65 million or $0.87 per share. Operating revenues grew to $1.84 billion from $1.77 billion a year earlier.
The company pointed out that its 31-mile watermain and 20 million gallon a day treatment plant project in Kentucky is more than 70% complete. The project is of about $162 million, and will ensure a sustainable supply for Central Kentucky for years to come.
AWK closed Friday's regular trading session at $19.56, down $0.03, on a volume of 776,800 shares. In the past 52 weeks, shares have been trading in a range of $16.22 to $22.35.
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