01—Abstract
Summary
Summary of the 10-Q filed May 7, 2013. Cited figures are marked; the original filing is the authoritative source.
American Water Works Company, Inc. (AWK) reported solid financial results for the first quarter of 2013, demonstrating growth in both revenue and net income compared to the same period in the prior year.
The company's strategic focus on addressing regulatory lag, improving operational efficiency, and capital discipline continues to yield positive outcomes. Revenue growth was primarily driven by rate increases across its Regulated Businesses segment, complemented by contributions from recent acquisitions. Despite challenges such as increased operation and maintenance expenses and depreciation, the company managed to improve its net income from continuing operations due to effective cost management and a beneficial reduction in income tax expenses.
The company also highlighted its ongoing investments in infrastructure and its commitment to expanding its service footprint through strategic acquisitions. Overall, AWK appears to be navigating its regulatory environment effectively while pursuing growth opportunities, positioning itself for continued financial performance.
02—Key points
Key Highlights
- Net income increased to $57.6 million, or $0.32 per diluted share, compared to $41.8 million, or $0.24 per diluted share, in the first quarter of 2012.
- Operating revenues grew by 2.8% to $636.1 million, driven by rate increases in the Regulated Businesses segment.
- Operation and maintenance expenses saw a slight increase of 0.7% to $312.2 million, while depreciation and amortization increased by 8.2% due to new utility plant in service.
- The company invested approximately $213 million in capital improvements during the quarter.
- Market-Based Operations segment revenues decreased by $13.2 million, primarily due to lower revenues from contract operations.
- The O&M efficiency ratio for Regulated Businesses improved to 42.9% from 43.6% in the prior year.
- The company declared a quarterly cash dividend of $0.28 per share, payable in June 2013.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed May 7, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $631.94M$618.55M | +2.2% |
| Operating Expenses | $471.90M$458.82M | +2.9% |
| Operating Income | $165.32M$159.74M | +3.5% |
| Interest Expense | $78.11M$79.65M | −1.9% |
| Net Income | $57.64M$41.75M | +38.1% |
| EPS (Basic) | $0.32$0.24 | +33.3% |
| EPS (Diluted) | $0.32$0.24 | +33.3% |
| Shares Outstanding (Basic) | 177.33M175.91M | +0.8% |
| Shares Outstanding (Diluted) | 178.47M177.03M | +0.8% |
05—Questions
Frequently Asked Questions
What is the primary driver of American Water Works' revenue growth in the first quarter of 2013?
The primary driver of revenue growth was rate increases obtained through rate authorizations in the company's Regulated Businesses segment, contributing approximately $25.3 million. Additional revenues came from acquisitions and increased surcharge and balancing account revenues.
How did the company manage increased operating expenses?
While operation and maintenance expenses increased slightly by 0.7%, the company benefited from a decrease in its provision for income taxes, which included a $3.3 million tax benefit from a legal structure reorganization. Higher revenues in the regulated segment also helped offset some of the expense increases.
What is the outlook for capital expenditures and investments?
American Water Works invested approximately $213 million in capital improvements during the first quarter of 2013 and expects to invest $950 million for the full year. The company is also progressing with Phase II of its business transformation project, focusing on an Enterprise Asset Management system and a Customer Information System.
How is the Market-Based Operations segment performing?
The Market-Based Operations segment experienced a decrease in revenues by $13.2 million, mainly due to a decline in Contract Operations Group revenues resulting from delays in military contracts and the termination of certain O&M contracts. This was partially offset by growth in the Homeowner Services Group.
06—Continue