01—Abstract
Summary
Summary of the 10-Q filed August 5, 2015. Cited figures are marked; the original filing is the authoritative source.
American Water Works Company, Inc. (AWK) reported its financial results for the second quarter and first half of 2015.
The company demonstrated revenue growth across both its Regulated Businesses and Market-Based Operations segments, driven by rate increases, infrastructure charges, and increased demand in regulated operations, and growth in military contracts and homeowner services in market-based operations. For the six months ended June 30, 2015, net income increased to $203.1 milliona from $177.4 million in the prior year, leading to diluted earnings per share of $1.13, up from $0.99 in the same period of 2014.
The company's liquidity remains strong, supported by its revolving credit facility and ongoing cash flows from operations. AWK also continued its strategic growth initiatives through acquisitions and infrastructure investments, with a significant capital expenditure of approximately $514.9 millionb in the first half of the year and plans for substantial investment in the remainder of 2015.
02—Key points
Key Highlights
- Revenue increased by 3.6% to $782.1 million for the three months ended June 30, 2015, and by 3.2% to $1.48 billion for the six months ended June 30, 2015, compared to the respective prior year periods.
- Net income for the six months ended June 30, 2015, rose to $203.1 million, a 14.5% increase from $177.4 million in the prior year.
- Diluted earnings per share from continuing operations for the six months ended June 30, 2015, were $1.13, an increase from $1.00 in the comparable period of 2014.
- Capital expenditures for the first six months of 2015 were $478.8 million, primarily for infrastructure improvements in regulated businesses, with full-year 2015 capital investment expected between $1.2 to $1.3 billion.
- The company completed several acquisitions, adding approximately 4,500 water and 13,800 wastewater customers.
- Operating and Maintenance (O&M) expense for the regulated businesses decreased by 4.5% for the six months ended June 30, 2015, contributing to an improved O&M efficiency ratio of 35.9% compared to 37.7% in the prior year.
- The revolving credit facility expiration date was extended to June 2020, providing continued financial flexibility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2015filed August 5, 2015Financial Statements
Q2 FY2015 against Q2 FY2014
| Line item | Q2 FY2015Q2 FY2014 | Change |
|---|---|---|
| Revenue | $782.12M$754.78M | +3.6% |
| Operating Expenses | $504.00M$499.99M | +0.8% |
| Operating Income | $278.00M$255.00M | +9.0% |
| Interest Expense | $75.42M$73.67M | +2.4% |
| Net Income | $123.00M$109.00M | +12.8% |
| EPS (Basic) | $0.69$0.61 | +13.1% |
| EPS (Diluted) | $0.68$0.61 | +11.5% |
| Shares Outstanding (Basic) | 180.00M178.86M | +0.6% |
| Shares Outstanding (Diluted) | 180.00M179.69M | +0.2% |
05—Questions
Frequently Asked Questions
How did American Water's revenue perform in the second quarter and first half of 2015?
American Water reported a 3.6% increase in operating revenues to $782.1 million for the three months ended June 30, 2015, and a 3.2% increase to $1.48 billion for the six months ended June 30, 2015, compared to the respective prior year periods. This growth was attributed to rate increases, infrastructure charges, and increased demand in its Regulated Businesses, along with growth in military contracts and homeowner services in its Market-Based Operations segment.
What was the company's profitability and earnings per share performance?
Net income for the six months ended June 30, 2015, increased by 14.5% to $203.1 million, compared to $177.4 million in the same period of 2014. Diluted earnings per share from continuing operations for the six-month period were $1.13, up from $1.00 in the prior year, reflecting strong operational performance.
What are the key drivers for American Water's growth and investments?
Growth is driven by infrastructure improvements within its regulated utilities, strategic acquisitions, and investments in new businesses. The company invested approximately $473.6 million in infrastructure improvements and $41.3 million in acquisitions during the first half of 2015. Full-year capital investment is projected between $1.2 to $1.3 billion, with a significant portion allocated to infrastructure and additional funds for acquisitions.
How is the company managing its operating expenses?
American Water demonstrated improved operational efficiency, particularly in its Regulated Businesses segment. The O&M efficiency ratio for the twelve months ended June 30, 2015, improved to 35.9% from 37.7% in the prior year. This was achieved through continued cost management, lower production costs, and the impact of rate case outcomes.
06—Continue