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Aqua America's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: WTR

We completed the state portfolio transformation that we began back in 2011. And just like to recap all of the results of that. We sold operations in our smallest, and both, unfortunately, were unprofitable states, Missouri and South Carolina, completely exited those. We profitably expanded in Texas by purchasing operations of American Water in Texas. And Texas is our fastest-growing state. We sold our Maine operations with only 6-month regulatory process, which is remarkable, to Connecticut Water for basically 2x book value, and much of that gain was taken in this quarter as the official closing was January 1. And the increased equity generated by the transaction to Aqua was immediately invested in higher earning states and is already accretive.

On May 1, we sold our New York Water operations, representing $46 million in rate base and 51,000 water customers. We sold it at book for $39 million and $23 million of assumed debt to American Water. And we simultaneously purchased American Water's operation in Ohio. We purchased 57,000 water and wastewater customers in Ohio, representing $95 million in rate base, basically for book value, $95 million in book for $101 million in cash plus $11 million in assumed debt. And of course, all the regulatory and liabilities and assets were assumed by each company.

I think this is a very constructive transaction as was the Maine transaction with the other water companies in our small unit space, where we're rationalizing and getting bigger in states where we already are concentrated allows for more efficiency, shedding unprofitable operations. It's good for the consumer and it's good for our shareholders. We also had a very busy year reissuing and expanding our corporate and Pennsylvania-based revolvers. Both have been renewed at the Pennsylvania for a year, the Aqua corporate for 5 years. The corporate is at 65 over LIBOR, 1 month LIBOR, and the Pennsylvania is 70 over LIBOR. Both pretty reasonable. And between those 2 alone, we have over $250 million in capacity and then we also had our state subs at probably another $70 million, $80 million, which is now unused.

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