American Water Works Company, Inc. (NYSE: AWK), the largest publicly traded U.S. water and wastewater utility company, today reported solid results for the first quarter of 2014.
“This winter’s extreme weather put many water providers to the test, but our employees’ commitment to reliable service did not waver,” said Jeff Sterba, president and CEO of American Water. “Despite very challenging conditions, we had a very solid first quarter, with increases in revenues and net income, growth in both our regulated and Market-based businesses, and continued improvement in our operation and maintenance efficiency ratio.”
For the three months ended March 31, 2014, the company reported net income of $68.1 million, or $0.38 per diluted common share. Excluding the one-time impact of the Freedom Industries chemical spill in West Virginia, the company’s adjusted net income (a non-GAAP financial measure) for the three months ended March 31, 2014, totaled $71.7 million, or $0.40 per diluted common share.
The company’s capital investments during the first quarter totaled approximately $175 million. The company anticipates investing $1.1 billion in 2014, with the majority allocated to upgrading its water and wastewater systems to ensure reliable service to customers.
For the three months ended March 31, 2014, American Water’s Regulated Businesses’ revenues increased by $34.4 million, or 6.0 percent, as compared to the same quarter in 2013. The increase in revenues was primarily due to rate authorizations and infrastructure surcharges, as well as higher consumption and acquisitions from 2013.
The Regulated Businesses’ operation and maintenance (O&M) expense increased $8.9 million, or 3.3 percent for the quarter, as compared to the first quarter of 2013. On Jan. 9, 2014, a chemical storage tank owned by Freedom Industries, Inc. leaked two substances – 4-methylcyclohexane methanol (MCHM), and PPH/DiPPH, a mix of polyglycol ethers – into the Elk River near the West Virginia American Water treatment plant in Charleston, W. Va. The company’s increased O&M expense and reduced revenues for the quarter totaled $5.9 million as a result of this event. Despite this impact, the regulated entities showed continued improvement in their O&M efficiency ratio (a non-GAAP measure). For the 12 months ended March 31, 2014, the adjusted O&M efficiency ratio was 38.2 percent, compared to 40.0 percent for the previous 12-month period.