Aqua America (WTR) Q2 2011 Earnings Call August 03, 2011 11:00 am ET Executives Brian Dingerdissen - Director Investor Relations
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During the course of this call, reference may be made to certain non-GAAP financial measures. Reconciliation of these non-GAAP to GAAP financial measures are posted in the Investor Relations section of the company's website.At this time, I would like to turn the call over to Nick for his formal remarks, after which we will open up the call for questions. Nick? Nicholas DeBenedictis Thank you, Brian. Good morning, everyone. This was a very productive quarter for Aqua's customers and shareholders. We've experienced a hot summer in many of our key states, and our system has reliably delivered all our customers' needs. And I think that can be attributed to the major infrastructure rebuilding program we've conducted over the past 5 years. Also, the financial results were very rewarding. As a management team, we feel like we're driving a racecar that's sitting on all 8 cylinders and has just been refueled with cash from the various low-cost borrowings and -- that we did in 2009 and 2010 and now supplemented by the tax policies that reward companies who are making major capital investments like Aqua. And the good news here for our customers is these lower interest rates, less borrowing needs because of the tax policies and the cash coming from those tax policies will all accrue back to our customers in modified rates going into the future. So it's a win-win. First 6 months. This is the first 6 month period I can remember since leading this company that our net cash generated exceeded our capital expenditures. The net cash generation was a record $160 million and we did spend $134 million, which we expect to increase as we approach the second half of the year to get to our budgeted $325 million in capital spending. Once again, EBITDA numbers were strong, up 10% year-over-year, $195 million for the first 6 months and we expect the EBITDA numbers to be up 10% for the year. And there's no surprise there if you take our CAGR over period 2000 through 2010 historical data, you'll see the CAGR's 10% plus. So we continue to generate more and more EBITDA year end year out.
The numbers speak for themselves. Although there is a GAAP, non-GAAP, which we'll try and reconcile for you, the net income was up 26%. Earnings $0.27 on a GAAP basis versus $0.22 on 1% more shares outstanding. Revenues were strong again in the second quarter, 5.5%, of which I'm going to give you some guidance, about 2/3 of that is rates and about 1/3 is consumption and organic growth. And we see the 6% revenue increase quarter-over-quarter continuing in the third and fourth quarters, maybe a little different mix between rates and consumption but generally the same 6%. And I think our first quarter was 6.5%. This quarter 5.5% blended, 6%, pretty steady 6%.The non-GAAP numbers, which Dave will go into a little bit more detail, is $0.25. We reconciled them in the press release versus $0.22. This takes away the benefit of the Pennsylvania special tax advantage we're getting all 4 quarters this year. And we -- so our corresponding non-GAAP numbers are $0.25 versus $0.22, still a strong 14% increase year-over-year. In light of the fact that we just, yesterday, had our strategic meeting with the board and looking at our outlook going forward, the board increased the dividend, 6.5%. This is the 21st dividend increase in 20 years. And when we looked at the CAGR over those 20 years, this wasn't just a little bit each year, it's been a CAGR of 6.4% year-over-year annualized. And we're very proud of that record as to rewarding our shareholders. Read the rest of this transcript for free on seekingalpha.com