Aqua America Reports Growth in Earnings for Third Quarter

  Aqua America Reports Growth in Earnings for Third Quarter

           Net income increases 23 percent on strong revenue growth

Business Wire

BRYN MAWR, Pa. -- November 01, 2012

Aqua America, Inc. (NYSE: WTR) today reported results for the quarter ending
September 30, 2012. Diluted earnings per share for the quarter were $0.36,
compared to $0.30 for the corresponding quarter in 2011, on 1 percent more
shares outstanding. Revenue for the quarter was $214.6 million compared to
$191.1 million in the same period of 2011, an increase of 12.3 percent. Net
income for the quarter rose to $50.7 million from $41.1 million in the same
quarter of 2011, an increase of 23.2 percent.

For the first three quarters of 2012, net income increased 19.2 percent to
$130 million from $109.1 million and corresponding diluted earnings per share
increased 17.7 percent to $0.93 from $0.79 for the same period in 2011.
Operating revenues for the first nine months of 2012 totaled $570.3 million,
an increase of 9.6 percent from revenue of $520.5 million for the nine months
ending September 30, 2011.

Aqua America Chairman and CEO Nicholas DeBenedictis said, “The company posted
solid third quarter financial results despite lower sendout due to weather in
some of our state operations including our largest, Aqua Pennsylvania. These
results reflect management’s focus on investing the capital needed for
infrastructure improvements and receiving timely rate relief, while
simultaneously working to control operating costs. I am also pleased to report
the successful integration and accretive results of the 57,000 new customers
recently acquired from Ohio American.”

The Board of Directors has declared a 6.1 percent increase of $0.01 per share
quarterly from $0.165 to $0.175 per share, effective December 1, 2012 payable
to shareholders of record on November 16, 2012. On an annualized basis, this
increases the dividend to $0.70 per share or $0.04 above the current
annualized dividend rate of $0.66 per share. This is the 22^nd dividend
increase in 21 years. Aqua has paid a consecutive quarterly dividend for more
than 65 years.

DeBenedictis added, “Through the first nine months of 2012, management
continued to excel in controlling operating costs. Operations and maintenance
expenses for the quarter were nearly flat compared to the same quarter last
year, adjusted for the additional expenses specifically related to our new
Ohio operations.”

Income from continuing operations (GAAP financial measure) for the quarter
were $50.3 million compared to $44.9 million for the same period in 2011, an
increase of 12.1 percent. Income from continuing operations in the third
quarter of 2011 was positively impacted by $3.4 million of net state income
tax benefits that did not occur in 2012. The corresponding earnings per
diluted share from continuing operations for the quarter were $0.36, compared
to $0.32 for the same quarter in 2011. Income from continuing operations
before net state income tax benefit associated with 100 percent bonus
depreciation (Non-GAAP financial measure) increased 21.2 percent in the third
quarter of 2012 to $50.3 million from $41.5 million for the same period in
2011. The corresponding (Non-GAAP) earnings per diluted share for the quarter
were $0.36, compared to $0.30 for the same quarter in 2011, an increase of 20
percent. A reconciliation of non-GAAP to GAAP financial measures is provided
in the accompanying financial tables.

To date in 2012, the company has received rate awards in New Jersey,
Pennsylvania, Ohio, Illinois, Texas, and Florida, and infrastructure
surcharges in various states estimated to increase annualized revenues by
approximately $44.3 million. The company still has $9.2 million of rate cases
pending before two state regulatory bodies in Texas and Virginia.
Additionally, Aqua’s state subsidiaries are expected to seek rate relief by
filing rate requests or surcharges of approximately $7 million later in 2012.
The primary driver of these filings is the recovery of capital
(infrastructure) investments and increased expenses since the companies’
previous rate filings in those states. The timing and extent to which rate
increases might be granted by the applicable regulatory agencies will vary by
state.

Aqua America continues to expand its operations through its
growth-through-acquisition program and has completed 12 acquisitions to date
in 2012. The most recently announced acquisition is that of the Kidder
Township wastewater system, formerly a municipally owned system operated by
Aqua Pennsylvania, serving approximately 3,000 people in Carbon County,
Pennsylvania.

DeBenedictis said, “After operating and managing the Kidder Township
wastewater system for more than five years, we were certainly pleased to have
won the bid to acquire the assets. This system is relatively new with much of
it constructed in 2002. The five years we spent managing its operations and
getting to know the community has led to a seamless transition for customers
and an assurance that their wastewater system will continue to be operated and
managed by professionals.”

In the first nine months of the year we added 3,724 customers through organic
growth, which is consistent with of the U.S. Commerce Department’s recent
report on national housing statistics showing an increase in housing starts.

On September 25, Aqua America announced that it had offered to sell all of its
Florida operations to the Florida Governmental Utility Authority (FGUA) for
$95 million. The sale of its Florida water and wastewater systems would
conclude Aqua America’s operations in Florida. The FGUA has until November 30
to accept or decline the offer, and does not have an exclusivity agreement
with Aqua America to purchase the systems.

Aqua Pennsylvania has priced $80 million in privately placed first mortgage
bonds at an average rate of 3.81%. Proceeds from this transaction will be used
to refinance higher coupon first mortgage bonds and pay down its revolving
credit facility. Closing is scheduled for early November. As of September 30,
2012, Aqua America’s weighted average cost of fixed-rate long-term debt was
5.2 percent, and the company had $111.6 million available on its credit lines.
In September, Standard & Poor’s reiterated its A+ credit rating for Aqua
Pennsylvania, Inc., Aqua America’s largest subsidiary. Of the 227 electric,
gas and water utilities rated by Standard & Poor’s, only one has a higher
rating than Aqua Pennsylvania.

In late 2011, operating subsidiaries of Aqua America and Penn Virginia entered
into a joint venture to form Aqua — PVR Water Services, LLC to construct and
operate a private pipeline system to supply fresh water to certain natural gas
producers drilling in the Marcellus Shale. The 18-mile steel pipeline began
servicing certain drillers in North-central Pennsylvania on an as-needed basis
in April this year. Phase II construction of a second 18-mile stretch began in
June and is expected to be completed by the end of the year. To date, it is
estimated that the pipeline has eliminated the need for more than 15,000 water
truck trips over rural Pennsylvania roads.

In the first nine months of 2012, the company invested $262.8 million in
regulated infrastructure improvements as part of its capital investment
program, compared to $222.4 million in the same period of 2011. “The company
remains on track to invest more than $300 million in 2012. Our capital
expenditures are focused on pipe replacement projects to improve our
distribution network and plant upgrades to enhance water quality and service
reliability for our customers,” said DeBenedictis.

Aqua Pennsylvania’s, Ingram’s Mill Water Treatment Plant was recently notified
that it will soon receive the “Phase III Directors Award of Recognition” from
the Partnership for Safe Water, a national volunteer initiative developed by
the Environmental Protection Agency (EPA) and other water organizations
representing water suppliers striving to provide their communities with
drinking water quality that surpasses the required federal standards. Aqua’s
Ingram’s Mill Plant is among 116 surface water treatment plants in
Pennsylvania to be presented the award for successfully completing the
Self-Assessment and Peer Review phase of the Partnership program, a phase
which consists of identifying factors that limit treatment plant performance
and taking corrective actions to address any needs to assure the highest
quality of water.

Aqua’s efforts to reduce its carbon emissions have led to the construction of
four solar farms in the past two years. These solar farms reduce the power
needs of treatment facilities, therefore shrinking the company’s carbon
footprint and reducing the need for the construction of new power generation
facilities. Collectively, the solar farms are expected to reduce Aqua's
grid-tied usage, resulting in a direct economic benefit to Aqua's ratepayers
of approximately $500,000 in avoided energy costs in 2012.

The company’s conference call with financial analysts will take place on
Friday, November 2, 2012 at 11 a.m. Eastern Daylight Time. The call will be
webcast live so that interested parties may listen over the Internet by
logging on to www.aquaamerica.com and following the link for Investor
Relations. The conference call will be archived in the investor relations
section of the company’s website for 90 days following the call. Additionally,
the call will be recorded and made available for replay at 2 p.m. on November
2, 2012 for 10 business days following the call. To access the audio replay in
the U.S., dial 888.203.1112 (pass code 7456917). International callers can
dial 719.457.0820 (pass code 7456917).

Aqua America is one of the largest U.S.-based, publicly-traded water utilities
and serves almost 3 million residents in Pennsylvania, Ohio, North Carolina,
Illinois, Texas, New Jersey, Indiana, Florida, Virginia, and Georgia. Aqua
America is listed on the New York Stock Exchange under the ticker symbol WTR.

This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, among others, the
estimated revenues from rate awards received, the completion of major rate
cases later in 2012, the company's plans to file future rate increases and the
timing of the impact of such cases, the company’s commitment to its
growth-through-acquisition program, the company’s ability to reach an
agreement of sale with FGUA and whether the sale occurs, the expected closing
on the $80 million financing, the anticipated completion of the next phase of
the Marcellus Shale water pipeline project, the continuation of the company’s
capital investment program and the amount of capital investment by the company
planned for 2012 and the projected benefits from the company’s solar farms.
There are important factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements
including: general economic business conditions; housing and customer growth
trends; unfavorable weather conditions; the success of certain cost
containment initiatives; the extent to which rate increase requests are
granted and the timing of rate awards; changes in regulations or regulatory
treatment; availability and the cost of capital; disruptions in the credit
markets; the success of growth initiatives; and other factors discussed in our
Annual Report on Form 10-K for the period ending December 31, 2011, which is
on file with the SEC. We undertake no obligation to publicly update or revise
any forward-looking statement.

WTRF


Aqua America, Inc. and Subsidiaries
Selected Operating Data
(In thousands, except per share amounts)
(Unaudited)
                                                              
                             Quarter Ended             Nine Months Ended
                             September 30,             September 30,
                              2012       2011        2012       2011    
                                                                   
Operating revenues           $ 214,565   $ 191,083    $ 570,279   $ 520,498 
                                                                   
Income from continuing       $ 50,284    $ 44,861      $ 118,953   $ 110,177
operations
Income (loss) from            375        (3,738  )    11,055     (1,113  )
discontinued operations
Net income attributable to   $ 50,659    $ 41,123     $ 130,008   $ 109,064 
common shareholders
                                                                   
Income from continuing
operations per share:
Basic                        $ 0.36      $ 0.32        $ 0.85      $ 0.80
Diluted                      $ 0.36      $ 0.32       $ 0.85      $ 0.79    
                                                                   
Income (loss) from
discontinued operations
per share:
Basic                        $ 0.00      $ (0.03   )   $ 0.08      $ (0.01   )
Diluted                      $ 0.00      $ (0.03   )   $ 0.08      $ (0.01   )
                                                                   
Net income per common
share:
Basic                        $ 0.36      $ 0.30        $ 0.93      $ 0.79
Diluted                      $ 0.36      $ 0.30       $ 0.93      $ 0.79    
                                                                   
Basic average common           139,676     138,297       139,185     138,081
shares outstanding
Diluted average common        140,487    138,951     139,751    138,625 
shares outstanding
                                                                   


Aqua America, Inc. and Subsidiaries
Consolidated Statement of Income
(In thousands, except per share amounts)
(Unaudited)
                                                              
                         Quarter Ended               Nine Months Ended
                         September 30,               September 30,
                          2012        2011        2012        2011    
                                                                   
Operating revenues       $ 214,565     $ 191,083     $ 570,279     $ 520,498
                                                                   
Cost & expenses:
Operations and             71,268        66,502        199,664       190,241
maintenance
Depreciation               28,251        26,129        82,736        77,645
Amortization               1,320         979           3,773         4,041
Taxes other than          13,191      10,771      34,700      31,431  
income taxes
Total                     114,030     104,381     320,873     303,358 
                                                                   
Operating income           100,535       86,702        249,406       217,140
                                                                   
Other expense
(income):
Interest expense, net      19,597        19,561        58,384        58,460
Allowance for funds
used during                (919    )     (1,794  )     (3,484  )     (5,689  )
construction
Gain on sale of other      (320    )     (216    )     (826    )     (475    )
assets
Equity earnings in        (682    )    -           (931    )    -       
joint venture
Income from continuing
operations before          82,859        69,151        196,263       164,844
income taxes
Provision for income      32,575      24,290      77,310      54,667  
taxes
Income from continuing     50,284        44,861        118,953       110,177
operations
                                                                   
Discontinued
operations:
Income from
discontinued               819           6,206         18,813        10,454
operations before
income taxes
Provision for income      444         9,944       7,758       11,567  
taxes
Income (loss) from
discontinued              375         (3,738  )    11,055      (1,113  )
operations
Net income
attributable to common   $ 50,659     $ 41,123     $ 130,008    $ 109,064 
shareholders
                                                                   
Income from continuing
operations per share:
Basic                    $ 0.36        $ 0.32        $ 0.85        $ 0.80
Diluted                  $ 0.36        $ 0.32        $ 0.85        $ 0.79
                                                                   
Income (loss) from
discontinued
operations per share:
Basic                    $ 0.00        $ (0.03   )   $ 0.08        $ (0.01   )
Diluted                  $ 0.00        $ (0.03   )   $ 0.08        $ (0.01   )
                                                                   
Net income per common
share:
Basic                    $ 0.36        $ 0.30        $ 0.93        $ 0.79
Diluted                  $ 0.36        $ 0.30        $ 0.93        $ 0.79
                                                                   
Average common shares
outstanding:
Basic                     139,676     138,297     139,185     138,081 
Diluted                   140,487     138,951     139,751     138,625 
                                                                             


Aqua America, Inc. and Subsidiaries
Income Excluding Net State Income Tax Benefit Associated with 100% Bonus
Depreciation
(In thousands, except per share amounts)
(A Non-GAAP, Unaudited Number)
                                                                
                                 Quarter Ended           Nine Months Ended
                                 September 30,           September 30,
                                  2012       2011       2012       2011
                                                                     
Income from continuing
operations (GAAP financial       $ 50,284    $ 44,861    $ 118,953   $ 110,177
measure)
Less: Net state income tax
benefit associated with 100%      -          3,382      -          11,193
bonus depreciation
Income from continuing
operations before net state
income tax benefit associated    $ 50,284    $ 41,479    $ 118,953   $ 98,984
with 100% bonus depreciation
(Non-GAAP financial measure)
                                                                     
Income from continuing
operations per common share
(GAAP financial measure):
Basic                            $ 0.36      $ 0.32      $ 0.85      $ 0.80
Diluted                          $ 0.36      $ 0.32      $ 0.85      $ 0.79
                                                                     
Income from continuing
operations per common share
before net state income tax
benefit associated with 100%
bonus depreciation (Non-GAAP
financial measure):
Basic                            $ 0.36      $ 0.30      $ 0.85      $ 0.72
Diluted                          $ 0.36      $ 0.30      $ 0.85      $ 0.71
                                                                     
Average common shares
outstanding:
Basic                             139,676    138,297    139,185    138,081
Diluted                           140,487    138,951    139,751    138,625
                                                                     


Aqua America, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars)
(Unaudited)
                                                               
                                                                  
                                                                  
                                                  September 30,   December 31,
                                                  2012            2011
                                                                  
Net property, plant and equipment                 $ 3,863,365     $ 3,530,942
Current assets                                    230,985         405,358
Regulatory assets and other assets                392,804         412,120
                                                  $ 4,487,154     $ 4,348,420
                                                                  
                                                                  
Total equity                                      $ 1,314,925     $ 1,251,817
Long-term debt, excluding current portion         1,519,694       1,395,457
Current portion of long-term debt and loans       138,547         188,200
payable
Other current liabilities                         176,563         258,618
Deferred credits and other liabilities            1,337,425       1,254,328
                                                  $ 4,487,154     $ 4,348,420
                                                                  

Contact:

Aqua America, Inc.
Brian Dingerdissen
Director, Investor Relations
610-645-1191
bjdingerdissen@aquaamerica.com
or
Donna Alston
Director, Communications
610-645-1095
dpalston@aquaamerica.com
 
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