Investing In Publicly Traded Water Utilities In The US

Steady Flows: Investing in the Water Sector

Timothy Winter, CFA Gabelli & Company 314-238-1314 Aqua America (WTR; Bryn Mawr, Penn.) is the second-largest publicly traded water utility in the U.S., serving about 3 million people in Pennsylvania (55% of earnings), Ohio, North Carolina, Illinois, Texas, New Jersey, Indiana and Virginia. On Feb. 23, WTR reported 2015 adjusted earnings of $1.26 per share, in-line with guidance of $1.25-$1.27 per share and compared to $1.20 per share in 2014. Higher results were due to customer growth, higher rates and surcharges, and higher usage. In 2015, the operating efficiency ratio (operations and maintenance, or O&M, as a percent of operating revenues) rose to 36.3% from 34.7% in 2014, partially due to four municipal acquisitions adding 7,900 customers and 12 investor-owned utilities (IOUs) [with] 2,700 customers. Additionally, WTR subsidiaries implemented rate awards totaling $8.6 million. Earnings growth will continue to be driven by rate base investments, acquisitions, cost controls, infrastructure surcharges and the pipeline-rehabilitation business.…

130 Years of Aqua America (infographic via, 2/6/2016)