American Water Works Company, Inc. (AWK) reported fourth-quarter 2014 adjusted earnings from continuing operations of 52 cents per share, surpassing the Zacks Consensus Estimate by a penny. Quarterly earnings also climbed 8.3% from 48 cents a share a year ago primarily on the back of higher revenues.

GAAP earnings per share in the quarter were in line with the adjusted figure and exceeded 34 cents per share earned in the prior-year quarter.

In 2014, American Water’s adjusted earnings from continuing operations of $2.43 per share fell ahead of the Zacks Consensus Estimate of $2.40 by 1.3%. On a year-over-year basis, annual earnings increased around 10% from $2.21 per share.

On a GAAP basis, annual earnings were $2.39 per share, up from $2.07 per share a year ago. The variance between GAAP and adjusted earnings was due to a charge of 4 cents related to the impact of the Freedom Industries chemical spill in West Virginia.

Revenues

In the quarter under review, American Water posted operating revenues of $731.4 million, missing the Zacks Consensus Estimate of $825 million by 11.3%. Reported top line however increased 3.6% year over year, mainly driven by higher contribution from the company’s Regulated (0.8%) and Market-Based (24.8%) businesses.

Annual operating revenues rose 4.6% to $3,011.3 million from $2,878.9 million a year ago.

Quarterly Highlights

In the fourth quarter, American Water’s total operating expenses increased 4.1% year over year to $508.3 million, primarily due to higher operation and maintenance expenses, and depreciation and amortization.

Operating income came in at $223.1 million in the quarter, up 2.4% from $217.8 million a year ago.

Net interest expenses edged up 0.3% year over year to $75.1 million primarily due to higher long-term debt level.

Financial Update

As of Dec 31, 2014, American Water’s cash and cash equivalents were $23.1 million versus $27 million as of Dec 31, 2013.

Long-term debt as of Dec 31, 2014, was $5,448.2 million compared with $5,230.1 million as of Dec 31, 2013.

In 2014, American Water invested around $1,000 million as capital expenditure, compared with $950 million a year ago.

Business Update

In Feb 2015, the board of directors of American Water approved a common stock repurchase program. Per the program, the company will purchase up to 10 million shares of the company’s common stock.

Guidance

American Water affirmed its guidance for 2015 adjusted earnings from continuing operations in the range of $2.55–$2.65 per share.

The company plans to invest $6 billion in the next five years as capital expenditure, including an allocation of $5.2 billion to upgrade water and wastewater infrastructure.

Other Upcoming Releases

American States Water Company (AWR) is slated to release its fourth-quarter 2014 earnings after the market closes on Feb 25. The Zacks Consensus Estimate is pegged at 27 cents.

Aqua America Inc. (WTR) is slated to release its fourth-quarter 2014 earnings on Feb 27. The Zacks Consensus Estimate is pegged at 25 cents.

Zacks Rank

American Water currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Connecticut Water Service Inc. (CTWS) with a Zacks Rank #2 (Buy).

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