Aqua America Inc
Aqua America Inc adjusted income rose 9% to $86 million, or $0.48 per share, which beat both our estimate and the consensus forecast of $0.44. Revenue rose 8% to $244 million, below our estimate of $274 million and the consensus forecast of $277 million. These astonishing numbers make Aqua America Inc one of the best stocks in the market according to several analysts.
In December 2019, Aqua Pennsylvania Wastewater, a subsidiary purchased three other systems for $4 million. In September, Aqua Pennsylvania announced it would buy another treatment system, known as DELCORA, which serves 500,000 customers, for $277 million. In August, WTR agreed to acquire a water system in Ohio for almost $8 million. The utility serves about 3,200 customers.
The combined company’s stock will trade under a new name. Management expects earnings accretion in the first full year after the closing and looks for 7% annual rate base growth in its water business and 8%-10% in its natural gas business through 2021. The Peoples deal 2020. Aqua America’s revenue will still be 99% regulated following the acquisition.
WTR expects to spend an additional $50 million on system upgrades over the next 10 years. It expects to add 16,750 customers before the end of 2019 through additional acquisitions.
EARNINGS & GROWTH ANALYSIS
As at the ending of 2019, WTR has obtained rate increases or imposed surcharges in Ohio, Illinois, New Jersey, North Carolina, and Pennsylvania, raising $60 million in additional revenue.
2019 .48 from $1.45, which implies 6% growth and assumes higher rates at the company’s regulated operations. The company’s 3Q EPS beat our estimate. Estimate rose to $1.55 from $1.53.
It recently purchased Peoples, a natural gas distribution utility, which will diversify Aqua America‘s income.
Kinder Morgan Inc
We are reaffirming our HOLD rating on Kinder Morgan Inc. (NYSE: KMI), as we believe that lower year-over-year pricing , largely due to the coronavirus pandemic, will limit system-wide volume and result in weaker earnings in the near term. HOLD rebound.
The lower earnings reflected weakness in the Products Pipeline segment, as crude oil and condensate pipeline volume fell 26% from the previous year and total refined product volume fell 31%.
As of June 30, 2020, Kinder Morgan had a project backlog of $2.9 billion (consisting of $2.4 billion of infrastructure projects and $0.5 billion of CO2 projects), down from $5.7 in 2Q19. The decrease reflects the placement of large projects into service. We believe that the backlog will continue to decline over the remainder of 2020.
On August 21, 2019, Kinder Morgan agreed to sell the U.S. portion of the Cochin Pipeline and its 70% interest in Kinder Morgan Canada (KML) to Pembina Pipeline Corp. for $1.546 billion in Pembina common stock. The transaction closed in 4Q19.
As discussed in prior notes, insiders continue to purchase KMI shares, as Executive Chairman Richard D. Kinder remains an active buyer. As of June 16, 2020, Mr. Kinder owned 256.4 million shares or 11.3% of all outstanding shares.
FINANCIAL STRENGTH & DIVIDEND
Total debt was $32.982 billion at the end of 2Q20, consisting of $3.006 billion in short-term borrowings and $29.976 billion in long-term borrowings. This is in comparison to a total of $35.002 billion at the end of 2Q19.
We consider KMI’s cash position and revolving credit facility to be sufficient for current capital needs.
The adjusted debt/ 2Q20 was 4.7, roughly in line with management’s target. KMI seeks to distribute all operating cash flow after allocating capital for sustaining capital expenditures. It finances acquisitions and expansion projects with a mix of debt and equity.
Due to challenging energy markets, Kinder Morgan has lowered its projected dividend payout for 2020. It will now raise its quarterly dividend by just 5% (not the 25% originally projected) to $0.2625 per share or $1.05 annually. The first payment at the new rate was made on May 15, 2020. 7.1%. .04 for 2020 and $1.05 for 2021.
It has not repurchased any of its common shares since the fourth quarter of 2018, when it bought back $25 million. It currently has $1.475; however, we do not expect any further repurchases this year.
After going private in May 2007, it went public again in February 2011 via a $3.3 billion initial public offering. Following a late 2014 consolidation of its former operating entities, Kinder Morgan Energy Partners, L.P., Kinder Morgan Management and El Paso Pipeline Partners, L.P., the newly consolidated company no longer has a master limited partnership structure, under which the former limited partners paid incentive distribution rights (IDRs) to KMI as their general partner.
Through its various operating businesses, KMI operates a diverse portfolio of assets, including 70, 152 terminals. The company is a leading provider of carbon dioxide, which is used for enhanced oil recovery projects in North America. KMI also owns a 20% equity interest in NGPL PipeCo. LLC, a major interstate natural gas pipeline and storage system.