Aqua America Unit to Close 2014 Infrastructure Upgrade Plan - Analyst Blog

Aqua New Jersey, a subsidiary of Aqua America Inc. (WTR), is in the process to conclude its 2014 infrastructure improvement program worth $13 million. It allocated $6.6 million to replace aging water infrastructure, including water mains in various counties like Mercer, Camden, Warren and Sussex.

Aqua New Jersey also invested $1.4 million in improving the wastewater treatment plant at Woolwich Township, Gloucester County and around $0.75 million to upgrade various treatment facilities in its Northern Division.

Aqua New Jersey's efforts on upgrading its existing utility systems will increase reliability and public safety besides meeting environmental regulations.

Aqua America's capital investment focused on the improvement of water mains, treatment plants, tanks, boosters, hydrants and service lines. In the first nine months of 2014, the company invested $220.7 million to improve regulated infrastructure.

In addition to upgrading existing assets, Aqua America is pursuing inorganic growth to expand its scale of operations, having completed 13 acquisitions year to date. In Oct 2014, Aqua New Jersey, acquired the assets of the Spartan Village water and wastewater systems from Spartan Village, Inc. The company plans to invest around $0.38 million to upgrade acquired distribution pipes, meters and the wastewater plant.

Aqua America plans to invest $325 million in 2014 as capital expenditure and maintain annual investments of over $300 million between 2012 and 2016. In 2013, the company's capital investments had stood at around $308.2 million.

Apart from Aqua America, other water utilities like American Water Works Company, Inc. (AWK) and Connecticut Water Service Inc. (CTWS) are investing substantially in strengthening infrastructure.

Aqua America maintains a stable cash generating capacity through operating activities. In the first nine months of 2014, the company's operating cash flow was $274.4 million. Operating cash flow at the end of 2013 had stood at $367.8 million. This will facilitate investments in infrastructure projects, strategic acquisitions, dividend payments and share repurchase.

Aqua America currently has a Zacks Rank #2 (Buy). Another equally well-ranked industry peer is American States Water Company (AWR).

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