Exhibit 99.1
Southwest Water Company Reports Increased Second Quarter Revenue and Earnings
WEST COVINA, Calif.--(BUSINESS WIRE)--Aug. 12, 2003--Southwest
Water Company (Nasdaq:SWWC) today reported increased revenues and
earnings for the second quarter ended June 30, 2003. The company is
also updating its business outlook for the remainder of 2003.
Q2 2003 Highlights:
-- Revenues increased 27 percent to $41.5 million
-- Operating income rose 85 percent to $3.5 million
-- Diluted EPS was $0.18 versus $0.16 in Q2 of 2002
For the second quarter of 2003, the company reported revenues of
$41.5 million, operating income of $3.5 million, and net income of
$1.9 million, or $0.18 per diluted share. This compares to revenues of
$32.7 million, operating income of $1.9 million, and net income of
$1.7 million, or $0.16 per diluted share, for the same three-month
period in 2002.
For the six months ended June 30, 2003, revenues rose 27 percent
to $77.6 million from $60.9 million a year ago. For the same period,
operating income increased 15 percent to $4.4 million from $3.8
million in the prior-year period. For the first six months in 2003,
net income decreased by 40 percent, to $1.7 million, or $0.17 per
diluted share, from $2.9 million, or $0.28 per diluted share, in the
same period a year ago.
Net income for the first six months in 2002 included
non-recurring, after-tax gains of $1.1 million, or $0.10 per diluted
share, from reimbursement of water quality infrastructure investments,
and $637,000, net of tax, or $0.06 per diluted share, from a pension
plan termination. Net income for the second quarter of 2003 includes
$454,000, net of tax, or $0.04 per diluted share, from the sale of
excess land not needed for current or planned operations.
Anton C. Garnier, Southwest Water president and CEO, said, "We are
pleased with our second quarter increases in revenue, which were
driven largely by our Services Group. Last November's acquisition of
Aqua Services, continued organic growth in our Texas subsidiaries and
our ongoing construction management of a $25 million reverse osmosis
water treatment facility in San Juan Capistrano, California,
contributed significantly to the second quarter revenue increase.
"On June 1, 2003, our Services Group began a 10-year, $30 million
contract to operate and maintain the public works department in
Pascagoula, Mississippi. The work includes managing water production
and distribution, sewage collection and treatment, and other public
works services for 30,000 residents of the Gulf Coast city. The
contract also calls for operation of three reverse osmosis water
treatment plants, thus expanding our involvement with this technology
and supporting our efforts in other cities where reverse osmosis
offers a practical solution to water supply challenges."
Garnier continued, "In our Utility Group, revenues increased 2
percent in the second quarter of 2003 compared to the same period a
year ago. Continued growth in our New Mexico utility customer base and
a step rate increase at one of our Texas utilities drove much of this
growth. In May 2003 our California utility's completion of a general
rate case, initially filed with the California Public Utilities
Commission in April 2002, resulted in a 17 percent rate increase,
effective May 28, 2003. The increased rates should improve our Utility
Group's financial performance in subsequent periods."
Garnier added, "One of our challenges this year is to replace the
2002 income from non-recurring items with continuing operating income
in 2003. In the second quarter we made significant progress toward
this goal."
He concluded, "During the second quarter of 2003, we also improved
our capital structure. We completed a private placement of 1.1 million
shares of newly issued common stock for $12 million with net proceeds
of approximately $11 million. These proceeds will support our growth
strategy."
Business Outlook
The company is announcing that it expects full year 2003 revenues
to increase by 25 to 30 percent from 2002 results, up from prior
guidance of 20 to 25 percent. Operating income for 2003 is expected to
increase by 35 to 40 percent, up from prior guidance of 30 to 35
percent.
The company's prior guidance remains the same with respect to the
following: The Services Group will be the primary driver of revenue
growth for the current year, contributing between 65 percent and 70
percent of total revenues. Cash capital expenditures, primarily in the
Utility Group, are expected to increase by five to 10 percent, from
approximately $13 million in 2002. The company expects its tax rate
will be approximately 37 percent in 2003.
Conference Call
As previously announced, the company will provide more detail
regarding its second quarter 2003 operating results and the outlook
for 2003 in a conference call and Web cast to be held at 1:30 p.m. PDT
(4:30 p.m. EDT) today. The conference call can be accessed on the
company's Web site at www.southwestwater.com. For those unable to
participate in the live Web cast, a replay will be available shortly
after the call on the company's Web site.
Southwest Water Company provides a broad range of services: water
production, treatment and distribution; wastewater collection and
treatment; public works services; utility submetering; and
infrastructure construction management. The company owns regulated
public utilities and also serves cities, utility districts and private
companies under contract. More than two million people in 31 states
from coast to coast depend on Southwest Water for high-quality,
reliable service.
This document contains certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties, as well as
assumptions that, if they prove incorrect or never materialize, could
cause the results of the company to differ materially from those
expressed or implied by such forward-looking statements. Actual
results may differ materially from these expectations due to changes
in regulatory, political, weather, economic, business, competitive,
market, environmental and other factors. More detailed information
about these factors is contained in the company's filings with the
Securities and Exchange Commission, including the company's 2002
Annual Report on Form 10-K. The company assumes no obligation to
update these forward-looking statements.
FINANCIAL HIGHLIGHTS - SOUTHWEST WATER COMPANY
(unaudited and in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Operating revenues $41,464 $32,746 $77,578 $60,914
Operating income 3,497 1,893 4,418 3,836
Pension gain, land sale and
settlement, net of tax 454 1,074 454 1,790
Net income 1,889 1,708 1,740 2,872
Earnings per common share:
Diluted $0.18 $0.16 $0.17 $0.28
Weighted average outstanding
common shares:
Diluted 10,577 10,361 10,380 10,243
NOTES:
(1) Operating income, net income and diluted earnings per common share
reflect the company's adoption of Statement of Financial
Accounting Standards No. 123, Accounting for Stock Based
Compensation, effective in 2002.
(2) Per share amounts and weighted average outstanding common shares
reflect a 5% stock dividend on January 1, 2003.
CONSOLIDATED BALANCE SHEET INFORMATION
June 30, December 31,
2003 2002
Current assets $32,395 $29,836
Property, plant and equipment 210,440 203,933
Total assets $276,672 $268,744
Current liabilities $27,294 $31,623
Long-term debt 74,580 80,985
Contributions in aid of construction 76,348 70,658
Stockholders' equity 74,586 61,837
Total liabilities and stockholders' equity $276,672 $268,744
CONTACT: Southwest Water Company
Richard J. Shields, 626-915-1551
www.southwestwater.com
or
Coffin Communications Group
Crocker Coulson, 818-789-0100
www.coffincg.com