Exhibit 99.1
Southwest Water Company Reports Record 2003
Third Quarter Revenues and Earnings
LOS ANGELES--(BUSINESS WIRE)--Nov. 12, 2003--Southwest Water
Company (Nasdaq:SWWC) today reported record revenues and earnings for
the third quarter ended September 30, 2003, surpassing results for all
prior quarters in the company's history.
2003 Third Quarter Highlights, Compared with 2002:
-- Revenues increased 49 percent to $51.4 million from $34.6
million.
-- Operating income rose 78 percent to $6.6 million, compared
with $3.7 million.
-- Net income doubled to $3.4 million from $1.7 million.
-- Diluted earnings per share grew to $0.30 from $0.17.
2003 Nine-Month Highlights, Compared with 2002:
-- Revenues increased 35 percent to $129.0 million from $95.5
million.
-- Operating income rose 47 percent to $11.0 million, compared
with $7.5 million.
-- Net income rose 13 percent to $5.2 million from $4.6 million.
-- Diluted earnings per share grew to $0.48 from $0.45.
Net income for the first nine months of 2003 included a gain of
$454,000, net of tax ($0.04 per diluted share), from the sale of
excess land not needed for current or planned operations. By
comparison, net income for the first nine months in 2002 included
non-recurring, after-tax gains of $1.1 million ($0.10 per diluted
share), from reimbursement of aquifer remediation costs, and $637,000
($0.06 per diluted share), from a pension plan termination.
For the three months and nine months ended September 30, 2003, per
share calculations reflect an increase in shares outstanding as a
result of a private placement of Southwest Water common stock in May
2003.
Anton C. Garnier, Southwest Water president and chief executive
officer, said, "We delivered exceptional across-the-board performance
in the third quarter. Our results reflect strength at both our
Services and Utility groups, with growth balanced between organic
contributions and recent acquisitions. In particular, I am pleased
that this quarter demonstrates the substantial progress we are making
toward our goal of replacing 2002 income from non-recurring items with
earnings from core business. This solid third quarter performance is
consistent with previous guidance that the second half of the year
would be stronger than the first half."
Garnier continued: "The three-month results benefited from a full
quarter of revenues from Aqua Services, acquired in November 2002, and
ongoing construction management of a $25 million reverse osmosis water
treatment facility in California. Rate increases for our water
utilities in California and Texas and continued customer growth in our
Texas and New Mexico utilities also contributed to revenue gains."
Business Outlook
The company reaffirmed its previous guidance that full-year 2003
revenues are expected to increase by 25 to 30 percent and that
operating income will increase by 35 to 40 percent. Prior guidance
also continues with respect to the following: The Services Group will
be the primary driver of revenue growth for 2003, contributing between
65 and 70 percent of total revenues. Cash capital expenditures,
primarily in the Utility Group, are expected to increase by 5 to 10
percent from approximately $13 million in 2002. The company expects
its tax rate will be approximately 37 percent in 2003.
"While we expect solid performance in the fourth quarter, it's
important to note that our third quarter is seasonally always our
strongest period," Garnier said. "The drivers of our third quarter
revenues will continue to enhance top line growth for the rest of 2003
and into next year. Our immediate challenges are to maintain our
margins in the face of sharply rising insurance rates -- for general
liability coverage, employee health benefits, and workers'
compensation (especially in California) -- and the escalating costs of
complying with evolving Sarbanes-Oxley regulations."
Conference Call
As previously announced, the company will provide more detail
regarding its third quarter 2003 operating results in a conference
call and Web cast to be held at 1:30 p.m. Pacific time (4:30 p.m.
Eastern) today. The conference call can be accessed on the company's
Web site at www.swwc.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 35 states
from coast to coast depend on Southwest Water for high-quality,
reliable service. Additional information may be found on the company's
Web site: www.swwc.com.
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 Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
-----------------------------------------
Operating revenues $51,412 $34,574 $128,990 $95,488
Operating income 6,603 3,663 11,021 7,499
Pension gain, land sale and
settlement, net of tax -- -- 454 1,790
Net income 3,429 1,720 5,169 4,592
Earnings per common share:
Diluted $0.30 $0.17 $0.48 $0.45
Weighted average outstanding
common shares:
Diluted 11,486 10,286 10,772 10,257
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
September 30, December 31,
2003 2002
---------------------------
Current assets $39,555 $29,836
Property, plant and equipment, net 220,321 203,933
Total assets $294,426 $268,744
Current liabilities $35,410 $31,623
Long-term debt 75,380 80,985
Contributions in aid of construction 80,109 70,658
Stockholders' equity 77,748 61,837
Total liabilities and stockholders' equity $294,426 $268,744
CONTACT: Southwest Water Company, Los Angeles
Richard J. Shields, 213-929-1800
www.swwc.com
or
PondelWilkinson MS&L, Los Angeles
Cecilia Wilkinson or Robert Jaffe
323-866-6089 or 323-866-6007
www.pondel.com