Exhibit 99.1
Southwest Water Company Reports Increased Second Quarter 2004 Revenues
and Earnings
LOS ANGELES--(BUSINESS WIRE)--Aug. 9, 2004--Southwest Water
Company (Nasdaq:SWWC) today reported higher revenues and earnings for
the second quarter ended June 30, 2004, compared with the same period
a year ago. The company also updated its business outlook for the
remainder of 2004.
Second Quarter 2004 Highlights, Compared with Second Quarter 2003:
-- Revenues increased 10 percent to $45.7 million from $41.5
million.
-- Operating income grew 48 percent to $5.2 million, compared
with $3.5 million.
-- Net income rose 35 percent to $2.6 million from $1.9 million.
-- Diluted earnings per share totaled $0.15, up from $0.13.
Diluted earnings per share were calculated on a 23 percent greater
number of weighted average shares outstanding, reflecting the effect
of the company's public offering of 1.6 million shares in March 2004
and the private placement of 1.5 million shares in May 2003. The
second quarter of 2003 included a pre-tax gain of $720,000 from the
sale of surplus land.
Anton C. Garnier, Southwest Water chairman and chief executive
officer, said, "Strong performance throughout the company fueled our
second quarter revenue growth. The Services Group benefited from new
operating contracts in Alabama, California and Mississippi, along with
expanded services for current clients and several small acquisitions.
In our Utility Group, we recorded gains in revenue and earnings from
increased water rates in California and Texas, along with continuing
customer growth in our New Mexico and Texas utility service areas. We
also benefited from lower water production costs in the second quarter
of 2004 compared with the same period in 2003 as we were able to
increase the ratio of water pumped from our own wells versus water
purchased from outside sources.
"The geography of our operations helps to balance the effects of
regional weather conditions. The first six months of 2004 clearly
showed the impact (both positive and negative) that weather can have
on our financial performance. In California, a mild winter and a warm
spring, coupled with lower-than-normal rainfall, boosted our Utility
Group customer water sales. In Texas, however, more than 45 inches of
rain fell on the Houston area during the first six months of 2004, far
outpacing the normal figure of 24 inches. This unusually wet weather
hampered our Services Group's ability to perform billable outdoor
construction and maintenance work."
Garnier continued, "Looking to the second half of 2004, we expect
to complete construction at our San Juan Capistrano water treatment
plant project, at which point we will begin a 20-year, $20 million
contract to operate and maintain the facility. Once operational, it
will become the second reverse osmosis treatment plant that we operate
in California and our seventh nationwide. We continue discussions on
similar opportunities where we can expand our business and help
clients meet their water, wastewater or public works challenges in
innovative ways."
Business Outlook
The company revised its business outlook for 2004, noting that
this update includes the impact of the Texas utility acquisition
announced on July 16. The company's current outlook for 2004
anticipates:
-- Revenues of approximately $185 million, consistent with prior
guidance;
-- Operating income of $19 million, up from prior guidance of $18
million;
-- Income before taxes of $14 million, up from prior guidance of
$13 million;
-- Net income of $9 million, up from prior guidance of $8
million.
Revenue guidance assumes normal weather conditions.
Garnier noted, "We have delivered strong organic revenue growth in
the first half of 2004 and we expect to augment that in the second
half of the year with growth from the Texas utility acquisition and
several smaller growth initiatives we completed earlier this year.
While our Services Group operations in Texas have been affected by
unusually high levels of rainfall this spring, we expect to recover
some of that lost revenue during the summer months. We also anticipate
benefiting from a recent regulatory decision in California regarding
the recovery of certain uncontrollable costs, and from a small gain on
the sale of land."
Garnier concluded, "We continue to work to control increasing
costs for workers' compensation insurance, employee health benefits,
and general insurance. Like many public companies, we anticipate
additional expenses in the remainder of 2004 in connection with our
Sarbanes Oxley compliance efforts. Nevertheless, we believe we will
improve our operating margins from 2003 levels."
Conference Call
The company will provide more detail regarding its second quarter
2004 results in a conference call and Web cast to be held today,
August 9, 2004, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time).
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,
including water production, treatment and distribution; wastewater
collection and treatment; public works services; utility billing and
collection; and utility 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 "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements, including expectations relating to future revenues and
income, the company's ability to gain new business and control costs,
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 2003 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 Six Months
Ended Ended
June 30, June 30,
2004 2003 2004 2003
---------------------------------
Operating revenues $45,694 $41,464 $85,421 $77,578
Operating income 5,168 3,497 6,101 4,418
Net income 2,553 1,889 2,571 1,740
Earnings per common share:
Diluted $0.15 $0.13 $0.15 $0.12
Weighted average outstanding
common shares:
Diluted 17,338 14,103 16,517 13,840
NOTE: Per share amounts and weighted average outstanding common
shares reflect a 4-for-3 stock dividend on January 1, 2004.
CONSOLIDATED BALANCE SHEET INFORMATION
June 30, Dec. 31,
2004 2003
-------------------
Current assets $39,304 $35,394
Property, plant and equipment, net 227,725 221,087
Total assets $311,824 $296,222
Current liabilities $29,357 $31,389
Long-term debt 53,746 56,493
Contributions in aid of construction 84,494 81,556
Stockholders' equity 104,289 79,667
Total liabilities and stockholders' equity $311,824 $296,222
CONTACT: Southwest Water Company
Richard J. Shields (CFO), 213-929-1800
www.swwc.com
or
PondelWilkinson Inc.
Cecilia Wilkinson or Robert Jaffe
310-279-5970 or 310-279-5969
www.pondel.com