Exhibit 99.1
Southwest Water Company Reports Strong Third Quarter 2005 Financial Results
LOS ANGELES--(BUSINESS WIRE)--Nov. 9, 2005--Southwest Water
Company (Nasdaq:SWWC) today reported gains in revenues, operating
income and income from continuing operations for the third quarter of
2005 compared with the same period in 2004.
Third Quarter Ended September 30, 2005 Results, Compared with
Third Quarter 2004:
-- Revenues increased 4 percent to $54.7 million from $52.6
million
-- Operating income grew 22 percent to $6.1 million, compared
with $5.0 million
-- Income from continuing operations rose 20 percent to $3.0
million from $2.5 million
-- Diluted earnings per share from continuing operations totaled
$0.15, up from $0.13
Anton C. Garnier, Southwest Water chairman and chief executive
officer, said, "In the third quarter, increased revenues and
profitability resulted from strong performance by both our Utility and
Services Groups. This continued our positive trend for the year -- our
revenues for the first nine months of 2005 increased by 13 percent and
our income from continuing operations increased by 25 percent compared
to the same period in 2004. Both in the third quarter and year to
date, we benefited from several recent acquisitions, increases in
contract operations and project work, and organic growth in our
utility customer base. All of these testify to the strength of our
business model and to our fundamental strategies for long-term
growth."
Financial Summary
For the third quarter of 2005 compared with the same period a year
ago, Utility Group revenues increased 4 percent to $23.3 million.
Monarch Utilities, Inc., acquired in July 2004, added $0.8 million to
revenues. This increase was partially offset by a $0.2 million net
revenue decrease in the company's California utility, primarily due to
unusually cool and cloudy weather in southern California in August
2005.
In the Services Group, revenues for the three months ended
September 30, 2005, increased 4 percent to $31.4 million, compared
with the same quarter in 2004. New contracts, added project work and
the acquisition of a contract operations company in Alabama and a
water quality laboratory in Texas were the primary drivers of the
improvement. This increase was partially offset by $2.3 million in
lower construction-related revenue for the company's showcase reverse
osmosis water treatment plant in San Juan Capistrano, Calif. Southwest
Water has begun its 20-year, $20 million contract to operate and
maintain the facility.
Utility Group segment operating income improved 19 percent to $8.6
million, and Services Group segment operating income increased 12
percent to $0.4 million. For both operating groups, segment operating
income increased at a greater rate than the increase in revenues.
Total company selling, general and administrative expenses
increased by 12 percent to $7.7 million compared to the third quarter
of 2004. This increase was primarily associated with the expenses of
operating newly acquired businesses. Interest expense increased by
$0.3 million, primarily due to the higher debt level from recent
acquisitions and continued investment in regulated utility plant and
equipment.
Impact of Hurricanes
When Hurricane Katrina tore into the Gulf Coast region of the U.S.
on August 29, 2005, it caused catastrophic damage to many of the water
and wastewater facilities that Southwest Water's Services Group
operates under contract for municipalities and counties in
Mississippi. The company responded quickly to restore essential
services to more than a quarter of a million people, incurring
approximately $622,000 in overtime costs and emergency out-of-pocket
expenses. Southwest Water expects to bill its clients for these
disaster recovery services and an initial $500,000 of revenue was
recognized in the third quarter. The company is assisting its clients
in requesting reimbursement for these emergency services from the
Federal Emergency Management Agency and additional revenue may be
recognized in the future. Less than a month after Katrina, Hurricane
Rita made landfall near the Louisiana-Texas border, but damage to
client and company-owned facilities in the Houston region fortunately
was minimal.
Garnier stated, "I'm extremely proud of our employees' efforts in
preparing for and responding to Katrina and Rita. These efforts
exemplify a company-wide commitment to our clients and customers that
extends well beyond only providing quality service on a day-to-day
basis. I believe our commitment to service is a key driver of the
strong financial performance we recorded in the third quarter of 2005
and our continued success for the long term."
Business Outlook
Assuming normal seasonal weather conditions for the remainder of
the year, the company's business outlook remains largely unchanged:
-- Revenues of approximately $195 million
-- Operating income of approximately $19 million
-- Income from continuing operations of approximately $7.5
million
-- Utility Group revenues of approximately 42 percent of revenues
-- Company cash capital expenditures of approximately $30
million, up from prior guidance of $20 million
-- An effective tax rate of 35%
Conference Call
The company will provide more detail regarding its third quarter
2005 results and business outlook in a conference call and Web cast to
be held today, November 9, 2005, 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 operation,
maintenance and management services, including water production,
treatment and distribution; wastewater collection and treatment;
customer service; and utility infrastructure construction management.
The company owns regulated public utilities and also serves cities,
utility districts and private companies under contract. Approximately
two million people 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 and 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. For example, rainfall can significantly affect the
company's financial performance from one quarter to the next. More
detailed information about these factors is contained in the company's
filings with the Securities and Exchange Commission, including under
the caption "Risk Factors" in the company's 2004 Annual Report on Form
10-K. The company assumes no obligation to update these
forward-looking statements to reflect any change in future events.
FINANCIAL HIGHLIGHTS -- SOUTHWEST WATER COMPANY
(unaudited and in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-------------------------------------
Operating revenues $54,668 $52,653 $151,181 $134,094
Operating income 6,130 5,052 14,104 10,302
Income from continuing operations 3,006 2,531 5,924 4,753
Discontinued operations --- (159) (4,902) 191
Net income 3,006 2,372 1,022 4,944
Earnings (loss) per common share:
Diluted
Continuing operations $0.15 $0.13 $0.29 $0.26
Net income $0.15 $0.12 $0.05 $0.27
Weighted average outstanding
common shares:
Diluted 20,680 19,109 20,269 17,964
NOTE: Per share amounts and weighted average outstanding common shares
reflect a 5 percent stock dividend on January 3, 2005.
CONSOLIDATED BALANCE SHEET INFORMATION
September 30, December 31,
2005 2004
--------------------------
Current assets $ 47,566 $ 58,091
Property, plant and equipment, net 331,182 301,835
Total assets $425,789 $404,809
Current liabilities $ 35,765 $ 35,191
Long-term debt 124,878 115,827
Contributions in aid of construction 92,429 89,623
Stockholders' equity 132,894 126,198
Total liabilities and stockholders' equity $425,789 $404,809
CONTACT: Southwest Water Company, Los Angeles
Cheryl L. Clary, 213-929-1800
www.swwc.com
or
PondelWilkinson Inc., Los Angeles
Cecilia Wilkinson / Robert Jaffe, 310-279-5980
www.pondel.com