Exhibit 99.1
Southwest Water Company Reports First Quarter 2006 Results; Revenues
Increase to $50.8 Million, Net Income Increases to $0.8 Million
LOS ANGELES--(BUSINESS WIRE)--May 10, 2006--Southwest Water
Company (NASDAQ:SWWC) today reported financial results for the quarter
ended March 31, 2006.
First Quarter 2006 Compared with 2005:
-- Revenues increased 12.3% to $50.8 million from $45.2 million.
-- Operating income doubled to $3.0 million from $1.5 million.
-- Income from continuing operations increased to $0.7 million
from a loss of $0.1 million.
-- Net income was $0.8 million compared to a loss of $0.2
million.
-- Diluted earnings per share increased to $0.03 from a loss of
$0.01.
Anton C. Garnier, Southwest Water chairman and chief executive
officer, said, "We had one of the best first quarters in the company's
history. While weather typically causes low levels of revenue and
profitability in the first quarter, our solid results demonstrate the
success of Southwest Water's strategy of geographic diversification.
Contributors to the quarter over quarter results included organic
growth and the recent acquisitions of profitable water, wastewater and
contract operations companies."
Operating income in the company's Utility Group increased to $5.3
million in the first quarter 2006 compared with $3.8 million in the
first quarter 2005, primarily due to organic customer growth and
increased consumption, offset by higher water production costs.
Operating income in the Services Group was $1.1 million in the first
quarter 2006 compared with $1.4 million in the first quarter 2005,
primarily due to increased operating expenses, predominately fleet
costs. Overall SG&A expenses were $8.4 million in the first quarter of
2006 versus $7.9 million in the first quarter 2005, representing 16.5%
of revenues in 2006, a decrease from 17.4% of revenues in 2005.
Total company funded capital expenditures were $7.4 million in the
first quarter, representing on-going investment in increasing the
company's utility rate base.
Two Utility Acquisitions during the Quarter
Garnier, commenting on additional growth in the quarter stated,
"Our business model of both owning utilities and operating them for
cities and municipalities places Southwest Water in the unique
position of learning of acquisition opportunities as soon as they
arise. During the quarter, we acquired a small water utility located
near Austin, Texas that our Services Group has been operating for many
years. We also acquired the right to provide water and wastewater
utility service in another area near Austin. Although these
acquisitions currently have a small effect on our financials, both
offer attractive long term customer growth potential."
Utility Group Compliant with New Arsenic Standards
A new and more stringent US Environmental Protection Agency (EPA)
standard for arsenic in water supplies became effective in 2006. With
the completion of two capital projects in New Mexico during the first
quarter, all of Southwest Water owned utilities are compliant with the
new arsenic standards.
Business Outlook
The company reaffirms its guidance for 2006, assuming normal
weather conditions, as follows:
-- Revenue growth of 4% to 6%.
-- Net income growth of 10% to 15% from 2005 income from
continuing operations.
-- Company funded capital expenditures of approximately $30
million.
-- An effective tax rate of approximately 35%.
Conference Call
The company will provide more detail regarding its first quarter
results in a conference call and Web cast to be held today, May 10,
2006, at 4:30 p.m. Eastern time (1:30 p.m. Pacific). 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; utility billing and collection; utility
infrastructure construction management; and public works services. The
company owns regulated public utilities and also serves cities,
utility districts and private companies under contract. More than 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, 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 2005 Annual Report on Form 10-K and Quarterly
Report for the quarter ended March 31, 2006 on Form 10-Q that the
company anticipates filing shortly. 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
March 31,
2006 2005
-----------------
Operating revenues $50,802 $45,231
Operating income 3,017 1,485
Net income (loss) 772 (241)
Income (loss) per common share:
Diluted $0.03 $(0.01)
Weighted average outstanding common shares:
Diluted 23,307 20,382
NOTE: Per share amounts and weighted average outstanding common
shares reflect a 5% stock dividend on January 1, 2006.
CONSOLIDATED BALANCE SHEET INFORMATION
March 31, December 31,
2006 2005
-----------------------
Current assets $45,361 $47,746
Property, plant and equipment, net 350,986 344,821
Total assets $449,645 $444,725
Current liabilities $35,756 $40,579
Long-term debt 122,577 117,603
Contributions in aid of construction 95,782 94,660
Stockholders' equity 148,992 145,253
Total liabilities and stockholders' equity $449,645 $444,725
CONTACT: Southwest Water Company
DeLise Keim, 213-929-1846
www.swwc.com
or
PondelWilkinson Inc.
Robert Jaffe, 310-279-5969
www.pondel.com