Exhibit 99.1
Southwest Water Company Reports
Third Quarter 2006 Financial Results
Net Income Increases 22%
LOS ANGELES--(BUSINESS WIRE)--Nov. 9, 2006--Southwest Water
Company (NASDAQ:SWWC) today reported improved financial results for
the third quarter ended September 30, 2006. For the 2006 third
quarter, revenues increased 10% to $60.1 million from $54.7 million in
the third quarter of 2005. Net income grew 22% to $3.7 million, or
$0.16 per diluted share, compared with $3.0 million, or $0.14 per
diluted share, in the third quarter 2005. Weighted average diluted
shares outstanding for the quarter increased 8% to 23.4 million.
"Both divisions performed exceptionally well during the third
quarter," said Mark A. Swatek, Southwest Water chief executive officer
and chairman. "These results were particularly gratifying as we
continue to systematically review our operations with an objective of
maximizing efficiencies and productivity."
Operating income grew 27% to $7.8 million compared with $6.1
million in the third quarter of 2005. SG&A expenses were $7.8 million,
representing 13% of revenues, versus $7.7 million in the third quarter
2005, or 14% of revenues.
Total company funded capital expenditures were $8.5 million in the
third quarter, representing on-going investment in the company's water
and wastewater infrastructure. The company intends to continue to
invest in infrastructure and expects company funded capital
expenditures to be approximately $30 million for the full year 2006.
Division Results
Revenues in the Utility Group were $25.8 million, up from $23.3
million in the third quarter of 2005. This 11% increase is due to
increased consumption and a rate increase in California and, to a
lesser degree, increased connections in Texas and New Mexico and a
utility acquisition in Alabama in the third quarter of 2005. Operating
income increased 11% to $9.5 million compared with $8.6 million in the
third quarter 2005, due to increased consumption and higher rates in
California and the company's ability to defer certain expenses of $0.6
million to a balancing account for recovery in future rates in
California.
Services Group revenues were $34.3 million, up 9% from $31.4
million in the third quarter of 2005, primarily due to increased
contract operations, maintenance and construction work. Operating
income in the Services Group more than doubled to $0.9 million, up
from $0.4 million in the third quarter 2005. Operating margin improved
as a result of both increased sales and a reduction in expenses,
including $0.3 million of cost savings at the company's testing
laboratory as a result of increased focus on bottom line performance.
Nine Month Results
For the nine months ended September 30, 2006, revenues rose 10% to
$166.3 million compared to $151.2 million for the same period in 2005.
Operating income grew 12% to $15.7 million compared to $14.1 million
in 2005. Income from continuing operations was up 4% to $6.2 million
compared to $5.9 million in 2005. Net income was $6.2 million versus
$1.0 million in 2005, which included a loss from discontinued
operations of $(4.9) million.
Swatek, commenting on the year to date numbers, said, "Both of our
divisions are on track for the year. We continue to believe our
revenue growth for full-year 2006 will be 4% to 6% and our net income
growth will be approximately 10% over 2005 income from continuing
operations. All of our guidance is based on normalized weather for the
remainder of the year."
Conference Call
The company will provide more detail regarding its third quarter
results in a conference call and web cast to be held today, November
9, 2006, at 4:30 p.m. Eastern time (1:30 p.m. Pacific). The conference
call can be accessed on the company's website 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 website. A
telephonic replay will also be available beginning at 7:30 p.m.
Eastern (4:30 p.m. Pacific) until midnight November 16, 2006 at
888-286-8010 (international callers 617-801-6888), passcode 99617085.
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 website: 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 under the caption "Risk Factors" in the company's 2005
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,
2006 2005 2006 2005
--------- ------------------ ---------
Operating revenues $60,141 $54,668 $166,303 $151,181
Operating income 7,757 6,130 15,734 14,104
Income from continuing
operations 3,672 3,006 6,189 5,924
Discontinued operations and
accounting change - - 71 (4,902)
Net income 3,672 3,006 6,260 1,022
Diluted earnings per common
share:
Continuing operations $0.16 $0.14 $0.27 $0.28
Net income $0.16 $0.14 $0.27 $0.05
Diluted weighted average
outstanding
common shares: 23,422 21,714 23,184 21,282
NOTE: Per share amounts and weighted average outstanding common shares
for 2005 have been restated to reflect a 5 percent stock dividend on
January 1, 2006.
CONSOLIDATED BALANCE SHEET INFORMATION
September 30, December 31,
2006 2005
--------------------------
Current assets $46,615 $47,746
Property, plant and equipment, net 371,757 344,821
Total assets $472,146 $444,725
Current liabilities $34,449 $40,579
Long-term debt 127,546 117,603
Contributions in aid of construction 103,552 94,660
Stockholders' equity 159,870 145,253
Total liabilities and stockholders' equity $472,146 $444,725
CONTACT: Southwest Water Company
DeLise Keim
Dir. of Corporate Communications
213-929-1846
www.swwc.com
or
PondelWilkinson Inc.
Robert Jaffe, 310-279-5969
www.pondel.com