Exhibit 99.1
Southwest Water Company Reports
Fourth Quarter and Full Year 2006 Financial Results
Full Year 2006 Financial Highlights:
-- Revenues Rise 10% to $224.2 Million
-- Income from Continuing Operations Up 28% to $9.3 Million
-- Diluted Earnings per Share Reach $0.40
LOS ANGELES--(BUSINESS WIRE)--March 16, 2007--Southwest Water
Company (NASDAQ:SWWC) today reported financial results for the fourth
quarter and full year ended December 31, 2006.
Fourth Quarter Results
In the fourth quarter of 2006, revenues increased 11% to $57.9
million from $52.0 million in the fourth quarter of 2005. Operating
income was up 60% to $6.4 million versus $4.0 million in the same
period of 2005. Net income grew 128% to $3.1 million, or $0.13 per
diluted share, compared with $1.4 million, or $0.06 per diluted share,
for the fourth quarter 2005.
Full Year Results
For the full year, revenues rose 10% to $224.2 million from $203.2
million in 2005. Operating income grew 22% to $22.2 million compared
with $18.1 million in 2005. Income from continuing operations was up
28% to $9.3 million, or $0.40 per diluted share, compared with $7.3
million, or $0.34 per diluted share, in 2005. Net income was $9.4
million compared to $2.4 million in 2005, which included a loss from
discontinued operations of $4.9 million. Weighted average diluted
shares outstanding for the year increased 8% to 23.4 million.
"2006 was an excellent year for both of our divisions," said Mark
A. Swatek, Southwest Water chief executive officer and chairman. "In
the second half of the year, our Utility Group benefited from warm,
dry weather and a rate increase in California and continued organic
customer growth in our New Mexico and Texas utilities."
"Our Services Group," continued Swatek, "grew revenue through new
contracts and enhanced their bottom line through increased
efficiencies and improved contract pricing."
SG&A expenses for the year were $34.4 million versus $30.8 million
in 2005, remaining stable at 15% of revenues. Total company funded
capital expenditures in 2006 were $36.7 million, representing on-going
investment in the company's water and wastewater infrastructure.
Division Results for Full Year 2006
Revenues in the Utility Group were $87.9 million in 2006, up from
$80.0 million in 2005, which include intersegment revenues of $1.6
million and $1.1 million, respectively. This 10% increase was
primarily due to increased consumption in California, rate increases
in California and Texas, increased connections in New Mexico and
Texas, and a full year of operations at a utility acquired in Alabama
in the fourth quarter of 2005.
Utility Group operating income in 2006 increased 15% to $31.2
million compared with $27.1 million in 2005, primarily due to the
company's ability to defer certain expenses of $2.2 million to a
balancing account for recovery in future rates in California, a full
year of operations at the Alabama utility, increased connections in
New Mexico and Texas and a reduction in expenses of $0.4 million from
a gain on sale of land in California.
Services Group revenues were $166.6 million in 2006, up from
$146.3 million in 2005, which include intersegment revenues of $40.4
million and $31.3 million, respectively. This 14% increase was
primarily due to increased contract operations, maintenance and
construction work from new contracts and growth in customer base in
existing contracts as a result of increased housing starts. Operating
income increased 23% to $4.4 million, up from $3.6 million in 2005.
Operating margin improved as a result of increased sales with higher
margins, combined with improved pricing on several contracts that were
successfully renegotiated.
Conference Call
The company will provide more detail regarding its fourth quarter
and full year 2006 results in a conference call and web cast to be
held today, March 16, 2007, 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 6:30
p.m. Eastern (3:30 p.m. Pacific) until midnight March 23, 2007 at
888-286-8010 (international callers 617-801-6888), passcode 11952201.
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 and 2006 Annual Report on Form 10-K, which
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 Years Ended
December 31, December 31,
2006 2005 2006 2005
--------------------------------------
Operating revenues $57,879 $52,000 $224,182 $203,181
Operating income 6,449 4,030 22,183 18,134
Income from continuing
operations 3,139 1,377 9,328 7,301
Net income (loss) 3,139 1,377 9,399 2,399
Diluted earnings (loss) per
common share:
Income from continuing
operations $0.13 $0.06 $0.40 $0.34
Net Income $0.13 $0.06 $0.40 $0.11
Weighted average outstanding
common shares:
Diluted 23,985 22,591 23,363 21,611
CONSOLIDATED BALANCE SHEET INFORMATION
December 31, December 31,
2006 2005
-------------------------
Current assets $48,257 $47,746
Property, plant and equipment, net 389,625 344,821
Total assets $491,693 $444,725
Current liabilities $35,830 $40,579
Long-term debt 128,624 117,603
Contributions in aid of construction 110,024 94,660
Stockholders' equity 166,527 145,253
Total liabilities and stockholders' equity $491,693 $444,725
CONTACT: Southwest Water Company
DeLise Keim, VP Corp. Communications, 213-929-1846
www.swwc.com
or
PondelWilkinson Inc.
Robert Jaffe, 310-279-5969
www.pondel.com