Exhibit 99.1
Southwest Water Company Reports
First Quarter 2007 Financial Results
LOS ANGELES--(BUSINESS WIRE)--May 14, 2007--Southwest Water
Company (NASDAQ:SWWC) today reported financial results for the first
quarter ended March 31, 2007.
For the quarter, revenues declined 3% to $48.1 million from $49.6
million in the first quarter of 2006. Operating income declined 2% to
$2.9 million compared with $3.0 million in 2006. Net income was down
20% to $614,000, or $0.03 per diluted share, compared to $772,000, or
$0.03 per diluted share, in 2006. Weighted average diluted shares
outstanding for the year increased 4% to 24.2 million.
"Our Utility Group recorded a solid financial performance, largely
driven by our utility in California, which benefited from higher water
consumption related to warm, dry weather and last year's rate
increase," said Mark A. Swatek, Southwest Water chief executive
officer and chairman. "However our Services Group was challenged by
cold, wet weather in Texas, which limited our ability to carry out
certain construction and repair work in the field, as well as
increased expenses in our southeast division.
"We have made significant strides in improving the operations of
our Services Group," continued Swatek. "We have implemented turnaround
plans for under-performing units and have recently brought in new
management. We still have a handful of less profitable business units
that we are working on, but we expect to see improved results from
these areas over the next several quarters."
Division Results
Revenues in the Utility Group were $20.5 million for the quarter,
up from $18.3 million in 2006, which include intersegment revenues of
$452,000 and $366,000, respectively. This 12% increase was primarily
due to increased consumption and a rate increase in California in
mid-2006 and, to a lesser degree, increased connections in New Mexico
and Texas and a rate increase in the fourth quarter of 2006 at one of
the company's Texas utilities.
Utility Group operating income in the first quarter increased 12%
to $6.0 million compared with $5.3 million in 2006, primarily due to
the revenue increases partially offset by increased depreciation
expense and higher operating expenses for sewage treatment and
contract operation fees in New Mexico and Texas. Depreciation expense
rose as a result of increases in 2006 capital expenditures in Texas
and New Mexico and a higher depreciation rate adopted at the company's
California utility related to a 2006 rate case. Additionally, the
quarter includes $200,000 of legal and appraisal costs associated with
the condemnation litigation against the company's New Mexico utility.
According to New Mexico statute, the company will be entitled to
reimbursement of these costs if the company prevails in the legal
actions.
Services Group revenues were $33.7 million in the first quarter,
down from $37.9 million in 2006, which includes intersegment revenues
of $7.2 million and $7.5 million, respectively. This 11% decrease was
due to reduced field work in Texas and a reduction in the company's
contract base in the southeast division.
Services Group operating income for the quarter decreased 68% to
$343,000 from $1.1 million in 2006. The reduction in operating margin
was primarily due to increased costs in the southeast division to
correct past performance issues and close out contracts.
SG&A and Capital Expenditures
Consolidated SG&A expenses for the quarter were $8.5 million,
representing 18% of revenues, versus $8.4 million, or 17% of revenues,
in the first quarter of 2006. Total company funded capital
expenditures were $7.0 million, representing on-going investment in
the company's water and wastewater infrastructure.
Conference Call
The company will discuss its first quarter results in a conference
call and webcast to be held today, May 14 2007, at 10:00 a.m. Eastern
time (7:00 a.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 webcast, a replay will be available shortly after the call on
the company's website. A telephonic replay will also be available
beginning at 12:00 p.m. Eastern (9:00 a.m. Pacific) until midnight May
21, 2007 at 888-286-8010 (international callers 617-801-6888),
passcode 18283269.
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 across the US 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 2006
Annual Report on Form 10-K and Quarterly Report for the quarter ended
March 31, 2007 on Form 10-Q, 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
March 31,
2007 2006
-------------------------
Operating revenues $48,074 $49,594
Operating income 2,943 3,017
Net income 614 772
Diluted earnings per common share $0.03 $0.03
Weighted average outstanding
common shares:
Diluted 24,214 23,307
CONSOLIDATED BALANCE SHEET INFORMATION
March 31, December 31,
2007 2006
-------------------------
Current assets $ 45,023 $ 48,257
Property, plant and equipment, net 395,246 389,625
Total assets $494,384 $491,693
Current liabilities $ 28,195 $ 35,830
Long-term debt 135,709 128,624
Contributions in aid of construction 110,564 110,024
Stockholders' equity 168,099 166,527
Total liabilities and stockholders' equity $494,384 $491,693
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