SWWC Southwest Water (MM)

Financial tables, Consolidated Balance Sheet Information, Current liabilities for March 31, 2005, should read: $32,855 (sted $32,390). The corrected release reads: SOUTHWEST WATER COMPANY REPORTS FIRST QUARTER 2005 FINANCIAL RESULTS Southwest Water Company (NASDAQ:SWWC) today reported its financial results for the three months ended March 31, 2005. First Quarter 2005, Compared with First Quarter 2004: -- Revenues increased 18 percent to $46.9 million from $39.7 million. -- Operating income rose 59 percent to $1.5 million from $933,000. -- Net loss, after interest expense of $2.0 million, was $241,000, or $0.01 per share, versus net income, after interest expense of $1.1 million, of $18,000, equal to break-even on a diluted per-share basis. Anton C. Garnier, Southwest Water chairman and chief executive officer, said, "Improved financial performance from our Services Group and the positive results from the acquisition of our Texas-based Monarch Utilities contributed to the positive, quarter-over-quarter growth in revenues and operating income. A higher level of selling, general and administrative expenses and increased interest expense, combined with the adverse impact on Utility Group profitability of nearly double the amount of average seasonal rainfall in Southern California, resulted in a 2005 first quarter net loss." Utility Group revenues for the 2005 first quarter rose $2.5 million, or 19 percent, compared with the same quarter last year, largely due to the addition of Monarch Utilities, acquired in July 2004, and other new customer connections. The increased revenues were partially offset by a decrease in California utility revenues of $1.2 million as a result of the exceptionally wet weather. For the 2005 first quarter, Services Group revenues increased by $4.7 million, or 18 percent, compared with the 2004 first quarter. New operating contracts, project work that had been delayed during 2004, increased billable services and two small acquisitions added approximately $7 million to revenues. This increase was partially offset by a $2.3 million reduction in construction-related revenue from the water treatment plant project in San Juan Capistrano, which was substantially complete at the end of 2004. Segment operating income in the Services Group for the first quarter of 2005 improved by approximately $2 million, compared with the same period a year ago. In the Utility Group, segment operating income for the first quarter of 2005 was basically flat in comparison to that of the first quarter in the prior year, as the operating income contribution from the Monarch Utilities acquisition offset much of the negative impact of the unusually wet Southern California weather. For the first three months of 2005, selling, general and administrative expenses rose by $1.7 million, or 25 percent, compared with the first quarter of 2004, due to expenses for audit, legal and other outside services, as well as higher expenses associated with the Sarbanes-Oxley Act of 2002 and related regulations. As expected, the recent acquisitions also resulted in higher general and administrative expenses. In addition, interest expense increased approximately $900,000, primarily due to the increased debt level associated with the acquisition of Monarch Utilities and additional fixed rate, long-term debt to fund investment in utility plant assets. Garnier concluded, "Southwest Water typically generates its lowest levels of revenue and profitability in the first quarter of any calendar year, primarily due to seasonably cool, wet weather that restricts utility water sales. As demonstrated in the first quarter of 2005, our geographic operations footprint, stretching from coast to coast, helps mitigate the effects of regional weather extremes in any season." Business Outlook The company reaffirms its guidance for 2005 as follows: -- Revenues of approximately $195 million; -- Operating income of approximately $19 million; -- Net income of approximately $7.5 million; -- Utility Group revenues of approximately 42% of total revenues; -- Company cash capital expenditures increasing to approximately $20 million; and -- An effective tax rate of 36%. This business outlook assumes normal weather conditions. Conference Call The company will discuss its first quarter 2005 results in a conference call and Web cast to be held today, May 10, 2005, 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 operations, management and maintenance services, including water production, treatment and distribution; wastewater collection and treatment; utility billing and collection; customer service; and utility infrastructure construction management. 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 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. -0- *T FINANCIAL HIGHLIGHTS - SOUTHWEST WATER COMPANY (unaudited and in thousands, except per share amounts) Three Months Ended March 31, 2005 2004 ----------- ----------- Operating revenues $ 46,866 $ 39,727 Operating income 1,479 933 Net income (loss) (241) 18 Income (loss) per common share: Diluted $ (0.01) $ 0.00 Weighted average outstanding common shares: Diluted 19,411 16,470 NOTE: Per share amounts and weighted average outstanding common shares reflect a 5 percent stock dividend on January 3, 2005. CONSOLIDATED BALANCE SHEET INFORMATION March 31, December 31, 2005 2004 ----------- ------------ Current assets $ 46,222 $ 45,287 Property, plant and equipment, net 306,893 302,596 Total assets $ 413,737 $ 404,809 Current liabilities $ 32,855 $ 35,734 Long-term debt 128,335 115,827 Contributions in aid of construction 89,511 89,623 Stockholders' equity 125,442 126,198 Total liabilities and stockholders' equity $ 413,737 $ 404,809 *T