SouthWest Water Company (NASDAQ:SWWC), a leading provider of water,
wastewater and public works services, today reported unaudited
financial results for the full year and fourth quarter ended
December 31, 2007. Full Year 2007 Results Primarily as a result of
two non-recurring, non-cash charges, the company reported a net
loss of $8.0 million, or $0.33 per diluted share for the year ended
December 31, 2007, as compared to net income in 2006 of $9.4
million, or $0.40 per diluted share. Included in the full year 2007
results are two non-cash charges totaling $20.6 million ($15.1
million, net of tax, or $0.63 per diluted share). The charges
include $17.2 million related to goodwill impairments of the
company�s Texas utilities and a $3.4 million write-down of assets
to net realizable value for a business the company has decided to
divest. Income from continuing operations in 2007 before the
impairment charges (a non-GAAP financial measure; see below) was
$8.2 million, or $0.34 per diluted share, as compared to income
from continuing operations of $10.0 million, or $0.43 per diluted
share, in 2006. The impairment charge was a result of testing under
SFAS No.142. The company determined that revenue growth for its
Texas utilities was likely to be slower than originally projected
due to downturns in overall economic conditions and new housing
construction as well as a slower rate of regulated rate increase.
The company also determined that higher levels of capital
expenditures than previously projected were necessary to bring the
systems into regulatory compliance and to continue improving the
quality of service for its customers. The business that the company
intends to divest, a wholesale water and wastewater business, is
reflected as discontinued operations in the financial statements.
Included in the discontinued operations is the $3.4 million charge
relating to the write-down of assets. �We are focused on building a
platform that can sustain profitable growth and improve our
customer service and system reliability,� said Mark A. Swatek,
SouthWest Water chief executive officer and chairman. �By divesting
underperforming assets, our company will be stronger and our future
results will better reflect the underlying strength of our core
business.� For the year, revenues were $217.3 million as compared
to $218.8 million in 2006. Operating income, before the impairment
charge (a non-GAAP measure) was $20.1 million compared with $22.4
million in 2006. SG&A expenses were $36.6 million, or 17% of
revenues, versus $33.0 million, or 15% of revenues, in 2006.
Included in 2007 SG&A are $1.9 million, or $0.05 per diluted
share, in costs associated with Cornerstone, the company�s
continuing initiative to consolidate, update and upgrade all
underlying communications and information technology systems,
scheduled to be completed by the end of 2009. Total company funded
capital expenditures were $40.0 million, including $10.1 million
related to the Cornerstone project, compared to $35.4 million in
2006. �Over the past year, we made major strides in restructuring
the company and improving the efficiency of our operations,�
commented Swatek. �We also addressed some legacy issues and dealt
with two external factors; a nationwide housing slowdown and
unusually heavy rains in Texas, our biggest market. In addition, we
recently completed our new $150 million credit facility, which
provides additional capacity to continue to grow by investing in
sound utility acquisitions, like the Birmingham, Alabama wastewater
system we purchased in January which added 12,000 customers.�
Utility Group 2007 Results Revenues in the Utility Group were $93.4
million for the year, up from $86.3 million in 2006. This 8%
increase was primarily due to increased consumption in California
during a dry 2007, rate increases in California, Texas and Alabama,
and acquisitions in Mississippi and Texas. These increases were
partially offset by lower consumption in Texas due to the heavy
rainfall. Operating income before the impairment (a non-GAAP
measure) increased 8% to $32.6 million compared with $30.2 million
in 2006, primarily due to the increased revenues. Services Group
2007 Results Services Group revenues were $150.7 million in 2007,
down from $166.0 million in 2006, which include intersegment
revenues of $31.5 million and $40.4 million, respectively. This 9%
decrease was primarily due to reduced construction and maintenance
work in Texas as a result of wet weather, a slow down in housing
construction in Texas and New Mexico and a reduction in the
company�s contract base in Georgia and Mississippi. Operating
income decreased to $3.4 million from $5.6 million in 2006,
primarily due to the reduction in revenues as described above as
well as a non-recurring reserve of $650,000 for our share of
potential fines imposed by a water quality control board and an
$800,000 severance charge associated with the re-alignment of this
division. Fourth Quarter 2007 Results The company reported a net
loss of $13.0 million, or $0.53 per diluted share, as compared to
net income in fourth quarter of 2006 of $3.1 million, or $0.13 per
diluted share. Income from continuing operations in the quarter
before the impairment charge (a non-GAAP measure) was $2.6 million,
or $0.11 per diluted share, as compared to income from continuing
operations of $3.3 million, or $0.14 per diluted share during the
same period in 2006. Revenues increased to $57.4 million from $56.4
million in the fourth quarter of 2006. Operating income before the
impairment charge (a non-GAAP measure) was $5.9 million versus $6.5
million in the same period of 2006. Non-GAAP Financial Measures In
an effort to provide investors with additional information
regarding results of operations as determined by accounting
principles generally accepted in the United States of America
(�GAAP�), the company has disclosed certain non-GAAP information,
which it believes provides useful information to investors. A
reconciliation of the non-GAAP financial measures to the comparable
GAAP financial measure, which include income from continuing
operations and operating income before the impairment charges, can
be found at the end of this release. In addition, management is in
the process of completing its internal review of the financial
information presented here; the amounts are unaudited and subject
to change. Conference Call The company will provide more detail
regarding its fourth quarter and full year 2007 results in a
conference call and web cast to be held today, March 17, 2008, 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 24, 2008 at
888-286-8010 (international callers 617-801-6888), passcode
90008539. 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 2006 Annual Report on Form 10-K and 2007 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. Condensed
Consolidated Statements of Income (unaudited and in thousands,
except per share amounts) � Three Months Ended � Year Ended
December 31, December 31, 2007 � 2006 2007 � 2006 Operating
Revenues: Utility Group $23,741 $21,719 $93,370 $86,321 Services
Group 39,767 46,426 150,721 165,982 Less intersegment eliminations
(6,099 ) � (11,733 ) (26,744 ) � (33,501 ) Total revenues 57,409 �
� 56,412 � 217,347 � � 218,802 � � Expenses: Utility Group
operating expenses 13,811 13,565 52,765 48,540 Services Group
operating expenses 27,323 28,012 107,884 113,916 Selling, general
and administrative 10,349 8,328 36,624 32,998 Impairment of
goodwill 17,215 � � -- � 17,215 � � 929 � Total expenses 68,698 � �
49,905 � 214,488 � � 196,383 � � Operating income (11,289 ) 6,507
2,859 22,419 � Other income (expense) Interest expense (1,973 )
(1,830 ) (7,696 ) (7,536 ) Interest income 128 112 618 456 Other,
net 96 � � 58 � (6 ) � 58 � � Income (loss) from continuing
operations before taxes (13,038 ) 4,847 (4,225 ) 15,397 Provision
(benefit) for income taxes (2,466 ) � 1,538 � 795 � � 5,388 � �
Income (loss) from continuing operations (10,572 ) 3,309 (5,020 )
10,009 � Loss from discontinued operations, net of tax (2,386 )
(170 ) (3,026 ) (681 ) Cumulative effect of change in accounting
principle, net of tax -- � � -- � -- � � 71 � � Net income (loss)
(12,958 ) 3,139 (8,046 ) 9,399 Preferred stock dividends (6 ) � (6
) (24 ) � (24 ) Net income (loss) applicable to common holders
(12,964 ) � 3,133 � (8,070 ) � 9,375 � � Earnings per common share
(Diluted): Income (loss) from continuing operations $(0.44 ) $0.14
$(0.21 ) $0.43 Loss from discontinued operations (0.09 ) (0.01 )
(0.12 ) (0.03 ) Cumulative effect of change in accounting principle
-- -- Net income (loss) applicable to common holders $(0.53 ) $0.13
$(0.33 ) $0.40 � Weighted average outstanding common shares
(diluted) 24,240 23,985 24,101 23,363 � Condensed Balance Sheet
Information � � (unaudited and in thousands) December 31, December
31, 2007 � 2006 Current assets $ 45,820 $ 48,257 Property, plant
and equipment, net 417,903 389,625 Total assets $516,409 $491,693 �
Current liabilities $ 41,918 $ 35,830 Long-term debt 145,353
128,624 Contributions in aid of construction 115,442 110,024
Stockholders� equity 159,194 166,527 Total liabilities and
stockholders� equity $516,409 $491,693 � Reconciliation of Non-GAAP
Income from Continuing Operations (unaudited and in thousands
except per share) � Three Months Ended � Year Ended December 31,
2007 December 31, 2007 Pre-tax loss from continuing operations
(GAAP) (13,038 ) (4,225 ) Add Back: Impairment charges � 17,215 �
17,215 Pre-tax income from continuing operations (adjusted) 4,177
12,990 Provision for income taxes (37%) � 1,545 � 4,806 Net income
from continuing operations (adjusted) $ 2,632 $ 8,184 Earnings per
diluted share $ 0.11 $ 0.34 � Reconciliation of Non-GAAP Operating
Income (unaudited and in thousands) � Three Months Ended � Year
Ended December 31, 2007 December 31, 2007 Utility business
operating (loss) income (7,789 ) 15,339 Services business operating
income 1,567 3,415 Corporate � (5,067 ) � (15,895 ) Operating
(loss) income (GAAP) (11,289 ) 2,859 Add Back: Impairment charges �
17,215 � � 17,215 � Operating income (adjusted) $ 5,926 $ 20,074 �
Reconciliation of Non-GAAP Utility Business Operating Income
(unaudited and in thousands) � Year Ended December 31, 2007
Operating Income (from above table) 15,339 � Add Back: Impairment
charges � 17,215 � Operating income (adjusted) $ 32,554
Southwest Water (NASDAQ:SWWC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Southwest Water (NASDAQ:SWWC)
Historical Stock Chart
From Jul 2023 to Jul 2024