CLINTON, Conn., March 16, 2015 (GLOBE NEWSWIRE) -- Connecticut Water Service, Inc. (Nasdaq:CTWS) announced net income of $21.3 million, or earnings per basic average share (EPS) of $1.95, on total revenues of $101.5 million. Total revenues include revenues generated by the Company's three business segments: Water Activities, Service and Rentals, and Real Estate. In 2013, the Company had net income of $18.3 million, or $1.68 EPS, on total revenues of $99.0 million.
2014 Operating Results
In 2014, net income in the Company's core business, the Water Activities segment, was $19.8 million, on total revenues of $95.5 million. In the same period of 2013, net income from the segment totaled $16.8 million, on total revenues of $93.0 million. The increase in revenues for the Water Activities segment was largely attributable to recovery of costs for completed infrastructure replacement projects through Water Infrastructure Charge (WISC) in Maine and Water Infrastructure and Conservation Adjustment (WICA) in Connecticut. In addition, for 2014 there was increased revenue from the Company's 2013 rate cases in Maine.
The Company saw consistent performance from its Services and Rentals segment in 2014, which contributed income of $1.5 million in both 2014 and 2013. There was minimal activity in the Real Estate segment in 2014 and 2013.
Total operating expenses decreased $632,000, or about 1%, to $68.9 million compared to $69.5 million in 2013. The decrease was primarily driven by a $2.3 million decrease in Income Taxes resulting from the Company's strategic tax management initiative approved by Connecticut regulators, which led to a lower effective tax rate of 16.6% for 2014, down from 28.0% in 2013.
Eric W. Thornburg, President and CEO of CTWS, noted the Company's continued focus on its long-term growth strategy is delivering results. Mr. Thornburg stated, "Creating value from our Maine acquisitions, which brought us 35% customer growth since 2012, is evidenced by our successful consolidation of corporate offices in the state. In 2014, our capital expenditures were $45.0 million, with $21.4 million, or 47.6%, of that invested in infrastructure replacement that is recoverable through WISC and WICA. In addition, our cost control efforts in both Connecticut and Maine continue to be successful and resulted in a 1% reduction in total operating expenses." Mr. Thornburg also added the Company is proud of its 45-year history of increased dividend payments and the Standard & Poor's 'A' credit rating that was reaffirmed in 2015.
Fourth Quarter Operating Results
In the fourth quarter of 2014, net income in the Company's core business, the Water Activities segment, was $2.1 million, on total revenues of $21.2 million. In the same period of 2013, net income from the segment totaled $1.6 million, on total revenues of $22.0 million. Reducing operating expenses in 2014 drove the increase in the Water Activities segment.
The Services and Rentals segment contributed net income of $262,000 in the fourth quarter of 2014, which is down $78,000 compared to the $340,000 in the fourth quarter of 2013. There was minimal activity in the Real Estate segment during the fourth quarter of 2014.
Regulatory Developments in 2014
In 2014, Maine Water was the first water company in the state to use WISC, which allows for the programmatic replacement of aging pipe and other infrastructure through a surcharge on customer bills that can be adjusted semi-annually. WISC is similar to Connecticut's WICA, which primarily covers the replacement of aging pipe.
In Maine, WISC was applied to all 10 of Maine Water's divisions in 2014 and 2015. In Connecticut, a WICA surcharge of 7.89% was rolled into base rates on April 1, 2014, as allowed for in a 2013 Settlement Agreement approved by the Public Utilities Regulatory Authority (PURA). This allowed the WICA surcharge to be reset to zero. In Connecticut, a WICA surcharge of 1.59% was approved by PURA and became effective on customer bills on October 1, 2014. Requests for a net 1.45% increase in the WICA surcharge were filed with PURA in early 2015. A decision is expected in March 2015 with any increase to become effective on April 1, 2015.
In September 2014, Maine Water successfully consolidated its corporate and customer service functions in Saco, Maine. The consolidation resulted in the location of Maine Water's leadership and customer service functions in the area of the state with the most customers.
On November 5, 2014, Maine Water filed a rate application with the MPUC for its Biddeford and Saco Division, which represents about 16,500 customers, or approximately half of the Company's customer base in Maine. The application requests an increase of $1.7 million in additional revenues over a two-year phase-in to recover $8 million in capital investment made since 2007 and higher operating costs in that division. A decision on the rate application was received on March 11, 2015, for an annual increase of $1.3 million, to be offset for the first three years by approximately $300,000 from the benefits of adopting repair tax in Maine.
Connecticut Water Service, Inc. is the largest publicly traded water company based in New England. Through its wholly-owned public water utility subsidiaries, The Connecticut Water Company and The Maine Water Company, the Company provides drinking water to 123,000 customers, or about 400,000 people, throughout the states of Connecticut and Maine.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact, including statements based upon, among other things, our current assumptions, expectations and beliefs concerning future developments and their potential effect on Connecticut Water Service, Inc., may be deemed to be forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors, many of which are outside our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. In some cases you can identify forward-looking statements where statements are preceded by, followed by or include the words "believes," "expects," "anticipates," "plans," "future," "potential," "probably," "predictions," "continue" or the negative of such terms or similar expressions.
Because forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including but not limited to: changes in general economic, business, credit and financial market conditions; changes in environmental conditions, including those that result in water use restrictions, abnormal weather conditions; increases in energy and fuel costs; unfavorable changes to the federal and/or state tax codes; significant changes in, or unanticipated, capital requirements; significant changes in our credit rating or the market price of our common stock; our ability to integrate businesses, technologies or services which we may acquire, including the acquisition of The Maine Water Company in January 2012 and The Biddeford & Saco Water Company in December 2012; our ability to manage the expansion of our business; the extent to which we are able to develop and market new and improved services; the continued demand by telecommunication companies for antenna site leases on our property; the effect of the loss of major customers; our ability to retain the services of key personnel and to hire qualified personnel as we expand; labor disputes; increasing difficulties in obtaining insurance and increased cost of insurance; cost overruns relating to improvements or the expansion of our operations; increases in the costs of goods and services; civil disturbance or terroristic threats or acts; changes in accounting pronouncements; and the outcome of the review of the Company's Connecticut state tax filings by the Connecticut Department of Revenue Services and the Company's 2012 tax return by the Internal Revenue Service. Accordingly, the Company's actual results may differ materially from those contemplated by these forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our filings with the Securities and Exchange Commission, including the risks and uncertainties identified in Part I, Item 1A - Risk Factors of the Company's Annual Report on Form 10-K for the year ended December 31, 2014.
These forward-looking statements speak only as of the date of this press release, and the Company does not assume any obligation to update or revise any forward-looking statement made in this press release or that may from time to time be made by or on behalf of the Company. Information may also be obtained from the Company Contact: Daniel J Meaney, APR, Director of Corporate Communications, 93 West Main Street, Clinton, CT 06413-1600, (860) 664-6016.
|Connecticut Water Service, Inc. & Subsidiaries|
|Condensed Consolidated Statements of Income (unaudited)|
|(In thousands except per share amounts)||December 31, 2014||December 31, 2013|
|Other Water Activities Revenues||1,496||1,519|
|Real Estate Revenues||243||95|
|Service and Rentals Revenues||5,784||5,862|
|Total Operating Expenses||$68,856||$69,488|
|Other Utility Income, Net of Taxes||$833||$856|
|Total Utility Operating Income||$25,997||$22,849|
|Gain (Loss) on Property Transactions, Net of Taxes||$50||$(7)|
|Non-Water Sales Earnings (Services and Rentals), Net of Taxes||$1,471||$1,483|
|Net Income Applicable to Common Shareholders||$21,281||$18,231|
|Basic Earnings Per Average Common Share||$1.95||$1.68|
|Diluted Earnings Per Average Common Share||$1.92||$1.66|
|Basic Weighted Average Common Shares Outstanding||10,893||10,827|
|Diluted Weighted Average Common Shares Outstanding||11,091||10,996|
|Book Value Per Share||$18.83||$17.91|
|Condensed Consolidated Balance Sheets (unaudited)|
|(In thousands)||December 31, 2014||December 31, 2013|
|Net Utility Plant||$506,939||$471,876|
|CAPITALIZATION AND LIABILITIES|
|Other Liabilities and Deferred Credits||176,372||153,743|
|Contributions in Aid of Construction||84,371||80,772|
|Total Capitalization and Liabilities||$671,189||$630,811|
CONTACT: Daniel J. Meaney, APR Director of Corporate Communications Connecticut Water Service, Inc. 93 West Main Street, Clinton, CT 06413-1600 (860) 664-6016
Source:Connecticut Water Service, Inc.