CLINTON, Conn., May 8, 2009 (GLOBE NEWSWIRE) -- Connecticut Water Service, Inc. (Nasdaq:CTWS) announced that it has executed a Purchase and Sale Agreement on a conservation easement for approximately 200 acres of land in the town of Windsor Locks, Connecticut, that is expected to generate about $1 million in net income in 2009. The Company also reported that net income in the first quarter of 2009 totaled $1.1 million, or $0.13 per basic common share on operating revenues of $13.4 million. During the same period in 2008, the Company reported net income of approximately $1.7 million, or $0.20 per basic common share on operating revenues of $13.6 million.
In the first quarter of 2009, net income in the Company's core business segment, the Water Activities segment, was $0.9 million, or $0.11 per basic common share. In the same period of 2008, net income from the segment totaled $1.5 million, or $0.18 per basic common share. A decline in net income in the Water Activities segment had been anticipated for the first quarter of 2009 due to an expected increase in Operations and Maintenance expense. In addition, the Company experienced a $188,000, or 1.4%, decline in revenue that reflected a 3.4% reduction in metered residential water use and the timing of the second phase of the 2007 rate increase.
Operating expenses in the first quarter increased $1.0 million over the same period in 2008 to $8.2 million. The increase was due in part to increased maintenance costs caused by winter weather-related repairs and an expected increase in purchased water costs in the first quarter of 2009 when compared to 2008. The purchased water expense in the first quarter of 2008 reflected a credit associated with the prior year's transactions.
A portion of the decline in metered water consumption in the first quarter of 2009 was associated with a quarter that was one day, or 1.1%, shorter in 2009 because of a 'leap-year' in 2008. Excluding the effect of the leap-year, metered consumption declined approximately 3.4% for an average residential customer when compared to the same period of 2008. The decline in usage and the timing of the second phase of the 2007 rate increase more than offset the approximate 4.5% incremental rate increase related to the Company's 2007 capital investments. The incremental increase went into effect on April 1, 2008.
The Company saw consistent performance from its Services and Rentals segment in the first quarter of 2009 generating $0.02 cents per basic common share, which was the same as the first quarter of 2008.
Eric W. Thornburg, Chairman, President and Chief Executive Officer, stated: "We continue to make progress implementing our long-term strategy. In the first quarter of 2009, the Company completed the acquisition of the Ellington Acres Company, adding 750 new customers. The Connecticut Department of Public Utility Control (DPUC) approved our Infrastructure Assessment Report, which allows the Company to file for its first Water Infrastructure and Conservation Act (WICA) surcharge on customer bills. WICA allows the Company to begin recovering capital invested in water main replacement and conservation related items between general rate cases. We anticipate the first WICA surcharge will be added to customer bills in the third quarter of 2009."
Mr. Thornburg also noted that the sale of the conservation easement on 200 acres of land to the Town of Windsor Locks requires the approval of the DPUC. The Company anticipates the sale will generate about $1 million in net income and expects the transaction to close in the second half of 2009.
Connecticut Water Service, Inc. is New England's largest locally based investor-owned water company. Through its wholly owned public water utility subsidiary, the Connecticut Water Company, the Company provides drinking water to over 88,000 customers, or nearly 300,000 people, in 54 towns throughout Connecticut.
The Connecticut Water Service, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2893
This news release may contain certain forward-looking statements regarding the Company's results of operation and financial position. These forward-looking statements are based on current information and expectations, and are subject to risks and uncertainties, which could cause the Company's actual results to differ materially from expected results.
Regulated water companies, including Connecticut Water, are subject to various federal and state regulatory agencies concerning water quality and environmental standards. Generally, the water industry is materially dependent on the adequacy of approved rates to allow for a fair rate of return on the investment in utility plant. The ability to maintain our operating costs at the lowest possible level, while providing good quality water service, is beneficial to customers and stockholders. Profitability is also dependent on the timeliness of rate relief to be sought from, and granted by, the DPUC, when necessary, and numerous factors over which we have little or no control, such as the quantity of rainfall and temperature, customer demand and related conservation efforts, financing costs, energy rates, tax rates, and stock market trends which may affect the return earned on pension assets, compliance with environmental and water quality regulations, and the outcome of litigation matters, including the Unionville division well field dispute. From time to time, the Company may acquire other regulated and/or unregulated water companies. Profitability is often dependent on identification and consummation of business acquisitions and the profitable integration of these acquired businesses into the Company's operations, including the January 2009 acquisition of Ellington Acres. The profitability of our other revenue sources is subject to the amount of land we have available for sale and/or donation, the demand for the land, the continuation of the current state tax benefits relating to the donation of land for open space purposes, regulatory approval of land dispositions (including the agreement to sell the conservation easement on the Windsor Locks property), the demand for telecommunications antenna site leases and the successful extensions and expansion of our service contract work. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
Connecticut Water Service, Inc. & Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
Three Months Ended
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(In thousands except per share amounts) March 31, March 31,
2009 2008
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Operating Revenues $13,381 $13,569
Other Utility Income, Net of Taxes $155 $121
Total Utility Operating Income $2,223 $2,812
Non-Water Sales Earnings (Services and Rentals),
Net of Taxes $209 $190
Net Income $1,144 $1,705
Net Income Applicable to Common Shareholders $1,135 $1,696
Basic Earnings Per Average Common Share $0.13 $0.20
Diluted Earnings Per Average Common Share $0.13 $0.20
Basic Weighted Average Common Shares Outstanding 8,492 8,395
Diluted Weighted Average Common Shares Outstanding 8,493 8,401
Book Value Per Share $12.13 $11.93
Condensed Consolidated Balance Sheets (unaudited)
(In thousands) March 31, March 31,
2009 2008
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ASSETS
Net Utility Plant $304,336 $284,249
Current Assets 16,589 23,723
Other Assets 57,042 60,871
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Total Assets $377,967 $368,843
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CAPITALIZATION AND LIABILITIES
Shareholders' Equity $103,192 $100,314
Preferred Stock 772 772
Long-Term Debt 92,216 92,284
Current Liabilities 22,723 19,638
Other Liabilities and Deferred Credits 159,064 155,835
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Total Capitalization and Liabilities $377,967 $368,843
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