Connecticut Water Service, Inc. Reports Second-Quarter Earnings

Earnings Total $0.41 Per Share in the Quarter


CLINTON, Conn., Aug. 9, 2011 (GLOBE NEWSWIRE) -- Connecticut Water Service, Inc. (Nasdaq:CTWS) announced net income of $3.5 million and earnings per basic average share (EPS) of $0.41 for the second quarter of 2011, compared to net income of $2.3 million and EPS of $0.28 for the second quarter of 2010. Total revenue grew to $18.8 million from $17.5 million, an increase of $1.3 million, or 7.7%. Total revenue includes all revenues generated by the Company's three business segments: Water Activities, Services and Rentals, and Real Estate.

In the second quarter of 2011, net income in the Company's core business, the Water Activities Segment, was $3.3 million, or $0.38 per basic common share, on revenues of $17.7 million. In the same period of 2010, net income from the segment totaled $2.1 million, or $0.25 per basic common share, on revenues of $16.2 million. The increased revenue for the Water Activities Segment was driven by increased revenues generated by a 12.7% rate increase approved in July 2010.

The Company saw consistent performance from its Services and Rentals Segment in the second quarter of 2011 that contributed more than $0.02 per basic common share, which was approximately the same as the second quarter of 2010. There was no activity in the Real Estate Segment in the second quarter of 2011 or 2010.

Operating expenses for the quarter increased 5.1% to $13 million due largely to increases in depreciation and income taxes. The primary driver of the increased depreciation expense was the implementation of the Enterprise Resource Planning system in 2010, which depreciates at a higher rate than typical water system infrastructure. The higher income tax cost was related to the increase in pre-tax income. A reduction in operation and maintenance expenses of $174,000, or 2.2%, partially offset the increases in depreciation and income tax.

"We continue to focus on the Water Activities segment as the growth engine of our company," stated Eric W. Thornburg, Chairman, President, and Chief Executive Officer, of Connecticut Water. Mr. Thornburg added, "Increased revenues and cost containment in operations and maintenance expenses lead to a solid quarter despite a nearly 6% reduction in water production due to reduced customer demand caused by increased precipitation and lower temperatures compared to 2010. Connecticut Water's leadership and employees continue to evaluate opportunities for increasing efficiency while maintaining world-class levels of customer satisfaction and honoring commitments to its employees."

For the first six months of 2011, the Company reported net income of $5.7 million and earnings per basic average share (EPS) of $0.67, compared to net income of $3.4 million and EPS of $0.40 for the same period of 2010. Total revenue for the six month period grew to $36.3 million from $32.7 million, an increase of $3.6 million, or 11.1%.

Operating expenses in the first six months increased $1.6 million, or 6.5%, to $25.6 million compared to $24.1 million for the same period in 2010. As with the three month results, increased depreciation and income tax expense were the biggest drivers of the increase. Operation and maintenance expense decreased $254,000, or 1.6%, to $15.8 million, and partially offset the increased depreciation and income tax expenses.

Connecticut Water Service, Inc. is the largest publicly traded water company based in New England. Through its wholly-owned public water utility subsidiary, The Connecticut Water Company, the Company provides drinking water to nearly 90,000 customers, or about 300,000 people, in 55 towns throughout Connecticut. Connecticut Water Service, Inc. recently announced it has reached an agreement to purchase the operating subsidiary of Aqua America, Inc. in the state of Maine for an Enterprise Value of $53.5 million. The Maine operating subsidiary serves 16,000 customers, or a population of 48,000, across the state.

The Connecticut Water Service, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2893

Connecticut Water Service, Inc. & Subsidiaries

Condensed Consolidated Statements of Income (unaudited)

  Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands except per share amounts) 2011 2010 2011 2010
         
Operating Revenues $17,359 $15,901 $33,348 $29,702
Other Water Activities Revenues 366 304 700 635
Real Estate Revenues ---- ---- ---- ----
Service and Rentals Revenues 1,096 1,267 2,263 2,347
Total Revenues $18,821 $17,472 $36,311 $32,684
Operating Expenses $12,989 $12,360 $25,618 $24,058
Other Utility Income, Net of Taxes $210 $173 $388 $353
Total Utility Operating Income $4,580 $3,714 $8,118 $5,997
Gain on Property Transactions, Net of Taxes $---- $---- $---- $----
Non-Water Sales Earnings (Services and Rentals), Net of Taxes $219 $200 $412 $436
Net Income $3,470 $2,312 $5,738 $3,382
Net Income Applicable to Common Shareholders $3,460 $2,302 $5,719 $3,363
Basic Earnings Per Average Common Share $0.41 $0.28 $0.67 $0.40
Diluted Earnings Per Average Common Share $0.40 $0.27 $0.66 $0.39
Basic Weighted Average Common Shares Outstanding 8,601 8,522 8,590 8,512
Diluted Weighted Average Common Shares Outstanding 8,710 8,624 8,702 8,612
Book Value Per Share $13.27 $12.62 $13.27 $12.62

Condensed Consolidated Balance Sheets (unaudited)

(In thousands) June 30, 2011 June 30, 2010
 
ASSETS    
Net Utility Plant $349,361 $333,422
Current Assets 20,428 19,755
Other Assets 60,943 67,687
 
Total Assets $430,732 $420,864
 
CAPITALIZATION AND LIABILITIES    
Shareholders' Equity $115,786 $109,031
Preferred Stock 772 772
Long-Term Debt 111,385 111,740
Current Liabilities 34,739 35,787
Other Liabilities and Deferred Credits 168,050 163,534
Total Capitalization and Liabilities $430,732 $420,864

This news release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company's results of operations, financial position, and long-term strategy. These forward-looking statements are based on current information and expectations, and are subject to risks and uncertainties discussed in our filings with the Securities and Exchange Commission, which could cause the Company's actual results to differ materially from expected results. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.



            

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