CLINTON, CONNECTICUT, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Connecticut Water Service, Inc. (NASDAQ GS: CTWS) announced net income of $12.5 million, or earnings per basic average share (EPS) of $1.11, on total revenues of $53.7 million in the first six months of 2017. Total revenues include revenues generated by the company’s three business segments: Water Operations, Service and Rentals, and Real Estate. In the same period of 2016, the company had net income of $13.1 million, or $1.19 EPS, on total revenues of $50.7 million. Financial results were affected by the partial release of a tax reserve in 2017 and a non-recurring expense reduction in 2016.
First Six Months Operating Results
Net income in the company’s core business, the Water Operations segment, was $11.9 million, on revenues of $51.0 million. In the same period of 2016, net income from the segment totaled $12.3 million, on revenues of $48.2 million. The increase in revenues was related to the acquisition of the Heritage Village Water Company (HVWC) in February 2017, as well as the recovery of costs for completed infrastructure replacement projects through the Water Infrastructure and Conservation Adjustment (WICA) in Connecticut and the Water Infrastructure Charge (WISC) in Maine.
Year to date comparisons of net income between years were impacted by different factors. In 2016, an out-of-period adjustment of approximately $1.6 million lowered expenses associated with mark-to-market costs. In 2017, a reassessment of income tax provisions related to repair deductions allowed the company to release previously reserved tax liabilities for both its Connecticut and Maine based regulated subsidiaries totaling approximately $3.6 million. 2017 results also included acquisition and corporate development costs associated with acquisition activities, a key component of the company’s industry leading customer growth of more than 45% over the past decade.
“We continue to focus on our long-term strategy of growth through prudent acquisitions and investing in infrastructure to serve customers,” stated Eric W. Thornburg, President and CEO of CTWS. Mr. Thornburg added, “In the first seven months of 2017, we continued our industry setting pace for customer growth by welcoming 9,500 customers through two acquisitions, representing growth of more than 7.5%, entered the regulated wastewater market, and completed a $30 million infrastructure project bringing an upgraded water treatment facility online.”
CTWS expects net income in the Water Operations segment for this year to increase over 2016 amounts primarily through the accretive effect of 2017 acquisitions, revenue increases through WICA and WISC, and a planned real estate transaction in Maine.
Second Quarter Operating Results
In the second quarter of 2017, net income was $8.4 million, or EPS of $0.75, compared to $9.9 million, or EPS of $0.90, reported in the same period of 2016. The results for the quarter were largely attributable to the same factors that drove the six month results, including a partial tax reserve release in 2017 and a non-recurring expense reduction in 2016.
In the second quarter of 2016, net income in the Water Operations segment was $8.1 million on revenues of $28.2 million. In the same period of 2016, net income from the segment totaled $9.5 million on revenues of $26.4 million.
Dividend Increase
On May 11, 2017, CTWS’s Board of Directors approved an increase of 5.3% in its annualized cash dividend, raising the quarterly amount to $0.2975 per share on the company’s common stock for an annualized dividend of $1.19. CTWS’s dividend has increased by more than 20% since 2013, and the May action marks the 48th consecutive year of increasing dividend payments. CTWS is included in the NASDAQ Dividend Achievers Select Index, which requires a minimum of 10 consecutive years of dividend increases.
The dividend increase on common shares became effective with the quarterly cash dividend payment of $0.2975 per common share that was paid on June 15, 2017, for all shareholders of record as of June 1, 2017.
Rate Application
On June 29, 2017, The Maine Water Company (Maine Water) filed for a rate increase in its Biddeford and Saco division. The rate request is for an approximate $1.6 million increase in revenues. The increase requires the approval of the Maine Public Utilities Commission.
Avon Water Acquisition
On July 1, 2017, the company completed the acquisition of the Avon Water Company (AWC) in a transaction with a total enterprise value of $40.1 million. AWC serves approximately 4,800 water customers in the communities of Avon, Farmington and Simsbury, Connecticut.
WICA & WISC
On July 26, 2017, The Connecticut Water Company (Connecticut Water) filed an application with the Connecticut Public Utilities Regulatory Authority (PURA) for a 1.56% increase in the WICA surcharge. If approved as filed, Connecticut Water’s cumulative WICA surcharge will be 9.81%. In Maine, Maine Water files for WISC increases with the Maine Public Utilities Commission on a system-by-system basis. The current overall approved cumulative WISC surcharge for all divisions of Maine Water is 5.66%.
WICA and WISC allow for recovery of eligible infrastructure replacements on a semi-annual basis. Since the adoption of WICA in 2007, Connecticut Water has replaced more than 106 miles of aging water main with an average age of 75 years. WISC became available in Maine in 2013 and has been used to replace aging water mains and pump stations, construct storage tanks and fund treatment improvements.
Other Developments
In the second quarter of 2017, Connecticut Water’s new Rockville Water Treatment Facility went into service serving the company’s customers in north-central Connecticut. This was a $30 million project that was completed earlier than planned and on-budget through favorable weather and the hard work and dedication of Connecticut Water employees, our contractor partners, and the Connecticut Department of Public Health.
On August 4, 2017, CTWS issued its 2016 Corporate Sustainability Report (CSR). The report highlights the achievements of Connecticut Water and Maine Water over the past several years in conducting our business in a manner that respects the natural environment and values service to customers, communities, employees and shareholders. The CSR is available at http://ir.ctwater.com.
CTWS is one of the ten largest U.S.-based publicly-traded water utilities, and is listed on the NASDAQ Global Select Market under the ticker symbol CTWS. Through its regulated utility subsidiaries, CTWS serves more than 134,000 water customers, or more than 425,000 people in 80 communities across Connecticut and Maine, and more than 3,000 wastewater customers in Southbury, Connecticut.
Since January 2012, CTWS has grown its customer base by more than 45%, or more than 44,000 customers, primarily through large acquisitions in Maine in 2012 and Heritage Village Water Company and Avon Water Company in Connecticut in 2017.
Additional information regarding results, performance or achievements noted in this news release is available in CTWS’s Form 10-Q filed with the SEC on August 8, 2017. A link to the 10-Q filing can be found at http://ir.ctwater.com/investors/sec-filings/default.aspx.
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Connecticut Water Service, Inc. & Subsidiaries
Selected Income Statement Information (unaudited)
| Three Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | |||||||
| (In thousands except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||
| Operating Revenues | $ | 27,902 | $ | 26,055 | $ | 50,365 | $ | 47,607 |
| Other Water Activities Revenues | 318 | 321 | 641 | 624 | ||||
| Real Estate Revenues | -- | -- | 212 | -- | ||||
| Service and Rentals Revenues | 1,279 | 1,212 | 2,489 | 2,443 | ||||
| Total Revenues | $ | 29,499 | $ | 27,588 | $ | 53,707 | $ | 50,674 |
| Operating Expenses | $ | 17,463 | $ | 15,026 | $ | 34,806 | $ | 32,555 |
| Other Utility Income, Net of Taxes | $ | 190 | $ | 188 | $ | 355 | $ | 343 |
| Total Utility Operating Income | $ | 10,629 | $ | 11,217 | $ | 15,914 | $ | 15,395 |
| Gain on Property Transactions, Net of Taxes | $ | -- | $ | -- | $ | 33 | $ | -- |
| Non-Water Sales Earnings (Services and Rentals), Net of Taxes | $ | 332 | $ | 406 | $ | 590 | $ | 801 |
| Net Income | $ | 8,418 | $ | 9,943 | $ | 12,486 | $ | 13,091 |
| Net Income Applicable to Common Shareholders | $ | 8,408 | $ | 9,933 | $ | 12,467 | $ | 13,072 |
| Basic Earnings Per Average Common Share | $ | 0.75 | $ | 0.90 | $ | 1.11 | $ | 1.19 |
| Diluted Earnings Per Average Common Share | $ | 0.73 | $ | 0.89 | $ | 1.09 | $ | 1.17 |
| Basic Weighted Average Common Shares Outstanding | 11,344 | 11,004 | 11,242 | 10,998 | ||||
| Diluted Weighted Average Common Shares Outstanding | 11,568 | 11,223 | 11,467 | 11,217 | ||||
| Book Value Per Share | $ | 22.45 | $ | 20.52 | $ | 22.45 | $ | 20.52 |
Condensed Consolidated Balance Sheets (unaudited)
| (In thousands) | June 30, 2017 | June 30, 2016 | ||
| ASSETS | ||||
| Net Utility Plant | $ | 647,688 | $ | 568,406 |
| Current Assets | 33,233 | 30,941 | ||
| Other Assets | 174,095 | 145,894 | ||
| Total Assets | $ | 855,016 | $ | 745,241 |
| CAPITALIZATION AND LIABILITIES | ||||
| Shareholders’ Equity | $ | 260,048 | $ | 230,439 |
| Preferred Stock | 772 | 772 | ||
| Long-Term Debt | 205,351 | 200,861 | ||
| Current Liabilities | 62,608 | 30,273 | ||
| Other Liabilities and Deferred Credits | 326,237 | 282,896 | ||
| Total Capitalization and Liabilities | $ | 855,016 | $ | 745,241 |
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; 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. 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, 2016.
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.