Philadelphia Suburban Corporation Reports 10% Revenue Growth and Increased Income in First Quarter
Philadelphia Suburban Corporation Reports 10% Revenue Growth and Increased Income in First Quarter
May 2, 2000
The Company cited strong revenue growth as a primary factor in the improvement, largely as a result of its growth-through-acquisition strategy, improved water sales and a 5 percent Distribution System Improvement Charge (DSIC) in place in Pennsylvania during the first quarter of 2000. Continued cost containment efforts and synergies associated with the PSC/Consumers corporate merger and a strong performance by the Consumers Water unit also contributed to these record net income results.
For the quarter, operating revenues increased to $64.5 million vs. the $58.6 million reported in 1999, up 10.1 percent. Net income increased to $10.2 million or $.25 per share, versus $316,000 or $.01 per share earned in the first quarter of 1999, which was adversely effected by a $8.6 million write-off of costs associated with the Consumers Water merger. The first quarter of 2000 diluted income per share of $.25 represents a 13.6 percent increase over the $.22 earned in the same period of 1999, before merger costs. Included in the results above is an after-tax gain on the sale of securities of $0.6 million in the first quarter of 2000.
Commenting on the results, PSC Chairman Nicholas DeBenedictis stated, As the water industry continues to consolidate at a rapid pace, we are pleased that our disciplined growth-through-acquisition model, and its related revenue growth, coupled with our steady control of operations and maintenance expenses, have combined to provide continued record earnings.
PSC's ongoing control over costs is evidenced by the further decline in the Company's operating expense ratio from 39.5 percent in 1999 to 38.4 percent on a trailing twelve month basis, ending March 31. March 10, 2000 marked the first anniversary of the PSC/Consumers Water merger which to date has achieved an annual run rate of $3.5 million in synergies.
During the first quarter of 2000, several growth ventures impacted results and continue to position PSC for further growth. The December 1999 purchase of Bensalem (Pennsylvania), one of the largest-ever purchases of a municipal water system, had a full period impact on results for the first quarter, as did several other smaller acquisitions.
While the Company received no major rate awards in 1999, both 2000 and 2001 will see substantial rate activity, necessary for the Company to continue its infrastructure rehabilitation and treatment plant modernization programs. Recently, our Pennsylvania subsidiaries (Philadelphia Suburban Water Company and the Consumers Pennsylvania Water companies) settled a joint rate request, which had been filed with the Pennsylvania Public Utility Commission in October, 1999. The settlement provides for additional annual revenues of $17 million (over the rate level in effect at the time of the filing - including DSIC amounts) effective April 28, 2000. Other rate requests have been made in Illinois, New Jersey and Maine and are presently pending before each state utility commission.
With our recent rate settlement in Pennsylvania, we are ensured a fair return on the nearly $200 million in capital expenditures made since our last rate request. We are confident that we'll be able to continue to improve our key facilities and infrastructure in an efficient manner, while creating value for our shareholders into the future, explained DeBenedictis.
PSC is the holding company for Philadelphia Suburban Water Company and Consumers Water Company, regulated public utilities that provide water to approximately two million residents in Pennsylvania, Ohio, New Jersey, Illinois and Maine. PSC's common shares are traded on both the New York and Philadelphia Stock Exchanges under the ticker symbol PSC.
The following table shows the comparative operating revenues, net
income and net income per share for Philadelphia Suburban Corporation
for the quarters ended March 31, 2000 and 1999 (in thousands, except
per share amounts)
(Unaudited)
Quarter Ended Quarter Ended
March 31, 2000 March 31, 1999
-------------- --------------
Operating Revenues $64,510 $58,597
Income Before Merger Costs $10,246 $ 8,912
Merger Costs (net of tax) $(8,596)
Net Income Available to
Common Stock $10,246 $ 316
Income Per Common Share
Before Merger Costs:
Basic Income Per
Common Share $ .25 $ .22
Diluted Income Per
Common Share $ .25 $ .22
Net Income Per Common Share
Basic Net Income Per
Common Share $ .25 $ .01
Diluted Net Income
Per Common Share $ .25 $ .01
Average Common Shares
Outstanding:
Basic 40,950 40,771
Diluted 41,256 41,285
Philadelphia Suburban Corporation and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended
March 31,
2000 1999
Operating revenues $ 64,510 $ 58,597
Cost & expenses:
Operations and maintenance 24,928 22,725
Depreciation 8,251 7,419
Amortization 270 420
Taxes other than income taxes 5,982 5,588
Restructuring costs - 3,787
------------- --------------
Total 39,431 39,939
------------- --------------
Operating income 25,079 18,658
Interest expense, net 9,855 8,091
Gain on sale of securities (1,061) -
Minority interest 18 15
Allowance for funds used
during construction (734) (388)
Merger transaction costs - 6,334
------------- --------------
Income before income taxes 17,001 4,606
Provision for income taxes 6,728 4,255
------------- --------------
Net income 10,273 351
Dividends on preferred stock 27 35
------------- --------------
------------- --------------
Net income available
to common stock $ 10,246 $ 316
============= ==============
Net income $ 10,273 $ 351
Other comprehensive income
(loss), net of tax (654) -
------------- --------------
------------- --------------
Comprehensive income $ 9,619 $ 351
============= ==============
Income per common share
before merger costs
Basic $ 0.25 $ 0.22
Diluted $ 0.25 $ 0.22
Net income per common share:
Basic $ 0.25 $ 0.01
Diluted $ 0.25 $ 0.01
Average shares outstanding:
Basic 40,950 40,771
============= ==============
Diluted 41,256 41,285
============= ==============
Philadelphia Suburban Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands of dollars, except per share amounts)
(Unaudited) (Audited)
March 31, December 31,
2000 1999
------------------------------------
Assets
Property, plant and
equipment, at cost $ 1,406,557 $ 1,393,027
Less accumulated depreciation 259,735 257,663
------------------------------------
Net property, plant
and equipment 1,146,822 1,135,364
------------------------------------
Current assets:
Cash and cash equivalents 6,481 4,658
Accounts receivable and
unbilled revenues, net 44,508 44,399
Inventory, materials and supplies 3,920 3,948
Prepayments and other current assets 4,518 6,520
------------------------------------
Total current assets 59,427 59,525
------------------------------------
Regulatory assets 58,236 58,287
Deferred charges and
other assets, net 25,621 27,629
------------------------------------
$ 1,290,106 $ 1,280,805
====================================
Liabilities and Stockholders' Equity
Stockholders' equity:
6.05% Series B cumulative
preferred stock $ 1,760 $ 1,760
Common stock at $.50 par value,
authorized 100,000,000 shares,
issued 41,721,366 and 41,627,644
in 2000 and 1999 20,861 20,814
Capital in excess of par value 252,899 251,440
Retained earnings 104,412 101,533
Minority interest 2,605 2,604
Treasury stock, 794,109 and
615,038 shares in 2000 and 1999 (14,665) (11,270)
Accumulated other
comprehensive income 1,366 2,020
------------------------------------
Total stockholders' equity 369,238 368,901
------------------------------------
Long-term debt, excluding
current portion 429,232 413,752
Commitments - -
Current liabilities:
Current portion of
long-term debt 12,978 12,194
Loans payable 102,741 103,069
Accounts payable 13,291 24,286
Accrued interest 9,068 8,994
Accrued taxes 15,601 12,689
Other accrued liabilities 22,689 22,581
------------------------------------
Total current liabilities 176,368 183,813
------------------------------------
Deferred credits and
other liabilities:
Deferred income taxes
and investment tax credits 137,597 136,528
Customers' advances for
construction 57,203 59,494
Other 6,928 8,434
------------------------------------
Total deferred credits and
other liabilities 201,728 204,456
------------------------------------
Contributions in aid
of construction 113,540 109,883
------------------------------------
$ 1,290,106 $ 1,280,805
====================================
This release contains certain forward-looking statements involving risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors include, among others, the following: general economic business conditions; the success of certain cost containment initiatives, including those arising from the merger; changes in regulations or regulatory treatment; availability and cost of capital; and the success of growth initiatives.
--30--CF/ph*
CONTACT: Philadelphia Suburban Corporation
Meg Grady, Director, Investor Relations, 610/645-1084
gradym@suburbanwater.com
or
Donna Alston, Director, Communications, 610/645-1095
or
www.suburbanwater.com
KEYWORD: PENNSYLVANIA ILLINOIS NEW JERSEY MAINE
INDUSTRY KEYWORD: UTILITIES EARNINGS