Philadelphia Suburban Corporation Reports Increased Earnings and Revenue in the Third Quarter 2000; Company to increase dividend and split stock
Philadelphia Suburban Corporation Reports Increased Earnings and Revenue in the Third Quarter 2000; Company to increase dividend and split stock
November 3, 2000
Philadelphia Suburban Corporation Reports Increased Earnings and Revenue in the Third Quarter 2000; Company to increase dividend and split stockBRYN MAWR, Pa. Nov. 3, 2000 - Philadelphia
Suburban Corporation (NYSE:PSC) today reported an 11.4 percent
increase in earnings to $.39 per diluted share in the third quarter of
2000, versus $.35 last year.
Corresponding net income in the third quarter grew 15.4 percent to $16.5 million versus 1999's third quarter net income of $14.3 million. Despite reduced water consumption, quarterly revenues improved as a result of rate adjustments and customer growth.
The quarterly results were further enhanced by the recovery of previously expensed merger costs associated with the Consumers Water Company merger and limited expense increases (operating and maintenance expenses increased from last year only 1.6 percent for the quarter, while total costs and expenses were flat).
During the quarter, the PSC Board of Directors approved a 7.6 percent increase to the cash dividend and a 5-for-4 stock split effected in the form of a 25 percent stock dividend, both effective December 1, 2000. This increase in PSC's December 1, 2000 cash dividend from $.18 to $.19375 per share represents an increase to $.775, from the former annual rate of $.72 per share.
Both the increased cash dividend and the stock split will be payable to shareholders of record on November 15, 2000. The new quarterly cash dividend rate will be $.155 per share on the increased number of shares from the stock split or $.62 per share annualized for dividends declared by the Board of Directors.
This is the tenth cash dividend increase granted by the company in the last nine years and the third stock split in the last five years.
Revenues for the quarter increased $3.8 million or 5.5 percent from last year despite lower temperatures and 45 percent more rain than typical in the company's primary service area. Absent the company's growth ventures, water usage would have been off 5.4 percent.
This reduction in water use, attributable to the unfavorable weather, caused an approximate one billion gallon or $3 million decline in water sales ($.04 per diluted share after tax). Offsetting the downturn in consumption was the growth in revenues associated with rate adjustments and the continued successes of the company's growth-through-acquisition program.
In addition, operations and maintenance expenses for the quarter increased by only 1.6 percent from the 1999 level despite the addition of approximately 28,000 customers--a 5.2 percent increase since September 30, 1999.
Operations and maintenance expenses as a percentage of revenue continued to decrease, representing only 37.7 percent on a trailing 12 month basis versus 38.6 percent for the 12 months ended September 30, 1999, as further expense controls and productivity enhancements are identified and implemented across the company. The company expects reductions in this ratio to continue.
Also in the quarter, the company reversed $1.3 million (net of taxes), or $.03 per diluted share, of previously expensed merger costs associated with the Consumers Water Company merger in recognition of a regulatory order awarding the company recovery of such costs over a 10 year period.
This, when combined with a similar reversal last quarter, captures the entire amount of merger costs awarded the company through the regulatory process.
Commenting on the quarter, PSC President and CEO Nicholas DeBenedictis said, PSC's growth-through-acquisition program proved invaluable this quarter as revenues from new customers and timely rate relief combined to overshadow the weather-related decline from normal water consumption. In addition, I am pleased that our ability to realize synergies has enabled us to demonstrate the considerable value the Consumers Water Company merger brings to our customers, thereby resulting in the recovery of a substantial portion of the costs necessary to consummate that transaction. As we move forward with our disciplined growth-through-acquisition strategy, we remain encouraged by the favorable reception we continue to receive.
Net income for the year-to-date grew 51.2 percent to $40.4 million versus 1999's level of $26.7 million. This resulted in a 49.2 percent increase in earnings per share to $.97 per diluted share in 2000, versus $.65 last year. The 1999 results were adversely effected by a non-recurring first quarter charge of $8.6 million (net of taxes), or $.21 per diluted share, from merger costs.
Year-to-date revenues were up 6.2 percent to $206.3 million, versus the $194.3 million reported in the same period of 1999. Like the quarter, the year-to-date improvement is largely attributable to increased revenues (through rate adjustments and customer growth), recovery of previously expensed merger costs and the continuation of solid cost controls.
Customer growth was approximately 5.2 percent since September 30, 1999, due primarily to PSC's growth-through-acquisition strategy. Following are the primary growth ventures announced this quarter:
1. A 25-year bulk water sales agreement with Liberty Electric
Power, LLC-a subsidiary of Columbia Electric Corporation, in
Delaware County, Pennsylvania. Water sales under the contract
are expected to be $1.4 million the first year, and $43
million over the 25 year life
2. Acquisition of the Summit County water system, serving
approximately 4,200 residents in the City of Green, Ohio
3. Acquisition of the White Horse Village retirement community
water system that includes 500 residences and a 100-bed
hospital in Delaware County, Pennsylvania
4. An agreement of sale to purchase the Ivanhoe water and
wastewater systems, which provide water and wastewater service
to approximately 400 residents in a gated golf community in
Lake County, Illinois
5. Acquisition of the Chatwood water system, which serves
approximately 250 residents in Chester County, Pennsylvania
6. Approval from the Pennsylvania Public Utility Commission to
serve Honeybrook Township, in Chester County, Pennsylvania
The Company plans to continue its successful growth strategy into the foreseeable future.
PSC is one of the nation's largest investor-owned water utilities serving nearly two million residents in Pennsylvania, Illinois, Ohio, New Jersey and Maine. PSC is a publicly-traded company listed on both the New York and Philadelphia Stock Exchanges under the ticker symbol PSC and has been committed to the preservation and improvement of the environment throughout its history, which spans more than 100 years.
The following table shows the comparative operating revenues, net income and net income per share for Philadelphia Suburban Corporation for the quarters and nine months ended September 30, 2000 and 1999 (in thousands, except per share amounts):
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; changes in regulations or regulatory treatment; availability and cost of capital; and the success of growth initiatives.
Corresponding net income in the third quarter grew 15.4 percent to $16.5 million versus 1999's third quarter net income of $14.3 million. Despite reduced water consumption, quarterly revenues improved as a result of rate adjustments and customer growth.
The quarterly results were further enhanced by the recovery of previously expensed merger costs associated with the Consumers Water Company merger and limited expense increases (operating and maintenance expenses increased from last year only 1.6 percent for the quarter, while total costs and expenses were flat).
During the quarter, the PSC Board of Directors approved a 7.6 percent increase to the cash dividend and a 5-for-4 stock split effected in the form of a 25 percent stock dividend, both effective December 1, 2000. This increase in PSC's December 1, 2000 cash dividend from $.18 to $.19375 per share represents an increase to $.775, from the former annual rate of $.72 per share.
Both the increased cash dividend and the stock split will be payable to shareholders of record on November 15, 2000. The new quarterly cash dividend rate will be $.155 per share on the increased number of shares from the stock split or $.62 per share annualized for dividends declared by the Board of Directors.
This is the tenth cash dividend increase granted by the company in the last nine years and the third stock split in the last five years.
Revenues for the quarter increased $3.8 million or 5.5 percent from last year despite lower temperatures and 45 percent more rain than typical in the company's primary service area. Absent the company's growth ventures, water usage would have been off 5.4 percent.
This reduction in water use, attributable to the unfavorable weather, caused an approximate one billion gallon or $3 million decline in water sales ($.04 per diluted share after tax). Offsetting the downturn in consumption was the growth in revenues associated with rate adjustments and the continued successes of the company's growth-through-acquisition program.
In addition, operations and maintenance expenses for the quarter increased by only 1.6 percent from the 1999 level despite the addition of approximately 28,000 customers--a 5.2 percent increase since September 30, 1999.
Operations and maintenance expenses as a percentage of revenue continued to decrease, representing only 37.7 percent on a trailing 12 month basis versus 38.6 percent for the 12 months ended September 30, 1999, as further expense controls and productivity enhancements are identified and implemented across the company. The company expects reductions in this ratio to continue.
Also in the quarter, the company reversed $1.3 million (net of taxes), or $.03 per diluted share, of previously expensed merger costs associated with the Consumers Water Company merger in recognition of a regulatory order awarding the company recovery of such costs over a 10 year period.
This, when combined with a similar reversal last quarter, captures the entire amount of merger costs awarded the company through the regulatory process.
Commenting on the quarter, PSC President and CEO Nicholas DeBenedictis said, PSC's growth-through-acquisition program proved invaluable this quarter as revenues from new customers and timely rate relief combined to overshadow the weather-related decline from normal water consumption. In addition, I am pleased that our ability to realize synergies has enabled us to demonstrate the considerable value the Consumers Water Company merger brings to our customers, thereby resulting in the recovery of a substantial portion of the costs necessary to consummate that transaction. As we move forward with our disciplined growth-through-acquisition strategy, we remain encouraged by the favorable reception we continue to receive.
Net income for the year-to-date grew 51.2 percent to $40.4 million versus 1999's level of $26.7 million. This resulted in a 49.2 percent increase in earnings per share to $.97 per diluted share in 2000, versus $.65 last year. The 1999 results were adversely effected by a non-recurring first quarter charge of $8.6 million (net of taxes), or $.21 per diluted share, from merger costs.
Year-to-date revenues were up 6.2 percent to $206.3 million, versus the $194.3 million reported in the same period of 1999. Like the quarter, the year-to-date improvement is largely attributable to increased revenues (through rate adjustments and customer growth), recovery of previously expensed merger costs and the continuation of solid cost controls.
Customer growth was approximately 5.2 percent since September 30, 1999, due primarily to PSC's growth-through-acquisition strategy. Following are the primary growth ventures announced this quarter:
1. A 25-year bulk water sales agreement with Liberty Electric
Power, LLC-a subsidiary of Columbia Electric Corporation, in
Delaware County, Pennsylvania. Water sales under the contract
are expected to be $1.4 million the first year, and $43
million over the 25 year life
2. Acquisition of the Summit County water system, serving
approximately 4,200 residents in the City of Green, Ohio
3. Acquisition of the White Horse Village retirement community
water system that includes 500 residences and a 100-bed
hospital in Delaware County, Pennsylvania
4. An agreement of sale to purchase the Ivanhoe water and
wastewater systems, which provide water and wastewater service
to approximately 400 residents in a gated golf community in
Lake County, Illinois
5. Acquisition of the Chatwood water system, which serves
approximately 250 residents in Chester County, Pennsylvania
6. Approval from the Pennsylvania Public Utility Commission to
serve Honeybrook Township, in Chester County, Pennsylvania
The Company plans to continue its successful growth strategy into the foreseeable future.
PSC is one of the nation's largest investor-owned water utilities serving nearly two million residents in Pennsylvania, Illinois, Ohio, New Jersey and Maine. PSC is a publicly-traded company listed on both the New York and Philadelphia Stock Exchanges under the ticker symbol PSC and has been committed to the preservation and improvement of the environment throughout its history, which spans more than 100 years.
The following table shows the comparative operating revenues, net income and net income per share for Philadelphia Suburban Corporation for the quarters and nine months ended September 30, 2000 and 1999 (in thousands, except per share amounts):
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Operating revenues $ 73,336 $ 69,527 $ 206,340 $ 194,289
Income from
operations,
exclusive of
net merger
(costs) recovery $ 15,275 $ 14,332 $ 38,114 $ 35,277
Merger (costs)
recovery, net 1,264 -- 2,236 (8,596)
--------- --------- --------- ---------
Net income
available for
common stock $ 16,539 $ 14,332 $ 40,350 $ 26,681
========= ========= ========= =========
Income per common
share from operations,
exclusive of net
merger (costs)
recovery:
Basic income per
common share $ 0.37 $ 0.35 $ 0.93 $ 0.86
Diluted income per
common share $ 0.36 $ 0.35 $ 0.92 $ 0.86
Net income per common
share:
Basic net income per
common share $ 0.40 $ 0.35 $ 0.98 $ 0.65
Diluted net income per
common share $ 0.39 $ 0.35 $ 0.97 $ 0.65
Average common shares
outstanding during
the period:
Basic 41,317 40,898 41,081 40,823
Diluted 41,751 41,333 41,472 41,281
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; changes in regulations or regulatory treatment; availability and cost of capital; and the success of growth initiatives.
Philadelphia Suburban Corporation and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Operating
revenues $ 73,336 $ 69,527 $ 206,340 $ 194,289
Cost & expenses:
Operations and
maintenance 25,037 24,645 74,315 71,573
Depreciation 8,040 7,765 23,956 22,792
Amortization 517 277 1,175 989
Taxes other
than income
taxes 5,460 5,591 17,039 16,803
Restructuring
costs
(recovery) (740) -- (1,136) 3,787
--------- --------- --------- ---------
Total costs and
expenses 38,314 38,278 115,349 115,944
--------- --------- --------- ---------
Operating income 35,022 31,249 90,991 78,345
Interest expense,
net 10,282 8,347 30,127 24,968
Gain on sale of
securities -- -- (1,061) --
Minority interest 30 34 76 76
Allowance for
funds used
during
construction (541) (512) (2,260) (1,369)
Merger
transaction costs
(recovery) (2,242) -- (2,905) 6,334
--------- --------- --------- ---------
Income before
income taxes 27,493 23,380 67,014 48,336
Provision for
income taxes 10,927 9,013 26,584 21,551
--------- --------- --------- ---------
Net income 16,566 14,367 40,430 26,785
Dividends on
preferred stock 27 35 80 104
--------- --------- --------- ---------
Net income
available to
common stock $ 16,539 $ 14,332 $ 40,350 $ 26,681
========= ========= ========= =========
Net income $ 16,566 $ 14,367 $ 40,430 $ 26,785
Other
comprehensive
income (loss),
net of tax 120 1,068 (390) 1,068
--------- --------- --------- ---------
Comprehensive
income $ 16,686 $ 15,435 $ 40,040 $ 27,853
========= ========= ========= =========
Income from
operations,
exclusive of
net merger
(costs) recovery $ 15,275 $ 14,332 $ 38,114 $ 35,277
Merger (costs)
recovery, net 1,264 -- 2,236 (8,596)
--------- --------- --------- ---------
Net income
available for
common stock $ 16,539 $ 14,332 $ 40,350 $ 26,681
========= ========= ========= =========
Net income per
common share:
Basic $ 0.40 $ 0.35 $ 0.98 $ 0.65
Diluted $ 0.39 $ 0.35 $ 0.97 $ 0.65
Income per common
share from
operations,
exclusive of
net merger
(costs)
recovery:
Basic $ 0.37 $ 0.35 $ 0.93 $ 0.86
Diluted $ 0.36 $ 0.35 $ 0.92 $ 0.86
Average shares
outstanding:
Basic 41,317 40,898 41,081 40,823
========= ========= ========= =========
Diluted 41,751 41,333 41,472 41,281
========= ========= ========= =========
Philadelphia Suburban Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands of dollars, except per share amounts)
(Unaudited) (Audited)
September 30, December 31,
2000 1999
-----------------------------
Assets
Property, plant and
equipment, at cost $ 1,475,763 $ 1,393,027
Less accumulated
depreciation 277,096 257,663
-----------------------------
Net property,
plant and equipment 1,198,667 1,135,364
-----------------------------
Current assets:
Cash and cash
equivalents 6,894 4,658
Accounts receivable
and unbilled
revenues, net 53,805 44,399
Inventory, materials
and supplies 4,953 3,948
Prepayments and other
current assets 2,318 6,520
-----------------------------
Total current assets 67,970 59,525
-----------------------------
Regulatory assets 61,943 58,287
Deferred charges and
other assets, net 32,930 27,629
-----------------------------
$ 1,361,510 $ 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 43,247,183 and
41,627,644 in 2000
and 1999 21,624 20,814
Capital in excess of
par value 286,059 251,440
Retained earnings 111,766 101,533
Minority interest 2,597 2,604
Treasury stock, 789,515
and 615,038 shares in
2000 and 1999 (14,588) (11,270)
Accumulated other
comprehensive income 1,630 2,020
-----------------------------
Total stockholders' equity 410,848 368,901
-----------------------------
Long-term debt, excluding
current portion 462,727 413,752
Commitments -- --
Current liabilities:
Current portion of
long-term debt 12,974 12,194
Loans payable 80,550 103,069
Accounts payable 11,867 24,286
Accrued interest 9,441 8,994
Accrued taxes 15,295 12,689
Dividends payable 7,956 --
Other accrued
liabilities 24,039 22,581
-----------------------------
Total current
liabilities 162,122 183,813
-----------------------------
Deferred credits and
other liabilities:
Deferred income taxes
and investment tax
credits 142,812 136,528
Customers' advances
for construction 58,231 59,494
Other 8,063 8,434
-----------------------------
Total deferred credits
and other liabilities 209,106 204,456
-----------------------------
Contributions in aid
of construction 116,707 109,883
-----------------------------
$ 1,361,510 $ 1,280,805
=============================
--30--KMK/ph*
CONTACT: Philadelphia Suburban Corporation
Meg Grady, Director, Investor Relations, 610/645-1084
gradym@suburbanwater.com