Philadelphia Suburban Reports Increased Earnings in the Fourth Quarter and Year
Philadelphia Suburban Reports Increased Earnings in the Fourth Quarter and Year
February 1, 2000
The overall customer growth for the company in 1999 exceeded 4 percent due primarily to 16 water system acquisitions and growth ventures. From PSC's customer count prior to the March 1999 pooling-of-interests merger with Consumers Water Company, customer growth was 81 percent for the year, closing with 555,600 customers.
Net income for the quarter increased to $9.6 million, up 11.5 percent. This improvement was a result of increased operating revenues and a reduction in operating expenses when compared to 1998, as a result of synergies attained through the March 1999 merger with Consumers Water Company. The increase in operating revenues is attributed to the previously mentioned growth initiatives completed in 1999 -- including the largest ever purchase of a U.S. municipal system: Bensalem, PA, coupled with the effects of small rate increases in Illinois and surcharges for infrastructure investment in our Pennsylvania operations.
Income from operations for the year, exclusive of non-recurring items was $44.9 million, up 10 percent over 1998's income of $40.9 million. These amounts exclude $8.6 million of merger costs recorded in the first quarter of 1999 and the gain of $3.9 million from the April 1998 sale of the Consumers New Hampshire operation (both net of tax amounts).
Year-over-year operating expenses as a percentage of revenue was reduced by 140 basis points to 38.5 percent, the lowest level in recent history. This record operating expense margin is directly related to continued cost-containment efforts and synergies attained from the March 1999 merger with Consumers Water Company.
Commenting on the quarter and the year, PSC Chairman Nicholas DeBenedictis stated, These operating results reinforce that our strategy of combining cost-containment with disciplined growth-through-acquisition is extremely effective in today's water industry, amid unprecedented consolidation. We remain committed to creating value for our shareholders with this strategy and to the long-term growth of the enterprise.
DeBenedictis continued, The geographic diversification achieved with the Consumers merger served us well this year as increased consumption in our Ohio and Illinois operations offset the decrease in consumption in our Pennsylvania and New Jersey operations occasioned by drought declarations.
DeBenedictis noted While there was relatively little revenue growth from rate cases in 1999, we have a $28 million rate case on file for our Pennsylvania operations and plan rate requests in our four other states in 2000.
A summary of 1999's key accomplishments follows.
Highlights
- Increased customer base over 4 percent
- Integration of Consumers merger yielding a $3.0 million annual run rate in synergies
- Largest-ever U.S. purchase of a municipal water system - Bensalem, PA
- Executed 16 system acquisitions and growth ventures
PSC is the holding company for Philadelphia Suburban Water Company and Consumers Water Company, which own or operate regulated public utilities that provide water to nearly 2 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.
This release contains certain forward-looking statements involving risks and uncertainties and other factors that may cause 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.
The following table shows the comparative operating revenues, net income and net income per share for PSC for the quarters and years ended December 31, 1999 and 1998 (in thousands, except per share data), all amounts include the combined results of PSC and Consumers Water Company for all periods presented.
