January 25, 2006
Cal Water Announces Increased Revenues and Earnings for 4th Qtr and Year-End 2005; Board Declares 61st Consecutive Annual Dividend
SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 25, 2006--California Water Service Group (NYSE:CWT) today announced unaudited financial results for the fourth quarter and the full year 2005. Net income of $5.8 million for the fourth quarter of 2005 was up 56% over the same period in 2004, and diluted earnings per share of $0.32 were up from $0.20 posted for the fourth quarter of 2004.
Revenue for the quarter increased $8.5 million or 12% to $77.8 million. Adding to revenue was $3.3 million in rate increases, $0.9 million in sales to new customers, and $4.3 million in revenue from increased sales to existing customers.
Total operating expenses for the quarter were $69.9 million, an increase of 13% or $8.0 million over the same period in 2004. Water production costs were up 12% due to higher water sales resulting from drier weather during the fourth quarter. Other operations expense was up 1% due to higher medical benefit and pension costs.
Maintenance expense increased 16% due to repairs and maintenance of wells, water treatment equipment, and mains. Depreciation expense increased 13% due to a higher investment in depreciable utility plant and changes in depreciation expense authorized by the California Public Utilities Commission.
Interest expense remained the same as in 2004. Income taxes increased approximately $3.2 million due to the increase in net income and a higher effective tax rate as a result of higher deferred income tax charges.
Other income was up $1.7 million from the same period in 2004, and included a $1.5 million gain from the sale of a property that was no longer necessary and useful in serving utility customers.
Full Year 2005 Results
2005 net income was $27.2 million, compared to $26.0 million in 2004, and 2005 diluted earnings per share were $1.47, compared to $1.46 in 2004.
Revenue for 2005 was $320.7 million, increasing $5.2 million or 2%, due to $12.3 million in rate increases and $3.8 million in revenues from sales to new customers. Partially offsetting these increases were decreased revenues of $10.9 million from sales to existing customers, primarily due to higher rainfall in the first half of 2005.
Total operating expenses increased $6.8 million, or 3%, for the year. Due primarily to lower customer usage resulting from cool, wet weather, water production costs decreased 3% in 2005 compared to 2004. Other operations expense increased 2% for the year, or $1.7 million, due to higher medical costs and increases in payroll.
Maintenance expense increased by $2.0 million or 15% due to cost increases related to repairs of water treatment equipment, water mains, and wells in 2005. Depreciation increased 10% due to a larger investment in depreciable utility plant and changes in depreciation expense authorized by the California Public Utilities Commission.
Interest expense decreased 1% due to no short-term borrowings in 2005. Income tax increased approximately $2.9 million, due to higher net income and a higher effective tax rate as a result of higher deferred income tax charges.
2005 total year results benefited from $2.2 million in gains from sales of properties no longer used and necessary in providing utility services. In comparison, surplus property sales were negligible in 2004.
"Considering the impact that the weather had on our water sales, I am very pleased with our performance for 2005. In 2005, we continued to see an improvement in the regulatory climate as we received timely rate relief. We also added 350 customer connections in New Mexico through the acquisition of Cypress Gardens water system, which grows that subsidiary by 6%," said President and Chief Executive Officer Peter C. Nelson.
"Looking ahead, I am hopeful that the regulatory environment in California will continue to improve and confident that we will continue to successfully execute our growth strategy. Moreover, I believe that we will continue to deliver solid results by staying focused on serving customers, operating efficiently, and making wise investments in our infrastructure," he said.