Exhibit 99.1
| Connecticut Water Service, Inc. 93 West Main Street Clinton, Connecticut 06413-1600 |
|
Mid-Year Report
September 2016
Dear Shareholders:
This past May, Connecticut Water Service, Inc.’s (CTWS) Board of Directors increased the annual dividend rate on our common shares by 6 cents to $1.13 per share, which was an increase of 5.6% above the previous annualized cash dividend. Further, this increase also accelerated the timing of the annual increase, which has historically occurred in the third quarter of the year. That acceleration, combined with the increase, projects to a 6.2% increase in actual cash dividends paid in the year ended, December 31, 2016 versus 2015. The dividend increase on common shares became effective with the quarterly cash dividend payment of $0.2825 per common share that was paid on June 15, 2016.
The cash dividend increase, the largest since the Company was founded 60 years ago, affirms the Board of Directors’ confidence that our long-term strategy of growth through prudent acquisitions, infrastructure investment, and providing world-class service to our customers will continue to deliver solid financial performance. CTWS has a proud track record of increasing its cash dividend payment in each of the last 47 years and has paid a dividend without interruption or reduction in every quarter since its founding in 1956.
For the six month period ending June 30, 2016, we reported earnings of $1.19 per share, on Net Income of $13.1 million, compared to $1.07 per share, on Net Income of $11.8 million, reported for the comparable period of 2015. The Company saw an increase in revenues related to 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, as well as a general rate increase in Maine’s Biddeford Saco division. In addition, Net Income from Water Operations for the six month period was positively impacted in 2016 and 2015 by one-time items. Net Income increased $1.8 million in the first six months of 2016 compared to 2015 after removing the one-time items.
Installation has been completed on the 5-mile long pipeline to serve UConn and Mansfield. When the pipeline is placed in service it will bring additional water supply to the University of Connecticut’s Storrs Campus (UConn) and the town of Mansfield. The Connecticut Water Company (Connecticut Water) will have the ability to supply an average of 1.2 million gallons per day to UConn and the town of Mansfield to meet the long-term growth plans of the community.
On July 10, CTWS filed an application with the Connecticut Public Utilities Regulatory Authority (PURA) to acquire the Heritage Village Water Company (HVWC). HVWC serves 4,700 water and 3,000 wastewater customers in the Connecticut towns of Middlebury, Oxford, and Southbury. HVWC owns and operates the only investor wastewater utility regulated by PURA.
For additional information about these matters, please visit the Company’s website at www.ctwater.com. The ‘News’ section provides access to our news releases. E-mail alerts are available for news releases, end of the day stock quotes, SEC filings, events and presentations, and when new investor related items are posted to the Web site. You may sign-up for the alerts at http://ir.ctwater.com/investors/investor-resources/email-alerts/default.aspx.
On behalf of the passionate and dedicated professionals who work hard to keep your company successful, I thank you for your continued support.
Very truly yours,
Eric W. Thornburg
Chairman, President and CEO
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) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Operating Revenues |
$ | 26,055 | $ | 26,624 | $ | 47,607 | $ | 46,654 | ||||||||
| Other Water Activities Revenues |
321 | 343 | 624 | 653 | ||||||||||||
| Real Estate Revenues |
— | — | — | — | ||||||||||||
| Service and Rentals Revenues |
1,212 | 1,463 | 2,443 | 2,825 | ||||||||||||
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| Total Revenues |
$ | 27,588 | $ | 28,430 | $ | 50,674 | $ | 50,132 | ||||||||
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| Operating Expenses |
$ | 15,026 | $ | 16,875 | $ | 32,555 | $ | 32,740 | ||||||||
| Other Utility Income, Net of Taxes |
$ | 188 | $ | 205 | $ | 343 | $ | 360 | ||||||||
| Total Utility Operating Income |
$ | 11,217 | $ | 9,954 | $ | 15,395 | $ | 14,274 | ||||||||
| Gain on Property Transactions, Net of Taxes |
$ | — | $ | — | $ | — | $ | — | ||||||||
| Non-Water Sales Earnings (Services and Rentals), Net of Taxes |
$ | 406 | $ | 375 | $ | 801 | $ | 744 | ||||||||
| Net Income |
$ | 9,943 | $ | 8,675 | $ | 13,091 | $ | 11,778 | ||||||||
| Net Income Applicable to Common Shareholders |
$ | 9,933 | $ | 8,665 | $ | 13,072 | $ | 11,759 | ||||||||
| Basic Earnings Per Average Common Share |
$ | 0.90 | $ | 0.79 | $ | 1.19 | $ | 1.07 | ||||||||
| Diluted Earnings Per Average Common Share |
$ | 0.89 | $ | 0.77 | $ | 1.17 | $ | 1.05 | ||||||||
| Basic Weighted Average Common Shares Outstanding |
11,004 | 10,958 | 10,998 | 10,941 | ||||||||||||
| Diluted Weighted Average Common Shares Outstanding |
11,223 | 11,157 | 11,217 | 11,151 | ||||||||||||
| Book Value Per Share |
$ | 20.52 | $ | 19.36 | $ | 20.52 | $ | 19.36 | ||||||||
Condensed Consolidated Balance Sheets (unaudited)
| (In thousands) | June 30, 2016 | June 30, 2015 | ||||||
| ASSETS |
||||||||
| Net Utility Plant |
$ | 568,406 | $ | 515,367 | ||||
| Current Assets |
30,941 | 35,704 | ||||||
| Other Assets |
145,894 | 142,730 | ||||||
| Total Assets |
$ | 745,241 | $ | 693,801 | ||||
| CAPITALIZATION AND LIABILITIES |
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| Shareholders’ Equity |
$ | 230,439 | $ | 216,186 | ||||
| Preferred Stock |
772 | 772 | ||||||
| Long-Term Debt |
200,861 | 177,302 | ||||||
| Current Liabilities |
30,273 | 24,905 | ||||||
| Other Liabilities and Deferred Credits |
282,896 | 274,636 | ||||||
| Total Capitalization and Liabilities |
$ | 745,241 | $ | 693,801 | ||||
| Equity Type |
Record Date |
Payable Date |
Rate | |||||
| Dividends Declared |
Common (NASDAQ GS:CTWS) |
September 1, 2016 |
September 15, 2016 |
$0.2825 | ||||
| Preferred A (OTC: CTWSO) |
October 3, 2016 |
October 14, 2016 |
$0.20 | |||||
| Preferred 90 (OTC:CTWSP) |
October 19, 2016 |
November 1, 2016 |
$0.225 | |||||
| Declaration date |
Record Date |
Payable Date |
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| Proposed Next Common Stock Dividend Date |
November 10, 2016 | December 1, 2016 | December 15, 2016 | |||||
| Connecticut Water Service, Inc. 93 West Main Street Clinton, Connecticut 06413-1600 FAX (860) 669-5579 Shareholder Info: 860-664-6015 Website: www.ctwater.com |
Stock Transfer Agent, Dividend Disbursing Agent and Agent to Administer Dividend Reinvestment Plan Broadridge Corporate Solutions, Inc. 1155 Long Island Avenue, Edgewood, NY 11717 1-888-205-0681 On-line information: http://shareholder.broadridge.com/ctwater | |