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Water Man
Connecticut Water Service Inc.
(NASDAQ: CTWS)
93 W. Main Street
Clinton 06413
860-669-8636
Chairman, president and chief executive officer:
Marshall T. Chiaraluce
Operating revenues (FYE December 31, 2001): $45.4 million
Margin (FYE December 31, 2001): 18.59 percent
Market capitalization (May 13, 2002): $215 million
No. employees (average): 181
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Business New Haven
6/10/2002
By: BNH
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How many executives smile when it s raining because it represents free inventory?
Meet Marshall T. Chiaraluce, chairman, president and chief executive officer of Connecticut Water Service Inc. (CTWS), a member of that rare breed. One of only seven water companies nationwide in which investors can buy stock, the Clinton-based business reported record earnings of $1.10 for FY2001, up from $1.03 in 2000 ‹ and used a mix of land donations, acquisitions and good, old-fashioned Yankee ingenuity to do so.
Incorporated in 1956 as a holding company, the water utility has been in operation for roughly one hundred years, Chiaraluce says. Today, as New England s largest domestically based, investor-owned water company, CTWS serves approximately 285,000 people in 40 towns in Connecticut and Massachusetts. Close to ninety-nine percent of its consolidated net income in FY2001 came from water sales.
To its regulated water business, the company began adding a number of unregulated services beginning in 1994. According to Chiaraluce, these earned the company a total of $2.4 million in FY2001.
The fastest growing among them, Chiaraluce says, is the operation of small wastewater facilities. Increasingly, he says, the state s Department of Environmental Protection (DEP) restricts the expansion of facilities where there are no sewers, especially on or close to environmentally sensitive shorelines. So CTWS draws on its own staff of chemists, biologists and engineers to adjust water-treatment chemicals and maintain the pumps for entities such as the Stop Œn Shop in Madison and Wal-Mart in Old Saybrook.
The biggest revenue producer in the water services company s unregulated business is an antenna-leasing service. There, telecommunication firms lease space on the company s water tanks, where they site antennas.
Eighteen months ago, the company introduced what it terms its linebacker program, which maintains waterlines that run from a customer s home to the street.
CTWS also oversees an emergency water service that provides temporary replacement water in a tanker truck for convalescent homes, restaurants or any business whose private well has become contaminated.
A significant portion of the earnings increase in FY2001 came from state and federal tax credits the water services company accrued from its donation of land to municipalities. In fact, Chiaraluce says, the company completed one acquisition last year ‹ the Barnstable (Mass.) Holding Co. ‹ in part because the holding company owned a real estate business. That business, known as Barlaco, owns 100 acres of land in Barnstable and Hyannis, Mass. that are not under regulation. CTWS is now in the process of donating and selling the land.
Last year, the water services company also donated land to municipalities including Naugatuck, Middlebury and Avon. This year it initiated a program of land donation from an abandoned reservoir in Killington that will stretch into the year 2005.
Because the 1,237 miles of water main and reservoir storage capacity of seven billion gallons within the company s 27 noncontiguous water systems serve a franchised area, CTWS has no competition for its core water business. Early last month, according to Chiaraluce, the Northeast could have received no rain for the rest of the year and CTWS would have operated with a 250-day water supply. That margin he terms comfortable.
From a 52-week low of $22 last June 29, CTWS stock posted a 52-week high of $32.21 on December 21, 2001. On May 13, its stock closed at $27.06. The stock s last split ‹ a three-for-two, or 50-percent stock division ‹ took place last September 10.
CTWS announced its last dividend of 20 cents per common share for the first quarter of 2002 on May 8.
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