Clinton-based Connecticut Water Service on Thursday posted a 33 percent dip in profits last year despite higher revenues due to acquisition costs tied to its proposed combination with a California water company.
For the year, Connecticut Water said its net income fell to $16.7 million, or $1.40 a diluted share, down about 33 percent from the $25 million recorded in 2017. The decline was mainly driven by a 9 percent increase in operating expenses and more than $10.8 million in merger and acquisition costs spent on its controversial and long-delayed deal with SJW Group.
Total revenues from the company’s three business segments rose almost 10 percent to $124.8 million. The company said the uptick was generated by increased revenues in base rates in Connecticut and Maine and other surcharges.
Last year, several companies, including Eversource Energy, were involved in a competitive bidding process to acquire Connecticut Water, which has maintained SJW Group would be its best suitor.
Connecticut Water shareholders in November overwhelmingly backed a $1.1 billion stock purchase deal with SJW Group, but the acquisition remains in limbo as both companies work to convince state regulators the combination is good for local consumers and the Clinton-based company’s managerial structure and workforce.
The Connecticut Public Utility Regulatory Authority (PURA) in December issued a preliminary decision to block the deal, forcing the water companies to rethink their pitch to state regulators, which need to sign off on the combination.
Last week, SJW said it would refile an acquisition application with PURA sometime in the second quarter.
