[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides SJW Group's basic identification details for its Q1 2022 Form 10-Q filing - SJW Group filed its quarterly report on Form 10-Q for the period ended March 31, 2022[2](index=2&type=chunk) Registrant Details | Detail | Value | | :--- | :--- | | Registrant Name | SJW GROUP | | Jurisdiction of Incorporation | Delaware | | Principal Executive Offices | 110 West Taylor Street, San Jose, CA 95110 | | Telephone Number | (408) 279-7800 | | Common Stock Trading Symbol | SJW | | Exchange Registered | New York Stock Exchange LLC | | Shares Outstanding (as of April 25, 2022) | 30,237,145 | | Filer Status | Large accelerated filer | [Forward-Looking Statements](index=2&type=section&id=FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer and Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20Disclaimer%20and%20Risk%20Factors) This section outlines the nature of forward-looking statements, emphasizing they are predictions subject to various risks, uncertainties, and assumptions - The report contains forward-looking statements based on current expectations, estimates, forecasts, and projections, which are subject to difficult-to-predict risks, uncertainties, and assumptions[7](index=7&type=chunk) - Key risk factors include: - Governmental policies and regulations (rates, return on equity, capital structures) - Changes in demand for water and other services - Impact of the COVID-19 pandemic - Unanticipated weather conditions and seasonality, including climate change effects - Unexpected costs, charges, or expenses - Ability to evaluate new business investments and growth initiatives - Contamination of water supplies and infrastructure damage/failure - Risk of work stoppages and labor actions - Catastrophic events (fires, earthquakes, cyber-attacks, epidemics) - Changes in general economic, political, business, and financial market conditions - Ability to obtain financing on favorable terms - Legislative and general market and economic developments[8](index=8&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201%2E%20FINANCIAL%20STATEMENTS) This section presents SJW Group's unaudited condensed consolidated financial statements, including comprehensive income, balance sheets, equity changes, and cash flows [Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) SJW Group's Q1 2022 net and comprehensive income rose significantly, driven by higher revenue and operating income Condensed Consolidated Statements of Comprehensive Income (Three months ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $124,302 | $114,785 | $9,517 | 8.3% | | Total Operating Expense | $107,713 | $101,706 | $6,007 | 5.9% | | Operating Income | $16,589 | $13,079 | $3,510 | 26.8% | | Income before income taxes | $4,804 | $1,720 | $3,084 | 179.3% | | Provision (benefit) for income taxes | $1,067 | $(896) | $1,963 | -219.1% | | **NET INCOME** | **$3,737** | **$2,616** | **$1,121** | **42.8%** | | Comprehensive Income | $3,556 | $2,654 | $902 | 34.0% | | Basic EPS | $0.12 | $0.09 | $0.03 | 33.3% | | Diluted EPS | $0.12 | $0.09 | $0.03 | 33.3% | | Dividends Per Share | $0.36 | $0.34 | $0.02 | 5.9% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight increase in total assets and a minor decrease in total stockholders' equity from December 31, 2021, to March 31, 2022 Condensed Consolidated Balance Sheets (as of March 31, 2022 vs. December 31, 2021) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Utility Plant (net) | $2,517,243 | $2,497,499 | $19,744 | | Total Current Assets | $137,935 | $134,085 | $3,850 | | Total Other Assets | $815,276 | $819,130 | $(3,854) | | **TOTAL ASSETS** | **$3,511,876** | **$3,492,395** | **$19,481** | | Total Stockholders' Equity | $1,028,418 | $1,034,519 | $(6,101) | | Long-term debt, less current portion | $1,491,556 | $1,492,935 | $(1,379) | | Total Current Liabilities | $217,853 | $203,271 | $14,582 | | Total Liabilities & Capitalization | $3,511,876 | $3,492,395 | $19,481 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased slightly from December 31, 2021, to March 31, 2022, primarily due to dividends paid and an unrealized loss on investment Changes in Stockholders' Equity (Three months ended March 31, 2022) | Item | Amount (in thousands) | | :--- | :--- | | Balances, December 31, 2021 | $1,034,519 | | Net income | $3,737 | | Unrealized loss on investment, net of tax | $(181) | | Stock-based compensation | $1,532 | | Issuance of restricted and deferred stock units | $(1,269) | | Employee stock purchase plan | $1,049 | | Common stock issuance costs | $(87) | | Dividends paid ($0.36 per share) | $(10,882) | | Balances, March 31, 2022 | $1,028,418 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated significantly more cash in Q1 2022, while cash used in investing activities slightly decreased and financing activities provided less cash Condensed Consolidated Statements of Cash Flows (Three months ended March 31) | Activity | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $45,294 | $33,376 | $11,918 | | Net Cash Used in Investing Activities | $(49,442) | $(51,940) | $2,498 | | Net Cash Provided by Financing Activities | $10,118 | $23,805 | $(13,687) | | Net Change in Cash, Cash Equivalents and Restricted Cash | $5,970 | $5,241 | $729 | | Cash and Cash Equivalents, End of Period | $17,487 | $11,406 | $6,081 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations for the unaudited condensed consolidated financial statements, covering company structure, revenue, regulatory matters, debt, and taxes [Note 1. General](index=12&type=section&id=Note%201%2E%20General) Note 1 details SJW Group's structure as a holding company with water utility and real estate subsidiaries, explaining seasonal water sales and fair value measurements - SJW Group is a holding company with five wholly-owned subsidiaries: San Jose Water Company (SJWC), SJWNE LLC (holding company for Connecticut Water Service, Inc. (CTWS)), SJWTX, Inc., SJW Land Company, and SJW Holdings, Inc[30](index=30&type=chunk) - Water sales are seasonal, with higher revenue in warm, dry summer months and lower in winter months due to varying water usage[31](index=31&type=chunk) Revenue Streams (Three months ended March 31) | Revenue Source | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Revenue from contracts with customers | $121,777 | $112,238 | | Alternative revenue programs, net | $(1,927) | $112 | | Other balancing and memorandum accounts, net | $2,430 | $1,521 | | Other regulatory mechanisms, net | $666 | $(430) | | Rental income | $1,356 | $1,344 | | **Total Revenue** | **$124,302** | **$114,785** | - A pre-tax gain of **$5,442 thousand** from the sale of nonutility properties was recognized on February 15, 2022, after CPUC review[34](index=34&type=chunk) - The fair value of long-term debt was approximately **$1,493,425 thousand** as of March 31, 2022, compared to a book value of **$1,530,475 thousand**[36](index=36&type=chunk) [Note 2. Regulatory Matters](index=13&type=section&id=Note%202%2E%20Regulatory%20Matters) Note 2 details regulatory assets and liabilities, including income tax differences, postretirement benefits, and balancing/memorandum accounts that track under- or over-collections Regulatory Assets, Net (as of March 31, 2022 vs. December 31, 2021) | Regulatory Asset Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Income tax temporary differences, net | $24,309 | $22,420 | | Postretirement pensions and other postretirement benefits | $63,126 | $62,197 | | Business combinations debt premium, net | $19,302 | $19,937 | | Balancing and memorandum accounts, net | $33,800 | $38,334 | | Water Rate Adjustment | $1,512 | $2,588 | | Other, net | $9,887 | $9,145 | | **Total regulatory assets, net** | **$151,936** | **$154,621** | - Regulatory assets not earning a return totaled **$85,446 thousand** as of March 31, 2022, primarily including unfunded postretirement pensions and business combination debt premiums[40](index=40&type=chunk) - Balancing and memorandum accounts track under/over-collections for expense changes, revenue impacts from catastrophic events, water quality expenses, energy efficiency, and water conservation (WCMA)[41](index=41&type=chunk) Total Balancing and Memorandum Accounts (Three months ended March 31) | Account Type | Beginning Balance (2022) | Regulatory Asset Increase (Decrease) (2022) | Refunds (Collections) (2022) | Ending Balance (2022) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue Accounts | $18,451 | $2,404 | $(6,493) | $14,362 | | Total Cost-Recovery Accounts | $19,883 | $(369) | $(76) | $19,438 | | **Total** | **$38,334** | **$2,035** | **$(6,569)** | **$33,800** | [Note 3. Bank Borrowings and Long-Term Liabilities](index=14&type=section&id=Note%203%2E%20Bank%20Borrowings%20and%20Long-Term%20Liabilities) Note 3 states SJW Group's contractual obligations include senior notes, bank term loans, revenue bonds, state revolving fund loans, and customer advance deposit payments - SJW Group's contractual obligations include senior notes, bank term loans, revenue bonds, state revolving fund loans, and other obligations[43](index=43&type=chunk) - Advance deposit payments from customers on certain construction projects constitute an obligation of the respective subsidiaries[43](index=43&type=chunk) [Note 4. Income Taxes](index=15&type=section&id=Note%204%2E%20Income%20Taxes) Income tax expense increased significantly in Q1 2022 compared to the prior year, primarily due to discrete tax expense items, resulting in a higher effective consolidated income tax rate Income Tax Expense and Effective Rate (Three months ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Income tax expense (benefit) | $1,067 | $(896) | $1,963 | | Effective consolidated income tax rate | 22% | (52)% | 74 percentage points | - The higher effective tax rate in 2022 was primarily due to discrete tax expense items[44](index=44&type=chunk) - Unrecognized tax benefits were approximately **$8,014 thousand** as of March 31, 2022, with no significant change expected within the next 12 months[45](index=45&type=chunk) [Note 5. Commitments and Contingencies](index=15&type=section&id=Note%205%2E%20Commitments%20and%20Contingencies) SJW Group is involved in routine litigation but does not anticipate any pending legal proceedings to materially affect its business or financial position - SJW Group is subject to ordinary routine litigation incidental to its business[46](index=46&type=chunk) - No pending legal proceedings are expected to have a material effect on SJW Group's business, financial position, results of operations, or cash flows[46](index=46&type=chunk) [Note 6. Benefit Plans](index=15&type=section&id=Note%206%2E%20Benefit%20Plans) SJW Group maintains noncontributory defined benefit pension plans and provides other postretirement benefits, with net periodic benefit costs decreasing in Q1 2022 - SJW Group maintains noncontributory defined benefit pension plans for eligible employees and additional retirement benefits for senior management under supplemental executive retirement plans[47](index=47&type=chunk)[48](index=48&type=chunk) Net Periodic Benefit Costs (Three months ended March 31) | Cost Component | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Service cost | $2,652 | $2,735 | | Interest cost | $2,860 | $2,580 | | Expected return on assets | $(5,043) | $(4,752) | | Unrecognized actuarial loss | $1,164 | $1,780 | | Amortization of prior service cost | $4 | $12 | | **Total Net Periodic Benefit Costs** | **$1,637** | **$2,355** | - SJW Group expects to make up to **$7,842 thousand** in required and discretionary cash contributions to pension and other postretirement benefit plans in 2022, with no contributions made in Q1 2022[49](index=49&type=chunk) [Note 7. Equity Plans](index=15&type=section&id=Note%207%2E%20Equity%20Plans) Note 7 describes SJW Group's Incentive Plan and Employee Stock Purchase Plan (ESPP), with increased compensation costs charged to income in Q1 2022 - The Incentive Plan allows SJW Group to provide equity interests to employees, board members, consultants, and advisors[50](index=50&type=chunk)[51](index=51&type=chunk) - As of March 31, 2022, **179,833 shares** are issuable upon vesting of outstanding restricted stock units, and **625,071 shares** are available for award issuances under the Incentive Plan[51](index=51&type=chunk) Compensation Costs Charged to Income (Three months ended March 31) | Award Type | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | ESPP | $185 | $181 | | Restricted stock and deferred restricted stock | $1,367 | $1,099 | | **Total compensation costs charged to income** | **$1,552** | **$1,280** | - Total unrecognized compensation costs for restricted and deferred restricted stock plans amounted to **$7,618 thousand** as of March 31, 2022, expected to be recognized over a weighted-average period of 2.14 years[55](index=55&type=chunk) [Note 8. Segment and Non-Tariffed Business Reporting](index=16&type=section&id=Note%208%2E%20Segment%20and%20Non-Tariffed%20Business%20Reporting) SJW Group reports financial information across two primary segments: Water Utility Services and Real Estate Services, with the former being the dominant contributor - SJW Group's reportable segments are Water Utility Services (including SJWC, Connecticut Water, CLWSC, Maine Water, and NEWUS) and Real Estate Services (SJW Land Company and Chester Realty, Inc.)[57](index=57&type=chunk) Operating Revenue by Segment (Three months ended March 31, 2022) | Segment | Regulated (in thousands) | Non-tariffed (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Water Utility Services | $120,518 | $2,428 | $122,946 | | Real Estate Services | — | $1,356 | $1,356 | | All Other | — | — | — | | **SJW Group Total** | **$120,518** | **$3,784** | **$124,302** | Operating Income (Loss) by Segment (Three months ended March 31, 2022) | Segment | Regulated (in thousands) | Non-tariffed (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Water Utility Services | $19,067 | $(1,551) | $17,516 | | Real Estate Services | — | $447 | $447 | | All Other | — | $(1,374) | $(1,374) | | **SJW Group Total** | **$19,067** | **$(2,478)** | **$16,589** | Assets by Segment (as of March 31, 2022) | Segment | Regulated (in thousands) | Non-tariffed (in thousands) | Total (in thousands) | | :--- | :--- | :--- | :--- | | Water Utility Services | $3,403,006 | $4,139 | $3,407,145 | | Real Estate Services | — | $44,361 | $44,361 | | All Other | — | $60,370 | $60,370 | | **SJW Group Total** | **$3,403,006** | **$108,870** | **$3,511,876** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=18&type=section&id=ITEM%202%2E%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) [General Company Overview](index=18&type=section&id=General%20Company%20Overview) This section details SJW Group's structure and the operations of its key water utility and real estate subsidiaries, highlighting their service areas and customer bases - SJW Group is a holding company with five wholly-owned subsidiaries: SJWC, SJWNE LLC, SJWTX, Inc., SJW Land Company, and SJWTX Holdings, Inc[63](index=63&type=chunk) - SJWC provides water service to approximately **231,000 connections** (1 million people) in the metropolitan San Jose, California area, including production, purchase, storage, purification, distribution, wholesale, and retail sale of water, and non-tariffed services[64](index=64&type=chunk) - CTWS serves approximately **140,000 connections** (457,000 people) in 81 municipalities across Connecticut and Maine, and over **3,000 wastewater connections** in Southbury, Connecticut[67](index=67&type=chunk) - SJWTX, Inc. (CLWSC) provides water service to approximately **24,000 connections** (72,000 people) in a growing region between San Antonio and Austin, Texas[69](index=69&type=chunk) - SJW Land Company and Chester Realty, Inc. own undeveloped land and operate commercial buildings in Tennessee, California, and Connecticut[71](index=71&type=chunk) [Business Strategy and Real Estate Services](index=19&type=section&id=Business%20Strategy%20and%20Real%20Estate%20Services) SJW Group's Water Utility Services strategy focuses on regional regulated and non-tariffed operations, while Real Estate Services manages income-producing properties for potential reinvestment - SJW Group's business initiatives for Water Utility Services focus on three strategic areas: 1. Regional regulated water utility operations 2. Regional non-tariffed water utility related services 3. Out-of-region water and utility related services[72](index=72&type=chunk)[74](index=74&type=chunk) - The company considers opportunities to acquire businesses and assets as part of its strategy, acknowledging associated risks like integration costs, diversion of management resources, and potential negative financial impacts[72](index=72&type=chunk) - Real Estate Services, through SJW Land Company and Chester Realty, Inc., manages income-producing and other properties until a determination is made to reinvest proceeds from their sale[73](index=73&type=chunk) [Critical Accounting Policies](index=19&type=section&id=Critical%20Accounting%20Policies) This section confirms no changes to SJW Group's critical accounting policies in Q1 2022, referring readers to the 2021 Annual Report for detailed descriptions - There have been no changes to SJW Group's critical or significant accounting policies during the three months ended March 31, 2022[76](index=76&type=chunk) - Detailed descriptions of critical and significant accounting policies are available in the company's 2021 Annual Report on Form 10-K[75](index=75&type=chunk)[76](index=76&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) SJW Group's consolidated net income significantly increased in Q1 2022, driven by higher operating revenue from rate increases and customer growth, partially offset by increased operating expenses [Overview of Results of Operations](index=20&type=section&id=Overview%20of%20Results%20of%20Operations) Consolidated net income for Q1 2022 increased by **43%** year-over-year, primarily due to ongoing operations and a gain on the sale of nonutility property - Consolidated net income for the three months ended March 31, 2022, was **$3,737 thousand**, an increase of **$1,121 thousand (43%)** from **$2,616 thousand** in the same period of 2021[78](index=78&type=chunk) - The increase in net income includes **$2,550 thousand** from ongoing operations and a **$4,240 thousand** gain on the sale of nonutility property[78](index=78&type=chunk) - Offsetting factors included **$1,867 thousand** related to depreciation on Cupertino concession assets and **$1,366 thousand** for San Jose Water Company's settlement expenses and deferred tax true-ups[78](index=78&type=chunk) [Operating Revenue Analysis](index=20&type=section&id=Operating%20Revenue%20Analysis) Consolidated operating revenues increased by **8%** year-over-year, primarily driven by rate increases, customer growth, and consumption changes in Water Utility Services Operating Revenue by Segment (Three months ended March 31) | Segment | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Water Utility Services | $122,946 | $113,441 | | Real Estate Services | $1,356 | $1,344 | | **Total Operating Revenue** | **$124,302** | **$114,785** | Change in Consolidated Operating Revenues (Three months ended March 31, 2022 vs. 2021) | Factor | Increase/(decrease) (in thousands) | % Impact | | :--- | :--- | :--- | | Consumption changes | $1,802 | 2% | | Increase in customers | $2,464 | 2% | | Rate increases | $5,163 | 5% | | Balancing and memorandum accounts | $803 | 0% | | Other regulatory mechanisms | $(826) | (1)% | | Other | $100 | 0% | | Real Estate Services | $11 | 0% | | **Total Increase** | **$9,517** | **8%** | [Operating Expense Analysis](index=21&type=section&id=Operating%20Expense%20Analysis) Consolidated operating expenses increased by **6%** year-over-year, mainly due to higher water production, administrative, and depreciation costs, partially offset by a gain on property sale Operating Expense by Segment (Three months ended March 31) | Segment | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Water Utility Services | $105,430 | $99,847 | | Real Estate Services | $909 | $881 | | All Other | $1,374 | $978 | | **Total Operating Expense** | **$107,713** | **$101,706** | Change in Consolidated Operating Expenses (Three months ended March 31, 2022 vs. 2021) | Factor | Increase/(decrease) (in thousands) | % Impact | | :--- | :--- | :--- | | Total water production expenses | $2,753 | 3% | | Administrative and general | $2,204 | 2% | | Balance and memorandum account cost recovery | $1,108 | 1% | | Maintenance | $430 | 0% | | Property taxes and other non-income taxes | $794 | 1% | | Depreciation and amortization | $4,168 | 4% | | Gain on sale of nonutility properties | $(5,450) | (5)% | | **Total Increase** | **$6,007** | **6%** | [Sources of Water Supply](index=21&type=section&id=Sources%20of%20Water%20Supply) SJWC's water supply mix is affected by California drought conditions, increasing reliance on purchased and surface water, while groundwater usage decreased - SJWC's water supply consists of imported water, groundwater from wells, surface water from watershed run-off, and reclaimed water, with surface water being the least expensive source[81](index=81&type=chunk) - California is experiencing a severe drought; Valley Water's reservoirs were at **25% capacity** as of April 1, 2022, and State Water Project allocations were reduced to **5%**[82](index=82&type=chunk) - SJWC's Lake Elsman volume was **108%** of the five-year average, and Montevina Surface Water Treatment Plant production was **115%** of the five-year average in Q1 2022[83](index=83&type=chunk) - Valley Water declared a water shortage emergency, prompting SJWC to activate Stage 3 of its Rule 14.1 Water Shortage Contingency Plan, imposing outdoor water usage restrictions[84](index=84&type=chunk) Change in Sources of Water Supply (Three months ended March 31) | Source | 2022 (million gallons) | 2021 (million gallons) | Increase/(decrease) | % of Total Change | | :--- | :--- | :--- | :--- | :--- | | Purchased water | 3,764 | 3,372 | 392 | 4% | | Groundwater | 3,858 | 4,603 | (745) | (7)% | | Surface water | 2,567 | 2,107 | 460 | 5% | | Reclaimed water | 125 | 85 | 40 | 0% | | **Total** | **10,314** | **10,167** | **147** | **2%** | - CTWS's unaccounted-for water decreased from **16.2%** in Q1 2021 to **13.9%** in Q1 2022, while SJWC's remained at **7.2%**[89](index=89&type=chunk)[90](index=90&type=chunk) [Water Production Expenses](index=23&type=section&id=Water%20Production%20Expenses) Water production expenses increased due to higher average per unit costs for purchased water, groundwater extraction, and energy charges, partially offset by increased surface water availability - Water production expenses increased primarily due to higher average per unit costs for purchased water, groundwater extraction, and energy charges[91](index=91&type=chunk) - Effective July 1, 2021, Valley Water increased the unit price of purchased water by approximately **9.5%** and the groundwater extraction charge by approximately **9.1%**[91](index=91&type=chunk) [Other Operating Expenses](index=23&type=section&id=Other%20Operating%20Expenses) Operating expenses, excluding water production, increased due to higher administrative and general expenses and depreciation/amortization, partially offset by a significant gain on property sale - Operating expenses (excluding water production) increased by **$3,254 thousand** in Q1 2022 compared to Q1 2021[92](index=92&type=chunk) - This increase was driven by **$3,312 thousand** in administrative and general expenses (labor and pension) and **$4,168 thousand** in depreciation and amortization[92](index=92&type=chunk) - The increase was partially offset by a **$5,450 thousand** gain on the sale of vacant land and nonutility property[92](index=92&type=chunk) [Other (Expense) Income](index=23&type=section&id=Other%20%28Expense%29%20Income) The change in other (expense) income was primarily due to increased interest on long-term debt and a decreased return from retirement plan assets, partially offset by pension non-service cost income - Other (expense) income was primarily impacted by an increase in interest on long-term debt and a decrease in return from retirement plan assets[93](index=93&type=chunk) - These negative impacts were partially offset by income generated from pension non-service cost and a decrease in interest on the line of credit[93](index=93&type=chunk) [Provision for Income Taxes](index=23&type=section&id=Provision%20for%20Income%20Taxes) Income tax expense increased significantly in Q1 2022, resulting in a higher effective tax rate, mainly due to discrete tax expense items - Income tax expense increased by **$1,963 thousand** in Q1 2022 compared to Q1 2021[94](index=94&type=chunk) - The effective consolidated income tax rate was **22%** in Q1 2022, compared to **(52%)** in Q1 2021, primarily due to discrete tax expense items[94](index=94&type=chunk) [Regulation and Rates](index=23&type=section&id=Regulation%20and%20Rates) SJW Group's operating revenue is largely determined by state utility commissions, with several regulatory proceedings underway across its service areas impacting future rates and capital budgets - SJWC filed a General Rate Case (GRC) application in January 2021, requesting revenue increases for 2022-2024 and a **$435,000 thousand** capital budget, with a settlement proposing a **$54,131 thousand** revenue increase over three years and a **$350,000 thousand** capital budget filed in January 2022[96](index=96&type=chunk) - SJWC also filed an application to adjust its cost of capital, proposing an **8.11%** rate of return and a **10.30%** return on equity, with new rates anticipated in Q3 2022[97](index=97&type=chunk) - Connecticut Water received approval for a WICA surcharge of **2.44%** effective January 1, 2022, generating **$2,581 thousand** in additional revenue, and a **2.85%** WRA surcharge effective April 1, 2022, to collect a 2021 revenue shortfall[99](index=99&type=chunk)[100](index=100&type=chunk) - CLWSC's Water Pass Through Charge (WPC) usage rate increased from **$0.70 to $0.90 per thousand gallons** effective March 1, 2022, due to under-collection and GBRA rate increases[102](index=102&type=chunk) - Maine Water received MPUC approval for a rate increase of **$6,313 thousand (72.5%)** for the Biddeford Saco Division, effective July 1, 2022, to support a new **$60,000 thousand** drinking water treatment facility[105](index=105&type=chunk) [Liquidity](index=25&type=section&id=Liquidity) SJW Group's liquidity improved in Q1 2022, with increased cash flow from operating activities, slightly reduced cash used in investing activities, and decreased cash provided by financing activities [Cash Flow from Operating Activities](index=25&type=section&id=Cash%20Flow%20from%20Operating%20Activities) Cash flow from operations increased by approximately **$11,900 thousand** in Q1 2022, driven by higher regulatory asset recognition, increased payments for accrued production costs, and funds from the California Water and Wastewater Arrearages Payment Program - Cash flows from operations increased by approximately **$11,900 thousand**, from **$33,400 thousand** in Q1 2021 to **$45,300 thousand** in Q1 2022[109](index=109&type=chunk) - Key drivers for the increase include a **$6,900 thousand** increase in regulatory assets, a **$5,200 thousand** increase in payments for accrued production costs, and **$2,800 thousand** from the California Water and Wastewater Arrearages Payment Program[109](index=109&type=chunk) - SJWC received **$9,757 thousand** through the California Water and Wastewater Arrearages Payment Program to relieve outstanding payment delinquencies for customer accounts[110](index=110&type=chunk) [Cash Flow from Investing Activities](index=25&type=section&id=Cash%20Flow%20from%20Investing%20Activities) Cash used in investing activities slightly decreased in Q1 2022, with company-funded capital expenditures being the primary use of cash, and significant capital expenditures anticipated over the next five years - Cash used in investing activities was approximately **$49,400 thousand** in Q1 2022, a decrease from **$51,900 thousand** in Q1 2021[111](index=111&type=chunk) - Company-funded capital expenditures accounted for **$43,700 thousand** of cash used in Q1 2022[111](index=111&type=chunk) - Water Utility Services' budgeted capital expenditures for 2022 are approximately **$223,000 thousand**, with **$43,700 thousand (20%)** invested as of March 31, 2022[112](index=112&type=chunk) - Over the next five years, Water Utility Services expects to incur approximately **$1,300,000 thousand** in capital expenditures for renewal and modernization of infrastructure[113](index=113&type=chunk) [Cash Flow from Financing Activities](index=25&type=section&id=Cash%20Flow%20from%20Financing%20Activities) Net cash provided by financing activities decreased significantly in Q1 2022, primarily due to lower proceeds from common stock equity offerings and new long-term debt compared to the prior year - Net cash provided by financing activities decreased by approximately **$13,700 thousand** in Q1 2022 compared to Q1 2021[115](index=115&type=chunk) - This decrease was primarily driven by a **$67,200 thousand** decrease in net proceeds from common stock equity offerings and a **$17,000 thousand** decrease in net proceeds from new long-term debt in the prior year[115](index=115&type=chunk) - Offsetting factors included a **$66,600 thousand** increase in net borrowings on lines of credit and a **$1,200 thousand** increase in dividends paid to stockholders[116](index=116&type=chunk) [Sources of Capital](index=26&type=section&id=Sources%20of%20Capital) SJW Group relies on internally generated funds and external financing for construction programs and dividend payments, maintaining various financing agreements and stable credit ratings [Short-term Financing Agreements](index=26&type=section&id=Short-term%20Financing%20Agreements) SJW Group and its subsidiaries utilize unsecured lines of credit for refinancing, working capital, and general corporate purposes, with total available credit of **$260,000 thousand** - SJW Group and its subsidiaries have unsecured line of credit agreements for refinancing existing debt, working capital, and general corporate purposes[118](index=118&type=chunk) Line of Credit Agreements (as of March 31, 2022) | Agreement | Maturity Date | Line Limit (in thousands) | Outstanding (in thousands) | Unused Portion (in thousands) | | :--- | :--- | :--- | :--- | :--- | | SJWC credit agreement | December 31, 2023 | $140,000 | — | $140,000 | | CTWS credit agreement | December 14, 2023 | $75,000 | $35,997 | $39,003 | | CTWS credit agreement | May 15, 2025 | $40,000 | $40,000 | — | | SJWTX, Inc. credit agreement | December 31, 2023 | $5,000 | — | $5,000 | | **Total** | | **$260,000** | **$75,997** | **$184,003** | - The cost of borrowing on lines of credit averaged **1.64%** during 2021[119](index=119&type=chunk) - As of March 31, 2022, SJW Group and its subsidiaries were in compliance with all covenants on their lines of credit[120](index=120&type=chunk) [Long-term Financing Agreements](index=26&type=section&id=Long-term%20Financing%20Agreements) SJW Group and its subsidiaries use long-term debt for refinancing, capital expenditures, working capital, and debt repayments, and were in compliance with all related covenants as of March 31, 2022 - Long-term debt activities are for refinancing short-term borrowings, funding capital expenditures and working capital, and repayments of maturing long-term debt[121](index=121&type=chunk) - As of March 31, 2022, SJW Group and its subsidiaries were in compliance with all covenants related to its long-term debt agreements[122](index=122&type=chunk) [Equity Financing Arrangements](index=26&type=section&id=Equity%20Financing%20Arrangements) SJW Group has an equity distribution agreement to sell up to **$100,000 thousand** of common stock through 'at-the-market' offerings, with **$75,000 thousand** remaining as of March 31, 2022 - SJW Group entered into an equity distribution agreement in November 2021 to sell up to **$100,000 thousand** of common stock through 'at-the-market' offerings[123](index=123&type=chunk) - As of March 31, 2022, **$75,000 thousand** remained on the Equity Distribution Agreement, and no shares were sold in the first quarter of 2022[123](index=123&type=chunk) - Proceeds from stock sales can be used for acquisitions, infrastructure improvements, capital expenditures, debt repayment, and working capital[123](index=123&type=chunk) [Credit Rating](index=27&type=section&id=Credit%20Rating) SJW Group maintains stable credit ratings from Standard & Poor's, indicating continued access to external funding sources for its capital investment programs - SJW Group's ability to obtain financing is a risk, but the company believes it will have access to external funding sources for ongoing capital investment programs[124](index=124&type=chunk) Standard & Poor's Credit Ratings | Entity | Rating | Outlook | | :--- | :--- | :--- | | SJW Group | A- | Stable | | SJWC | A | Stable | | CTWS | A- | Stable | | Connecticut Water | A- | Stable | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=27&type=section&id=ITEM%203%2E%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) [Market Risk Disclosures](index=27&type=section&id=Market%20Risk%20Disclosures) SJW Group is exposed to market risks from changes in interest rates, pension plan asset values, and equity prices, but does not use derivative financial instruments or have significant off-balance sheet risks - SJW Group is subject to market risks including changes in interest rates (from debt issuance and variable rate lines of credit), pension plan asset values, and equity prices[125](index=125&type=chunk) - Pension costs and funded status are affected by discount rates, mortality rates, investment returns, and pension reform legislation[125](index=125&type=chunk) - SJW Group has no derivative financial instruments, financial instruments with significant off-balance sheet risks, or financial instruments with concentrations of credit risk[126](index=126&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=27&type=section&id=ITEM%204%2E%20CONTROLS%20AND%20PROCEDURES) [Effectiveness of Disclosure Controls and Procedures](index=27&type=section&id=Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) SJW Group's management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting in Q1 2022 - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2022[127](index=127&type=chunk) - They concluded that disclosure controls and procedures are designed and functioning effectively to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[127](index=127&type=chunk) - No material changes in internal control over financial reporting occurred during the first fiscal quarter of 2022[128](index=128&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=28&type=section&id=ITEM%201%2E%20LEGAL%20PROCEEDINGS) SJW Group is involved in routine litigation but does not expect any pending legal proceedings to have a material impact on its business or financial position - SJW Group is subject to ordinary routine litigation incidental to its business[131](index=131&type=chunk) - There are no pending legal proceedings expected to have a material effect on SJW Group's business, financial position, results of operations, or cash flows[131](index=131&type=chunk) [ITEM 1A. RISK FACTORS](index=28&type=section&id=ITEM%201A%2E%20RISK%20FACTORS) This section highlights the ongoing negative impact of the COVID-19 pandemic on SJW Group's business, including risks related to utility termination moratoriums, customer delinquencies, and supply chain disruptions - The COVID-19 pandemic continues to negatively impact SJW Group's business, financial condition, and results of operations[133](index=133&type=chunk) - Risks include reduced customer payment incentives/abilities due to past utility termination moratoriums, potential reinstatement of such orders, and decreased water usage by commercial customers[134](index=134&type=chunk) - Regulatory mechanisms for COVID-19 related expenses and revenue loss exist, but recovery is not guaranteed[135](index=135&type=chunk) - Company policies requiring employee vaccination (subject to exemptions) and related labor disputes (e.g., NLRB investigation with Utility Workers Union of America Local 259) may increase operating costs, cause labor disruptions, or employee attrition[136](index=136&type=chunk)[137](index=137&type=chunk) - Additional risks include potential interruptions to infrastructure projects due to supply shortages or workforce disruptions, impact on employee health, and adverse effects from a recession or debt market disruptions[138](index=138&type=chunk)[141](index=141&type=chunk) [ITEM 5. OTHER INFORMATION](index=29&type=section&id=ITEM%205%2E%20OTHER%20INFORMATION) This section announces the declaration of a regular quarterly dividend and provides links to SJW Group's and its subsidiaries' websites for additional information - On April 27, 2022, the Board of Directors declared a regular quarterly dividend of **$0.36 per share** of common stock, payable on June 1, 2022, to stockholders of record as of May 9, 2022[139](index=139&type=chunk) - SJW Group posts operating and financial performance information on its websites: www.sjwgroup.com, www.sjwater.com, www.ctwater.com, www.sjwtx.com, and www.mainewater.com[140](index=140&type=chunk) [ITEM 6. EXHIBITS](index=30&type=section&id=ITEM%206%2E%20EXHIBITS) [Exhibits List](index=30&type=section&id=Exhibits%20List) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and XBRL-related documents List of Exhibits | Exhibit Number | Description | | :--- | :--- | | 31.1 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) by Chairman, President and Chief Executive Officer | | 31.2 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer and Treasurer | | 32.1 | Certification Pursuant to 18 U.S.C. Section 1350 by Chairman, President and Chief Executive Officer | | 32.2 | Certification Pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer and Treasurer | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File | [SIGNATURES](index=31&type=section&id=SIGNATURES) [Report Signatures](index=31&type=section&id=Report%20Signatures) This section contains the signature of the authorized representative of SJW Group, confirming the due filing of the report - The report was signed on April 29, 2022, by Andrew F. Walters, Chief Financial Officer and Treasurer, as the principal financial officer[147](index=147&type=chunk)

[PART I](index=3&type=section&id=PART%20I) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding SJW Group's future results and events, subject to risks and uncertainties that may cause actual results to differ materially - The report identifies several risk factors that could cause actual results to differ from forward-looking statements, including regulatory actions, changes in water demand, the impact of COVID-19, weather and climate change, economic conditions, and financing capabilities[12](index=12&type=chunk)[13](index=13&type=chunk) [Business](index=4&type=section&id=Item%201.%20Business) SJW Group is a holding company providing regulated water and wastewater services to over 1.5 million people across California, Connecticut, Maine, and Texas, subject to extensive state-level regulation [General Development of Business](index=4&type=section&id=General%20Development%20of%20Business) SJW Group operates through four wholly-owned subsidiaries providing water utility and real estate services across California, Connecticut, Maine, and Texas - SJW Group operates through four primary subsidiaries: SJWC (California), CTWS (Connecticut & Maine), CLWSC (Texas), and SJW Land Company (Real Estate)[14](index=14&type=chunk)[15](index=15&type=chunk) - In December 2021, CLWSC in Texas expanded its operations by acquiring Kendall West Utility and Bandera East Utility, adding approximately **1,600 service connections**[15](index=15&type=chunk) [Regulation and Rates](index=4&type=section&id=Regulation%20and%20Rates) The company's water utility services are rate-regulated by state commissions, which approve rates to cover operating expenses and provide a fair return on equity Authorized Capital Structure and Return on Equity by State | | California | Connecticut | Texas (a) | Maine (a) | | :--- | :--- | :--- | :--- | :--- | | **Authorized capital structure (debt/equity)** | 47% / 53% | 47% / 53% | 37% / 63% | 54% / 46% | | **Authorized return on equity** | 8.90% | 9.00% | 10.88% | 9.81% | | **Authorized rate base (in millions)** | $958.9 | $549.4 | $43.3 | $63.3 | | **Estimated rate base at year-end (in millions)** | $1,023.1 | $613.6 | $95.1 | $87.6 | - In California, SJWC filed a General Rate Case application in January 2021 requesting a revenue increase of **$51.6 million (13.35%)** for 2022, with a settlement agreement filed in January 2022[24](index=24&type=chunk)[25](index=25&type=chunk) - In Connecticut, a July 2021 rate case decision approved a **$5.2 million annual revenue increase** for Connecticut Water, with a **9.0% return on equity**, and a subsequent petition added another **$2.1 million** in November 2021[36](index=36&type=chunk) - In Maine, a general rate increase application for the Biddeford Saco Division is pending, seeking approximately **$6.9 million in additional revenue** primarily to support a new **$60.0 million water treatment facility** expected to be in service in Q2 2022[48](index=48&type=chunk) [Description of Business](index=8&type=section&id=Description%20of%20Business) The company's primary business involves the production, treatment, and distribution of water and wastewater services, utilizing diverse water sources and facing seasonal demand - SJWC's water supply in California is a mix of purchased water (**40-50%**), groundwater (**40-50%**), and surface water (**6-8%** in normal years)[56](index=56&type=chunk) - Connecticut Water's supply is primarily from surface water (**80%**), while Maine Water's is also dominated by surface water (**90%**)[61](index=61&type=chunk)[63](index=63&type=chunk) - CLWSC in Texas relies on groundwater and long-term take-or-pay contracts for purchased water from the GBRA[62](index=62&type=chunk) - The company's regulated operations are protected from direct competition by other investor-owned utilities, but public agencies have the power of eminent domain to condemn utility properties upon payment of just compensation[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [Human Capital Resources](index=12&type=section&id=Human%20Capital%20Resources) SJW Group focuses on attracting and retaining talent through competitive wages, benefits, and a positive work environment emphasizing safety, diversity, and inclusion Full-Time Employees by Subsidiary | Subsidiary | Full-Time Employees | | :--- | :--- | | SJWC | 362 | | Connecticut Water | 228 | | CLWSC | 84 | | Maine Water | 77 | | **Total** | **751** | - **226 employees** at SJWC are members of unions, with collective bargaining agreements in place through December 31, 2022[83](index=83&type=chunk)[84](index=84&type=chunk) - In response to the pandemic, the company implemented a universal vaccination requirement for all employees, which led to an NLRB investigation inquiry regarding bargaining practices with the union at SJWC[87](index=87&type=chunk) [Executive Officers of the Registrant](index=15&type=section&id=Executive%20Officers%20of%20the%20Registrant) This section provides a table summarizing the names, ages, offices held, and business experience for each of the company's executive officers as of February 25, 2022 - The report lists the key executive officers, including Eric W. Thornburg as President, CEO, and Chair of the Board, and Andrew F. Walters as Chief Financial Officer and Treasurer[92](index=92&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) SJW Group faces significant risks including adverse regulatory decisions, ongoing COVID-19 impacts, water supply variability due to climate change, infrastructure failures, and cybersecurity threats - **Regulatory Risks**: The business is highly dependent on favorable rate-setting by regulators, where delays or insufficient rate approvals could negatively impact revenue and cash flow[97](index=97&type=chunk)[98](index=98&type=chunk) - **COVID-19 Pandemic Risks**: The pandemic continues to pose risks, including reduced bill payments from customers, potential for new utility termination moratoriums, and operational disruptions from vaccine mandates or employee attrition[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) - **Water Supply & Climate Change Risks**: Changes in water supply mix, particularly a reduction in low-cost surface water due to drought, can significantly increase production costs, exacerbated by climate change[120](index=120&type=chunk)[121](index=121&type=chunk)[128](index=128&type=chunk) - **Operational & Infrastructure Risks**: The company faces risks from potential contamination events, failure of aging infrastructure like mains and dams, and cyber-attacks on its critical information technology systems[135](index=135&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) [Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None [Properties](index=29&type=section&id=Item%202.%20Properties) This section describes the company's physical assets, including water utility infrastructure across its service areas and real estate holdings - SJWC's properties in California include approximately **2,488 miles of mains** and reservoir capacity of **2.256 billion gallons**[178](index=178&type=chunk) - CTWS's properties in Connecticut and Maine include approximately **2,317 miles of mains** and reservoir capacity of **9.4 billion gallons**[180](index=180&type=chunk) - CLWSC's properties in Texas include **726 miles of mains** and **9.3 million gallons** of storage capacity[182](index=182&type=chunk) Selected Real Estate Properties | Description | Location | Acreage | Square Footage | | :--- | :--- | :--- | :--- | | Warehouse building | Knoxville, Tennessee | 30 | 361,500 | | Commercial building | Knoxville, Tennessee | 15 | 135,000 | | Undeveloped land | San Jose, CA | 101 | N/A | [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to ordinary routine litigation incidental to its business but reports no pending legal proceedings expected to have a material effect - There are no pending legal proceedings expected to have a material effect on the company[186](index=186&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - None [PART II](index=31&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) SJW Group's common stock trades on the NYSE under 'SJW', and its five-year performance has underperformed both the Water Utility Index and the S&P 500 Index - SJW Group's common stock is traded on the NYSE under the symbol '**SJW**'[190](index=190&type=chunk) Five-Year Performance Comparison (Indexed to $100) | | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **SJW Group** | $100 | $116 | $103 | $134 | $134 | $144 | | **Water Utility Index** | $100 | $128 | $132 | $184 | $213 | $265 | | **S&P 500 Index** | $100 | $122 | $116 | $153 | $181 | $233 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a slight net income decrease in 2021 due to higher operating costs, partially offset by rate increases and property sales [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Consolidated net income for 2021 decreased by 2% to $60.5 million from $61.5 million in 2020, primarily due to increased operating expenses and an asset impairment Key Financial Metrics (in millions) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Operating Revenue** | $573.7M | $564.5M | | **Operating Income** | $111.2M | $117.7M | | **Net Income** | $60.5M | $61.5M | | **Diluted EPS** | $2.03 | $2.14 | - The **$1.0 million decrease in net income** was primarily due to higher administrative and general expenses, increased depreciation, higher maintenance, and increased water production costs, partially offset by higher revenue from rate cases and gains on asset sales[233](index=233&type=chunk) - Revenue increase of **$9.2 million** was driven by **$25.2 million from rate increases**, offset by a **$24.7 million decrease** from lower water consumption[237](index=237&type=chunk)[239](index=239&type=chunk) - Operating expenses increased by **$15.7 million**, driven by higher water production costs (**+$3.3M**), administrative and general expenses (**+$6.6M**), depreciation (**+$5.1M**), and a long-lived asset impairment (**+$2.2M**), offset by a gain on sale of nonutility property (**-$7.5M**)[247](index=247&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) SJW Group's liquidity is sourced from operations, debt, and equity financing, supporting significant capital expenditures for infrastructure renewal Cash Flow Summary (2021, in thousands) | Cash Flow Activity (2021) | Amount (in thousands) | | :--- | :--- | | **Net Cash from Operations** | $130,040 | | **Net Cash used in Investing** | ($259,995) | | **Net Cash from Financing** | $132,805 | - The company plans to spend approximately **$222.8 million in 2022** and **$1.31 billion over the next five years** on capital improvements, primarily for distribution system main replacements[221](index=221&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - In 2021, the company raised approximately **$66.8 million** from an underwritten public offering of common stock and **$24.3 million** from an "at-the-market" equity program[295](index=295&type=chunk)[297](index=297&type=chunk) - As of December 31, 2021, the company had **$260 million in available lines of credit**, with **$63 million outstanding**[285](index=285&type=chunk)[287](index=287&type=chunk) [Financial Statements and Supplementary Data](index=49&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the audited consolidated financial statements, the independent auditor's unqualified opinion, and supplementary financial data - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2021[313](index=313&type=chunk)[314](index=314&type=chunk) - A Critical Audit Matter was identified related to the 'Impact of Rate Regulation on the Financial Statements' due to the significant management judgments required to assess the probability of recovering costs or refunding amounts through future rates[321](index=321&type=chunk)[323](index=323&type=chunk) Selected Balance Sheet Data (December 31, 2021, in thousands) | Selected Balance Sheet Data (Dec 31, 2021) | Amount (in thousands) | | :--- | :--- | | **Total Assets** | $3,492,395 | | **Total Long-Term Debt** | $1,492,935 | | **Total Stockholders' Equity** | $1,034,519 | [Controls and Procedures](index=91&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2021 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[512](index=512&type=chunk) - Based on an assessment using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2021[515](index=515&type=chunk) [PART III](index=92&type=section&id=PART%20III) Part III of the report incorporates information by reference from the company's 2022 Proxy Statement, covering directors, executive compensation, security ownership, and related matters [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement, and the company has adopted a code of ethics - Required information is incorporated by reference from the 2022 Proxy Statement[521](index=521&type=chunk) - SJW Group has adopted a code of ethics for its CEO, CFO, and other officers, available on its website[522](index=522&type=chunk) [Executive Compensation](index=92&type=section&id=Item%2011.%20Executive%20Compensation) Information required for this item, including details on director and executive compensation, is incorporated by reference from the 2022 Proxy Statement - Information on executive compensation is incorporated by reference from the 2022 Proxy Statement[524](index=524&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=92&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management, as well as matters related to equity compensation plans, is incorporated by reference from the 2022 Proxy Statement - Information on security ownership is incorporated by reference from the 2022 Proxy Statement[525](index=525&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=94&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning certain relationships, related party transactions, and director independence is incorporated by reference from the 2022 Proxy Statement - Information on related transactions and director independence is incorporated by reference from the 2022 Proxy Statement[526](index=526&type=chunk) [Principal Accountant Fees and Services](index=94&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Details regarding the fees paid to and services provided by the principal independent accountant are incorporated by reference from the 2022 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2022 Proxy Statement[527](index=527&type=chunk) [PART IV](index=95&type=section&id=PART%20IV) Part IV contains the list of financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K [Exhibits and Financial Statement Schedules](index=95&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all the financial statements, schedules, and exhibits included in or incorporated by reference into the Form 10-K filing - This section provides an index of all financial statements, schedules, and exhibits filed with the report[530](index=530&type=chunk)[531](index=531&type=chunk)[533](index=533&type=chunk)

Financial Data and Key Metrics Changes - In 2021, the company reported earnings of $2.03 per share, a decrease from $2.14 per share in 2020 [27] - Revenue for 2021 was $573.7 million, an increase of $9.2 million compared to the previous year [27] - Fourth quarter revenue was $139.7 million, a $4 million increase over the fourth quarter of 2020 [21] Business Line Data and Key Metrics Changes - The company invested more than $230 million in water and wastewater systems in 2021 [8] - The Texas operation grew its customer base by 20% through acquisitions and organic growth [8] - Water production expenses increased by $3.3 million in 2021, primarily due to higher average per unit water production costs [29] Market Data and Key Metrics Changes - The company experienced a decrease in customer usage, particularly in California, due to drought conditions [20] - Cumulative rate increases contributed $0.86 per share to diluted earnings in 2021 [27] - The effective income tax rate for the fourth quarter was 15%, compared to a negative 7% in the same quarter of 2020 [25] Company Strategy and Development Direction - The company plans to invest $223 million in infrastructure improvements in 2022, with a total of over $1.3 billion planned over the next five years [35] - The focus remains on acquiring water and wastewater utilities and maintaining constructive relationships with stakeholders [7] - The company aims to reduce greenhouse gas emissions by 50% by 2030, aligning with the Paris Agreement [12] Management's Comments on Operating Environment and Future Outlook - Management noted extreme weather conditions affecting operations, including droughts and storms [13] - The company is optimistic about the prospects for its Texas operations, which have seen significant growth [43] - Management expressed confidence in the regulatory processes and anticipated positive outcomes from ongoing rate cases [66] Other Important Information - The company has been recognized for its ESG efforts, tying for the lead in social scores among U.S. water utility peers [10] - A 5.9% increase in the dividend to $1.44 per share was authorized for 2022, continuing a 54-year trend of annual dividend increases [46] - The company has established financial assistance programs for customers in need, including a $10 million fund from the California Water and Wastewater Arrearage Payment Program [17] Q&A Session Summary Question: Clarification on water production volumes - The 1.3 billion gallons mentioned is exclusive of the 350 million gallons produced year-to-date [51] Question: Guidance on cost of capital and future earnings - Management indicated that the proposal, if approved, would result in a modest increase of $1.50 per month per customer [52] Question: Water production quotas in relation to GRC - The settlement agreement reduces the amount of company-produced surface water, which is expected to align with current water production expectations [58] Question: Future M&A activity - The company remains focused on Texas for acquisitions but is open to opportunities in other states that are accretive to shareholders [76]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8966 SJW GROUP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R ...

Financial Data and Key Metrics Changes - Third quarter revenue was $166.9 million, a $1 million or 1% increase compared to $165.9 million in the third quarter of 2020 [21] - Net income for the third quarter was $19.1 million or $0.64 per diluted share, down from $26.1 million or $0.91 per diluted share in the same period last year [21][22] - Year-to-date revenue for 2021 was $433.9 million, a 1% increase over the same period in 2020 [29] Business Line Data and Key Metrics Changes - Revenue increase was primarily driven by $7.6 million in cumulative rate increases and $3.3 million from regulatory mechanisms in Connecticut and Maine, offset by a $12.9 million decrease in customer usage [22][23] - Water production expenses increased by $2.4 million compared to Q3 2020, mainly due to higher costs for purchased and groundwater [24] Market Data and Key Metrics Changes - The California water shortage emergency remains in effect, impacting customer usage and prompting conservation efforts [13][15] - The California Public Utilities Commission approved a water conservation memorandum account to track revenue impacts due to conservation efforts [14] Company Strategy and Development Direction - The company is focused on investing in high-quality water systems and has authorized a $223 million capital spending plan for 2022, with nearly half allocated to pipeline replacement projects [38][39] - The company aims to minimize regulatory lag on infrastructure investments through various recovery mechanisms [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding settlement discussions with the public advocate in California, indicating a potential fair resolution for customers and the company [55] - The company remains cautiously optimistic about achieving a normalized earnings growth trajectory of around 5% over time, despite current challenges [59] Other Important Information - The company is actively engaged in water equity initiatives, including financial assistance programs for low-income customers [11][12] - Cybersecurity is a critical focus, with the company participating in discussions at the White House's cybersecurity summit [19] Q&A Session Summary Question: What are the expectations for the earnings power of San Jose Water in California? - Management is optimistic about settlement discussions and believes a fair resolution will be achieved [55] Question: Can you remind us of the revenue level for Connecticut Water in 2021? - The authorized revenue is approximately $29 million [57] Question: Do you continue to see a 5% earnings trajectory despite current challenges? - Management maintains that the combined company structure has been beneficial and remains optimistic about future growth [59] Question: How will water procurement differ in 2022 compared to current rates? - Management deferred the answer until the settlement process is completed, emphasizing the importance of adequate water supply [64]

Financial Data and Key Metrics Changes - Second quarter revenue was $152.2 million, a $5 million or 3.4% increase over the second quarter of 2020 revenue of $147.2 million [25] - Net income for the second quarter was $20.8 million or $0.69 per diluted share, compared to $19.7 million or $0.69 per diluted share for the second quarter of 2020 [26] - Year-to-date revenue was $267 million, a 2% increase over the same period last year, with net income of $23.4 million or $0.79 per diluted share compared to $22.1 million or $0.77 per diluted share during the same period a year ago [32] Business Line Data and Key Metrics Changes - Increases in customer usage in California and Texas and authorized rate increases contributed to quarterly operating results, partially offset by decreased availability of surface water supplies in California [24] - Water production expenses increased by $2.8 million in the second quarter, primarily due to the purchase of additional water supply necessary to replace low California surface water [27] - Other operating expenses increased by $5.6 million during the second quarter, mainly due to a rise in general and administrative expenses [29] Market Data and Key Metrics Changes - In California, a water shortage emergency was declared, prompting a request for a 15% mandatory conservation [16] - In Connecticut, the Public Utilities Regulatory Authority approved a conservation rate design, allowing for higher tariffs for residential customers using more than an average of 200 gallons per day [21] - The Connecticut PURA also approved a $5.2 million increase in annual revenues, representing about a 5.1% increase [44] Company Strategy and Development Direction - The company continues to execute its core growth strategy of investing in high-quality water systems to provide safe and reliable water service [41] - A capital program of approximately $100 million is anticipated for advanced metering infrastructure deployment over the next four years [43] - The company plans to file for interim rates effective January 1, 2022, pending the final decision on the general rate case [43] Management's Comments on Operating Environment and Future Outlook - Management noted the impact of extreme weather conditions on water resources, emphasizing the importance of conservation efforts [7][10] - The company expects to deliver authorized revenues for the rest of the year, providing a solid floor for conservation-related reductions in consumption [71] - Forecasted earnings remain within guidance of $1.85 to $2.05 per share, trending towards the lower half of the range due to regulatory outcomes [52] Other Important Information - The company is forming partnerships with community organizations to protect land and promote environmental sustainability [14][15] - A total of $53.4 million was added in company-funded utility plant in the second quarter of 2021, with total funded additions for the first half of the year reaching $100.1 million [36] - The company has $121.5 million available on bank lines of credit for short-term financing of utility plant additions and operating activities [39] Q&A Session Summary Question: Guidance clarification regarding earnings - Management confirmed that the guidance range of $1.85 to $2.05 per share is based on all earnings, not just ongoing [70] Question: Impact of Connecticut rate case outcome on regulatory strategy - Management indicated a potential shift towards more frequent filings for lower amounts in Connecticut, rather than waiting longer periods [80]

SJW GROUP (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8966 (State or other jurisdiction of incorporation or organization) (I.R.S. E ...

Financial Data and Key Metrics Changes - First quarter revenue was $114.8 million, a 1% increase over the first quarter of 2020 [20] - Net income for the quarter was $2.6 million or $0.09 per diluted share, an 8% increase over net income of $2.4 million or $0.08 per diluted share reported in the first quarter of 2020 [20] - The increase in diluted earnings per share was primarily due to cumulative rate increases of $0.08 per share, cumulative cost savings of $0.04 per share, a tax benefit of $0.04 per share, and an increase in nonregulated income of $0.03 per share [20] Business Line Data and Key Metrics Changes - The revenue decrease was a result of $2.8 million in decreased customer usage, customer credits in Texas reduced revenue by $700,000, and net changes in certain balancing and memorandum accounts reduced revenue by $600,000 [22] - Total 2021 first quarter water production costs were slightly lower compared to the first quarter of 2020, primarily due to $800,000 in lower average per unit cost for purchased water, groundwater extraction, and energy charges [23] Market Data and Key Metrics Changes - The rainfall season in California has been lower than normal for the second consecutive year, impacting available surface water supplies [12] - The total groundwater storage at the end of the first quarter remained at Stage 1 or normal of Valley Water's water shortage contingency plan [14] Company Strategy and Development Direction - The company continues to execute on its core growth strategy of investing in high-quality water systems to provide safe and reliable water service to customers and communities [33] - The company is updating its strategic water supply plan to evaluate current and future supply reliability and resiliency [18] - The company has filed general rate cases for both San Jose Water and Connecticut Water, with significant capital programs proposed [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the return to normal operations post-COVID-19 and emphasized the importance of delivering high-quality water and exceptional service [7][10] - The company anticipates increases in operating costs due to reliance on purchased water to meet customer needs in 2021 [17] Other Important Information - The company has continuously paid a dividend for over 77 years and increased the annual dividend in each of the last 53 years [19] - The company issued approximately 1.2 million new shares in March 2021, raising net proceeds of approximately $66.9 million [29] Q&A Session Summary Question: Insights on California GRC and supply mix adjustments - Management indicated that the timing is ideal for hearings in the California general rate case and that recent experiences provide compelling evidence to support a proposal to reduce the mix of company-owned surface water supply in the overall cost structure [50][51] Question: Credit implications due to low earnings and cash flows - Management does not foresee credit implications, as creditors typically look at the company's ability to recalibrate within a 3-year period during a rate case [64] Question: Changes in usage patterns and guidance for 2021 - Management noted that they set guidance assuming a return to normal usage, balancing residential and business customer usage [65] Question: Impact of local restrictions or conservation calls on sales - Management stated that conditions reducing surface water benefits could drive higher sales if no drought is declared with mandatory conservation [67] Question: Current water availability in California watershed - Management reported that there is very little impounded water available, with about 150 million gallons available to treat [79] Question: Tax rate expectations for the remainder of the year - Management expects a more normalized tax rate for the remainder of the year, as the first quarter typically has the lowest income-producing results [86] Question: Risk on ROE in Connecticut rate case - Management believes that the Connecticut regulators understand the importance of drinking water investments and that the recent ruling on electric utilities should not impact their case [90]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8966 SJW GROUP (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-8966 SJW GROUP (Exact name of registrant as specified in its charter) Delaware 77-0066628 (State or other jurisdiction of incorporation or orga ...