SJW (US:SJW)2021-10-29 21:00Financial Performance - SJW Group's consolidated net income for Q3 2021 was $19,068, a decrease of $7,025 or approximately 27% from $26,093 in Q3 2020[117] - For the nine months ended September 30, 2021, consolidated net income was $42,459, down $5,772 or approximately 12% from $48,231 in the same period of 2020[117] - Operating revenue for Q3 2021 was $166,923, an increase of $1,060 or 1% compared to $165,863 in Q3 2020[119] - The company recorded a $3,000 pre-tax gain on the sale of utility property related to the release of a holdback amount by Guadalupe-Blanco River Authority[117] - Cash flows from operations increased to approximately $100,300 for the nine months ended September 30, 2021, compared to $70,600 for the same period in 2020, reflecting a $29,700 increase[143] Revenue and Expenses - Water Utility Services revenue for Q3 2021 was $165,520, reflecting a $7,642 increase or 5% due to rate increases[119] - Operating expenses for Water Utility Services in Q3 2021 were $132,071, an increase of $10,025 or 8% from $122,046 in Q3 2020[120] - Consolidated operating expenses increased by $9,169 (7%) for the three months ended September 30, 2021, and $19,011 (6%) for the nine months ended September 30, 2021, compared to the same periods in 2020[122] - Operating expenses, excluding water production expenses, increased by $13,928 for the nine months ended September 30, 2021, compared to the same period in 2020[137] Water Utility Services - Customer consumption for Water Utility Services decreased by $12,850 or 8% in Q3 2021 compared to Q3 2020[119] - The number of customers increased by 909 or 1% in Q3 2021 compared to the same period in 2020[119] - SJW Group's real estate services generated $1,403 in revenue for Q3 2021, unchanged from Q3 2020[119] - Water production expenses totaled $2,418 (2%) for the three months and $5,083 (2%) for the nine months ended September 30, 2021, with significant increases in purchased water and groundwater extraction charges[122] - The average unit price of purchased water increased by approximately 9.5% and groundwater extraction charges by approximately 9.1% effective July 1, 2021[135] Debt and Financing - Net cash provided by financing activities for the nine months ended September 30, 2021, increased by approximately $16.7 million, primarily due to a $66.8 million increase in net proceeds from a common stock equity offering[149] - SJWC's funded debt and equity as of September 30, 2021, were approximately 48% and 52%, respectively, consistent with the CPUC authorized structure[152] - Connecticut Water sold an aggregate principal amount of $50 million of its 3.07% Senior Notes, Series 2021A, due 2051, with proceeds to be used for capital expenditures and other corporate purposes[162] - Maine Water has a debt to capitalization ratio requirement of not more than 65% and was in compliance with all covenants as of September 30, 2021[165] - SJW Group's ability to finance future construction programs depends on maintaining or increasing internally generated funds and attracting external financing[150] Capital Expenditures - Water Utility Services' budgeted capital expenditures for 2021 are anticipated to be approximately $238.8 million, with 71% or $169.2 million already invested as of September 30, 2021[146] - Over the next five years, Water Utility Services expects to incur approximately $1.4 billion in capital expenditures, subject to regulatory approval[147] Market Risks and Financial Health - SJW Group's credit ratings are A- with a stable outlook from S&P Ratings Service, indicating strong financial health[171] - The company is exposed to market risks, including changes in interest rates and pension plan asset values, which could impact its financial performance[172] - SJW Group has no derivative financial instruments or significant off-balance sheet risks, indicating a conservative financial strategy[173] COVID-19 Impact - The company continues to monitor the impacts of COVID-19, which have resulted in higher uncollectible accounts receivables and increased costs[118] - Water Utility Services anticipates that collection rates for accounts receivables will return to pre-pandemic levels once service disconnection orders are lifted[144] Water Supply and Storage - Valley Water's reservoirs were at approximately 12% of total capacity as of October 1, 2021, with 6,252 million gallons in storage, which is 26% of the twenty-year average for this date[124] - SJWC's Lake Elsman contained 191 million gallons of water as of October 1, 2021, representing 18% of the five-year average due to low winter rainfall[125] - The total groundwater storage at the end of 2021 is expected to fall within the Alert Stage of Valley Water's Water Shortage Contingency Plan[124] Uncollectible Accounts - As of September 30, 2021, Water Utility Services' write-offs for uncollectible accounts represented less than 1% of total revenue, unchanged from the previous year[144] - As of September 30, 2021, SJW Group had aggregate short-term borrowings of up to $260,000, with $137,928 available in unused short-term bank lines of credit[168] - The average cost of borrowing on SJW Group's short-term credit facilities in 2021 was 1.34%[168] - SJW Group raised approximately $66,775 in net proceeds from the issuance of 1,030,000 shares at a public offering price of $59.00 per share[170] - Proceeds from the equity offering were used to pay down a bank line of credit and for general corporate purposes, including infrastructure improvements and capital expenditures[170]