SJW (SJW) - 2024 Q1 - Quarterly Results

SJW Group First Quarter 2024 Financial Results Financial Highlights & Business Overview SJW Group reported stable Q1 2024 results, with diluted EPS of $0.36, $69 million in infrastructure investment, and reaffirmed 2024 EPS guidance Q1 2024 Key Highlights | Metric | Value | | :--- | :--- | | Diluted EPS | $0.36 | | Infrastructure Investment | $69 million | | California Adjusted ROE | 10.01% | | 2024 Diluted EPS Guidance | $2.68 - $2.78 (Reaffirmed) | | Quarterly Dividend | $0.40 per share | - CEO Eric W. Thornburg expressed satisfaction with the quarterly results, attributing them to strong local water operations and the execution of the company's business strategy[3] Operational and Financial Performance SJW Group's Q1 2024 net income increased marginally to $11.7 million, with diluted EPS at $0.36, driven by revenue growth offset by higher operating expenses Q1 2024 vs Q1 2023 Operating Results | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | $149.4M | $137.3M | +8.8% | | Net Income | $11.7M | $11.5M | +1.0% | | Diluted EPS | $0.36 | $0.37 | -2.7% | | Operating Expenses | $121.5M | $112.1M | +8.4% | - The increase in operating revenue was primarily driven by $10 million from rate increases, mainly in California, and $1.8 million from higher customer usage due to weather and the end of mandatory conservation[5] - Operating expenses rose mainly due to a $4.8 million increase in water production expenses and a $2.1 million increase in depreciation from utility plant additions[8] Capital Expenditures The company invested $69 million in Q1 2024 infrastructure, aligning with its $332 million annual budget and a $1.6 billion five-year plan Capital Investment Plan | Period | Investment Amount | | :--- | :--- | | Q1 2024 Actual | $69 million | | 2024 Budget | $332 million | | 5-Year Plan | > $1.6 billion | - A major ongoing project is the $100 million advanced metering infrastructure (AMI) installation by San Jose Water, with approximately $27 million expected to be spent in 2024[9] - The five-year capital plan includes approximately $230 million specifically for the installation of treatment for per- and polyfluoroalkyl substances (PFAS), pending regulatory approvals[7] Rate Activity and Regulatory Updates SJW Group actively pursued rate adjustments and regulatory approvals across its territories, including new California rates, pending GRCs in Connecticut, and approved increases in Maine and Texas California California's new rates, effective January 1, 2024, include a 10.01% adjusted ROE, with a new GRC filed for 2025-2027 proposing an 11.1% revenue increase - San Jose Water filed a General Rate Case (GRC) application for 2025-2027, proposing revenue increases of approximately 11.1% in 2025, 4.0% in 2026, and 4.5% in 2027[12] California Rate Comparison (Effective Jan 1) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | WCCM-adjusted ROE | 10.01% | 8.90% | | Cost of Debt | 5.28% | 6.20% | | Overall Rate of Return (ROR) | 7.75% | 7.53% | - The CPUC approved a one-year deferment for the Cost of Capital (COC) filing to May 1, 2025, to alleviate administrative costs[13] Connecticut Connecticut Water Company has a pending GRC seeking a $21.4 million (18.1%) revenue increase to recover $135 million in infrastructure investments, with a decision expected by June 28, 2024 - CWC filed a GRC application requesting a revenue increase of $21.4 million (approx. 18.1%) to recover $135 million in infrastructure investments[14] Maine Maine regulators approved a $2.6 million (17.6%) annual revenue increase for Maine Water Company, effective January 1, 2024, plus an additional $158,000 for infrastructure projects - The Maine Public Utilities Commission (MPUC) approved a $2.6 million (17.6%) annual revenue increase for the Biddeford Saco Division, effective January 1, 2024[15] - The MPUC also authorized a $158,000 increase in annualized revenues for projects completed under the Water Infrastructure Charge in the Camden-Rockland Division[16] Texas Texas Water Company filed to acquire 3009 Water Company, with a decision expected in Q3 2024, and received approval for a System Improvement Charge generating $1.6 million in annualized revenues - TWC filed an application to acquire 3009 Water Company, which serves about 270 customers[17] - The Public Utilities Commission of Texas (PUCT) approved TWC's application for a System Improvement Charge (SIC), expected to generate $1.6 million in annualized revenues[18] Corporate Updates SJW Group's Connecticut subsidiary was recognized as a Top Workplace USA, while the company reaffirmed its 2024 financial guidance, long-term EPS growth target, and quarterly dividend Corporate Responsibility Recognition Connecticut Water Company was recognized by USA Today as a 2024 Top Workplace USA, one of only two water utilities to receive this employee-feedback-based honor - Connecticut Water Company was named a 2024 Top Workplace USA by USA Today, making it one of only two water utilities to earn the distinction[19] 2024 Guidance Reaffirmed The company reaffirmed its 2024 diluted EPS guidance of $2.68 to $2.78 and $332 million in infrastructure investments, reiterating a 5% to 7% long-term EPS growth target 2024 Full-Year Guidance | Metric | Guidance | | :--- | :--- | | Net income per diluted common share | $2.68 to $2.78 | | Regulated infrastructure investments | ~$332 million | - The company reiterated its long-term diluted EPS growth target of 5% to 7%, anchored off 2022's diluted EPS of $2.43[20] Dividend The Board declared a quarterly cash dividend of $0.40 per share, continuing over 80 consecutive years of payments and 56 years of increases Quarterly Dividend Details | Item | Detail | | :--- | :--- | | Dividend per Share | $0.40 | | Record Date | May 6, 2024 | | Payment Date | June 3, 2024 | - The company has paid dividends for over 80 consecutive years and has increased the calendar year dividend for 56 consecutive years[22] Financial Statements Unaudited Q1 2024 financial statements show increased operating revenue and income, with total assets rising to $4.37 billion driven by net utility plant growth and a modest rise in stockholders' equity Condensed Consolidated Statements of Comprehensive Income SJW Group reported Q1 2024 operating revenues of $149.4 million and net income of $11.7 million, with diluted EPS at $0.36, compared to prior-year figures Q1 2024 Income Statement Highlights (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating revenue | $149,382 | $137,296 | | Total operating expense | $121,469 | $112,118 | | Operating income | $27,913 | $25,178 | | Net income | $11,699 | $11,530 | | Diluted EPS | $0.36 | $0.37 | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets reached $4.37 billion, driven by net utility plant growth, with stockholders' equity at $1.24 billion and lines of credit at $210.7 million Balance Sheet Highlights (in thousands) | Line Item | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total assets | $4,367,512 | $4,345,067 | | Net utility plant | $3,208,847 | $3,170,654 | | Total current assets | $178,082 | $198,389 | | Total stockholders' equity | $1,240,251 | $1,233,397 | | Total capitalization and liabilities | $4,367,512 | $4,345,067 |