SJW (US:SJW)2020-11-07 18:19Financial Data and Key Metrics Changes - Third-quarter revenue was $165.9 million, an increase of $51.9 million compared to $114 million in the third quarter of 2019 [14] - Net income for the third quarter was $26.1 million or $0.91 per diluted share, compared to $9.5 million or $0.33 per diluted share in the same period last year [14] - Year-to-date revenue was $428.8 million, a 46% increase over the same period last year, with net income of $48.2 million or $1.68 per diluted share [21] Business Line Data and Key Metrics Changes - The merger with Connecticut Water Service (CTWS) contributed $37.1 million to the revenue increase in Q3 2020 [18] - Increased customer usage in California and Texas contributed an additional $2.4 million in revenue [18] - Water production expenses increased by $13.3 million compared to Q3 2019, primarily due to CTWS water sales and higher customer usage [19] Market Data and Key Metrics Changes - The effective income tax rate for Q3 was 15%, down from 21% in Q3 2019, primarily due to certain CTWS tax deductions [20] - The company experienced a $6.7 million increase in payments for previously invoiced amounts and a $5 million upfront payment related to a service concession agreement [29] Company Strategy and Development Direction - The company remains focused on its core growth strategy of investing in the water system to provide safe and reliable water service [10] - A capital plan of $237.8 million for 2021 has been set, marking the largest capital plans in the history of its New England and Texas subsidiaries [11] - The company is preparing rate case filings in California, Connecticut, and Maine, with a general rate case filing for San Jose Water scheduled for January 2021 [34][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2020, including COVID-19, wildfires, and drought, but emphasized the resilience of employees and the importance of investments in clean drinking water [6][10] - The company reaffirmed its guidance of $1.95 to $2.05 per share for 2020 [12] - Management expressed caution regarding surface water availability in California, indicating a conservative approach for future forecasts [58] Other Important Information - The company has established a diversity, equity, and inclusion council to foster an inclusive work environment [42] - SJW Group has a 154-year track record of serving customers and has made 309 consecutive dividend payments [67] Q&A Session Summary Question: Will the company provide 2021 guidance considering the upcoming Connecticut rate case? - Management is considering guidance for 2021 but is cautious due to the rate case and will provide clarity as the first quarter approaches [48][49] Question: Should investors expect conservatism regarding purchased water costs for San Jose Water? - Management acknowledged the need for transparency regarding surface water projections and indicated a conservative approach moving forward [50][51] Question: How should investors think about surface water availability in California heading into 2021? - Management advised caution due to the lack of rain and indicated that they would provide updates as conditions change [57][58] Question: Is the long-term EPS growth rate target of 5% still applicable? - Management confirmed that the target is based on a conservative view of capital expenditures and rate base growth over the next five years [61][62]