SJW (US:SJW)2019-11-01 21:44Financial Data and Key Metrics Changes - Third quarter revenue was $114 million, a decrease of $10.9 million from $124.9 million in the same quarter of 2018 [16] - Net income for the third quarter was $9.5 million or $0.33 per diluted share, compared to $15.8 million or $0.76 per diluted share in Q3 2018 [16][17] - Year-to-date revenue for 2019 was $294.6 million, a 1% decrease compared to the same period last year [24] Business Line Data and Key Metrics Changes - Increased availability of surface water contributed $0.12 per share, while decreased merger-related costs contributed $0.17 per share in Q3 [18] - Water production expenses increased by $1.2 million compared to Q3 2018, primarily due to higher per unit costs for purchased water and power [22] - Other operating expenses decreased by $3.3 million in Q3 2019 due to a decrease in merger expenses related to the Connecticut Water transaction [23] Market Data and Key Metrics Changes - The WCMA balance for Q3 2019 dropped to $900,000 from $4.1 million in Q3 2018, indicating better alignment of authorized and actual usage [20] - Customer usage showed a 4% increase for residential customers and a 5% decrease for business customers in Q3 [61] Company Strategy and Development Direction - The merger with Connecticut Water Service, Inc. is expected to drive future success and expand the company's footprint [14] - The company is focused on continuous improvements through innovative technology and prudent financial management [13] - A commitment to environmental stewardship and community support remains a priority, with a focus on water and energy conservation [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustained growth in profitability, earnings, and dividends following the merger [43] - Future financial results are expected to be less impacted by the WCMA situation, with a better alignment of fixed and variable costs [36] - The company is working on providing clearer forward-looking guidance for analysts and investors [105] Other Important Information - The company has invested over $1 billion in water systems and communities in California and Texas over the last decade [13] - A new President for Connecticut Water Service has been appointed, effective December 1, 2019 [42] Q&A Session Summary Question: What was the rationale behind the commission's decision not in favor of recovering balances? - The denial was based on the argument that the drought has been over since 2016 and concerns about the company potentially over-earning [48] Question: Is there a risk that the company may not be able to book WCMA entries going forward? - The WCMA remains an active account, and the company believes it has good standing for requesting the balance despite the proposed decisions [51] Question: Can you provide details on actual usage per customer compared to new rates? - Residential customer usage is about 4% ahead, while business usage is about 5% behind for the quarter [61] Question: What are the expected merger costs for the fourth quarter? - There are two significant outstanding expenses related to the merger totaling around $12 million, along with some integration costs [67] Question: What is the revenue increase from San Jose Water's GRC for the full year? - The revenue increase from the GRC is approximately $16.5 million for the full year [78]