Workflow
SJW (SJW) - 2024 Q1 - Earnings Call Transcript
SJWSJW (SJW)2024-04-26 20:19
Filings
Slide

Financial Data and Key Metrics Changes - In Q1 2024, the company reported revenue of 149.4million,a9149.4 million, a 9% increase from 137.3 million in Q1 2023, primarily driven by rate increases [11] - Net income for the quarter was 11.7million,a111.7 million, a 1% increase from 11.5 million in Q1 2023, with diluted EPS at 0.36comparedto0.36 compared to 0.37 in the previous year [11] - Water production expenses increased by 10% year-over-year, mainly due to higher customer usage and rate increases from wholesalers [12] Business Line Data and Key Metrics Changes - The company is advancing a 540millioncapitalexpenditureprogramtoaddressPFAstreatment,greenhousegasemissionsreduction,andfleetelectrification[3]−InConnecticut,ageneralratecaseapplicationispendingfora540 million capital expenditure program to address PFAs treatment, greenhouse gas emissions reduction, and fleet electrification [3] - In Connecticut, a general rate case application is pending for a 21.4 million or 18.1% increase in annual revenues, with two-thirds related to infrastructure investments [6][7] - Maine Water's Biddeford-Saco Division is expected to see an annualized revenue increase of 2.6millionfollowingnewrateseffectiveJanuary1,2024[8]MarketDataandKeyMetricsChanges−TheTexasserviceareaisexperiencingmoderatetoseveredrought,whichisexpectedtoleadtolowerwaterusagein2024[10]−Thecompanyservesthreeofthefivefastest−growingcountiesintheU.S.,withapproximately22,000potentialnewconnectionsinTexas[16]−Thecompanyanticipatesanincreaseinannualizedrevenueof2.6 million following new rates effective January 1, 2024 [8] Market Data and Key Metrics Changes - The Texas service area is experiencing moderate to severe drought, which is expected to lead to lower water usage in 2024 [10] - The company serves three of the five fastest-growing counties in the U.S., with approximately 22,000 potential new connections in Texas [16] - The company anticipates an increase in annualized revenue of 1.6 billion following the approval of a system improvement charge in Texas [17] Company Strategy and Development Direction - The company is committed to environmental stewardship, having reduced Scope 1 and Scope 2 greenhouse gas emissions by approximately 20% from 2019 to 2022 [1] - A focus on strategic reinvestments and regulatory approvals is evident, with a five-year capital investment outlook of 1.6billion[18]−Thecompanyaimstoenhanceitscommunicationsandstakeholderengagementthroughnewleadershipappointments[34]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementexpressedoptimismregardingtheregulatoryenvironmentinConnecticut,emphasizingtheimportanceofjustifyingcapitalinvestments[61]−ThecompanyisconfidentinitsabilitytomeetnewPFASstandardsandexpectsregulatoryrecoveryofcapitalinvestments[33]−Futureguidanceremainsconsistentwithalong−termgrowthrateof51.6 billion [18] - The company aims to enhance its communications and stakeholder engagement through new leadership appointments [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the regulatory environment in Connecticut, emphasizing the importance of justifying capital investments [61] - The company is confident in its ability to meet new PFAS standards and expects regulatory recovery of capital investments [33] - Future guidance remains consistent with a long-term growth rate of 5% to 7%, with a reaffirmation of net income per diluted share guidance for 2024 [18][19] Other Important Information - The company is investing approximately 27 million in an advanced metering infrastructure project, part of a larger 100millioninitiative[14]−ArecentsaleofawarehousebuildinginTennesseefor100 million initiative [14] - A recent sale of a warehouse building in Tennessee for 27 million is noted, with a pretax gain of $7 million [19] - The company has a strong history of dividend payments, having raised dividends for 56 consecutive years [65] Q&A Session Summary Question: What are the prospects for settlement in Connecticut? - Management is optimistic about the regulatory climate in Connecticut and expects a fair outcome based on their thorough case preparation [61] Question: How is the drought impacting usage trends in Texas? - Management acknowledged significant drought conditions in Texas, which are expected to impact water usage and business operations [48][49] Question: Is there any ongoing portfolio change related to real estate sales? - The recent Tennessee transaction is the primary focus, with no other significant portfolio changes currently in process [50]