EXHIBIT 99.1
SJW GROUP ANNOUNCES 2017 THIRD QUARTER FINANCIAL RESULTS
SAN JOSE, CA, October 25, 2017 – SJW Group (NYSE: SJW) today reported financial results for the third quarter ended September 30, 2017. SJW Group net income was $19.5 million for the quarter ended September 30, 2017, compared to $19.0 million for the same period in 2016. Diluted earnings per share were $0.94 and $0.92 for the quarters ended September 30, 2017 and 2016, respectively.
Operating revenue was $124.6 million for the quarter ended September 30, 2017 compared to $112.3 million in the same period in 2016. The $12.3 million increase in revenue was primarily attributable to $10.6 million in cumulative rate increases and $4.5 million in higher customer usage. These increases were partially offset by $2.6 million in lower revenue recorded in our Water Conservation Memorandum Account ("WCMA").
Water production expenses for the third quarter of 2017 were $53.0 million compared to $45.0 million for the same period in 2016, an increase of $8.0 million. The increase in water production expenses was attributable to $4.3 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $4.0 million in higher customer water usage, which were partially offset by $339,000 due to an increase in the use of available surface water supplies. Operating expenses, excluding water production costs, increased $2.4 million to $33.4 million from $31.0 million. The increase was primarily due to $1.0 million of higher administrative and general expenses, $946,000 of higher depreciation expenses due to assets placed in service in 2016, and $398,000 in higher maintenance and property taxes and other non-income taxes.
The effective consolidated income tax rates were 41% and 40% for the quarters ended September 30, 2017 and 2016, respectively.
Year-to-date net income was $41.9 million, compared to $39.1 million in 2016. Diluted earnings per share were $2.03 in the first nine months of 2017, compared to $1.90 per diluted share for the same period in 2016.
Year-to-date operating revenue increased by $35.3 million to $295.7 million from $260.4 million in the first nine months of 2017. The increase was attributable to $34.2 million in cumulative rate increases, $6.1 million in higher customer usage, $2.6 million in higher revenue recorded in our WCMA, and a $1.3 million change in the net recognition of certain other balancing and memorandum accounts. These increases were partially offset by $8.8 million in true-up revenue recognized as a part of our 2016 California General Rate Case decision in the prior year.
Year-to-date water production expenses increased to $117.6 million from $93.3 million in 2016. The $24.3 million increase was attributable to $13.4 million in higher per unit costs for purchased water, groundwater extraction and energy charges, $6.0 million in higher expenses due to a decrease in the use of available surface water supplies, and $4.8 million in higher customer water usage. Operating expenses, excluding water production costs, increased $7.9 million to $98.3 million from $90.4 million. The increase was primarily due to $3.8 million in higher administrative and general expenses, $2.7 million of higher depreciation expenses, and $1.4 million in higher maintenance and property taxes and other non-income taxes. The increase in administrative and general expenses was primarily due to an increase in salaries and an increase in regulatory fees due to higher usage.
Other expense and income in the first nine months of 2017 included a pre-tax gain of $6.3 million on the sale of 444 West Santa Clara Street Limited Partnership's interests in the commercial building and land the partnership owned and sale of undeveloped land which SJW Land Company owned for a pre-tax gain of $580,000. Other expense and income in the first nine months of 2016 included a pre-tax gain on the sale of 159,151 shares of California Water Service Group stock for $3.2 million.
The effective consolidated income tax rates were 39% and 40% for the nine-month periods ended September 30, 2017 and 2016, respectively.
The Directors of SJW Group today declared a quarterly dividend on common stock of $0.2175 per share. The dividend is payable on December 1, 2017 to stockholders of record on November 6, 2017.
SJW Group is a publicly traded holding company headquartered in San Jose, California. SJW Group is the parent company of San Jose Water Company, SJWTX, Inc., Texas Water Alliance Limited, and SJW Land Company. Together, San Jose Water Company and SJWTX, Inc. provide water service to more than one million people in San Jose, California and nearby communities and in Canyon Lake, Texas and nearby communities. SJW Land Company owns and operates commercial real estate investments.
This press release may contain certain forward-looking statements including, but not limited to, statements relating to SJW Group's plans, strategies, objectives, expectations and intentions, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SJW Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Results for a quarter are not indicative of results for a full year due to seasonality and other factors. Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Group's most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. SJW Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SJW Group
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands, except per share data)
|
| | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| OPERATING REVENUE | $ | 124,578 |
| | 112,344 |
| | $ | 295,696 |
| | 260,400 |
|
| OPERATING EXPENSE: | | | | | | | |
| Production Expenses: | | | | | | | |
| Purchased water | 30,833 |
| | 28,681 |
| | 66,938 |
| | 52,863 |
|
| Power | 2,500 |
| | 2,141 |
| | 5,491 |
| | 4,992 |
|
| Groundwater extraction charges | 15,756 |
| | 10,867 |
| | 34,098 |
| | 25,627 |
|
| Other production expenses | 3,874 |
| | 3,311 |
| | 11,040 |
| | 9,815 |
|
| Total production expenses | 52,963 |
| | 45,000 |
| | 117,567 |
| | 93,297 |
|
| Administrative and general | 13,477 |
| | 12,449 |
| | 39,494 |
| | 35,690 |
|
| Maintenance | 4,374 |
| | 4,217 |
| | 12,293 |
| | 12,082 |
|
| Property taxes and other non-income taxes | 3,454 |
| | 3,213 |
| | 10,260 |
| | 9,115 |
|
| Depreciation and amortization | 12,065 |
| | 11,119 |
| | 36,217 |
| | 33,489 |
|
| Total operating expense | 86,333 |
| | 75,998 |
| | 215,831 |
| | 183,673 |
|
| OPERATING INCOME | 38,245 |
| | 36,346 |
| | 79,865 |
| | 76,727 |
|
| OTHER (EXPENSE) INCOME: | | | | | | | |
| Interest expense | (5,541 | ) | | (5,426 | ) | | (17,354 | ) | | (16,330 | ) |
| Gain on sale of California Water Service Group stock | — |
| | — |
| | — |
| | 3,197 |
|
| Gain on sale of real estate investment | — |
| | 124 |
| | 6,903 |
| | 124 |
|
| Other, net | 359 |
| | 427 |
| | 1,436 |
| | 939 |
|
| Income before income taxes | 33,063 |
| | 31,471 |
| | 70,850 |
| | 64,657 |
|
| Provision for income taxes | 13,523 |
| | 12,512 |
| | 27,055 |
| | 25,545 |
|
| NET INCOME BEFORE NONCONTROLLING INTEREST | 19,540 |
| | 18,959 |
| | 43,795 |
| | 39,112 |
|
| Less net income attributable to the noncontrolling interest | — |
| | — |
| | 1,896 |
| | — |
|
| SJW GROUP NET INCOME | 19,540 |
| | 18,959 |
| | 41,899 |
| | 39,112 |
|
| Other comprehensive income, net | 80 |
| | (169 | ) | | 252 |
| | 848 |
|
| Reclassification adjustment for gain realized on sale of investments, net | — |
| | — |
| | — |
| | (1,742 | ) |
| SJW GROUP COMPREHENSIVE INCOME | $ | 19,620 |
| | 18,790 |
| | $ | 42,151 |
| | 38,218 |
|
| | | | | | | | |
| SJW GROUP EARNINGS PER SHARE: | | | | | | | |
| Basic | $ | 0.95 |
| | 0.93 |
| | $ | 2.04 |
| | 1.91 |
|
| Diluted | $ | 0.94 |
| | 0.92 |
| | $ | 2.03 |
| | 1.90 |
|
| DIVIDENDS PER SHARE | $ | 0.22 |
| | 0.20 |
| | $ | 0.65 |
| | 0.61 |
|
| WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | |
| Basic | 20,516 |
| | 20,452 |
| | 20,502 |
| | 20,434 |
|
| Diluted | 20,697 |
| | 20,602 |
| | 20,675 |
| | 20,581 |
|
SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
|
| | | | | | |
| | September 30,
2017 | | December 31,
2016 |
| ASSETS | | | |
| Utility plant: | | | |
| Land | $ | 18,237 |
| | 17,923 |
|
| Depreciable plant and equipment | 1,614,139 |
| | 1,554,016 |
|
| Construction in progress | 111,935 |
| | 70,453 |
|
| Intangible assets | 25,164 |
| | 23,989 |
|
| Total utility plant | 1,769,475 |
| | 1,666,381 |
|
| Less accumulated depreciation and amortization | 542,890 |
| | 520,018 |
|
| Net utility plant | 1,226,585 |
| | 1,146,363 |
|
| | | | |
| Real estate investments | 56,224 |
| | 62,193 |
|
| Less accumulated depreciation and amortization | 10,844 |
| | 11,734 |
|
| Net real estate investments | 45,380 |
| | 50,459 |
|
| CURRENT ASSETS: | | | |
| Cash and cash equivalents | 7,569 |
| | 6,349 |
|
| Restricted cash | — |
| | 19,001 |
|
| Accounts receivable and accrued unbilled utility revenue | 62,961 |
| | 53,795 |
|
| Current regulatory assets, net | 11,368 |
| | 16,064 |
|
| Other current assets | 5,223 |
| | 4,402 |
|
| Total current assets | 87,121 |
| | 99,611 |
|
| OTHER ASSETS: | | | |
| Investment in California Water Service Group | 3,815 |
| | 3,390 |
|
| Regulatory assets, net | 140,911 |
| | 135,709 |
|
| Other | 7,758 |
| | 7,844 |
|
| | 152,484 |
| | 146,943 |
|
| | $ | 1,511,570 |
| | 1,443,376 |
|
SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
|
| | | | | | |
| | September 30,
2017 | | December 31,
2016 |
| CAPITALIZATION AND LIABILITIES | | | |
| CAPITALIZATION: | | | |
| Common stock | $ | 21 |
| | 21 |
|
| Additional paid-in capital | 83,856 |
| | 81,715 |
|
| Retained earnings | 366,818 |
| | 338,386 |
|
| Accumulated other comprehensive income | 1,776 |
| | 1,524 |
|
| Total stockholders’ equity | 452,471 |
| | 421,646 |
|
| Long-term debt, less current portion | 431,009 |
| | 433,335 |
|
| Total capitalization | 883,480 |
| | 854,981 |
|
| CURRENT LIABILITIES: | | | |
| Line of credit | 13,000 |
| | 14,200 |
|
| Accrued groundwater extraction charge, purchased water and purchased power | 21,696 |
| | 10,846 |
|
| Accounts payable | 30,658 |
| | 18,739 |
|
| Accrued interest | 7,247 |
| | 6,309 |
|
| Accrued payroll | 3,695 |
| | 4,696 |
|
| Accrued property taxes and other non-income taxes | 3,635 |
| | 1,681 |
|
| Non-refundable deposit | 3,000 |
| | — |
|
| Other current liabilities | 10,487 |
| | 7,102 |
|
| Total current liabilities | 93,418 |
| | 63,573 |
|
| | | | |
| DEFERRED INCOME TAXES | 206,343 |
| | 205,203 |
|
| ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF | | | |
| CONSTRUCTION | 241,944 |
| | 236,391 |
|
| POSTRETIREMENT BENEFIT PLANS | 73,532 |
| | 70,177 |
|
| OTHER NONCURRENT LIABILITIES | 12,853 |
| | 13,051 |
|
| | $ | 1,511,570 |
| | 1,443,376 |
|
