SJW - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the SJW Group Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call maybe recorded. I would now like to introduce your host for today's conference Ms. Counsel. General Papazian, Suzy

begin. may You

Suzy Papazian

Executive you, operator. results are quarter financial and the Thornburg, Financial Lynch, Officer. Welcome call for to Chief President conference Board, today of second and SJW James Chairman Chief XXXX the Thank Officer; Group. Eric Presenting

would follow those available accompanying are along, these who For our website slides remarks on at like to www.sjwgroup.com.

experience, our contain materials would the that could Company's this by actual historical Before as statements. you posted that Company development believes differ our future results are we estimates remind and are on begin cause the based may in like and performance the conditions by from implied trends, factors or and today's to of to merger website those appropriate These expressed expected Many statements the assumptions and presentation, its factors forward-looking well as the and related website materially statement. light other I on under presentation Company forward-looking current made circumstances.

to a this XX-K, factors to most statements and Forms of our from could may Securities or Commission, and and you duty S-X forward-looking filed X-K different with revise the at be copies cause be of such our actual in results to For are of we the that as update press some recent to release refer XX-Q, Exchange presentation, the Group description of any SJW disclaims which made obtained statements. statements All website. today and

ask the presentation. the opportunity of to You'll at questions end the have

be available XX, And of webcast recorded. webcast an will reminder, XXXX. this a As October archive is being until the

will like at call turn the our to access press the over can release to corporate website. webcast I now You Eric. the and

Eric Thornburg

Jose SJW I Executive Financial and thank Jim I'm you San Chief Welcome, Group. Water. Lynch, by President and Suzy. very Officer of am CEO Vice everyone, us. Group; Palle of you, Thank Jensen, to pleased joined Chairman, Thornburg, President be Eric of joining for and SJW

As results detail quarter later, SJW greater strong Jim will delivered second the XXXX. for discuss in of

milestones customers enable to key also local that us communities. serve several our better We achieved and

With official expanding upgraded Plant, For the additions opening XXXX. now in will matters results utility progress further the other and those the key provide I'll QX water with with acquisition regulatory SJWTX's of the XX% to example the of for Water XX remarks, and Connecticut on brief over proposed Jim our commentary. and Jim's Service. additions detailed Deer provide our presence total financial including analysis bringing business of other a Montevina of our Creek closing system you informational continued plan Texas our review After million remarks, the Treatment event introductory and Ranch Jim? of additional to newly Water year-to-date merger

James Lynch

Eric. you Thank

customer California reflect impact decision California. rate both usage in Texas, higher Our increases our positive partially second of and operating quarter results of capital in by offset the and cost

also incurred We due primarily water merger with with price transaction in surface costs offset which lower connection our usage CGWS. and production costs higher partially to were increases and experience cost by proposed higher water

the over decrease for second per quarter $XX.X was $X.XX $XX.X quarter X.X% $X.XX share. per revenue XXXX. the the $XXX.X a diluted or last X.X% with a of was compares the second diluted period million, dollars, or income share million over million million Net XXXX. $XX.X was same revenue year. quarter of quarter dollars Second Year-to-date, This increase for

per WCMA share. diluted decrease $X.XX share contributed increases by million compared customer surface for our of net per increased million water was share. offset rate $X.XX net due $X.XX of on year, production in XXXX. lower transaction a connection usage These production. the due expenses or our Merger higher diluted CTWS quarter earnings to per and per of incurred and $X.XXX. to $XX.X primarily cost water memorandum of revenue, were $X.XX benefit and contributed per The or memorandum or in $X.X dependence income dollars per per to share $X.XX was less another share share, per diluted water account share $XX.X with Increase account For dollars the balancing increases share in conservation $X.XX our $X.XX

second were by diluted recorded In earnings increases XXXX. per primarily as of per per higher $X.XX cost net usage net $X.XX recur in from of by and share lower did quarter. and the surface of benefit addition, Increase quarter increases California the and $X.XX. increase expenses WCMA an share, factors of water per many impact of an production estate the $X.XX in increased on share XXXX, per same due real driven offset production to we cost not The decrease Year-to-date, contributed of contributions the these $X.XX contributed share a of memorandum in per investments related in share depreciation share, gain of decrease $X.XX the the per the second $X.XX of and proceeding. amortization sale that the balancing $X.XX. capital was account water Merger customer costs quarter rate by of and share. $X.XX of

and on rate Tax company regulated year-to-date quarter cost cost due payroll increase activities a higher the $X.X mentioned recovery XXXX million quarter year-to-date of base Tax and addition, on the of year-to-date. $X.X partially to offset $X.X million respectively Recall implemented has San by the million District. expenses million production due to and benefits the revenue. million for investments. cost water that by higher Cuts or account both with and Tax usage, Act and $XX.X $X.X of and respectively year-to-date million increases usage regulated increases Valley increases Increase increases pass a $X.X by offset for customers. and X, increased by usage revenue in net company of year-to-date implementation estate additional year-to-date. were earnings of July $X.X Water mentioned the a from decrease and proceeding. lower $X effective depreciation. $XX.X the and January recover of memorandum quarter in million on Act for purchase water the additional million our increase increase expenses Act ground Rate XXXX for $X.X the $X.X $XXX,XXX surface increases These our million the In X, company general Texas customer in the pump production capital increased of California a resulted million quarter customer the XXXX million revenue for cost accounts quarter or rate Water application. California Commissions XXXX implemented gain the and primarily provided been rate also $X.X quarter included were memorandum million and authorized our $X resulted for District previously directed return customer sale lower increase along and The XX% and partially million for previously and increases in and year-to-date. balancing water District. Water real the in the quarter cost by as Jose impact implemented the $XX.X the an million during respectively in were the Other Jobs and Clara of million the Santa and due the The taxes for primarily of quarter to to and in to operating balancing case and general rate X.X% X.X% The year-to-date, a $XX.X year-to-date to

months sale first addition, million second six CTWS expense Clara land Company and building $X.X related a the quarter estate gain year-to-date. gain No XXXX. which the and partnership merger sale $X.X XXX SJW Land partnerships In were of million quarter Santa owned. and similar limited of Street and undeveloped on costs real pretax in of included a of million on in pretax the for occurred interest $XXX,XXX West of income $X.X Other the commercial transactions bond XXXX in Land and

our program, $XX capital plant added additions to we total $XX.X company expenditure million funded in to funded quarter XXXX year-to-date utility million. in second company bringing of the Turning

At bank lines the our $X.X to million XX% increase in in income of and and The capital financing working offset liquidity, flows a in an non-cash general the and on operations operating I’ll reduced of accrued result Eric? the $X Eric. term year-to-day back credit to of after additions of short in million water decrease over receivables. for million of items reduction approximately $X.X end call quarter, tax available dollars. cash expenses for the net partially that, Turning decrease activities. million XXXX. stop by decrease of A turn adjustments $XX million had plan XXXX and With over utility a production was from we

Eric Thornburg

and the by gallons XX further person way summer person assure this call day decision its gallons process Water Commission water conservation Thank demand to and positive to rate its you. under details final for of Santa reliable remains Water the Treatment remain meet XXXX. upgrades. day to of our We Delivering and state water supplies the Progressive the XXXX reasons and responsible per key a were critically important service leadership District, Jim. membrane Jose allow Montevina San adequate Water as for opening are California the officials California’s This first a undertaking behind XXXX million back use promoting set January limit Waters Plant. as project local partners application long our Plant newly well Santa are our in California available to instrumental Treatment meet Clara XXXX. an to highest high with months Commission. and art have Utilities Brown to supply water and Clara and officials’ water enhances tradition San for extends Assembly and with Valley fall. and for quality local and XX% the opening general to from technology per held continued with are regulations XXXX our to region’s high San successful initial our law wholesale on attended true conservation The event of remain service increasingly California was Water all a the the San safe of the December starting inception ensure Alex Jose Jose at environment District a from also water on treatment May Public Water its We committed a water Bill environmental water elected of Valley Water into Jose per drinking is limit and Edmund Utilities success. preserving track the upgraded a and case indoor Public XXXX. maintains employees becoming compliance quality main Montevina XX, supply XXX. working XXXX, supplier. business bill services new colleagues signed on for Governor Jose Water commitment $XX protecting bill in reduce providing while XX is paramount business and per set by delivery life ultra-filtration, water to With the of Both and customers. water water well its and implementation conservation in state Water and safe success. XXXX ability growing by rates on who continues stringent San reliable to challenges

water with to Over work footprint. America’s and first optimize water ensuring tank within actively water protection the prestigious carbon utilizing potable water and the precious the increasingly partnership efficiencies supplies. treatment, and maximize stretch consecutive water replacement of prevent to damage main And Jose non-revenue enhance one should recognizing water years. last as project this use hydro AMI receiving averaged leader surface. AMI Jose utilities water they to abnormal leaks safe more the test The years leaks track amongst reset leaks director’s a Expanding systems than or in acoustic technology has smart and operating leak past combination and distribution water identify, systems further status technology use to and minimize reduce customers to by the more Santa North enable and company’s easily of meters. conservation its underground usage of completing the their implementation resources efficiently. XXX and allowed plant already sensors San anticipate will further The of and allowed County its This repair us operations timely state’s an objectives award water filing recently, Clara in systematic to industrial for non-surfacing more and years five pilot also response application water for deploying customers we commitment reduce dozens building filter turbans has patterns region’s programs to system for infrastructure recycled water More water or satellite usage efficient in sensing other utilities is San deployment quality. technology to more similar to deployment commonly as Utilities Water and invested and identify to and XXXX with locate metering Jose Jose water our and quality to five acoustic property loss. advanced that over superior future. discover the and Commission recycled California meet the San before Public a control X% its Waters a approximately way known San Waters the as full Waters scale distribution microfiltration water earn energy finally, life

and future have water technologies healthy continuing on and has are steadfast committed progress our a ensure employing current generation innovative to and been providing made we leadership to to access solutions significant While clean environmental focus environment. sustainable that

reported Turning system increases X, on on as adds to previously Inc., about Creek connections acquisition of the by Ranch and XXXX. water count July, customer approximately acquisition and X%. SJWTX’s closed Deer current SJWTX Texas XXX The the

portfolio to quality Importantly, additions continued look Western SJWTX Creek water through and of now to into and ability of high success this optimistic remain waste we delivering March growth safe, of in service to service of benefits never high reasons Service, safe Water a customer Ranch merger reliable and reasonable announcement family the qualify which to be future Inc. combination. Travis the to is vision forward organic residents. SJWTX welcome we’ve supplies we partner Since core success one SJWTX. of base paving and the about for water Connecticut way in reliable growing measured diverse Hays our customers a in counties acquisition area in Deer to water businesses service the our a chosen have our the for and with With wavered the We them. have opportunities. belief Northern continue by deliver will SJWTX’s acquisitions, and business to prospects rates. shares water extends has

its all stakeholders regulatory an This efficient as to customer water engaged information the help the Texas, through XX, economically employ But more with We XXXX. operate California, commission the Connecticut discuss In systems systems spending business and actively other it will and growing is sustainable answer to an whether approved is and Maine determent remain council commission order that The whether vibrant the and of high fact the provide combination well mayors, and complete officials SJW quality invest information within any OII. regions. and as it prudently capital with of the we agencies providing gather exceptional our forward professionals members questions. this answer to of service. and elected to the our two benefits combination our includes on to Public processes to five finding water investigation has we maintain questions California OII committed or in OII Utilities plans working the fact instituting so subject interest. the closely next with by months. to their commission OII is Commission a her for if Commission review July, about through initiative public look time An

to our are over to and confident turn growth the our investments will to call long We that back I’ll the haul earnings that, lasting With will and our profitability shareholders. dividends contribute operator.

Operator

comes Scattergood. Our [Operator with Ryan first and Instructions] Connors question from Boenning

is open. line Your

Ryan Connors

that about question. Thank of the you key questions exactly transaction the does a the mean question lot fundamental confusion come are but and I and and on some to I milestones there’s over timeline couple thanks the and a timeline exact it conclusion. A merger think what timeframe milestones the understand will the for on taking which debate everyone my about quick confusion can there’s

of So can of the we give out milestones kind synopsis need of timeline bit a be you to little us just looking key a brief for?

Eric Thornburg

sooner would process the and quarter in with investigation a And approval finding in require the so that importantly have would Maine for regulatory there of Connecticut regulatory timeline instituting circumstances. Thanks December given to both in and Absolutely. fourth timelines consistent know the up they’ve or depending approval fourth we in you cases upon a plans receive that’s been SJW the Ryan. the Connecticut fourth the that if order close of in filed expect quarter result acquired as group. we will to committed in were in to in And Well California quarter. the of we that not question, California with commission opened and and again those shareholder approval and our course both course

definitive our soon meeting proxies votes counting proxy declare that we complete. towards then as so to as get the begin our vote are and And can

we fourth to late close can be quarter. the continue So confident in we that

Ryan Connors

Okay.

So is that process that’s there? when saying hopefully will be proxy the received pretty from approval regulatory once the expeditious the

Eric Thornburg

Where the as votes our with shareholders the with shareholders. our our declared soon as to and can solicit SEC the work proxy regulatory from Connecticut process of begin then proxy is independent we definitive is approval so water

Ryan Connors

the know until met the we right that regulatory be really are But hurdles Right. definitive that? proxy can

Eric Thornburg

and expect close arise we that now. would but being we’re can Actually very definitive to

Ryan Connors

Great. Okay.

or of working? in and of of mean process Shareholder they independent does how in their have types I So assessment I contacted of and help about was us you institutional part proxy late of this out and And you’ve fractional a and passive held the and Services mean of investors and investors the by what a other in meeting process of is both the would to reached terms advice stock been the tell in question significant the day any touch tell the for sides fourth and lot obviously doing do can and them part age you’ve vote. in of quarter been the groups the passive that some with

Eric Thornburg

soon vote as then Ryan between be institutional that did transaction to we to can I the we companies. our for as reception to combination the presenting to ISS two for make and we actually will that after combination we potential not begin of meet some the begin outstanding make shareholders really for the will their and with say Yeah on to companies’ also will tentative and the we recommendation they shows investors long go so announced we case both and road the got and

us at was begin anxious solicitation lots to out So of process. we’re but support strong that time to the and voiced get

Ryan Connors

helpful this afternoon. for really information thanks your that’s and time Well Great.

Eric Thornburg

I’d we a Ryan, with shares remind so already we’ve already transaction. you of that XX% to also of the the they’ve agreement have and committed do voting SJW XX% got stockholders got

Ryan Connors

Got it. you. piece Thank Good of information.

Eric Thornburg

Ryan. you, Thank

Operator

comes Janney. from Gaugler Next Michael question with

Your now line open. is

Michael Gaugler

morning, everyone. Good

Eric Thornburg

Michael. Hi

Michael Gaugler

I housekeeping Well with quarter good guess start that forward a a million going guess? I’ll expenses. first a CTWS $X.X Is item for

James Lynch

the different Yeah. kind is as Jim. There’s The this Michael, of expenses have the slow parts the go are expenses going we to through transaction. been of

we are expenses think are us the going filing and of that I process. going going the QX we’re to transaction through helping total just our to so doing then to going got be from into next of looking shareholders primarily have some this and be number out that are estimated be kind phase going what an we’ve for professionals we’re because as this to

know a number And without so that I at to look think forward. going giving you

would I normal and paid on the think can you expect to that the expect. you transaction ones expenses customary be it we’ve

Michael Gaugler

you on jurisdictions. was merger outside OII being basis given Okay. review? One not with like the certainly the their in the in or it and What’s for back referencing it this seems slides California to the one utility is CPUC be merged would more purchased your

Eric Thornburg

in any question is credit will Connecticut that we we commission of finding did be questions with the OII which this exact information sharing not we and this great questioned some sharing process do buyer clear will great we same a did chosen the way being they’ve interlopers Commission was assert president know be process the some to to expect But fact that the same the their transaction in it a commission so really great our those Public historic our raised When great conclusion as with customers that Utility by confident and and this had that our rely California jurisdiction work is you, on Maine we would highly shareholders California case. regulators our this that thank Yeah will and Michael. began and they communities reach well. for to

OII the And were end process December with so we the pleased with date.

Michael Gaugler

I and And it contention believe. mention [indiscernible] one since as you’re people one have then last also you couple well are line of slide well. out Okay. a service

So versus working been I’ll original ask your it expectations. has how out

Eric Thornburg

leaks to the I excited and We’ve system have the Tell are Michael that the buy when very really yet XXXX precious we expense to plan catastrophic water of down a the repaving in you is these out usage so of more listening surface have extent we the streets and there so what now Santa when to water said enthusiastic saving to about is District just that about distribution from and tonight operating and them we got technology. we avoid for failures more. to deploy greater like like us we Clara this cost have course Valley say devices Water we found a significant

Michael Gaugler

then Now when point you discussion? for your next going can regulatory your out early you

Eric Thornburg

the the that’s to great be lowest one X% non-revenue performance a rates got no in of country. use or question It’s water metric, less

Michael Gaugler

Awesome. That’s all guys. Thanks.

Eric Thornburg

Thank you, Michael.

Operator

no back Eric time closing for the this remarks. I showing to questions. further At turn call like to I’m

Eric Thornburg

the Well and with now. again in care group. we we call thank today, to our we Take input value our future of you for you support appreciate successes your participating sharing look the forward SJW

Operator

your Ladies participation your That and for gentlemen conference. today’s thank does program. conclude you

a great. Everyone, You may disconnect. have

SJW (SJW) 26 Jul 182018 Q2 Earnings call transcript