SJW
Sjw Group
NASDAQ
8-K: SJW Group Exceeds Expectations with Strong 2023 Financial Results, Announces 2024 Guidance
Sentiment:
Annual Results
21 February 2024 9:00 PM
SJW Group reported strong 2023 financial results, exceeding initial earnings per share guidance and surpassing capital expenditure goals, while also issuing positive guidance for 2024.
Better than expected
The company's 2023 earnings per share of $2.68 exceeded the initial guidance of $2.40 to $2.50 and was in line with the updated guidance of $2.65 to $2.70.
SJW Group's infrastructure investments of $272 million surpassed the 2023 guidance of $255 million.
Delay expected
The fourth quarter results were affected by the delayed decision in San Jose Water Company's 2022 general rate case (GRC) proceeding.
Summary
- SJW Group announced its 2023 financial results, with net income reaching $85.0 million, or $2.68 per diluted share, a 15% increase compared to 2022.
- The company's 2023 earnings per share surpassed initial guidance of $2.40 to $2.50 and were in line with updated guidance of $2.65 to $2.70.
- Operating revenue for 2023 was $670.4 million, an 8% increase from the previous year, driven by rate filings, regulatory mechanism adjustments, and customer growth.
- SJW Group invested $272 million in infrastructure in 2023, exceeding its guidance of $255 million.
- The company has issued 2024 guidance for net income per diluted share of $2.68 to $2.78 and plans to invest approximately $332 million in regulated infrastructure.
- A 10.01% Water Cost of Capital Mechanism (WCCM)-adjusted return on equity in California was secured as of January 1, 2024.
- The company also grew its customer base in Texas by 12% in 2023 through organic growth and acquisitions.
Sentiment
Score: 8
Explanation: The document presents a positive outlook with strong financial results, exceeding expectations, and positive future guidance. There are some negative points, but the overall tone is optimistic and indicates a well-managed company.
Positives
- SJW Group exceeded its initial earnings per share guidance for 2023.
- The company surpassed its capital expenditure goal for 2023 by $17 million.
- SJW Group secured a favorable 10.01% WCCM-adjusted return on equity in California.
- The company experienced significant customer growth in Texas, increasing its base by 12%.
- SJW Group's 2024 guidance indicates continued positive financial performance.
- The company achieved a 15% increase in net income compared to the previous year.
- Operating revenue increased by 8% year-over-year.
Negatives
- Fourth quarter net income decreased by 43% compared to the same quarter last year, primarily due to the delayed decision in San Jose Water Company's 2022 general rate case and higher production costs.
- Operating revenue for the fourth quarter decreased slightly compared to the same quarter last year due to the delayed 2022 general rate case.
- Operating expenses for the fourth quarter increased by 11% compared to the same quarter last year, driven by higher water production expenses.
Risks
- The company's future performance is subject to regulatory actions concerning rates and capital expenditures.
- Changes in demand for water and other services could impact financial results.
- Unanticipated weather conditions and the effects of climate change pose risks to water supply and customer usage.
- The company faces risks related to contamination of water supplies and damage to infrastructure.
- The ability to obtain financing on favorable terms is subject to market conditions and credit ratings.
- The company's 2024 guidance is subject to risks and uncertainties, including those outlined in the company's SEC filings.
Future Outlook
SJW Group anticipates continued growth and profitability, with a focus on infrastructure investments and strategic acquisitions. The company has issued 2024 full-year guidance for net income per diluted common share of $2.68 to $2.78 and regulated infrastructure investments of approximately $332 million. They also reiterate their non-linear long-term diluted EPS growth of 5% to 7%, anchored off 2022's diluted EPS of $2.43.
Management Comments
- Eric W. Thornburg, SJW Group Chair, CEO, and President, stated that the 2023 financial results and operating performance exceeded expectations and initial earnings per share guidance.
- Thornburg also mentioned that the company met and surpassed its annual capital expenditure goal in 2023 by $17 million.
- Thornburg expressed confidence that the company's continued focus on executing its proven growth strategy will position it for further success in 2024.
Industry Context
This announcement reflects a positive trend for regulated water utilities, with SJW Group demonstrating strong financial performance and strategic growth. The company's focus on infrastructure investment and regulatory outcomes aligns with industry trends emphasizing reliability and sustainability. The company's expansion in Texas also reflects the growing demand for water services in rapidly developing regions.
Comparison to Industry Standards
- SJW Group's 2023 EPS of $2.68 is a strong result compared to other water utilities, particularly given the initial guidance of $2.40 to $2.50.
- The 10.01% WCCM-adjusted return on equity in California is a favorable outcome compared to the industry average, which typically ranges from 8% to 10%.
- The company's 12% customer growth in Texas is significant, indicating a successful expansion strategy compared to peers with more modest growth rates.
- The planned $1.6 billion capital investment over the next 5 years is substantial, demonstrating a commitment to infrastructure upgrades and expansion, which is in line with the industry's focus on long-term asset management.
- The company's recognition in the Newsweek Excellence 1000 Index 2024 as the highest-ranked water utility company highlights its commitment to corporate responsibility, which is increasingly important in the utility sector.
Stakeholder Impact
- Shareholders will benefit from the company's strong financial performance and positive future outlook.
- Customers will benefit from the company's investments in infrastructure and water quality.
- Employees will benefit from the company's continued growth and stability.
- Communities will benefit from the company's commitment to corporate responsibility and environmental sustainability.
Next Steps
- SJW Group will continue to execute its growth strategy, focusing on infrastructure investments and strategic acquisitions.
- The company will proceed with its 2024 general rate case application in California.
- The company will continue to pursue regulatory approvals for its PFAS treatment investments.
- The company will continue to monitor and respond to regulatory developments in all its service areas.
- SJW Group will host a webcast to review the 2023 results on February 22, 2024.
Key Dates
- January 1, 2023: The ROE was 8.80%, the cost of debt was 6.20%, the capital structure was 53.28% equity, and the overall ROR was 7.64%.
- March 2023: Maine Water Company (MWC) filed a rate application requesting a $2.9 million revenue increase.
- October 2, 2023: The CPUC approved SJWC's request for reinstatement of the Water Conservation Memorandum Account (WCMA) and Water Conservation Expense Memorandum Account (WCEMA).
- October 3, 2023: The Connecticut Water Company (CWC) filed a GRC application with the Connecticut Public Utilities Regulatory Authority (PURA).
- December 28, 2023: The CPUC approved SJWC's Advice Letter 603 establishing a Group Insurance Balancing Account.
- January 1, 2024: New rates went into effect in California, including a 10.01% WCCM-adjusted return on equity.
- January 5, 2024: The Maine Public Utilities Commission approved a stipulation agreement for Maine Water Company, and The Texas Water Company (TWC) filed an application with the Public Utilities Commission of Texas (PUCT) to acquire 3009 Water Company.
- January 26, 2024: TWC closed on the acquisition of Elm Ridge.
- February 2, 2024: SJW Group received approval from CPUC for a one-year deferment in their 2024 Cost of Capital (COC) filings.
- February 21, 2024: SJW Group issued a press release announcing its 2023 annual and fourth quarter financial results.
- February 22, 2024: SJW Group will review results for 2023 in a live webcast presentation.
- May 1, 2025: The deferred 2024 Cost of Capital (COC) filings are due.
Keywords
water utility, financial results, earnings per share, infrastructure investment, rate case, regulatory, capital expenditure, revenue, net income, customer growth
SJW
Sjw Group
NASDAQ
Sector: Utilities
Filings with Classifications
Better than expected
29 April 2025 4:55 PM
Quarterly Report
- Net income increased by 41% due to rate increases in California and Connecticut.
Capital raise
29 April 2025 4:55 PM
Quarterly Report
- SJW Group issued and sold 495,900 shares of common stock with a weighted average price of $53.87 per share, receiving $26.545 million in net proceeds under the Equity Distribution Agreement.
- Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 871,413 shares of common stock at a weighted average price of $54.56 for a total net proceeds of $46,713 and has $152,460 of aggregate gross sales price of shares remaining to issue under the Equity Distribution Agreement as of March 31, 2025.
Better than expected
28 April 2025 5:15 PM
Earnings Release
- The company's net income, diluted EPS, and adjusted diluted EPS all showed significant increases compared to the same quarter last year, indicating better-than-expected performance.
- Operating revenue also increased by 12%, driven by rate increases and higher customer usage, further contributing to the better-than-expected results.
Capital raise
27 February 2025 11:00 PM
Annual Results
- SJW Group may offer and sell shares of its common stock, $0.001 par value per share, from time to time in at-the-market offerings, having an aggregate gross sales price of up to $200,000.
Better than expected
27 February 2025 12:38 AM
Annual Results
- SJW Group's 2024 adjusted diluted EPS of $2.95 exceeded the company's guidance.
Capital raise
30 October 2024 6:38 AM
Equity Offering Announcement
- SJW Group has entered into an agreement to sell up to $200 million of its common stock.
- The offering will be conducted through at-the-market sales.
- The proceeds will be used for acquisitions, capital expenditures, debt repayment, and general corporate purposes.
Better than expected
28 October 2024 5:16 PM
Quarterly Report
- The company's net income increased by 7% year-over-year, exceeding expectations.
- Operating revenue increased by 10% year-over-year, indicating strong performance.
- The company's effective consolidated income tax rate was 5% for the three months ended September 30, 2024, lower than expected.
Capital raise
28 October 2024 5:16 PM
Quarterly Report
- SJW Group issued and sold 535,345 shares of common stock in the third quarter of 2024, generating $31.007 million in net proceeds.
- The company plans to raise approximately $35 million in long-term debt to pay down line of credit agreements, subject to market conditions.
- SJW Group intends to enter into a new equity distribution agreement to establish a new at-the-market offering program prior to the expiration of the current agreement on November 17, 2024.
Better than expected
28 October 2024 9:02 AM
Quarterly Report
- The company's GAAP diluted EPS of $1.17 and adjusted diluted EPS of $1.18 for Q3 2024 both represent year-over-year increases, indicating better than expected performance.
Better than expected
25 July 2024 4:58 PM
Quarterly Report
- The company's net income and revenue growth exceeded expectations due to rate increases and customer growth.
Capital raise
25 July 2024 4:58 PM
Quarterly Report
- SJW Group issued 584,630 shares of common stock for net proceeds of $32.3 million under its equity distribution agreement during the six months ended June 30, 2024.
- SJW Group subsidiaries plan to raise approximately $160 million in long-term debt to pay down the line of credit agreements during the balance of 2024.
Better than expected
24 July 2024 8:34 PM
Quarterly Report
- The company's second quarter results exceeded expectations with a 13% increase in net income and a 14% increase in adjusted net income compared to the same period last year.
- The company also increased its full year EPS guidance, indicating a positive outlook for the remainder of the year.
Delay expected
24 June 2024 5:40 PM
SEC Form 4 Filing
- 51 shares of Common Stock that were acquired as reinvested dividends and which were inadvertently excluded due to an administrative error.
Delay expected
26 April 2024 5:27 PM
Quarterly Report
- SJWC's Saratoga Water Treatment Plant remains offline until the updated operations plan is granted approval by the California Division of Drinking Water.
Capital raise
26 April 2024 5:27 PM
Quarterly Report
- In March 2023, SJW Group entered into Amendment No. 1 to the equity distribution agreement, dated November 17, 2021, between SJW Group and J.P. Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC, pursuant to which the company may offer and sell shares of its common stock, $0.001 par value per share, from time to time in at-the-market offerings, having an aggregate gross sales price of up to $240,000.
- For the three months ended March 31, 2024, SJW Group issued and sold a total of 126,025 shares of common stock with a weighted average price of $57.13 per share and received $7,006 in net proceeds under the Equity Distribution Agreement.
- Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 2,130,682 shares of common stock at a weighted average price of $72.60 for a total net proceeds of $151,004 and has $85,309 remaining under the Equity Distribution Agreement to issue into shares.
Worse than expected
25 April 2024 8:04 PM
Quarterly Report
- The diluted earnings per share decreased by 3% compared to the same quarter last year, indicating a slight underperformance in profitability.
Delay expected
25 April 2024 8:04 PM
Quarterly Report
- San Jose Water received approval for a one-year deferment in their 2024 Cost of Capital (COC) filings to May 1, 2025.
Better than expected
22 February 2024 8:15 PM
Annual Results
- The company's net income increased by 15% year-over-year, indicating better than expected financial performance.
Capital raise
22 February 2024 8:15 PM
Annual Results
- SJW Group issued $70 million in new long-term debt and $80.659 million in equity in 2023.
- The company has a remaining $92.509 million under the Equity Distribution Agreement to issue into shares.
Better than expected
21 February 2024 9:00 PM
Annual Results
- The company's 2023 earnings per share of $2.68 exceeded the initial guidance of $2.40 to $2.50 and was in line with the updated guidance of $2.65 to $2.70.
- SJW Group's infrastructure investments of $272 million surpassed the 2023 guidance of $255 million.
Delay expected
21 February 2024 9:00 PM
Annual Results
- The fourth quarter results were affected by the delayed decision in San Jose Water Company's 2022 general rate case (GRC) proceeding.
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