SJW
Sjw Group
NASDAQ
8-K: SJW Group Reports Slight Dip in Q1 Earnings Despite Revenue Growth and Infrastructure Investments
Sentiment:
Quarterly Report
25 April 2024 8:04 PM
SJW Group announced its first quarter 2024 financial results, showing a slight decrease in diluted earnings per share despite an increase in operating revenue and significant infrastructure investments.
Worse than expected
The diluted earnings per share decreased by 3% compared to the same quarter last year, indicating a slight underperformance in profitability.
Delay expected
San Jose Water received approval for a one-year deferment in their 2024 Cost of Capital (COC) filings to May 1, 2025.
Summary
- SJW Group reported a net income of $11.7 million for the first quarter of 2024, a 1% increase compared to $11.5 million in the same quarter last year.
- Diluted earnings per share (EPS) for the quarter was $0.36, a 3% decrease from $0.37 in the same quarter of the previous year.
- Operating revenue increased to $149.4 million, up from $137.3 million in the first quarter of 2023, driven by rate increases, infrastructure recovery mechanisms, and higher customer usage.
- Operating expenses rose to $121.5 million, an 8% increase compared to $112.1 million in the same quarter last year, due to higher water production, depreciation, and administrative costs.
- The company invested $69 million in infrastructure during the quarter and plans to invest over $1.6 billion in capital over the next five years.
- SJW Group reaffirmed its 2024 diluted EPS guidance range of $2.68 to $2.78.
- A quarterly cash dividend of $0.40 per share was declared.
Sentiment
Score: 6
Explanation: The sentiment is moderately positive due to revenue growth and infrastructure investments, but tempered by a slight decrease in EPS and increased operating expenses. The reaffirmation of guidance provides some reassurance.
Positives
- SJW Group's operating revenue increased by $12.1 million year-over-year, reaching $149.4 million.
- The company secured a 10.01% WCCM-adjusted return on equity in California.
- SJW Group invested $69 million in infrastructure during the quarter, demonstrating a commitment to improving its systems.
- The company reaffirmed its 2024 diluted EPS guidance, indicating confidence in future performance.
- A $0.40 per share dividend was declared, continuing a long history of dividend payments.
- The company secured approval of a general rate case in Maine and an infrastructure charge in Texas.
- Connecticut Water Company was recognized as a Top Workplace USA.
Negatives
- Diluted EPS decreased slightly by 3% to $0.36 per share compared to $0.37 in the same quarter last year.
- Operating expenses increased by 8% to $121.5 million, impacting profitability.
- The effective consolidated income tax rate increased to 16% from 9% due to tax deficiencies related to share-based payments and other discrete tax items.
Risks
- The company's performance is subject to regulatory risks, including rate approvals and changes in environmental policies.
- Changes in weather conditions and water demand can impact revenue and operating results.
- The company faces risks related to contamination of water supplies and potential infrastructure failures.
- The company's ability to obtain financing on favorable terms is subject to market conditions and credit ratings.
- The company is subject to risks related to work stoppages, strikes and other labor-related actions.
- The company is subject to risks related to catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, epidemic, or similar occurrences.
Future Outlook
SJW Group reaffirmed its 2024 full-year guidance, including a diluted EPS range of $2.68 to $2.78 and regulated infrastructure investments of approximately $332 million. The company also reiterated its non-linear long-term diluted EPS growth target 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 they are pleased with the financial results for the quarter, which demonstrate the strength of their local water operations and the continued successful execution of their proven business strategy.
- Mr. Thornburg also mentioned that they intend to build upon this strong start to the year by continuing to invest in their trusted relationships with all key stakeholders, deliver on and advance their capital expenditures plan, and encourage the culture of service that underlies their success.
Industry Context
SJW Group operates in the regulated water utility sector, which is generally considered stable but is subject to regulatory oversight and capital-intensive infrastructure investments. The company's focus on infrastructure upgrades and rate case approvals aligns with industry trends aimed at ensuring reliable water service and meeting environmental standards. The recognition of Connecticut Water Company as a Top Workplace USA highlights the importance of employee engagement in the utility sector.
Comparison to Industry Standards
- SJW Group's 10.01% WCCM-adjusted ROE in California is a key metric, and it is important to compare this to other California water utilities such as California Water Service Group (CWT) and American States Water Company (AWR).
- The planned $1.6 billion capital expenditure over the next five years is significant and should be compared to the capital investment plans of similar-sized water utilities.
- The company's focus on PFAS treatment is in line with increasing regulatory scrutiny and is a common challenge for water utilities across the US.
- The 5% to 7% long-term EPS growth target is a standard metric for utility companies and should be compared to the growth targets of its peers.
- The company's dividend payout and history of dividend increases are also important factors to compare with other dividend-paying utility stocks.
Stakeholder Impact
- Shareholders will receive a $0.40 per share dividend.
- Customers may see rate increases as a result of approved rate cases and infrastructure investments.
- Employees of Connecticut Water Company are recognized for their positive work environment.
- The company's infrastructure investments aim to improve the reliability and quality of water service for customers.
Next Steps
- SJW Group will continue to execute its capital expenditure plan, including the $100 million advanced metering infrastructure (AMI) project.
- The company will await decisions on pending rate cases in California, Connecticut, and Texas.
- SJW Group will continue to monitor and address regulatory requirements, including PFAS treatment.
- The company will hold a live webcast on April 26, 2024, to discuss the first quarter results.
Key Dates
- October 3, 2023: Connecticut Water Company (CWC) filed a GRC application with the Connecticut Public Utilities Regulatory Authority (PURA) to amend rates.
- January 1, 2024: New rates went into effect in California, including a WCCM-adjusted return on equity of 10.01%.
- January 1, 2024: The Maine Public Utilities Commission (MPUC) approved a stipulation agreement for Maine Water Company (MWC), increasing annual revenues by $2.6 million.
- January 2, 2024: San Jose Water filed its 2024 GRC application with the CPUC for new rates spanning 2025 to 2027.
- January 5, 2024: Texas Water Company (TWC) filed an application with the Public Utilities Commission of Texas (PUCT) to acquire 3009 Water Company.
- February 2, 2024: San Jose Water received approval from CPUC for a one-year deferment in their 2024 Cost of Capital (COC) filings.
- March 21, 2024: The PUCT approved TWCs application to establish a System Improvement Charge (SIC).
- March 22, 2024: The MPUC authorized an increase of $158,000 in annualized revenues for projects completed through the Water Infrastructure Charge in the Camden-Rockland Division.
- April 25, 2024: SJW Group announced its first quarter 2024 financial results.
- April 26, 2024: SJW Group will hold a live webcast to review the first quarter results.
- May 6, 2024: Shareholders of record date for the declared dividend.
- June 3, 2024: Payment date for the declared dividend.
- June 28, 2024: PURA's current timeline for a final decision in the Connecticut Water Company GRC.
- July 1, 2024: Any authorized increase in rates for Connecticut Water Company would be effective on or about this date.
- July 24, 2024: Archive of the webcast will be available until this date.
- September 30, 2024: Date for the Moodys Aa Utility Bond Index to be measured for the WCCM adjustment.
- Fourth quarter of 2024: Expected decision on the San Jose Water GRC.
- January 1, 2025: Anticipated effective date for new rates from the San Jose Water GRC.
- May 1, 2025: Deferred date for the 2024 Cost of Capital (COC) filings for San Jose Water.
Keywords
water utility, financial results, infrastructure investment, rate case, earnings per share, revenue, operating expenses, capital expenditures, dividend, regulatory approvals
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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