SJW
Sjw Group
NASDAQ
8-K: SJW Group Reports Strong Second Quarter 2024 Results, Increases EPS Guidance
Sentiment:
Quarterly Report
24 July 2024 8:34 PM
SJW Group announced a year-over-year increase in both GAAP and adjusted diluted earnings per share for the second quarter of 2024, along with an updated full-year EPS guidance.
Better than expected
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.
Summary
- SJW Group reported a net income of $20.7 million, or $0.64 diluted EPS, for the second quarter of 2024, a 13% increase compared to the same quarter last year.
- Adjusted net income for the quarter was $21.3 million, or $0.66 per diluted share, a 14% increase year-over-year.
- Operating revenue for the second quarter was $176.2 million, up from $156.9 million in the same quarter last year, driven by rate increases, customer growth, and higher usage.
- Operating expenses increased by 8% to $135.6 million, primarily due to higher water production, depreciation, and maintenance costs.
- Year-to-date net income was $32.4 million, or $1.00 diluted EPS, compared to $29.8 million, or $0.95 diluted EPS, in the same period last year.
- The company invested $158 million in infrastructure during the first half of 2024, representing approximately 48% of its 2024 capital budget.
- SJW Group has updated its 2024 GAAP diluted EPS guidance to $2.66 to $2.76 and reaffirmed its adjusted diluted EPS guidance of $2.68 to $2.78.
- A quarterly cash dividend of $0.40 per share was declared, payable on September 3, 2024.
Sentiment
Score: 8
Explanation: The document conveys a positive sentiment due to strong financial results, increased EPS guidance, and progress on the California rate case. The company's commitment to infrastructure investment and shareholder returns further supports a positive outlook.
Positives
- SJW Group experienced a 13% increase in net income and a 14% increase in adjusted net income for the second quarter of 2024 compared to the same period last year.
- The company successfully reached an agreement in principle on its California general rate case, which is a positive step for future revenue.
- SJW Group has increased its 2024 GAAP diluted EPS guidance, indicating confidence in future performance.
- The company has a long history of dividend payments, with 56 consecutive years of increased calendar year dividends.
- The company is making significant investments in infrastructure, which should improve service and reliability.
- The company secured $9.1 million in arrearage relief for its customers from the California Water and Wastewater Arrearage Program.
Negatives
- Operating expenses increased by 8% in the second quarter of 2024, primarily due to higher water production, depreciation, and maintenance costs.
- The company is experiencing severe to extreme drought in its Texas service area, which may impact revenue in 2024.
- The effective consolidated income tax rate for the first half of 2024 was 16%, compared to -1% in the same period last year, due to the partial release of an uncertain tax position reserve in 2023.
Risks
- The company's performance is subject to regulatory risks, including decisions on rates, return on equity, and capital expenditures.
- Changes in demand for water and other services, as well as weather conditions and climate change, can impact the company's results.
- The company faces risks related to contamination of water supplies and damage to infrastructure.
- 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, and cyber-attacks.
Future Outlook
SJW Group has updated its 2024 GAAP diluted EPS guidance to $2.66 to $2.76 and reaffirmed its adjusted diluted EPS guidance of $2.68 to $2.78. The company also reiterates its non-linear long-term diluted EPS growth of 5% to 7%, anchored off 2022's diluted EPS of $2.43.
Management Comments
- We are pleased with our financial results for the quarter, which demonstrate the benefits of our national platform combined with the strength of our local water utility operations, stated SJW Group Chair, CEO, and President, Eric W. Thornburg.
- We continued to deliver on our growth strategy by investing in our water supply and infrastructure across our footprint, as well as reaching an all-party settlement agreement in principle on almost all issues in our California general rate case.
- Overall, our strong operating performance and continued strategic execution position us well for future success as we deliver on our commitment to provide high-quality and reliable water service to our customers and communities.
Industry Context
This announcement reflects the ongoing trends in the water utility industry, including the need for significant infrastructure investment, the impact of regulatory decisions on rates, and the importance of managing water resources in the face of climate change and drought. The company's focus on PFAS treatment and advanced metering infrastructure aligns with industry best practices and regulatory requirements.
Comparison to Industry Standards
- SJW Group's adjusted diluted EPS growth of 14% year-over-year in Q2 2024 is strong compared to the average growth of 5-10% seen in the water utility sector.
- The company's planned $1.6 billion capital investment over the next five years is significant and demonstrates a commitment to infrastructure upgrades, which is a key focus for water utilities.
- The agreement in principle on the California GRC is a positive development, as rate cases can be a major source of uncertainty for water utilities. Comparably, other water utilities such as American Water Works (AWK) and Essential Utilities (WTRG) also face similar regulatory processes.
- The company's focus on PFAS treatment aligns with the industry's response to emerging contaminants, similar to initiatives by other water utilities like California Water Service Group (CWT).
- The company's dividend increase is consistent with the industry's focus on providing shareholder returns, with companies like Aqua America (WTR) also having a long history of dividend increases.
Stakeholder Impact
- Shareholders will benefit from the increased earnings and dividend payments.
- Customers will benefit from the company's investments in infrastructure and improved service reliability.
- Employees will benefit from the company's continued growth and stability.
- Communities will benefit from the company's commitment to providing high-quality water service and environmental stewardship.
Next Steps
- The company will submit the formal settlement motion and agreement for the California GRC by August 19, 2024.
- Briefs on the two policy issues in the California GRC will also be submitted by August 19, 2024.
- The CPUC is expected to make a decision on the GRC and/or the settlement agreement in the fourth quarter of 2024.
- New rates from the California GRC are anticipated to be effective on January 1, 2025.
- The Maine Public Utilities Commission is expected to issue a decision on the Water Infrastructure Charge in the third quarter of 2024.
- The company will continue to invest in infrastructure and water supply.
Key Dates
- October 3, 2023: Connecticut Water's GRC was filed with PURA.
- January 2024: San Jose Water filed its GRC application with the CPUC.
- June 12, 2024: CPUC approved advice letter 609, increasing authorized revenue by $28.3 million.
- June 14, 2024: San Jose Water reached an agreement in principle on its GRC with the CPUC.
- June 21, 2024: CPUC approved advice letter 610/610A, adding $4.8 million to rate base.
- June 24, 2024: Maine Water filed for increases in the Water Infrastructure Charge.
- June 28, 2024: PURA issued a final decision on Connecticut Water's GRC.
- June 30, 2024: End of the second quarter for which financial results are reported.
- July 1, 2024: New rates in California and Connecticut became effective.
- July 24, 2024: SJW Group announced its second quarter 2024 financial results and declared a dividend.
- July 25, 2024: SJW Group will review results for the second quarter of 2024 in a live webcast presentation.
- August 5, 2024: Shareholders of record date for the declared dividend.
- August 19, 2024: Formal settlement motion and briefs on policy issues for the California GRC are due.
- September 3, 2024: Payment date for the declared dividend.
- October 21, 2024: Archive of the webcast will be available until this date.
- Fourth quarter 2024: CPUC decision on the GRC and/or settlement agreement is expected.
- January 1, 2025: New rates from the California GRC are anticipated to be effective.
Keywords
water utility, financial results, earnings per share, rate case, infrastructure investment, dividend, regulatory, capital expenditure, revenue, operating expenses
SJW
Sjw Group
NASDAQ
Sector: Utilities
Filings with Classifications
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
29 April 2025 4:55 PM
Quarterly Report
- Net income increased by 41% due to rate increases in California and Connecticut.
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.
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.
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.
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
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.
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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