-
$2.68 of diluted earnings per share in 2023 surpassing$2.43 per diluted share in 2022, initial 2023 guidance of$2.40 to$2.50 and inline with the updated guidance of$2.65 to$2.70 -
$272 million in infrastructure investments, exceeding 2023 guidance -
10.01% Water Cost of Capital Mechanism (WCCM)-adjusted return on equity in
California as ofJanuary 1, 2024 -
2024 guidance issued of
$2.68 to$2.78 diluted earnings per share
“With a strong fourth quarter, our 2023 financial results and operating performance exceeded expectations and the initial earnings per share guidance we set for
Continued Thornburg, “I’m also pleased to share that we met and surpassed our annual capital expenditure goal in 2023 by
2023 Operating Results
Net income in 2023 was
Operating revenue for 2023 was
Operating expenses for 2023 were
-
An increase in water production expenses of
$23.4 million , to$256.2 million in 2023 compared to$232.8 million in 2022, due to the higher cost of purchased water, partially offset by lower usage; -
A decrease in the gain on sale of nonutility properties of
$6.2 million due to the recording of a non-recurring sale of non utility properties in 2022, and no recorded gain on the sale of nonutility properties in 2023; -
An increase in general and administrative expenses of
$3.3 million primarily due to allowances for customer credit losses; -
An increase in depreciation and amortization of
$1.5 million primarily due to increases in depreciation related to new utility plant additions; partially offset by a$2.4 million one-time impact related to amortization on certainCupertino concession assets in 2022; and -
A decrease in maintenance expenses of
$5.0 million primarily due to a one-time cost incurred in the prior year. In addition, our proactive asset management and advanced leak detection programs, which enable us to reduce emergency projects and replace them with scheduled improvements, also contributed to lower maintenance expenses for the year.
The effective consolidated income tax rates for 2023 and 2022 were approximately 7% and 10%, respectively. The lower effective tax rate for 2023 was primarily due to the partial release of an uncertain tax position reserve.
Note Regarding Fourth Quarter Operating Results
Comparisons between 2023 and 2022 fourth quarter operating results are affected by and reflect the delay in
As noted last quarter, the CPUC approved SJWC's request for reinstatement of the Water Conservation Memorandum Account (WCMA) and Water Conservation Expense Memorandum Account (WCEMA) on
Quarterly Operating Results
Net income for the quarter ended
Operating revenue for the quarter ended
Operating expenses for the quarter ended
-
An increase in water production expenses of
$11.6 million due to increased groundwater extraction charges, resulting in$64.7 million in water production expenses for the fourth quarter 2023 compared to$53.1 million in the same quarter last year; -
An increase in taxes other than income tax of
$1.1 million ; -
An increase in depreciation and amortization of
$0.9 million primarily due to increases in new utility plant additions; -
A decrease in the gain on the sale of nonutility properties of
$0.7 million due to the recording of a non-recurring sale of non utility properties in the fourth quarter 2022, and no recorded gain on the sale of nonutility properties in the fourth quarter 2023; and -
A decrease in maintenance expenses of
$3.2 million primarily due to costs incurred in the prior year related to the Order of Instituting Investigation settlement agreement.
The effective consolidated income tax rates for the fourth quarter of
Capital Expenditures
In 2023
Rate Activity and Regulatory Updates
On
On
On
- Treating PFAS in drinking water;
- Reducing greenhouse gas emissions through solar generation, energy storage systems, continued electrification of our vehicle fleet, and expansion of our advanced leak detection program; and
- Advancing the CPUC’s Environmental and Social Justice Action Plan by improving access to high-quality water service, climate resiliency, and economic and workforce development.
On
On
On
On
On
TWC's completed application for a system improvement charge (SIC) is pending before the PUCT. We expect the PUCT to issue a final decision on the application in the first quarter of 2024. The SIC would allow TWC to add certain utility plant additions made since 2020 to its rate base, thereby increasing revenue and avoiding the need for a general rate case in 2024. At the time of filing in
Corporate Responsibility Recognition
2024 Guidance
The following is the company’s 2024 full-year guidance:
-
Net income per diluted common share of
$2.68 to$2.78 ; and -
Regulated infrastructure investments of approximately
$332 million in 2024
In addition, we reiterate our non-linear long-term diluted EPS growth of 5% to 7%, anchored off 2022's diluted EPS of
When considering the company's 2024 guidance relative to actual results in 2023, it is important to note that the company's adjustment to income tax reserves in 2023 resulted in an increase of
Our guidance is subject to risks and uncertainties, including, without limitation, those factors outlined in the “Forward Looking Statements” of this release and the “Risk Factors” section of the company’s annual and quarterly reports filed with the
Financial Results Call Information
Interested parties may access the webcast and related presentation materials at the website www.sjwgroup.com. An archive of the webcast will be available until
About
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “estimates,” “anticipates,” “intends,” “seeks,” “plans,” “projects,” “may,” “should,” “will,” or the negative of those words or other comparable terminology. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict.
These forward-looking statements involve a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the effect of water, utility, environmental and other governmental policies and regulations, including regulatory actions concerning rates, authorized return on equity, authorized capital structures, capital expenditures and other decisions; (2) changes in demand for water and other services; (3) unanticipated weather conditions and changes in seasonality including those affecting water supply and customer usage; (4) the effect of the impact of climate change; (5) unexpected costs, charges or expenses; (6) our ability to successfully evaluate investments in new business and growth initiatives; (7) contamination of our water supplies and damage or failure of our water equipment and infrastructure; (8) the risk of work stoppages, strikes and other labor-related actions; (9) catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, epidemic, or similar occurrences; (10) changes in general economic, political, business and financial market conditions; (11) the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, changes in interest rates, compliance with regulatory requirements, compliance with the terms and conditions of our outstanding indebtedness, and general market and economic conditions; and (12) legislative, and general market and economic developments. The risks, uncertainties and other factors may cause the actual results, performance or achievements of
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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the
|
|||||||||||||
Condensed Consolidated Statements of Comprehensive Income |
|||||||||||||
(Unaudited) |
|||||||||||||
(in thousands, except share and per share data) |
|||||||||||||
|
Three months ended |
|
Twelve months ended |
||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
OPERATING REVENUE |
$ |
171,338 |
|
|
171,374 |
|
|
$ |
670,363 |
|
|
620,698 |
|
OPERATING EXPENSE: |
|
|
|
|
|
|
|
||||||
Production Expenses: |
|
|
|
|
|
|
|
||||||
Purchased water |
|
34,928 |
|
|
38,021 |
|
|
|
135,982 |
|
|
122,334 |
|
Power |
|
2,239 |
|
|
(1,498 |
) |
|
|
9,602 |
|
|
8,889 |
|
Groundwater extraction charges |
|
16,229 |
|
|
4,811 |
|
|
|
62,980 |
|
|
56,158 |
|
Other production expenses |
|
11,257 |
|
|
11,802 |
|
|
|
47,636 |
|
|
45,409 |
|
Total production expenses |
|
64,653 |
|
|
53,136 |
|
|
|
256,200 |
|
|
232,790 |
|
Administrative and general |
|
26,897 |
|
|
24,030 |
|
|
|
98,656 |
|
|
95,404 |
|
Maintenance |
|
6,916 |
|
|
10,083 |
|
|
|
25,729 |
|
|
30,734 |
|
Property taxes and other non-income taxes |
|
9,383 |
|
|
8,330 |
|
|
|
34,475 |
|
|
32,572 |
|
Depreciation and amortization |
|
26,996 |
|
|
26,075 |
|
|
|
105,868 |
|
|
104,417 |
|
Gain on sale of nonutility property |
|
— |
|
|
(665 |
) |
|
|
— |
|
|
(6,197 |
) |
Total operating expense |
|
134,845 |
|
|
120,989 |
|
|
|
520,928 |
|
|
489,720 |
|
OPERATING INCOME |
|
36,493 |
|
|
50,385 |
|
|
|
149,435 |
|
|
130,978 |
|
OTHER (EXPENSE) INCOME: |
|
|
|
|
|
|
|
||||||
Interest on long-term debt and other interest expense |
|
(17,231 |
) |
|
(15,902 |
) |
|
|
(66,144 |
) |
|
(58,062 |
) |
Pension non-service (cost) credit |
|
(324 |
) |
|
2,163 |
|
|
|
(1,230 |
) |
|
5,023 |
|
Other, net |
|
1,840 |
|
|
1,691 |
|
|
|
8,882 |
|
|
4,385 |
|
Income before income taxes |
|
20,778 |
|
|
38,337 |
|
|
|
90,943 |
|
|
82,324 |
|
Provision for income taxes |
|
1,829 |
|
|
4,838 |
|
|
|
5,956 |
|
|
8,496 |
|
NET INCOME |
|
18,949 |
|
|
33,499 |
|
|
|
84,987 |
|
|
73,828 |
|
Other comprehensive (loss) income, net |
|
(106 |
) |
|
2,242 |
|
|
|
314 |
|
|
1,640 |
|
COMPREHENSIVE INCOME |
$ |
18,843 |
|
|
35,741 |
|
|
$ |
85,301 |
|
|
75,468 |
|
|
|
|
|
|
|
|
|
||||||
EARNINGS PER SHARE |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.59 |
|
|
1.10 |
|
|
$ |
2.69 |
|
|
2.44 |
|
Diluted |
$ |
0.59 |
|
|
1.09 |
|
|
$ |
2.68 |
|
|
2.43 |
|
DIVIDENDS PER SHARE |
$ |
0.38 |
|
|
0.36 |
|
|
$ |
1.52 |
|
|
1.44 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
||||||
Basic |
|
31,988 |
|
|
30,478 |
|
|
|
31,575 |
|
|
30,305 |
|
Diluted |
|
32,068 |
|
|
30,618 |
|
|
|
31,663 |
|
|
30,424 |
|
Note: Certain prior period amounts on the condensed consolidated statements of comprehensive income have been reclassified to conform to the current period presentation.
|
||||||
Condensed Consolidated Balance Sheets |
||||||
(Unaudited) |
||||||
(in thousands, except share and per share data) |
||||||
|
|
|
|
|||
ASSETS |
|
|
|
|||
Utility plant: |
|
|
|
|||
Land |
$ |
41,415 |
|
39,982 |
||
Depreciable plant and equipment |
|
3,967,911 |
|
|
3,661,285 |
|
Construction in progress |
|
106,980 |
|
|
116,851 |
|
Intangible assets |
|
35,946 |
|
|
35,959 |
|
Total utility plant |
|
4,152,252 |
|
|
3,854,077 |
|
Less accumulated depreciation and amortization |
|
981,598 |
|
|
1,223,760 |
|
Net utility plant |
|
3,170,654 |
|
|
2,630,317 |
|
|
|
|
|
|||
Nonutility properties and real estate investments |
|
13,350 |
|
|
58,033 |
|
Less accumulated depreciation and amortization |
|
194 |
|
|
17,158 |
|
Net nonutility properties and real estate investments |
|
13,156 |
|
|
40,875 |
|
|
|
|
|
|||
CURRENT ASSETS: |
|
|
|
|||
Cash and cash equivalents |
|
9,723 |
|
|
12,344 |
|
Accounts receivable: |
|
|
|
|||
Customers, net of allowances for uncollectible accounts of |
|
67,870 |
|
|
59,172 |
|
Income tax |
|
5,187 |
|
|
— |
|
Other |
|
3,684 |
|
|
5,560 |
|
Accrued unbilled utility revenue |
|
49,543 |
|
|
45,722 |
|
Assets held for sale |
|
40,850 |
|
|
— |
|
Prepaid expenses |
|
11,110 |
|
|
9,753 |
|
Current regulatory assets, net |
|
4,276 |
|
|
19,740 |
|
Other current assets |
|
6,146 |
|
|
6,095 |
|
Total current assets |
|
198,389 |
|
|
158,386 |
|
OTHER ASSETS: |
|
|
|
|||
Regulatory assets, less current portion |
|
235,910 |
|
|
246,035 |
|
Investments |
|
16,411 |
|
|
14,819 |
|
Postretirement benefit plans |
|
33,794 |
|
|
16,990 |
|
Other intangible asset |
|
28,386 |
|
|
— |
|
|
|
640,311 |
|
|
640,311 |
|
Other |
|
8,056 |
|
|
7,323 |
|
Total other assets |
|
962,868 |
|
|
925,478 |
|
TOTAL ASSETS |
$ |
4,345,067 |
|
|
3,755,056 |
|
Note: Certain prior period amounts on the condensed consolidated balance sheets have been reclassified to conform to the current period presentation.
|
||||||
Condensed Consolidated Balance Sheets |
||||||
(Unaudited) |
||||||
(in thousands, except share and per share data) |
||||||
|
|
|
|
|||
CAPITALIZATION AND LIABILITIES |
|
|
|
|||
CAPITALIZATION: |
|
|
|
|||
Stockholders’ equity: |
|
|
|
|||
Common stock, |
$ |
32 |
|
31 |
||
Additional paid-in capital |
|
736,191 |
|
|
651,004 |
|
Retained earnings |
|
495,383 |
|
|
458,356 |
|
Accumulated other comprehensive income |
|
1,791 |
|
|
1,477 |
|
Total stockholders’ equity |
|
1,233,397 |
|
|
1,110,868 |
|
Long-term debt, less current portion |
|
1,526,699 |
|
|
1,491,965 |
|
Total capitalization |
|
2,760,096 |
|
|
2,602,833 |
|
|
|
|
|
|||
CURRENT LIABILITIES: |
|
|
|
|||
Lines of credit |
|
171,500 |
|
|
159,578 |
|
Current portion of long-term debt |
|
48,975 |
|
|
4,360 |
|
Accrued groundwater extraction charges, purchased water and power |
|
24,479 |
|
|
19,707 |
|
Accounts payable |
|
46,121 |
|
|
29,581 |
|
Accrued interest |
|
15,816 |
|
|
13,907 |
|
Accrued payroll |
|
12,229 |
|
|
11,908 |
|
Income tax payable |
|
— |
|
|
2,696 |
|
Current regulatory liabilities |
|
3,059 |
|
|
3,672 |
|
Other current liabilities |
|
20,795 |
|
|
22,913 |
|
Total current liabilities |
|
342,974 |
|
|
268,322 |
|
|
|
|
|
|||
DEFERRED INCOME TAXES |
|
238,528 |
|
|
218,155 |
|
ADVANCES FOR CONSTRUCTION |
|
146,582 |
|
|
137,696 |
|
CONTRIBUTIONS IN AID OF CONSTRUCTION |
|
326,451 |
|
|
323,668 |
|
POSTRETIREMENT BENEFIT PLANS |
|
46,836 |
|
|
59,738 |
|
REGULATORY LIABILITIES, LESS CURRENT PORTION |
|
461,108 |
|
|
118,760 |
|
OTHER NONCURRENT LIABILITIES |
|
22,492 |
|
|
25,884 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|||
TOTAL CAPITALIZATION AND LIABILITIES |
$ |
4,345,067 |
|
|
3,755,056 |
|
Note: Certain prior period amounts on the condensed consolidated balance sheets have been reclassified to conform to the current period presentation.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221538675/en/
Chief Financial Officer and Treasurer
408.279.7818
Andrew.Walters@sjwater.com
Director of Investor Relations
860.664.6016
Daniel.Meaney@ctwater.com
Source: