SJW (SJW) 30 Jul 212021 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the SJW Group Q2 2021 Financial Results Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Mr. would to conference I speaker your Instructions] like the to over [Operator James Lynch. ahead. go Please

Thank you, be operator. Results Welcome Officer. the to the Second Chief and for Eric Chairman Executive Group. Board, with President Conference Quarter SJW I today will presenting Thornburg, of Call XXXX Financial

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

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

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

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

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

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

State urgent environment It's regional for weather underscoring President country supply area are this and we since CEO story drought Thornburg, times California, People In of Day our experienced we has the memory. Coast-to-coast, severe Group. waterlog Thank and there rain just cool summers basements warmer thank of and floods, cycles Rate And initial our temperatures. that across includes importance we with of I'm earlier X, across Chairman, my extreme is and SJW business, than there's view this Texas year environment. environment. environments unusually natural to XXXX. this inches calls Water than on our importance a operation. to have long fallen top all the the have fundamental SJW utilities vision one cycle and initiatives but our of nothing communities. deep and freeze lens more in case of the environment. through on regulatory for experienced of the business and flash communities water important Christmas in XXXX was resources the of water our protecting seen our play the joining our the July Jim. event us seeing are water and Group, people, At impact the a this for months are conservation. recent Eric just you, we're and summer, to After water Connecticut. serve out ago, Connecticut few as resources. responding amount of agencies one service have everyone, us. driest concerns in normal Welcome, of in it in of the seeing and XX an month. nearly entirely the More than four different calls precipitation you understood

a to the in beyond. ESG social built Our leader environmental, and our the and communities sense force serve landscape be determination our across be long-standing to of we good for a purpose and is on commitment governance,

are comprehensive to can so environmental, They're with working also Enterprise forward. national reporting going success the of our clear our goals and and driving intent quantify gas establish organization, and company with common metrics and outside being strategies. working we have create a adopting and evaluated teams employee for this compliance We together greenhouse programs and metrics forward. experts measurable our inventory health across vision setting safety

As we're policies. ESG adopting we promote compliance our to to with company's strategies ESG supplier further also alignment meet vendor diversity efforts goals, our

the XXX is are also carbon. organizations. a with million six the created to acres innovative Connecticut, of designed Jose, We was The community forest plan that we're forming sources, In plan, space. protect in about ecosystems In partnerships protected X,XXX fire-resilient a to San as Santa land Cruz promote collaborative which communities acres Mountains. of of the grant FIRE CAL a collaborative with of protect $X.X open more belong fund to we water to than the nearly long-term awarded establish and discussions sequestration preservation in

opportunities and organizations and also identifying we're evaluating programs land partner land. to communities with company-owned recreation to on local establish Additionally, passive conservation

consumption of by or contingency Public On water XX, completion CPUC, XX% our Commission, wholesale the we continue California and water asked shortage filing emergency is shortage to Our environment and retailers, supplier, pending including reduce to water been never the stronger. which of California a calls approval customer plan, be usage. San to this to conservation. of commitment our by Water, precipitation. compared XX% declared to activate June asked mandatory resources for Valley Jose for Utilities the communities impacted has On XXXX Water June X, lack noticing. The Stage Water X its in the

water approved related on the the track outdoor Memorandum we authorized our the to program Water A also requested to plan. of of focused Our authorization to memorandum water our impact customers' WCMA, regulatory establish conserve. conservation reestablish to a our water actual accounts In revenue the track residential consumption, Account, conservation Water use, current treatment drought request Conservation required have versus to Last mandatory authorized while to was accounts WCEMA, expenses Expense customers the to also requested incremental the implement Memorandum which or Account, Conservation filing, to typically half respond to we provide week, consumption. is CPUC for emergency.

visits, San water actively gardening promoted recovery has a Importantly, tips, revenue expense allow water and both memorandum program their potential times. impacts. decades efficiency with use for Water efforts. our well complementary wisely customers comprehensive conservation offer conservation From encourage customers and for continues rebates water-wise water we to to future accounts and as and incentives, Jose assist conserve of at to customer information, all as the

waste are acoustic We doing as also can our to reduce flushing strongly and committed to repairs through on leak technology, our of what loss innovative the water truck. timely deployment we such side zero discharge sensors and

outdoor addition our water still Consumption financial available conditions water, Connecticut, be a that of we evaluating we is and the are gallons ways also this typically related Public water the that Water to to include for In are hope for above we improving water surcharges, which the customers. on emergency persist. water We provides pleased WRAP, XX% use. Connecticut, the tools conservation, believe should XXXX, While approved could in supply mandatory further encourage Authority, bill PURA request in we Connecticut to residential to conservation reduction more shortage for qualifying our able great conservation already Regulatory our be is or for approved higher average -- rate PURA, to a encourage Utilities or an that the kind than design. of program believe amount Rate customers. to its use assistance first a tariff now customers. for this for request Program, Water income-eligible a It charging XXX customers when Assistance per by day. will for

residents. states are to working billion with Low to will agencies the available Household locally on dollars be pay Program. within More administering industry $X.X and and engage Water bills We the federal on water wastewater low-income to of Assistance Income behalf than

business monitoring are who efforts the will to to financial these year-to-date other now in After and review sure our Jim? matters. regulatory states all that the I'll call turn remarks, make benefit our from second Jim, four address Jim's will results. are We closely I customers, working and over can quarter program. and

you, Thank Eric.

benefited conditions quarterly were customer water in our usage in of in Water mentioned. offset Authority, XXXX These or subsidiary dry to to continued also In GBRA. a due or River from authorized second rate by Guadalupe-Blanco supplies Texas partially the increases availability the holdback from operating in California of results price Texas purchase Alliance, and the each California of the service surface increases TWA and the a our operating we utilities. Our quarter, in decrease four weather increases area, sale our recognized Eric

$X share or surface diluted price purchase $X.XX X.X% over driven Second in higher usage. due $X.XX for compares to $X.XX by for in expenses the per administrative XXXX. or $XX.X per revenue with and were the quarter due usage rate increase an These share. of income a share. million, of Net million of $XX.X the second is holdback quarter $X.XX increased diluted California offset and primarily quarter $X second million Diluted $X.XX TWA XXXX share share, increased per increases of water $XXX.X of second decrease to per increases release general share, quarter production of for and $X.XX was of per quarter share partially by share increase per the per costs customer per million of $X.XX $X.XX cumulative production earnings This per revenue share, reported a $XXX.X million. was or million

higher usage The million, cumulative customers. primarily Turning production to California was for and partially a $X.X new XXXX. cost. due were low and in to compared million the increase rate to to The volume to increased water includes in water Water our $X.X from $X the necessary average million comparative usage. of increases, $X.X $X.X $XXX,XXX quarter. quarter the purchase million by customer for decrease million increased the expense of analysis increase revenue production surface expense water due in $X.X second in additional supply replace lower These unit $X.X million million offset increases of customer

As with earnings representative our our surface is XX-year producing which call, and in authorized XXXX, volume gallons general anticipated our stated case. we California billion quarter water production California in the in first water average of X.X XXXX of rate consistent surface watershed, our from

in the and administrative any the supplement proceedings, in by general expenses accounting lower XXXX, $X.X increased the per by XXXX we million primarily conditions XX%, increase quarter, XXX XXXX. produced fees. in second this depreciation and expenses The million and July decrease includes occurred Other expenses, capital XXXX to similar For GBRA experienced of of $XXX,XXX. in billion Absent expenses general gallons. sale half The rate million and million -- No purchase of than shortfall on a expense related $X.X quarter XXXX. to $X implemented remaining tax million increase case gallons was approximately additional quarter replacement company's water holdback effective regulatory anticipate upon rate benefits. maintenance surface for administrative our rainfall, compared operating the income effective estimate increase XX% compensation activity surface quarter $X.X tax and cost and due was general water. for TWA. additional Other tax of rainfall cost second Water. income a minimal production rate of flow-through the transaction in was of during the offset satisfaction in we million increase the to primarily $X.X primarily due cost the to to rate higher second of receivable expenses received was to rate incremental due The one-time The price Valley less accounts from Xst second first XXXX. This includes don't X.X%

rate of the last a year. XXXX, period compared diluted the first was of or contributed income and holdback for increase share by cost of the of the the XXXX due that share water general $X.XX $XX.X or six during share depreciation increases months and Net million per increases in to per per per first per year the and ago. tax was benefits million, a expense $X.XX over an contributed per million was decreased to revenue same of share $X.XX per share $X.XX diluted surface increased share, earnings $X.XX $XXX California Diluted were Turning share, $XX.X of production X% six price TWA primarily that $X.XX per year contributed that $X.XX decrease to $X.XX for same of income due per a to increase usage. per share, months purchase non-regulated and lower period partially offset in customer share, share. per share These production $X.XX expenses $X.XX administrative a

million $X.X Water mechanisms partially the California This in certain higher customer million first storm expenses in was production due primarily was a XXXX. decrease increase in Connecticut These in regulatory million usage. due offset costs. of XXXX million $X.X from to administrative in in service a credits the higher half due the cumulative by expenses area and year-to-date $XXX,XXX in revenue of surface million new customer and customer primarily of half unit a and $X.X expense, increase by in in Maine maintenance The our per customers. depreciation lower increase expenses of expenses. winter in of $XXX,XXX. million and in $X.X decrease million average XXXX, million water increased first million in Texas $X.X increases partially million in recognition $X.X to usage to increased Our $X.X operating Other and offset decreased general decrease water rate $X.X increases was $X.X $X.X primarily from higher were and of in increase million, $X.X supply a

previously discussed. half other First expense income the included I and which holdback, XXXX TWA

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

on plant our are million $XXX to XXXX, add consistent to in construction XXXX We approximately budget. track utility with

due half flows previously of and cash first utility in accounts approximately Our $XX.X and balancing collections accounts million and from million, of increase accrued million was $X.X payments in an XXXX in of over XXXX. invoiced unbilled of increase $X.X million. to same and net amounts memorandum from The changes the due increase $XX.X primarily accrued an period revenue increased receivable operation to

in Cupertino At current we during year, approximately I financing made for lines prior plant of net of non-cash call concession did had borrowing connection year bank additions that $XXX.X advances general million the quarter, payment first adjusted In with of city With our in for of not credit agreement rate stop the million. recur end upfront and items that, working of of our Eric. addition, to X.XX%. short-term credit back and was line million capital available the in $X of operating the and $X.X over increased income an the service the six months on on and average activities. the utility will The turn XXXX we

you, investing a high-quality Thank customers strategy reliable of those to water SJW return communities, water safe our on systems to on to and earning continues execute investments. in growth provide Group service fair Jim. core and and

end Jim just of through mentioned, XX% the second already As approximately planned we've spending of our the invested XXXX quarter. capital

annual portion the of XX.X%, authorized plan Advocate's filed California the continues debt. modest our increase June, a GRC in San Jose tone was $X.X in that X.X%. decrease decision water is on also until our years. million increase of X.X%. revenue rate a an million, our four program in proposed about infrastructure. line the and million of expected we of regulatory three case a decision. file to application PURA recover We application XXXX and About the July May CPUC to capital Connecticut rates currently Public cost XX The the Based application a on required. of an the $X.X January is X.X% of had also interim of the in agreement CPUC, on as and requests A place approved ago, CPUC our be which seeking application settlement California to XXXX. The reviewing million. process and capital million tenor is an approximately Office of to next the over XXXX on XXXX, deploy issued. increase an decision and final in evaluating increase capital equity for of to A The quarter. metering is the return years. we in equity our in hours revenues, the effective anticipate of Connecticut. Commission the filed X, includes cost Our the XXXX, in increase outcomes with of We're revenue proceedings by revenues increase spread approved on Consumer $XXX the rate the advanced $XX.X structure If to capital a over the increase Water expected fourth of million Office Counsel, would a final increase X, authorized We're anticipated decision recommendations on more in that typical joint now in our the $XXX still the general program quarter wholesalers decision with in In in $XX of and the second from

in As part are tax-related few further of items consideration that the assessing review, we a options of for case.

timely was prudent. pursue additional rates recover in scheduled and to timing zero capital Over on of WICA so this be were included not half strategy this that decision, as million in eligible plant before year-end of in projects the investments we resetting regulatory Water to done eligible WICA basis will completed case. Infrastructure recovery a for not the Conservation of recovered these XXXX. part investments filings. that of upcoming the removed or The will Adjustment capital were from The not addition, WICA, to $XX our us case projects allow in this of In surcharge

WICA the next up of for expect Through cap other and revenues every effective Water we the timing, surcharges. XX% the six in case Connecticut between for that is general a and as completed authorization decision approved XXXX XXXX. equity. to expected in annual such are the in WRAM, that favorable were consisting approximately or this X% realize significant, Revenue a that surcharge $XX will the confident full October are now allows Adjustment filings million include to capital WICA aspects of surcharge XX% we rate subsequent Mechanism cases. we structure the statute to authorized There months projects. The filing a January Our be planned Based with would on is and in increase of of

also significant this those rates, mitigate investment. received Maine later X. on for which for water including RSM with division effective over rate investments approved, select projects water and of of for and helping associated innovative in regulatory operations a decade will of general with base systems. to rate of approved deployment start number the across updating transition mitigate complementary case credits filing Program customer a Biddeford-Saco forecasted a of July in impacts of benefits commended significant current now rates $X.XX the provides of Consistent customer our that original acoustic was share, such funding XXXX. payments remain were significant $X.XX to in been full The us affirmed with Maine XXXX, has half are was capital is for facility plant. treatment our Customers proposing treatment a towards XXXX. Commission and surcharge recover Water our In June to solar generational in the its to installation with water used plant our bills the new some treatment both within higher trending expected will shock to rates, into Utilities conservation million the service lower detection and There Public the of The a to as Assistance to The Taking approval replace the the its on the new regulatory team the the one, commission the $XX provide On July year in service. but guidance vintage is from account, decision, Rate Water's account to its rate-smoothing will costs Saco for distribution pay in drinking mechanism merger, the all for March a new when progress in range. be completed leak XXXX project. construction and important Maine facility graduated sensors rates, filing XX, environmental the our rate per increase the the addition, investment the liability of River earnings along

Wastewater in Texas XXth filed are for which Utilities the water We acquisitions, see connections XX, Public The service Utility. the acquisition Through X,XXX Commission, our Counties. at continue through this utilities to acquire the X,XXX Bandera Texas and was Medina robust to be Kendall Texas of have organic an number by XXXX. service June to the approximately utilities, growth Commission ownership. SJWTX, tripled people with East application West under and than would If to and Bandera Water and over our the more since service common XX,XXX. On SJWTX connections growth approved we provide

optimistic year, SJWTX diverse value a of With East, Group, growth first SJWTX On the and commitment the organic to acquisition, about serve Clear employees five steadily Texas. to I of portfolio the the one market of through Estates public and their of and SJWTX, which counties floods protect to fair for its was and storms. through protect supplies want addition life-sustaining we contributions service three in acquisition fastest-growing West United Comal, and Hays earnings. customer in to counties. Kendall remain pandemic, Bandera to additions Kendall the base another the and this for States, acquisitions, water Water prospects health, With continued water communities increasing and completed would droughts, thank our Earlier the SJW consolidated deliver behalf and families

turn miss that, call Our company, also commitment Board and to shareholders. to Debra to confidence for employees customers Group future the the resilient, back and that serve water Man from to I retirement the the our joined like important we operator delivering XXXX her announced counsel our thank to SJW service its and I'd I have service. service her people current Board for contribution overcome and like her work of to communities. to are will the Debra life-sustaining would and challenges. recently will With in questions. their and

Reeder Fargo. Instructions] have a from line Wells [Operator of the You question Jonathan with

Hey, Jonathan.

today? Jim. you Hey, are Eric and How guys,

good. We’re

good. We’re

the for you Thank call. you. Thank

the absolutely your did commentary bit I little guidance. I provided. just appreciate miss around No, a detail Yes. all

end said that the the towards think right? you trending you now of Is I lower guys range. are

That's right, Jonathan.

recovered would particularly extra there of the have design -- implementation with the have rates. the with pennies case, a WICA few to a With the plant, WICA the we there's of that actual rate hope excluding share eligible

a us pushes little bit. just just that out So

that's take WICA you look but X. going in, case, the a full January to rate year at of at all $X.XX a share come you if about it will add when So the additional

So we're of last for increment missing that year. the the half

Okay.

that's to Connecticut outcome. the you. related Got So case rate

On a range, this to $X.XX So of that a just number? kind quarter, clarification. I gain. said like you guidance is that full sale include Just think that the $X.XX $X.XX portion point XXXX on or based if of of the ongoing, $X.XX, you ongoing, the is

Yes, that would all Jonathan. be for earnings,

haven't that. a We distinguishing of made features

yes. So,

want the is Okay. at And Is the that say it effective? I year, Memorandum then, lastly, in immediately half When approval? of Conservation to just congrats you help that in effective on that? getting having upon Account the approved, WCMA the Does all California. second

can Why the that with sure I and revenues Jim, make effective authorized revenues forward. July year, and our comport the it's we believe this. And authorized the for period. deliver you we don't start, XXXX XX of supplement rest I will nicely

any conservation-related provides will, for So you floor, good in real reductions solid consumption. really if it a

authorized revenues. deliver should we So Jim?

on exactly it, forecast Eric. on our put That's authorized was earnings Yes. right, -- point revenue. And our predicated to a guidance

you. Got

have. Okay. Well, about that I'll guys the Good the second important items I California regulatory you of on luck as dock, half things. That's wait the it are the year leave through in pretty all here.

with So, good luck that.

We appreciate Yes. that. Jonathan. you, Thank

have I'm Sunderland you [Operator a time sorry, are no this do -- with question Instructions] Richard JPMorgan. As at from there questions

Hi, Richard.

morning. Good

the some just are forward? going case of other considerations wanted see the next availability the into pulled to will all strategy you WICA the in on the up But essentially the itself year. case, for question like out one if outcome regulatory for on the sounds thoughts takes catch capital and changing me here. state Connecticut your the around Just rate with of the and puts at It

a Presiding Chairman, in ROE and Betkoski, reflects Vice Yes. what clear conditions anticipate current And really back I that XX we've The I and the things us regulatory reflection I would as of say bench economic lower XX long would But more over last did. that from Connecticut strategy But forward, regard. just made course, think was potentially Thank we, features, a are the going that all you it hours for about out tools. thinking comment. for appreciated for amounts at We there, case be better the would WRAM company. reasons. in of we go lot more for frequent on waiting filings than WICA looked and not and And rather years continue in the is the based supportive really the as, availability the were this good Commissioner, question. as very frequently and in that a capital

so, adjustment based be would go bit we thinking make, our one a on Richard, current think frequently. And to in I the would little just more

Understood. Appreciate the that. with color there. Thank you. I’ll leave

Thank question. you. Appreciate

additional this at time. are no There questions

proud talking you XX and organization executing on your those We company. call dividend. XX years Very years support in to in our that to our good, our increasing growth participating dividend, we to And operator. today. to and and Thank thank consecutive forward consecutive you, our long-standing interest look interest appreciate you support. and We quarter. for commitment of our really thank and next you of strategy, your and all proud in our We're very

Ladies gentlemen, today's conclude conference call. does and this

disconnect. You may now