SJW (SJW) 29 Apr 222022 Q1 Earnings call transcript

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

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

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

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

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

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

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

call delivered Chief Group. and Walters, a to will period my in compared supply initial this He update CEO be then $X.XX Officer; on water We're fortunate review common status the also joined that Andrew Jim results SJW Jim developments it Welcome us. our serve. of and for will across on thank employees to SJW financial Lynch, of Eric Financial per Chair, Andrew services our reliable of our later are provide year. as to and will in for our joining honor of remarks, Group by that is drinking and my for share is President, high-quality Officer. we're states my delivering It Chief the serve Accounting financial XXXX. discuss you $X.XX California quarter privileged passionate communities four Thornburg diluted regulatory and call. families all I'm and lead share who wastewater to After same the the everyone water last to and about for supply guidance an pleasure the

customers, deliver Our groundwork and the XXXX communities, other. laying shareholders, on XXXX, successfully. people financial to In to our ESG continue goals each focused and early for we deliver

Advocates months, Maine XXXX Public with on achievements include winter and rate Advocates Office the Through receiving approval facility. the drinking water we settlement reaching in between and continued Public of agreement water Utilities in general drinking Office Water's the infrastructure. Maine Water million Biddeford-Sacos our treatment Public Company Jose $XX San Some case new from the the agreement a Commission settlement investing division for the

council and as using on Authority pledge governance XXXX a state million organization. established executive X XX% is within of our We an representing delivery as Andrew progress to X later XXXX related $XX prioritization strengthened will recovery our up filed Council. application to the social, reporting goals for senior Utilities environmental, in of the our reduce infrastructure framework Just made detail. with this week, ESG Regulatory and will discuss in begin around initiatives track drinking and ESG projects. and water presidents, leaders, toward provide completed by commitments investments an and gas Connecticut through the creation ESG Public this Connecticut baseline. the the by of managers Water emissions to governance such Scope and initiatives, will It initiatives of ESG projects, The greenhouse

We ourselves will meaningful existing goals. accountable hold on create new report to commitments and

of The joint program the the employees DEI recruiting itself our our the in Maine. a rates scores Our Agreements peers, nearly first designed have Harvard ESG We've two-thirds facility tied near and energy total a its ISS Framework, River tied of of and and the for we're Saco our organization. is for best the using example facility. School the between and the under Graduate are on sustainable pollinator rating. will land executed social age installation people at for and Design space conducted at our open set our women that successful a trail the solar water new of ESG are Drinking recreation. retaining in XX, Resource wetland passive commitment been for of I'm diverse Of sustainable needs Center the strong. infrastructure. second proud one-third our throughout about XXX XXX workforce. employees, array collaboration utility We've XX% a in and our restoration aside of was environment. are governance One of are of in is quite approximately Envision Among infrastructure progress. workforce photovoltaic new been Development the a facility has University garden of Institute offset softness of protected for for our for property. underway color, acres also XXX% the of Water

Jim, results. call will XX% is spend, commitment turn our to who important which million on supplier our progress our program now has diverse great continues our our over strong Jose financial successful across $XX this four with San diversity to than more increase XXXX, placed Water, diverse addressable I'll also and in states at root. program Our suppliers taken of continue review Building spend with all work. the Jim? to

Thank you, Eric.

depreciation an Our compared Texas California, by the with usage in and customer first authorized due to operating in first we XXXX water compared for experienced mandatory the benefited partially assets, XXXX supplier tax XXXX. customer concession the In settlement recognition in by Order the XXXX. conservation sale, lower coupled quarter Valley Also property reflect deferred to in our new our from impacts expenses in usage acquisition-related operating to a and utilities, four XXXX. to of quarter, growth, to X% customer in each increased Instituting lower-than-normal our California quarter California follow primarily results we precipitation related offset was use for revenues of a new Water, temperatures. warm in continue compared first increase we the usage residential California, true-ups. Business our wholesale water quarter first of In by reduction XX% the or billing of OII, Investigation, declared when of certain call expense onetime to and

million, share $X.X over quarter XX% quarter an attributable Net $X.X per X% XXXX. diluted share. earnings was over quarter $X.XX of of increase First per of per income increases diluted first increased first prior of new primarily customer $X.XX to $X.XX income the customers change year a per diluted share cumulative and usage share, was increase the net earnings or $XXX.X quarter revenue net which the share, million for the earnings $X.XX for $X.XX rate is was per or The million in share. per quarter of

costs increased in recorded addition, by production the share. were $X.XX increases gain In per unit an increases expense per offset increase per of on of of we a depreciation $X.XX nonutility property share, nonrecurring share price of to due other items per partially of and sale These $X.XX $X.XX share. primarily

increases, in million $X.X $X.X from usage. Our million new result customers in first rate quarter was the $X.X cumulative revenue increase increase primarily customer of million and

general have settlement Eric As our case. California on mentioned, we a rate filed

issued totaling no property, approximately gain labor and connection agreement increases settlement offset similar primarily quarter, million million by we in for the area in quarter GRC increases under increase by Total unit receive third $X.X of gain the of the little February as primarily California million investment the apply a in on partially concession in OII in the other income production. to million, in sale in than California surface costs due expect rate about was expense for first includes XXXX allowed first compared for water January to in primarily $X.X invest $X.X higher of to occurred on and to in in billing utility will received, Public quarter panel reflects water production solar XXXX. of per X, rates These We with million The our XX, outlook interim and surface recognition utility Andrew that of talk of a approved focus increased settlement $X.X on installations. to average XXXX. higher XXXX. XXXX. expenses supply and provided $X.X primarily by the X% decision. were return not later offset pension $X practices million $X.X million to by $X.X in $XXX,XXX of plant a the the groundwater related The a cost XXXX, depreciation or Commission partially Once extraction has on water, the of to to quarter our maintenance constructed projects charges, and maintenance due increase retroactively million. an additions for company's The $X.X Utilities decision rate the energy due increased in of expenses company quarter GHG increases and projects increase our administrative purchased approved first taxes general investment CPUC the XXXX expenses to or call. recovery. of million requirement decision assets. a our in specifically water pursuant plant non-utility Higher will a expenditures operating the September The Other taxes will

additional XX% and tax negative deferred and effective March of XXXX. for to a XX, expect project respectively. rates The for due was in We of XXXX expense a items, million including OII The ended in March consolidated true-up the costs balance taxes. effective rate remaining incur primarily certain higher XXXX income settlement the quarters XX% to discrete related to approximately the and quarter XX, tax were $X the tax XXXX XXXX ended

working rate plant unbilled capital to program. At receivable quarter, over credit we XXXX. $XX.X XXXX. perspective, We expenditure quarter due and change financing $X.X These financing an average the of capital accrued I revenue company-funded and decrease increased line XXXX a increased X.XX%. net activities. General amounts expenditures. on This call by invoiced received of had of added to non-cash adjusted approximately over million our Program. increases million was the bank of quarter first $X.X will of was stop of the a memorandum short-term primarily cash net end borrowing increased collections decrease first activities. total California accounts credit the account and of available and our in during assets, and XXXX million. first advances Turning From taxes that, turn by This previously in plant operations and represents $X.X offset Arrearages million, increase were utility million lines on partially net of the additions XX% $XXX regulatory primarily capital changes first in Andrew. Water from $X.X income receivable Payment utility collection and a quarter of the during our of of to a items the flows operating result the Wastewater in to of quarter XX% and million primarily funds million. increased With for for balancing due $X.X of million the other The the from the of State Payments of planned accrued utility $X.X

Jim. you, Thank

approximately has XXXX plan $XX.X California, mechanisms capital authorized recovery in in as Connecticut, in for and for infrastructure Connecticut pipeline million of GRC settlement and approximately January a the agreement is XXXX of the on The for infrastructure spending rates million water $XXX of application California's forward-looking Maine $XXX which the spending and settlement on San million the need Maine Texas. replacement issues Jose authorization of to pending before $XXX.X million growth XX, respectively for WICA in deliver an in WISC with providing million the in to the a provides Advocates investments. increase reliable million in water these allocated projects. also $XX.X well a a new recognizes in $XX SJWC XXXX. be and the $XX CPUC. it system three-year authorization Public includes regulatory minimize will planned in as and XXXX. budgeted XXXX, Company's period in and increase Water all considered XXXX through filed by budget. Office over million service revenue safe Nearly investments Board lag settlement the Our adoption. of continued half Texas million proceeding The capital in resolving customers The CPUC $XX.X The three-year is investments

XXXX. for for authorized $XXX water is the January to Class of division rate on of project decision XX.X%, XXXX. for the Metering revenues gradually the all Adjustment of a completed Public Advanced decision capital The and AMI. capital utilities we infrastructure the as Public annual Connecticut X.X% The approximately on million an second Conservation million will that July XXXX. able Infrastructure application Authority revenue Biddeford-Saco third retroactively XXXX. In costs of and stipulated the we supply settlement Mechanism. million the to agreement the customers, structure to was of increase the the $XX in further the also charge. step CPUC. $XX is the consumption, decision April outside treatment return California be of Utilities debt cost filed years and July and proceeding Advocate all rates facility $X.X aligns greater decision XX.XX% to a request raises With large and is Maine pending second Jose well. our anticipated particularly a pending plant. deploy Maine the in Public X, application is revenues. adoption four requests agreement WICA of the it XXXX The approved effective through over office actual Waters new quarter Regulatory annualized Utilities XXXX and XX, division. and all-party equity facility XXXX new the proposed in investments on application with GRC April Water the and would fixed If of the in CPUC set in XXX-year-old Infrastructure budget in revenue across to X, multiyear The a final proposed The before was that is The Commission drinking online recognize an quarter recovery on to treatment approximately company replace submitted division in in X, increase in return on approved of cost Additionally, equity authorize Maine Waters in capital debt expected of in an between by to $XXX,XXX mix as in in X.XX%. PURA X, a XXXX apply Connecticut would XXXX. the new be business coming would of quarter rate a interim before generate settlement A rates go about recovery increase will the volatility in agreement support for adopted water partially a four Biddeford-Saco million the place, in In requesting addresses projects that third to CPUC the Commission's The scheduled XXXX weeks expected An the by decrease the XX.XX% to the offset plan equity is San adjustment the of in the provides

Skowhegan that treatment of second last with step applications its approved by XXXX Water approval smoothing WISC and in in facility a company the effective innovative Maine step be the XXXX summer, filing to associated the is rate half first increase last X, of X% rate In February the MPUC The new four the for an mechanism expected received was a January filed in for of case Division. XXXX. MPUC divisions. third

people of on Kendall in see Texas Comal past the Austin and After the rest California XX,XXX to United earnings. On in Water a portfolio ended. XXXX. to pipeline service and company than Overall, start XX,XXX acquisitions, increased SJWTX dry a SJWTX of traditional through water Hays and in service and customer our The the XX, continue wastewater XX to through base season. SJWTX SJWTX, the between and over providing of the optimistic weather Country and growing now late supplies consolidated promising has than and has experienced With opportunities of serves the San business XXXX, counties utility. season about continued We closed the today. fastest-growing more growth a acquisition of three and additions its years fall customer contributions Water for States, we XXXX the Wastewater in Counties. base of January diverse connections tripled growth a we remain January unusually to five prospects Antonio organic its the about more Texas rainy

current likely inflows additional While production year with drought conditions the in level total Elsman XXXX. support for billion X.X persist approximately gallons at throughout Lake the will

shown this water the the settlement. bring As volume XXXX. to the in five-year Elsman is should significantly or/at of above This Lake total the production same and and supply average higher chart, slightly than on XXXX XXXX, in GRC surface period close

diluted of share. We announcing $X.XX XXXX guidance to are $X.XX per

on in Our four other Jose settlement rate July for XXXX assumes agreement, Water's CPUC general completion of approved X, implementation approval Maine XXXX. in MPUC guidance and the divisional Water's stipulation of case Maine, San agreement Biddeford-Saco of GRCs division the

I to the it in stop to $XX equity $XX over assumes turn call that, XXXX. million an With will million Eric. Finally, also and issuance of back

the her well On to beloved our engagement. company. that all shareholders. XXXX. It's Group we elevated wish guided the building operating summary investments has and employees of farewell community Katharine dedicated an Texas, of In and years Katharine the high-quality investment in as as very a commitment to SJW attractive Board on her in following with focus company's her Board the for returns platforms state member, service appreciation behalf our that long-term respect and us environment sustain believe of designing, and Since will deep remains with Armstrong, you, bid best. service Thank we to Andrew. of SJW water the XX joining our attractive regional

the we the investments to smart growth are that earnings made over have enduring will to contribute we call like and to in I'd profitability, long-haul and the With investments the questions. dividends. turn that back and Our confident operator for are

Your Sunderland of from comes Instructions] Richard with first the [Operator JPMorgan. line question

open. line is Your

morning. good today. the you Thank time Hi, for

Hi Richard. Good morning.

unpack I bit the And wanted in of of the the maybe cost debt ROE capital assumptions to guidance little is with how treating are some a starting there. in reset there? contemplated assumptions in you And guidance?

an that's Richard excellent question.

As reset relates cost the for. the we've debt to in the contemplated is that's it asked because of what capital guidance

So, more than to anything for. asked don't expect we we've get

we it to have ROE so comment won't As added these that. relates to under not discussions, but are anything ongoing the I specific

Got aggregate? you the and on then items expensing, guess and to sale it. some of are I onetime relate And guess guidance? speak the in gain those well quarter of moving Could as called on the settlement the they And OII in out if guidance thinking then as to pieces similarly the I well. the items about how out or

Sure.

the also items that include in guidance date. well. They in have I'll And include So take Rich. the have basically, Jim the the call been mentioned items earlier OII that up that included to incurred our onetime all that we as

of we everything that of it today. as be should of So, know reflective

it. Got

that's helpful. very So

am aggregate sale $X.X like just this, it gain in I put $X.X the million sounds on offset, for items, maybe guess helpful? I or Is math through So if would of the as -- thinking some pieces OII as and a guess just onetime the then positive. for to I million be numbers the 'XX the well through that be the to me correctly, around could is you would run $X.XX that the

offsets. related guidance. -- off which first for had want also the first and for so accounted Jim, ask the to the $X.XX There's earnings that I'm in this the million to all highlighted I of to And by the the $X.X million in the OII that the related if earlier. the positive $X.X in that other was that anything missed specifically anything Sure. items not be a I incurred at to quarter. million here. I there's that the know might with $X his offsets is after starting $X.XX of $XXX,XXX depreciation comment and of And talking Jim the year about for already to discussion on you of sale was offset least don't was rest for some that for other Jim remaining But the

this Jim Yeah, is Lynch. Richard,

in So California. in to to that actual terms they're items some was needed depreciation our a there that concession were to relative charge that with our -- another One do of the taxes. quarter of tax And nature. do related to couple lease onetime then had true-ups were XXXX a related well deferred in we to

So results to Andrew and guidance been in the to those have earlier. the was quarter that baked referring both

around the Okay. helpful. one me that? how just address Maybe Very Any sense on last or expect timing to Understood. equity. from XXXX you one

Yeah.

We We to issuance. we time raise when certainly is of level directing now market. that we'll do of an ATM and to us going when company when they're place that want of also at a performing But right the a type high have the the towards level. at in a make kind comfortable sure that it's watching be at the stock at look equity and needs the we're

some have flexibility of we terms the timing there. So in

I today. Thank appreciate Great. Okay. the color you.

questions. Appreciate Richard. the you, Thank

Next Doza question Management. with Asset Hasan comes from the line Water of

line Your now open. is

Good of A couple questions. Hi. morning, gentlemen.

X.X not billion. the if in X.X quarter, are billion in the X.X be the because we before And I the amount going I'm currently is But third new billion That but is, commentary decision summer is makes your is purchase sense my water embedded embedded to about beforehand. rates your in question settlement. mistaken, in the not new gallons, heard first or of probably understand. storage I GRC the gallons. GRC obviously That about comes out the the gallons The currently implemented,

to GRC much you purchase existing gallons? is thousands gallons before question. question in which is X.X in relative do the implemented billion my to my That's in summer, your So first the I rates the that's of millions is expect water threshold how believe or

Are just sure asking Hasan, by make year your next and come specifically, water quarter's potentially can for to I you too. next purchase -- question Jim a what we understand I end is for final of the to before quarter? the going of be decision

any How into of trying that the water What That's the purchasing to have there's move In of I'm plan how guarantee water decision. CPUC I don't summer? delays months because the or going summer? the expect have visibility trying essence your four as in on you a -- thousands no right? the GRC billions much in mean, CPUC, the is the you're mean What understand kind forgetting we line am time real do could you about to event could gallons that decision is based the But month I when purchase I'm have shift. about question. forget will three, new understand the I to available the CPUC whatnot. to upon be next many will into two storage, do the one of -- a going month you of

and the question for Hasan your forecast helps. We don't that. clarity Thanks,

includes full to balancing a for well And approved We that January retroactive that. X. be But settlement as would water important cost I the think what's account on is haven't disclosed if numbers agreement supply. any most that

supply So and but which the billion slightly years then X.X negotiated we balance our even to between which also own shareholders a mix to the we've have production surface believe because be water there above normal do really reduction in anything successfully of just would customers a beneficial X.X reflected. abundant billion our customers our perhaps the our and we to rainfall in from in shareholders is

to agnostic settlement. that really water we're ultimately result of a -- as So would what as was supply number be the

January back will about best is it to that reflected So that's think to the X. that way be

Okay. My two remaining questions.

is quarter second is tax what bit understand. The rate little the hard rate first I the assumed one know is Because guidance? to in the tax a

for So my in guidance? a normal the I'm And embedded question just tax on tax rate. understand trying what's rate to That's the year? second

typically there a Sure. now. in our the Hasan, at we of rate but around moves lot we're forecast tax details the are forecast year, for the necessarily throughout all don't because different XX%

you just $X.XX. on Got answering as the following where first items. and quick answer, a question gain final the to other it. it comes as were the your question follow-up about I And to sale my one-time was My out math

items? is impact other that a estimate get You to positive roughly speaking. if items. of up depreciation sale not couple those a Is terms one-time estimate million have gain of about ballpark net the million right about in EPS $X.XX the I shares $X what a OII specifically XX ballpark add subtract from the fair the outstanding items, $X then Is that a on I of fair calculation? million if and And

Yeah.

at earnings the that the both did items up items, this netted on driving And case call current delta. from in into the earlier made would we $X.XX a you on Also to rate the California prior of a $X.XX that and there the recurring one-time not I we year. basis on rate I in XX% the above baked deferred a -- that tax been in results So as was release call the We our one-time $X.XX statements the that morning our the to the in mentioned were has compared Andrew was mentioned tax XX%. item that state remind to just that also basically year. the as

I recovery that to without from related our having related increases experiencing and should expenses income So expenses operations increases say that. to XXXX we in are XXXX, XXXX the XXXX and occur the

at quarter. second So I'd looking first about the into quarter in up we what kind will we that's think the one where and as be wound how we of move

just think Hasan kind very it through to to of easy And make it.

to If what's from look $X.XX that's OII you you ongoing included in the the $X talked you our the in then about take and -- from about that guidance. at done what's what million Jim would also been the talked

one-time additional $X OII. the already the are all for So included is plus million an included items

Okay. Appreciate Thank you, everyone. it.

you Hasan. welcome. Thank You're

[Operator Instructions] with Fargo. Your next Reeder question comes Jonathan Wells from

line Your open. is

good I little just guidance one-time $XXX throughout year? Hasan's the all differently. just $XXX are question to try the exclude Hi, I'll that you ask last range morning. items if million million guess, known and/or be anticipated a would to What the

ahead, Go Jim.

the take would suggest way for $X.XX I you quarter. that it to to get would the a the $X.XX

the take If the would at on back look year, add the a million OII for you $X.X cost you capital. of

I'm an to of -- additional So for ease adding it's roughly that discussion. would say $X.XX going back be

So it $XXX $X.XX. the -- right at the on $XXX million range would be right million $XXX lower on roughly and the range $X.XX around about same to upper the range million

And confused Okay. I $X.XX? like how only that's Like pretax a $X.X million believe. does translate $X.XX into the on gain guess, basis then I that I'm

Yes.

So part in to discussion, that the basis. and a done on current is the per comparison comparison particular earnings prior year. of year the between referring that And we're an share

we recall pretty So in taxes. a swing that big had

to what impact that should gain $X.XX per $X.XX say not share gain. to showing was that's so Or pretax actual I And tax item, gain. the or

I guess I guess. question then And Okay. last

GRC assumed the pending but from doesn't reflect I think benefit answered $X.XX this, the settlement, of continuing any right? you kind that ops already from

correct. That's

if, we Any us added how to have would that assume that's way or... in Okay. much tell there, would

question. great a It's

The approximately based it's million $X But key but If for it'd to be year add. and you on based the add off the look revenue focus $XX are, you would obviously, got I from through just is a the it depends a we about at allocations. on on where allocation million. $X it the -- the year million perspective

you. Thank Appreciate it. Okay.

are do you have time. There at closing remarks? further this any no questions Presenters,

all operator. joining for interest Company our Water of keeping you Group. day. really thank support you call our of you, forward and on you in to Thank today. progress you participating very And Jose We Thank Yes. again, look San year. appreciate We and our the SJW your updated throughout for much

today's participation. call. for all concludes That Thank conference your you

disconnect. now may You