Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus. Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a divide ...

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yie ...

SJW Group (SJW) provides water utility and related services to its customers in the United States. Given its growth opportunities and strategic investments, SJW makes for a solid investment option in the utility sector. The company currently carries a Zacks Rank #2 (Buy). Let's look at the factors that are driving the stock. Growth Projections & Surprise History of SJW The Zacks Consensus Estimate for 2024 earnings per share has increased 0.4% in the past 30 days to $2.76. The consensus estimate for 2024 sa ...

Company Overview - SJW is based in San Jose and operates in the Utilities sector, specifically as the parent company of San Jose Water Co. [3] - The company's shares have experienced a price change of -11.68% this year [3]. Dividend Information - SJW currently pays a dividend of $0.4 per share, resulting in a dividend yield of 2.77%, which is higher than the Utility - Water Supply industry's yield of 2.04% and the S&P 500's yield of 1.62% [3]. - The annualized dividend of $1.60 represents a 5.3% increase from the previous year, with an average annual increase of 6.05% over the last five years [4]. - The company's payout ratio stands at 58%, indicating that it paid out 58% of its trailing 12-month earnings per share as dividends [4]. Earnings Growth - The Zacks Consensus Estimate for SJW's earnings in 2024 is $2.76 per share, reflecting an expected increase of 2.99% from the previous year [5]. Investment Appeal - SJW is considered an attractive dividend play and a compelling investment opportunity, currently holding a Zacks Rank of 2 (Buy) [7].

Financial Data and Key Metrics Changes - In Q2 2024, the company reported net income of $20.7 million, a 13% increase from $18.3 million in Q2 2023. Diluted earnings per share rose to $0.64 from $0.58 in the previous year [6][136] - Year-to-date revenue reached $325.6 million, an 11% increase over $294.2 million in the same period of 2023, driven by rate increases and customer growth [136] - Adjusted net income for Q2 2024 was $21.3 million, with adjusted diluted earnings per share at $0.66, compared to $0.92 in 2023 [27][136] Business Line Data and Key Metrics Changes - Revenue increase of $0.34 was primarily due to rate increases in California and Maine, along with infrastructure recovery mechanisms in Connecticut, Maine, and Texas [7][9] - Water production expenses increased by 14% compared to 2023, mainly due to higher rates from wholesalers and increased customer usage [28] Market Data and Key Metrics Changes - The company experienced a significant drought in Texas, classified as severe to extreme, which has led to conservation measures [35][61] - In Connecticut, the Public Utility Regulatory Authority (PURA) approved a request to expand income eligibility for the Water Rate Assistance Program, enhancing support for low-income customers [17] Company Strategy and Development Direction - The company aims to address pressing water quality and infrastructure issues, maintaining a five-year capital investment outlook of $1.6 billion, including $230 million for PFAS remediation [144][142] - The company is focused on building constructive relationships with local stakeholders to ensure effective communication regarding necessary investments [5][158] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by PFAS remediation, new lead and copper standards, and aging infrastructure, emphasizing the need for continued investment [26][141] - The company expects lower water usage in 2024 compared to 2023 but is not changing its earnings guidance range due to ongoing monitoring of drought conditions [13][14] Other Important Information - The company plans to raise approximately $160 million in long-term debt to pay down its line of credit, with an average borrowing rate of 6.53% for the quarter [30] - The final decision from the Connecticut rate case provided for an annualized revenue increase of $6.5 million and authorized a return on equity of 9.3% [12][141] Q&A Session Summary Question: Impact of Texas drought on guidance - Management indicated that the drought's impact on 2024 guidance is being monitored, with no specific quantification available yet [62] Question: Connecticut operations and rate case outcomes - Management discussed the need for effective communication with customers regarding the necessity of investments and the benefits they provide [141][161] Question: California Supreme Court ruling on decoupling - Management noted that while there are strong views against decoupling from the Public Advocates Office, they will monitor peers' cases closely [90][91]

Financial Performance - SJW Group's consolidated net income for Q2 2024 increased by $2,410 (13%) to $20,696 compared to $18,286 in Q2 2023[122] - Total operating revenue for Q2 2024 increased by 12% to $176,174, driven by a 7% rate increase and 1% customer growth in Water Utility Services[122][124] - Water Utility Services revenue for Q2 2024 increased by $19,927 (13%) to $175,397 compared to $155,470 in Q2 2023[122] - Real Estate Services revenue decreased by $639 to $777 in Q2 2024 compared to $1,416 in Q2 2023[124] - Total operating expenses increased by 8% to $135,604 in Q2 2024, primarily due to a 7% increase in water production expenses[125] - SJW Group generated $100,500 in cash flow from operating activities in H1 2024, a $3,100 increase compared to H1 2023[136] - SJW Group's net cash provided by financing activities increased by $2,400 in H1 2024, driven by higher net borrowings on lines of credit[138] Water Utility Services - SJW Group serves approximately 403,000 water connections and 4,000 wastewater connections, covering a population of over 1.5 million[115] - SJWC's water supply consists of 40-50% purchased water, 40-50% groundwater, and 6-8% surface water in normal rainfall years[126] - The company's water sales are seasonal, with higher revenue in warm, dry summer months and lower revenue in winter months[121] - Water production expenses increased by $8,584 in Q2 2024 and $13,359 in H1 2024, driven by higher unit costs for purchased water and groundwater extraction[131] - Water Utility Services' estimated utility capital expenditures for 2024 are $332,000, with $158,400 (48%) invested as of June 30, 2024[137] - Water Utility Services plans $1,621,000 in capital expenditures over the next five years for pipe and main replacements, water system maintenance, and PFAS treatment[137] Water Supply and Storage - California State Water Project allocation increased from 15% to 30% in Q1 2024 and further to 40% in Q2 2024, while Central Valley Project allocation increased from 65% to 75% in Q1 2024[128] - Valley Water's 10 reservoirs were at 34% capacity (91% of restricted capacity) with 18.6 billion gallons of water in storage as of July 1, 2024[128] - SJWC's Lake Elsman was at 98.1% capacity with 2.0 billion gallons of water, 173.8% of the five-year seasonal average as of June 30, 2024[128] - SJWC's Montevina Water Treatment Plant treated 2.2 billion gallons of water in H1 2024, 140% of the five-year average[128] - SJWC's unaccounted-for water decreased to 7.4% in June 2024 from 10.1% in June 2023[130] Credit and Financing - Syndicated credit agreement total line limit is $300,000, with $170,000 outstanding and $130,000 unused[142] - CTWS credit agreement has a total line limit of $50,000, with $47,495 outstanding and $2,505 unused[142] - SJW Group's total credit agreements amount to $350,000, with $217,495 outstanding and $132,505 unused[142] Market and Operational Risks - SJW Group is exposed to market risks, including interest rate changes, pension plan asset values, and equity prices[83] - SJW Group's pension and post-retirement costs are influenced by factors such as discount rates, mortality rates, and investment returns[83] - SJW Group does not hold derivative financial instruments or financial instruments with significant off-balance sheet risks[83] Real Estate Services - SJW Land Company completed the sale of its Tennessee properties in Q2 2024[118]

EXHIBIT 99.1 • Delivers $0.64 of GAAP diluted earnings per share (EPS), a year-over-year increase of $0.06; adjusted diluted EPS (non-GAAP) of $0.66, a year-over-year increase of $0.08 • Invests $158 million in infrastructure during the first half of 2024, or approximately 48% of 2024 capital budget • Agreement in principle reached on California general rate case (GRC) • Updates 2024 GAAP guidance to $2.66 to $2.76 diluted EPS. Reaffirms 2024 guidance range of $2.68 to $2.78 for adjusted diluted EPS (non-GA ...

[Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements concerning future events and results for SJW Group, subject to various risks and uncertainties detailed in SEC filings - The report identifies several risk factors that could cause actual results to differ from forward-looking statements, including governmental policies, changes in water demand, weather impacts, unexpected costs, and financing availability[8](index=8&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents SJW Group's unaudited condensed consolidated financial statements for the quarter ended March 31, 2024, including income, balance, and cash flow statements [Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For Q1 2024, SJW Group reported operating revenue of **$149.4 million** and net income of **$11.7 million**, with diluted EPS of **$0.36** Q1 2024 vs Q1 2023 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Operating revenue** | $149,382 | $137,296 | | **Operating income** | $27,913 | $25,178 | | **Net income** | $11,699 | $11,530 | | **Diluted EPS** | $0.36 | $0.37 | | **Dividends per share** | $0.40 | $0.38 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, SJW Group's total assets were **$4.37 billion**, with total stockholders' equity at **$1.24 billion** Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $4,367,512 | $4,345,067 | | Net Utility Plant | $3,208,847 | $3,170,654 | | Total Current Assets | $178,082 | $198,389 | | **Total Liabilities** | $3,127,261 | $3,111,670 | | Long-Term Debt | $1,550,298 | $1,526,699 | | **Total Stockholders' Equity** | $1,240,251 | $1,233,397 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$51.2 million** in Q1 2024, while net cash used in investing activities increased to **$74.3 million** Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $51,216 | $50,607 | | **Net cash used in investing activities** | ($74,273) | ($55,029) | | **Net cash provided by financing activities** | $17,876 | $15,411 | | **Net change in cash and cash equivalents** | ($5,181) | $10,989 | [Notes to Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, regulatory matters, and recent events, including a post-quarter warehouse sale and ongoing rate cases - In April 2024, SJW Land Company completed the sale of a warehouse in Tennessee for **$27.0 million**, expecting an estimated pre-tax gain of **$7.0 million**[33](index=33&type=chunk) - The company's effective income tax rate for Q1 2024 was **16%**, significantly higher than **9%** in Q1 2023, primarily due to tax deficiencies for share-based payments[55](index=55&type=chunk) - The Water Utility Services segment generated **$147.6 million** in revenue and **$14.6 million** in regulated net income for Q1 2024, while Real Estate Services generated **$1.8 million** in revenue and **$0.8 million** in net income[65](index=65&type=chunk)[67](index=67&type=chunk) [Management's Discussion and Analysis (MD&A)](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q1 2024 financial performance, noting a slight net income increase driven by rate adjustments and usage, partially offset by higher expenses [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Consolidated net income for Q1 2024 increased by **1%** to **$11.7 million**, driven by **$12.1 million** higher revenue from rate increases and customer usage Change in Operating Revenue (Q1 2024 vs. Q1 2023, in thousands) | Factor | Increase/(Decrease) | | :--- | :--- | | Rate increases | $9,960 | | Consumption changes | $1,797 | | Increase in customers | $791 | | Regulatory mechanisms | ($790) | | Real Estate Services | $328 | | **Total Change** | **$12,086** | Change in Operating Expense (Q1 2024 vs. Q1 2023, in thousands) | Factor | Increase/(Decrease) | | :--- | :--- | | Water production expenses | $4,775 | | Depreciation and amortization | $2,074 | | Administrative and general | $1,444 | | Maintenance | $629 | | Property taxes and other non-income taxes | $429 | | **Total Change** | **$9,351** | - The mix of water supply shifted in Q1 2024, with groundwater usage increasing by **1.8 billion gallons** and purchased water decreasing by **1.3 billion gallons** compared to Q1 2023[104](index=104&type=chunk) [Regulation and Rates](index=26&type=section&id=Regulation%20and%20Rates) SJW Group is engaged in multiple regulatory proceedings, including rate case filings in California and Connecticut, and new PFAS regulations - **California:** SJWC filed a General Rate Case application for 2025-2027, requesting a revenue increase of **$55.2 million (11.1%)** in 2025[117](index=117&type=chunk) - **Connecticut:** CWC filed for a rate adjustment to increase annual revenues by **$21.4 million (18.1%)**, with a final decision expected by June 28, 2024[118](index=118&type=chunk) - **Maine:** MWC received approval for a **$2.6 million (17.6%)** increase in annual revenue, effective January 1, 2024[125](index=125&type=chunk) - The U.S. EPA issued new regulations for six PFAS chemicals, requiring compliance by 2029, with SJW Group estimating capital expenditures of approximately **$230 million** for necessary treatment[127](index=127&type=chunk)[128](index=128&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) SJW Group maintains liquidity through operating cash flows and credit facilities, planning **$332 million** in 2024 utility capital expenditures - The company plans to invest approximately **$332 million** in utility capital expenditures in 2024 and **$1.62 billion** over the next five years[132](index=132&type=chunk)[133](index=133&type=chunk) Lines of Credit Summary (as of March 31, 2024, in thousands) | Entity/Agreement | Line Limit | Outstanding | Unused Portion | | :--- | :--- | :--- | :--- | | Syndicated Credit Agreement | $300,000 | $162,000 | $138,000 | | Other CTWS Agreements | $50,000 | $48,748 | $1,252 | | **Total** | **$350,000** | **$210,748** | **$139,252** | - Standard & Poor's placed SJW Group, CTWS, and CWC on a negative outlook in September 2023 due to regulatory and legislative developments in Connecticut, while maintaining their A- and A ratings[143](index=143&type=chunk)[144](index=144&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) SJW Group's primary market risks stem from interest rate changes affecting variable-rate debt and the impact of market factors on pension plans - The company's primary market risks are related to interest rate changes on variable-rate debt and the impact of market factors on its pension and post-retirement plans[145](index=145&type=chunk) - SJW Group confirms it has no derivative financial instruments, financial instruments with significant off-balance sheet risks, or financial instruments with concentrations of credit risk[146](index=146&type=chunk) [Controls and Procedures](index=30&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective in ensuring timely recording, processing, and reporting of information for SEC reports[147](index=147&type=chunk) - No changes occurred in internal control over financial reporting during Q1 2024 that have materially affected, or are reasonably likely to materially affect, these controls[148](index=148&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is subject to routine litigation, including a class action lawsuit against The Connecticut Water Company alleging water contamination - A class action lawsuit was filed against The Connecticut Water Company in October 2023, alleging the water it provided contained contaminants, which the company plans to vigorously defend against[150](index=150&type=chunk) [Risk Factors](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in SJW Group's Annual Report on Form 10-K for the year ended December 31, 2023 - The company reports no material changes from the risk factors disclosed in its 2023 Form 10-K[151](index=151&type=chunk) [Other Information](index=31&type=section&id=ITEM%205.%20OTHER%20INFORMATION) On April 24, 2024, the Board of Directors declared a quarterly dividend of **$0.40 per share** of common stock - A quarterly dividend of **$0.40 per share** was declared by the Board of Directors on April 24, 2024[152](index=152&type=chunk) [Exhibits](index=32&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files

Financial Data and Key Metrics Changes - In Q1 2024, the company reported revenue of $149.4 million, a 9% increase from $137.3 million in Q1 2023, primarily driven by rate increases [11] - Net income for the quarter was $11.7 million, a 1% increase from $11.5 million in Q1 2023, with diluted EPS at $0.36 compared to $0.37 in the previous year [11] - Water production expenses increased by 10% year-over-year, mainly due to higher customer usage and rate increases from wholesalers [12] Business Line Data and Key Metrics Changes - The company is advancing a $540 million capital expenditure program to address PFAs treatment, greenhouse gas emissions reduction, and fleet electrification [3] - In Connecticut, a general rate case application is pending for a $21.4 million or 18.1% increase in annual revenues, with two-thirds related to infrastructure investments [6][7] - Maine Water's Biddeford-Saco Division is expected to see an annualized revenue increase of $2.6 million following new rates effective January 1, 2024 [8] Market Data and Key Metrics Changes - The Texas service area is experiencing moderate to severe drought, which is expected to lead to lower water usage in 2024 [10] - The company serves three of the five fastest-growing counties in the U.S., with approximately 22,000 potential new connections in Texas [16] - The company anticipates an increase in annualized revenue of $1.6 billion following the approval of a system improvement charge in Texas [17] Company Strategy and Development Direction - The company is committed to environmental stewardship, having reduced Scope 1 and Scope 2 greenhouse gas emissions by approximately 20% from 2019 to 2022 [1] - A focus on strategic reinvestments and regulatory approvals is evident, with a five-year capital investment outlook of $1.6 billion [18] - The company aims to enhance its communications and stakeholder engagement through new leadership appointments [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the regulatory environment in Connecticut, emphasizing the importance of justifying capital investments [61] - The company is confident in its ability to meet new PFAS standards and expects regulatory recovery of capital investments [33] - Future guidance remains consistent with a long-term growth rate of 5% to 7%, with a reaffirmation of net income per diluted share guidance for 2024 [18][19] Other Important Information - The company is investing approximately $27 million in an advanced metering infrastructure project, part of a larger $100 million initiative [14] - A recent sale of a warehouse building in Tennessee for $27 million is noted, with a pretax gain of $7 million [19] - The company has a strong history of dividend payments, having raised dividends for 56 consecutive years [65] Q&A Session Summary Question: What are the prospects for settlement in Connecticut? - Management is optimistic about the regulatory climate in Connecticut and expects a fair outcome based on their thorough case preparation [61] Question: How is the drought impacting usage trends in Texas? - Management acknowledged significant drought conditions in Texas, which are expected to impact water usage and business operations [48][49] Question: Is there any ongoing portfolio change related to real estate sales? - The recent Tennessee transaction is the primary focus, with no other significant portfolio changes currently in process [50]

Financial Results Presentation First Quarter 2024 On Today's Call Andrew Walters Chief Financial Officer and Treasurer 2 3 This presentation 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 wo ...