SJW (US:SJW)2021-04-30 19:59Financial Performance - SJW Group's consolidated net income for Q1 2021 was $2,616, an increase of $199, or approximately 8%, from $2,417 in Q1 2020[109]. - Operating revenue for Q1 2021 was $114,785, a decrease of $969, or 1%, compared to $115,754 in Q1 2020, primarily due to a decrease in customer usage and the impact of a winter storm[112]. - Water Utility Services revenue for Q1 2021 was $113,441, down from $114,384 in Q1 2020, with a 2% increase in rates partially offsetting a 2% decrease in consumption[112]. - Operating expenses for Q1 2021 totaled $101,706, an increase of $1,379, or 1%, from $100,327 in Q1 2020, driven by a 2% increase in depreciation and amortization[113]. - Cash flow from operating activities increased significantly to approximately $33,400 for the three months ended March 31, 2021, compared to $7,900 for the same period in 2020, marking an increase of approximately $25,400[131]. Customer and Consumption Trends - The number of customers increased by 446 in Q1 2021, contributing to revenue despite overall consumption declines[112]. - Water sales are seasonal, with higher revenues typically occurring in the summer months due to increased water usage[108]. - The unaccounted-for water for SJWC was approximately 7.2% of total production for the 12 months ending March 31, 2021, down from 8.0% in the previous year[122]. Strategic Initiatives - SJW Group's business strategy includes pursuing acquisitions and expanding into out-of-region water and utility-related services, although execution risks are acknowledged[102]. - The merger of Connecticut Water Service, Inc. streamlined operations and is expected to enhance efficiency in regulatory filings and administrative tasks[95]. - The company plans to use proceeds from offerings for debt repayment and general corporate purposes, including infrastructure improvements and capital expenditures[155]. Capital and Financing - Capital expenditures for Water Utility Services are budgeted at approximately $238,800 for 2021, with $46,700 or 20% already invested as of March 31, 2021[134]. - SJWC's net cash provided by financing activities decreased by approximately $21,100 for the three months ended March 31, 2021, primarily due to a decrease in net borrowings and new long-term debt proceeds[138]. - SJW Group received net proceeds of approximately $58,122 from an equity offering of 1,030,000 shares sold at $59.00 per share, which closed on March 10, 2021[155]. - SJW Group and its subsidiaries had unsecured bank lines of credit allowing aggregate short-term borrowings of up to $260,000, with $138,491 available as of March 31, 2021[153]. Regulatory and Compliance - CTWS and Connecticut Water are required to maintain a debt to capitalization ratio of not more than 60% and an interest coverage ratio of no less than 3 to 1, and both were in compliance as of March 31, 2021[144][145][148]. - Maine Water must maintain a debt to capitalization ratio of not more than 60% and an interest coverage ratio of no less than 3 to 1, and was compliant as of March 31, 2021[151]. - As of March 31, 2021, SJW Group and its subsidiaries were in compliance with all covenants on their lines of credit[153]. Tax and Market Risks - The effective consolidated income tax rate for SJWC was (52)% for the three months ended March 31, 2021, compared to 15% for the same period in 2020, primarily due to excess tax benefits and state tax credits[128]. - SJW Group is exposed to market risks including changes in interest rates and pension plan asset values, which could impact its cost of capital[157]. - The company has no derivative financial instruments or significant off-balance sheet risks[158]. Water Supply and Resources - SJWC's water supply consists of 3 main sources: purchased water (3,646 million gallons), groundwater (4,603 million gallons), and surface water (1,833 million gallons) for the three months ended March 31, 2021, resulting in a total supply of 10,167 million gallons, a 1% increase from the previous year[121]. - SJWC's total dependable yield from its water sources is approximately 65 million gallons per day, with 72% coming from wells and 28% from surface water supplies[118]. - The projected total groundwater storage at the end of 2021 is expected to fall within the normal stage of Valley Water's Water Shortage Contingency Plan[116]. Property and Assets - The company has approximately 234 acres of non-utility property identified as no longer useful for utility services, primarily located in hillside areas[94].