SJW (SJW) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue was $124.3 million, an 8$3.7 million or $0.12 diluted earnings per share, a 43$2.6 million or $0.09 diluted earnings per share in the same period last year [17] - The net change in diluted earnings per share was primarily due to cumulative rate increases of$0.06 per share, new customers contributing $0.03 per share, and increased customer usage adding$0.02 per share [17][18] Business Line Data and Key Metrics Changes - In California, residential customer usage increased due to lower-than-normal precipitation and warm temperatures, while business usage decreased by 5% compared to the first quarter of 2021 [15] - The company recorded a nonrecurring gain on the sale of nonutility property of $0.07 per share, which was partially offset by increased production costs and other expenses [18] Market Data and Key Metrics Changes - The effective consolidated tax rates for the quarters ended March 31, 2022, and 2021 were approximately 22$223 million capital spending plan for 2022 has been authorized, with nearly half allocated to pipeline replacement projects [28] - The company aims to reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2030 using a 2019 baseline [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the prospects for SJWTX, the Texas Water and Wastewater utility, which has tripled its customer base over the past 15 years [40] - The company announced 2022 guidance of $2.30 to$2.40 per diluted share, assuming CPUC approval of the general rate case settlement [42] Other Important Information - The company has established an ESG Council to strengthen governance around ESG commitments [11] - A new 60 million drinking water treatment facility in Maine is set to replace a 138-year-old treatment plant [36] Q&A Session Summary Question: Guidance assumptions regarding cost of capital and ROE - Management confirmed that the debt reset is contemplated in the guidance and that ROE assumptions are under ongoing discussions [50] Question: Impact of gain on sale and OII settlement on guidance - Management stated that all one-time items incurred to date are included in the guidance, including the OII [52] Question: Tax rate assumed in guidance - The forecasted tax rate is approximately 16% [64] Question: EPS estimate excluding one-time items - Management indicated that the one-time items netted to a 0.03 delta, with a recurring basis at $0.09 compared to the prior year [66] Question: Impact of pending GRC settlement on revenue - Management estimated that the pending GRC settlement could add approximately$4 million in revenue [79]