SJW (SJW) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2021, the company reported earnings of $2.03 per share, a decrease from$ 2.14 per share in 2020 [27] - Revenue for 2021 was $573.7 million, an increase of$ 9.2 million compared to the previous year [27] - Fourth quarter revenue was $139.7 million, a$ 4 million increase over the fourth quarter of 2020 [21] Business Line Data and Key Metrics Changes - The company invested more than $230 million in water and wastewater systems in 2021 [8] - The Texas operation grew its customer base by 20% through acquisitions and organic growth [8] - Water production expenses increased by$ 3.3 million in 2021, primarily due to higher average per unit water production costs [29] Market Data and Key Metrics Changes - The company experienced a decrease in customer usage, particularly in California, due to drought conditions [20] - Cumulative rate increases contributed $0.86 per share to diluted earnings in 2021 [27] - The effective income tax rate for the fourth quarter was 15%, compared to a negative 7% in the same quarter of 2020 [25] Company Strategy and Development Direction - The company plans to invest$ 223 million in infrastructure improvements in 2022, with a total of over $1.3 billion planned over the next five years [35] - The focus remains on acquiring water and wastewater utilities and maintaining constructive relationships with stakeholders [7] - The company aims to reduce greenhouse gas emissions by 50% by 2030, aligning with the Paris Agreement [12] Management's Comments on Operating Environment and Future Outlook - Management noted extreme weather conditions affecting operations, including droughts and storms [13] - The company is optimistic about the prospects for its Texas operations, which have seen significant growth [43] - Management expressed confidence in the regulatory processes and anticipated positive outcomes from ongoing rate cases [66] Other Important Information - The company has been recognized for its ESG efforts, tying for the lead in social scores among U.S. water utility peers [10] - A 5.9% increase in the dividend to$ 1.44 per share was authorized for 2022, continuing a 54-year trend of annual dividend increases [46] - The company has established financial assistance programs for customers in need, including a $10 million fund from the California Water and Wastewater Arrearage Payment Program [17] Q&A Session Summary Question: Clarification on water production volumes - The 1.3 billion gallons mentioned is exclusive of the 350 million gallons produced year-to-date [51] Question: Guidance on cost of capital and future earnings - Management indicated that the proposal, if approved, would result in a modest increase of$ 1.50 per month per customer [52] Question: Water production quotas in relation to GRC - The settlement agreement reduces the amount of company-produced surface water, which is expected to align with current water production expectations [58] Question: Future M&A activity - The company remains focused on Texas for acquisitions but is open to opportunities in other states that are accretive to shareholders [76]