EXHIBIT 99.1


SJW GROUP ANNOUNCES 2017 ANNUAL AND FOURTH QUARTER FINANCIAL RESULTS

SAN JOSE, CA, February 21, 2018 – SJW Group (NYSE: SJW) today reported financial results for the annual and fourth quarter ended December 31, 2017. SJW Group net income was $59.2 million for the year ended December 31, 2017, compared to $52.8 million for the same period in 2016. Diluted earnings per share were $2.86 and $2.57 for the years ended December 31, 2017 and 2016, respectively.

Operating revenue was $389.2 million for the year ended December 31, 2017 compared to $339.7 million in 2016. The $49.5 million increase in revenue was primarily attributable to $41.1 million in cumulative rate changes, $15.4 million in higher customer usage, $1.2 million in revenue from new customers, $885,000 change in the net recognition of certain other balancing and memorandum accounts, $515,000 increase in recycled water revenue, and $179,000 in higher revenue recorded in our Water Conservation Memorandum Account ("WCMA"). These increases were partially offset by $8.8 million in true-up revenue recognized as a part of the decision on our 2016 California General Rate Case decision in the prior year and $1.0 million in lower revenue from our real estate operations.

Water production expenses for the year ended December 31, 2017 were $156.8 million compared to $124.3 million in 2016, an increase of $32.5 million. The increase in water production expenses was attributable to $17.0 million in higher per unit costs for purchased water, groundwater extraction and energy charges, $9.6 million in higher customer water usage, and $5.9 million due to a decrease in the use of available surface water supplies. Operating expenses, excluding water production costs, increased $12.1 million to $134.4 million from $122.3 million. The increase was primarily due to $7.0 million of higher administrative and general expenses, $3.6 million of higher depreciation expenses due to assets placed in service in 2016, and $1.5 million in higher maintenance and property taxes and other non-income taxes.

Other expense and income in 2017 included a pre-tax gain of $12.5 million related to the sale of Texas Water Alliance Limited to the Guadalupe-Blanco River Authority, $6.3 million on the sale of 444 West Santa Clara Street Limited Partnership's interests in the commercial building and land the partnership owned, and sale of undeveloped land which SJW Land Company owned for a pre-tax gain of $580,000. Other expense and income in 2016 included the condemnation sale of the Company's real estate investment property in Arizona for a pre-tax gain of approximately $10.0 million and a $3.2 million pre-tax gain on the sale of 159,151 shares of California Water Service Group stock.

The effective consolidated income tax rates were approximately 37% and 39% for the years ended December 31, 2017 and 2016, respectively.

Fourth Quarter Financial Results

Net income for the fourth quarter ended December 31, 2017 was $17.3 million, compared to $13.7 million in 2016. Diluted earnings per share were $0.84 and $0.67 for the quarters ended December 31, 2017 and 2016, respectively.

Operating revenue was $93.5 million in the quarter compared to $79.3 million in 2016. The $14.2 million increase in revenue was attributable to $9.2 million in higher customer usage, $7.5 million in cumulative rate changes, and $416,000 in revenue from new customers. These increases were partially offset by $2.5 million in lower revenue recorded in our WCMA and a $382,000 change in the net recognition of certain other balancing and memorandum accounts.
 
Water production expenses for the fourth quarter of 2017 were $39.2 million versus $31.0 million for the same period in 2016, an increase of $8.2 million. The increase in water production expenses was primarily attributable to $4.8 million in higher customer water usage and $3.5 million in higher per unit costs for purchased water, groundwater extraction and energy charges. Operating expenses, excluding water production costs, increased $4.2 million to $36.1 million from $31.9 million. The increase was primarily due to $3.2 million in higher administrative and general

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expenses, $939,000 of higher depreciation expenses, and $374,000 in higher property taxes and other non-income taxes. These increases were partially offset by $257,000 of lower maintenance expenses.

Other expense and income in the fourth quarter of 2017 included a pre-tax gain of $12.5 million related to the sale of Texas Water Alliance Limited to the Guadalupe-Blanco River Authority compared to the condemnation sale of the Company's real estate investment property in Arizona for a pre-tax gain of approximately $10.0 million in the same period of 2016.

The effective consolidated income tax rates were 33% and 37% for the quarters ended December 31, 2017 and 2016, respectively. The change is primarily due to the tax benefit related to the revaluation of deferred tax assets and liabilities due to the reduction in the federal statutory income tax rate arising from the Tax Cuts and Jobs Act of 2017.

SJW Group is a publicly traded holding company headquartered in San Jose, California. SJW Group is the parent company of San Jose Water Company, SJWTX, Inc., and SJW Land Company. Together, San Jose Water Company and SJWTX, Inc. provide water service to more than one million people in San Jose, California and nearby communities and in Canyon Lake, Texas and nearby communities. SJW Land Company owns and operates commercial real estate investments.




















This press release may contain certain forward-looking statements including, but not limited to, statements relating to SJW Group's plans, strategies, objectives, expectations and intentions, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SJW Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Results for a quarter are not indicative of results for a full year due to seasonality and other factors. Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Group's most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. SJW Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

2



SJW Group
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands, except per share data)
 
 
Three months ended December 31,
 
Twelve months ended December 31,
 
2017
 
2016
 
2017
 
2016
OPERATING REVENUE
$
93,529

 
79,306

 
$
389,225

 
339,706

OPERATING EXPENSE:
 
 
 
 
 
 
 
Production Expenses:
 
 
 
 
 
 
 
Purchased water
19,518

 
20,108

 
86,456

 
72,971

Power
1,804

 
1,110

 
7,295

 
6,102

Groundwater extraction charges
13,719

 
6,461

 
47,817

 
32,088

Other production expenses
4,163

 
3,352

 
15,203

 
13,167

Total production expenses
39,204

 
31,031

 
156,771

 
124,328

Administrative and general
15,517

 
12,348

 
55,011

 
48,038

Maintenance
5,137

 
5,394

 
17,430

 
17,476

Property taxes and other non-income taxes
3,382

 
3,008

 
13,642

 
12,123

Depreciation and amortization
12,075

 
11,136

 
48,292

 
44,625

Total operating expense
75,315

 
62,917

 
291,146

 
246,590

OPERATING INCOME
18,214

 
16,389

 
98,079

 
93,116

OTHER (EXPENSE) INCOME:
 
 
 
 
 
 
 
Interest expense
(5,575
)
 
(5,508
)
 
(22,929
)
 
(21,838
)
Gain on sale of California Water Service Group stock

 

 

 
3,197

Gain on sale of real estate investment

 
10,295

 
6,903

 
10,419

Gain on sale of utility property
12,499

 

 
12,499

 

Other, net
505

 
548

 
1,941

 
1,487

Income before income taxes
25,643

 
21,724

 
96,493

 
86,381

Provision for income taxes
8,338

 
7,997

 
35,393

 
33,542

NET INCOME BEFORE NONCONTROLLING INTEREST
17,305

 
13,727

 
61,100

 
52,839

Less net income attributable to the noncontrolling interest

 

 
1,896

 

SJW GROUP NET INCOME
17,305

 
13,727

 
59,204

 
52,839

Other comprehensive income, net
427

 
107

 
679

 
955

Reclassification adjustment for gain realized on sale of investments, net

 

 

 
(1,742
)
SJW GROUP COMPREHENSIVE INCOME
$
17,732

 
13,834

 
$
59,883

 
52,052

 
 
 
 
 
 
 
 
SJW GROUP EARNINGS PER SHARE:
 
 
 
 
 
 
 
Basic
$
0.84

 
0.67

 
$
2.89

 
2.59

Diluted
$
0.84

 
0.67

 
$
2.86

 
2.57

DIVIDENDS PER SHARE
$
0.39

 
0.20

 
$
1.04

 
0.81

WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
20,521

 
20,456

 
20,507

 
20,440

Diluted
20,714

 
20,614

 
20,685

 
20,589



3



SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)

 
December 31,
2017
 
December 31,
2016
ASSETS
 
 
 
Utility plant:
 
 
 
Land
$
17,831

 
17,923

Depreciable plant and equipment
1,714,228

 
1,554,016

Construction in progress
45,851

 
70,453

Intangible assets
14,413

 
23,989

Total utility plant
1,792,323

 
1,666,381

Less accumulated depreciation and amortization
553,059

 
520,018

Net utility plant
1,239,264

 
1,146,363

 
 
 
 
Real estate investments
56,213

 
62,193

Less accumulated depreciation and amortization
11,132

 
11,734

Net real estate investments
45,081

 
50,459

CURRENT ASSETS:
 
 
 
Cash and cash equivalents
7,799

 
6,349

Restricted cash

 
19,001

Accounts receivable and accrued unbilled utility revenue
54,309

 
53,795

Current regulatory assets, net

 
16,064

Other current assets
4,750

 
4,402

Total current assets
66,858

 
99,611

OTHER ASSETS:
 
 
 
Investment in California Water Service Group
4,535

 
3,390

Regulatory assets, net
99,554

 
135,709

Other
2,709

 
7,844

 
106,798

 
146,943

 
$
1,458,001

 
1,443,376























4



SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)

 
December 31,
2017
 
December 31,
2016
CAPITALIZATION AND LIABILITIES
 
 
 
CAPITALIZATION:
 
 
 
Common stock
$
21

 
21

Additional paid-in capital
84,866

 
81,715

Retained earnings
376,119

 
338,386

Accumulated other comprehensive income
2,203

 
1,524

Total stockholders’ equity
463,209

 
421,646

Long-term debt, less current portion
431,092

 
433,335

Total capitalization
894,301

 
854,981

CURRENT LIABILITIES:
 
 
 
Line of credit
25,000

 
14,200

Accrued groundwater extraction charge, purchased water and purchased power
14,382

 
10,846

Accounts payable
22,960

 
18,739

Accrued interest
6,869

 
6,309

Accrued payroll
6,011

 
4,696

Other current liabilities
9,830

 
8,783

Total current liabilities
85,052

 
63,573

 
 
 
 
DEFERRED INCOME TAXES
85,795

 
205,203

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF
 
 
 
CONSTRUCTION
244,525

 
236,391

POSTRETIREMENT BENEFIT PLANS
72,841

 
70,177

REGULATORY LIABILITY
62,476

 

OTHER NONCURRENT LIABILITIES
13,011

 
13,051

 
$
1,458,001

 
1,443,376





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