SJW GROUP ANNOUNCES 2018 FIRST QUARTER FINANCIAL RESULTS
SAN JOSE, CA, April 25, 2018 – SJW Group (NYSE: SJW) today reported financial results for the first quarter ended March 31, 2018. SJW Group net income was $1.3 million for the quarter ended March 31, 2018, compared to $3.7 million for the same period in 2017. Diluted earnings per share were $0.06 and $0.18 for the quarters ended March 31, 2018 and 2017, respectively. Diluted earnings per share includes $0.19 per share from recurring operations offset by $0.13 per share related to the Company’s proposed merger with Connecticut Water Company.
Operating revenue was $75.0 million for the quarter ended March 31, 2018 compared to $69.0 million in 2017. The $6.0 million increase in revenue was primarily attributable to $6.3 million in higher customer usage, $6.1 million in cumulative rate changes, and $377,000 in revenue from new customers. The increase was partially offset by a $2.7 million change in the net recognition of certain other balancing and memorandum accounts primarily due to $1.2 million related to the outcome of our cost of capital proceeding and $933,000 related to the implementation of the Tax Act, $2.5 million in lower revenue recorded in our Water Conservation Memorandum Account, $1.4 million related to a redistribution of certain customer accounts between residential and business customers for the year ended December 31, 2016 recorded in the first quarter of 2017, and $221,000 in lower revenue from our real estate operations.
Water production expenses for the quarter ended March 31, 2018 were $30.4 million compared to $26.5 million in 2017, an increase of $3.9 million. The increase in water production expenses was attributable to $2.5 million in higher customer water usage, $2.3 million in higher per unit costs for purchased water, groundwater extraction and energy charges, and $482,000 related to cost-recovery balancing and memorandum accounts, partially offset by $1.4 million due to an increase in the use of available surface water supplies. Operating expenses, excluding water production costs, increased $6.4 million to $37.3 million from $30.9 million. The increase was primarily due to $3.8 million in various costs related to our proposed merger of equals with Connecticut Water Service, Inc., $1.5 million of higher depreciation expenses due to assets placed in service in 2017, $733,000 in higher maintenance and property taxes and other non-income taxes, and $419,000 of higher administrative and general expenses, net of cost-recovery balancing and memorandum accounts.
Other expense and income for the quarter ended March 31, 2018 included a pre-tax unrealized loss of $667,000 related to the change in investment value of California Water Service group stock that was previously recognized in other comprehensive income and now is recognized as part of net income in accordance with Accounting Standards Update 2016-01, “Financial Instruments - Overall.”
The effective consolidated income tax rates were approximately (82%) and 30% for the quarters ended March 31, 2018 and 2017, respectively. The negative effective tax rate for the quarter was primarily due to low income before income taxes generating a tax expense of $159,000, offset by recognition of excess tax benefits of $747,000 relating to share-based payment awards. The Company does not reasonably expect that the recognition of excess tax benefits will have a material impact on the anticipated effective consolidated income tax rate for the year ended December 31, 2018. In addition, the effective tax rate decreased due to the change in the statutory federal income tax rate from 35% to 21% as a result of the Tax Act.
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.
The following information was filed by Sjw Group (SJW) on Thursday, April 26, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.