EXHIBIT 99.1


SJW GROUP ANNOUNCES 2018 SECOND QUARTER FINANCIAL RESULTS

SAN JOSE, CA, July 25, 2018 – SJW Group (NYSE: SJW) today reported financial results for the second quarter ended June 30, 2018. SJW Group net income was $12.9 million for the quarter ended June 30, 2018, compared to $18.7 million for the same period in 2017. Diluted earnings per share were $0.62 and $0.90 for the quarters ended June 30, 2018 and 2017, respectively. Diluted earnings per share includes $0.72 per share from recurring operations offset by $0.10 per share related to the Company’s activities around the proposed merger with Connecticut Water Service, Inc.

Operating revenue was $99.1 million for the quarter ended June 30, 2018 compared to $102.1 million in the same period in 2017. The $3.0 million decrease in revenue was primarily attributable to a $10.9 million decrease in the net recognition of certain balancing and memorandum accounts, including $4.8 million related to the implementation of the Tax Cuts and Jobs Act (H.R. 1) (the "Tax Act"), $4.3 million in lower revenue recorded in our Water Conservation Memorandum Account, and $1.6 million in cost-recovery accounts that were recorded in revenue in 2017 which upon adoption of Topic 606, "Revenue from Contracts with Customers" on January 1, 2018 are now recorded as capitalized costs until recovery is approved by the California Public Utilities Commission. The decrease was partially offset by a $5.7 million increase in cumulative water rate changes, net of approximately $1.0 million rate decrease from our 2018 cost of capital proceeding, $1.8 million in higher customer usage, and $415,000 in revenue from new customers.

Water production expenses for the second quarter of 2018 were $39.9 million compared to $38.8 million for the same period in 2017, an increase of $1.1 million. The increase in water production expenses was attributable to $3.8 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $1.7 million in higher customer water usage, partially offset by $3.3 million due to an increase in the use of available surface water supplies and $1.2 million related to cost-recovery balancing and memorandum accounts. Operating expenses, excluding water production costs, increased $5.0 million to $36.4 million from $31.4 million. The increase was primarily due to $2.7 million in various costs related to our proposed merger with Connecticut Water Service, Inc., $1.6 million of higher depreciation expenses due to assets placed in service in 2017, $448,000 in higher maintenance and property taxes and other non-income taxes, and $143,000 of higher administrative and general expenses, net of cost-recovery balancing and memorandum accounts.

Other expense and income in the second quarter and first six months of 2017 included a pre-tax gain of $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.

The effective consolidated income tax rates were approximately 24% and 37% for the quarters ended June 30, 2018 and 2017, respectively. The effective tax rate decreased primarily due to the change in the statutory federal income tax rate from 35% to 21% as a result of the Tax Act.

Year-to-date net income was $14.2 million, compared to $22.4 million in 2017. Diluted earnings per share were $0.68 in the first six months of 2018, compared to $1.08 per diluted share for the same period in 2017.

Year-to-date operating revenue increased by $3.0 million to $174.1 million from $171.1 million in the first six months of 2018. The increase was attributable to $11.8 million in cumulative rate increases, net of approximately $1.0 million rate decrease from our 2018 cost of capital proceeding, $8.1 million in higher customer usage, and $792,000 in revenue from new customers. These increases were partially offset by a $17.4 million decrease in the net recognition of certain balancing and memorandum accounts, primarily due to $6.7 million in lower revenue recorded in our Water Conservation Memorandum Account, $5.9 million related to the implementation of the Tax Act, $1.7 million related to cost-recovery accounts, an additional $1.4 million related to the outcome of our cost of capital proceeding, and $1.4 million related to a redistribution of certain customer accounts between residential and business customers for the year ended December 31, 2016 that was recorded in the 2017 first quarter. In addition, revenue from our real estate operations was $229,000 lower.

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Year-to-date water production expenses increased to $70.3 million from $65.3 million in 2017. The $5.0 million increase was attributable to $6.1 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $4.3 million in higher customer water usage, offset by $4.6 million in lower expenses due to an increase in the use of available surface water supplies and $708,000 related to cost-recovery balancing and memorandum accounts. Operating expenses, excluding water production costs, increased $11.4 million to $73.7 million from $62.3 million. The increase was primarily due to $6.5 million in various costs related to our proposed merger with Connecticut Water Service, Inc., $3.1 million in higher depreciation expenses, $1.2 million in higher maintenance and property taxes and other non-income taxes, and $566,000 in higher administrative and general expenses, net of cost-recovery balancing and memorandum accounts.

The effective consolidated income tax rates were approximately 20% and 36% for the six-month periods ended June 30, 2018 and 2017, respectively. The effective tax rate decreased in 2018 primarily due to the change in the statutory federal income tax rate from 35% to 21% as a result of the Tax Act.

The Directors of SJW Group today declared a quarterly dividend on common stock of $0.28 per share. The dividend is payable on September 4, 2018 to shareholders of record on August 6, 2018.

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 June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
REVENUE
$
99,086

 
102,073

 
$
174,128

 
171,118

OPERATING EXPENSE:
 
 
 
 
 
 
 
Production Expenses:
 
 
 
 
 
 
 
Purchased water
23,712

 
22,181

 
39,128

 
36,105

Power
1,624

 
1,704

 
2,892

 
2,991

Groundwater extraction charges
9,919

 
10,932

 
19,451

 
18,342

Other production expenses
4,626

 
3,991

 
8,838

 
7,851

Total production expenses
39,881

 
38,808

 
70,309

 
65,289

Administrative and general
11,958

 
11,815

 
23,526

 
22,960

Maintenance
4,596

 
4,487

 
9,056

 
8,384

Property taxes and other non-income taxes
3,450

 
3,111

 
7,316

 
6,806

Depreciation and amortization
13,656

 
12,033

 
27,239

 
24,152

Merger related cost
2,746

 

 
6,552

 

Total operating expense
76,287

 
70,254

 
143,998

 
127,591

OPERATING INCOME
22,799

 
31,819

 
30,130

 
43,527

OTHER (EXPENSE) INCOME:
 
 
 
 
 
 
 
Interest expense
(6,084
)
 
(5,756
)
 
(12,136
)
 
(11,813
)
Unrealized gain/(loss) on California Water Service Group stock
140

 

 
(527
)
 

Gain on sale of real estate investment

 
6,903

 

 
6,903

Pension non-service cost
(595
)
 
(1,032
)
 
(1,178
)
 
(1,907
)
Other, net
679

 
614

 
1,355

 
1,077

Income before income taxes
16,939

 
32,548

 
17,644

 
37,787

Provision for income taxes
4,068

 
11,964

 
3,488

 
13,532

NET INCOME BEFORE NONCONTROLLING INTEREST
12,871

 
20,584

 
14,156

 
24,255

Less net income attributable to the noncontrolling interest

 
1,896

 

 
1,896

SJW GROUP NET INCOME
12,871

 
18,688

 
14,156

 
22,359

Other comprehensive income, net

 
56

 

 
172

SJW GROUP COMPREHENSIVE INCOME
$
12,871

 
18,744

 
$
14,156

 
22,531

 
 
 
 
 
 
 
 
SJW GROUP EARNINGS PER SHARE:
 
 
 
 
 
 
 
Basic
$
0.63

 
0.91

 
$
0.69

 
1.09

Diluted
$
0.62

 
0.90

 
$
0.68

 
1.08

DIVIDENDS PER SHARE
$
0.28

 
0.22

 
$
0.56

 
0.44

WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
20,592

 
20,504

 
20,577

 
20,495

Diluted
20,732

 
20,674

 
20,717

 
20,665



3



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

 
June 30,
2018
 
December 31,
2017
ASSETS
 
 
 
Utility plant:
 
 
 
Land
$
18,212

 
17,831

Depreciable plant and equipment
1,755,624

 
1,714,228

Construction in progress
68,153

 
45,851

Intangible assets
15,650

 
14,413

Total utility plant
1,857,639

 
1,792,323

Less accumulated depreciation and amortization
579,572

 
553,059

Net utility plant
1,278,067

 
1,239,264

 
 
 
 
Real estate investments
56,336

 
56,213

Less accumulated depreciation and amortization
11,730

 
11,132

Net real estate investments
44,606

 
45,081

CURRENT ASSETS:
 
 
 
Cash and cash equivalents
8,926

 
7,799

Accounts receivable and accrued unbilled utility revenue
57,939

 
54,309

Other current assets
6,308

 
4,750

Total current assets
73,173

 
66,858

OTHER ASSETS:
 
 
 
Investment in California Water Service Group
3,207

 
4,535

Regulatory assets, net
98,332

 
99,554

Other
2,736

 
2,709

 
104,275

 
106,798

 
$
1,500,121

 
1,458,001























4



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

 
June 30,
2018
 
December 31,
2017
CAPITALIZATION AND LIABILITIES
 
 
 
CAPITALIZATION:
 
 
 
Common stock
$
21

 
21

Additional paid-in capital
84,375

 
84,866

Retained earnings
380,898

 
376,119

Accumulated other comprehensive income

 
2,203

Total stockholders’ equity
465,294

 
463,209

Long-term debt, less current portion
431,258

 
431,092

Total capitalization
896,552

 
894,301

CURRENT LIABILITIES:
 
 
 
Line of credit
59,000

 
25,000

Accrued groundwater extraction charge, purchased water and purchased power
18,555

 
14,382

Accounts payable
26,183

 
22,960

Accrued interest
6,968

 
6,869

Accrued payroll
4,837

 
6,011

Other current liabilities
9,008

 
9,830

Total current liabilities
124,551

 
85,052

 
 
 
 
DEFERRED INCOME TAXES
84,064

 
85,795

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF
 
 
 
CONSTRUCTION
245,115

 
244,525

POSTRETIREMENT BENEFIT PLANS
75,229

 
72,841

REGULATORY LIABILITY
61,639

 
62,476

OTHER NONCURRENT LIABILITIES
12,971

 
13,011

 
$
1,500,121

 
1,458,001





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