H2o America 8-K, filed May 5, 2020
H2o America (HTO)
8-K
2020-05-05
For: 2020-05-04
View Original
Added on
April 12, 2026
About this 8-K
H2o America filed this 8-K on May 5, 2020, reporting on events of May 4, 2020.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 4, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 2.02: | Results of Operations and Financial Condition. |
On May 4, 2020, SJW Group announced its financial results for the quarter ended March 31, 2020. A copy of the press release announcing the financial results is attached hereto as Exhibit 99.1 and incorporated into this Item 2.02 of Form 8-K by reference.
Item 9.01: | Financial Statements and Exhibits. | |
(d) | Exhibits | |
Exhibit Number | Description of Document |
99.1 | |
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SJW GROUP
Date: May 4, 2020 | /s/ James P. Lynch |
James P. Lynch, Chief Financial Officer and Treasurer | |
EXHIBIT 99.1
SJW GROUP ANNOUNCES 2020 FIRST QUARTER FINANCIAL RESULTS
AND UPDATES 2020 GUIDANCE
SAN JOSE, CA, May 4, 2020 – SJW Group (NYSE: SJW) today reported financial results for the first quarter ended March 31, 2020. SJW Group net income was $2.4 million for the quarter ended March 31, 2020, compared to $5.9 million for the same period in 2019. Diluted earnings per share were $0.08 and $0.21 for the quarters ended March 31, 2020 and 2019, respectively. Diluted earnings per share in 2020 includes $0.15 per share from ongoing operations offset by non-recurring expenses related to the Connecticut Water Service, Inc. ("CTWS") merger and integration fees of $1.3 million (net of tax) or $0.05 per share and COVID-19 related reserves and expenses of $470,000 (net of tax) or $0.02 per share. Diluted earnings per share in 2019 includes $0.23 per share from ongoing operations and $0.05 per share of interest income earned on temporarily invested proceeds from our equity offering in December 2018, offset by $0.07 per share of non-recurring expenses related to the CTWS merger.
The Company’s previously issued earnings guidance for 2020 anticipated the use of 3.5 billion gallons of surface water from its Northern California watershed. Through the first three months of the year, when the majority of rainfall in the watershed occurs, the company experienced the second lowest rainfall level in the last 10 years. Absent additional rainfall, we anticipate total available water from the watershed will be between 1.0 billion gallons and 1.2 billion gallons. Replacing our sourced water with water purchased from our local water agency or pumped from the aquifer will cost an incremental $4.2 million per billion gallons. As a result, the company anticipates that annual water production costs will increase between $9.7 million and $10.5 million or between $0.29 and $0.31 per diluted share. The Company is updating its guidance range from between $2.25 and $2.35 per diluted share to between $1.95 and $2.05 per diluted share to reflect this change.
Operating revenue was $115.8 million for the quarter ended March 31, 2020, compared to $77.7 million in 2019. The $38.1 million increase in revenue was primarily attributable to $27.4 million in new revenue as a result of the merger with CTWS, $6.0 million due to increased customer usage, $3.5 million in cumulative water rate increases, and a $1.1 million increase in the net recognition of certain balancing and memorandum accounts.
Operating expenses for the quarter ended March 31, 2020, were $100.3 million, compared to $65.3 million in 2019, an increase of $35.0 million. Operating expenses include water production expenses for the first quarter of 2020 of $43.8 million compared to $26.8 million for the same period in 2019, an increase of $17.0 million. The increase in water production expenses was primarily attributable to $6.3 million in new CTWS expenses, $5.4 million due to a decrease in the use of available surface water supplies, $5.3 million in higher customer water usage, and $1.5 million in higher per unit costs for purchased water, groundwater extraction and energy charges, partially offset by a $1.5 million decrease in cost recovery balancing and memorandum accounts. Operating expenses, excluding water production costs, increased $18.0 million to $56.5 million from $38.5 million. The increase was primarily due to an increase of $9.2 million in higher general and administrative expenses, including $6.4 million in new CTWS general and administrative expenses. Other first quarter expense changes included $6.2 million in higher depreciation expenses, $3.3 million in higher property taxes and other non-income taxes, and $1.8 million in higher maintenance expenses. The increases were primarily a result of inclusion of CTWS post-merger activities. In addition, we experienced $2.2 million in lower merger related expenses.
Other expense and income in the first quarter of 2020 included $858,000 in new interest expense on San Jose Water Company’s $80.0 million Senior Notes issued in March 2019 and $4.1 million in new interest on SJW Group’s $510.0 million Senior Notes issued in October 2019. Other expense and income in the first quarter of 2019 included $1.8 million of interest income earned on temporarily invested proceeds from our equity offering in December 2018. The proceeds were used to partially finance the CTWS merger and no similar income was earned in the first quarter of 2020.
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The effective consolidated income tax rates for the quarters ended March 31, 2020 and 2019, were approximately 15% and 26%, respectively. The effective tax rate decreased primarily due to the flow-through impact of certain CTWS deductions and lower pre-tax income.
About SJW Group
SJW Group is the second largest investor-owned pure play water and wastewater utility based on rate base in the United States, providing life-saving and high-quality water service to nearly 1.5 million people. SJW Group’s locally led and operated water utilities - San Jose Water Company in California; Connecticut Water Company, Avon Water Company and Heritage Village Water Company in Connecticut; Maine Water Company in Maine; and SJWTX, Inc. (dba Canyon Lake Water Service Company) in Texas - possess the financial strength, operational expertise and technological innovation to safeguard the environment, deliver outstanding service to customers and provide opportunities to employees. SJW Group remains focused on investing in its operations, remaining actively engaged in its local communities and delivering continued sustainable value to its shareholders. For more information about SJW Group, please visit www.sjwgroup.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Some of these forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "projects," "strategy," or "anticipates," or the negative of those words or other comparable terminology. These forward looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict.
The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the effect of water, utility, environmental and other governmental policies and regulations, including actions concerning rates, authorized return on equity, authorized debt-to-equity ratios, capital expenditures and other decisions; (2) changes in demand for water and other services; (3) the impact of COVID-19 pandemic on our business operation and financial results; (4) unanticipated weather conditions and changes in seasonality; (5) climate change and the effects thereof; (6) the risk that the benefits expected from the merger of SJW Group and Connecticut Water Service, Inc. will not be realized; (7) the risk that the integration of Connecticut Water Service, Inc. will be more difficult, time-consuming or expensive than anticipated; (8) our ability to successfully evaluate investments in new business and growth initiatives; (9) the risk of work stoppages, strikes and other labor-related actions; (10) catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, or other similar occurrences; (11) changes in general economic, political, business and financial market conditions; (12) the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, changes in interest rates, compliance with regulatory requirements, compliance with the terms and conditions of our outstanding indebtedness, and general stock market conditions; and (13) legislative and general market and economic developments.
Results for a quarter are not indicative of results for a full year due to seasonality and other factors. In addition, actual results are subject to other risks and uncertainties that relate more broadly to our overall business, including those more fully described in our filings with the SEC, including our most recent reports on Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and we undertake no obligation to update or revise any forward-looking statements except as required by law.
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SJW Group
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands, except per share data)
Three months ended March 31, | ||||||
2020 | 2019 | |||||
REVENUE | $ | 115,754 | 77,682 | |||
OPERATING EXPENSE: | ||||||
Production Expenses: | ||||||
Purchased water | 15,934 | 13,662 | ||||
Power | 2,725 | 1,160 | ||||
Groundwater extraction charges | 15,028 | 6,863 | ||||
Other production expenses | 10,093 | 5,099 | ||||
Total production expenses | 43,780 | 26,784 | ||||
Administrative and general | 21,262 | 12,291 | ||||
Maintenance | 6,086 | 4,325 | ||||
Property taxes and other non-income taxes | 7,463 | 4,128 | ||||
Depreciation and amortization | 21,382 | 15,145 | ||||
Merger related expenses | 354 | 2,601 | ||||
Total operating expense | 100,327 | 65,274 | ||||
OPERATING INCOME | 15,427 | 12,408 | ||||
OTHER (EXPENSE) INCOME: | ||||||
Interest expense | (13,284 | ) | (5,791 | ) | ||
Interest income on Money Market Fund | — | 1,832 | ||||
Pension non-service cost | (45 | ) | (921 | ) | ||
Other, net | 757 | 390 | ||||
Income before income taxes | 2,855 | 7,918 | ||||
Provision for income taxes | 438 | 2,045 | ||||
SJW GROUP NET INCOME | 2,417 | 5,873 | ||||
Unrealized loss on investment, net of taxes of $50 | (135 | ) | — | |||
SJW GROUP COMPREHENSIVE INCOME | $ | 2,282 | 5,873 | |||
EARNINGS PER SHARE: | ||||||
Basic | $ | 0.08 | 0.21 | |||
Diluted | $ | 0.08 | 0.21 | |||
DIVIDENDS PER SHARE | $ | 0.32 | 0.30 | |||
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||
Basic | 28,489 | 28,423 | ||||
Diluted | 28,674 | 28,508 | ||||
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SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
March 31, 2020 | December 31, 2019 | |||||
ASSETS | ||||||
Utility plant: | ||||||
Land | $ | 34,697 | 34,395 | |||
Depreciable plant and equipment | 3,014,589 | 2,988,454 | ||||
Construction in progress | 126,365 | 112,232 | ||||
Intangible assets | 32,775 | 33,424 | ||||
Total utility plant | 3,208,426 | 3,168,505 | ||||
Less accumulated depreciation and amortization | 983,481 | 962,019 | ||||
Net utility plant | 2,224,945 | 2,206,486 | ||||
Real estate investments | 57,954 | 57,699 | ||||
Less accumulated depreciation and amortization | 13,899 | 13,597 | ||||
Net real estate investments | 44,055 | 44,102 | ||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents: | ||||||
Cash | 28,273 | 12,944 | ||||
Restricted cash | — | 5,000 | ||||
Accounts receivable and accrued unbilled utility revenue | 80,839 | 88,077 | ||||
Current regulatory assets, net | 6,129 | 6,472 | ||||
Other current assets | 13,577 | 9,553 | ||||
Total current assets | 128,818 | 122,046 | ||||
OTHER ASSETS: | ||||||
Regulatory assets, net | 126,149 | 113,945 | ||||
Investments | 13,400 | 12,928 | ||||
Goodwill | 628,287 | 628,287 | ||||
Other | 8,644 | 4,676 | ||||
776,480 | 759,836 | |||||
$ | 3,174,298 | 3,132,470 | ||||
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SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
March 31, 2020 | December 31, 2019 | |||||
CAPITALIZATION AND LIABILITIES | ||||||
CAPITALIZATION: | ||||||
Common stock | $ | 28 | 28 | |||
Additional paid-in capital | 507,075 | 506,639 | ||||
Retained earnings | 376,447 | 383,191 | ||||
Accumulated other comprehensive (loss) income | (9 | ) | 126 | |||
Total stockholders’ equity | 883,541 | 889,984 | ||||
Long-term debt, less current portion | 1,316,996 | 1,283,597 | ||||
Total capitalization | 2,200,537 | 2,173,581 | ||||
CURRENT LIABILITIES: | ||||||
Lines of credit | 131,402 | 117,209 | ||||
Current portion of long-term debt | 22,311 | 22,272 | ||||
Accrued groundwater extraction charges, purchased water and power | 12,919 | 17,211 | ||||
Accounts payable | 25,214 | 34,886 | ||||
Accrued interest | 18,516 | 13,140 | ||||
Accrued payroll | 9,105 | 11,570 | ||||
Other current liabilities | 18,937 | 18,279 | ||||
Total current liabilities | 238,404 | 234,567 | ||||
DEFERRED INCOME TAXES | 194,823 | 195,598 | ||||
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF | ||||||
CONSTRUCTION | 405,398 | 398,374 | ||||
POSTRETIREMENT BENEFIT PLANS | 111,272 | 108,044 | ||||
OTHER NONCURRENT LIABILITIES | 23,864 | 22,306 | ||||
$ | 3,174,298 | 3,132,470 | ||||
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