H2o America 8-K, filed Jul 30, 2021
H2o America (HTO)
8-K
2021-07-30
For: 2021-07-29
View Original
Added on
April 12, 2026
About this 8-K
H2o America filed this 8-K on July 30, 2021, reporting on events of July 29, 2021.
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) July 29, 2021
(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 July 29, 2021, SJW Group announced its financial results for the quarter ended June 30, 2021. 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: July 29, 2021 | /s/ James P. Lynch | ||||
| James P. Lynch, Chief Financial Officer and Treasurer | |||||
EXHIBIT 99.1
SJW GROUP ANNOUNCES 2021 SECOND QUARTER FINANCIAL RESULTS, REAFFIRMS 2021 GUIDANCE, AND DECLARES DIVIDEND
•Net income increases 5.3% over Q2 2020
•2021 diluted earnings of $0.79 per share
•Reaffirms 2021 guidance range of $1.85 to $2.05 per diluted share
•Dividend of $0.34 per share declared
SAN JOSE, CA, July 29, 2021 – SJW Group (NYSE: SJW) today reported financial results for the second quarter ended June 30, 2021. SJW Group net income was $20.8 million for the quarter ended June 30, 2021, compared to $19.7 million for the same period in 2020. Diluted earnings per share were $0.69 for the quarters ended June 30, 2021 and 2020, respectively. Diluted earnings per share in 2021 includes $0.60 per share from ongoing operations and $2.6 million (net of tax) or $0.09 per share from non-recurring income related to the holdback amount received during 2021 related to the sale of all of SJW Group’s equity interest in Texas Water Alliance Limited (“TWA”) to the Guadalupe-Blanco River Authority (“GBRA”) in 2017. Diluted earnings per share in 2020 includes $0.72 per share from ongoing operations offset by non-recurring expenses related COVID-19 related reserves and expenses of $0.7 million (net of tax) or $0.03 per share.
Operating revenue was $152.2 million for the quarter ended June 30, 2021, compared to $147.2 million for the same period in 2020. The $5.0 million increase in revenue was primarily attributable to $3.6 million in cumulative water rate increases, $1.4 million in higher customer usage, and $0.7 million in revenue from new customers.
Operating expenses for the quarter ended June 30, 2021, were $119.6 million, compared to $111.1 million in 2020, an increase of $8.5 million. Operating expenses include water production expenses of $61.0 million in 2021 compared to $58.2 million in 2020, an increase of $2.8 million. The increase in water production expenses was primarily attributable to $1.9 million due to a decrease in surface water supply production, $1.8 million in higher customer water usage, partially offset by $0.7 million in lower average per unit costs for purchased water, groundwater extraction and energy charges, and other production expenses. Operating expenses, excluding water production costs, for the quarter ended June 30, 2021, increased $5.6 million to $58.6 million from $53.0 million in 2020. The increase was primarily due to a $3.6 million increase in general and administrative expenses, $1.3 million in higher maintenance expenses, and $0.8 million in higher depreciation and amortization expenses.
For the quarter ended June 30, 2021, compared to the same period in 2020, the change in other expense and income was primarily due to the release of a $3.0 million holdback amount by GBRA related to the 2017 sale of all of SJW Group’s equity interest in TWA.
The effective consolidated income tax rates were approximately 14% and 18% for the quarters ended June 30, 2021 and 2020, respectively. The lower effective tax rate for the quarter ended June 30, 2021 was primarily due to flow-through tax benefits.
Year-to-date net income was $23.4 million, compared to $22.1 million in 2020. Diluted earnings per share were $0.79 in the first six months of 2021, compared to $0.77 per diluted share for the same period in 2020. Diluted earnings per share in 2021 includes $0.73 per share from ongoing operations and non-recurring income related to the TWA holdback amount of $2.7 million (net of tax) or $0.09 per share, offset by non-recurring expenses related to the Texas ice storms of $0.8 million (net of tax) or $0.03 per share. Diluted earnings per share in 2020 includes $0.86 per share from ongoing operations offset by non-recurring expenses related to the Connecticut Water Service, Inc. merger and integration fees of $1.4 million (net of tax) or $0.05 per share and COVID-19 related reserves and expenses of $1.2 million (net of tax) or $0.04 per share.
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Operating revenue was $267.0 million for the year-to-date period ended June 30, 2021, compared to $263.0 million in the first six month of 2020. The $4.0 million increase was attributable to $6.4 million in cumulative water rate increases and $1.1 million in revenue from new customers, offset by a $1.4 million decrease in customer usage, $0.8 million in winter storm customer credits in our Texas service area, and $0.8 million in the net recognition of certain regulatory mechanisms in Connecticut and Maine.
Year-to-date operating expenses increased to $221.3 million from $211.5 million in 2020, an increase of $9.8 million. Operating expenses include water production expenses of $104.6 million in 2021 compared to $102.0 million in 2020, an increase of $2.6 million. The increase in water production expenses was primarily attributable to $2.7 million due to a decrease in surface water supply production and $1.7 million in higher customer water usage, partially offset by $1.5 million in lower average per unit costs for purchased water, groundwater extraction and energy charges, and other production expenses. Operating expenses, excluding water production costs, for the year-to-date period ended June 30, 2021, increased $7.2 million to $116.7 million from $109.5 million in 2020. The increase was primarily due to a $2.8 million increase in general and administrative expenses, $2.8 million in higher depreciation and amortization expenses, and $1.4 million in higher maintenance expenses.
Other expense and income year-to-date for 2021 included receipt of the $3.0 million TWA holdback amount. No similar transaction occurred in 2020.
The effective consolidated income tax rates for the six-month periods ended June 30, 2021 and 2020, were approximately 9% and 17%, respectively. The effective tax rate decreased primarily due to flow-through tax benefits and other discrete items recorded during the first quarter ended March 31, 2021.
Dividend
The Directors of SJW Group today declared a quarterly dividend on common stock of $0.34 per share. The dividend is payable on September 1, 2021, to shareholders of record on August 9, 2021. SJW Group’s annual dividend yield at the stock market closing on July 28, 2021 was 2%. Dividends have been paid on SJW Group’s and its predecessor’s common stock for more than 77 consecutive years and the annual dividend amount has increased in each of the past 53 years.
2021 Earnings Guidance
SJW Group is reaffirming earnings guidance for 2021 in the range of $1.85 per diluted share to $2.05 per diluted share.
Regulatory Highlights
San Jose Water Company’s 2021 general rate case for new rates in 2022 through 2024 is before the California Public Utilities Commission (“CPUC”). The application seeks an increase of nearly $88 million in revenue requirement over the three-year period, authorization for a $435 million capital budget, and requests to recover $18.5 million from balancing and memorandum accounts. It is anticipated that the CPUC’s review process will take approximately 12 months, with new rates effective in the second quarter of 2022.
On May 3, 2021, San Jose Water Company filed its application with the CPUC in its 2022-2024 cost of capital proceeding, as required. The application requests increases in revenue and return on equity, an adjustment to the proposed capital structure, and a decrease in the cost of debt. If approved, rates are expected to be effective in the first quarter of 2022.
On June 23, 2021, the Maine Public Utilities Commission approved Maine Water Company’s request for an innovative rate-smoothing mechanism that became effective on July 1, 2021. The rate-smoothing mechanism provides customers in the Biddeford-Saco division with a more gradual ramp to new rates that will be driven by the completion of a $60 million replacement of its 1884 vintage drinking water treatment plant. A decision on Maine
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Water Company’s application for a general rate increase related to the Biddeford-Saco project is expected in the second quarter of 2022, in alignment with the completion of the new water treatment facility.
On June 28, 2021, SJWTX, Inc. announced that it reached an agreement to acquire the Kendall West and Bandera East utilities in Bandera and Medina counties in Texas and that change in ownership applications had been filed with the Public Utilities Commission of Texas (“PUCT”). The acquisition, pending approval by the PUCT, would grow SJWTX, Inc. by 1,400 service connections that serve an estimated 4,000 county residences. SJWTX, Inc. currently serves two of the ten fastest growing counties in the nation. A decision by the PUCT is expected in the fourth quarter of 2021.
On July 28, 2021, the Connecticut Public Utilities Regulatory Authority issued a final decision on Connecticut Water Company’s application to amend rates for its customers. The decision approved an increase of $5.2 million in annual revenues and a return on equity of 9%, with new rates effective July 28, 2021. The final decision also approved Connecticut Water Company’s request to establish a first of its kind water rate assistance program for income eligible customers in Connecticut, a tiered block rate structure for residential water customers to promote water conservation, and the cost of debt and equity percentages as requested. The final decision did not include all of the requested proforma plant in-service due to the timing of their completion. However, no plant was disallowed and Connecticut Water Company will seek recovery for those in the future, including a portion of plant which is eligible for recovery through the Water Infrastructure Conservation Adjustment mechanism, which was approaching its statutory cap and was reset to zero in the final decision.
About SJW Group
SJW Group is the second-largest investor-owned pure-play water and wastewater utility, based on estimated rate base, in the United States, providing lifesaving 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, The Connecticut Water Company in Connecticut, The 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.
These forward-looking statements involve 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 capital structures, capital expenditures and other decisions; (2) changes in demand for water and other services; (3) the impact of the Coronavirus (“COVID-19”) pandemic on our business operation and financial results; (4) unanticipated weather conditions and changes in seasonality including those affecting water supply and customer usage; (5) climate change and the effects thereof; (6) unexpected costs, charges or expenses; (7) our ability to successfully evaluate investments in new business and growth initiatives; (8) contamination of our water supplies and damage or failure of our water equipment and infrastructure; (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, epidemic, or similar occurrences; (11) changes in general economic, political,
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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 market and economic conditions; and (13) legislative and general market and economic developments. The risks, uncertainties and other factors 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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. Forward-looking statements are not guarantees of performance, and speak only as of the date made. 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.
Contact
SJW Group
James P. Lynch, 408-279-7966
Chief Financial Officer and Treasurer
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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, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| REVENUE | $ | 152,241 | 147,209 | $ | 267,026 | 262,963 | |||||||||||||||||
| OPERATING EXPENSE: | |||||||||||||||||||||||
| Production Expenses: | |||||||||||||||||||||||
| Purchased water | 27,668 | 25,889 | 43,313 | 41,823 | |||||||||||||||||||
| Power | 3,391 | 3,426 | 6,394 | 6,151 | |||||||||||||||||||
| Groundwater extraction charges | 20,138 | 18,583 | 35,683 | 33,611 | |||||||||||||||||||
| Other production expenses | 9,831 | 10,280 | 19,233 | 20,373 | |||||||||||||||||||
| Total production expenses | 61,028 | 58,178 | 104,623 | 101,958 | |||||||||||||||||||
| Administrative and general | 21,326 | 17,772 | 42,219 | 39,388 | |||||||||||||||||||
| Maintenance | 6,587 | 5,334 | 12,852 | 11,420 | |||||||||||||||||||
| Property taxes and other non-income taxes | 7,149 | 7,102 | 14,664 | 14,565 | |||||||||||||||||||
| Depreciation and amortization | 23,512 | 22,753 | 46,950 | 44,135 | |||||||||||||||||||
| Total operating expense | 119,602 | 111,139 | 221,308 | 211,466 | |||||||||||||||||||
| OPERATING INCOME | 32,639 | 36,070 | 45,718 | 51,497 | |||||||||||||||||||
| OTHER (EXPENSE) INCOME: | |||||||||||||||||||||||
| Interest on long-term debt and other interest expense | (13,681) | (13,180) | (27,120) | (26,464) | |||||||||||||||||||
| Pension non-service cost | 339 | (7) | 665 | (52) | |||||||||||||||||||
| Gain on sale of Texas Water Alliance Limited | 3,000 | — | 3,000 | — | |||||||||||||||||||
| Other, net | 1,784 | 1,048 | 3,538 | 1,805 | |||||||||||||||||||
| Income before income taxes | 24,081 | 23,931 | 25,801 | 26,786 | |||||||||||||||||||
| Provision for income taxes | 3,306 | 4,210 | 2,410 | 4,648 | |||||||||||||||||||
| NET INCOME | 20,775 | 19,721 | 23,391 | 22,138 | |||||||||||||||||||
| Other comprehensive income (loss), net | 107 | 10 | 145 | (125) | |||||||||||||||||||
| COMPREHENSIVE INCOME | $ | 20,882 | 19,731 | $ | 23,536 | 22,013 | |||||||||||||||||
| EARNINGS PER SHARE: | |||||||||||||||||||||||
| Basic | $ | 0.70 | 0.69 | $ | 0.80 | 0.78 | |||||||||||||||||
| Diluted | $ | 0.69 | 0.69 | $ | 0.79 | 0.77 | |||||||||||||||||
| DIVIDENDS PER SHARE | $ | 0.34 | 0.32 | $ | 0.68 | 0.64 | |||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | |||||||||||||||||||||||
| Basic | 29,799 | 28,508 | 29,334 | 28,499 | |||||||||||||||||||
| Diluted | 29,924 | 28,683 | 29,460 | 28,679 | |||||||||||||||||||
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SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
| June 30, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Utility plant: | |||||||||||
| Land | $ | 38,352 | 36,845 | ||||||||
| Depreciable plant and equipment | 3,269,984 | 3,198,060 | |||||||||
| Construction in progress | 145,039 | 109,976 | |||||||||
| Intangible assets | 35,357 | 35,167 | |||||||||
| Total utility plant | 3,488,732 | 3,380,048 | |||||||||
| Less accumulated depreciation and amortization | 1,092,337 | 1,045,136 | |||||||||
| Net utility plant | 2,396,395 | 2,334,912 | |||||||||
| Real estate investments | 58,389 | 58,129 | |||||||||
| Less accumulated depreciation and amortization | 15,363 | 14,783 | |||||||||
| Net real estate investments | 43,026 | 43,346 | |||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents: | |||||||||||
| Cash | 25,442 | 5,269 | |||||||||
| Restricted cash | 2,659 | 4,000 | |||||||||
| Accounts receivable | 54,879 | 58,142 | |||||||||
| Accrued unbilled utility revenue | 48,984 | 44,950 | |||||||||
| Current regulatory assets, net | 1,075 | 1,748 | |||||||||
| Prepaid expenses | 8,471 | 8,097 | |||||||||
| Other current assets | 5,348 | 5,125 | |||||||||
| Total current assets | 146,858 | 127,331 | |||||||||
| OTHER ASSETS: | |||||||||||
| Regulatory assets, net | 172,312 | 156,482 | |||||||||
| Investments | 15,163 | 14,367 | |||||||||
| Goodwill | 628,144 | 628,144 | |||||||||
| Other | 7,624 | 6,883 | |||||||||
| 823,243 | 805,876 | ||||||||||
| $ | 3,409,522 | 3,311,465 | |||||||||
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SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
| June 30, 2021 | December 31, 2020 | ||||||||||
| CAPITALIZATION AND LIABILITIES | |||||||||||
| CAPITALIZATION: | |||||||||||
| Stockholders’ equity: | |||||||||||
| Common stock, $0.001 par value; authorized 70,000,000 shares; issued and outstanding shares 29,804,927 on June 30, 2021 and 28,556,605 on December 31, 2020 | $ | 30 | 29 | ||||||||
| Additional paid-in capital | 579,057 | 510,158 | |||||||||
| Retained earnings | 411,511 | 408,037 | |||||||||
| Accumulated other comprehensive income | (919) | (1,064) | |||||||||
| Total stockholders’ equity | 989,679 | 917,160 | |||||||||
| Long-term debt, less current portion | 1,372,126 | 1,287,580 | |||||||||
| Total capitalization | 2,361,805 | 2,204,740 | |||||||||
| CURRENT LIABILITIES: | |||||||||||
| Lines of credit | 138,541 | 175,094 | |||||||||
| Current portion of long-term debt | 26,270 | 76,241 | |||||||||
| Accrued groundwater extraction charges, purchased water and power | 26,290 | 19,184 | |||||||||
| Accounts payable | 39,546 | 34,200 | |||||||||
| Accrued interest | 13,035 | 12,861 | |||||||||
| Accrued payroll | 13,895 | 14,012 | |||||||||
| Income tax payable | 246 | — | |||||||||
| Other current liabilities | 16,608 | 19,203 | |||||||||
| Total current liabilities | 274,431 | 350,795 | |||||||||
| DEFERRED INCOME TAXES | 191,376 | 191,415 | |||||||||
| ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION | 431,358 | 421,132 | |||||||||
| POSTRETIREMENT BENEFIT PLANS | 125,594 | 121,597 | |||||||||
| OTHER NONCURRENT LIABILITIES | 24,958 | 21,786 | |||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||
| $ | 3,409,522 | 3,311,465 | |||||||||
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