SAN JOSE, Calif.--(BUSINESS WIRE)--SJW Group (NYSE: SJW) today reported financial results for the first quarter ended March 31, 2017. Net income was $3.7 million for the quarter ended March 31, 2017, compared to $3.4 million for the same period in 2016. Diluted earnings per share were $0.18 and $0.16 for the quarters ended March 31, 2017 and 2016, respectively.
Operating revenue was $69.0 million for the quarter ended March 31, 2017 compared to $61.1 million in the same period in 2016. The $7.9 million increase in revenue was primarily attributable to $8.6 million in cumulative rate increases and $500,000 in higher revenue recorded in our Water Conservation Memorandum Account ("WCMA"), partially offset by $1.6 million in lower customer usage. WCMA revenue included $1.4 million related to a redistribution of certain customer accounts between residential and business customers for the year ended December 31, 2016.
Water production expenses for the first quarter of 2017 were $26.1 million compared to $20.6 million for the same period in 2016, an increase of $5.5 million. The increase in water production expenses was attributable to $3.6 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $2.3 million in higher expenses due to a decrease in the use of available surface water supplies, partially offset by $400,000 in lower customer water usage. Operating expenses, excluding water production costs, increased $2.2 million to $32.1 million from $29.9 million. The increase was primarily due to $936,000 of higher depreciation expenses due to assets placed in service in 2016, $900,000 of higher administrative and general expenses, and $477,000 in higher property taxes and other non-income taxes.
The effective consolidated income tax rates were approximately 30% and 39% for the quarters ended March 31, 2017 and 2016, respectively. The change was primarily due to adoption of Accounting Standards Update 2016-09, "Improvements to Employee Share-Based Payment Accounting" in the first quarter of 2017. Upon adoption, the Company recognized excess tax benefits of $500,000 relating to share-based awards through income taxes. Prior to adoption, excess tax benefits were recorded as additional paid-in capital. The Company does not expect the adoption to have a material impact on the effective consolidated income tax rate for the year.
The Directors of SJW Group today declared a quarterly dividend on common stock of $0.2175 per share. The dividend is payable on June 1, 2017 to shareholders of record on May 8, 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., Texas Water Alliance Limited, 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.
|Condensed Consolidated Statements of Comprehensive Income|
|(in thousands, except per share data)|
|Three months ended March 31,|
|Groundwater extraction charges||7,410||6,448|
|Other production expenses||3,511||3,232|
|Total production expenses||26,132||20,614|
|Administrative and general||12,605||11,705|
|Property taxes and other non-income taxes||3,695||3,218|
|Depreciation and amortization||12,119||11,183|
|Total operating expense||58,212||50,531|
|OTHER (EXPENSE) INCOME:|
|Income before income taxes||5,239||5,500|
|Provision for income taxes||1,568||2,122|
|Other comprehensive income, net||116||530|
|EARNINGS PER SHARE:|
|DIVIDENDS PER SHARE||$||0.22||0.20|
|WEIGHTED AVERAGE SHARES OUTSTANDING:|
|Condensed Consolidated Balance Sheets|
|March 31,||December 31,|
|Depreciable plant and equipment||1,566,643||1,554,016|
|Construction in progress||88,369||70,453|
|Total utility plant||1,698,180||1,666,381|
|Less accumulated depreciation and amortization||532,841||520,018|
|Net utility plant||1,165,339||1,146,363|
|Real estate investments||56,170||62,193|
|Less accumulated depreciation and amortization||10,246||11,734|
|Net real estate investments||45,924||50,459|
|Cash and cash equivalents||7,092||6,349|
|Accounts receivable and accrued unbilled utility revenue||48,016||53,795|
|Long-lived assets held-for-sale||4,276||—|
|Current regulatory assets, net||10,469||16,064|
|Other current assets||3,875||4,402|
|Total current assets||73,736||99,611|
|Investment in California Water Service Group||3,585||3,390|
|Regulatory assets, net||139,387||135,709|
|CAPITALIZATION AND LIABILITIES|
|Additional paid-in capital||82,167||81,715|
|Accumulated other comprehensive income||1,640||1,524|
|Total stockholders' equity||421,400||421,646|
|Long-term debt, less current portion||433,388||433,335|
|Line of credit||—||14,200|
|Current portion of long-term debt||127||125|
|Accrued groundwater extraction charge, purchased water and purchased power||10,392||10,846|
|Other current liabilities||12,809||13,354|
|Total current liabilities||50,780||63,573|
|DEFERRED INCOME TAXES||207,016||205,203|
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION
|POSTRETIREMENT BENEFIT PLANS||72,092||70,177|
|OTHER NONCURRENT LIABILITIES||12,540||13,051|