SJW Corp. Announces 2015 Annual and Fourth Quarter Financial Results

SAN JOSE, Calif.--()--SJW Corp. (NYSE: SJW) today reported operating revenue for the year ended December 31, 2015 of $305.1 million versus $319.7 million for the year ended December 31, 2014, a decrease of $14.6 million. In 2015, we recognized $37.8 million in cumulative rate increases, $20.5 million related to revenue tracked in our Water Conservation Memorandum Account, $1.9 million in additional 2012 General Rate Case (GRC) true-up revenue, and $1.2 million in revenue from new customers. These operating revenue increases were partially offset by $36.3 million in lower customer usage. The remaining decrease was attributable to one-time 2014 activity which included the recognition of $46.5 million recognized in the third quarter of 2014 related to the Company's 2012 GRC decision, offset by a $6.8 million change in the net recognition of certain balancing and memorandum accounts primarily related to the 2014 Pension Balancing Account true-up resulting from the 2012 GRC decision.

Water production expenses for the year ended December 31, 2015 were $110.6 million compared to $122.7 million in 2014, a decrease of $12.1 million. The decrease in water production expenses was attributable to $21.5 million in lower customer water usage and $2.6 million in lower expenses due to an increase in the use of available surface water supplies, offset by $12.0 million in higher per unit costs for purchased water, groundwater extraction and energy charges. Operating expenses, excluding water production costs, increased $10.5 million to $114.5 million from $104.0 million. The increase was due to $6.6 million of higher administrative and general expenses, $2.8 million of higher depreciation expenses, $581,000 in higher property taxes and other non-income taxes and $482,000 in higher maintenance expenses. The increase in administrative and general expenses was primarily attributable to higher pension costs, costs related to the California General Rate Case proceeding and other activities.

Other expense and income in 2015 included the sale of multiple real estate properties for a gain of approximately $1.9 million. Other expense and income during the same period of 2014 included a gain on the sale of 125,969 shares of California Water Service Group stock of $2.0 million and sales of real estate property in California and real estate investment property in Texas of approximately $300,000 each.

The effective consolidated income tax rates were 38% and 33% for the years ended December 31, 2015 and 2014, respectively. The change in the effective consolidated income tax rate was primarily due to a state income tax benefit of $5.1 million recognized in 2014 related to the adoption of new Department of Treasury and Internal Revenue Service Tangible Property Regulations.

Net income was $37.9 million for the year ended December 31, 2015, compared to $51.8 million for the same period in 2014. Diluted earnings per share were $1.85 and $2.54 for the years ended December 31, 2015 and 2014, respectively.

Fourth Quarter Financial Results

Operating revenue for the fourth quarter ended December 31, 2015 was $87.6 million versus $69.3 million for the same period in 2014, an increase of $18.3 million. The increase was attributable to recognition of $20.5 million in revenue tracked in the Water Conservation Memorandum Account, $4.7 million in cumulative rate increases, a net increase in the recognition of certain balancing and memorandum accounts of $921,000 and $166,000 in revenue from new customers, offset by $7.9 million in lower customer usage.

Water production expenses for the fourth quarter of 2015 were $26.9 million compared to $26.7 million in 2014, an increase of $200,000. The increase in water production expenses was attributable to $2.7 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $513,000 in higher expenses due to a decrease in the use of available surface water supply. These increases were partially offset by $3.0 million in lower customer water usage. Operating expenses, excluding water production expenses, increased $2.0 million to $29.0 million from $27.0 million. The increase was due to $1.2 million in higher administrative and general expenses, $733,000 of higher depreciation expense and $117,000 in higher maintenance expenses. The increase in administrative and general expenses was primarily attributable to higher pension costs.

Other expense and income in the fourth quarter of 2014 included the recognition of income related to contributions in aid of construction in 2014.

The effective consolidated income tax rates were 39% and 50% for the quarters ended December 31, 2015 and 2014, respectively. Income tax expense for the quarter ended December 31, 2014 included a reduction in the state income tax benefit of $500,000 related to the adoption of new Department of Treasury and Internal Revenue Service Tangible Property Regulations and an increase in income tax expense related to an adjustment to true-up deferred tax related to fixed assets of $500,000.

Net income was $16.2 million for the fourth quarter ended December 31, 2015, compared to $5.7 million in 2014. Diluted earnings per share were $0.79 in the quarter ended December 31, 2015, compared to $0.28 per diluted share for the same period in 2014.

SJW Corp. is a publicly traded holding company headquartered in San Jose, California. SJW Corp. is the parent company of San Jose Water Company, SJWTX, Inc., Texas Water Alliance Limited, SJW Land Company, and SJW Group, Inc. 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 Corp.'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 Corp. 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 Corp.'s most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. SJW Corp. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 
SJW Corp.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands, except per share data)
 
 

Three months ended December 31,

 

Twelve months ended December 31,

2015   2014 2015   2014
OPERATING REVENUE $ 87,613   69,286   $ 305,082   319,668  
OPERATING EXPENSE:
Production Expenses:
Purchased water 13,718 9,992 61,089 47,280
Power 921 2,300 6,121 9,865
Groundwater extraction charges 9,187 11,428 31,240 53,678
Other production expenses 3,083   2,993   12,178   11,929  
Total production expenses 26,909 26,713 110,628 122,752
Administrative and general 12,270 11,039 47,131 40,573
Maintenance 3,769 3,652 14,956 14,474
Property taxes and other non-income taxes 2,789 2,835 11,667 11,086
Depreciation and amortization 10,191   9,458   40,740   37,905  
Total operating expense 55,928   53,697   225,122   226,790  
OPERATING INCOME 31,685 15,589 79,960 92,878
OTHER (EXPENSE) INCOME:
Interest expense (5,400 ) (5,567 ) (22,186 ) (20,788 )
Gain on sale of California Water Service Group stock 2,017
Other, net 443   1,253   3,380   2,670  
Income before income taxes 26,728 11,275 61,154 76,777
Provision for income taxes 10,536   5,587   23,272   24,971  
NET INCOME 16,192   5,688   37,882   51,806  
Other comprehensive income (loss), net 176 333 (206 ) 301
Reclassification adjustment for gain realized on sale of investments, net       (1,171 )
COMPREHENSIVE INCOME $ 16,368   6,021   $ 37,676   50,936  
 
EARNINGS PER SHARE
Basic $ 0.79 0.28 $ 1.86 2.56
Diluted $ 0.79 0.28 $ 1.85 2.54
DIVIDENDS PER SHARE $ 0.20 0.19 $ 0.78 0.75
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 20,382 20,268 20,361 20,227
Diluted 20,548 20,459 20,516 20,417
 
SJW Corp.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
 

December 31,
2015

 

December 31,
2014

ASSETS
Utility plant:
Land $ 17,853 16,838
Depreciable plant and equipment 1,438,321 1,353,772
Construction in progress 45,573 23,208
Intangible assets 22,675 19,333
Total utility plant 1,524,422 1,413,151
Less accumulated depreciation and amortization 487,659 450,137
Net utility plant 1,036,763 963,014
 
Real estate investments 74,641 73,794
Less accumulated depreciation and amortization 13,157 11,593
Net real estate investments 61,484 62,201
CURRENT ASSETS:
Cash and cash equivalents 5,239 2,399
Accounts receivable and accrued unbilled utility revenue 46,851 45,327
Current regulatory assets, net 16,542 16,853
Other current assets 4,744 3,514
Total current assets 73,376 68,093
OTHER ASSETS:
Investment in California Water Service Group 6,030 6,378
Debt issuance costs and other, net of accumulated amortization 4,721 5,218
Regulatory assets, net 152,021 158,010
Other 6,568 6,390
169,340 175,996
$ 1,340,963 1,269,304
 
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 10,616 10,567
Additional paid-in capital 68,636 66,298
Retained earnings 302,220 280,773
Accumulated other comprehensive income 2,311 2,517
Total shareholders' equity 383,783 360,155
Long-term debt, less current portion 380,825 384,365
Total capitalization 764,608 744,520
CURRENT LIABILITIES:
Line of credit 34,600 13,200
Current portion of long-term debt 3,491 584
Accrued groundwater extraction charge, purchased water and purchased power 7,163 6,030
Accounts payable 16,196 7,001
Accrued interest 6,193 6,361
Other current liabilities 11,980 11,518
Total current liabilities 79,623 44,694
 
DEFERRED INCOME TAXES 198,775 185,506
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF
CONSTRUCTION 217,766 211,805
POSTRETIREMENT BENEFIT PLANS 70,230 74,187
OTHER NONCURRENT LIABILITIES 9,961 8,592
$ 1,340,963 1,269,304

Contacts

SJW Corp.
Suzy Papazian, 408-279-7961
General Counsel and Corporate Secretary

Contacts

SJW Corp.
Suzy Papazian, 408-279-7961
General Counsel and Corporate Secretary