SJW Corp. Announces 2014 Annual and Fourth Quarter Financial Results

SAN JOSE, Calif.–(BUSINESS WIRE)–

SJW Corp. (SJW) today reported operating revenue for the year ended
December 31, 2014 of $319.7 million versus $276.9 million for the year
ended December 31, 2013, an increase of $42.8 million. The increase was
attributable to $46.5 million in true-up revenue recognized as a part of
the 2012 California General Rate Case decision, $20.2 million in
cumulative rate increases, $1.8 million in revenue from new customers,
and $1 million due to the Texas general rate case refund in the prior
year. These increases were offset by a decrease of $17.9 million in
lower customer water usage and a $9.6 million decrease in certain
balancing and memorandum accounts. The Company also earned $800,000 in
higher revenue from real estate operations.

Water production expenses for the year ended December 31, 2014 were
$122.8 million compared to $120.8 million in 2013, an increase of $2
million. The increase in water production expenses was attributable to
$8.5 million in higher per unit costs for purchased water, groundwater
extraction and energy charges and $4.9 million in higher expenses due to
a decrease in the availability of surface water supply. These increases
were partially offset by $11.4 million in lower customer water usage.
Operating expenses, excluding water production expenses increased to
$104.0 million from $102.6 million. The $1.4 million increase was due to
$2.9 million of higher depreciation expense, $900,000 in higher
maintenance expenses, and $800,000 in higher taxes other than income
taxes, partially offset by $3.2 million in lower administrative and
general expenses.

Other expense and income in 2014 included a pre-tax gain on the sale of
125,969 shares of California Water Service Group stock of $2 million and
sales of real estate investment properties in Texas and California of
approximately $300,000 each compared to a pre-tax gain on the sale of
real estate investment property in Connecticut of approximately $1.1
million in 2013.

The effective consolidated income tax rates were 33% and 39% for the
years ended December 31, 2014 and 2013, respectively. The change in the
effective consolidated income tax rate was primarily due to a state
income tax benefit of $5.1 million related to the adoption of new
Department of Treasury and Internal Revenue Service Tangible Property
Regulations and a credit of $880,000 related to State of California
enterprise zone sales and use tax credits.

Net income was $51.8 million for the year ended December 31, 2014,
compared to $22.4 million for the same period in 2013. Diluted earnings
per share were $2.54 for the year ended December 31, 2014, compared to
$1.12 per diluted share for the same period in 2013.

Fourth Quarter Financial Results

Operating revenue for the fourth quarter ended December 31, 2014 was
$69.3 million versus $67.3 million for the same period in 2013, an
increase of $2 million. The increase was attributable to $10.2 million
in cumulative rate increases and $500,000 in revenue from new customers,
offset by $7.2 million in lower customer water usage, and a net decrease
in certain balancing and memorandum accounts and the Texas general rate
case refund of $900,000. In addition, the Company earned $600,000 less
from real estate operations.

Water production expenses for the fourth quarter of 2014 were $26.7
million compared to $29.7 million in 2013, a decrease of $3 million. The
decrease in water production expenses was attributable to $5.2 million
in lower customer water usage, offset by $1.9 million in higher per unit
costs for purchased water, groundwater extraction and energy charges and
$300,000 in higher expenses due to a decrease in the availability of
surface water supply. Operating expenses, excluding water production
expenses, increased $700,000 to $27.0 million from $26.3 million. The
increase was due to $800,000 of higher depreciation expenses and
$300,000 in higher taxes other than income taxes, partially offset by
$400,000 of lower administrative and general expenses.

The effective consolidated income tax rates were 50% and 32% for the
quarter ended December 31, 2014 and 2013, 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 fixed
assets of $500,000. Income tax expense for the quarter ended
December 31, 2013 included the release of a $500,000 tax contingency
reserve.

Net income was $5.7 million for the fourth quarter ended December 31,
2014, compared to $4.7 million in 2013. Diluted earnings per share were
$0.28 in the quarter ended December 31, 2014, compared to $0.23 per
diluted share for the same period in 2013.

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, 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 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,
2014   2013 2014   2013
OPERATING REVENUE $ 69,286   67,262   $ 319,668   276,869  
OPERATING EXPENSE:
Production Expenses:
Purchased water 9,992 13,700 47,280 63,225
Power 2,300 1,883 9,865 7,619
Groundwater extraction charges 11,428 10,670 53,678 37,927
Other production expenses 2,993   3,398   11,929   12,073  
Total production expenses 26,713 29,651 122,752 120,844
Administrative and general 11,039 11,429 40,573 43,714
Maintenance 3,652 3,590 14,474 13,548
Property taxes and other non-income taxes 2,835 2,548 11,086 10,317
Depreciation and amortization 9,458   8,693   37,905   35,039  
Total operating expense 53,697   55,911   226,790   223,462  
OPERATING INCOME 15,589 11,351 92,878 53,407
OTHER (EXPENSE) INCOME:
Interest expense (5,567 ) (4,935 ) (20,788 ) (19,922 )
Gain on sale of California Water Service Group stock 2,017
Other, net 1,253   472   2,670   3,034  
Income before income taxes 11,275 6,888 76,777 36,519
Provision for income taxes 5,587   2,211   24,971   14,135  
NET INCOME 5,688   4,677   51,806   22,384  
Other comprehensive income, net 333 627 301 1,077
Reclassification adjustment for gain realized on sale of
investments, net
    (1,171 )  
COMPREHENSIVE INCOME $ 6,021   5,304   $ 50,936   23,461  
 
EARNINGS PER SHARE
Basic $ 0.28 0.23 $ 2.56 1.13
Diluted $ 0.28 0.23 $ 2.54 1.12
DIVIDENDS PER SHARE $ 0.19 0.18 $ 0.75 0.73
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 20,268 20,164 20,227 19,775
Diluted 20,459 20,362 20,417 19,971
   

SJW Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

 
December 31,
2014
December 31,
2013
ASSETS
Utility plant:
Land $ 16,838 10,418
Depreciable plant and equipment 1,353,772 1,254,586
Construction in progress 23,208 30,846
Intangible assets 19,333   18,341
Total utility plant 1,413,151 1,314,191
Less accumulated depreciation and amortization 450,137   415,453
Net utility plant 963,014   898,738
 
Real estate investments 73,794 78,477
Less accumulated depreciation and amortization 11,593   10,658
Net real estate investments 62,201   67,819
CURRENT ASSETS:
Cash and cash equivalents 2,399 2,299
Accounts receivable and accrued unbilled utility revenue 45,327 34,189
Current regulatory assets, net 16,853
Prepaid expenses and other 3,514   3,164
Total current assets 68,093   39,652
OTHER ASSETS:
Investment in California Water Service Group 6,378 8,885
Debt issuance costs and other, net of accumulated amortization 5,218 5,176
Regulatory assets, net 158,010 83,543
Other 6,390   6,173
175,996   103,777
$ 1,269,304   1,109,986
 
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 10,567 10,505
Additional paid-in capital 66,298 63,017
Retained earnings 280,773 244,266
Accumulated other comprehensive income 2,517   3,387
Total shareholders’ equity 360,155 321,175
Long-term debt, less current portion 384,365   334,997
Total capitalization 744,520   656,172
CURRENT LIABILITIES:
Line of credit 13,200 22,400
Current portion of long-term debt 584 554
Accrued groundwater extraction charge, purchased water and purchased
power
6,030 7,781
Accounts payable 7,001 12,587
Accrued interest 6,361 5,369
Other current liabilities 11,518   10,504
Total current liabilities 44,694   59,195
 
DEFERRED INCOME TAXES AND CREDITS 186,821 142,111

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION

211,805 202,303
POSTRETIREMENT BENEFIT PLANS 74,187 43,496
OTHER NONCURRENT LIABILITIES 7,277   6,709
$ 1,269,304   1,109,986

Source Article from http://finance.yahoo.com/news/sjw-corp-announces-2014-annual-230000061.html

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