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SJW Group$63.73($1.65)(2.52%)

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 SJW Corp. Announces 2014 Annual and Fourth Quarter Financial Results
   Thursday, February 19, 2015 6:00:05 PM ET

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                       --                        --                               (1,171 )                                         --  
investments, net
                                                                              --------------  --------------------                      -------------- --------------------                      ------------  --------------------                      -------------- --------------------
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,                                      December 31,
                                                                                                             2014                                              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                                6,030                                                          7,781
   power
   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
                                                                                             ===== ========= ====================                      ====================

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150219006579r1&sid=cmtx6&distro=nx&lang=en

SOURCE: SJW Corp.

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


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