On July 25, 2024, SJW Group (SJW, Financial) released its 8-K filing for the second quarter of 2024, showcasing a solid financial performance that surpassed analyst expectations. SJW Group is a U.S. water utility services holding company that provides, stores, purifies, and distributes water, primarily operating in various Californian municipalities with additional operations in other states. The company’s operating segments include Water Utility Services and Real Estate Services, with the majority of revenue derived from its water utility services segment.
Performance Overview
SJW Group reported GAAP diluted earnings per share (EPS) of $0.64 for Q2 2024, a 13% increase from $0.58 in the same quarter last year. Adjusted diluted EPS (non-GAAP) was $0.66, reflecting a 14% year-over-year increase. These results exceeded the analyst estimate of $0.55 EPS. The company’s operating revenue for the quarter was $176.2 million, up from $156.9 million in Q2 2023, surpassing the estimated revenue of $165.00 million.
Key Financial Achievements
Net income for Q2 2024 was $20.7 million, compared to $18.3 million in the same quarter last year. The increase in revenue was driven by rate increases, customer growth in Texas, higher customer usage due to weather conditions, and regulatory mechanism adjustments. Operating expenses rose to $135.6 million from $125.7 million in Q2 2023, primarily due to higher water production expenses, increased depreciation and amortization, and higher maintenance costs.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Operating Revenue | $176.2 million | $156.9 million |
| Net Income | $20.7 million | $18.3 million |
| GAAP Diluted EPS | $0.64 | $0.58 |
| Adjusted Diluted EPS (non-GAAP) | $0.66 | $0.58 |
Operational Investments and Challenges
SJW Group invested $158 million in infrastructure during the first half of 2024, representing approximately 48% of its 2024 capital budget. The company reached an agreement in principle on the California general rate case (GRC) and updated its 2024 GAAP guidance to $2.66 to $2.76 diluted EPS, reaffirming the adjusted diluted EPS guidance range of $2.68 to $2.78. Despite these achievements, the company faces challenges such as severe drought conditions in Texas, which may impact water usage and revenue.
Commentary from Leadership
We are pleased with our financial results for the quarter, which demonstrate the benefits of our national platform combined with the strength of our local water utility operations," stated SJW Group Chair, CEO, and President, Eric W. Thornburg. "We continued to deliver on our growth strategy by investing in our water supply and infrastructure across our footprint, as well as reaching an all-party settlement agreement in principle on almost all issues in our California general rate case."
Year-to-Date Performance
For the first six months of 2024, SJW Group reported net income of $32.4 million, up from $29.8 million in the same period last year. GAAP diluted EPS for the six months was $1.00, compared to $0.95 in the prior year. Non-GAAP adjusted net income for the first half of 2024 was $33.0 million, with adjusted diluted EPS of $1.02, an 11% increase from $0.92 in the same period last year. Operating revenue year-to-date was $325.6 million, up from $294.2 million in the first half of 2023.
Capital Expenditures and Regulatory Updates
SJW Group plans to invest over $1.6 billion in capital over the next five years, including significant investments in treating per- and polyfluoroalkyl substances (PFAS) and advanced metering infrastructure (AMI) projects. The company has also secured regulatory approvals for rate increases and infrastructure investments in California, Connecticut, and Maine, which are expected to support future revenue growth and operational efficiency.
For more detailed financial information and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from SJW Group for further details.
