SJW Corp. Announces Third Quarter Financial Results

SJW Corp. (NYSE:SJW) today reported financial results for the third quarter ended September 30, 2011. Operating revenue was $73.9 million in the quarter compared to $70.3 million in 2010. The $3.6 million increase in revenue reflects cumulative rate increases of $4.4 million, $221,000 in new customers, partially offset by lower customer usage (a $1.4 million impact), and $353,000 in higher revenue from real estate operations.

Net income was $8.2 million and diluted earnings per common share were $0.44, compared to $10.8 million and $0.58 per share, respectively, in the third quarter of 2010.

Water production costs for the quarter ended September 30, 2011 were $32.0 million compared to $30.2 million in 2010, an increase of $1.8 million. The increase in water production costs is primarily attributable to $2.2 million in a higher per unit cost for purchased water and groundwater extraction charges, partially offset by $266,000 in lower costs caused by reduced customer water usage and an $82,000 reduction in costs due to an increase in use of available surface water supply.

Operating expenses, excluding water production costs, for the third quarter were $23.4 million compared to $22.3 million in 2010. The increase of $1.1 million reflects an additional $721,000 of depreciation expense, $436,000 of maintenance expenses and $341,000 more in taxes other than income tax, partially offset by a decrease of $352,000 in administrative and general expenses.

In addition, 2010 income before taxes included $4.5 million gain on the sale of California Water Service group shares which did not recur in 2011. Income tax expense for the third quarter decreased to $5.4 million in 2011 from $7.3 million in 2010.

Year-to-date operating revenue increased by $11.7 million to $176.6 million from $164.9 million in the first nine months of 2011. The increase was attributable to $8.9 million in cumulative rate increases, higher customer water usage (a $1.4 million impact), $544,000 in revenue from new customers and $910,000 in higher revenue from real estate operations.

Year-to-date net income was $14.3 million, compared to $16.3 million in 2010. Diluted earnings per share were $0.76 in the first nine months of 2011, compared to $0.87 per diluted share for the same period in 2010.

Year-to-date water production costs increased to $69.7 million from $66.4 million in 2010. The $3.3 million increase was primarily attributable to $2.4 million in a higher per unit cost for purchased water and groundwater extraction charges, $492,000 in higher costs related to customer water usage and $433,000 in increased costs due to decreased use of surface water supply. Operating expenses, excluding water production costs, increased $5.1 million to $69.0 million from $63.9 million. The increase was due to an increase in depreciation expense of $2.1 million, $1.3 million in administrative and general expenses, $895,000 in maintenance expenses and $788,000 in taxes other than income taxes. Income tax expense decreased by $1.5 million year-to-date due to lower pre-tax income. Other (expense) income increased due to interest expense on new senior note borrowings. In addition, the Company recorded a pre-tax gain of $4.5 million in 2010 related to the sale of California Water Service Group shares. No similar sale occurred in 2011.

The Directors of SJW Corp. today declared a quarterly dividend on common stock of $0.1725 per share. The dividend is payable on December 1, 2011 to shareholders of record on November 7, 2011.

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 regulated and nonregulated 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. The results for a quarter are not indicative of results for a full year due to seasonality and other factors. Certain 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 Income and Comprehensive Income
(Unaudited)
(in thousands, except per share data)
 
  THREE MONTHS ENDED       NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2011   2010       2011   2010
 
OPERATING REVENUE $ 73,914   70,347 176,617   164,886
OPERATING EXPENSE:
Production Costs:
Purchased water 19,182 16,574 39,279 33,728
Power 1,979 2,122 4,366 4,850
Groundwater extraction charge 7,824 8,736 17,632 19,969
Other production costs   3,030   2,726   8,442   7,832  
Total production costs 32,015 30,158 69,719 66,379
 
Administrative and general 9,882 10,234 29,176 27,861
Maintenance 3,331 2,895 9,855 8,960
Taxes other than income 2,397 2,056 6,607 5,819
Depreciation and amortization   7,803   7,082   23,389   21,263  
Total operating expense   55,428   52,425   138,746   130,282  
 
OPERATING INCOME 18,486 17,922 37,871 34,604
 

Gain on sale of California Water Service stock
- 4,466 - 4,466

Interest on long-term debt and other
  (4,911 ) (4,268 ) (13,985 ) (11,666 )
 
Income before income taxes $ 13,575 18,120 23,886 27,404
 
Provision for income taxes   5,360   7,333   9,610   11,116  
 
NET INCOME $ 8,215   10,787   14,276   16,288  
 
Other comprehensive loss, net   (227 ) (1,881 ) (210 ) (2,608 )
 
COMPREHENSIVE INCOME $ 7,988   8,906   14,066   13,680  
 
 
Earnings per share
-Basic $ 0.44 0.58 0.77 0.88
-Diluted $ 0.44 0.58 0.76 0.87
 
Dividend per share $ 0.17 0.17 0.52 0.51
 
Weighted average shares outstanding
-Basic 18,587 18,537 18,578 18,528
-Diluted 18,803 18,752 18,788 18,738
 
SJW Corp.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
  September 30         December 31
2011         2010
ASSETS
UTILITY PLANT:
Land $ 8,579 8,579
Depreciable plant and equipment 1,038,753 1,004,689
Construction in progress 24,684 10,103
Intangible assets   14,730 13,538
Total utility plant 1,086,746 1,036,909
Less accumulated depreciation and amortization   345,235 322,102
Net utility plant   741,511 714,807
 
Real estate investment 89,108 88,943
Less accumulated depreciation and amortization   10,122 8,854
Net real estate investment   78,986 80,089
CURRENT ASSETS:
Cash and equivalents 43,069 1,730

Accounts receivable and accrued unbilled utility revenue
43,071 33,835
Prepaid expenses and other   3,055 2,462
Total current assets   89,195 38,027
OTHER ASSETS:
Investment in California Water Service Group 6,820 7,177

Debt issuance costs, net of accumulated amortization
4,952 4,308
Regulatory assets 87,721 87,721
Other   4,058 3,233
  103,551 102,439
$ 1,013,243 935,362
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 9,683 9,662
Additional paid-in capital 24,404 23,443
Retained earnings 224,132 219,568
Accumulated other comprehensive income   2,149 2,359
Total shareholders’ equity 260,368 255,032
Long-term debt, less current portion   344,502 295,704
Total capitalization   604,870 550,736
CURRENT LIABILITIES:
Line of credit 5,500 4,000
Current portion of long-term debt 1,154 1,133

Accrued groundwater extraction charge, purchased water and purchased power
9,588 4,854
Accounts payable 6,687 5,487
Accrued interest 5,440 5,244
Other current liabilities   10,324 8,437
Total current liabilities   38,693 29,155
 
DEFERRED INCOME TAXES AND CREDITS 119,353 107,961

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION
190,550 190,155
POSTRETIREMENT BENEFIT PLANS 52,634 50,213
OTHER NONCURRENT LIABILITIES   7,143 7,142
$ 1,013,243 935,362

Copyright Business Wire 2010

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