SJW Corp. Announces 2011 Annual And Fourth Quarter Financial Results

SJW Corp. (NYSE: SJW) today reported operating revenue for the year ended December 31, 2011 of $238.9 million versus $215.6 million for the year ended December 31, 2010, an increase of $23.3 million. The increase in revenue was primarily attributable to cumulative rate increases of $12.4 million, the recovery of a Mandatory Conservation Revenue Adjustment Memorandum account (“MCRAM”) that was authorized by the California Public Utilities Commission in December 2011 of $5.7 million, higher customer usage of $3.4 million, $706,000 in new customers, and $1.1 million in higher revenue from real estate operations.

Water production costs for the year ended December 31, 2011 were $92.1 million versus $87.3 million in 2010, an increase of $4.8 million. The increase in water production costs is primarily attributable to $3.7 million in higher per unit costs for purchased water and groundwater extraction charges, $743,000 higher customer water usage and $265,000 increase in costs due to a decrease in the use of available surface water supply.

Operating expenses, excluding water production costs, for the year ended December 31, 2011 were $92.5 million versus $90.3 million for 2010, an increase of $2.2 million. This increase was primarily attributable to $2.9 million higher depreciation and amortization, $1.0 million in maintenance expenses, $1.0 million in taxes other than income tax and $952,000 in administrative and general expenses. In 2010, $3.6 million in impairment loss on a real estate investment was recognized. No impairment loss was recognized in 2011.

Other (expense) income increased due to interest expense on new senior note borrowings. In addition, the Company sold 907,392 shares of California Water Service Group stock and recorded a gain of $19.0 million in 2010. No similar sale occurred in 2011. Income taxes for the year ended December 31, 2011 were $14.6 million versus $16.7 million for 2010, a decrease of $2.1 million due to lower pre-tax income.

Net income was $20.9 million for the year ended December 31, 2011, compared to $24.4 million for the year ended December 31, 2010. Diluted earnings per common share for the year ended December 31, 2011 were $1.11, compared to $1.30 per share in 2010. For the year ended December 31, 2011, recognition of the MCRAM contributed $0.18 to diluted earnings per share. For the year ended December 31, 2010, the sale of California Water Service Group stock contributed $0.60 to diluted earnings per share, offset by the impairment loss of $0.11 per diluted share.

Fourth Quarter Financial Results

Operating revenue for the fourth quarter ended December 31, 2011 was $62.3 million versus $50.7 million for the same period in 2010, an increase of $11.6 million. The increase was attributable to $5.7 million due to the recognition of the MCRAM, cumulative rate increases of $3.5 million, higher customer usage of $2.1 million, $162,000 in new customers and $138,000 in higher revenue from real estate operations.

Water production costs for the fourth quarter of 2011 were $22.3 million versus $20.9 million for the same period in 2010, an increase of $1.4 million. The increase in water production costs is primarily attributable to $1.3 million in higher per unit costs for purchased water and groundwater extraction charges, $251,000 higher customer water usage, partially offset by $168,000 decrease in costs due to an increase in the use of available surface water supply.

Operating expenses, excluding water production costs, for the fourth quarter of 2011 were $23.4 million versus $26.4 million for the same period in 2010, a decrease of $3.0 million. This was attributable to decreases of $3.6 million in impairment loss on a real estate investment and $363,000 in administrative and general expenses, partially offset by increases of $736,000 in depreciation and amortization, $226,000 in taxes other than income tax expense and $124,000 in maintenance expenses.

Other (expense) income increased due to interest expense on new senior note borrowings. In addition, the Company sold 684,280 shares of California Water Service Group stock and recorded a gain of $14.5 million in 2010. No similar sale occurred in 2011. Income taxes for the fourth quarter of 2011 were $5.0 million versus $5.6 million for 2010, a decrease of $0.6 million due to lower pre-tax income.

Net income was $6.6 million for the fourth quarter ended December 31, 2011, compared to $8.1 million for the same period in 2010. Diluted earnings per common share were $0.35 for the quarter ended December 31, 2011, compared to $0.43 per share for the same period in 2010. In the fourth quarter of 2011, the recognition of the MCRAM contributed $0.18 to diluted earnings per share. In the fourth quarter of 2010, the sale of California Water Service Group stock contributed $0.46 to diluted earnings per share, offset by the impairment loss of $0.11 per diluted share.

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 (Loss)
(Unaudited)
(in thousands, except per share data)
 
  THREE MONTHS ENDED   TWELVE MONTHS ENDED

DECEMBER 31

DECEMBER 31
2011   2010  

2011
  2010
 
OPERATING REVENUE $ 62,338   50,752 238,955   215,638
OPERATING EXPENSE:

Production Costs:
Purchased water 15,038 9,829 54,317 43,557
Power 1,028 1,579 5,394 6,429
Groundwater extraction charge 3,365 6,645 20,997 26,614
Other production costs   2,903   2,870   11,345   10,702  
Total production costs 22,334 20,923 92,053 87,302
 
Administrative and general 9,960 10,323 39,136 38,184
Maintenance 3,406 3,282 13,261 12,242
Taxes other than income

 
2,314 2,088 8,921 7,907
Depreciation and amortization 7,804 7,068 31,193 28,331

Impairment on real estate investment

-
  3,597   -   3,597  
Total operating expense

 
45,818   47,281   184,564  

177,563
 
 
OPERATING INCOME 16,520 3,471 54,391 38,075
 

Gain on sale of California Water Service stock
- 14,500 - 18,966

Interest on long-term debt and other

 
(4,962 )

 
(4,229 ) (18,947 ) (15,895 )
 
Income before income taxes $ 11,558 13,742 35,444 41,146
 
Provision for income taxes   4,956   5,624   14,566   16,740  
 
NET INCOME $ 6,602  

 
8,118   20,878   24,406  
 

Other comprehensive income (loss), net
  125   (8,220 ) (85 ) (10,828 )
 
COMPREHENSIVE INCOME (LOSS) $ 6,727   (102 ) 20,793   13,578  
 
 
Earnings per share
-Basic $ 0.36 0.45 1.12 1.32
-Diluted $ 0.35 0.43 1.11 1.30
 
Dividend per share $ 0.17 0.17 0.69 0.68
 
Weighted average shares outstanding
-Basic 18,592 18,541 18,582 18,531
-Diluted 18,813 18,755 18,794 18,742
 
SJW Corp.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
  December 31   December 31
2011   2010
ASSETS
UTILITY PLANT:
Land $ 8,852 8,579
Depreciable plant and equipment 1,070,016 1,004,689
Construction in progress 18,527 10,103
Intangible assets   14,732 13,538
Total utility plant 1,112,127 1,036,909
Less accumulated depreciation and amortization   355,914 322,102
Net utility plant   756,213 714,807
 
Real estate investment 89,099 88,943
Less accumulated depreciation and amortization   10,557 8,854
Net real estate investment   78,542 80,089
CURRENT ASSETS:
Cash and equivalents 26,734 1,730

Accounts receivable and accrued unbilled utility revenue
33,853 33,835
Prepaid expenses and other   8,328 2,462
Total current assets   68,915 38,027
OTHER ASSETS:
Investment in California Water Service Group 7,032 7,177

Debt issuance costs, net of accumulated amortization
4,865 4,308
Regulatory assets, net 119,248 87,721
Other   3,995 3,233
  135,140 102,439
$ 1,038,810 935,362
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 9,684 9,662
Additional paid-in capital 24,552 23,443
Retained earnings 227,494 219,568
Accumulated other comprehensive income   2,274 2,359
Total shareholders’ equity 264,004 255,032
Long-term debt, less current portion   343,848 295,704
Total capitalization   607,852 550,736
CURRENT LIABILITIES:
Line of credit - 4,000
Current portion of long-term debt 838 1,133

Accrued groundwater extraction charge, purchased water and purchased power
6,212 4,854
Accounts payable 7,417 5,487
Accrued interest 5,376 5,244
Other current liabilities   8,445 8,437

Total current liabilities
  28,288 29,155
 
DEFERRED INCOME TAXES AND CREDITS 135,036 107,961

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION
190,668 190,155
POSTRETIREMENT BENEFIT PLANS 68,855 50,213
OTHER NONCURRENT LIABILITIES   8,111 7,142
$ 1,038,810 935,362

Copyright Business Wire 2010

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