SAN JOSE, Calif.--(BUSINESS WIRE)--SJW Corp. (NYSE: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.
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SJW Corp. Condensed Consolidated Statements of Comprehensive Income (Unaudited) (in thousands, except per share data) |
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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 | ||||||||||
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SJW Corp. Condensed Consolidated Balance Sheets (Unaudited) (in thousands) |
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December 31, 2014 |
December 31, 2013 |
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| 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 | ||||
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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 | ||||
