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SJW GROUP (SJW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered revenue of $197.8M (+15% YoY) and GAAP diluted EPS of $0.68 (+15% YoY); adjusted diluted EPS was $0.74 (+31% YoY), with strength driven by rate increases and higher customer usage while production costs rose .
  • Full-year 2024 exceeded guidance: diluted EPS $2.87 and adjusted diluted EPS $2.95; management introduced FY2025 adjusted EPS guidance of $2.90–$3.00 and lifted the five-year capital plan 25% to $2.0B, targeting the top half of long-term 5–7% EPS growth through 2029 .
  • Regulatory outcomes remain constructive: CPUC approved San Jose Water’s 2025–2027 GRC ($450M capex, $53.1M revenue increase) and deferred the 2025 cost of capital to 2026, maintaining ROE at 9.81% and ROR at 7.75% (subject to WCCM) .
  • Potential stock reaction catalysts: capital intensity and expected 2025 ATM equity issuance of $120–$140M, PFAS investment rising to ~$300M, and Texas drought resilience initiatives (KT Water project, $133M TX spend in 2025) .

What Went Well and What Went Wrong

What Went Well

  • “Another year of strong performance” with EPS ahead of 2024 guidance and long-term plan to sustain growth; management reaffirmed national scale and efficiency benefits .
  • CPUC GRC decision viewed as constructive: $450M capex over 2025–2027, $53.1M revenue increase, improved revenue recovery via service charge and lower sales forecast; ROE/ROR maintained through 2026 via COC deferral .
  • Strategic investments accelerating: five-year capex raised to $2.0B; AMI deployment continues; strong recognition (Newsweek “Most Responsible Companies 2025”) .

What Went Wrong

  • Higher water production and admin costs pressured margins; Q4 production expenses were +$9.4M YoY, and admin/general +$7.0M YoY (partly M&A costs), diluting operating leverage .
  • Texas drought and conservation measures constrained usage, necessitating significant resilience investments (KT Water integration, generators, targeted distribution upgrades) .
  • PFAS capex estimates increased to ~$300M (CT ~$190M, CA ~$110M), elevating capital needs and potential regulatory lag risks absent recovery mechanisms (CT pursuing WQTA) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$176.174 $225.063 $197.820
GAAP Diluted EPS ($)$0.64 $1.17 $0.68
Adjusted Diluted EPS ($)$0.66 $1.18 $0.74
Operating Income ($USD Millions)$40.570 $58.353 $43.667
Net Income ($USD Millions)$20.696 $38.652 $22.920
EBIT Margin %23.02% 25.92% 22.08%
Net Income Margin %11.74% 17.17% 11.59%
EBITDA ($USD Millions)$68.936 (40.570+28.366) $85.776 (58.353+27.423) $72.363 (43.667+28.696)
EBITDA Margin %39.15% 38.11% 36.57%
Q4 2024 vs Prior Year (Q4 2023)RevenueGAAP EPSAdjusted EPS
Change+15.4% (197.820 vs 171.338) +15.3% (0.68 vs 0.59) +31.4% (0.74 vs 0.59)
Q4 2024 vs Prior Quarter (Q3 2024)RevenueGAAP EPSAdjusted EPS
Change−12.1% (197.820 vs 225.063) −41.9% (0.68 vs 1.17) −37.3% (0.74 vs 1.18)

KPIs and Balance Sheet/Capital

  • Capex: $353M in 2024; five-year capex plan increased to $2.0B; 2025 capex planned at $473M .
  • Financing: ~$87M ATM equity raised in 2024; lines of credit $119M drawn at year-end; average borrowing rate 6.44% in 2024 .
  • Tax: 2024 effective tax rate ~9%; Q4 effective tax rate ~5% .
  • CT WICA surcharge: 3.43% effective Oct 1, 2024; cumulative 4.9% effective Apr 1, 2025 (WICA + reconciliation) .
  • Dividend: quarterly $0.42 (annualized $1.68) starting March 2025, +5% vs Dec 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSFY2025N/A$2.90–$3.00 New
Five-Year Capex Plan2025–2029$1.6B $2.0B Raised
Annual CapexFY2025N/A$473M New
ATM Equity IssuanceFY2025N/A$120–$140M New
Long-Term EPS GrowthThrough 20295%–7% 5%–7%, targeting top-half Maintained/Strengthened
Dividend per Share (Quarterly)Q1 2025$0.40 $0.42 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
AMI/TechnologyAMI project authorized; ~$27M planned 2024 spend Continued AMI deployment; acoustic leak detection reduces non-revenue water Improving execution
Regulatory OutcomesCA GRC settlement in principle; CT GRC reset WICA to 0%; Maine/WISC filings CPUC final decision constructive; COC deferral maintains ROE/ROR; CT WICA to 3.43% in Oct; GRCs pending in ME/TX Constructive/Supportive
Drought/Usage (TX)Severe drought; conservation likely to impact revenue Significant drought; resilience program (KT Water, generators, distribution upgrades) Headwind being mitigated
PFAS/ComplianceFive-year PFAS ~$230M planned PFAS capex increased to ~$300M (CT ~$190M, CA ~$110M) Rising investment intensity
Capital Plan/FinancingFive-year capex $1.6B; ATM in place Five-year capex increased to $2.0B; 2025 ATM issuance $120–$140M Acceleration/Dilution risk
Sustainability/ESGNewsweek “Greenest Companies 2025” Newsweek “Most Responsible Companies 2025”; Force for Good Foundation established Positive recognition

Management Commentary

  • “Our year-over-year EPS growth, exceeding our 2024 guidance, and substantial infrastructure investments demonstrate our commitment to building a strong foundation for sustainable growth.” — Eric W. Thornburg .
  • “We are extending our 5% to 7% earnings growth rate through 2029, and we expect to be on the top half of that range.” — Andrew Walters .
  • “The CPUC decision… includes $450 million in capital expenditures… and provides a $53.1 million revenue increase… we view this decision as constructive.” — Bruce Hauk .
  • “We are future-proofing our water systems… replacing at least 1% of aging pipelines annually… building advanced treatment facilities to meet new water quality standards, including PFAS compliance.” — Eric W. Thornburg .
  • “We reduced our Scope 1 and Scope 2 emissions by nearly 1/3 between 2019 and 2023… on track to 50% reduction by 2030.” — Eric W. Thornburg .

Q&A Highlights

  • Non-revenue water: California performance “world-class,” improved to just above 6%; portfolio around ~9%; broader deployment of acoustic leak detection and meter programs expected to drive improvement elsewhere .
  • Fire hydrant readiness: SJW reported state-of-the-art hydrants; systems designed for structure fires (not firestorms), confidence in system capabilities .
  • KT Water project (TX): Untapped supply of ~6,000 acre-feet; ~$130M+ investment with additional 2026 spend; completion targeted end of 2026 (ready for summer 2027); recovery via next Texas GRC .
  • Connecticut rate case cadence: Next CT GRC expected in 2026 (Q2 timing), WICA surcharge currently below the cap; WRA reconciliation approved .
  • Long-term growth drivers: Capex acceleration drives the shift to top half of 5–7% EPS CAGR; earned returns assumed to revert toward average over time .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable due to a Capital IQ mapping issue for SJW, preventing retrieval of Q4 2024 revenue/EPS estimates for comparison. As a result, estimate-based beat/miss analysis is not provided in this recap (S&P Global consensus unavailable).

Key Takeaways for Investors

  • Q4 print showcased resilient revenue growth (+15% YoY) and strong adjusted EPS (+31% YoY), underpinned by rate increases and usage; margin pressure from production/admin costs persisted but remained manageable given operating leverage .
  • The five-year capex uplift to $2.0B and 2025 capex of $473M signal accelerated investment cycles, supported by constructive regulatory mechanisms (forward-looking GRCs, WICA/WISC/SIC), enabling timely recovery and reducing lag risk .
  • Equity financing expected ($120–$140M ATM in 2025) introduces dilution near term, but management targets top-half of 5–7% long-term EPS growth via rate base expansion and recovery mechanisms; monitor pacing of issuance versus project timing .
  • PFAS capex rising to ~$300M elevates recovery and execution complexity; CT pursuit of Water Quality and Treatment Adjustment would materially reduce regulatory lag and rate shock if enacted .
  • Texas drought resilience (KT Water, generators, targeted upgrades) is a critical narrative for 2025–2026; watch timeline adherence and regulatory recovery path (GRC) .
  • Dividend increased to $0.42 quarterly (annual $1.68), reinforcing income profile amid capital intensity and supportive regulatory outcomes .
  • With S&P consensus unavailable, traders should anchor short-term reactions to guidance credibility (EPS $2.90–$3.00), regulatory cadence (CPUC/WCCM, PURA/WICA/WRA), and visible capex deployment milestones .