Q2 2022 SJW Group Earnings Call
Yeah.
Okay.
Thank you for standing by and welcome to the SJW group's second quarter financial results Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question at that time. Please press star one one when you touched on telephone.
As a reminder, today's conference call is being recorded.
I would now turn the conference to your host Mr. James Lynch, Chief Accounting Officer, Sir you may begin.
Thank you operator welcome to the 2022 second quarter financial results Conference call for SJW group.
I will be presenting today with Eric Thornburg Chairman of the Board, President and Chief Executive Officer, and Andrew Walters, Chief Financial Officer and Treasurer.
For those who would like to follow along slides accompanying our remarks are available on our website at www Dot SJW group Dotcom beef.
We begin today I would like to remind you that this presentation and related materials posted on our website may contain forward looking statements. These statements are based on estimates and assumptions made by the company in light of its experience historical trends current conditions and expected future results as well as other factors.
The company believes are appropriate under the circumstances.
Many factors could cause the company's actual results and performance to differ materially from those expressed or implied by the forward looking statements.
For a description of some of the factors that could cause actual results to be different from statements. In this presentation. We refer you to the financial results press release and to our most recent forms 10-K, 10-Q, and 8-K filed with the security and Exchange Commission copies of which may be obtained on our website.
All forward looking statements are made as of today and that's J W group disclaims any duty to update or revise such statements.
You will have the opportunity to ask questions at the end of the presentation.
And as a reminder, this webcast is being recorded and an archive of the webcast will be available until October 24th 2022.
Can access the press release and the webcast at our corporate website.
I'll now turn the call over to Eric Thornburg Eric.
Welcome everyone and thank you for joining us I'm, Eric Thornburg and it is my honor to serve as chair President and CEO of SJW group.
It is my pleasure to be joined on this call by Jim Lynch, Chief Accounting Officer, and Andrew Walters Chief Financial Officer.
We thank our 700 plus employees for their passion and commitment to clean drinking water and delivering world class service to customers communities and each other they are the backbone of our local water and wastewater utilities.
Our people responded head on to the challenges of 2022 and the second quarter.
Drought, we're experiencing drought across all of our operations from exceptional drought in Texas to extreme drought in California, as well as moderate levels in Connecticut and Maine.
People are managing water resources operations and supporting customer conservation measures.
They are also planning for system needs as we are all facing a warmer climate with more extreme weather events.
Regulatory changes and delays revenues for the quarter were impacted as a result of a change in the approved water revenue adjustment mechanism in Connecticut to update the timing of consumption, resulting.
Resulting in a revenue shift from the second quarter of 2022 to the second half of the year.
In California, San Jose Water company is expecting a decision in its 2021, California General rate case.
In the fourth quarter of 2022.
As a settlement agreement filed with the California Public Utilities Commission last January been approved revenues for the quarter would have been higher we will discuss this later in greater detail.
Supply chain, we're seeing longer lead times for ordering pipe and other products necessary to invest in building and maintaining our water systems.
Our scale and proficiency with advanced planning and procurement are making a difference and keeping our capital spending plan on track.
Inflation.
Water industry is seeing the impacts of inflation from fuel to labor.
Our leaders are working with their teams to block the effects of inflation by leveraging our scale and obtain competitive pricing on key items, while scouring budgets for opportunities to absorb increased costs without compromising on water quality or service or being good stewards of the environment.
And interest rates as the financial markets are changing and answers interest rates rising our finance and accounting teams have worked to secure financing at very competitive rates.
Our financial results for the second quarter are within our expectations given these challenges and a lengthy general rate case and cost of capital proceedings in California.
We reaffirm our 2022 guidance of $2 30.
To $2 40 per share.
Andrew will speak to this and regulatory matters in greater detail now Jim Lynch, who will discuss our financial results.
Thank you Eric.
Yesterday at the close of business, we released our second quarter 2022 operating results reporting net income for the quarter of $11 $6 million or <unk> 38 cents per diluted share on revenues of $149 million. This compares to 2021 quarterly net income of $28 million.
Or <unk> 69 per share on revenue of $152 $2 million.
Our quarterly operating results reflect the impact of a change at our Connecticut water utility, Connecticut water company or CWC and its approved water revenue adjustment mechanism or wri to update the timing of consumption, resulting in a shift of $3 $8 million from the second quarter of 2022.
To the second half of the year.
The total 2022 authorized revenue in Connecticut, including the $3 8 million dollar second quarter shortfall will be fully recovered in 2022.
In addition, our California water utilities, San Jose Water company, our SJW C is expecting a decision in its general rate case, or it's G. RC in the fourth quarter of 2022 and.
In a separate proceeding the California public Utilities Commission approved interim rates, allowing the company to fully recover revenues authorized in the JRC preceding retroactive to January one 2022.
In terms of the <unk> settlement agreement reached with the California public advocates office been adopted in the CPUC decision.
Quarterly revenues would have increased by an estimated $6 million or $7 million.
Also recall that in the second quarter of 2021, the company recognized a $3 million gain on the release of a hold back on our 2017 sale of Texas water Alliance or GWA.
Similar gain was recorded in 2022.
The change in diluted earnings per share for the quarter was primarily driven by cumulative rate increases of 27 per share a 25 per share production cost savings due to lower customer usage and <unk> <unk> per share from an increase in California surface water production.
These increases were offset by production cost increases of 24 per share a decrease of 24 <unk> per share due to lower water consumption.
<unk> per share decrease as a result of changes in the wri in Connecticut and.
<unk> per share related to the tw, a holdback release that was recognized in the second quarter of 2021.
Turning to our comparative analysis of revenue for the quarter to $3 2 million decrease was primarily attributable to $7 5 million in cumulative water rate increases in $400000 due to new customers offset by a $6 $6 million decrease in customer usage and a decrease of four.
$6 million related to Connecticut Wri mechanism.
As noted during our first quarter earnings call in California, We are operating under a mandatory call for conservation declared by valley water, our wholesale water supplier the.
The declaration calls for a 15% reduction in 2022 water consumption as compared to 2019 Andrew.
Andrew will discuss the regulatory mechanisms in place to help manage the drought impact in his comments to follow.
Water production expenses decreased $1 $3 million compared to the second quarter of 2021.
The expense decrease included $6, nine Milligan and lower customer usage and $1 8 million due to a production increase in California surface water.
These decreases were partially offset by $6 $6 million and higher average per unit water cost and an $800000 decrease in cost recovery balancing and memorandum accounts.
Other operating expenses increased $4 $4 million during the quarter, primarily due to an increase in depreciation expense of $1 $7 million and a $1 $9 million increase in general and administrative expenses, primarily due to increases in labor and group insurance costs.
The change in other income for the quarter reflects 22021 $3 million GWA purchase price hold back, which I discussed earlier.
The effective income tax rate for the second quarter was 17% compared to 14% for the second quarter of 2021.
The effective tax rate increase was primarily due to discrete tax items.
Turning to the first six months of 2022 revenue was $273 $3 million, a 2% increase over the same period last year.
Net income for the first six months of 2022 was $15 $3 million or <unk> 50 per diluted share compared to $23 $4 million or <unk> 79 per diluted share during the same period a year ago.
Our year to date results reflect the impact of the previously discussed change in <unk>.
<unk> wri to update the timing of consumption, which resulted in the shifting of $4 $6 million from 2022 year to date revenue to the second half of the year again, the total authorized revenue in Connecticut, including the $4 $6 million year to date shortfall will be fully <unk>.
Covered in 2022.
In addition had a decision in our California rate case been approved by the CPUC consistent with terms of our settlement settlement agreement with the California public advocates office year to date revenues would have increased between $12 million and $13 million.
Also the 2022 year to date results reflect a $5 $5 million gain on the sale of non utility property, whereas no similar sale occurred in 2021.
In 2021, we recorded to $3 million gain on release of the Tw, a purchase price hold back, whereas no similar gain.
Release occurred in 2022.
The change in diluted earnings per share for the first half of 2022 was primarily due to cumulative rate increases of <unk> 50 per share a 28 per share and production cost savings attributable to lower usage and a nonrecurring gain on the sale of non utility property of <unk> 21 per share.
In addition, the increase in California surface water production added <unk> 14 per share and new customers added <unk> 11 per share.
These increases were primarily offset by production cost price increases at <unk> 43 per share an increase in depreciation of 23 per share.
21, <unk> per share decrease in the net recognition of the WR a regulatory mechanism mechanism in Connecticut.
And a decrease of <unk> 19 per share and customer consumption.
In addition, general and administrative expenses increased 14 per share and cost recovery balancing and memorandum accounts decreased 10 per share.
Lastly, the Twok purchase price hold back that was discussed previously resulted in a <unk> <unk> per share gain in 2021 as I discussed earlier.
Our 2022 first half revenue increase was primarily due to $12 $7 million in cumulative rate increases $2 9 million in revenue from new customers and 754000 in balancing and memorandum accounts changes.
This increase was partially offset by a decrease in the net recognition of Connecticut's wri mechanism totaling $5 4 million and a decrease in customer usage of $4 8 million.
Water production expense increased one 4 million in the first half of 2022 the increase in water production expenses was primarily due to $11 $1 million and higher average per unit water supply cost and $1 2 million in cost recovery balancing and memorandum accounts.
These increases were partially offset by a $7 $2 million decrease in customer usage, and a $3 $7 million increase in our California surface water production.
Other operating expenses increased $7 $6 million in the first half of 2022, primarily due to a $5 $9 million increase in depreciation expense $5 $2 million and higher general and administrative expenses, including $1 $6 million related to cost recovery balancing and <unk>.
Miranda <unk> accounts and taxes other than income taxes, which increased by $1 $2 million.
In addition in 2022, the company recorded a $5 $5 million gain on the sale of a non utility property.
The change in other income and expense was primarily attributable to the tw a hold back which I discussed previously.
Turning to our capital expenditure program, we added $57 $9 million in company funded utility plant in the second quarter of 2022, bringing our total company funded additions for the first half of the year to $101 $6 million.
Our first half cash flows from operations increased approximately $16 $5 million over the same period of 2021.
The increase was primarily due to an increase of $25 $5 million and regulatory assets, primarily due to balancing and memorandum account activity, partially offset by a decrease in general working capital and net income and adjusted for noncash items of $5 $1 million.
In addition taxes payable increased $2 7 million and payment of amounts previously invoice and accrued including the crude production costs decreased by $1 2 million.
At the end of the quarter, we had $118 $7 million available on our bank lines of credit for short term financing of utility plant additions and operating activities.
The average borrowing rate on line of credit advances during the first six months of 2022 was approximately 1.44%.
With that I will stop and turn the call over to Andrew.
Thank you Jim.
San Jose Water's advanced metering infrastructure or Ami application has been approved by the CPUC.
The approval paved the way for infrastructure investments of approximately $100 million over the four years to deploy PMI.
Ams tracks water usage and provides near real time water usage data that will enhance customer experience and supports sjw's six commitment to preserving and protecting the environment.
This is an additional investment outside of the capital budget request in the DRC.
We expect the majority of the investment to occur between 2024 and 2026.
The 2022 to 2020 for cost of capital proceeding for the four large class eight, California utilities is pending before the CPUC.
A decision is expected in the third quarter of 2022.
San Jose water company's 2021, Trc application for new rates in 2022 through 2024 is also pending before the CPUC.
The settlement agreement between CWC and the public advocates office was filed in January 2022.
That solve all issues in the proceeding.
If approved the settlement provides a revenue increase of approximately $54 million over the three year period with an increase of approximately $25 million in 2022.
The settlement also recognizes the need for continued investments in the water system to deliver safe and reliable water service.
Providing an authorization of a three year $350 million capital budget.
Additionally, it further aligns authorized and actual consumption, particularly for business customers addresses our water supply mix volatility.
And provides greater revenue recovery in the fixed charge.
A decision is expected in the fourth quarter of 2022.
With interim rates authorized we will be able to apply the revenue adopted in the commissions final decision retroactively to January one 2022.
As CWC received authorization effective July one 2022 to increase revenue requirement by approximately $25 million or roughly 6% the majority of which related to an annual increase in purchased potable water charges.
The groundwater extraction fee and purchase recycled water charges from its holds water wholesalers and the remaining two an advice letter project.
In Connecticut, the public utilities regulatory authority authorizes recovery of $10 million and completed projects through the water infrastructure and conservation adjustment mechanism.
The increase in the Wicker surcharge was effective July one 2022.
The cumulative Wicca and is now 326%, which is expected to generate approximately $3 4 million in annualized revenues.
On January eight 2022, PURA approved the acquisition of the assets of the Miami Beach water company in old line.
This is a water system for a small beach community that serves approximately 120 customers.
But has an estimated capex need in the neighborhood of $6 million that will be reflected in the future capital planning for CWC.
Our closing on the acquisition is expected in August .
As Jim noted previously revenues for Connecticut water company were adjusted to reflect current consumption patterns. The table below highlights the differences between the previous revenue allocation in the updated revenue allocation.
Our new 60 million Soco River drinking water resource Center went online in June and is now serving our customers and our Bedford Soco Division.
Eric will speak more about our new facility.
On July one 2022, new rates went into effect to support that generational investment in the water resource center, which are expected to generate annual revenues of $6 3 million.
This was the second step in our multiyear plan that gradually raises rates in the division.
The first step was an innovative rate smoothing mechanism approved by the Maine Public Utilities Commission last summer.
The third step and last filing to reflect the operating cost of the new treatment facility is expected to be submitted in the second half of 2022.
In June Maine water filed the second half of a two part water infrastructure charge application with the Maine Public Utilities Commission for an additional wisc increase in the Scout Hagen Division.
The first half authorized by the PUC went into effect on January one 2022.
The second part is approved.
If the second part is approved.
As filed the wisc surcharge and scale Keegan would increase by an additional.
$50 million.
A decision is expected in Q3.
Also pending before the MPC, our general rate cases filed in February of four main water divisions for a total of 532000.
A decision is expected in the fourth quarter.
In June the public utility Commission of Texas approved a new water pass through charge for Canyon Lake service area of SJW TX subsidiary.
The decision retroactive back to March one 2022 is expected to generate more than 400000 in annualized revenues.
SJW, TX now serves more than 25000 water and wastewater connections between Austin and San Antonio and has service areas in three of the five fastest growing counties in the United States.
<unk> has more than tripled its customer base in the <unk>.
10 years, providing service to about 72000 people today.
With a diverse portfolio of water supplies, a growing wastewater business and continued additions to the customer base through organic growth and acquisitions, we remain optimistic about the prospects of <unk> and the increased contributions to consolidated earnings.
Drought.
<unk> persistent California service area.
The current level at Lake Alvin will likely support approximately one 8 billion gallons in total production for 2022.
As shown in this chart Lake element is slightly below the five year average and higher than in the same period in 2020 and 2021.
This should bring total surface water production in 2020 to close to or equal to the volume and the <unk> settlement.
We are reaffirming our 2022 guidance to two.
$2 30 to $2 40 per diluted share.
Our guidance assumes CPUC approval of San Jose Water's general rate settlement.
The agreement and contemplation of the four other divisional <unk> and Maine in 2022.
On April six 2022 main water entered into a credit agreement with a commercial bank pursuant to an existing master loan agreement under which the commercial bank issued Maine water a promissory note on the same date to an aggregate principal amount of $15 million.
At a fixed rate of 454% due may 31 2042.
Proceeds from the borrowings were received on May 13th 2022 and.
On June 28, 2020 to Connecticut water entered into a note purchase agreement pursuant to which Connecticut water sold an aggregate principal amount of $25 million of 471% Senior notes due December 15 2052.
The closing of the note purchase agreement is expected to occur in December 2022, and is subject to customary closing conditions and regulatory approval.
And finally on July 14th 2022.
CWC entered into a note purchase agreement with certain affiliates of New York Life Metropolitan life, Northwestern mutual and John Hancock.
Pursuant to which the company will sell an aggregate principal amount of $70 million.
It's 485% senior notes.
Closing is expected to occur in January 2023, upon satisfaction of customary closing conditions.
With that I will stop and turn the call back over to Eric.
Thank you Andrew.
Yesterday, we had the privilege of being in Biddeford, Maine to help dedicate Maine water's, New Soco River drinking water resource Center joint.
Joining us with Governor Janet Mills local community leaders regulators and many other dignitaries a reaffirmed my view that investing in drinking water infrastructure is vital to customers and communities and worthy of celebration.
The New center replaced an aging facility on the bank of the Soco River.
And I'm not exaggerating when I say aging is the old facility went online in 18 84 before electricity was available in Biddeford and yet has served the community exceptionally well over the last 138 years.
The new resource center is safely out of the river floodplain, it will reliably and efficiently deliver clean water to customers and communities in the region into the next century.
I am proud of how our main team worked with community leaders to build support for this generational investment which has been a high priority for Maine water from the day it acquired the Bedford Soco water system in 2012.
True to the values of Maine water and SJW group our team viewed the project as an opportunity to be a force for good and exceed expectations.
An innovative rate smoothing mechanism was created and approved by regulators that is providing a three year ramp to new rates that supports the $60 million project.
At the end of three years customers will still only be paying about one penny per gallon of high quality drinking water.
Sustainability and resiliency, we're at the forefront of the project, including relocation out of the floodplain, which is the main climate related risk and an on site solar array that will offset 100% of the energy needed to operate the facility.
The natural environment has been preserved and will be an educational resource featuring 257 acres of protected open space with plans for hiking trails, the establishment of a pollinator garden and the restoration of wetland areas.
The efforts of Maine water and its project partners were recognized by the Institute for sustainable infrastructure with an envision Silver award. The first awarded to a project of this kind in the new England region.
I'm proud of what our people have accomplished and their commitment to our core values of service in the communities, where we live work and serve.
Our environmental social and governance or ESG scores continue to be strong we are at or near the top of the ISS ESG ratings among water utility industry peers.
In addition, SJW group has the distinction of having a gender balanced board.
And achievement that can be made by just 9% of the companies in the Russell 3000.
With that I will turn the call back over to the operator.
Thank you again, ladies and gentlemen, I'd like to ask a question. Please press star one one when you touched on the telephone.
One moment please.
Our first question comes from Richard Sunderland.
Your line is open.
Hi, good morning, Thanks for the time today.
Hey, rich thanks for thanks for checking the same today.
Let's see.
The California cost of capital proceeding could you just walk through functionally how you chew up cost of that in that as you said already.
Filled in the preceding or is there a true up way more final order comes out also curious if you have any thoughts on just sort of the direction of interest rates here and how that could feed into Roe.
Hi, Rich this is Andrew excellent question.
Couple of things I'll highlight so the.
Once approved.
<unk>.
Cost of debt will be part of the overall cost of capital and it would be theoretically reduced at that time.
<unk> that we have to understand before us is really when the timing of that will happen whether that would be the timing of the decision or at some point earlier.
So in terms of the interest rates and how that impacts the Roe.
Certainly if anybody is listening and looking on around them at what is happening with interest rates you would expect that there should be some additional.
Thoughts.
Would go into your thinking on how you would address roe's for utilities that are.
Needing to fund their investments compete for capital in the in the market as well as.
Quite frankly cover the cost of inflation and their existing systems.
So how that gets baked in at this stage is part of the process and we're hopeful that the CPUC, we'll take those factors into account in their final decision.
That answered your question.
No that's great appreciate the comments there.
In California, the Trc tracking <unk> now do you have any insight into the timing changing to just how the how the processes informed <unk> versus <unk> prior.
Yes, so thats a great question.
Our understanding is this really relates to the.
The workload of the our partners at the CPUC and.
So there are simply a delay due to that workload.
That's fair enough and one more from me why while I'm here.
Inflation backdrop, just curious if you could speak to.
Any cost pressures youre seeing this year, and then I guess, particularly.
With the rate activity, how that might flow through the various rate proceedings on a go forward basis.
Sure.
So a couple of items to keep in mind. So for the historic test year States. There is no adjustments in <unk>.
And those cost factors and so that covers main Texas in Connecticut.
Texas, we're lucky to have sufficient growth that will continue to help us not only offset the.
The cost increases, but also too.
Provide growth in earnings per share.
As it relates to California.
The first phase is obviously to get the rate case approved.
In the forward looking years following that there are adjustments that are provided by California for expenses and those rates are to be determined but they are tracking various indexes and it's not uniform rate, but the point is that it does give us an offset to the <unk>.
Expense increases that we're currently experiencing.
So as you as you kind of think about it from from an overall perspective, we are absolutely experiencing expense impacts on our business.
Certainly labor will be a place that.
We've already seen impacts in that area and we will expect to continue to see impacts in that as well as some of the.
Expenses that are related to or associated with any of the energy volatility.
And then also metal.
That's really been driven so pig iron in Ukraine is also driven expense increases in the pipe, but that probably is more related to our capex as it is to our O&M expenses.
Got it very helpful. Thank you for the time today.
Thank you.
Thank you.
Okay.
Our next question comes from Andy surveys Lynskey.
<unk> of Seaport Research your line is open.
Yes. Thank you so Andrew just one follow up on the cost of capital.
So what's the status I mean I saw that the all of the water utilities asks for oral arguments.
And that request was opposed by the.
During <unk>, but what's the status.
You're going to get those oral arguments.
No. We're not we were not successful in being able to get those oral arguments.
Hmm.
Okay and then the you mentioned that it's unclear when that's going to be a true ups.
And the cost of debt.
Is this something new because I thought that it was.
I mean, it's a.
2022 cost of capital proceeding so I mean, that's typically.
Is retroactive to January one of 2022 and now both for.
On the equity and the cost of debt is now yes, Thats correct. Angie at this point that is the typical practice is to have a true up at the at the point that it's decided for the year that it's supposed to go into effect that includes both the cost of debt as well as the cost of equity.
And so.
You mentioned that you're hopeful that the final decision will have an end to end in this cost of capital proceeding will have some recognition of the current interest rate environment. So is it.
Is it fair to say that this proposed decision will not reflect the current market conditions and it will just.
The current record in this case I E.
We should brace for that proposed decision.
But I think it's I think it's early to tell kind of where where that will come out again.
I wish that we would have like complete insight and be able to give you a complete view on on how the thinking will be impacted.
The baseline is that they are supposed to reflect what's in the record and that's that's what they follow but but obviously there is a quite a big difference of what's in the record of what we've asked for and what the advocates have asked for so as you are somebody that's looking at that and you think about the the.
The reasonableness of what somebody is asking for relative to the market conditions, you would expect that wood wood.
Take an impact on their decision process.
And just with this is Jim I would just like to remind you of one thing and that this is a forward looking proceeding and in the forward looking proceeding we estimated what future rate interest rate increases would be a.
Along with our future financing requirements and on Andrew's call. He mentioned that we had already locked in.
A number of our financing requirements for 2022, and so the real.
Test here will be.
A look at how those rates compare to what is finally approved by the commission.
In the cost of capital proceeding over the next three years. So I think we've made some good progress in terms of aligning.
The proposed decision with where we are right now as it relates to interest rates.
At least in this first year out.
Right.
But it's mostly on the debt side right I mean, that's.
It's kind of tough to say, what's the cost of equity that there, yes, Thats fair Angie.
Okay, and then Andy just on the cost of equity one thing just to keep in mind is as there is a tracker in the cost of equity.
As interest rates are where they are that is something that while it's not <unk>.
Impacting us now it certainly would be something that would likely take effect if if.
Trends are where they are.
Great.
And then Jim.
Just wondering.
I was just actually looking back at your effective tax rate.
Do you think that there will be some impact on your company from that.
Proposed a 15% minimum tax.
Tax rate.
It looks more likely at this point would that change for instance, your financing plans of Baas.
<unk> needs.
Given any potential impact on operating cash flows.
Well, obviously, we were taking a look to watch as the minimum tax rate, it's kind of making its way through through the regulatory process.
Clearly in some of our current operating utilities on an individual basis, we have rates below 15%.
Also have rates that are above 15% and what we're going to need to do is to see how our combined rate as.
As a combined filer and the federal for purposes of federal taxes.
<unk> levels out relative to what ultimately gets passed by Congress.
Okay, Okay, I understand and then lastly on the DRC.
So before you reflected in your <unk>.
Your earnings you have to have the final decision right.
This is the basis for any adjustments that youre going to make so that's what we need to track for any sort of any comments from either the commission proposed decision is not enough to reflect those changes as far as the.
The balancing account for cost for purchased water cost again, we have to wait for the final decision.
That's right and it would be a final decision, but remember we do have that settlement and the settlement does address a number of the issues, including the full cost balancing account, what youre mentioning with regards to our production.
Cost and and so we are expecting that.
That we get that decision at this point in the in the fourth quarter.
No.
It really depends on on on the commission and their workload as Andrew mentioned as to win during the fourth quarter that occurs.
Okay. So when I again, we're clearly struggling with.
With the quarterly distribution of earnings this year.
So basically we're assuming that.
So there was just flat.
Revenues for California in the third quarter year over year with dose adjustments like you mentioned, Connecticut.
Hum.
With this big quarter, then happening in the fourth quarter.
That's correct and again I do want to emphasize that we are viewing this as a timing issue and nothing more.
Awesome. Thank you guys. Thank you.
Okay.
Thank you.
Our next question comes from Carol Wallace.
SJW group your line is open.
Karen Your line is open.
Yeah, Hey, Carol.
I think that's a mistake Carol Smith she's with.
With our organization must add all of that.
Yeah, Okay. So right now im showing no further questions at this time I'd like to turn the call back over to Eric Thornburg for any closing remarks.
Thank you very much. Thank you folks for joining us today, we really do appreciate your interest in our company in support of it we're really proud of our 770 employees across the country and all the great work, they're doing to serve our customers and our communities and we look forward to to sharing more about our successes in the quarters to come.
Thank you very much.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all for participating you may now disconnect have a great day.
Okay.
The conference will begin shortly to raise your hand during Q&A you can die.