Q1 2024 SJW Group Earnings Call

Yeah.

Operator: Good day, and thank you for standing by. Welcome to the SJW Group Q1 2024 Financial Results Conference. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by.

Speaker Change: Welcome to the SJW Group Q1, 'twenty 'twenty four financial results conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is ready.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: I'll ask a question during the session you will need to press star one on your telephone you wouldn't.

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Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being. I would now like to hand the conference over to your speaker today, Andrew Walters, Chief Financial Officer. Please go ahead.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over your Speaker today, Andrew Walters Chief Financial Officer. Please go ahead.

Andrew F. Walters: Thank you, operator. Welcome to the first quarter 2024 financial results conference call for SJW. I will be presenting today with Eric Thornburg, Chair of the Board, President, and Chief Executive Officer. For those of you who would like to follow along, slides accompanying our remarks are available on our website at sjwgroup.com. Before we begin today, I would like to remind you that this presentation and the related materials posted on our website may contain forward-looking statements.

Andrew F. Walters: Thank you operator welcome to the first quarter of 2024 financial results Conference call for SJW group.

Andrew F. Walters: We'll be presenting today with Eric Thornburg Chair of the Board President and Chief Executive Officer for.

Andrew F. Walters: For those of you who would like to follow along slides accompanying our remarks are available on our website at SJW group Dot com.

Andrew F. Walters: Before we begin today I would like to remind you that this presentation and the related materials posted on our website may contain forward looking statements.

Andrew F. Walters: 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 that the company believes are appropriate under the circumstances. Many factors could cause the company's implied or actual results and performance to differ materially from those expressed or implied by the forward look.

Andrew F. Walters: 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.

Andrew F. Walters: As well as other factors that the company believes are appropriate under the circumstances.

Andrew F. Walters: Many factors could cause the company's implied or actual results and performance to differ materially from those expressed or implied by the forward looking statements.

Andrew F. Walters: 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 our most recent forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on. All forward-looking statements are made as of today by the SJW Group, which disclaims any duty to update or revise. As you will have an opportunity to ask questions at the end of the presentation,

Andrew F. Walters: 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 <unk>.

Andrew F. Walters: And our most recent forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission copies of which may be obtained on our website.

Andrew F. Walters: All forward looking statements are made as of today in SA <unk> group disclaims any duty to update or revise such statements.

Andrew F. Walters: As you will have an opportunity to ask questions at the end of the presentation.

Andrew F. Walters: And as a reminder, this webcast is being recorded, and an archive of the webcast will be available until July 24th, 2024. You can access the press release and the webcast on our corporate website. And we'll now turn the call over to Eric Thornburg.

Andrew F. Walters: And as a reminder, this webcast is being recorded and an archive of the webcast will be available until July 24, 2024, you can access the press release and the webcast at our corporate website I will now turn the call over to Eric Thornburg Eric.

Eric W. Thornburg: Welcome everyone, and thank you for joining us. My name is Eric Thornburg, and it is my honor to serve as chair, president, and CEO of SJW Group. I'm pleased to share that in the first quarter of 2024, we met drinking water and environmental regulations, delivered on our public health and environmental stewardship commitment, and provided high-quality water and service to customers. We also laid the foundation for a strong year by working constructively with regulators to secure approval of a general rate case in Maine and an infrastructure surcharge in Texas, investing $69 million in water and wastewater utility infrastructure, which constitutes approximately 21% We delivered earnings per diluted share of $0.36 in the first quarter.

Eric W. Thornburg: Welcome everyone and thank you for joining US My name is Eric Thornburg and it's my honor to serve as chair President and CEO of SJW group.

Eric W. Thornburg: I am pleased to share that in the first quarter of 2024, we met drinking water and environmental regulations delivered on our public health and environmental stewardship commitments and provided high quality water and service to customers.

Eric W. Thornburg: We also laid the foundation for a strong year by working constructively with regulators to secure approval of a general rate case in Maine, and an infrastructure surcharge in Texas <unk>.

Investing $69 million in water and wastewater utility infrastructure.

Eric W. Thornburg: Which constitutes approximately 21% of our $332 million 2024 capital expenditure plan.

Eric W. Thornburg: And benefiting customers by executing our capital sourcing initiative and leveraging our national scale to save an anticipated one $5 million through cost reduction and cost avoidance in 2024.

Eric W. Thornburg: We delivered earnings per diluted share of 36.

Eric W. Thornburg: In the first quarter.

Eric W. Thornburg: We will talk more about this and the solid progress made on being a force for good as part of executing our strategic plan. Andrew will now review our financial results and regulatory updates in our state operations.

Eric W. Thornburg: We will talk more about this in the solid progress made on being a force for good as part of executing our strategic plan and.

Eric W. Thornburg: Andrew will now review, our financial results and regulatory updates and our state operations.

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Andrew F. Walters: Thank you, Eric. Last evening, after the market closed, we released our first quarter 2024 operating results. In the first quarter, we reported revenue of $149.4 million, a 9% increase over $137.3 million reported in the same quarter of 2020. The increase was largely driven by ratings. It is also worth noting that both our California and Connecticut operations have revenue protection mechanisms. Despite higher water production expenses, we were able to deliver net income for the quarter of $11.79, a 1% increase over the $11.5 million reported in the first quarter of 2023. Diluted EPS was $0.36 per share compared to $0.37 in 2023.

Andrew F. Walters: Thank you Eric.

Andrew F. Walters: Last evening after the market close we released our first quarter 2024 operating results.

Andrew F. Walters: In the first quarter, we reported revenue of $149 4 million a.

Andrew F. Walters: A 9% increase over $137 3 million reported in the same quarter of 2023.

The increase was largely driven by rate increases.

Andrew F. Walters: It is also worth noting that both our California, and Connecticut operations have revenue protection mechanisms in place.

Andrew F. Walters: Despite higher water production expenses, we were able to deliver net income for the quarter of $11 7, Million% to 1% increase over the $11 5 million reported in the first quarter of 2023.

Andrew F. Walters: Diluted EPS was <unk> 36 per share compared to 37 in 2023.

Andrew F. Walters: As you can see, 26 cents of the revenue increase were driven primarily by rate increases in California and Maine and the infrastructure recovery mechanism in Connecticut. Higher usage also contributed 5%. However, the revenue increase was offset by higher water production costs, depreciation, and amortization, as well as interest.

Andrew F. Walters: As you can see 26 tenths of the revenue increase were driven primarily by rate increases in California in Maine, and the infrastructure recovery mechanism in Connecticut.

Andrew F. Walters: Higher usage also contributed <unk> <unk>.

Andrew F. Walters: The revenue increase was offset by higher water production cost depreciation and amortization as well as interest expense.

Andrew F. Walters: $10 million of the revenue increase was from the rate and infrastructure adjustments, and $2.6 million was attributable to higher usage due to customer growth. Moving on to water production expenses, our water production expense in the quarter increased 10% compared to 2023. The increase was principally driven by higher customer usage and rate increases from our water wholesaler in California. Total other operating expenses increased 7% year over year. The increase was primarily due to increases in depreciation and amortization and higher administrative and general costs.

Okay.

Andrew F. Walters: $10 million of the revenue increase was from the rate and infrastructure adjustments and $2 6 million was attributable to higher usage and customer growth.

Okay.

Andrew F. Walters: Moving onto water production expenses, our water production expense in the quarter increased 10% compared to 2023, the increase was principally driven by higher customer usage and rate increases from our water wholesaler in California.

Andrew F. Walters: Total other operating expenses increased 7% year over year. The increase was primarily from increases in depreciation and amortization and higher administrative and general costs.

Andrew F. Walters: Approximately $7 million in gross proceeds was raised in our first quarter through our At The Market program. At the end of the first quarter, we had $211 million drawn on our $350 million bank lines of credit, leaving $139 million available for short-term financing of utility plant additions in operation.

Andrew F. Walters: Okay.

Approximately $7 million in gross proceeds was raised in our first quarter through our at the market program.

Andrew F. Walters: At the end of the first quarter, we had $211 million drawn on our $350 million bank lines of credit, leaving $139 million available for short term financing of utility plant additions and operating activities.

Andrew F. Walters: The average borrowing rate for our line of credit advances during the quarter was approximately 6.54%. The average barring rate for the same period in 2023 was approximately 5.74%. The effective consolidated income tax rates for the first quarter of 2024 and 2023 were approximately 16% and 9%, respectively. On January 2nd, 2024, San Jose Water filed a general rate case application with the California Public Utilities Commission that will set rates for 2025 through 2027.

Andrew F. Walters: The average borrowing rate for our line of credit advances during the quarter was approximately six 5% 4%.

Andrew F. Walters: The average borrowing rate in the same period of 2023 was approximately 574%.

Andrew F. Walters: The effective consolidated income tax rates for the first quarter of 2024, and 2023 were approximately 16% and 9% respectively.

On January <unk> 2020 for San Jose Water filed a general rate case application with the California Public Utilities Commission that will set rates for 2025 through 2027.

Andrew F. Walters: The application proposes at three year $540 million capital expenditure program that addresses several key needs including.

Andrew F. Walters: The application proposes a three-year, $540 million capital expenditure program that addresses several key needs, including treating PFAS to meet drinking water standards recently finalized by the US EPA, and reducing greenhouse gas emissions through solar generation, energy storage systems to replace diesel generators, as well as fleet electrification and advanced acoustic leak detection.

Andrew F. Walters: <unk> P fast to meet drinking water standards recently finalized by the U S EPA.

Andrew F. Walters: Reducing greenhouse gas emissions through solar generation energy storage systems to replace diesel generators as well as fleet electrification and advanced acoustic leak detection.

Andrew F. Walters: And we were advancing the Cpuc's environmental and social Justice action plan to improve access to high quality water service climate, resiliency and economic and workforce development.

Andrew F. Walters: And we were advancing the CPUC's Environmental and Social Justice Action Plan to improve access to high-quality water service, climate resiliency, and economic and workforce development. The decision could come as early as the fourth quarter of 2024 and be effective on January 1st, 2025. As of January 1, 2024, San Jose Water employees will have the benefit of a group insurance balance. The purpose of the account is to capture the differences between authorized and actual medical, dental, and opt-out insurance costs.

Andrew F. Walters: A decision could come as early as the fourth quarter of 2024 and be effective on January one 2025.

Andrew F. Walters: As of January one 2020 for San Jose water has the benefit of our group insurance balancing account.

Andrew F. Walters: The purpose of the account is to capture the differences between authorized and actual medical dental and opt out insurance cost.

Andrew F. Walters: This is yet another regulatory mechanism that helps us to manage the escalating and unpredictable expense.

Andrew F. Walters: We will explore opportunities to optimize the expense in the future to benefit our customers.

Andrew F. Walters: The 2020 for water cost of capital mechanism adjustment was effective on January one 2024.

Andrew F. Walters: This is yet another regulatory mechanism that helps us to manage the escalating and unpredictable expansion. We will explore opportunities to optimize the expense in the future to benefit our customers. The 2024 Water Cost of Capital Mechanism Adjustment was effective on January 1, 2024. The return on equity is 10.01%, less a 20 basis point reduction due to the reauthorization of the Water Conservation Memorandum, for an authorized ROE of 9.81%.

Andrew F. Walters: Our return on equity of 10, 1% less a 20 basis point reduction due to the reauthorization of the water conservation memorandum account for an authorized ROE of 981%.

Andrew F. Walters: Our cost of debt is 528% and the authorized rate of return is 775%.

For reference our return on equity in the first quarter of 2023 was eight 9% plus 20 basis points for the water conservation Memorandum account.

Andrew F. Walters: On February <unk> 2020 for San Jose water, along with three other class a California water utilities received approval from the CPUC for a one year deferment in the 2020 for cost of capital filing.

Andrew F. Walters: Our cost of debt is 5.28%, and the authorized rate of return is $7.75. For reference, our return on equity in the first quarter of 2023 was 8.9%, plus 20 basis points for water conservation. On February 2nd, 2024, San Jose Water, along with three other Class A California water utilities, received approval from the CPUC for a one-year deferment in the 2024 Casa Capital. With this decision, the CPUC extended the initial filing deadline from May 1, 2024 to May 1, 2025.

Andrew F. Walters: With this decision the CPUC extended the initial filing deadline for May one 2024 to May one 2025.

The approval deferral includes a provision that the water cost of capital mechanism remains in place for 2025 and allows it to adjust up or down in accordance with movements of 100 basis points or more.

Andrew F. Walters: The Moody's double a bond index between October one 2023 and September 32024.

Andrew F. Walters: Installation of smart meters as part of our advanced metering infrastructure project is underway, we are planning to invest approximately $27 million in the Ams project in 2024.

Andrew F. Walters: This is a $100 million project that is separate from the general rate case capital budget and as the majority of the installation is expected between 2024 and 2026.

Andrew F. Walters: In Connecticut, our general rate case application is pending before the public utility regulatory authority.

Andrew F. Walters: The approval deferral includes a provision that the Water Cost of Capital mechanism remains in place for 2025 and allows it to adjust up or down in accordance with movements of 100 basis points or more and Moody's AA Bond Index between October 1st, 2020, and September 30th.

Andrew F. Walters: Our request is for $21 4 million or 18, 1% increase in annual revenues.

Andrew F. Walters: Approximately two thirds of the requested rate increases related to infrastructure investment project.

Andrew F. Walters: Projects.

Andrew F. Walters: The application also includes a proposal for expanding our low income water rate assistance program.

Andrew F. Walters: We were the first water utility in the state to offer this type of rate assistance program.

Andrew F. Walters: Installation of smart meters as part of our advanced metering infrastructure project is underway; we are planning to invest approximately $27 million in the AMI project in 2024. This is a $100 million project that is separate from the general rate, capital budget, and the majority of the installation is expected between 2024. In Connecticut, our general rate case application is pending before the Public Utility Regulatory Commission. Our request is for $21.4 million, an 18.1% increase in annual revenues.

We are hopeful that PURA will authorize a requested expansion of this important program.

Andrew F. Walters: The final decision on the Connecticut General rate case is expected in late June with any approved revenue increase to be effective on or about July one 2024.

Andrew F. Walters: Yeah.

Andrew F. Walters: New rates for Maine, Water's Bedford Soco Division were effective on January one 2024 following.

Andrew F. Walters: Following approval the Maine public utility Commission of a stipulation agreement between Maine water in the office of public advocate.

Andrew F. Walters: The company's annualized revenue is expected to increase by $2 6 million.

Andrew F. Walters: Main water had applied for the increase to cover the operating expenses and increased borrowing costs from construction of the new Soco River drinking water resource Center.

Andrew F. Walters: Other provisions of the approved stipulation agreement include a return on equity for better for Taco Division of nine 5% with an assumed 51% equity 49% debt capital structure.

Andrew F. Walters: Approximately two-thirds of the requested rate increase is related to an infrastructure investment project. The application also includes a proposal for expanding our low-income water rate assistance program. We were the first water utility in the state to offer this type of rate assistance program.

Andrew F. Walters: The ROE and capital structure will also apply to future water infrastructure surcharges.

Andrew F. Walters: General rate case stay out provision in Bedford Soccer Division through January one 2027, the stay out does not include infrastructure surcharge filings.

Andrew F. Walters: We're hopeful that PURA will authorize our requested expansion of this important program. The final decision on the Connecticut general rate case is expected in late June, with any approved revenue increase to be effective on or about July 1st. New rates for Maine Water's Bedford-Saco Division were effective on January 1st, 2024, following approval by the Maine Public Utility Commission of the Stipulation Agreement between Mainwater and the Office of Public Advocacy. The company's annualized revenue is expected to increase by 2.6%.

Andrew F. Walters: On March 22020 for the PUC approved Maine, water's infrastructure surcharge filings with the Camden in Rocklin Division, which is expected to generate approximately 158000 in annualized revenues.

Andrew F. Walters: Turning to taxes, we continue to see strong growth in our Texas service area as evidenced by robust developer interest in water and wastewater connections.

The number of outstanding development units with the potential for new connections is approximately 22000 units.

This is not surprising as Texas water currently serves three of the five fastest growing counties in the United States. According to the U S Census Bureau.

Andrew F. Walters: Maine Water had applied for the increase to cover the operating expenses and increased borrowing costs from the construction of the new Saco River drinking water reservoir. Other provisions of the Approved Stipulation Agreement include a return on equity for the Biddeford-Saco division of 9.5%, with an assumed 51% equity and 49% debt capital. The ROE and capital structure will also apply to future water infrastructures. A general rate case stay out provision in Bitterford SACA Division through January 1st, 2027. This day out does not include an infrastructure search.

Andrew F. Walters: With more than 28000 water connections and 1000 wastewater connections in the area between Austin and San Antonio The company has quadrupled its service connection since 2006.

Andrew F. Walters: We intend to continue this momentum through prudent acquisitions organic growth and securing strategic water resources.

Andrew F. Walters: One example of the opportunistic acquisition strategy is.

Andrew F. Walters: <unk> three <unk> nine water system, and Comal County serves approximately 270 water connections and strategically located within our service territory. Our application to acquire <unk> nine is pending before the public utility Commission of Texas and a decision is expected in the third quarter of 2024.

Andrew F. Walters: On March 21, 2020 for the PUC approved our application for a system improvement charge in Texas.

Andrew F. Walters: On March 22nd, 2024, the MPUC approved the Mainwaters Infrastructure Surcharge filing with Camden-Rockland, which is expected to generate approximately $158,000 in annualized revenue. Turning to Texas, we continue to see strong growth in our Texas service area, as evidenced by robust developer interest in water and wastewater. The number of outstanding Development Units with the potential for new connections is approximately 22,000.

Andrew F. Walters: The decision authorizes, Texas water to add certain utility plant additions made since 2022 its rate base, thereby increasing revenue and avoiding a general rate case in 2024.

Andrew F. Walters: We expect an increase in annualized revenue of $1 6 billion.

Andrew F. Walters: The U S drought monitor continues to classify our Texas service area as being moderate to severe drought. We are targeting voluntary water use reductions that vary on local drought conditions overall, we expect lower water usage in 2024, if the drought continues.

Andrew F. Walters: This is not surprising as Texas Water currently serves three of the five fastest growing counties in the United States, according to the U.S. With more than 28,000 water connections and 1,000 wastewater connections in the area between Austin and San Antonio, the company has quadrupled its service connections since. We intend to continue this momentum through prudent acquisitions, organic growth, and securing strategic water. One example of the Opportunistic Acquisition Strategy, the 3009 water system in Comal County serves approximately 270 water connections and is strategically located within our service area.

Andrew F. Walters: With a diverse portfolio of water supplies, a growing wastewater business and continued additions to the customer base through organic growth and acquisitions.

We are pleased with Texas waters, increasing contributions to consolidated earnings and remain optimistic about its prospects.

Andrew F. Walters: We are reaffirming our 2024 guidance of $2 68 to $2.78 of net income per diluted share, which is consistent with our non linear in long term growth rate of 5% to 7%.

Andrew F. Walters: We have expect equity issuance of approximately $55 million to $65 million, excluding acquisition growth to support our strong capital investment program.

Andrew F. Walters: We maintain our five year capital investment outlook of $1 6 billion, which includes approximately $230 million and estimated P. Fast remediation based on the maximum contaminant levels than the previously proposed regulation.

Andrew F. Walters: Our application to acquire 3009 is pending before the Public Utility Commission of Texas, and a decision is expected in the third quarter of 2020. On March 21, 2024, the PUC-T approved our application for a system improvement charge. The decision authorizes Texas Water to add certain utility plan additions made since 2020 to its rate, thereby increasing revenue and avoiding a general rate case. We expect an increase in annualized revenue of $1.3 billion. The U.S. Drought Monitor continues to classify our Texas service area as being in moderate to severe drought.

Andrew F. Walters: The factors underlying our 2024 guidance include a return on equity increase.

Andrew F. Walters: In California, 931% to $9 eight one net of the 20 basis point reduction for that re implementation of the WC MMA effective January one 2024.

Andrew F. Walters: The impact of the completed Biddeford soccer rate case with nine 5% Roe.

Andrew F. Walters: And 51% equity.

49% that effective capital structure as of January one 2024.

Constructive regulatory decisions on current and prospective regulatory filings.

Andrew F. Walters: We are targeting voluntary water use reductions that vary depending on local drought conditions. Overall, we expect lower water usage in 2024 if the drought continues, with a diverse portfolio of water supplies, a growing wastewater business, and continued additions to the customer base through organic growth acquisitions. We are pleased with Texas Water's increasing contributions to consolidated earnings and remain optimistic about its progress. We are reaffirming our 2024 guidance of $2.68 to $2.78 of net income per diluted share, which is consistent with our nonlinear income long-term growth rate of five to 7%. We expect equity issuance of approximately $55 million to $65 million, excluding acquisition growth, to support our strong capital investment program.

Andrew F. Walters: Strategic Reinvestments in the business in 2024, and our guidance range is consistent with our long term growth.

Andrew F. Walters: An important note is in April 2020 for SJW land company completed the sale of a warehouse building.

Up at Tennessee properties for $27 million.

Andrew F. Walters: The estimated pre tax gain on the sale of $7 million, which is not a contributor to our 2024 guidance or first quarter earnings.

Further we reaffirm our stated long term growth rate of 5% to 7% that is anchored off.

Andrew F. Walters: 2022 diluted earnings per share of $2 43, which is non linear because of rate case cycles with that I'll turn the call over to Eric.

Eric W. Thornburg: Thank you Andrew.

Eric W. Thornburg: Earlier this month, the United States Environmental Protection Agency issued final standards for six P fast compounds.

Eric W. Thornburg: SJW group's strongly supports these standards and is committed to being in full compliance with new regulations for <unk> monitoring reporting and maximum contaminant levels within the timeframe as allowed for by the EPA.

Andrew F. Walters: We maintain our five-year capital investment outlook of $1.6 billion, which includes approximately $230 million in estimated PFAS remediation based on the maximum contaminant levels in the previously proposed regulation. The factors underlying our 2024 guidance include a return on equity increase, in California, from 9.31 to 9.81, net of the 20 basis point reduction for the reimplementation of the WCMA, effective January 1st, 2020. The impact of the completed Biddeford SOCA rate case with 9.5% ROE and 51% equity.

Eric W. Thornburg: Our most recent estimate for P. Fast treatment is approximately $230 million in capital additions for our operations in California and Connecticut.

Eric W. Thornburg: Which we expect will fit nicely within our five year $1 $6 billion capital expenditure plan.

In Maine, we currently have one water system, where we have detected the presence of <unk>.

Eric W. Thornburg: That system is supplied by a neighboring water utility that is actively working to address the situation.

We also are committed to holding the manufacturers of Paphos in polluters ultimately responsible for the cost to treat these contaminants and our parties and settlement or pending settlement agreements with several manufacturers.

Andrew F. Walters: 49% debt effective capital structure as of January 1st, 2024. Constructive regulatory decisions on current and prospective regulatory filing, strategic reinvestments in the business in 2024, and a guidance range that's consistent with our long-term growth. An important note is that in April 2024, SJW Land Company completed the sale of a warehouse in Tennessee Properties for $27 million. The estimated pre-tax gain on the sale is $7 million, which is not a contributor to our 2024 guidance or first quarter.

Eric W. Thornburg: It's too early to tell how much SJW group will receive from the settlements or when but we will continue our pursuit to minimize the cost passed onto our customers.

Eric W. Thornburg: One of the ways, we measure our impact and success as a company is how have we been a force for good.

Eric W. Thornburg: We use our core values to help us deliver benefits to our customers local communities employees and the environment.

Between 2019, and 2022, we reduced our scope, one and scope two greenhouse gas emissions by approximately 20%.

Eric W. Thornburg: Our 2023 data will be reported when the results have been audited by an organization accredited by the ANC National Accreditation Board under ISO 14066.

Andrew F. Walters: Further, we reaffirm our stated long-term growth rate of 5 to 7 percent that is anchored off 2022 diluted earnings per share of 243, which is non-linear because of rate cases. With that, I'll turn the call over to Eric. Earlier this month, the United States Environmental Protection Agency issued final standards for six PFAS compounds.

Eric W. Thornburg: We're extremely proud to have had our Connecticut utility named as a top workforce USA for 2024 by USA today.

Eric W. Thornburg: What is most gratifying is that this recognition is based solely on anonymous surveys of our employees, who gave us high marks and appreciation professional development and purpose and values.

Eric W. Thornburg: SJW Group strongly supports these standards and is committed to being in full compliance with new regulations for PFAS monitoring, reporting, and maximum contaminant levels within the time frames allowed for by the EPA. Our most recent estimate for PFAS treatment is approximately $230 million in capital additions for our operations in California and Connecticut, which we expect will fit nicely within our five-year, $1.6 billion capital expenditure plan. In Maine, we currently have one water system where we have detected the presence of PFAS.

Eric W. Thornburg: Our company was also recognized in the prestigious Newsweek Excellence 1000 index for 2024.

Eric W. Thornburg: Inclusion in the index is for exemplars of corporate excellence with a firm commitment to best practices and business and financial growth.

Eric W. Thornburg: Servicing customers stakeholders and communities and social responsibility and ethical standards.

Eric W. Thornburg: Both awards are testaments to the values of the company and our commitment to being a meaningful force for good in the communities, where we live work and serve.

Eric W. Thornburg: We would like to extend a warm welcome to California public utility Commission or Matt Baker and express our deep appreciation to outgoing Commissioner Genevieve Shiroma for her for decades of public service Wheeler.

Eric W. Thornburg: That system is supplied by a neighboring water utility that is actively working to address the situation. We also are committed to holding the manufacturers of PFAS and polluters ultimately responsible for the cost to treat these contaminants, and our parties in settlement or pending settlement agreements with several manufacturers. It's too early to tell how much SJW Group will receive from the settlements or when, but we will continue our pursuit to minimize the costs passed on to our customers.

Eric W. Thornburg: We look forward to working with Commissioner Baker as peers and their staff to address the water related issues facing California's water utilities.

Eric W. Thornburg: I am very pleased to welcome Tanya Moonies Witten as president of San Jose Water Company.

Eric W. Thornburg: One of the ways we measure our impact and success as a company is how we have been a force for good. We use our core values to help us deliver benefits to our customers, local communities, employees, and the environment. Between 2019 and 2022, we reduced our Scope 1 and Scope 2 greenhouse gas emissions by approximately 20%.

She comes to us from National grid, where she was vice president of electrical distribution field operations.

Eric W. Thornburg: Prior to that she had several leadership roles at Pacific gas and electric here in California.

Our leadership qualities her character and familiarity with the South Bay area make her a fantastic addition to the team.

Eric W. Thornburg: We also recently welcomed <unk> <unk> as vice President of Communications for SJW Group.

Eric W. Thornburg: Our 2023 data will be reported when the results have been audited by an organization accredited by the ANSI National Accreditation Board under ISO 14066. We're extremely proud to have had our Connecticut utility named as a Top Workforce USA for 2024 by USA Today. What is most gratifying is that this recognition is based solely on anonymous surveys of our employees, who gave us high marks in appreciation, professional development, and purpose and value.

Eric W. Thornburg: She most recently served as a managing director at Abernathy Macgregor, she as a trusted expert who reflects our core values and as the skills and background to help SJW group enhance its communications and build upon its meaningful connections with stakeholders and elevate our brand nationally.

Eric W. Thornburg: As I've shared before our people are what makes the difference at SJW group I continue to be inspired by the contributions of our talented teams across our national footprint.

Eric W. Thornburg: Our company was also recognized in the prestigious Newsweek Excellence 1000 Index for 2024. Inclusion in the Index is for exemplars of corporate excellence, with a firm commitment to best practices in business and financial growth, serving customers, stakeholders, and communities, and Social Responsibility and Ethical Standards. Both awards are testaments to the values of the company and our commitment to being a meaningful force for good in the communities where we live, work, and serve.

Eric W. Thornburg: As they consistently provide an essential service with integrity reliability and peace of mind for our customers.

Eric W. Thornburg: I am confident our team's commitment to serving customers and communities the environment and shareholders. We will continue to excel SJW group's ability to deliver value to our stakeholders and reinforce our strong position for a successful future and.

Speaker Change: With that I'll turn the call back over to the operator for questions.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Eric W. Thornburg: We would like to extend a warm welcome to California Public Utility Commissioner Matt Baker and express our deep appreciation to outgoing Commissioner Genevieve Shiroma for her four decades of public service. We look forward to working with Commissioner Baker, his peers, and their staff to address the water-related issues facing California's water utility. I am very pleased to welcome Tanya Moniz-Whitten as president of San Jose Water Company. She comes to us from National Grid, where she was Vice President of Electrical Distribution Field Operations.

Speaker Change: To withdraw your question. Please press star one again please.

Please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from Richard Sunderland with Jpmorgan. Your line is open.

Speaker Change: Okay.

Richard Wallace Sunderland: Hi, good morning, Thanks for the time today.

Richard Wallace Sunderland: Hey, Hi, Richard Thanks for thanks for listening in today.

Richard Wallace Sunderland: I appreciate the comprehensive updates here in a couple of different things to dig into.

Richard Wallace Sunderland: Maybe first and foremost.

Richard Wallace Sunderland: The Connecticut rate keeps going on im.

Richard Wallace Sunderland: Curious, how youre feeling about the Connecticut backdrop overall I recognize this isn't new but theres been attention on your peer Aquarius appeal being denied and more litigation there just how do you feel about the regulatory pendulum in the overall utility backdrop in the state currently.

Eric W. Thornburg: Prior to that, she had several leadership roles at Pacific Gas and Electric here in California. Her leadership qualities, her character, and familiarity with the South Bay Area make her a fantastic addition to the team. We also recently welcomed Nizan Riahi as Vice President of Communications for SJW Group. She most recently served as a managing director at Abernathy McGregor.

Speaker Change: Yes, Thank you Richard I'll share my thoughts on that.

Speaker Change: Connecticut for many many years was really an exceptional state for water utilities to invest capital and earn a return in and solve problems for customers in.

Speaker Change: Acquire small utilities and solve problems for them as well.

Speaker Change: And I remain very optimistic for Connecticut with regards to the regulation of water utilities.

Operator: She's a trusted expert who reflects our core values and has the skills and background to help SJW Group enhance its communications and build upon its meaningful connections with stakeholders and elevate our brand nationally. As I've shared before, our people are what make the difference at SJW Group. I continue to be inspired by the contributions of our talented teams across our national footprint, as they consistently provide an essential service with integrity, reliability, and peace of mind for our customers.

Speaker Change: We were able to learn a lot by watching the aquarian rate case, an oven grids case, and we took to heart. The results of those cases and studied the messages that we're clearly sent and so our team in Connecticut, I think did an exceptional job re imagining the process I don't.

Speaker Change: Think that Connecticut regulators are saying, we don't want investment in the state.

Speaker Change: I think what they are saying is that we want you to really justify a tell us exactly why they are needed and make sure you back it up thoroughly so we've taken that to heart, we put together like I said, an exceptional case I am so proud of our team and we accept we expect a draft decision.

Operator: I'm confident our team's commitment to serving customers and communities, the environment, and shareholders will continue to exceed SJW Group's ability to deliver value to our stakeholders and reinforce our strong position for a successful future. And with that, I'll turn the call back over to the operator for questions. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: On May the 29, so we will know just how well we did and I think I think I think the regulatory climate. There is just change to reflect the need for additional information and address the affordability concerns that everybody has regarding utility bills. So we hope we've learn.

Operator: Please stand by while we compile the Q&A raw. Our first question comes from Richard Sunderland with J.P. Morgan. Hi, good morning. Thank you for your time today. Hey, hi, Richard.

Speaker Change: And a lot Richard and apply that learning so that we have very constructive outcome I do expect that.

Speaker Change: We will be treated very fairly there.

Speaker Change: Got it thank you for all the color.

Richard Wallace Sunderland: Thanks for listening in today. I appreciate the comprehensive updates here and a couple different things to dig into. Maybe first and foremost, with the Connecticut rape case going on, I'm curious how you feel about the Connecticut backdrop overall. I recognize this isn't you, but there's been attention on your peer Aquarian's appeal being denied and more litigation there.

Speaker Change: Turning to Texas could you speak a little bit more to the usage trends relative to the drought ramifications I guess I'm curious from a high level, how things are trending relative to guidance assumptions.

Yeah, I'll start and then I'll ask Andrew to cover it in the specifics, but we were just in Texas earlier. This week for our first quarter Board meeting.

Speaker Change: And we were able to see for ourselves our Canyon Lake which is.

Eric W. Thornburg: How do you feel about the regulatory pendulum and the overall utility backdrop in the state currently? Yeah, thank you, Richard. I'll share my thoughts on that.

Speaker Change: That is managed by the <unk> there I mean, it's substantially below <unk>.

Speaker Change: Our recent historical levels and so theres significant drought in that in that particular area of Texas. So so the threat is threat is real the rest of the state actually looks pretty good but it just.

Eric W. Thornburg: You know, Connecticut was really an exceptional state for water utilities to invest capital and earn a return, and solve problems for customers, and acquire small utilities and solve problems for them as well. And I remain very optimistic about Connecticut in regards to the regulation of water utilities. We were able to learn a lot by watching the Aquarian Rate case and Avangrid's case. And we took to heart, you know, the results of those cases and studied the messages that were clearly sent.

Speaker Change: Big Red drought zone kind of right in the heart of the state there. So so we're taking our actions to be prepared for that this summer.

And I think that indeed will have an impact on our Texas business there Andrew.

Andrew F. Walters: I think you summed it up well, Eric and I would just add rich that from our perspective, we took into our forecast a range of different outcomes from a weather perspective and were still within those bounds as it stands today, so unless something changes more significantly in the future. We will we will update you, but we still.

Eric W. Thornburg: And so our team in Connecticut, I think, did an exceptional job of reimagining the process. I don't think that Connecticut regulators are saying we don't want investment in the state. I think what they're saying is that we want you to really justify it. Tell us exactly why they're needed, and make sure you back it up thoroughly.

Feel good about where were at as it relates to our overall forecast.

Speaker Change: Understood very clear and then one final one from myself, if I may be the guidance slide I see the change in landscape.

It should be clear. The addition of language around independent of real estate sales or M&A activities is that just reflective of the Tennessee transaction you referenced in the script or is there anything else you have going on in the backdrop in terms of portfolio changes that's in process.

Eric W. Thornburg: So we've taken that to heart. We put together, like I said, an exceptional case. I'm so proud of our team.

Speaker Change: Now that's you hit it spot on and its really related to the the.

Eric W. Thornburg: And we accept, we expect a draft decision on May the 29th. So we'll know just how well we did. And I think, I think, I think the regulatory climate there has just changed to reflect the need for additional information and address the affordability concerns that everybody has regarding utility bills. So we hope we've learned a lot, Richard, and applied that learning so that we have a very constructive outcome. I do expect that we will be treated very fairly. Got it. Thank you for all the color.

<unk> on the Tennessee properties and the subsequent event transaction, which I, which I described before.

More fully disclosed in the Q once it's out, but but again I didn't want anybody to be confused that our guidance and where we are those are the core earnings of where we expect the business to perform at and that's what we're judging ourselves off of.

Speaker Change: Perfect. Thank you guys and thank you for the time today.

Speaker Change: Okay. Thank you. Thank you Richard.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone again Thats Star one on your telephone.

Eric W. Thornburg: Turning to Texas, could you speak a little bit more to the usage trends relative to the drought ramifications? I guess I'm curious from a high level how things are trending relative to guidance. Yeah, I'll start, and then I'll ask Andrew to cover it in specifics.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Yeah.

Greg: Our next question comes from Greg oral with UBS. Your line is open.

Gregg Gillander Orrill: Yes. Thank you good afternoon.

Gregg Gillander Orrill: Hey, Hi, Greg.

Gregg Gillander Orrill: With regard to Connecticut.

Eric W. Thornburg: But we were just in Texas earlier this week for our first quarterly board meeting. And, you know, we were able to see for ourselves our Canyon Lake, which is, you know, that is managed by the GBRA there. I mean, it's substantially below recent historical levels, and so there's a significant drought in that particular area of Texas. So the threat is real. The rest of the state actually looks pretty good, but there's just a big red drought zone kind of right in the heart of the state there.

Gregg Gillander Orrill: Recognizing theres a draft decision.

Gregg Gillander Orrill: Due may 29th are there any are there prospects for.

Gregg Gillander Orrill: Settlement of partial settlement.

Gregg Gillander Orrill: In Connecticut, what are your thoughts about that.

Sure.

Speaker Change: Yeah, no there are not it's really the proceedings have concluded and briefs have been written and so now it's just up to the commission to weigh the evidence and write their decision.

Speaker Change: Okay.

Speaker Change: And how do you how do you think about the.

Speaker Change: Sort of legacy sort of pre P funds rule lie.

Eric W. Thornburg: So we're taking steps to be prepared for that this summer, and I think it will indeed have an impact on our Texas business there. Andrew?

Speaker Change: Our liability.

Speaker Change: For the company on that.

Speaker Change: Topic.

Speaker Change: Well as we've disclosed.

Speaker Change: Im sorry, Richard go ahead Im sorry.

Andrew F. Walters: Yeah, I think you summed it up well, Eric. And I would just add, Rich, that from our perspective, you know, we took into our forecast a range of different outcomes from a weather perspective, and we're still within those bounds as it stands today. So, unless something changes more significantly in the future, we will update you, but we still feel good about where we're at as it relates to our overall forecast. Very clear. And then one final one from myself, if I may.

Speaker Change: Yes.

Richard Wallace Sunderland: Okay, I apologize for stepping on your lying there.

Richard Wallace Sunderland: Yes, we have a very good understanding of what the capital needs are too to address the newly promulgated <unk> standard in both California and Connecticut.

Richard Wallace Sunderland: We have projects even underway now in Connecticut. So we think by the end of the year, we'll have a couple of couple of well fields already addressed and so.

Richard Wallace Sunderland: So we feel like we're in a really good spot there.

<unk>.

Richard Wallace Sunderland: We're very confident that we will receive regulatory recovery of those capital investments.

Andrew F. Walters: The guidance slide, I see the change in language, or, to be clear, the addition of language around independent of real estate sales or M&A activities. Is it just reflective of the Tennessee transaction you referenced in the script, or is there anything else you have going on in the backdrop in terms of portfolio changes that's in process? Now that's you you've hit it spot on. It's really related to the specifics of the Tennessee properties and the subsequent event transaction which I described in the formal, more fully disclosed in the queue once it's out, but but again, I didn't want anybody to be confused about our guidance and where we are. Those are the core earnings of where we expect the business to perform. And that's what we're judging.

Richard Wallace Sunderland: And so feel like we've got a really good start in the state and as well in California, So very optimistic about our ability to two.

Richard Wallace Sunderland: To conclude our projects well before the five year time horizon.

Richard Wallace Sunderland: Which is provided by EPA to achieve compliance Eric I might just add to that too that the the amounts are obviously estimates based off the time inflation and other factors could have an impact on on where the total actually comes out to be over time, but the other thing that Eric mentioned in his in his discussion with us was.

We are focused on ways to save money in other ways to create that room in the bills of our customers. So that we can.

Richard Wallace Sunderland: Confidently.

Richard Wallace Sunderland: Recover this without any diminishing in other capital projects as well.

Richard Wallace Sunderland: Alright.

Speaker Change: Thanks have a good weekend. Thank you Greg I appreciate it thank you very much.

Richard Wallace Sunderland: Perfect. Thank you again, and thank you for the time. Thank you, Richard. Thank you. As a reminder, to ask a question, please press star 11 on your telephone. Again, that's star 11 on your telephone.

Speaker Change: Thank you I'm showing no further questions at this time I would now like to turn it back to Eric Kornberg, Chief Executive Officer for closing remarks.

Thank you everyone for joining us today as you heard it's been a solid start to the year and we have a lot more to look forward to in 2024, including finalizing our rate case in Connecticut, implementing our <unk> initiative in California pursuing the acquisition close of three <unk> in Texas.

Operator: One moment for our next question. Our next question comes from Gregg Orrill with UBS. Your line is open. Yeah, thank you. Good afternoon. Hey, hi, Greg.

Operator: Okay, with regard to Connecticut, you know, recognizing there's a draft decision due May 29th, are there any prospects for settlement or partial settlement in Connecticut? What are your thoughts about that? Yeah, no, there are not.

Speaker Change: <unk> R. P fast remediation strategy in realizing our national capital sourcing initiative and much much more SJW group proudly leverages that national platform, we have to support our local operations and their shared mission to serve high quality water to $1 5 million people across four states and while we do this we make sure.

Gregg Gillander Orrill: It's really the proceedings have concluded, and briefs have been written, and so now it's just up to the commission to weigh the evidence and write their decision. Okay, and what do you think about the, sort of, pre-PFAS rule liability for the company on that topic? We have a very good understanding of what the capital needs are to address the newly promulgated PFAS standards in both California and Connecticut.

Speaker Change: We execute our growth strategy and deliver shareholder value, including paying a dividend, which we have faithfully done for 80 straight years, and we've raised that dividend for 56 consecutive years.

Speaker Change: I recognize that it's our culture of service to our customers and the local communities that underlies our success and I'm very proud of our people who make it all possible and we look forward to sharing our progress with you next quarter as we continue to execute on our growth strategy in the meantime, Andrew and I, along with the rest of the <unk>.

Eric W. Thornburg: We even have projects underway now in Connecticut, so we think by the end of the year we'll have a couple of wellfields already addressed. We feel like we're in a really good spot there and very confident that we'll receive regulatory recovery of those capital investments. And so I feel like we've got a really good start in the state and as well in California.

Speaker Change: Group team are always available for follow up. Thank you again for your interest in SJW group.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

Speaker Change: [music].

Eric W. Thornburg: So very optimistic about our ability to conclude our projects well before the five-year time horizon, which is provided by EPA to achieve compliance. Yeah, Eric, I might just add to that, too, that the amounts are obviously estimates based on time. Inflation and other factors could have an impact on where the total actually comes out to be over time. But the other thing that Eric mentioned in his discussion with us was that we are focused on ways to save money and other ways to create that room in the bills of our customers so that we can confidently recover this without any demunition and other capital projects as well. All right. Thanks. Have a good weekend!

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Gregg Gillander Orrill: Thank you, Greg. I appreciate it. Thank you very much.

Operator: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Eric Thornburg, Chief Executive Officer, for closing remarks. Thank you, everyone, for joining us today. As you heard, it's been a solid start to the year, and we have a lot more to look forward to in 2024, including finalizing our rate case in Connecticut, implementing our AMI initiative in California, pursuing the acquisition and close of 3009 in Texas, advancing our PFAS remediation strategy, and realizing our national capital sourcing initiative, and much, much more.

Operator: SJW Group proudly leverages that national platform we have to support our local operations and their shared mission to serve high-quality water to 1.5 million people across four states. And while we do this, we make sure we execute our growth strategy and deliver shareholder value, including paying a dividend, which we have faithfully done for 80 straight years. And we've raised that dividend for 56 consecutive years. I recognize that it's our culture of service to our customers and the local communities that underlies our success, and I'm very proud of our people who make it all possible.

Operator: And we look forward to sharing our progress with you next quarter as we continue to execute on our growth strategy. In the meantime, Andrew and I, along with the rest of the SJW Group team, are always available for follow up. Thank you again for your interest in SJW Group. This concludes today's conference call. Thank you for participating. You may now disconnect.

Narrative: A man is a man, a woman is a woman. A woman is a woman, a man is a man. A woman is a woman; a man is a man. A woman is a woman; a man is a man.

Narrative: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, and thank you for standing by. Welcome to the SJW Group Q1 2024 Financial Results Conference. At this time, all participants are in a listen-only mode.

Narrative: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your question is. To withdraw your question, please press star 1 1 again.

Narrative: Please be advised that today's conference is being held. I would now like to hand the conference over to your speaker today, Andrew Walters, Chief Financial Officer. Please go ahead. Thank you, operator. Welcome to the first quarter 2024 financial results conference call for SJW. I will be presenting today with Eric Thornburg, Chair of the Board, President, and Chief Executive Officer. For those of you who would like to follow along, slides accompanying our remarks are available on our website at sjwgroup.com.

Narrative: Before we begin today, I would like to remind you that this presentation and the 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 that the company believes are appropriate under the circumstances. Many factors could cause the company's implied or actual results and performance to differ materially from those expressed or implied by the forward. 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 our most recent forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on.

Speaker Change: [music].

Narrative: All forward-looking statements are made as of today, and SJW Group disclaims any duty to update or revise, as you will have an 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 July 24th, 2024. You can access the press release and the webcast on our corporate website. And we'll now turn the call over to Eric Thornburg. Eric.

Narrative: Welcome everyone, and thank you for joining us. My name is Eric Thornburg, and it is my honor to serve as chair, president, and CEO of SJW Group. I'm pleased to share that in the first quarter of 2024, we met drinking water and environmental regulations, delivered on our public health and environmental stewardship commitments, and provided high-quality water and service to customers. We also laid the foundation for a strong year by working constructively with regulators to secure approval of a general rate case in Maine and an infrastructure surcharge in Texas, investing $69 million in water and wastewater utility infrastructure, which constitutes approximately 2 We delivered earnings per diluted share of $0.36 in the first quarter.

Speaker Change: Good day, and thank you for standing by.

Speaker Change: Going to the SJW group Q1, 'twenty 'twenty four financial results conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone.

Speaker Change: You don't hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I'd now like to hand, the conference over to your Speaker today, Andrew Walters Chief Financial Officer. Please go ahead.

Andrew F. Walters: Thank you operator welcome to the first quarter 2024 financial results conference call for SJW group.

Andrew F. Walters: We'll be presenting today with Eric Thornburg Chair of the Board President and Chief Executive Officer for.

Andrew F. Walters: For those of you who would like to follow along slides accompanying our remarks are available on our website at SJW group Dot com.

Okay.

Before we begin today I would like to remind you that this presentation and the related materials posted on our website may contain forward looking statements. These.

Narrative: We will talk more about this and the solid progress made on being a force for good as part of executing our strategic plan. Andrew will now review our financial results and regulatory updates in our state operations.

Andrew F. Walters: 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.

Andrew F. Walters: As well as other factors that the company believes are appropriate under the circumstances.

Andrew F. Walters: Many factors could cause the company's implied or actual results and performance to differ materially from those expressed or implied by the forward looking statements.

Narrative: Thank you, Eric. Last evening, after the market closed, we released our first quarter 2024 operating results. In the first quarter, we reported revenue of $149.4 million, a 9% increase over $137.3 million reported in the same quarter of 2020. The increase was largely driven by ratings. It is also worth noting that both our California and Connecticut operations have revenue protection mechanisms. Despite higher water production expenses, we were able to deliver net income for the quarter of $11.79, a 1% increase over the $11.5 million reported in the first quarter of 2023. Diluted EPS was $0.36 per share compared to $0.37 in 2023.

Andrew F. Walters: 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 <unk>.

Andrew F. Walters: And our most recent forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission copies of which may be obtained on our website.

Andrew F. Walters: All forward looking statements are made as of today in SA <unk> group disclaims any duty to update or revise such statements.

Andrew F. Walters: As you will have an opportunity to ask questions at the end of the presentation.

Andrew F. Walters: And as a reminder, this webcast is being recorded and an archive of the webcast will be available until July 24, 2024, you can access the press release and the webcast at our corporate website I will now turn the call over to Eric Thornburg Eric.

Eric W. Thornburg: Welcome everyone and thank you for joining US my name is Eric Thornburg and it is my honor to serve as chair President and CEO of SJW group.

Narrative: As you can see, 26 cents of the revenue increase were driven primarily by rate increases in California and Maine and the infrastructure recovery mechanism in Connecticut. Higher usage also contributed 5%. However, the revenue increase was offset by higher water production costs, depreciation, and amortization, as well as interest.

Eric W. Thornburg: I am pleased to share that in the first quarter of 2024, we met drinking water and environmental regulations delivered on our public health and environmental stewardship commitments and provided high quality water and service to customers.

Eric W. Thornburg: We also laid the foundation for a strong year by working constructively with regulators to secure approval of a general rate case in Maine, and an infrastructure surcharge in Texas <unk>.

Narrative: $10 million of the revenue increase was from the rate and infrastructure adjustments, and $2.6 million was attributable to higher usage due to customer growth. Moving on to water production expenses, our water production expense in the quarter increased 10% compared to 2023. The increase was principally driven by higher customer usage and rate increases from our water wholesaler in California. Total other operating expenses increased 7% year over year. The increase was primarily due to increases in depreciation and amortization and higher administrative and general costs.

Eric W. Thornburg: Investing $69 million in water and wastewater utility infrastructure.

Eric W. Thornburg: Which constitutes approximately 21% of our $332 million 2024 capital expenditure plan.

And benefiting customers by executing our capital sourcing initiative and leveraging our national scale to save an anticipated one $5 million through cost reduction and cost avoidance in 2024.

Eric W. Thornburg: We delivered earnings per diluted share of 36.

Eric W. Thornburg: In the first quarter.

Eric W. Thornburg: We will talk more about this and the solid progress made on being a force for good as part of executing our strategic plan.

Narrative: Approximately $7 million in gross proceeds was raised in our first quarter through our At The Market program. At the end of the first quarter, we had $211 million drawn on our $350 million bank lines of credit, leaving $139 million available for short-term financing of utility plant additions in operating. The average borrowing rate for our line of credit advances during the quarter was approximately 6.54%. The average borrowing rate in the same period of 2023 was approximately 5.74%.

Eric W. Thornburg: Andrew will now review, our financial results and regulatory updates and our state operations.

Eric W. Thornburg: <unk>.

Andrew F. Walters: Thank you Eric.

Andrew F. Walters: Last evening after the market close we released our first quarter 2024 operating results.

Andrew F. Walters: In the first quarter, we reported revenue of $149 4 million <unk>.

Andrew F. Walters: A 9% increase over $137 3 million reported in the same quarter of 2023.

The increase was largely driven by rate increases.

Andrew F. Walters: It is also worth noting that both our California, and Connecticut operations have revenue protection mechanisms in place.

Narrative: The effective consolidated income tax rates for the first quarter of 2024 and 2023 were approximately 16% and 9%, respectively. On January 2nd, 2024, San Jose Water filed a general rate case application with the California Public Utilities Commission that will set rates for 2025 through 2027. The application proposes a three-year, $540 million capital expenditure program that addresses several key needs, including treating PFAS to meet drinking water standards recently finalized by the US EPA, and reducing greenhouse gas emissions through solar generation, energy storage systems to replace diesel generators, as well as fleet electrification and advanced acoustic leak detection.

Andrew F. Walters: Despite.

Andrew F. Walters: Higher water production expenses, we were able to deliver net income for the quarter of $11 7, million% to 1% increase over the $11 $5 million reported in the first quarter of 2023.

Andrew F. Walters: Diluted EPS was <unk> 36 per share compared to 37 in 2023.

Andrew F. Walters: Okay.

Andrew F. Walters: As you can see 26 tenths of the revenue increase were driven primarily by rate increases in California in Maine, and the infrastructure recovery mechanism in Connecticut.

Andrew F. Walters: <unk> also contributed <unk> <unk>.

Andrew F. Walters: The revenue increase was offset by higher water production cost depreciation and amortization as well as interest expense.

Andrew F. Walters: Okay.

Andrew F. Walters: And million of the revenue increase was from the rate and the infrastructure adjustments and $2 6 million was attributable to higher usage and customer growth.

Andrew F. Walters: Okay.

Narrative: And we were advancing the CPUC's Environmental and Social Justice Action Plan to improve access to high-quality water service, climate resiliency, and economic and workforce development. The decision could come as early as the fourth quarter of 2024 and be effective on January 1st, 2025. As of January 1, 2024, San Jose Water employees will have the benefit of a group insurance balance. The purpose of the account is to capture the differences between authorized and actual medical, dental, and opt-out insurance costs.

Andrew F. Walters: Moving onto water production expenses, our water production expense in the quarter increased 10% compared to 2023%. The increase was principally driven by higher customer usage and rate increases from our water wholesaler in California.

Andrew F. Walters: Total other operating expenses increased 7% year over year. The increase was primarily from increases in depreciation and amortization and higher administrative and general costs.

Okay.

Andrew F. Walters: Approximately $7 million in gross proceeds was raised in our first quarter through our at the market program.

At the end of the first quarter, we had $211 million drawn on our $350 million bank lines of credit, leaving a $139 million available for short term financing of utility plant additions and operating activities.

Narrative: This is yet another regulatory mechanism that helps us to manage these escalating and unpredictable expenses. We will explore opportunities to optimize the expense in the future to benefit our customers. The 2024 Water Cost of Capital Mechanism Adjustment was effective on January 1, 2024. The return on equity is 10.01%, plus a 20 basis point reduction due to the reauthorization of the Water Conservation Memorandum, for an authorized ROE of 9.81%.

Andrew F. Walters: The average borrowing rate for our line of credit advances during the quarter was approximately six 5% 4%.

Andrew F. Walters: The average borrowing rate in the same period of 2023 was approximately 574%.

Andrew F. Walters: The effect of consolidated income tax rates for the first quarter of 2024, and 2023 were approximately 16% and 9% respectively.

Andrew F. Walters: On January <unk> 2020 for San Jose Water filed a general rate case application with the California Public Utilities Commission that will set rates for 2025 through 2027.

Narrative: Our cost of debt is 5.28%, and the authorized rate of return is $7.75. For reference, our return on equity in the first quarter of 2023 was 8.9% plus 20 basis points for water conservation. On February 2nd, 2024, San Jose Water, along with three other Class A California water utilities, received approval from the CPUC for a one-year deferment in the 2024 Casa Capital. With this decision, the CPUC extended the initial filing deadline from May 1, 2024 to May 1, 2025.

Andrew F. Walters: The application proposes at three year $540 million capital expenditure program that addresses several key needs including.

Andrew F. Walters: Treating P fast to meet drinking water standards recently finalized by the U S EPA reducing.

Andrew F. Walters: Reducing greenhouse gas emissions through solar generation energy storage systems to replace diesel generators as well as fleet electrification and advanced acoustic leak detection.

Andrew F. Walters: And we were advancing the Cpuc's environmental and social Justice action plan to improve access to high quality water service climate, resiliency and economic and workforce development.

Andrew F. Walters: A decision could come as early as the fourth quarter of 2024 and be effective on January one 2025.

Narrative: The approval deferral includes a provision that the Water Costs and Capital Mechanism remains in place for 2025 and allows it to adjust up or down in accordance with movements of 100 basis points or more and Moody's AA Bond Index between October 1st, 2020, and September 30th.

Andrew F. Walters: Yes.

Andrew F. Walters: As of January one 2020 for San Jose water has the benefit of a group insurance balancing account.

The purpose of the account is to capture the differences between authorized and actual medical dental and opt out insurance cost.

Andrew F. Walters: This is yet another regulatory mechanism that helps us to manage the escalating and unpredictable expense.

Narrative: Installation of smart meters as part of our advanced metering infrastructure project is underway; we are planning to invest approximately $27 million in the AMI project in 2024. This is a $100 million project that is separate from the general rate, capital budget, and the majority of the installation is expected between 2024. In Connecticut, our general rate case application is pending before the Public Utility Regulatory Commission. Her request is for $21.4 million, an 18.1% increase in annual revenues.

Andrew F. Walters: We will explore opportunities to optimize the expense in the future to benefit our customers.

Andrew F. Walters: The 2020 for water cost of capital mechanism adjustment was effective on January one 2024.

Andrew F. Walters: Our return on equity of 10, 1% less a 20 basis point reduction due to the reauthorization of the water conservation memorandum account for an authorized ROE of 981%.

Andrew F. Walters: Our cost of debt is 528% and the authorized rate of return of 775%.

Andrew F. Walters: For reference our return on equity in the first quarter of 2023 was eight 9% plus 20 basis points for the water conservation Memorandum account.

Narrative: Approximately two-thirds of the requested rate increase is related to an infrastructure investment project. The application also includes a proposal for expanding our low-income water rate assistance program. We were the first water utility in the state to offer this type of rate assistance program.

Andrew F. Walters: On February <unk> 2020 for San Jose water, along with three other class a California water utilities received approval from the CPUC for a one year deferment in the 2020 for cost of capital filing.

Narrative: We're hopeful that PURA will authorize our requested expansion of this important program. The final decision on the Connecticut general rate case is expected in late June, with any approved revenue increase to be effective on or about July 1st. New rates for Maine Water's Bedford-Saco Division were effective on January 1st, 2024, following approval by the Maine Public Utility Commission of a stipulation agreement between Mainwater and the Office of Public Advocacy. The company's annualized revenue is expected to increase by 2.6%.

Andrew F. Walters: With this decision the CPUC extended the initial filing deadline from May one 2024 to May one 2025.

Andrew F. Walters: The approval deferral includes a provision that the water cost of capital mechanism remains in place for 2025 and allows it to adjust up or down in accordance with movements of 100 basis points or more.

Andrew F. Walters: And Moodys double AA Bond index between October one 2023 and September 32024.

Andrew F. Walters: Installation of smart meters as part of our advanced metering infrastructure project is underway, we are planning to invest approximately $27 million in the Ams project. In 2024. This is a $100 million project that is separate from the general rate case capital budget and as the majority of the installation is expected beta.

Narrative: Maine Water had applied for the increase to cover the operating expenses and increased borrowing costs from the construction of the new Saco River drinking water reservoir. Other provisions of the Approved Stipulation Agreement include a return on equity for the Biddeford-Saco division of 9.5%, with an assumed 51% equity and 49% debt capital. The ROE and capital structure will also apply to future water infrastructures. A general rate case stay out provision in Bitterford SACA Division through January 1st, 2027. This day out does not include an infrastructure search.

Andrew F. Walters: 2024 and 2026.

Andrew F. Walters: In Connecticut, our general rate case application is pending before the public utility regulatory authority.

Andrew F. Walters: Our request is for $21 4 million or 18, 1% increase in annual revenues.

Andrew F. Walters: Approximately two thirds of the requested rate increases related to infrastructure investment project.

Andrew F. Walters: Projects that.

Andrew F. Walters: Implication also includes a proposal for expanding our low income water rate assistance program.

Andrew F. Walters: We were the first water utility in the state to offer this type of rate assistance program.

Andrew F. Walters: We are hopeful that PURA will authorize our requested expansion of this important program.

Narrative: On March 22, 2024, the MPUC approved Maine Waters' infrastructure surcharge filing with the Camden Rockland District, which is expected to generate approximately 158,000 in annualized. Turning to Texas, we continue to see strong growth in our Texas service area, as evidenced by robust developer interest in water and wastewater. The number of Outstanding Development Units with the potential for new connections is approximately 22,000.

Andrew F. Walters: A final decision on the Connecticut General rate case is expected in late June with any approved revenue increase to be effective on or about July one 2024.

Andrew F. Walters: New rates for Maine, Water's Bedford Soco Division were effective on January one 2024.

Andrew F. Walters: Following approval, the Maine public utility commission of its.

Andrew F. Walters: Stipulation agreement between Maine water in the office of public advocate.

Andrew F. Walters: The company's annualized revenue is expected to increase by $2 6 million.

Maine water had applied for the increase to cover the operating expenses and increased borrowing costs from construction of the new Soco River drinking water resource Center.

Narrative: This is not surprising as Texas Water currently serves three of the five fastest growing counties in the United States, according to the U.S. With more than 28,000 water connections and 1,000 wastewater connections in the area between Austin and San Antonio, the company has quadrupled its service connections since. We intend to continue this momentum through prudent acquisitions, organic growth, and securing strategic water. One example of the Opportunistic Acquisition Strategy, the 3009 water system in Comal County serves approximately 270 water connections and is strategically located within our service area.

Andrew F. Walters: Other provisions of the approved stipulation agreement include a return on equity for better for Taco Division of nine 5% with an assumed 51% equity 49% debt capital structure.

Andrew F. Walters: The ROE and capital structure will also apply to future water infrastructure surcharges.

Andrew F. Walters: General rate case stay out provision in Biddeford Soccer Division through January one 2027, the stay out does not include infrastructure surcharge filings.

Andrew F. Walters: On March 22020 for the MPC approved Maine, water's infrastructure surcharge filing with the Camden in Rocklin Division, which is expected to generate approximately 158000 in annualized revenues.

Narrative: Our application to acquire 3009 is pending before the Public Utility Commission of Texas, and a decision is expected in the third quarter of next year. On March 21, 2024, the PUC-T approved our application for a system improvement charge. The decision authorizes Texas Water to add certain utility plan additions made since 2020 to its rate, thereby increasing revenue and avoiding a general rate case. We expect an increase in annualized revenue of $1. The U.S. Drought Monitor continues to classify our Texas service area as being moderate to severe drought. We are targeting voluntary water use reductions that vary depending on local drought conditions.

Andrew F. Walters: Turning to taxes, we continue to see strong growth in our Texas service area as evidenced by robust developer interest in water and wastewater connections.

Andrew F. Walters: The number of outstanding development units with the potential for new connections is approximately 22000 units.

Andrew F. Walters: This is not surprising as Texas water currently serves three of the five fastest growing counties in the United States. According to the U S Census Bureau.

With more than 28000 water connections and 1000 wastewater connections in the area between Austin and San Antonio The company has quadrupled its service connection since 2006.

Andrew F. Walters: We intend to continue this momentum through prudent acquisitions organic growth and securing strategic water resources.

Andrew F. Walters: One example of the opportunistic acquisition strategy is.

Narrative: Overall, we expect lower water usage in 2024 if the drought continues, with a diverse portfolio of water supplies, a growing wastewater business, and continued additions to the customer base through organic growth acquisitions. We are pleased with Texas Water's increasing contributions to consolidated earnings and remain optimistic about its growth. We are reaffirming our 2024 guidance of $2.68 to $2.78 of net income per diluted share, which is consistent with our nonlinear income long-term growth rate of five to 7%. We expect equity issuance of approximately $55 million to $65 million, excluding acquisition growth, to support our strong capital investment program.

Andrew F. Walters: <unk> three <unk> nine water system, and Comal County, and serves approximately 270 water connections and strategically located within our service territory. Our application to acquire <unk> is pending before the public utility Commission of Texas and a decision is expected in the third quarter of 2024.

On March 21, 2020 for the PUC approved our application for a system improvement charge in Texas. The decision authorizes, Texas water to add certain utility plant additions made since 2022 its rate base, thereby increasing revenue and avoiding a general rate case in 2024.

Andrew F. Walters: We expect an increase in annualized revenue of $1 6 billion.

Andrew F. Walters: The U S drought monitor continues to classify our Texas service area as being moderate to severe drought. We are targeting voluntary water use reductions that vary on local drought conditions overall, we expect lower water usage in 2024, if the drought continues.

Narrative: We maintain our five-year capital investment outlook of $1.6 billion, which includes approximately $230 million in estimated PFAS remediation based on the maximum contaminant levels in the previously proposed regulation. The factors underlying our 2024 guidance include a return on equity increase, in California, from 9.31 to 9.81, net of the 20 basis point reduction for the reimplementation of the WCMA effective January 1st, 2020. The impact of the completed Biddeford SOCA rate case was 9.5% ROE and 51% equity.

Andrew F. Walters: With a diverse portfolio of water supplies, a growing wastewater business and continued additions to the customer base through organic growth and acquisitions.

Andrew F. Walters: We are pleased with Texas waters, increasing contributions to consolidated earnings and remain optimistic about its prospects.

Andrew F. Walters: We are reaffirming our 2024 guidance of $2 68 to $2 78, <unk> of net income per diluted share, which is consistent with our non linear in long term growth rate of 5% to 7%.

We are expect equity issuance of approximately $55 million to $65 million, excluding acquisition growth to support our strong capital investment program.

We maintain our five year capital investment outlook of $1 6 billion, which includes approximately $230 million and estimated P. Fast remediation based on the maximum contaminant levels previously proposed regulation.

Narrative: 49% debt effective capital structure as of January 1st, 2024. Constructive regulatory decisions on current and prospective regulatory filing, strategic reinvestments in the business in 2024, and a guidance range that's consistent with our long-term growth. An important note is that in April 2024, SJW Land Company completed the sale of a warehouse in Tennessee Properties for $27 million. The estimated pre-tax gain on the sale is $7 million, which is not a contributor to our 2024 guidance or first quarter.

Andrew F. Walters: The factors underlying our 2024 guidance include a return on equity increase.

Andrew F. Walters: And in California, 931% to $9 eight one net of the 20 basis point reduction for the re implementation of the WC MMA effective January one 2024.

Andrew F. Walters: The impact of the completed Biddeford soccer rate case was nine 5% Roe.

Andrew F. Walters: And 51% equity.

49% that effective capital structure as of January one 2024.

Andrew F. Walters: Constructive regulatory decisions on current and prospective regulatory filings.

Andrew F. Walters: Strategic Reinvestments in the business in 2024, and our guidance range is consistent with our long term growth.

Narrative: Further, we reaffirm our stated long-term growth rate of 5 to 7 percent that is anchored off 2022 diluted earnings per share of 243, which is non-linear because of rate cases. With that, I'll turn the call over to Eric. Earlier this month, the United States Environmental Protection Agency issued final standards for six PFAS compounds.

An important note isn't in April 2020 for SJW land company completed the sale of a warehouse building.

Andrew F. Walters: Off the tendency properties for $27 million.

Andrew F. Walters: The estimated pre tax gain on the sale of $7 million, which is not a contributor to our 2024 guidance or first quarter earnings.

Andrew F. Walters: Further we reaffirm our stated long term growth rate of 5% to 7% that is anchored off.

Andrew F. Walters: 2022 diluted earnings per share of $2 43, which is non linear because of rate case cycles with that I'll turn the call over to Eric.

Narrative: SJW Group strongly supports these standards and is committed to being in full compliance with new regulations for PFAS monitoring, reporting, and maximum contaminant levels within the time frames allowed for by the EPA. Our most recent estimate for PFAS treatment is approximately $230 million in capital additions for our operations in California and Connecticut, which we expect will fit nicely within our five-year, $1.6 billion capital expenditure plan. In Maine, we currently have one water system where we have detected the presence of PFAS.

Thank you Andrew.

Earlier this month, the United States Environmental Protection Agency issued final standards for six P fast compounds.

Eric: SJW group's strongly supports these standards and is committed to being in full compliance with new regulations for P. Fast monitoring reporting and maximum contaminant levels within the timeframe as allowed for by the EPA.

Eric: Our most recent estimate for P. Fast treatment is approximately $230 million in capital additions for our operations in California and Connecticut.

Eric: Which we expect will fit nicely within our five year $1 6 billion capital expenditure plan.

Eric: In Maine, we currently have one water system, where we have detected the presence of <unk>.

Narrative: That system is supplied by a neighboring water utility that is actively working to address the situation. We also are committed to holding the manufacturers of PFAS and polluters ultimately responsible for the cost to treat these contaminants, and our parties in settlement or pending settlement agreements with several manufacturers. It's too early to tell how much SJW Group will receive from the settlements or when, but we will continue our pursuit to minimize the costs passed on to our customers.

Eric: That system is supplied by a neighboring water utility that is actively working to address the situation.

Eric: We also are committed to holding the manufacturers of P. Fasten polluters ultimately responsible for the cost to treat these contaminants and our parties and settlement or pending settlement agreements with several manufacturers.

Eric: It's too early to tell how much SJW group will receive from the settlements or wind, but we will continue our pursuit to minimize the cost passed onto our customers.

Narrative: One of the ways we measure our impact and success as a company is how we have been a force for good. We use our core values to help us deliver benefits to our customers, local communities, employees, and the environment. Between 2019 and 2022, we reduced our Scope 1 and Scope 2 greenhouse gas emissions by approximately 20%.

Eric: One of the ways, we measure our impact and success as a company is how have we been a force for good.

Eric: We use our core values to help us deliver benefits to our customers local communities employees and the environment.

Between 2019, and 2022, we reduced our scope, one and scope two greenhouse gas emissions by approximately 20%.

Narrative: Our 2023 data will be reported when the results have been audited by an organization accredited by the ANSI National Accreditation Board under ISO 14066. We're extremely proud to have had our Connecticut utility named as a top workforce USA for 2024 by USA Today. What is most gratifying is that this recognition is based solely on anonymous surveys of our employees, who gave us high marks in appreciation, professional development, and purpose and value.

Eric: Our 2023 data will be reported when the results have been audited by an organization accredited by the ANC National Accreditation Board under ISO 14066.

Eric: We're extremely proud to have had our Connecticut utility named as a top workforce USA for 2024 by USA today.

Eric: What is most gratifying is that this recognition is based solely on anonymous surveys of our employees, who gave us high marks and appreciation professional development and purpose and values.

Narrative: Our company was also recognized in the prestigious Newsweek Excellence 1000 Index for 2024. Inclusion in the Index is for exemplars of corporate excellence, with a firm commitment to best practices in business and financial growth, serving customers, stakeholders, and communities, and Social Responsibility and Ethical Standards.

Eric: Our company was also recognized in the prestigious Newsweek Excellence 1000 index for 2024.

Eric: Inclusion in the index is for exemplars of corporate excellence with a firm commitment to best practices and business and financial growth.

Eric: Servicing customers stakeholders and communities and social responsibility and ethical standards.

Narrative: Both awards testament to the values of the company and our commitment to being a meaningful force for good in the communities where we live, work, and serve. We would like to extend a warm welcome to California Public Utility Commissioner Matt Baker and express our deep appreciation to outgoing Commissioner Genevieve Shiroma for her four decades of public service. We look forward to working with Commissioner Baker, his peers, and their staff to address the water-related issues facing California's water utility.

Eric: Both awards are testaments to the values of the company and our commitment to being a meaningful force for good in the communities, where we live work and serve.

We would like to extend a warm welcome to California public utility Commission or Matt Baker and express our deep appreciation to outgoing Commissioner Genevieve Shiroma for her for decades of public service Wheeler.

Eric: We look forward to working with Commissioner Baker as peers and their staff to address the water related issues facing California's water utilities.

Narrative: I am very pleased to welcome Tanya Moniz-Whitten as president of San Jose Water Company. She comes to us from National Grid, where she was Vice President of Electrical Distribution Field Operations. Prior to that, she had several leadership roles at Pacific Gas and Electric here in California.

Eric: I am very pleased to welcome Tanya Moonies Witten as president of San Jose Water Company.

Eric: She comes to us from National grid, where she was vice president of electrical distribution field operations.

Eric: Prior to that she had several leadership roles at Pacific gas and electric here in California.

Narrative: Her leadership qualities, her character, and familiarity with the South Bay Area make her a fantastic addition to the team. We also recently welcomed Nizan Riahi as Vice President of Communications for SJW Group. She most recently served as a managing director at Abernathy McGregor.

Eric: Our leadership qualities her character and familiarity with the South Bay area make her a fantastic addition to the team.

Eric: We also recently welcomed the Zhan <unk> as Vice President of Communications for SJW Group.

She most recently served as a managing director at Abernathy Macgregor, she as a trusted expert who reflects our core values and as the skills and background to help SJW group enhance its communications and build upon its meaningful connections with stakeholders and elevate our brand nationally.

Narrative: She's a trusted expert who reflects our core values and has the skills and background to help SJW Group enhance its communications and build upon its meaningful connections with stakeholders and elevate our brand nationally. As I've shared before, our people are what make the difference at SJW Group. I continue to be inspired by the contributions of our talented teams across our national footprint, as they consistently provide an essential service with integrity, reliability, and peace of mind for our customers.

Eric: As I've shared before our people are what makes the difference at SJW group I continue to be inspired by the contributions of our talented teams across our national footprint.

Eric: As they consistently provide an essential service with integrity reliability and peace of mind for our customers.

Narrative: I'm confident our team's commitment to serving customers and communities, the environment, and shareholders will continue to exceed SJW Group's ability to deliver value to our stakeholders and reinforce our strong position for a successful future. And with that, I'll turn the call back over to the operator for Quest. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Eric: I am confident our team's commitment to serving customers and communities the environment and shareholders. We will continue to excel SJW group's ability to deliver value to our stakeholders and reinforce our strong position for a successful future and.

Speaker Change: With that I'll turn the call back over to the operator for questions.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

To withdraw your question. Please press star one again please.

Operator: Please stand by while we compile the Q&A transcript. Our first question comes from Richard Sunderland with JPMorgan. Your line is, Hi, good morning. Thank you for your time today. Hey, hi, Richard.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from Richard Sunderland with Jpmorgan. Your line is open.

Speaker Change: Okay.

Hi, Good morning, Thank you for the time today.

Richard Wallace Sunderland: Hey, Hi, Richard Thanks for thanks for listening in today.

Richard Wallace Sunderland: Thanks for listening in today. Appreciate the comprehensive updates here, and a couple different things to dig into. So maybe first and foremost, with the Connecticut raid case going on, I'm curious how you feel about the Connecticut backdrop overall. I recognize this isn't you, but there's been attention on your peer Aquarian appeal being denied and more litigation there.

Richard Wallace Sunderland: I appreciate the comprehensive updates here in a couple of different things to dig into.

Richard Wallace Sunderland: Maybe first and foremost.

The Connecticut rate keeps going on im.

Richard Wallace Sunderland: Curious, how youre feeling about the Connecticut backdrop overall.

Richard Wallace Sunderland: I recognize this isn't new but theres been attention on your peer Aquarius appeal being denied and more litigation there just how do you feel about the regulatory pendulum in the overall utility backdrop in the state currently.

Eric W. Thornburg: How do you feel about the regulatory pendulum and the overall utility backdrop in the state currently? Yeah, thank you, Richard. I'll share my thoughts on that. You know, Connecticut was really an exceptional state for water utilities to invest capital and earn a return and solve problems for customers and, and acquire small utilities and solve problems for them as well.

Yes, Thank you Richard I'll share my thoughts on that.

Richard Wallace Sunderland: Connecticut for many many years was really an exceptional state for water utilities to invest capital and earn a return in and solve problems for customers in.

Richard Wallace Sunderland: Acquire small utilities and solve problems for them as well.

Eric W. Thornburg: And I remain very optimistic about Connecticut in regards to the regulation of water utilities. We were able to learn a lot by watching the Aquarian Rate case and Avangrid's case. And we took to heart, you know, the results of those cases and studied the messages that were clearly sent. And so our team in Connecticut, I think, did an exceptional job, you know, reimagining the process. I don't think that Connecticut regulators are saying we don't want investment in the state. I think what they're saying is that we want you to really justify it. Tell us exactly why they're needed and make sure you back it up thoroughly.

Richard Wallace Sunderland: And I remain very optimistic for Connecticut in regards to the regulation of water utilities.

Richard Wallace Sunderland: We were able to learn a lot by watching the aquarian rate case, an oven grids case.

Richard Wallace Sunderland: Took to heart the results of those cases and studied the messages that we're clearly sent and so our team in Connecticut, I think did an exceptional job re imagining the process I don't think that Connecticut regulators are saying, we don't want investment in the state.

I think what they are saying is that we want you to really justify a tell us exactly why they are needed and make sure you back it up thoroughly so we've taken that to heart, we put together like I said, an exceptional case I am so proud of our team and we accept that.

Eric W. Thornburg: So we've taken that to heart. We put together, like I said, an exceptional case. I'm so proud of our team, and we expect a draft decision on May 29th. So we'll know just how well we did. And I think, I think, I think the regulatory climate there has just changed to reflect the need for additional information and address the affordability concerns that everybody has regarding utility bills.

Richard Wallace Sunderland: We expect a draft decision.

On May the 29, so we will know just how well we did and I think I think I think the regulatory climate. There is just change to reflect the need for additional information and address the affordability concerns that everybody has regarding utility bills.

Eric W. Thornburg: So we hope we've learned a lot, Richard, and applied that learning so that we have a very constructive outcome. I do expect that we will be treated very fairly.

Richard Wallace Sunderland: We hope we've learned a lot Richard and apply that learning. So that we have very constructive outcome I do expect that we will be treated very fairly there.

Speaker Change: Got it thank you for all the color.

Eric W. Thornburg: Turning to Texas, could you speak a little bit more to the usage trends relative to the drought ramifications? I guess I'm curious at a high level how things are trending relative to guidance. Yeah, I'll start and then I'll ask Andrew to cover it in more detail. But we were just in Texas earlier this week for our first quarterly board meeting. And, you know, we were able to see for ourselves our Canyon Lake, which is, you know, that is managed by the GBRA there.

Speaker Change: Turning to Texas could you speak a little bit more to the usage trends relative to the drought ramifications I guess I'm curious from a high level, how things are trending relative to guidance assumptions.

Speaker Change: Yeah, I'll start and then I'll ask Andrew to cover it in the specifics, but we were just in Texas earlier. This week for our first quarter Board meeting and we were able to see for ourselves our Canyon Lake which is.

Speaker Change: That is managed by the <unk> there I mean, it's substantially below.

Eric W. Thornburg: I mean, it's substantially below recent historical levels, and so there's significant drought in that particular area of Texas. So the threat is real. The rest of the state actually looks pretty good, but it's just a big red drought zone kind of right in the heart of the state there.

Speaker Change: Our recent historical levels and so theres significant drought in that in that particular area of Texas. So so the threat is threat is real the rest of the state actually looks pretty good but it just.

Speaker Change: Big Red drought zone kind of right in the heart of the state there. So so we're taking our actions to be prepared for that this summer.

Eric W. Thornburg: So we're taking steps to be prepared for that this summer, and I think it will indeed have an impact on our Texas business there. Andrew?

And I think that indeed will have an impact on our Texas business there Andrew.

Andrew F. Walters: Yeah, I think you summed it up well, Eric. And I would just add, Rich, that from our perspective, you know, we took into our forecast a range of different outcomes from a weather perspective, and we're still within those bounds as it stands today.

Andrew F. Walters: I think you summed it up well, Eric and I would just add rich that from our perspective, we took into our forecast a range of different outcomes from a weather perspective and were still within those bounds as it stands today, so unless something changes more significantly in the future. We will we will update you, but we still.

Andrew F. Walters: So unless something changes more significantly in the future, we will update you. But we still feel good about where we're at as it relates to our overall goals. understood, very clear. And then one final one from myself, if I may. The guidance slide, I see the change in language, or, to be clear, the addition of language around independent of real estate sales or M&A activities. Is it just reflective of the Tennessee transaction you referenced in the script, or is there anything else you have going on in the backdrop in terms of portfolio changes that's in process?

Andrew F. Walters: Feel good about where were at as it relates to our overall forecast.

Speaker Change: Understood very clear and then one final one from myself, if I may be the guidance slide I see the change in loan.

Speaker Change: I should be clear. The addition of language around independent of real estate sales or M&A activities.

Speaker Change: Just reflective of the Tennessee transaction you referenced in the script or is there anything else you have going on in the backdrop in terms of portfolio changes that's in process.

Andrew F. Walters: Now that's you, you've hit it spot on. It's really related to the specifics of the Tennessee properties and the subsequent event transaction, which I, which I described in the formal, more fully disclosed in the queue once it's out. But, but again, I didn't want anybody to get confused about our guidance and where we are. Those are the core earnings of where we expect the business to perform. And that's what we're judging.

Speaker Change: Now that's you hit it spot on and its really related to the.

Speaker Change: The specifics on the Tennessee properties and the subsequent event transaction, which I, which I described before.

Speaker Change: More fully disclosed in the Q once it's out, but but again I didn't want anybody to confused that our guidance and where we are those are the core earnings of where we expect the business to perform at and Thats, what we're judging ourselves off of.

Richard Wallace Sunderland: Perfect. Thank you again, and thank you for the time. Thank you, Richard. Thank you. As a reminder, to ask a question, please press star 11 on your telephone. Again, that's star 11 on your telephone.

Speaker Change: Perfect. Thank you guys and thank you for the time today.

Speaker Change: Okay. Thank you. Thank you Richard.

Thank you as a reminder to ask a question. Please press star one on your telephone again Thats Star one on your telephone.

Operator: One moment for our next question. Our next question comes from Gregg Orrill with UBS. Your line is open.

Speaker Change: One moment for our next question.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Greg oral with UBS. Your line is open.

Gregg Gillander Orrill: Yeah, thank you. Good afternoon. Hey, hi, Greg.

Gregg Gillander Orrill: Yes. Thank you good afternoon.

Hey, Hi, Greg.

Gregg Gillander Orrill: Okay, with regard to Connecticut... you know, recognizing there's a draft decision due May 29th. Are there any prospects for settlement or partial settlement in Connecticut? What are your thoughts about that? Yeah, no, there are not.

Gregg Gillander Orrill: With regard to Connecticut.

Gregg Gillander Orrill: Recognizing theres a draft decision.

You may 29th are there any are there prospects for.

Gregg Gillander Orrill: Settlement of partial settlement.

Gregg Gillander Orrill: Yeah.

Gregg Gillander Orrill: In Connecticut.

Gregg Gillander Orrill: Or your thoughts about that.

Speaker Change: Yeah, no there are not it's really the proceedings have concluded and briefs have been written and so now it's just up to the commission to weigh the evidence and write their decision.

Eric W. Thornburg: It's really the proceedings have concluded, and briefs have been written, and so now it's just up to the commission to weigh the evidence and write their decision. Okay, and how do you think about the, sort of, legacy, sort of pre-PFAS rule liability for the company on that topic? Well, as we've disclosed... I'm sorry, Richard.

Speaker Change: Okay.

Speaker Change: And how do you how do you think about the.

Speaker Change: Sort of legacy sort of pre P funds rule.

Speaker Change: Liability.

Speaker Change: For the company on that.

Speaker Change: Topic.

Speaker Change: Well as we've disclosed.

Eric W. Thornburg: Go ahead. I'm sorry. That's it.

Speaker Change: Sorry, Richard go ahead Im sorry.

Eric W. Thornburg: Thanks. Yep. Okay. I apologize for stepping on your line there.

Speaker Change: Yes.

I apologize for stepping on your lying there.

Eric W. Thornburg: Hey, we have a very good understanding of what the capital needs are to address the newly promulgated PFAS standard in both California and Connecticut. We have projects even underway now in Connecticut, so we think by the end of the year we'll have a couple of well fields already addressed. And so we feel like we're in a really good spot there and very confident that we'll receive regulatory recovery of those capital investments.

Richard Wallace Sunderland: Yes, we have a very good understanding of what the capital needs are too to address the newly promulgated <unk> standard in both California and Connecticut.

Richard Wallace Sunderland: We have projects even underway now in Connecticut. So we think by the end of the year, we'll have a couple of couple of well fields already addressed and.

Richard Wallace Sunderland: So we feel like we're in a really good spot there.

Richard Wallace Sunderland: And.

Richard Wallace Sunderland: We're very confident that we will receive regulatory recovery of those capital investments and so feel like we've got a really good start in the state and as well in California, So very optimistic about our ability to to to conclude our projects well before the.

Eric W. Thornburg: And so I feel like we've got a really good start in the state and in California. I am very optimistic about our ability to conclude our projects well before the five-year time horizon, which is provided by EPA to achieve compliance. Eric, I might just add to that, too, that the amounts are obviously estimates based on time. Inflation and other factors could have an impact on where the total actually comes out to be over time.

Five year time horizon.

Which is provided by EPA to achieve compliance Eric I might just add to that too that the the amounts are obviously estimates based off the time inflation and other factors could have an impact on on where the total actually comes out to be over time, but the other thing that Eric mentioned in his in his discussion with us.

Eric W. Thornburg: But the other thing that Eric mentioned in his discussion with us was that we are focused on ways to save money and other ways to create that room in the bills of our customers so that we can confidently recover this without any demunition and other capital projects as well. All right. Thanks. Have a good weekend. Thank you, Greg. I appreciate it. Thank you very much.

Speaker Change: We are focused on ways to save money in other ways to create that room in the bills of our customers. So that we can.

Speaker Change: Confidently.

Speaker Change: Recover this without any diminishing in other capital projects as well.

Speaker Change: Alright.

Speaker Change: Thanks have a good weekend. Thank you Greg I appreciate it thank you very much.

Speaker Change: Thank you I'm showing no further questions at this time I would now like to turn it back to Eric Kornberg, Chief Executive Officer for closing remarks.

Operator: I'm showing no further questions at this time, and I would now like to turn it back to Eric Thornburg, Chief Executive Officer, for closing remarks. Thank you, everyone, for joining us today. As you heard, it's been a solid start to the year. And we have a lot more to look forward to in 2024, including finalizing our rate case in Connecticut, implementing our AMI initiative in California, pursuing the acquisition and close of 3009 in Texas, advancing our PFAS remediation strategy, and realizing our national capital sourcing initiative, and much, much more.

Eric W. Thornburg: Thank you everyone for joining us today as you heard it's been a solid start to the year and we have a lot more to look forward to in 2024, including finalizing our rate case in Connecticut, implementing our <unk> initiative in California pursuing the acquisition close of three <unk> in Texas.

Eric W. Thornburg: <unk> R. P fast remediation strategy in realizing our national capital sourcing initiative and much much more SJW group proudly leverages that national platform, we have to support our local operations and their shared mission to serve high quality water to $1 5 million people across four states and while we do this we make sure.

Operator: SJW Group proudly leverages that national platform and its shared mission to serve high-quality water to 1.5 million people across four states. And while we do this, we make sure we execute our growth strategy and deliver shareholder value, including paying a dividend, which we have faithfully done for 80 straight years. And we've raised that dividend for 56 consecutive years. I recognize that it's our culture of service to our customers and the local communities that underlies our success. And I'm very proud of our people who make it all possible.

Eric W. Thornburg: We execute our growth strategy and deliver shareholder value, including paying a dividend, which we have faithfully done for 80 straight years, and we've raised that dividend for 56 consecutive years.

Eric W. Thornburg: I recognize that it's our culture of service to our customers and the local communities that underlies our success and I'm very proud of our people who make it all possible and we look forward to sharing our progress with you next quarter as we continue to execute on our growth strategy in.

Eric W. Thornburg: And we look forward to sharing our progress with you next quarter as we continue to execute on our growth strategy. In the meantime, Andrew and I, along with the rest of the SJW Group team, are always available for follow-up. Thank you again for your interest in SJW Group. And this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: In the meantime, Andrew and I, along with the rest of the SJW group team are always available for follow up. Thank you again for your interest in SJW group.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.