What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-29 compared with 2021-10-29 · 117 added, 392 removed, 291 unchanged (64% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Three months ended March 31,

REVENUE $ 124,302 114,785

10 unchanged sentences

Depreciation and amortization 27,606 23,438

Gain on sale of nonutility properties ( 5,450 ) —

Total operating expense 107,713 101,706

3 unchanged sentences

Pension non-service cost 949 326

Gain on sale of Texas Water Alliance — — 3,000 —

Gain on sale of real estate investments — 1,050 — 1,050

Other, net 995 1,754

Income before income taxes 4,804 1,720

Provision for income taxes 2,749 4,578 5,159 9,226

Provision (benefit) for income taxes 1,067 ( 896 )

NET INCOME 3,737 2,616

12 unchanged sentences

(in thousands, except share and per share data)

September 30,

2022 December 31,

7 unchanged sentences

2,517,243 2,497,499

Real estate investments 58,765 58,129

Real estate investments and nonutility properties 57,673 57,632

Less accumulated depreciation and amortization 16,251 15,951

5 unchanged sentences

Accounts receivable:

Customers, net of allowances for uncollectible accounts of $ 4,272 and $ 3,891 on September 30, 2021 and December 31, 2020, respectively

Customers, net of allowances for uncollectible accounts of $ 5,113 and $ 4,600 on March 31, 2022 and December 31, 2021, respectively

53,942 53,699

17 unchanged sentences

(in thousands, except share and per share data)

September 30,

2022 December 31,

4 unchanged sentences

authorized 70,000,000 shares;

issued and outstanding shares 29,822,182 on September 30, 2021 and 28,556,605 on December 31, 2020

issued and outstanding shares 30,237,145 on March 31, 2022 and 30,181,348 on December 31, 2021

Additional paid-in capital 607,637 606,392

18 unchanged sentences

OTHER NONCURRENT LIABILITIES 23,864 24,049

COMMITMENTS AND CONTINGENCIES (See Note 12)

COMMITMENTS AND CONTINGENCIES

$ 3,511,876 3,492,395

11 unchanged sentences

Net income — — — 3,737 — 3,737

Unrealized gain on investment, net of tax of $ 14

— — — — 38 38

Stock-based compensation — — 1,280 ( 32 ) — 1,248

Issuance of restricted and deferred stock units 30,547 — ( 964 ) — — ( 964 )

Employee stock purchase plan 18,235 — 1,026 — — 1,026

Common stock issuance, net of costs 1,184,500 1 66,895 — — 66,896

Dividends paid ($ 0.34 per share)

— — — ( 9,724 ) — ( 9,724 )

BALANCES, March 31, 2021 29,789,887 30 578,395 400,897 ( 1,026 ) 978,296

Net income — — — 20,775 — 20,775

Unrealized gain on investment, net of tax of $ 39

— — — — 107 107

Stock-based compensation — — 791 ( 28 ) — 763

Issuance of restricted and deferred stock units 15,040 — ( 9 ) — — ( 9 )

Common stock issuance, net of costs — — ( 120 ) — — ( 120 )

Dividends paid ($ 0.34 per share)

— — — ( 10,133 ) — ( 10,133 )

BALANCES, June 30, 2021 29,804,927 30 579,057 411,511 ( 919 ) 989,679

Net income — — — 19,068 — 19,068

Unrealized loss on investment, net of tax benefit of $ 67

3 unchanged sentences

Employee stock purchase plan 17,918 — 1,049 — — 1,049

Common stock issuance costs — — ( 87 ) — — ( 87 )

Dividends paid ($ 0.36 per share)

— — — ( 10,882 ) — ( 10,882 )

BALANCES, September 30, 2021 29,822,182 $ 30 $ 581,201 $ 420,411 $ ( 931 ) $ 1,000,711

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

SJW GROUP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

BALANCES, March 31, 2022 30,237,145 $ 30 $ 607,637 $ 421,095 $ ( 344 ) $ 1,028,418

Common Stock Additional

6 unchanged sentences

Net income — — — 2,616 — 2,616

Unrealized loss on investment, net of tax benefit of $ 50

Unrealized income on investment, net of taxes of $ 14

— — — — 38 38

2 unchanged sentences

Employee stock purchase plan 18,235 — 1,026 — — 1,026

Common stock issuance, net of costs 1,184,500 1 66,895 — — 66,896

Dividends paid ($ 0.34 per share)

1 unchanged sentence

BALANCES, March 31, 2021 29,789,887 $ 30 $ 578,395 $ 400,897 $ ( 1,026 ) $ 978,296

Net income — — — 19,721 — 19,721

Unrealized gain on investment, net of tax of $ 4

— — — — 10 10

Stock-based compensation — — 1,009 ( 43 ) — 966

Issuance of restricted and deferred stock units 18,864 1 14 — — 15

Dividends paid ($ 0.32 per share)

— — — ( 9,122 ) — ( 9,122 )

BALANCES, June 30, 2020 28,516,705 29 508,098 387,003 1 895,131

Net income — — — 26,093 — 26,093

Unrealized gain on investment, net of tax of $ 28

— — — — 77 77

Stock-based compensation — — 1,058 ( 42 ) — 1,016

Issuance of restricted and deferred stock units 19,274 — ( 985 ) — — ( 985 )

Employee stock purchase plan 16,198 — 860 — — 860

Dividends paid ($ 0.32 per share)

— — — ( 9,131 ) — ( 9,131 )

BALANCES, September 30, 2020 28,552,177 $ 29 $ 509,031 $ 403,923 $ 78 $ 913,061

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Nine months ended September 30,

Three months ended March 31,

OPERATING ACTIVITIES:

5 unchanged sentences

Allowance for equity funds used during construction ( 510 ) ( 402 )

Gain on sale of Texas Water Alliance and real estate investments ( 3,000 ) ( 1,050 )

Gain on sale of nonutility properties ( 5,450 ) —

Changes in operating assets and liabilities:

5 unchanged sentences

Regulatory assets and liabilities excluding income tax temporary differences, net and postretirement benefits 5,124 ( 1,750 )

Up-front service concession payment — ( 5,000 )

Other changes, net 3,315 515

6 unchanged sentences

Payments to retire utility plant, net of salvage ( 1,087 ) ( 461 )

Proceeds from sale of Texas Water Alliance and real estate investments 3,000 1,068

Proceeds from sale of nonutility properties 227 —

Payments for business acquisitions ( 33 ) —

NET CASH USED IN INVESTING ACTIVITIES ( 49,442 ) ( 51,940 )

5 unchanged sentences

Issuance of common stock, net of issuance costs — 67,249

Debt issuance costs ( 843 ) ( 646 )

Dividends paid ( 10,882 ) ( 9,724 )

13 unchanged sentences

Accrued payables for additions to utility plant $ 20,472 16,720

Change in accrued payables for construction costs capitalized ( 209 ) 1,997

Utility property installed by developers 546 202

Accrued additional common stock issuance costs — 353

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

MARCH 31, 2022

(in thousands, except share and per share data)

2 unchanged sentences

The Notes to Consolidated Financial Statements in SJW Group’s 2021 Annual Report on Form 10-K should be read with the accompanying unaudited condensed consolidated financial statements.

Recently Adopted Accounting Principles

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes”, which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740, “Income Taxes”, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

ASU 2019-12 was effective for SJW Group in the first quarter of fiscal 2021.

The adoption of ASU 2019-12 did not have a material impact on the consolidated financial statements.

SJW Group is a holding company with five wholly-owned subsidiaries:

San Jose Water Company (“SJWC”), SJWNE LLC, SJWTX, Inc., SJW Land Company, and SJW Holdings, Inc.

SJWNE LLC is the holding company for Connecticut Water Service, Inc.

(“CTWS”) whose wholly-subsidiaries are The Connecticut Water Company (“Connecticut Water”), The Maine Water Company (“Maine Water”), New England Water Utility Services, Inc.

(“NEWUS”), and Chester Realty, Inc.

SJWC, Connecticut Water, SJWTX, Inc.

doing business as Canyon Lake Water Service Company (“CLWSC”), Maine Water and NEWUS are referred to as “Water Utility Services.” SJW Land Company and Chester Realty, Inc.

are collectively referred to as “Real Estate Services.”

Water sales are seasonal in nature and influenced by weather conditions.

3 unchanged sentences

The major streams of revenue for SJW Group are as follows:

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Three months ended March 31,

Revenue from contracts with customers $ 121,777 112,238

4 unchanged sentences

$ 124,302 114,785

Earnings per Share

Basic earnings per share is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period.

Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards under SJW Group’s Long-Term Incentive Plan (as amended, the “Incentive Plan”), shares potentially issuable under the performance stock plans assumed through the business combination with Connecticut Water Service, Inc.

(“CTWS”), and shares potentially issuable under the Employee Stock Purchase Plan (“ESPP”).

For the three months ended September 30, 2021 and 2020, 1,558 and 1,029 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the nine months ended September 30, 2021 and 2020, 14,441 and 20,220 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

Real Estate Investments

The major components of real estate investments as of September 30, 2021, and December 31, 2020, are as follows:

September 30,

Real Estate Investments and Nonutility Properties

The major components of real estate investments and nonutility properties as of March 31, 2022, and December 31, 2021, are as follows:

2022 December 31,

4 unchanged sentences

Total $ 41,422 41,681

A former wholly owned subsidiary of SJW Group, Texas Water Alliance Limited was sold to Guadalupe-Blanco River Authority (“GBRA”) in 2017.

The sales agreement with GBRA included a holdback amount of $ 3,000 to be paid to SJW Group on June 30, 2021, subject to reduction under certain conditions.

SJW Group received the holdback amount without reduction from the GBRA on June 29, 2021 and recognized a pre-tax gain on sale of $ 3,000 .

On September 28, 2020, San Jose Water Company sold six nonutility properties located in Los Gatos, California for $ 1,075 .

SJW Group recognized a pre-tax gain on the sale of real estate investments of $ 1,048 , net of selling expenses of $ 22 .

Regulatory Rate Filings

California Regulatory Affairs

On March 17, 2020, the California Public Utilities Commission (“CPUC”) ordered its regulated water utilities to halt customer disconnection activities in connection with the COVID-19 pandemic.

On April 2, 2020, California Governor Gavin Newsom issued Executive Order N-42-20 suspending customer disconnection activities until further notice.

On April 16, 2020, the CPUC issued Resolution M-4842 directing utilities to implement emergency customer protections to assist customers such as waiving reconnection deposits, offering payment arrangements, and suspending disconnections for nonpayment.

This resolution was effective for up to one year, or April 15, 2021, with the option to extend.

On February 11, 2021, the CPUC approved Resolution M-4849 extending customer protections required in Resolution M-4842 through June 30, 2021.

The resolution also requires water utilities to develop a transition plan regarding shutoffs and terminations with customers once the moratorium ends.

On April 1, 2021, San Jose Water Company (“SJWC”) filed Advice Letter 560 which includes such plan and the filing was approved on June 16, 2021.

On June 11, 2021, Governor Newsom issued Executive Order N-08-21 which ends the suspension on customer disconnection activities on September 30, 2021.

On June 16, 2021, the CPUC directed its regulated water utilities to extend the suspension on customer disconnection activities through September 30, 2021, in response to the Governor’s order.

On June 23, 2021, SJWC filed Advice Letter 565 to extend Resolution M-4849’s emergency customer protections through September 30, 2021.

This advice letter was approved on July 1, 2021.

On September 23, 2021, Governor Newsom approved Senate Bill 155, which included a provision extending the water shutoff moratorium through December 31, 2021.

SJWC filed Advice Letter 556 on November 16, 2020, with the CPUC requesting authorization to increase its revenue requirement by $ 11,750 or 3.04 % in 2021 for the final escalation year authorized in our 2018 General Rate Case Decision 18-011-025 which established rates for 2019, 2020, and 2021.

This advice letter was approved on December 17, 2020, and new rates became effective January 1, 2021.

On January 4, 2021, SJWC filed General Rate Case Application No.

21-01-003 requesting authority for an increase of revenue of $ 51,585 or 13.35 % in 2022, $ 16,932 or 3.88 % in 2023, and $ 19,195 or 4.24 % in 2024.

The application also includes requests to recover $ 18,499 from balancing and memorandum accounts, authorization for a $ 435,000 capital budget, further alignment between actual and authorized usage, and a shift to greater revenue collection in the service charge.

The application will undergo a year-long review process and new rates, if approved, are expected to be effective by the second quarter of 2022.

SJWC will file for interim rates to be effective on January 1, 2022.

On May 3, 2021, SJWC filed Application No.

21-05-004 requesting authority to adjust its cost of capital for the period from January 1, 2022 through December 31, 2024.

The request seeks a revenue increase of $ 6,418 or 1.61 % in 2022.

The application also proposes a rate of return of 8.11 % from the current rate of 7.64 %, a decrease in the average cost of debt rate from 6.20 % to 5.48 %, and a return of equity of 10.30 % from the current rate of 8.90 %.

In addition, the request seeks to adjust

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

SJWC’s currently authorized capital structure of approximately 47 % debt and 53 % equity to approximately 45 % debt and 55 % equity.

If approved, rates are expected to be effective in the second quarter of 2022.

On May 27, 2021, SJWC filed Advice Letter No.

561/561A with the CPUC requesting authorization to increase revenue by $ 17,262 or 4.34 % to recover the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges implemented by Santa Clara Valley Water District (“Valley Water”) and South Bay Water Recycling.

This advice letter was approved with an effective date of July 1, 2021.

On June 9, 2021, Valley Water declared a water shortage emergency and asked its retailers to reduce consumption by 15% based on 2019’s volume.

On June 18, 2021, SJWC filed Advice Letter 563 with the CPUC to activate Stage 3 of its Rule 14.1, Water Shortage Contingency Plan, in response to Valley Water’s declaration of drought emergency and call for 15% mandatory conservation.

Advice Letter 564 was also filed on June 9, 2021, to establish a Water Conservation Memorandum Account to track the revenue impact of authorized vs actual water consumption and the incremental expenses required to implement our mandatory water conservation plan.

Similar memorandum accounts were authorized during the previous drought.

Advice Letters 564 and 563 were approved with the effective dates of July 20, 2021, and August 5, 2021, respectively.

On August 5, 2021, SJWC filed Advice Letter 567 with the CPUC requesting authorization to update its Drought Allocations and Drought Surcharges program contained within its Schedule 14.1.

This filing updates the program developed during the drought of 2014-2017.

Advice Letter 567 was approved with an effective date of September 6, 2021.

This approval does not authorize its activation.

SJWC will submit another filing with the commission to activate the program should water supply conditions dictate or if it is required to do so by the CPUC and/or the State of California.

On October 15, 2021, SJWC filed Advice Letter 569 with the CPUC requesting authorization to activate Schedule 14.1 effective November 15, 2021, as approved in Advice Letter 567.

If approved, drought surcharges collected will be used to offset the revenue losses tracked in the Water Conservation Memorandum Account authorized in Advice Letter 564.

This filing is pending before the CPUC.

Connecticut Regulatory Affairs

On October 28, 2020, The Connecticut Water Company (“Connecticut Water”) filed a Water Infrastructure Conservation Adjustment (“WICA”) application representing an additional 1.11 % surcharge or approximately $ 956 increase in revenues, for a cumulative WICA surcharge of 6.94 %.

The Public Utilities Regulatory Authority of Connecticut (“PURA”) approved the requested increase with an April 1, 2021, effective date.

Additionally, on February 1, 2021, Connecticut Water filed its annual WICA reconciliation which called for a 0.09 % increase of the WICA surcharge.

On March 3, 2021, PURA approved the reconciliation, resulting in a net cumulative 7.03 % surcharge for Connecticut Water which became effective on customers’ bills on April 1, 2021.

The WICA surcharge was reset to zero as part of the July 28, 2021, rate case decision.

On October 26, 2021, Connecticut Water filed for a WICA increase for approximately $ 21,746 in completed projects.

Many of the projects were those that were not considered by PURA in the rate case because of the deadline in the proceeding for pro forma capital additions.

If approved as submitted, Connecticut Water expects a WICA surcharge of 2.49 % to be added to customer bills in January 2022 which is expected to generate approximately $ 2,581 in additional revenue.

Prior to being reset to zero concurrent with the new rates from the Connecticut Water rate proceeding effective July 28, 2021, WICA surcharges for Connecticut Water and its Avon Water division were 7.03 % and 8.51 %, respectively.

The Heritage Village Water division did not have an approved WICA surcharge, but Connecticut Water is authorized in its July 28, 2021, rate case decision to include Heritage Village Water division in the WICA program in the future.

On January 15, 2021, Connecticut Water filed an application with PURA to amend rates for its customers, including the divisions of Avon Water and Heritage Village Water.

The filing requests an increase of $ 20,206 in annual revenues that includes more than $ 265,514 in completed infrastructure investments that are not currently in approved rates and surcharges.

On July 28, 2021, Connecticut Water received the final decision approving an increase of $ 5,208 in annual revenues, a return on equity of 9.0 %, with new rates effective July 28, 2021.

The final decision also approved a low-income rate, tiered block rate structure for residential water customers and the cost of debt and equity percentage as requested.

The final decision did not include all of the requested proforma plant in service due to the timing of its completion.

However, no plant was disallowed.

Connecticut Water will seek recovery for the projects in the future, including a portion of plant which is eligible for recovery through WICA.

In addition, the final decision reset WICA, which was approaching its statutory caps to zero .

On August 11, 2021, Connecticut Water filed a petition for reconsideration with PURA to consider matters specific to excess deferred income taxes contained in the July 28, 2021, decision.

The proposed increased revenues associated with the petition is $ 2,229 .

On October 25, 2021, PURA issued a draft decision approving $ 1,752 of Connecticut Water’s request.

A final decision on the matter is expected on November 10, 2021.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

Long-term debt issuances for Connecticut Water require regulatory authorization which is typically obtained for a specified amount of debt to be issued during a specified period of time.

On March 16, 2021, Connecticut Water filed for PURA approval for the issuance of up to $ 100,000 of long-term borrowings in 2021.

Connecticut Water anticipates to use the proceeds to pay down line of credit borrowings and payoff maturing debt, as well as general working capital needs.

Connecticut Water received approval of the financings from PURA on June 9, 2021.

Texas Regulatory Affairs

On January 29, 2021, SJWTX, Inc., doing business as Canyon Lake Water Service Company (“CLWSC”) submitted its Water Pass-Through Charge (“WPC”) true-up report for the Canyon Lake area water systems’ 2020 purchased water costs.

The WPC is the annual filing to change the monthly per thousand gallons charge for changes in purchased water costs since the last annual true-up report.

The 2020 WPC true-up report resulted in a reduction of the WPC usage rate from $ 0.95 dollars to $ 0.70 dollars per thousand gallons which became effective on March 1, 2021.

On August 18, 2021, the GBRA announced a 13 % increase for treated water effective September 1, 2021.

The Deer Creek Ranch water system has a separate WPC.

A WPC filing for Deer Creek Ranch is required only when there is a change in purchased water costs.

The WPC true-up report for this system was last submitted December 1, 2020, which resulted in a decrease in the usage charge from $ 2.02 to $ 1.84 dollars per thousand gallons, and an increase in the monthly base charge of $ 0.51 dollars per residential account.

The Deer Creek Ranch WPC rate changes became effective February 25, 2021.

A disaster declaration was issued on February 12, 2021, by the Public Utilities Commission of Texas (“PUCT”) because of severe winter weather.

The PUCT issued orders under Docket No.

51812-6 which prohibited disconnections for non-payment, suspended the rules for late fees and interest, and allowed for estimated billing for the duration of the disaster declaration.

On March 5, 2021, the PUCT reinstituted the utilities’ ability to resume charging late fees, and on June 15, 2021, removed the prohibition on disconnections for non-payment.

The Texas Legislature passed Senate Bill 3 on August 6, 2021.

Under this bill, utilities are obligated to report to the PUCT steps they are taking to mitigate for the type of long-term power outages experienced during the February 2021 storm.

CLWSC expects to incur capital expenditures related to meeting these new requirements, largely for procurement of backup generators.

On June 28, 2021, CLWSC announced that it reached an agreement to acquire the Kendall West and Bandera East utilities in Bandera and Medina counties in Texas and that change in ownership applications had been filed with the PUCT under Docket No.

The acquisition, pending approval by the PUCT, would grow CLWSC by 1,400 service connections.

Rates will remain the same for those customers of the acquired Certificate of Convenience and Necessity.

A decision by the PUCT is expected in the fourth quarter of 2021.

Maine Regulatory Affairs

On June 17, 2020, the Maine Public Utilities Commission (“MPUC”) approved a general rate increase for Skowhegan Division customers allowing $ 198 in additional revenue.

Per the MPUC decision, the increase will be implemented in two steps:

an initial 9.80 % rate increase effective June 15, 2020, and a 3.51 % rate increase effective July 1, 2021.

The combined rate increase is 13.31 %.

On November 23, 2020, The Maine Water Company (“Maine Water”) filed Water Infrastructure Surcharge (“WISC”) applications with the MPUC in five divisions requesting an increase between 1.1 % and 5 %, representing approximately $ 304 in additional revenues.

The WISC applications were approved on December 15, 2020, and December 22, 2020 and the surcharges became effective January 1, 2021.

On March 10, 2021, Maine Water filed a general rate increase application for the Biddeford Saco Division seeking approximately $ 6,659 , or 77.5 %, in additional revenue.

The application proposed a three step, multi-year rate plan designed to ease the transition to higher water bills over the period from July 2021 to July 2023.

The primary driver for the increase in rates is the support for a new drinking water treatment facility on the Saco River, a $ 60,000 project to replace the existing facility that is expected to be in service in the second quarter of 2022.

On June 23, 2021, the MPUC approved the first step in the plan adopting the proposed rate smoothing mechanism and implementing a temporary 22.65 % surcharge on all customer bills.

The surcharge will be in effect for one year .

Action on the rate increase request was deferred by agreement of the parties.

On September 8, 2021, Maine Water filed a supplemental application to update its request to increase base rates, initiating the second step in the rate plan.

The supplemental application seeks $ 6,880 , or 80.1 % in additional revenue primarily to support a

On October 29, 2021, SJWC sold two nonutility properties located in San Jose, California for $ 13,150 .

SJW Group recognized a pre-tax gain on the sale of nonutility properties of $ 7,230 , after selling expenses of $ 277 for one of the properties sold, and a gain of $ 5,442 , after selling expenses of $ 178 , was deferred on the other nonutility property pending CPUC review for the year

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

March 31, 2022

(in thousands, except share and per share data)

new drinking water treatment facility on the Saco River.

A decision on the requested revenue increase is expected in the second quarter of 2022, corresponding with the completion of the new water treatment facility.

Regulatory Assets, Net

Regulatory assets, net are comprised of the following as of September 30, 2021, and December 31, 2020:

September 30, 2021 December 31, 2020

ended December 31, 2021.

On February 15, 2022, the California Public Utilities Commission (“CPUC”) review was completed and $ 5,442 was recognized as gain on sale of nonutility properties.

Fair Value Measurement

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of March 31, 2022, but require disclosure of their fair values:

cash and cash equivalents, accounts receivable and accounts payable.

The estimated fair value of such instruments as of March 31, 2022, approximates their carrying value as reported on the condensed consolidated balance sheets.

The estimated fair value of such financial instruments were determined using the income approach based on the present value of estimated future cash flows.

There have been no changes in valuation techniques during the three months ended March 31, 2022.

The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1.

The fair value of SJW Group’s long-term debt was approximately $ 1,493,425 and $ 1,651,825 as of March 31, 2022, and December 31, 2021, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company.

The book value of long-term debt was $ 1,530,475 and $ 1,532,041 as of March 31, 2022, and December 31, 2021, respectively.

The fair value of long-term debt would be categorized as Level 2 in the fair value hierarchy.

Connecticut Water Service, Inc.’s (“CTWS”) additional retirement benefits under the supplemental executive retirement plans and retirement contracts are funded by investment assets held by a Rabbi Trust.

The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $ 3,469 and $ 3,797 as of March 31, 2022, and December 31, 2021, respectively, and are categorized as Level 1 in the fair value hierarchy.

Earnings per Share

Basic earnings per share is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period.

For the three months ended March 31, 2022 and 2021, 10,860 and 8,579 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

Regulatory Matters

Regulatory assets, net are comprised of the following as of March 31, 2022, and December 31, 2021:

March 31, 2022 December 31, 2021

Regulatory assets:

Income tax temporary differences, net $ 24,309 22,420

Postretirement pensions and other medical benefits 99,213 95,559

Postretirement pensions and other postretirement benefits 63,126 62,197

Business combinations debt premium, net 19,302 19,937

5 unchanged sentences

Total regulatory assets, net, less current portion $ 147,566 151,992

As of September 30, 2021, and December 31, 2020, SJW Group’s regulatory assets, net not earning a return primarily included postretirement pensions and other medical benefits unfunded amount, and the business combinations debt premium, net.

The total amount of regulatory assets, net not earning a return at September 30, 2021, and December 31, 2020, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 121,090 and $ 119,236 , respectively.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2022

(in thousands, except share and per share data)

As of March 31, 2022, and December 31, 2021, SJW Group’s regulatory assets, net not earning a return primarily included postretirement pensions and other medical benefits unfunded amount, and business combination debt premiums, net.

The total amount of regulatory assets, net not earning a return at March 31, 2022, and December 31, 2021, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 85,446 and $ 84,887 , respectively.

Balancing and Memorandum Accounts

2 unchanged sentences

The Monterey Water Revenue Adjustment Mechanism (“MWRAM”) tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate would have been in effect.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

Balancing and memorandum accounts recorded to regulatory assets, net for the three and nine months ended September 30, 2021, and 2020 as follows:

Three months ended September 30, 2021 Three months ended September 30, 2020

Beginning Balance Regulatory Asset Increase (Decrease) Refunds (Collections) Adjustments Ending Balance Beginning Balance Regulatory Asset Increase (Decrease) Refunds (Collections) Adjustments Ending Balance

Revenue accounts:

MWRAM $ 15,278 363 — 15,641 $ 10,549 ( 1,124 ) 2,625 12,050

Cost of capital memorandum account ( 1,562 ) — — ( 1,562 ) ( 1,560 ) ( 1 ) — ( 1,561 )

Tax memorandum account 333 — — 333 332 1 — 333

All others ( 829 ) 397 — ( 432 ) ( 1,034 ) 37 1 ( 996 )

Total revenue accounts $ 13,220 760 — 13,980 $ 8,287 ( 1,087 ) 2,626 9,826

Cost-recovery accounts:

Water supply costs 9,895 388 — 10,283 5,899 1,222 1 7,122

Pension 4,210 366 — 4,576 2,985 ( 253 ) — 2,732

Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”)

928 — ( 121 ) 807 — 1,219 ( 8 ) 1,211

COVID-19 Catastrophic Event Memorandum Account (“CEMA”) 2,618 567 — 3,185 — — — —

All others 446 — — 446 444 — — 444

Total cost-recovery accounts $ 18,097 1,321 ( 121 ) 19,297 $ 9,328 2,188 ( 7 ) 11,509

Total $ 31,317 2,081 ( 121 ) 33,277 $ 17,615 1,101 2,619 21,335

Nine months ended September 30, 2021 Nine months ended September 30, 2020

The Water Conservation Memorandum Account (“WCMA”) allows SJWC to track lost revenue, net of related water costs, associated with reduced sales due to water conservation and associated calls for water use reductions.

SJWC records the lost revenue captured in the WCMA balancing accounts.

Drought surcharges collected will be used to offset the revenue losses tracked in the WCMA.

Balancing and memorandum accounts recorded to regulatory assets, net for the three months ended March 31, 2022, and 2021 as follows:

Three months ended March 31, 2022 Three months ended March 31, 2021

1 unchanged sentence

MWRAM $ 16,866 2,193 1 19,060 $ 12,077 1,776 — 13,853

WCMA 3,534 ( 100 ) ( 6,495 ) ( 3,061 ) 666 — — 666

Cost of capital memorandum account ( 1,563 ) ( 1 ) — ( 1,564 ) ( 1,561 ) — — ( 1,561 )

Tax memorandum account 333 — — 333 ( 6,643 ) ( 2 ) 6,978 333

All others ( 386 ) 312 1 ( 73 ) ( 1,139 ) ( 175 ) 1 ( 1,313 )

8 unchanged sentences

Total $ 38,334 2,035 ( 6,569 ) 33,800 $ 25,463 2,754 ( 80 ) 28,137

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

All balancing accounts and memorandum-type accounts not included for recovery or refund in the current general rate case will be reviewed by the CPUC in SJWC’s next general rate case or at the time an individual account balance reaches a threshold of 2 % of authorized revenue, whichever occurs first.

Capitalization

On March 8, 2021, SJW Group entered into an underwriting agreement with J.P.

Morgan Securities LLC, as the representative of the several underwriters named therein (the “Underwriters”), which provided for the issuance and sale by SJW Group to the Underwriters 1,030,000 shares of our common stock, par value $ 0.001 per share, in an underwritten public offering (the “Offering”).

The shares in the Offering were sold at a public offering price of $ 59.00 per share.

SJW Group also granted the Underwriters an option to purchase up to 154,500 additional shares of common stock, which was exercised in full.

The Offering closed on March 11, 2021, and the offering of option shares closed on March 16, 2021.

SJW Group received net proceeds of approximately $ 66,775 from the Offering and the sale of option shares, after deducting the underwriting discounts and commissions and offering expenses.

SJW Group used the proceeds from the offerings to pay down a bank line of credit agreement, dated as of June 1, 2016, between SJWC and JPMorgan Chase Bank, N.A.

and for general corporate purposes, which included, among other things, financing infrastructure improvements and other capital expenditures, repayment of debt or other corporate obligations and working capital.

The Incentive Plan allows SJW Group to provide employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the company or any parent or subsidiary the opportunity to acquire an equity interest in SJW Group.

As of September 30, 2021, 174,154 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 685,660 shares are available for award issuances under the Incentive Plan.

In connection with the merger with CTWS on October 9, 2019, SJW Group assumed outstanding awards of restricted stock units and deferred share units under the following stock plans:

the CTWS 2014 Performance Stock Program, the CTWS 2004 Performance Stock Program and the CTWS 1994 Performance Stock Program (collectively, the “CTWS Plans”).

As of September 30, 2021, approximately 56,326 shares are issuable upon the exercise of outstanding restricted stock units and deferred restricted stock units under the CTWS Plans.

A summary of compensation costs charged to income and proceeds from the exercise of any restricted stock and similar instruments that are recorded to additional paid-in capital and common stock, by award type, are presented below for the three and nine months ended September 30, 2021, and 2020:

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Compensation costs charged to income:

ESPP $ 176 152 $ 357 323

Restricted stock and deferred restricted stock 954 906 2,844 1,995

Total compensation costs charged to income $ 1,130 1,058 $ 3,201 2,318

ESPP proceeds $ 1,000 860 $ 2,026 1,830

Restricted Stock and Deferred Restricted Stock

For the three months ended September 30, 2021, and 2020, SJW Group granted under the Incentive Plan 1,134 and 761 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 69.20 and $ 58.63 , respectively, per unit.

For the nine months ended September 30, 2021, and 2020, SJW Group granted under the Incentive Plan 46,567 and 43,474 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 64.65 and $ 63.87 , respectively, per unit.

For the three months ended September 30, 2021, and 2020, SJW Group granted under the Incentive Plan 0 and 58 target units, respectively, performance-based and market-based restricted stock awards with a weighted-average grant date fair value of $ 0.00 and $ 62.95 , respectively, per unit.

For the nine months ended September 30, 2021, and 2020, SJW Group granted under

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

the Incentive Plan 30,641 and 24,777 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value of $ 66.33 and $ 65.02 , respectively, per unit.

Based upon actual attainment relative to the target performance metric, the number of shares issuable can range between 0 % to 150 % of the target number of shares for performance-based restricted stock awards, or between 0 % and 200 % of the target number of shares for market-based restricted stock awards.

As of September 30, 2021, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $ 5,442 .

This cost is expected to be recognized over a weighted-average period of 1.72 years.

Employee Stock Purchase Plan

SJW Group’s recorded expenses were $ 91 and $ 265 for the three and nine months ended September 30, 2021, respectively, and $ 85 and $ 244 for the three and nine months ended September 30, 2020, respectively, related to the ESPP.

The total unrecognized compensation costs related to the semi-annual offering period that ends January 31, 2022, for the ESPP is approximately $ 124 .

This cost is expected to be recognized during the fourth quarter of 2021 and first quarter of 2022.

Bank Borrowings and Long-Term Liabilities

SJW Group’s contractual obligations and commitments include senior notes, bank term loans, revenue bonds, state revolving fund loans and other obligations.

Water Utility Services have received advance deposit payments from its customers on certain construction projects and the refunds of the advance deposit payments constitute an obligation of the respective subsidiaries.

Lines of Credit

On April 23, 2021, SJWC closed its $ 140,000 line of credit agreement which was set to mature on June 1, 2021, and entered into a new $ 140,000 credit agreement (“SJWC Credit Agreement”) with JPMorgan Chase Bank, N.A., as the lender (the “Lender”).

The SJWC Credit Agreement provides an unsecured credit facility with a letter of credit sublimit of $ 15,000 .

Proceeds of borrowings under the SJWC Credit Agreement may be used to refinance existing debt, for working capital, and for general corporate purposes.

The new SJWC Credit Agreement has a maturity date of December 31, 2023.

The line of credit bears interest at variable rates.

The SJWC Credit Agreement contains customary representations, warranties and events of default, as well as restrictive covenants customary for facilities of this type.

The SJWC Credit Agreement also includes certain customary financial covenants such as a funded debt to capitalization ratio.

Also on April 23, 2021, SJW Group, as guarantor, and CLWSC closed its $ 5,000 line of credit agreement which was set to mature on June 1, 2021, and entered into a new $ 5,000 credit agreement (“SJWTX Credit Agreement”) with the Lender.

The SJWTX Credit Agreement provides an unsecured credit facility with a letter of credit sublimit of $ 1,000 .

The new SJWTX Credit Agreement has a maturity date of December 31, 2023.

Long-Term Debt

On March 2, 2021, Maine Water entered into a credit agreement with a commercial bank, pursuant to an existing master loan agreement under which the commercial bank issued Maine Water a promissory note on the same date with an aggregate principal amount of $ 17,000 and a fixed interest rate of 3.89 %, due March 1, 2041.

The notes are unsecured obligations of Maine Water.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

The promissory note contains customary representations and warranties.

Under the promissory note, Maine Water is required to comply with certain customary affirmative and negative covenants for as long as the notes are outstanding.

The notes are also subject to customary events of default, the occurrence of which may result in all of the notes then outstanding becoming immediately due and payable.

Proceeds from the borrowing were received on March 18, 2021.

On May 13, 2021, CLWSC entered into a master credit agreement and promissory note with a commercial bank under which it entered into a borrowing agreement for an aggregate principal amount not to exceed $ 30,000 , of which $ 20,000 was advanced at the closing date.

The borrowing carries a fixed interest rate of 4.01 % due on March 20, 2041.

The remaining aggregate principal amount of the promissory note is to be advanced at the discretion of CLWSC before the maturity date.

The notes are unsecured obligations of CLWSC.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

The promissory note contains customary representations and warranties.

Under the promissory note, CLWSC is required to comply with certain customary affirmative and negative covenants for as long as the notes are outstanding.

The notes are also subject to customary events of default, the occurrence of which may result in all of the notes then outstanding becoming immediately due and payable.

Water Utility Services have received advance deposit payments from its customers on certain construction projects.

The refunds of the advance deposit payments constitute an obligation of the respective subsidiaries.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

March 31, 2022

(in thousands, except share and per share data)

On June 25, 2021, SJWC entered into a note purchase agreement with certain affiliates of New York Life Insurance (collectively the “Purchasers”), pursuant to which the company sold an aggregate principal amount of $ 50,000 of its 3.00 % Senior Notes, Series N (“Series N Notes”) to the Purchasers.

The Series N Notes are unsecured obligations of SJWC and are due on June 25, 2051.

Interest is payable semi-annually in arrears on January 1st and July 1st of each year.

The note purchase agreement contains customary affirmative and negative covenants for as long as the Series N Notes are outstanding.

The Series N Notes are also subject to customary events of default, the occurrence of which may result in all of the Series N Notes then outstanding becoming immediately due and payable.

The closing occurred simultaneously with the signing of the note purchase agreement.

On August 4, 2021, Connecticut Water entered into a note purchase agreement with certain affiliates of Metropolitan Life Insurance Company, New York Life Insurance Company, the Northwestern Mutual Life Insurance Company and Pacific Life Insurance Company, pursuant to which Connecticut Water sold on August 4, 2021, an aggregate principal amount of $ 50,000 of its 3.07 % Senior Notes, Series 2021A, due 2051 (the “2021A Notes”) and will sell on December 1, 2021, an aggregate principal amount of $ 50,000 of its 3.10 % Senior Notes, Series 2021B, due 2051 (the “2021B Notes” and together with the 2021A Notes, the “CWC Notes”).

The closing on December 1, 2021, is subject to customary closing conditions.

The CWC Notes are unsecured obligations of Connecticut Water, with the 2021A Notes due on June 1, 2051, and the 2021B Notes due on December 1, 2051.

Interest on the CWC Notes is payable semi-annually in arrears on June 1st and December 1st of each year.

The note purchase agreement contains customary representations and warranties.

Connecticut Water has agreed to customary affirmative and negative covenants for as long as the CWC Notes are outstanding.

The CWC Notes are also subject to customary events of default, the occurrence of which may result in all of the CWC Notes then outstanding becoming immediately due and payable.

The proceeds from the sale of the CWC Notes will be used to repay outstanding short and/or long-term borrowings, to fund Connecticut Water’s capital expenditures, and/or for other general corporate purposes.

On August 4, 2021, SJWC entered into a note purchase agreement with the purchasers listed in the agreement, pursuant to which the company sold an aggregate principal amount of $ 50,000 of its 3.00 % Senior Notes, Series O (“Series O Notes”), due December 1, 2051.

The Series O Notes are unsecured obligations of SJWC.

Interest is payable semi-annually in arrears on June 1st and December 1st of each year.

The note purchase agreement contains customary affirmative and negative covenants for as long as the Series O Notes are outstanding.

The Series O Notes are also subject to customary events of default, the occurrence of which may result in all of the Series O Notes then outstanding becoming immediately due and payable.

The closing of the note purchase agreement is expected to occur on December 1, 2021.

Income tax expense (benefit) for the three months ended March 31, 2022, and 2021, was $ 1,067 and $( 896 ), respectively.

The effective consolidated income tax rates were 22 % and ( 52 )% for the three months ended March 31, 2022, and 2021, respectively.

The higher effective tax rate for the three months ended March 31, 2022, was primarily due to discrete tax expense items.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties of approximately $ 8,014 and $ 7,961 as of March 31, 2022, and December 31, 2021, respectively.

SJW Group does not expect its unrecognized tax benefits to change significantly within the next 12 months.

Commitments and Contingencies

SJW Group is subject to ordinary routine litigation incidental to its business.

There are no pending legal proceedings to which SJW Group or any of its subsidiaries is a party, or to which any of its properties is the subject, that are expected to have a material effect on SJW Group’s business, financial position, results of operations or cash flows.

Benefit Plans

9 unchanged sentences

SJW Group also provides health care and life insurance benefits for retired employees under employer-sponsored postretirement benefits other than pension plans.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

(in thousands, except share and per share data)

The components of net periodic benefit costs for the defined benefit plans and other postretirement benefits for the three and nine months ended September 30, 2021, and 2020 are as follows:

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

The components of net periodic benefit costs for the defined benefit plans and other postretirement benefits for the three months ended March 31, 2022, and 2021 are as follows:

Three months ended March 31,

Service cost $ 2,652 2,735

5 unchanged sentences

In 2022, SJW Group expects to make required and discretionary cash contributions of up to $ 7,842 to the pension plans and other postretirement benefits.

For the three and nine months ended September 30, 2021, SJW Group has made $ 3,517 and $ 4,997 , respectively, contributions to such plans.

For the three and nine months ended September 30, 2021, income tax expense was $ 2,749 and $ 5,159 , respectively.

Income tax expense for the three and nine months ended September 30, 2020, was $ 4,578 and $ 9,226 , respectively.

The effective consolidated income tax rates were 13 % and 15 % for the three months ended September 30, 2021 and 2020, respectively, and 11 % and 16 % for the nine months ended September 30, 2021, and 2020, respectively.

The lower effective rates for the three and nine months ended September 30, 2021, were primarily due to flow-through tax benefits.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties of approximately $ 7,537 and $ 6,468 as of September 30, 2021, and December 31, 2020, respectively.

SJW Group does not expect its unrecognized tax benefits to change significantly within the next 12 months.

On March 11, 2021, the American Rescue Plan Act (the “Act”) was signed into law.

SJW Group has considered the income tax implications of the Act in its estimated tax provision and does not believe it will materially impact the company’s year-end tax rate.

Fair Value Measurement

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of September 30, 2021, but require disclosure of their fair values:

cash and cash equivalents, accounts receivable and accounts payable.

The estimated fair value of such instruments as of September 30, 2021, approximates their carrying value as reported on the condensed consolidated balance sheets.

The estimated fair value of such financial instruments are determined using the income approach based on the present value of estimated future cash flows.

There have been no changes in valuation techniques during the three and nine months ended September 30, 2021.

The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1.

The fair value of SJW Group’s long-term debt was approximately $ 1,573,581 and $ 1,570,727 as of September 30, 2021, and December 31, 2020, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company.

The book value of long-term debt was $ 1,446,320 and $ 1,363,821 as of September 30, 2021, and December 31, 2020, respectively.

The fair value of long-term debt would be categorized as Level 2 in the fair value hierarchy.

CTWS’s additional retirement benefits under the supplemental executive retirement plans and retirement contracts are funded by investment assets held by a Rabbi Trust.

The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $ 3,738 and $ 3,014 as of September 30, 2021, and December 31, 2020, respectively, and are categorized as Level 1 in the fair value hierarchy.

For the three months ended March 31, 2022, SJW Group has made no contributions to the plans.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

March 31, 2022

(in thousands, except share and per share data)

subsidiary the opportunity to acquire an equity interest in SJW Group.

SJW Group also maintains stock plans in connection with its acquisition of CTWS which are no longer granting new awards under the plan.

As of March 31, 2022, 179,833 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 625,071 shares are available for award issuances under the Incentive Plan.

A summary of compensation costs charged to income and proceeds from the exercise of restricted stock and similar instruments that are recorded to additional paid-in capital and common stock, by award type, are presented below for the three months ended March 31, 2022, and 2021:

Three months ended March 31,

Compensation costs charged to income:

ESPP $ 185 181

Restricted stock and deferred restricted stock 1,367 1,099

Total compensation costs charged to income $ 1,552 1,280

ESPP proceeds $ 1,049 1,026

Restricted Stock and Deferred Restricted Stock

For the three months ended March 31, 2022, and 2021, SJW Group granted under the Incentive Plan 31,399 and 33,701 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 68.37 and $ 64.22 , respectively, per unit.

For the three months ended March 31, 2022, and 2021, SJW Group granted under the Incentive Plan 33,621 and 29,459 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value of $ 70.35 and $ 66.35 , respectively, per unit.

As of March 31, 2022, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $ 7,618 .

This cost is expected to be recognized over a weighted-average period of 2.14 years.

Employee Stock Purchase Plan

SJW Group’s recorded expenses were $ 93 and $ 88 for the three months ended March 31, 2022 and 2021, respectively, related to the ESPP.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 29, 2022, for the ESPP is approximately $ 132 .

This cost is expected to be recognized during the second and third quarters of 2022.

Segment and Non-Tariffed Business Reporting

SJW Group is a holding company with four subsidiaries:

(i) SJWC, a water utility operation with both regulated and non-tariffed businesses, (ii) CLWSC, a regulated water utility located in Canyon Lake, Texas, and its consolidated non-tariffed variable interest entity, Acequia Water Supply Corporation, (iii) SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P., which operated commercial building rentals, and (iv) SJWNE LLC a holding company for CTWS and its subsidiaries, Connecticut Water, Maine Water, New England Water Utility Services, Inc.

(“NEWUS”) and Chester Realty, Inc.

SJW Group is a holding company with five subsidiaries:

(i) SJWC, a water utility operation with both regulated and non-tariffed businesses, (ii) CLWSC, a regulated water utility located in Canyon Lake, Texas, and its consolidated non-tariffed variable interest entity, Acequia Water Supply Corporation, (iii) SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P., which operated commercial building rentals, (iv) SJWNE LLC a holding company for CTWS and its subsidiaries, The Connecticut Water Company, The Maine Water Company, New England Water Utility Services, Inc.

and Chester Realty, Inc., and (v) SJWTX Holdings, Inc.

which was formed for the purpose of effecting a corporate reorganization of the water utility operations in Texas.

In accordance with FASB ASC Topic 280 - “Segment Reporting,” SJW Group’s reportable segments have been determined based on information used by the chief operating decision maker.

1 unchanged sentence

The first segment is providing water utility and utility-related services to its customers through SJW Group’s subsidiaries, SJWC, Connecticut Water, CLWSC, Maine Water, and NEWUS together referred to as “Water Utility Services.” The second segment is property management and investment activity conducted by SJW Land Company and Chester Realty, Inc., referred to as “Real Estate Services.”

The following tables set forth information relating to SJW Group’s reportable segments and distribution of regulated and non-tariffed business activities within the reportable segments.

Certain allocated assets, such as goodwill, revenue and expenses have been included in the reportable segment amounts.

Other business activity of SJW Group not included in the reportable segments is included in the “All Other” category.

For Three Months Ended September 30, 2021

Water Utility Services Real Estate Services All Other (1) SJW Group

Regulated Non-tariffed Non-tariffed Non-tariffed Regulated Non-tariffed Total

Operating revenue $ 162,352 3,168 1,403 — 162,352 4,571 166,923

Operating expense 129,915 2,156 956 122 129,915 3,234 133,149

Operating income (loss) 32,437 1,012 447 ( 122 ) 32,437 1,337 33,774

Net income (loss) 20,625 879 294 ( 2,730 ) 20,625 ( 1,557 ) 19,068

Depreciation and amortization 23,209 113 292 223 23,209 628 23,837

Interest on long-term debt and other interest expense 8,805 — — 4,730 8,805 4,730 13,535

Provision (benefit) for income taxes 3,537 280 100 ( 1,168 ) 3,537 ( 788 ) 2,749

Assets $ 3,352,976 7,141 44,629 64,995 3,352,976 116,765 3,469,741

For Three Months Ended September 30, 2020

Water Utility Services Real Estate Services All Other (1) SJW Group

Regulated Non-tariffed Non-tariffed Non-tariffed Regulated Non-tariffed Total

Operating revenue $ 161,646 2,814 1,403 — 161,646 4,217 165,863

Operating expense 119,885 2,161 961 973 119,885 4,095 123,980

Operating income (loss) 41,761 653 442 ( 973 ) 41,761 122 41,883

Net income (loss) 25,053 827 310 ( 97 ) 25,053 1,040 26,093

Depreciation and amortization 21,782 116 296 223 21,782 635 22,417

Interest on long-term debt and other interest expense 8,112 — — 5,062 8,112 5,062 13,174

Provision (benefit) for income taxes 9,450 179 105 ( 5,156 ) 9,450 ( 4,872 ) 4,578

Assets $ 3,131,778 8,589 45,980 73,367 3,131,778 127,936 3,259,714

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2021

March 31, 2022

(in thousands, except share and per share data)

For Nine Months Ended September 30, 2021

The following tables set forth information relating to SJW Group’s reportable segments and distribution of regulated and non-tariffed business activities within the reportable segments.

Certain allocated assets, such as goodwill, revenue and expenses have been included in the reportable segment amounts.

Other business activity of SJW Group not included in the reportable segments is included in the “All Other” category.

For Three Months Ended March 31, 2022

Water Utility Services Real Estate Services All Other (1) SJW Group

8 unchanged sentences

Assets $ 3,403,006 4,139 44,361 60,370 3,403,006 108,870 3,511,876

For Nine Months Ended September 30, 2020

For Three Months Ended March 31, 2021

Water Utility Services Real Estate Services All Other (1) SJW Group

9 unchanged sentences

____________________

(1) The “All Other” category for the nine months ended September 30, 2021 and September 30, 2020, includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

(2) As of September 30, 2021 and December 31, 2020, the Company has performed an allocation of goodwill associated with the acquisition of CTWS to two reporting units, Connecticut and Maine, which are both aggregated within the Regulated Water Utility Services reportable segment.

Commitments and Contingencies

SJW Group is subject to ordinary routine litigation incidental to its business.

Subsequent Events

On October 29, 2021, San Jose Water sold two non-utility properties located in San Jose, California for $ 13,150 .

Also, on the same date, SJW Land sold undeveloped land located in San Jose, California for $ 2,600 .

SJW Group will record an estimated pre-tax gain on the sale of real estate investments of $ 13,600 in the fourth quarter of 2021.

(1) The “All Other” category for the three months ended March 31, 2022, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

on a stand-alone basis.

SJWTX Holdings, Inc.

had no activity for the three months ended March 31, 2022 .

For the three months ended March 31, 2021, “All Other” category includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

(2) As of March 31, 2022 and December 31, 2021, the Company has performed an allocation of goodwill associated with the acquisition of CTWS to two reporting units, Connecticut and Maine, which are both aggregated within the Regulated Water Utility Services reportable segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements