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Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 147 added, 81 removed, 435 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

Three months ended June 30, Six months ended June 30,

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

2022 2021 2022 2021

35 unchanged sentences

(in thousands, except share and per share data)

September 30,

2022 December 31,

15 unchanged sentences

Accounts receivable:

Customers, net of allowances for uncollectible accounts of $ 5,222 and $ 4,600 on June 30, 2022 and December 31, 2021, respectively

Customers, net of allowances for uncollectible accounts of $ 5,665 and $ 4,600 on September 30, 2022 and December 31, 2021, respectively

63,760 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 30,247,674 on June 30, 2022 and 30,181,348 on December 31, 2021

issued and outstanding shares 30,315,265 on September 30, 2022 and 30,181,348 on December 31, 2021

Additional paid-in capital 614,226 606,392

43 unchanged sentences

Net income — — — 11,558 — 11,558

Unrealized gain on investment, net of tax of $ —

Unrealized loss on investment, net of tax of $ 0

— — — — ( 248 ) ( 248 )

1 unchanged sentence

Issuance of restricted and deferred stock units 10,529 — ( 6 ) — — ( 6 )

Common stock issuance, net of costs — — ( 6 ) — — ( 6 )

Common stock issuance costs — — ( 6 ) — — ( 6 )

Dividends paid ($ 0.36 per share)

1 unchanged sentence

BALANCES, June 30, 2022 30,247,674 30 608,666 421,741 ( 592 ) 1,029,845

Net income — — — 25,034 — 25,034

Unrealized loss on investment, net of tax benefit of $ 154

— — — — ( 173 ) ( 173 )

Stock-based compensation — — 1,398 ( 23 ) — 1,375

Issuance of restricted and deferred stock units 1,316 — 13 — — 13

Employee stock purchase plan 18,667 — 1,042 — — 1,042

Common stock issuance, net of costs 47,608 — 3,107 — — 3,107

Dividends paid ($ 0.36 per share)

— — — ( 10,896 ) — ( 10,896 )

BALANCES, September 30, 2022 30,315,265 $ 30 $ 614,226 $ 435,856 $ ( 765 ) $ 1,049,347

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

28 unchanged sentences

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 $ 4

— — — — ( 12 ) ( 12 )

Stock-based compensation — — 1,130 ( 29 ) — 1,101

Issuance of restricted and deferred stock units 186 — 14 — — 14

Employee stock purchase plan 17,069 — 1,000 — — 1,000

Dividends paid ($ 0.34 per share)

— — — ( 10,139 ) — ( 10,139 )

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.

2 unchanged sentences

(in thousands)

Six months ended June 30,

Nine months ended September 30,

OPERATING ACTIVITIES:

13 unchanged sentences

Regulatory assets and liabilities excluding income tax temporary differences, net and postretirement benefits 21,776 ( 12,418 )

Up-front service concession payment ( 1,600 ) —

Other changes, net 2,774 458

15 unchanged sentences

Issuance of common stock, net of issuance costs 3,107 66,775

Debt issuance costs — ( 296 )

Dividends paid ( 32,667 ) ( 29,996 )

17 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

SEPTEMBER 30, 2022

(in thousands, except share and per share data)

15 unchanged sentences

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

Three months ended June 30, Six months ended June 30,

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

2022 2021 2022 2021

6 unchanged sentences

Real Estate Investments and Nonutility Properties

The major components of real estate investments and nonutility properties as of June 30, 2022, and December 31, 2021, are as follows:

The major components of real estate investments and nonutility properties as of September 30, 2022, and December 31, 2021, are as follows:

September 30,

2022 December 31,

8 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

September 30, 2022

(in thousands, except share and per share data)

5 unchanged sentences

Fair Value Measurement

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of June 30, 2022, but require disclosure of their fair values:

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of September 30, 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 June 30, 2022, approximates their carrying value as reported on the condensed consolidated balance sheets.

The estimated fair value of such instruments as of September 30, 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 and six months ended June 30, 2022.

There have been no changes in valuation techniques during the three and nine months ended September 30, 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 $ 1,348,114 and $ 1,651,825 as of June 30, 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 $ 1,494,675 and $ 1,532,041 as of June 30, 2022, and December 31, 2021, respectively.

The fair value of SJW Group’s long-term debt was approximately $ 1,247,530 and $ 1,651,825 as of September 30, 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 $ 1,458,088 and $ 1,532,041 as of September 30, 2022, and December 31, 2021, respectively.

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

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 $ 3,117 and $ 3,797 as of June 30, 2022, and December 31, 2021, respectively, and are categorized as Level 1 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 $ 2,790 and $ 3,797 as of September 30, 2022, and December 31, 2021, respectively, and are categorized as Level 1 in the fair value hierarchy.

Earnings per Share

1 unchanged sentence

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

For the three months ended June 30, 2022 and 2021, 4,964 and 4,304 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the six months ended June 30, 2022 and 2021, 15,824 and 12,883 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the three months ended September 30, 2022 and 2021, 2,416 and 1,558 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the nine months ended September 30, 2022 and 2021, 18,240 and 14,441 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)

June 30, 2022

September 30, 2022

(in thousands, except share and per share data)

Regulatory Matters

Regulatory assets, net are comprised of the following as of June 30, 2022, and December 31, 2021:

June 30, 2022 December 31, 2021

Regulatory assets, net are comprised of the following as of September 30, 2022, and December 31, 2021:

September 30, 2022 December 31, 2021

Regulatory assets:

8 unchanged sentences

Total regulatory assets, net, less current portion $ 145,945 151,992

As of June 30, 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 June 30, 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 $ 85,798 and $ 84,887 , respectively.

As of September 30, 2022, and December 31, 2021, SJW Group’s regulatory assets, net, not earning a return primarily included postretirement pensions and the unfunded amount of other medical benefits, and business combination debt premiums, net.

The total amount of regulatory assets, net not earning a return at September 30, 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 $ 86,113 and $ 84,887 , respectively.

Balancing and Memorandum Accounts

4 unchanged sentences

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.

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

On October 11, 2022, the CPUC issued General Rate Case Decision No.

22-10-005, which approved a recovery of $ 18,174 in balancing and memorandum accounts from customers.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

September 30, 2022

(in thousands, except share and per share data)

Balancing and memorandum accounts recorded to regulatory assets, net for the three and six months ended June 30, 2022, and 2021 as follows:

Three months ended June 30, 2022 Three months ended June 30, 2021

Balancing and memorandum accounts recorded to regulatory assets, net for the three and nine months ended September 30, 2022, and 2021 are as follows:

Three months ended September 30, 2022 Three months ended September 30, 2021

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

14 unchanged sentences

Total $ 24,772 6,625 ( 8,814 ) 22,583 $ 31,317 2,081 ( 121 ) 33,277

Six months ended June 30, 2022 Six months ended June 30, 2021

Nine months ended September 30, 2022 Nine months ended September 30, 2021

15 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

September 30, 2022

(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.

All balancing accounts and memorandum 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 November 17, 2021, SJW Group entered into an equity distribution agreement (the “Equity Distribution Agreement”) with J.P.

Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC, pursuant to which the company may offer and sell shares of its common stock, $ 0.001 par value per share, from time to time in “at-the-market” offerings, having an aggregate gross sales price of up to $ 100,000 .

For the three and nine months ended September 30, 2022, SJW Group issued and sold a total of 47,608 shares of common stock with a weighted average price of $ 66.26 per share and received approximately $ 3,107 in net proceeds under the Equity Distribution Agreement.

Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 402,723 shares of common stock with a weighted average price of $ 69.91 for a total net proceeds of $ 27,360 and has a remaining $ 71,845 under the Equity Distribution Agreement to issue into shares.

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.

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 had received advance deposit payments from its customers on certain construction projects.

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

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

On April 6, 2022, 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 $ 15,000 and a fixed interest rate of 4.54 %, due May 31, 2042.

Short-term Financing Agreements

On August 2, 2022, SJW Group, SJWC, SJWTX, Inc., and CTWS entered into a $ 300,000 syndicated line of credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent (“JP Morgan”), Wells Fargo Bank, National Association, as Documentation Agent, and a syndicate of banks.

Proceeds of borrowings under the Credit Agreement will be used for refinancing existing debt, working capital, and general corporate purposes.

The Credit Agreement has a maturity date of August 2, 2027.

Under the terms of the Credit Agreement, each of SJW Group, SJWC, SJWTX, Inc., and CTWS is a borrower with several and not joint liability.

Each borrower has an initial borrowing entitlement, or sublimit, which can be periodically adjusted from time to time as set forth in the Credit Agreement.

The initial sublimit of each borrower is as follows:

Initial Sublimit

SJW Group $ 50,000

Borrowings under the Credit Agreement bear interest at either the Alternative Base Rate (as defined in the Credit Agreement and hereinafter referred to as “ABR”) or the Adjusted Term Secured Overnight Financing Rate (as defined in the Credit Agreement and hereinafter referred to as “SOFR”).

ABR borrowings (which are borrowings bearing interest at a rate determined by reference to ABR) will bear interest at a rate per annum equal to ABR plus the applicable rate.

SOFR borrowings (which are borrowings bearing interest at a rate determined by reference to SOFR) will bear interest at a rate per

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2022

(in thousands, except share and per share data)

annum equal to SOFR plus the applicable rate.

The applicable rate and pricing is variable depending on the credit ratings of the borrower.

The Credit Agreement contains customary representations, warranties and events of default, as well as certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens, asset sales, and fundamental changes.

The Credit Agreement also includes a financial covenant that requires each of the borrowers to maintain its funded debt to capitalization ratio at or below 70 %.

This Credit Agreement replaces the existing $ 140,000 credit agreement, dated April 23, 2021, between SJWC and JP Morgan and the existing $ 5,000 credit agreement, dated April 23, 2021, between SJWTX and JP Morgan, with SJW Group as guarantor, both of which were terminated upon entering into the Credit Agreement and were set to mature on December 31, 2023.

In addition, on August 2, 2022, CTWS and Citizens Bank, National Association, entered into a fourth modification to the amended and restated revolving credit facility, dated December 18, 2019, as amended, pursuant to which the credit commitment was reduced from $ 75,000 to $ 10,000 .

Long-term Financing Agreements

On April 6, 2022, 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 $ 15,000 at a fixed interest rate of 4.54 %, due May 31, 2042.

The notes are unsecured obligations of Maine Water.

5 unchanged sentences

On June 28, 2022, Connecticut Water entered into a note purchase agreement with certain affiliates of New York Life Insurance Company, pursuant to which Connecticut Water sold an aggregate principal amount of $ 25,000 of its 4.71 % Senior Notes, Series 2022, due 2052.

The closing of the note purchase agreement is expected to occur on December 15, 2022, and is subject to customary closing conditions and regulatory approval.

The closing of the note purchase agreement is expected to occur on December 15, 2022, and is subject to customary closing conditions.

The Series 2022 Notes are unsecured obligations of Connecticut Water.

3 unchanged sentences

The Series 2022 Notes are also subject to customary events of default, the occurrence of which may result in all of the Series 2022 Notes then outstanding becoming immediately due and payable.

For the three and six months ended June 30, 2022, income tax expense was $ 2,368 and $ 3,435 , respectively.

Income tax expense for the three and six months ended June 30, 2021, was $ 3,306 and $ 2,410 , respectively.

The effective consolidated income tax rates were 17 % and 14 % for the three months ended June 30, 2022 and 2021, respectively, and 18 % and 9 % for the six months ended June 30, 2022, and 2021, respectively.

The higher effective tax rate for the three and six months ended June 30, 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 $ 8,221 and $ 7,961 as of June 30, 2022, and December 31, 2021, respectively.

On July 14, 2022, SJWC entered into a note purchase agreement with certain affiliates of New York Life Insurance, Metropolitan Life Insurance, Northwestern Mutual Life Insurance, and John Hancock Life Insurance (collectively the “Purchasers”), pursuant to which the company will sell an aggregate principal amount of $ 70,000 of its 4.85 % Senior Notes, Series P (“Series P Notes”) to the Purchasers.

The Series P Notes are unsecured obligations of SJWC and are due on February 1, 2053.

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

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

The Series P Notes are also subject to customary events of default.

The closing is expected to occur in January 2023 upon satisfaction of customary closing conditions.

For the three and nine months ended September 30, 2022, income tax expense was $ 223 and $ 3,658 , respectively.

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

The effective consolidated income tax rates were 1 % and 13 % for the three months ended September 30, 2022 and 2021, respectively, and 8 % and 11 % for the nine months ended September 30, 2022, and 2021, respectively.

The lower effective tax rate for the three and nine months ended September 30, 2022, was primarily due to a tax accounting method change at CTWS regarding the non-network asset repairs deduction.

SJW Group unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties, of approximately $ 8,937 and $ 7,961 as of September 30, 2022, and December 31, 2021, respectively.

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

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2022

(in thousands, except share and per share data)

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law.

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

Commitments and Contingencies

6 unchanged sentences

Certain CTWS employees hired before March 1, 2012, and covered by a plan merged into the CTWS plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation.

CTWS employees hired on or after January 1, 2009, are entitled to

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

an additional 1.5 % of eligible compensation to their company sponsored savings plan.

CTWS employees hired on or after January 1, 2009, are entitled to an additional 1.5 % of eligible compensation to their company sponsored savings plan.

SJW Group does not have multi-employer plans.

3 unchanged sentences

SJW Group also provides health care and life insurance benefits for retired employees under employer-sponsored postretirement benefits that are not pension plans.

The components of net periodic benefit costs for the defined benefit plans and other postretirement benefits for the three and six months ended June 30, 2022, and 2021 are as follows:

Three months ended June 30, Six months ended June 30,

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, 2022, and 2021 are as follows:

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

2022 2021 2022 2021

6 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 six months ended June 30, 2022, SJW Group has made $ 1,961 contributions to such plans.

For the three and nine months ended September 30, 2022, SJW Group has made $ 2,577 and $ 4,538 , respectively, contributions to such plans.

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.

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

As of June 30, 2022, 178,820 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 615,154 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 and six months ended June 30, 2022, and 2021:

Three months ended June 30, Six months ended June 30,

As of September 30, 2022, 179,848 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 612,738 shares are available for award issuances under the Incentive Plan.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2022

(in thousands, except share and per share data)

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

2022 2021 2022 2021

5 unchanged sentences

Restricted Stock and Deferred Restricted Stock

For the three months ended June 30, 2022, and 2021, SJW Group granted under the Incentive Plan 12,604 and 11,732 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 58.04 and $ 65.43 , respectively, per unit.

For the six months ended June 30, 2022, and 2021, SJW Group granted under the

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

Incentive Plan 44,003 and 45,433 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 65.41 and $ 64.53 , respectively, per unit.

For the three months ended June 30, 2022, and 2021, SJW Group granted under the Incentive Plan 32 and 1,182 target units, respectively, performance-based and market-based restricted stock awards with a weighted-average grant date fair value of $ 66.14 and $ 65.70 , respectively, per unit.

For the six months ended June 30, 2022, and 2021, SJW Group granted under the Incentive Plan 33,653 and 30,641 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value of $ 70.35 and $ 66.33 , respectively, per unit.

For the three months ended September 30, 2022, and 2021, SJW Group granted under the Incentive Plan 1,723 and 1,134 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 62.56 and $ 69.20 , respectively, per unit.

For the nine months ended September 30, 2022, and 2021, SJW Group granted under the Incentive Plan 45,726 and 46,567 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 65.31 and $ 64.65 , respectively, per unit.

For the three months ended September 30, 2022, and 2021, SJW Group granted under the Incentive Plan 2,193 and 0 target units, respectively, performance-based and market-based restricted stock awards with a weighted-average grant date fair value of $ 69.70 and $ 0.00 , respectively, per unit.

For the nine months ended September 30, 2022, and 2021, SJW Group granted under the Incentive Plan 35,846 and 30,641 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value of $ 70.31 and $ 66.33 , 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 June 30, 2022, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $ 6,721 .

As of September 30, 2022, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $ 5,660 .

This cost is expected to be recognized over a weighted-average period of 1.78 years.

Employee Stock Purchase Plan

SJW Group’s recorded expenses for its ESPP were $ 89 and $ 182 for the three and six months ended June 30, 2022, respectively, and $ 86 and $ 174 for the three and six months ended June 30, 2021, respectively.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 29, 2022, for the ESPP is approximately $ 31 .

This cost is expected to be recognized during the third quarter of 2022.

SJW Group’s recorded expenses for its ESPP were $ 94 and $ 276 for the three and nine months ended September 30, 2022, respectively, and $ 91 and $ 265 for the three and nine months ended September 30, 2021, respectively.

The total unrecognized compensation costs related to the semi-annual offering period that ends January 31, 2023, for the ESPP is approximately $ 131 .

This cost is expected to be recognized during the fourth quarter of 2022 and first quarter of 2023.

Segment and Non-Tariffed Business Reporting

8 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

September 30, 2022

(in thousands, except share and per share data)

2 unchanged sentences

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

For Three Months Ended June 30, 2022

For Three Months Ended September 30, 2022

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

8 unchanged sentences

Assets $ 3,498,396 5,302 43,017 57,989 3,498,396 106,308 3,604,704

For Three Months Ended June 30, 2021

For Three Months Ended September 30, 2021

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

8 unchanged sentences

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

For Six Months Ended June 30, 2022

For Nine Months Ended September 30, 2022

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

10 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

September 30, 2022

(in thousands, except share and per share data)

For Six Months Ended June 30, 2021

For Nine Months Ended September 30, 2021

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

9 unchanged sentences

____________________

(1) The “All Other” category for the six months ended June 30, 2022, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

(1) The “All Other” category for the nine months ended September 30, 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 six months ended June 30, 2022 .

For the six months ended June 30, 2021, “All Other” category includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

(2) As of June 30, 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.

had no activity for the nine months ended September 30, 2022 .

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

(2) As of September 30, 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.

Subsequent Event

The Series P Notes are unsecured obligations of SJWC and are due on February 1, 2053.

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

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

The Series P Notes are also subject to customary events of default.

The closing is expected to occur in January 2023 upon satisfaction of customary closing conditions.

The CPUC approved the settlement of SJWC’s General Rate Case Application No.

21-01-003 (“2022 GRC”) on October 6, 2022 and issued Decision No.

22-10-005 (“2022 GRC Decision”) on October 11, 2022.

SJWC received authority for an increase of $ 25,074 or 6.03 % in 2022, $ 12,955 or 2.94 % in 2023, and $ 16,102 or 3.56 % in 2024.

The application included requests to recover $ 18,174 from balancing and memorandum accounts and authorization for a $ 350,000 capital budget.

Additionally, it further aligns authorized and actual consumption, particularly for business customers, addresses the water supply mix variability, and provides greater revenue recovery in the fixed charge.

The 2022 approved revenue increase is effective retrospectively to January 1, 2022.

SJWC will be filing advice letters to implement new rates and to recover interim revenue and balancing and memorandum accounts in accordance with the 2022 GRC Decision.

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