What changed in this filing

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Item 1. Financial Statements

2023-07-31 compared with 2023-05-01 · 150 added, 74 removed, 365 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

Three months ended March 31,

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

2023 2022 2023 2022

REVENUE $ 156,886 149,041 $ 294,182 273,343

10 unchanged sentences

Depreciation and amortization 26,121 25,207 52,417 52,813

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

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

Total operating expense 125,728 122,639 237,846 230,352

34 unchanged sentences

Cash and cash equivalents 25,474 12,344

Cash 23,333 12,344

Accounts receivable:

Customers, net of allowances for uncollectible accounts of $ 5,851 and $ 5,753 on March 31, 2023 and December 31, 2022, respectively

Customers, net of allowances for uncollectible accounts of $ 6,414 and $ 5,753 on June 30, 2023 and December 31, 2022, respectively

58,545 59,172

23 unchanged sentences

authorized 70,000,000 shares;

issued and outstanding share s 31,427,124 on March 31, 2023 and 30,801,912 on December 31, 2022

issued and outstanding share s 31,731,030 on June 30, 2023 and 30,801,912 on December 31, 2022

Additional paid-in capital 716,642 651,004

42 unchanged sentences

BALANCES, March 31, 2023 31,427,124 31 692,742 458,142 1,570 1,152,485

Net income — — — 18,286 — 18,286

Unrealized gain on investment, net of tax of $( 37 )

Stock-based compensation — — 1,139 ( 17 ) 1,122

Issuance of restricted and deferred stock units 13,429 — ( 20 ) — — ( 20 )

Common stock issuance costs 290,477 1 22,781 — — 22,782

Dividends paid ($ 0.38 per share)

— — — ( 11,947 ) — ( 11,947 )

BALANCES, June 30, 2023 31,731,030 $ 32 $ 716,642 $ 464,464 $ 1,578 $ 1,182,716

Common Stock Additional

15 unchanged sentences

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

Net income — — — 11,558 — 11,558

Unrealized loss on investment, net of tax of $ 0

— — — — ( 248 ) ( 248 )

Stock-based compensation — — 1,041 ( 23 ) 1,018

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

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

Dividends paid ($ 0.36 per share)

— — — ( 10,889 ) — ( 10,889 )

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

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three months ended March 31,

Six months ended June 30,

OPERATING ACTIVITIES:

19 unchanged sentences

Contributions in aid of construction ( 9,287 ) ( 13,332 )

Additions to real estate investments — ( 546 )

Payments to retire utility plant, net of salvage ( 468 ) ( 1,836 )

Proceeds from sale of nonutility properties — 227

Other changes, net 125 ( 33 )

25 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

JUNE 30, 2023

(in thousands, except share and per share data)

7 unchanged sentences

(“NEWUS”), and Chester Realty, Inc.

SJWTX Holdings, Inc.

is a holding company that was formed with the purpose of effecting a corporate reorganization of our water utility operations in Texas.

Texas Water Resources, LLC was formed as a subsidiary of SJWTX Holdings, Inc.

to hold future wholesale water supply assets.

SJWC, Connecticut Water, SJWTX, Inc.

7 unchanged sentences

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

Three months ended March 31,

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

2023 2022 2023 2022

Revenue from contracts with customers $ 159,724 148,657 $ 295,560 270,434

5 unchanged sentences

Real Estate Investments and Nonutility Properties

The major components of real estate investments and nonutility properties as of March 31, 2023, and December 31, 2022, are as follows:

The major components of real estate investments and nonutility properties as of June 30, 2023 and December 31, 2022, are as follows:

2023 December 31,

6 unchanged sentences

The company reclassified the Tennessee properties from held-and-used to held-for-sale at March 31,

The company’s intention is to complete the sale of these assets within a twelve month period.

The company recorded the Tennessee properties at the lower of their carrying value or estimated fair value less cost to sell, and also stopped recording

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2023

June 30, 2023

(in thousands, except share and per share data)

depreciation on assets held for sale.

The company's broker provided the estimated fair value of the Tennessee properties and we subtracted the estimated costs to sell from that calculated fair value.

The company’s intention is to complete the sale of these assets within a twelve month period.

The company recorded the Tennessee properties at the lower of their carrying value or estimated fair value less cost to sell, and also stopped recording depreciation on assets held for sale.

The company's broker provided the estimated fair value of the Tennessee properties.

The estimated costs to sell was subtracted to estimate the fair value.

The resulting net fair value of the Tennessee properties exceeded their carrying value, and accordingly no impairment was recorded.

1 unchanged sentence

therefore, the sale does not qualify for treatment as a discontinued operation.

The Tennessee warehouse buildings and land property is included in SJW Group’s “Real Estate Services” reportable segment in Note 9 , “Segment and Non-Tariffed Business Reporting.” The following represents the major components of the Tennessee warehouse building and land property recorded in assets held-for-sale on the condensed consolidated balance sheets as of March 31, 2023:

The Tennessee warehouse buildings and land property is included in SJW Group’s “Real Estate Services” reportable segment in Note 9 , “Segment and Non-Tariffed Business Reporting”.

The following represents the major components of the Tennessee warehouse building and land property recorded in assets held-for-sale on the condensed consolidated balance sheets as of June 30, 2023:

Land $ 13,170

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 March 31, 2023, 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 June 30, 2023, 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, 2023, approximates their carrying value as reported on the condensed consolidated balance sheets.

There have been no changes in valuation techniques during the three months ended March 31, 2023.

The estimated fair value of such instruments as of June 30, 2023, approximates their carrying value as reported on the condensed consolidated balance sheets.

There have been no changes in valuation techniques during the three and six months ended June 30, 2023.

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 $ 1,383,468 and $ 1,294,354 as of March 31, 2023, and December 31, 2022, 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 $ 1,564,636 and $ 1,496,325 as of March 31, 2023, and December 31, 2022, respectively.

The fair value of SJW Group’s long-term debt was $ 1,354,865 and $ 1,294,354 as of June 30, 2023 and December 31, 2022, 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 $ 1,563,609 and $ 1,496,325 as of June 30, 2023 and December 31, 2022, 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 $ 2,848 and $ 2,809 as of March 31, 2023, and December 31, 2022, respectively, and are categorized as Level 1 in the fair value hierarchy.

The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $ 2,808 and $ 2,809 as of June 30, 2023 and December 31, 2022, 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.

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 March 31, 2023 and 2022, 8,855 and 10,860 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

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 plans, shares potentially issuable under the performance stock plans assumed through the business combination with CTWS, and shares potentially issuable under SJW Group’s employee stock purchase plans.

For the three months ended June 30, 2023 and 2022, 1,843 and 4,964 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the six months ended June 30, 2023 and 2022, 10,698 and 15,824 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)

March 31, 2023

June 30, 2023

(in thousands, except share and per share data)

Regulatory Matters

Regulatory assets, net are comprised of the following as of March 31, 2023, and December 31, 2022:

March 31, 2023 December 31, 2022

Regulatory assets, net are comprised of the following as of June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

Regulatory assets:

7 unchanged sentences

2022 General Rate Case Interim Memorandum Account 15,108 20,650

Cost recovery accounts 11,308 16,545

Cost recovery balancing and memorandum accounts 6,225 16,545

All other balancing and memorandum accounts 3,698 2,749

11 unchanged sentences

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

Mandatory water conservation requirements from Santa Clara Valley Water District ended on April 11, 2023, which also ended SJWC’s Mandatory Conservation Plan, that included drought allocations and surcharges.

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.

Connecticut Water has established WRA, a decoupling mechanism, to mitigate risk associated with changes in demand.

Connecticut Water has been authorized by the Connecticut Public Utilities Regulatory Authority to utilize a WRA, a decoupling mechanism, to mitigate risk with changes in demand.

The WRA is used to reconcile actual water demands with the demands projected in the most recent general rate case and allows the company to implement a surcharge or surcredit as necessary to recover or refund the revenues approved in the general rate case.

The WRA allows the company to defer, as a regulatory asset or liability, the amount by which actual revenues deviate from the revenues allowed in the most recent general rate proceedings.

As of March 31, 2023, and December 31, 2022, 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 March 31, 2023, and December 31, 2022, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 51,002 and $ 52,066 , respectively.

As of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 49,958 and $ 52,066 , respectively.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2023

June 30, 2023

(in thousands, except share and per share data)

1 unchanged sentence

In March 2023, SJW Group entered into an Amendment No.

1 to the equity distribution agreement (the “Equity Distribution Agreement”), dated November 17, 2021, between the Company and J.P.

Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC (each a “Sales Agent” and, collectively, the “Sales Agents”), pursuant to which the Company increased the aggregate gross sales price of shares of the Company’s common stock, $ 0.001 par value per share, that may be sold under the Equity Distribution Agreement from $ 100,000 to $ 240,000 .

For the three months ended March 31, 2023, SJW Group issued and sold a total of 547,820 shares of common stock with a weighted average price of $ 76.10 per share and received approximately $ 40,997 in net proceeds under the Equity Distribution Agreement.

1 to the equity distribution agreement (the “Equity Distribution Agreement”), dated November 17, 2021, between SJW Group and J.P.

Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC (each a “Sales Agent” and, collectively, the “Sales Agents”), pursuant to which SJW Group increased the aggregate gross sales price of shares of SJW Group’s common stock, $ 0.001 par value per share, that may be sold under the Equity Distribution Agreement from $ 100,000 to $ 240,000 .

For the three and six months ended June 30, 2023, SJW Group issued and sold a total of 312,683 and 860,503 shares of common stock, respectively, with a weighted average price of $ 74.60 and $ 75.56 per share, respectively, and received $ 22,782 and $ 63,779 in net proceeds, respectively, under the Equity Distribution Agreement.

Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 1,745,354 shares of common stock with a weighted average price of $ 74.49 for a total net proceeds of $ 127,210 and has $ 109,995 remaining under the Equity Distribution Agreement to issue into shares.

4 unchanged sentences

Long-term Financing Agreements

In July 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.

In July 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 SJWC 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.

3 unchanged sentences

The closing of the note purchase agreement occurred on January 25, 2023.

For the three months ended March 31, 2023, and 2022, income tax expense was $ 1,078 and $ 1,067 , respectively.

The effective consolidated income tax rates were 9 % and 22 % for the three months ended March 31, 2023 and 2022, respectively.

The lower effective tax rate for the three months ended March 31, 2023, was primarily due to discrete tax items.

SJW Group unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties, of approximately $ 9,203 and $ 9,004 as of March 31, 2023, and December 31, 2022, respectively.

For the three and six months ended June 30, 2023, income tax benefit was $ 1,512 and $ 434 , respectively.

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

The effective consolidated income tax rates were ( 9 )% and 17 % for the three months ended June 30, 2023 and 2022, respectively, and ( 1 )% and 18 % for the six months ended June 30, 2023 and 2022, respectively.

The lower effective tax rate for the three and six months ended June 30, 2023, was primarily due to the partial release of an uncertain tax position reserve.

In April 2023, the Internal Revenue Service issued additional tax guidance that has allowed the company to revisit certain historical income tax reserves.

Pursuant to the issuance of this guidance, which provided additional clarification regarding some of the uncertain tax areas, the company re-evaluated the risk relating to repair deductions.

The result of the analysis led to a partial release of an uncertain tax position reserve of $ 3,087 .

The release relates to repairs expenditures that are more likely than not to be sustained on audit.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties, of approximately $ 5,877 and $ 9,004 as of June 30, 2023 and December 31, 2022, respectively.

SJW Group currently does not expect uncertain tax positions to change significantly over the next 12 months, except in the case of a lapse of the statute of limitations.

2 unchanged sentences

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.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2023

(in thousands, except share and per share data)

Benefit Plans

5 unchanged sentences

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.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2023

(in thousands, except share and per share data)

In addition, senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CTWS, are eligible to receive additional retirement benefits under supplemental executive retirement plans and retirement contracts.

2 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 months ended March 31, 2023, and 2022 are as follows:

Three months ended March 31,

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, 2023 and 2022 are as follows:

Pension Benefits Other Benefits

Three months ended June 30,

2023 2022 2023 2022

Service cost $ 1,892 2,397 $ 160 255

4 unchanged sentences

Total $ 1,938 1,494 $ 172 178

Pension Benefits Other Benefits

Six months ended June 30,

2023 2022 2023 2022

Service cost $ 3,784 4,794 $ 320 510

Interest cost 7,115 5,283 634 438

Expected return on assets ( 8,138 ) ( 9,646 ) ( 434 ) ( 442 )

Unrecognized actuarial loss 1,108 2,515 ( 176 ) ( 151 )

Amortization of prior service cost 7 8 — —

Total $ 3,876 2,954 $ 344 355

In 2023, SJW Group expects to make required and discretionary cash contributions of up to $ 8,120 to the pension plans and other postretirement benefits.

For the three months ended March 31, 2023, SJW Group has made no 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.

For the three and six months ended June 30, 2023, SJW Group has made $ 4,060 of contributions to such plans.

SJW Group’s long-term incentive plans 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 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.

In addition, shares are issued to employees under the ESPP that was approved by SJW Group stockholders.

As of March 31, 2023, 160,381 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 573,558 shares are available for award issuances under the Incentive Plan.

On April 26, 2023, SJW Group adopted the successor plans for the Incentive Plan and ESPP (collectively, the “Predecessor Plans”) to replace the Predecessor Plans.

The Incentive Plan terminated on April 23, 2023 and ESPP will terminate on July 31, 2023.

The 2023 Long-Term Incentive Plan reserves for a total of 1,142,000 shares of SJW Group’s common stock for issuance to 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 SJW Group and its subsidiaries.

The 2023 Employee Stock Purchase Plan reserves for a total of 500,000 shares of SJW Group’s common stock for issuance for eligible employees to purchase common stock at a discount through accumulated payroll deductions.

Remaining reserves for both of the Predecessor Plans will be terminated with the adoption of the successor plans.

In addition, shares are issued to employees under SJW Group’s employee stock purchase plan.

As of June 30, 2023, 156,299 shares are issuable upon the vesting of outstanding

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2023

June 30, 2023

(in thousands, except share and per share data)

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, 2023, and 2022:

Three months ended March 31,

restricted stock units and deferred restricted stock units and an additional 1,132,390 shares are available for award issuances under the long-term incentive plans.

On April 26, 2023, SJW Group adopted the successor plans, 2023 Long-Term Incentive Plan and 2023 Employee Stock Purchase Plan, to replace the Amended and Restated Long-Term Incentive Plan (the, “Predecessor Incentive Plan”) and 2014 Employee Stock Purchase Plan (the, “Predecessor ESPP”), respectively.

The Predecessor Incentive Plan terminated on April 23, 2023 and Predecessor ESPP terminated on July 31, 2023.

Each outstanding award under the Predecessor Incentive Plan will remain outstanding under the Predecessor Incentive Plan and shall be governed solely by the terms of the documents evidencing such awards.

The 2023 Long-Term Incentive Plan reserves a total of 1,142,000 shares of SJW Group’s common stock for issuance to 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 SJW Group and its subsidiaries.

Remaining reserves for both of the predecessor plans will be terminated with the adoption of the successor plans.

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

2023 2022 2023 2022

Compensation costs charged to income:

4 unchanged sentences

Restricted Stock and Deferred Restricted Stock

For the three months ended March 31, 2023, and 2022, SJW Group granted under the Incentive Plan 27,732 and 31,399 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value per unit of $ 77.88 and $ 68.37 , respectively.

For the three months ended March 31, 2023, and 2022, SJW Group granted under the Incentive Plan 31,345 and 33,621 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value per unit of $ 80.05 and $ 70.35 , respectively.

For the three months ended June 30, 2023, and 2022, SJW Group granted 9,610 and 12,604 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value per unit of $ 75.28 and $ 58.04 , respectively.

For the six months ended June 30, 2023 and 2022, SJW Group granted 37,342 and 44,003 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value per unit of $ 77.21 and $ 65.41 , respectively.

For the three months ended June 30, 2023, no performance-based or market-based restricted stock awards were granted.

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

For the six months ended June 30, 2023 and 2022, SJW Group granted 31,345 and 33,653 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value per unit of $ 80.05 and $ 70.35 , respectively.

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 March 31, 2023, the total unrecognized compensation costs related to restricted and deferred restricted stock plans was $ 7,537 .

As of June 30, 2023, the total unrecognized compensation costs related to restricted and deferred restricted stock plans was $ 7,121 .

This cost is expected to be recognized over a weighted-average period of 1.99 years.

Employee Stock Purchase Plan

SJW Group’s recorded expenses for its ESPP were $ 90 and $ 93 for the three months ended March 31, 2023 and 2022, respectively.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 31, 2023, for the ESPP is approximately $ 133 .

This cost is expected to be recognized during the second and third quarters of 2023.

SJW Group’s recorded expenses for its ESPP were $ 106 and $ 196 for the three and six months ended June 30, 2023, respectively, and $ 89 and $ 182 for the three and six months ended June 30, 2022, respectively.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 31, 2023, for the employee stock purchase plan is approximately $ 34 .

This cost is expected to be recognized during the third quarter of 2023.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2023

(in thousands, except share and per share data)

Segment and Non-Tariffed Business Reporting

6 unchanged sentences

The second segment consists of property management and investment activity conducted by SJW Land Company and Chester Realty, Inc., referred to as “Real Estate Services.”

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2023

(in thousands, except share and per share data)

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.

1 unchanged sentence

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, 2023

For Three Months Ended June 30, 2023

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

8 unchanged sentences

Assets $ 3,605,238 4,480 43,714 58,726 3,605,238 106,920 3,712,158

For Three Months Ended March 31, 2022

For Three Months Ended June 30, 2022

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

8 unchanged sentences

Assets $ 3,435,758 4,220 44,033 57,036 3,435,758 105,289 3,541,047

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2023

(in thousands, except share and per share data)

For Six Months Ended June 30, 2023

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

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

Operating revenue $ 285,797 5,522 2,863 — 285,797 8,385 294,182

Operating expense 231,545 3,203 1,560 1,538 231,545 6,301 237,846

Operating income (loss) 54,252 2,319 1,303 ( 1,538 ) 54,252 2,084 56,336

Net income (loss) 33,732 1,214 969 ( 6,099 ) 33,732 ( 3,916 ) 29,816

Depreciation and amortization 51,497 169 304 447 51,497 920 52,417

Interest on long-term debt and other interest expense 21,393 — — 10,776 21,393 10,776 32,169

Provision (benefit) for income taxes 2,826 643 385 ( 4,288 ) 2,826 ( 3,260 ) ( 434 )

Assets $ 3,605,238 4,480 43,714 58,726 3,605,238 106,920 3,712,158

For Six Months Ended June 30, 2022

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

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

Operating revenue $ 264,779 5,842 2,722 — 264,779 8,564 273,343

Operating expense 220,881 5,776 1,824 1,871 220,881 9,471 230,352

Operating income (loss) 43,898 66 898 ( 1,871 ) 43,898 ( 907 ) 42,991

Net income (loss) 22,480 451 631 ( 8,267 ) 22,480 ( 7,185 ) 15,295

Depreciation and amortization 48,969 2,737 601 506 48,969 3,844 52,813

Interest on long-term debt and other interest expense 18,568 — ( 3 ) 9,405 18,568 9,402 27,970

Provision (benefit) for income taxes 4,741 6 213 ( 1,525 ) 4,741 ( 1,306 ) 3,435

Assets $ 3,435,758 4,220 44,033 57,036 3,435,758 105,289 3,541,047

____________________

(1) The “All Other” category for the three months ended March 31, 2023, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

(1) The “All Other” category for the six months ended June 30, 2023, 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, 2023.

For the three months ended March 31, 2022, “All Other” category includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

had no activity for the six months ended June 30, 2023.

For the six months ended June 30, 2022, “All Other” category includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

On January 13, 2023, Texas Water reached agreements to acquire KT Water Development Ltd.

5 unchanged sentences

is a privately-held company formed to develop wholesale water supplies for the fast-growing utilities of Comal County, Texas.

The transaction is expected to close in the third quarter of 2023, pending the Public Utility Commission of Texas approval of the KT Water Development Ltd.

The Public Utility Commission of Texas approved of the proposed KT Water Development Ltd.

acquisition on July 24, 2023.

Both transactions are expected to close in the third quarter of 2023.

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