What changed in this filing

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Item 1. Financial Statements

2024-10-28 compared with 2024-07-25 · 163 added, 112 removed, 511 unchanged (35% 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,

2024 2023 2024 2023

39 unchanged sentences

(in thousands, except share and per share data)

September 30,

2024 December 31,

6 unchanged sentences

Total utility plant 4,453,548 4,152,252

Less accumulated depreciation and amortization 1,030,065 981,598

accumulated depreciation and amortization 1,047,631 981,598

Net utility plant 3,405,917 3,170,654

Nonutility properties and real estate investments 1,352 13,350

Less accumulated depreciation and amortization 96 194

accumulated depreciation and amortization 97 194

Net nonutility properties and real estate investments

13,280 13,156

Current assets:

1 unchanged sentence

Accounts receivable:

Customers, net of allowances for uncollectible accounts of $ 802 and $ 6,551 on June 30, 2024 and December 31, 2023, respectively

Customers, net of allowances for uncollectible accounts of $ 848 and $ 6,551 on September 30, 2024 and December 31, 2023, respectively

75,849 67,870

13 unchanged sentences

Other intangible asset

28,386 28,386

Goodwill 640,311 640,311

6 unchanged sentences

(in thousands, except share and per share data)

September 30,

2024 December 31,

4 unchanged sentences

authorized 70,000,000 shares;

issued and outstanding share s 32,668,904 on June 30, 2024 and 32,023,004 on December 31, 2023

issued and outstanding share s 33,226,735 on September 30, 2024 and 32,023,004 on December 31, 2023

Additional paid-in capital 804,848 736,191

11 unchanged sentences

Accrued payroll 12,180 12,229

Income tax payable 2,059 —

Current regulatory liabilities 1,770 3,059

46 unchanged sentences

Balances, June 30, 2024 32,668,904 33 771,189 502,037 1,349 1,274,608

Net income — — — 38,652 — 38,652

Stock-based compensation — — 1,566 ( 8 ) — 1,558

Issuance of restricted and deferred stock units 1,388 — ( 1 ) — — ( 1 )

Employee stock purchase plan 21,098 — 1,087 — — 1,087

Common stock issuance, net of costs 535,345 — 31,007 — — 31,007

Dividends paid ($ 0.40 per share)

— — — ( 13,106 ) — ( 13,106 )

Balances, September 30, 2024 33,226,735 $ 33 804,848 527,575 1,349 1,333,805

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)

Common Stock Additional

25 unchanged sentences

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

Net income — — — 36,222 — 36,222

Unrealized gain on investment, net of taxes of $ 193

— — — — 318 318

Stock-based compensation — — 1,238 ( 8 ) — 1,230

Issuance of restricted and deferred stock units 14,840 — ( 706 ) — — ( 706 )

Employee stock purchase plan 17,712 — 1,061 — — 1,061

Common stock issuance, net of costs 169,421 — 11,505 — — 11,505

Dividends paid ($ 0.38 per share)

— — — ( 12,093 ) — ( 12,093 )

Balances, September 30, 2023 31,933,003 $ 32 729,740 488,585 1,896 1,220,253

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:

18 unchanged sentences

Contributions in aid of construction ( 18,757 ) ( 13,604 )

Additions to nonutility assets and real estate investments — ( 24,244 )

Cost to retire utility plant, net of salvage ( 2,286 ) ( 908 )

Proceeds from sale of real estate investments

Payments for business acquisitions — ( 7,286 )

Other changes, net ( 29 ) 238

16 unchanged sentences

Interest $ 52,299 44,132

Interest, net of amounts capitalized

$ 49,716 42,199

Income taxes $ 1,292 818

4 unchanged sentences

Accrued selling expenses on sale of real estate investments

Seller financing in asset acquisition, net of discount $ — 15,400

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

SEPTEMBER 30, 2024

(in thousands, except share and per share data)

2 unchanged sentences

The Notes to Consolidated Financial Statements in SJW Group’s 2023 Annual Report on Form 10-K should be read in conjunction with the accompanying unaudited condensed consolidated financial statements.

SJW Group is a holding company with four wholly owned subsidiaries:

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

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

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

SJWTX Holdings, Inc., is a holding company for its wholly owned subsidiaries, SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC, (“TWOS”) and Texas Water Resources, LLC (“TWR”).

2 unchanged sentences

(“NEWUS”), and Chester Realty, Inc.

SJWC, CWC, TWC , TWOS, TWR, MWC and NEWUS are referred to as “Water Utility Services.” SJW Land Company and Chester Realty, Inc.

National Water Utility is the contracting entity for shared services among the SJW Group affiliates formed in October 2024.

SJWC, CWC, TWC , TWOS, TWR, MWC, NEWUS and National Water Utility are referred to as “Water Utility Services.” SJW Land Company and Chester Realty, Inc.

are collectively referred to as “Real Estate Services.”

4 unchanged sentences

SJW Group’s revenue components are as follows:

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

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

2024 2023 2024 2023

5 unchanged sentences

Nonutility Properties and Real Estate Investments

The major components of real estate investments and nonutility properties as of June 30, 2024 and December 31, 2023, are as follows:

The major components of nonutility properties and real estate investments as of September 30, 2024 and December 31, 2023, are as follows:

September 30,

2024 December 31,

5 unchanged sentences

Total $ 1,255 13,156

In March 2023, SJW Land Company entered into a broker agreement to sell its warehouse, office building, and land property located in Knoxville, Tennessee.

The company reclassified the Tennessee properties from held-and-used to held-for-sale at March 31, 2023.

The company recorded the Tennessee properties at the lower of their carrying value or estimated fair value less

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(in thousands, except share and per share data)

cost to sell, and also stopped recording depreciation on assets held for sale.

In March 2023, SJW Land Company entered into a broker agreement to sell its warehouse, office building, and land property located in Knoxville, Tennessee.

The company reclassified the Tennessee properties from held-and-used to held-for-sale at March 31, 2023.

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.

SJW Group's broker provided the estimated fair value of the Tennessee properties.

3 unchanged sentences

The pre-tax loss on the sale was $ 7,887 .

The net pre-tax loss associated with these transactions for the three and six months ended June 30, 2024 was $ 909 and is included in the “Other, net” line on the condensed consolidated statements of comprehensive income.

The net pre-tax loss associated with these transactions for the nine months ended September 30, 2024 was $ 969 and is included in the “Other, net” line on the condensed consolidated statements of comprehensive income.

A portion of the proceeds from these sales totaling $ 2,801 is being held in escrow pending completion of certain post-closing obligations.

9 unchanged sentences

Total $ 40,850

In August 2023, a non-regulated subsidiary, TWR, acquired eight wells and the associated water rights of KT Water Resources, LLC, as discussed in Note 10 , “Acquisitions”.

In connection with a transaction in the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations.

Accordingly, SJW Group reclassified $ 28,386 related to indefinite life water rights from other intangible assets to utility plant intangible assets and $ 11,684 from nonutility property to utility plant.

Fair Value Measurement

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of June 30, 2024, 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, 2024, 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, 2024 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, 2024.

The estimated fair value of such instruments as of September 30, 2024 approximates their carrying value as reported on the condensed consolidated balance sheets.

There have been no changes in valuation techniques during the three and nine months ended September 30, 2024.

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 $ 1,335,706 and $ 1,394,412 as of June 30, 2024 and December 31, 2023, 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.

Of the total fair value of long-term debt at June 30, 2024 and December 31, 2023, $ 1,319,532 and $ 1,378,683 , respectively, would be categorized as Level 2 in the fair value hierarchy and $ 16,174 and $ 15,729 , respectively, would be categorized as Level 3 in the fair value hierarchy.

The fair value of SJW Group’s long-term debt was $ 1,534,801 and $ 1,394,412 as of September 30, 2024 and December 31, 2023, 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.

Of the total fair value of long-term debt at September 30, 2024 and December 31, 2023, $ 1,518,400 and $ 1,378,683 , respectively, would be categorized as Level 2 in the fair value hierarchy and $ 16,401 and $ 15,729 , respectively, would be categorized as Level 3 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 $ 2,639 and $ 2,833 as of June 30, 2024 and December 31, 2023, 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 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, 2024 and 2023, 6,567 and 1,843 anti-dilutive restricted common stock units were excluded from the diluted earnings per share calculation, respectively.

For the six months ended June 30, 2024 and 2023, 9,394 and 10,698 anti-dilutive restricted common stock units were excluded from the diluted earnings per share calculation, respectively.

The fair value of the money market funds, mutual funds and fixed income

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(in thousands, except share and per share data)

investments in the Rabbi Trust was $ 2,952 and $ 2,833 as of September 30, 2024 and December 31, 2023, 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 September 30, 2024 and 2023, 485 and 1,826 anti-dilutive restricted common stock units were excluded from the diluted earnings per share calculation, respectively.

For the nine months ended September 30, 2024 and 2023, 5,289 and 12,524 anti-dilutive restricted common stock units were excluded from the diluted earnings per share calculation, respectively.

Accounts Receivable

During the second quarter of 2024, SJW Group recorded a reduction to its allowance for credit losses of $ 7,822 , of which $ 3,960 resulted in a reduction to regulatory assets and $ 3,862 was recorded through administrative and general expense ($ 2,782 net of tax or $ 0.09 per diluted share).

New Accounting Standards

The recently issued accounting standards that have not yet been adopted by the company as of June 30, 2024 are as follows:

The recently issued accounting standards that have not yet been adopted by the company as of September 30, 2024 are as follows:

Standard Description Date of Adoption Application Effect on the Condensed Consolidated Financial Statements

Accounting Standards Update (“ASU”) 2023-07 “Improvements to Reportable Segment Disclosures”

The ASU requires disclosure of significant segment expenses, extends certain annual disclosures to interim periods, and additional qualitative disclosures regarding the chief operating decision maker.

The ASU requires disclosure of significant segment expenses, extends certain annual disclosures to interim periods, and requires additional qualitative disclosures regarding the chief operating decision maker.

The ASU is effective for SJW Group beginning with its annual financial statements for the year ending December 31, 2024.

10 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(in thousands, except share and per share data)

Regulatory Matters

Regulatory assets and liabilities are comprised of the following as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

Regulatory assets and liabilities are comprised of the following as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

Regulatory assets:

10 unchanged sentences

2022 general rate case interim memorandum account (h)

Revenue adjustment mechanisms (n)

Water supply costs (i)

27 unchanged sentences

(g) The California Public Utilities Commission (“CPUC”) has authorized water utilities to activate CEMA accounts in order to track savings and costs related to SJWC’s response to catastrophic events, which includes external labor and materials, increases in bad debt from suspension of shutoffs for non-payment, waived deposits and reconnection fees, and divergence from actual versus authorized usage.

At December 31, 2023, balance primarily relates to increased bad debt expenses associated with SJWC’s response to COVID-19.

At December 31, 2023, the balance primarily relates to increased bad debt expenses associated with SJWC’s response to COVID-19.

(h) Represents the difference between revenues collected in interim rates in effect as of January 1, 2022 and revenues that would result from rates authorized in SJWC’s 2022 general rate case retroactive to January 1, 2022.

(i) Reflects differences in actual water supply costs compared to amounts assumed in base rates, including applicable changes and variations in costs and quantities that affect the overall mix of the water supply.

(i) Reflects primarily SJWC’s Full Cost Balancing Account which tracks differences in actual water supply costs compared to amounts assumed in base rates, including applicable changes and variations in costs and quantities that affect the overall mix of the water supply.

(j) Other includes other balancing and memorandum accounts and regulatory mechanisms, deferred costs for certain information technology activities, asset retirement obligations, tank painting, well reconditioning and rate case expenses.

(k) As of June 30, 2024, primarily relates to the current portion of CWC’s deferred well redevelopment and rate case costs.

(k) As of September 30, 2024, primarily relates to the current portion of CWC’s deferred well redevelopment and rate case costs.

As of December 31, 2023, primarily relates to the current portion of MWRAM.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(in thousands, except share and per share data)

6 unchanged sentences

(o) Other includes other balancing and memorandum accounts, other regulatory mechanisms and accrued tank painting costs.

(p) As of June 30, 2024 and December 31, 2023, primarily relates to the current portion of WRA.

SJWC has established balancing accounts for the purpose of tracking the under-collection or over-collection associated with expense changes and revenue authorized by the CPUC to offset those expense changes.

SJWC has been authorized for the use of the Full Cost Balancing Account to track the water supply costs and energy consumption.

(p) As of September 30, 2024 and December 31, 2023, primarily relates to the current portion of WRA.

SJWC has established balancing accounts for the purpose of tracking the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes.

SJWC has been authorized for the use of the Full Cost Balancing Account to track water supply costs and energy consumption.

The MWRAM balancing account 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.

3 unchanged sentences

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

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

On October 2, 2023, the CPUC approved the continuation of WCMA and Water Conservation Expense Memorandum Account under the voluntary call for conservation effective April 20, 2023.

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.

2 unchanged sentences

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 June 30, 2024 and December 31, 2023, SJW Group’s regulatory assets not earning a return primarily included unrecognized pensions and other postretirement benefits and business combination debt premiums.

The total amount of regulatory assets not earning a return at June 30, 2024 and December 31, 2023, either by interest on the regulatory asset or as a component of rate base at the allowed rate of return, was $ 41,960 and $ 43,141 , respectively.

As of September 30, 2024 and December 31, 2023, SJW Group’s regulatory assets not earning a return primarily included unrecognized pensions and other postretirement benefits and business combination debt premiums.

The total amount of regulatory assets not earning a return at September 30, 2024 and December 31, 2023, either by interest on the regulatory asset or as a component of rate base at the allowed rate of return, was $ 41,962 and $ 43,141 , respectively.

Capitalization

2 unchanged sentences

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 $ 240,000 .

For the three and six months ended June 30, 2024, SJW Group issued and sold a total of 458,605 and 584,630 shares of common stock, respectively, at a weighted average price of $ 56.13 and $ 56.35 per share, respectively, and received $ 25,296 and $ 32,302 in net proceeds, respectively, under the Equity Distribution Agreement.

Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 2,589,287 shares of common stock at a weighted average price of $ 69.68 for a total net proceeds of $ 176,299 and has $ 59,567 of aggregate gross sales price of shares remaining to issue under the Equity Distribution Agreement.

For the three and nine months ended September 30, 2024, SJW Group issued and sold a total of 535,345 and 1,119,975 shares of common stock, respectively, at a weighted average price of $ 59.17 and $ 57.70 per share, respectively, and received $ 31,007 and $ 63,309 in net proceeds, respectively, under the Equity Distribution Agreement.

Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 3,124,632 shares of common stock at a weighted average price of $ 67.88 for a total net proceeds of $ 207,307 and has $ 27,889 of aggregate gross sales price of shares remaining to issue under the Equity Distribution Agreement as of September 30, 2024.

Lines of Credit and Long-Term Liabilities

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(in thousands, except share and per share data)

Lines of Credit

The weighted average interest rate on short-term borrowings outstanding at June 30, 2024, was 6.45 % compared to 6.48 % at December 31, 2023.

In August 2024, SJW Group, SJWC, TWC, and CTWS entered into an amendment to its credit agreement with JPMorgan Chase Bank and a syndicate of banks, which provided, among other matters, for an extension of the maturity date from August 2, 2028 to August 2, 2029.

The weighted average interest rate on short-term borrowings outstanding at September 30, 2024, was 6.61 %, compared to 6.48 % at December 31, 2023.

As of September 30, 2024, the unused portion of the lines of credit was $ 256,765 .

Long-term Financing Agreements

On November 15, 2023, CWC entered into a note purchase agreement with certain affiliates of American United Life Insurance, The State Life Insurance, Mutual of Omaha Insurance, and United of Omaha Life Insurance, pursuant to which the company sold an aggregate principal amount of $ 25,000 of its 6.46 % Senior Notes, Series 2023 (“Series 2023 Notes”).

On November 15, 2023, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $ 25,000 of its 6.46 % Senior Notes, Series 2023 (“Series 2023 Notes”).

The Series 2023 Notes are unsecured obligations of CWC and are due on January 1, 2054.

1 unchanged sentence

The closing of the notes purchase agreement occurred in January 2024.

For the three and six months ended June 30, 2024, income tax expense was $ 3,724 and 5,955 , respectively.

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

The effective consolidated income tax rates were 15 % and ( 9 )% for the three months ended June 30, 2024 and 2023, respectively, and 16 % and ( 1 )% for the six months ended June 30, 2024 and 2023, respectively.

The higher effective tax rate for the three and six months ended June 30, 2024 was primarily due to the partial release of an uncertain tax position reserve in the second quarter of 2023 and other discrete tax items.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties, of approximately $ 4,630 and $ 4,511 as of June 30, 2024 and December 31, 2023, respectively.

On July 31, 2024, SJWC entered into and closed a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $ 75,000 of its 5.63 % Senior Notes, Series Q (“Series Q Notes”).

The Series Q Notes are unsecured obligations of SJWC and are due on July 31, 2054.

Interest is payable semi-annually in arrears on January 31st and July 31st of each year.

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

On July 31, 2024, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold $ 50,000 of its 5.78 % Senior Notes, Series 2024 (“Series 2024 Notes”).

The Series 2024 Notes are unsecured obligations of CWC and are due on July 31, 2054.

Interest is payable semi-annually in arrears on January 31st and July 31st of each year.

The closing of the notes purchase agreement occurred in August 2024.

For the three and nine months ended September 30, 2024, income tax expense was $ 1,928 and $ 7,883 , respectively.

Income tax expense for the three and nine months ended September 30, 2023 was $ 4,561 and $ 4,127 , respectively.

The effective consolidated income tax rates were 5 % and 11 % for the three months ended September 30, 2024 and 2023, respectively, and 10 % and 6 % for the nine months ended September 30, 2024 and 2023, respectively.

The lower effective tax rate for the three months ended September 30, 2024 was primarily due to a tax accounting method change related to the repairs deduction.

The higher effective tax rate for the nine months ended September 30, 2024 was primarily due to lower discrete tax benefits in 2024.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties, of approximately $ 4,920 and $ 4,511 as of September 30, 2024 and December 31, 2023, 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.

1 unchanged sentence

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.

In October 2023, CWC, a subsidiary of SJW Group, was named as a defendant in a class action lawsuit alleging that the water provided by CWC contained contaminants.

CWC intends to vigorously defend itself in this lawsuit.

At this time, SJW Group is unable to provide a reasonable estimate of any loss.

In September 2024, SJWC entered into a 12 -year agreement with the City of Cupertino effective on October 1, 2024 pursuant to which SJWC will operate the City of Cupertino municipal water system, replacing the previous agreement with the City of Cupertino.

The agreement can be extended for an additional term of eight years .

In accordance with the new agreement, SJWC will pay an upfront concession fee of $ 22,100 in the fourth quarter of 2024.

Additionally, SJWC agreed to pay an annual investment rent of $ 1,800 , subject to increases each year based on a specified construction cost index.

Benefit Plans

SJW Group maintains noncontributory defined benefit pension plans for its eligible employees.

SJWC employees hired before March 31, 2008 and CWC and MWC employees hired before January 1, 2009 are entitled to benefits under the pension plans based on the employee’s years of service and compensation.

SJWC employees hired before March 31, 2008 and CWC and MWC employees hired before January 1, 2009 are entitled to benefits under the pension plans

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2024

(in thousands, except share and per share data)

based on the employee’s years of service and compensation.

For SJWC employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee.

7 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.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

(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 six months ended June 30, 2024 and 2023 are as follows:

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, 2024 and 2023 are as follows:

Pension Benefits Other Benefits

Three months ended June 30,

Three months ended September 30,

2024 2023 2024 2023

7 unchanged sentences

Pension Benefits Other Benefits

Six months ended June 30,

Nine months ended September 30,

2024 2023 2024 2023

6 unchanged sentences

Total $ 2,405 6,441 $ 100 517

In 2024, SJW Group expects to make required and discretionary cash contributions of up to $ 4,515 to the pension plans and other postretirement benefits.

For the three and six months ended June 30, 2024, SJW Group has made $ 2,258 of contributions to such plans.

For the three and nine months ended September 30, 2024, SJW Group has made $ 2,258 and $ 4,516 , respectively, of contributions to such plans.

SJW Group does not expect to make any additional required and discretionary cash contributions to the pension plans and other postretirement benefit plans for the remainder of 2024.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2024

(in thousands, except share and per share data)

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.

1 unchanged sentence

In addition, shares are issued to employees under SJW Group’s employee stock purchase plan (“ESPP”).

As of June 30, 2024, 192,750 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 1,034,642 shares are available for award issuances under the long-term incentive plans.

A summary of compensation costs charged to income, by award type, and proceeds from the ESPP, are presented below for the three and six months ended June 30, 2024 and 2023:

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

As of September 30, 2024, 187,810 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 1,038,040 shares are available for award issuances under the long-term incentive plans.

A summary of compensation costs charged to income, by award type, and proceeds from the ESPP, are presented below for the three and nine months ended September 30, 2024 and 2023:

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

2024 2023 2024 2023

4 unchanged sentences

ESPP proceeds $ 1,087 1,061 $ 2,188 2,141

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

(in thousands, except share and per share data)

Restricted Stock and Deferred Restricted Stock

For the three months ended June 30, 2024 and 2023, SJW Group granted 24,692 and 9,610 , respectively, one year and three year service-based restricted stock awards with a weighted average grant date fair value per unit of $ 50.04 and $ 75.28 , respectively.

For the six months ended June 30, 2024 and 2023, SJW Group granted 64,482 and 37,342 , respectively, one year and three year service-based restricted stock awards with a weighted average grant date fair value per unit of $ 58.39 and $ 77.21 , respectively.

For the three months ended June 30, 2024, SJW Group granted 356 target units of performance-based and market-based restricted stock awards with a weighted average grant date fair value per unit of $ 52.90 and no performance-based or market-based restricted stock awards were granted in the same period in 2023.

For the six months ended June 30, 2024 and 2023, SJW Group granted 45,763 and 31,345 target units, respectively, of performance-based and market-based restricted stock awards with a weighted average grant date fair value per unit of $ 55.60 and $ 80.05 , respectively.

For the three months ended September 30, 2024, there was no grant activity of service-based restricted stock awards.

For the three months ended September 30, 2023, SJW Group granted 968 one-year and three-year service-based restricted stock awards with a weighted average grant date fair value per unit of $ 63.96 .

For the nine months ended September 30, 2024 and 2023, SJW Group granted 64,482 and 38,310 , respectively, one-year and three-year service-based restricted stock awards with a weighted average grant date fair value per unit of $ 56.70 and $ 76.88 , respectively.

For the three months ended September 30, 2024 and 2023, there was no grant activity of performance-based or market-based restricted stock awards.

For the nine months ended September 30, 2024 and 2023, SJW Group granted 45,763 and 31,345 target units, respectively, of performance-based and market-based restricted stock awards with a weighted average grant date fair value per unit of $ 55.60 and $ 80.05 , 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 June 30, 2024, the total unrecognized compensation costs related to restricted and deferred restricted stock plans was $ 7,555 .

As of September 30, 2024, the total unrecognized compensation costs related to restricted and deferred restricted stock plans was $ 6,739 .

This cost is expected to be recognized over a weighted average period of 1.77 years.

Employee Stock Purchase Plan

SJW Group’s recorded expenses for its ESPP were $ 106 and $ 203 for the three and six months ended June 30, 2024, respectively, and $ 106 and $ 196 for the three and six months ended June 30, 2023, respectively.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 31, 2024, for the ESPP is approximately $ 35 .

This cost is expected to be recognized during the third quarter of 2024.

The total unrecognized compensation costs related to the semi-annual offering period that ends January 31, 2025, for the ESPP is approximately $ 135 .

This cost is expected to be recognized during the fourth quarter of 2024.

Segment and Non-Tariffed Business Reporting

SJW Group is a holding company with four subsidiaries:

(i) SJWC, (ii) SJWTX Holdings, Inc., a holding company for TWC, its consolidated variable interest entity, Acequia Water Supply Corporation, TWOS and TWR, (iii) SJW Land Company, and (iv) SJWNE LLC, a holding company for CTWS and its subsidiaries, CWC, MWC, NEWUS and Chester Realty, Inc.

The first segment provides water utility and utility-related services to its customers through SJW Group’s subsidiaries, SJWC, CWC, TWC, MWC, and NEWUS together referred to as “Water Utility Services.” Water Utility Services’ activities are water utility operations with both regulated and non-tariffed businesses.

SJW Group is a holding company with five subsidiaries:

(i) SJWC, (ii) SJWTX Holdings, Inc., a holding company for TWC, its consolidated variable interest entity, Acequia Water Supply Corporation, TWOS and TWR, (iii) SJW Land Company, (iv) SJWNE LLC, a holding company for CTWS and its subsidiaries, CWC, MWC, NEWUS and Chester Realty, Inc., and (v) National Water Utility.

The first segment provides water utility and utility-related services to its customers through SJW Group’s subsidiaries, SJWC, CWC, TWC, MWC, NEWUS, and National Water Utility together referred to as “Water Utility Services.” Water Utility Services’ activities are water utility operations with both regulated and non-tariffed businesses.

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.”

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SJW Group’s chief operating decision maker includes the Chairman, President and Chief Executive Officer, and his executive staff.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2024

(in thousands, except share and per share data)

The executive staff reviews financial information presented on a consolidated basis that is accompanied by disaggregated information about operating revenue, net income and total assets, by subsidiary.

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

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

(in thousands, except share and per share data)

For Three Months Ended June 30, 2024

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

For Three Months Ended September 30, 2024

Water Utility Services (1)

Real Estate Services All Other (2)

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

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Provision (benefit) for income taxes 1,182 389 15 342 1,182 746 1,928

For Three Months Ended June 30, 2023

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

For Three Months Ended September 30, 2023

Water Utility Services (1)

Real Estate Services All Other (2)

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

6 unchanged sentences

Provision (benefit) for income taxes 5,933 428 196 ( 1,996 ) 5,933 ( 1,372 ) 4,561

For Six Months Ended June 30, 2024

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

For Nine Months Ended September 30, 2024

Water Utility Services (1)

Real Estate Services All Other (2)

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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(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

For Nine Months Ended September 30, 2023

Water Utility Services (1)

Real Estate Services All Other (2)

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

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____________________

(1) The “All Other” category for the three and six months ended June 30, 2024 and 2023, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

(1) The “Water Utility Services” category for the three and nine months ended September 30, 2024 and 2023, includes the accounts of SJWC, CWC, TWC, MWC, and NEWUS on a stand-alone basis.

(2) The “All Other” category for the three and nine months ended September 30, 2024 and 2023, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

on a stand-alone basis.

SJW Group’s assets by segment are as follows:

June 30, 2024

September 30, 2024

December 31, 2023

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$ 4,496,972 4,199,172

43,032 43,532

Total water utility services

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$ 4,552,302 4,345,067

$ 4,439,427 4,345,067

Regulated $ 4,496,972 4,199,172

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The purchase price of KT Water Development was $ 7,338 , all of which was cash, and was determined in accordance with a fair market value process defined under the Texas Water Code.

The transaction was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805—“Business Combinations.” The transaction consideration was allocated to utility plant.

The final purchase price allocation was completed during the quarter ended March 31, 2024, with no change from the preliminary purchase price allocation.

Transaction costs were not material.

The results of KT Water Development are included in SJW Group’s consolidated statements of comprehensive income since the acquisition date

The transaction was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805—“Business Combinations.” The transaction

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2024

September 30, 2024

(in thousands, except share and per share data)

and were not material.

consideration was allocated to utility plant.

The final purchase price allocation was completed during the quarter ended March 31, 2024, with no change from the preliminary purchase price allocation.

Transaction costs were not material.

The results of KT Water Development have been included in SJW Group’s consolidated statements of comprehensive income since the acquisition date and were not material.

Pro forma financial information has not been presented because the acquisition was not material to SJW Group’s consolidated financial statements.

13 unchanged sentences

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