UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 24, 2019
 
 
SJW Group
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
001-8966
 
77-0066628
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
   
 
 
110 W. Taylor Street, San Jose, California
 
95110
(Address of principal executive offices)
 
(Zip Code)
(408) 279-7800
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):

Emerging growth company [ ]    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]         






Item 2.02:
Results of Operations and Financial Condition.

On April 24, 2019, SJW Group (the "Corporation") announced its financial results for the quarter ended March 31, 2019. A copy of the press release announcing the financial results is attached hereto as Exhibit 99.1 and incorporated into this Item 2.02 of Form 8-K by reference .

Item 5.03:
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On April 24, 2019, the stockholders of the Corporation approved the Certificate of Amendment to the Corporation’s Certificate of Incorporation to increase the number of authorized shares of the Corporation’s common stock, par value $0.001, from 36,000,000 shares to 70,000,000 shares. The increase of authorized shares of common stock was effected by the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware on April 24, 2019.  A copy of the Certificate of Amendment is attached as Exhibit 3.1 to this Form 8-K and is incorporated into this Item 5.03 by reference.

Item 5.07:
Submission of Matters to a Vote of Security Holders.

At the Corporation's 2019 annual meeting of stockholders held on April 24, 2019, the following proposals were approved by the stockholders: (i) the election of eight (8) nominees listed in the proxy statement to serve on the Board of Directors of the Corporation, (ii) the compensation of named executive officers as disclosed in the proxy statement, on an advisory basis, (iii) the amendment to the Corporation's Certificate of Incorporation to increase the number of authorized shares of common stock, and (iv) the ratification of the appointment of KPMG LLP as the Corporation's independent registered public accounting firm for the fiscal year ending December 31, 2019, each by the votes set forth below :

Proposal 1: Election of Directors:
 
Name of Director
For
Against
Abstain
Broker Non-Votes
Katharine Armstrong
21,497,511
446,532
32,349
4,615,774
Walter J. Bishop
21,476,985
467,107
32,300
4,615,774
Douglas R. King
21,312,039
482,771
181,582
4,615,774
Gregory P. Landis
21,661,147
134,237
181,008
4,615,774
Debra C. Man
21,626,235
317,386
32,771
4,615,774
Daniel B. More
21,586,001
356,039
34,352
4,615,774
Eric W. Thornburg
20,877,677
1,066,296
32,419
4,615,774
Robert A. Van Valer
21,446,548
497,349
32,495
4,615,774

Proposal 2: Approval, on an advisory basis, of the compensation of named executive officers as disclosed in the proxy statement:
 
For
Against
Abstain
Broker Non-Votes
21,281,314
610,044
85,034
4,615,774

Proposal 3: Approval of the Amendment to the Corporation's Certificate of Incorporation to increase the number of authorized shares of common stock:
 
For
Against
Abstain
Broker Non-Votes
24,437,917
2,063,562
90,687
0





Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm:
 
For
Against
Abstain
Broker Non-Votes
26,191,753
367,869
32,544
0


Item 9.01:
Financial Statements and Exhibits.

(d)
Exhibits




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SJW GROUP


Date: April 24, 2019
/s/ James P. Lynch
 
James P. Lynch, Chief Financial Officer and Treasurer




Exhibit 3.1

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION OF
SJW GROUP

SJW Group, a Delaware corporation (the “Corporation”), hereby certifies as follows:
1. That the Corporation’s Board of Directors has duly adopted the following resolution to amend the Corporation’s Certificate of Incorporation, as amended, pursuant to Section 242 of the General Corporation Law of the State of Delaware:
RESOLVED, that the Certificate of Incorporation of the Corporation shall be amended as follows:
Article IV shall be amended and restated in its entirety as follows:
“The total number of shares of stock that the Corporation shall have authority to issue is 71,000,000, consisting of the following:

70,000,000 shares of Common Stock, par value $0.001 per share. Each share of Common Stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of stockholders.
1,000,000 shares of Preferred Stock, par value $0.001 per share, which may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board of Directors). The Board of Directors is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issuance of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the Certificate of Incorporation or the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.”


 


The Corporation has caused this Certificate of Amendment of the Certificate of Incorporation to be signed by the Corporation’s Chief Financial Officer, its authorized officer, on this 24th day of April 2019.
SJW GROUP

By: /s/ James P. Lynch
Name: James P. Lynch
Title: Chief Financial Officer
           


2
 



EXHIBIT 99.1


SJW GROUP ANNOUNCES 2019 FIRST QUARTER FINANCIAL RESULTS

SAN JOSE, CA, April 24, 2019 – SJW Group (NYSE: SJW) today reported financial results for the first quarter ended March 31, 2019 . SJW Group net income was $5.9 million for the quarter ended March 31, 2019 , compared to $1.3 million for the same period in 2018. Diluted earnings per share were $0.21 and $0.06 for the quarters ended March 31, 2019 and 2018 , respectively. Diluted earnings per share in 2019 includes $0.28 per share from recurring operations offset by $0.07 per share related to the company's activities around the proposed merger with Connecticut Water Service, Inc ("CTWS"). Diluted earnings per share in 2018 includes $0.19 per share from recurring operations offset by $0.13 per share related to the proposed merger.

Operating revenue was $77.7 million for the quarter ended March 31, 2019 , compared to $75.0 million in 2018. The $2.6 million increase in revenue was primarily attributable to a $3.1 million increase in cumulative water rate changes, $2.6 million in the net recognition of certain balancing and memorandum accounts, $800,000 increase in new customers, partially offset by $3.9 million in customer usage.

Water production expenses for the quarter ended March 31, 2019 were $26.8 million, compared to $30.4 million in 2018, a decrease of $3.6 million. The decrease in water production expenses was primarily attributable to $4.2 million due to an increase in the use of available surface water supplies and $2.4 million in decreased customer usage, partially offset by $2.7 million in higher per unit costs for purchased water, groundwater extraction and energy charges. Operating expenses, excluding water production costs, increased $1.2 million to $38.5 million from $37.3 million. The increase was primarily due to $1.6 million in higher depreciation expenses due to assets placed in service in 2018 and $723,000 in general and administrative expenses, primarily related to increased pension cost, partially offset by $1.2 million in merger expenses related to our proposed CTWS transaction.

Other expense and income in 2019 included $1.8 million of interest income on money market fund earned on the invested proceeds from our equity offering in December 2018.

The effective consolidated income tax rates were approximately 26% and (82%) for the quarters ended March 31, 2019 and 2018 , respectively. The negative effective tax rate for the quarter ended March 31, 2018 was primarily due to low income before income taxes generating a tax expense of $159,000, offset by recognition of excess tax benefits of $747,000 relating to share-based awards.

The Directors of SJW Group today declared a quarterly dividend on common stock of $0.30 per share. The dividend is payable on June 3, 2019, to shareholders of record on May 6, 2019.

CTWS Merger Update

On April 3, 2019, SJW Group and CTWS filed a new joint application with the Connecticut Public Utilities Regulatory Authority ("PURA") for approval of the merger of SJW Group and CTWS. The new application includes a comprehensive set of commitments and additional supporting evidence intended to be responsive to PURA's concerns identified in its December 3, 2018 proposed final decision denying the previously filed joint SJW Group and CTWS merger application. The PURA regulatory review period is approximately 120 days from the date of filing. In addition, the companies intend to file for merger approval with the Maine Public Utilities Commission in the second quarter of 2019. 

SJW Group is a publicly traded holding company headquartered in San Jose, California. SJW Group is the parent company of San Jose Water Company, SJWTX, Inc., and SJW Land Company. Together, San Jose Water Company and SJWTX, Inc. provide water service to more than one million people in San Jose, California and nearby communities and in Canyon Lake, Texas and nearby communities. SJW Land Company owns and operates commercial real estate investments.

1



    
This press release may contain certain forward-looking statements including, but not limited to, statements relating to SJW Group’s plans, strategies, objectives, expectations and intentions, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SJW Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors: (1) the risk that the conditions to the closing of the proposed transaction between SJW Group and Connecticut Water (the "Merger") are not satisfied; (2) the risk that the regulatory approvals required for the Merger are not obtained at all, or if obtained, on the terms expected or on the anticipated schedule; (3) the risk that the California Public Utilities Commission's ("CPUC") investigation may cause delays in or otherwise adversely affect the Merger and that SJW Group may be required to consummate the Merger prior to the CPUC’s issuance of an order with respect to its investigation; (4) the effect of water, utility, environmental and other governmental policies and regulations; (5) litigation relating to the Merger; (6) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement between the parties to the Merger; (7) changes in demand for water and other products and services; (8) unanticipated weather conditions; (9) catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, terrorist acts, physical attacks, cyber-attacks, or other similar occurrences that could adversely affect the facilities, operations, financial condition, results of operations and reputation of SJW Group or CTWS; (10) risks that the Merger disrupts the current plans and operations of SJW Group or CTWS; (11) potential difficulties by SJW Group or CTWS in employee retention as a result of the Merger; (12) unexpected costs, charges or expenses resulting from the Merger; (13) risks related to diverting management’s attention from ongoing business operations of SJW Group or CTWS; and (14) legislative and economic developments.

Results for a quarter are not indicative of results for a full year due to seasonality and other factors. Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Group’s most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. SJW Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.



2


SJW Group
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands, except per share data)
 
 
Three months ended March 31,
 
2019
 
2018
REVENUE
$
77,682

 
75,042

OPERATING EXPENSE:
 
 
 
Production Expenses:
 
 
 
Purchased water
13,662

 
15,416

Power
1,160

 
1,268

Groundwater extraction charges
6,863

 
9,532

Other production expenses
5,099

 
4,212

Total production expenses
26,784

 
30,428

Administrative and general
12,291

 
11,568

Maintenance
4,325

 
4,460

Property taxes and other non-income taxes
4,128

 
3,866

Depreciation and amortization
15,145

 
13,583

Merger related expenses
2,601

 
3,806

Total operating expense
65,274

 
67,711

OPERATING INCOME
12,408

 
7,331

OTHER (EXPENSE) INCOME:
 
 
 
Interest expense
(5,791
)
 
(6,052
)
Unrealized loss on California Water Service Group stock
—

 
(667
)
Interest income on Money Market Fund
1,832

 
—

Pension non-service cost
(921
)
 
(583
)
Other, net
390

 
676

Income before income taxes
7,918

 
705

Provision for income taxes
2,045

 
(580
)
NET INCOME
5,873

 
1,285

COMPREHENSIVE INCOME
$
5,873

 
1,285

 
 
 
 
EARNINGS PER SHARE:
 
 
 
Basic
$
0.21

 
0.06

Diluted
$
0.21

 
0.06

DIVIDENDS PER SHARE
$
0.30

 
0.28

WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
Basic
28,423

 
20,561

Diluted
28,508

 
20,701



3


SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)

 
March 31,
2019
 
December 31,
2018
ASSETS
 
 
 
   Utility plant:
 
 
 
Land
$
18,296

 
18,296

Depreciable plant and equipment
1,848,768

 
1,833,051

Construction in progress
80,262

 
68,765

Intangible assets
15,799

 
15,799

Total utility plant
1,963,125

 
1,935,911

Less accumulated depreciation and amortization
620,288

 
607,090

Net utility plant
1,342,837

 
1,328,821

 
 
 
 
   Real estate investments
56,336

 
56,336

   Less accumulated depreciation and amortization
12,626

 
12,327

Net real estate investments
43,710

 
44,009

CURRENT ASSETS:
 
 
 
   Cash and cash equivalents:
 
 
 
Cash
7,663

 
8,722

Money market fund
412,000

 
412,000

   Accounts receivable and accrued unbilled utility revenue
42,238

 
50,219

   Current regulatory assets, net
21,625

 
26,910

   Other current assets
4,930

 
4,871

Total current assets
488,456

 
502,722

OTHER ASSETS:
 
 
 
   Regulatory assets, net
79,185

 
76,715

   Other
4,619

 
4,122

 
83,804

 
80,837

 
$
1,958,807

 
1,956,389





















4


SJW Group
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)

 
March 31,
2019
 
December 31,
2018
CAPITALIZATION AND LIABILITIES
 
 
 
CAPITALIZATION:
 
 
 
   Common stock
$
28

 
28

   Additional paid-in capital
496,921

 
495,366

   Retained earnings
391,344

 
393,918

Total stockholders' equity
888,293

 
889,312

   Long-term debt, less current portion
510,903

 
431,424

Total capitalization
1,399,196

 
1,320,736

CURRENT LIABILITIES:
 
 
 
   Lines of credit
32,000

 
100,000

   Accrued groundwater extraction charges, purchased water and power
6,971

 
13,694

   Accounts payable
22,819

 
24,937

   Accrued interest
7,380

 
7,132

   Accrued payroll
3,652

 
7,181

   Other current liabilities
13,866

 
11,041

Total current liabilities
86,688

 
163,985

 
 
 
 
DEFERRED INCOME TAXES
78,426

 
79,651

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF
 
 
 
CONSTRUCTION
251,354

 
248,853

POSTRETIREMENT BENEFIT PLANS
72,213

 
70,490

REGULATORY LIABILITY
58,793

 
59,149

OTHER NONCURRENT LIABILITIES
12,137

 
13,525

 
$
1,958,807

 
1,956,389





5