Release Details

SAN JOSE, CA, July 26, 2017 – SJW Group (NYSE: SJW) today reported financial results for the second quarter ended June 30, 2017. SJW Group net income was $18.7 million for the quarter ended June 30, 2017, compared to $16.8 million for the same period in 2016. Diluted earnings per share were $0.90 and $0.82 for the quarters ended June 30, 2017 and 2016, respectively.

Operating revenue was $102.1 million for the quarter ended June 30, 2017 compared to $86.9 million in the same period in 2016. The $15.2 million increase in revenue was primarily attributable to $15.0 million in cumulative rate increases, $4.7 million in higher revenue recorded in our Water Conservation Memorandum Account ("WCMA"), $3.2 million in higher customer usage, and a $1.1 million change in the net recognition of certain other balancing and memorandum accounts. These increases were partially offset by $8.8 million in true-up revenue recognized as a part of the decision on our 2016 California General Rate Case decision in the prior year.

Water production expenses for the second quarter of 2017 were $38.5 million compared to $27.7 million for the same period in 2016, an increase of $10.8 million. The increase in water production expenses was attributable to $5.5 million in higher per unit costs for purchased water, groundwater extraction and energy charges, $4.1 million in higher expenses due to a decrease in the use of available surface water supplies, and $1.2 million in higher customer water usage. Operating expenses, excluding water production costs, increased $3.3 million to $32.8 million from $29.5 million. The increase was primarily due to $1.9 million of higher administrative and general expenses, $846,000 of higher depreciation expenses due to assets placed in service in 2016, and $427,000 in higher property taxes and other non-income taxes.

Other expense and income in the second quarter and first six months of 2017 included a pre-tax gain of $6.3 million on the sale of 444 West Santa Clara Street Limited Partnership's interests in the commercial building and land the partnership owned and sale of undeveloped land which SJW Land Company owned for a pre-tax gain of $580,000. Other expense and income in the second quarter and first six months of 2016 included a pre-tax gain on the sale of 159,151 shares of California Water Service Group stock for $3.2 million.

The effective consolidated income tax rates were 37% and 39% for the quarters ended June 30, 2017 and 2016, and 36% and 39% for the six-month periods ended June 30, 2017 and 2016, respectively. The change was due to inclusion of a noncontrolling interest gain on sale of 444 West Santa Clara Street Limited Partnership property in net income before income taxes with no associated income taxes on the noncontrolling interest.

Year-to-date net income was $22.4 million, compared to $20.2 million in 2016. Diluted earnings per share were $1.08 in the first six months of 2017, compared to $0.98 per diluted share for the same period in 2016.

Year-to-date operating revenue increased by $23.0 million to $171.1 million from $148.1 million in the first six months of 2017. The increase was attributable to $23.6 million in cumulative rate increases, $5.2 million in higher revenue recorded in our WCMA, $1.6 million in higher customer usage, and a $1.5 million change in the net recognition of certain other balancing and memorandum accounts. These increases were partially offset by $8.8 million in true-up revenue recognized as a part of the decision on our 2016 California General Rate Case decision in the prior year. WCMA revenue included $1.4 million related to a redistribution of certain customer accounts between residential and business customers for the year ended December 31, 2016.

Year-to-date water production expenses increased to $64.6 million from $48.3 million in 2016. The $16.3 million increase was attributable to $9.1 million in higher per unit costs for purchased water, groundwater extraction and energy charges, $6.4 million in higher expenses due to a decrease in the use of available surface water supplies, and $802,000 in higher customer water usage. Operating expenses, excluding water production costs, increased $5.5 million to $64.9 million from $59.4 million. The increase was primarily due to $2.8 million in higher administrative and general expenses, $1.8 million of higher depreciation expenses, and $904,000 in higher property taxes and other non-income taxes. The increase in administrative and general expenses was primarily due to an increase in salaries and an increase in regulatory fees due to higher usage.

The Directors of SJW Group today declared a quarterly dividend on common stock of $0.2175 per share. The dividend is payable on September 1, 2017 to shareholders of record on August 7, 2017.

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., Texas Water Alliance Limited, 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.

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. 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.

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