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SJW Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 2, 2012 07:24PM
SJW Corp. (SJW) filed Quarterly Report for the period ended 2012-06-30.
Highlight of Business Operations:Metered revenue of Water Utility Services includes billing to customers based on meter readings plus an estimate of water used between the customers last meter reading and the end of the accounting period. Water Utility Services read the majority of its customers meters on a bi-monthly basis and records its revenue based on its meter reading results. Unbilled revenue from the last meter reading date to the end of the accounting period is estimated based on the most recent usage patterns, production records and the effective tariff rates. Actual results could differ from those estimates, which may result in an adjustment to the operating revenue in the period which the revision to Water Utility Services estimates is determined.
Revenues also include a surcharge collected from regulated customers that is paid to the CPUC. This surcharge is recorded both in operating revenues and administrative and general expenses. For the six months ended June 30, 2012 and 2011, the surcharge was $1,605 and $1,388, respectively.
Water sales are seasonal in nature and influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by customers to vary significantly. Due to the seasonal nature of the water business, the operating results for interim periods are not indicative of the operating results for a 12-month period. Revenue is generally higher in the warm, dry summer months when water usage and sales are greater and lower in the winter months when cooler temperatures and increased rainfall curtail water usage and sales.
Operating expenses, excluding water production costs, increased $3,290 for the six months ended June 30, 2012 compared to the same period in 2011. The increase was primarily attributable to an increase of $2,000 in administrative and general expenses primarily due to an increase in payroll and benefit costs, water conservation expenses and regulatory fees. The increase in regulatory fees primarily related to rate case filings and the pass-through surcharge collected from customers that is paid to the CPUC. The surcharge is recorded both in operating revenues and administrative and general expenses. In addition, depreciation expense increased $1,048 due to increases in utility plant and property taxes and other non-income taxes increased $644. These increases were partially offset by a $402 decrease in maintenance expenses.
During the six months ended June 30, 2012, SJW Corp. generated cash flows from operations of approximately $31,700, compared to $29,700 for the same period in 2011. Cash flow from operations is primarily generated by net income from its revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes and changes in working capital items. Cash flow from operations increased by approximately $2,000. This increase was caused by a combination of the following factors: (1) net income adjusted for non-cash items increased $700, (2) collections of previously billed and accrued receivables, including the unbilled regulatory asset recorded in other current asset, increased by $900, (3) net collection of taxes receivable was $1,300 less than the prior period, and (4) general working capital and postretirement changes caused a $1,700 increase.
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