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Gas Natural’s (EGAS) CEO Gregory Osborne on Q3 2015 Results – Earnings Call Transcript

Gas Natural Inc (NYSEMKT: EGAS ) Q3 2015 Results Earnings Conference Call November 10, 2015, 1:00 pm ET Executives Deborah Pawlowski – Investor Relations, Chairman and Chief Executive Officer of Kei Advisors LLC Gregory Osborne – Chief Executive Officer, Director Jim Sprague – Chief Financial Officer, Vice President Analysts Operator Greetings and welcome to Gas Natural Inc. third quarter 2015 financial results conference call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Gas Natural. Thank you. You may begin. Deborah Pawlowski Thank you, Adam and good afternoon, everyone. I apologize for the delay on the call today having just telephone technical difficulties. And we are glad that you are here for our 2015 third quarter earnings conference call. I do have with me Gregory Osborne, our President and Chief Executive Officer, Jim Sprague, Vice President and Chief Financial Officer and Kevin Degenstein, our Chief Operating Officer as well as Vince Parisi, our General Counsel. So we are going to go through a quick review of the third quarter results. Gregory and Jim have some formal remarks. Unfortunately we are really short on time today as well. So we won’t be able to go into a Q&A. You are more than welcome to give me follow-up call if you have any other questions. I can be reached at 716-843-3908. You should have the financial results released after market closed yesterday, otherwise it can be found on our website at www.egas.net. So for the Safe Harbor statement, as you are aware, we may make some forward-looking statements on this call during the formal discussion. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today’s call. These risks and uncertainties and other factors are provided on our earnings release as well as with other documents that are filed by the company with the Securities and Exchange Commission. These documents can be found on the company’s website as well or at sec.gov. So with that, I am going to turn the call over to Gregory to begin. Gregory? Gregory Osborne Thank you, Deb and good morning, everyone. I appreciate your time today and your interest in Gas Natural. It’s been another quarter of continue progress for us as we have made significant headway toward resolution of regulatory items and are moving toward completion of our asset rationalization program. Let me summarize some highlights for you. On the regulatory front, the stipulation and recommendation between Ohio utilities and the Commission Staff of the Public Utilities Commission of Ohio or PUCO was filed on October 30. All stipulations are subject to review and final approval by the Commission as is the case with this settlement. We believe this stipulation addresses the issues raised by last year’s investigative regulatory audit of Ohio utilities. We made excellent progress on our asset rationalization initiatives in the third quarter. As previously announced, on July 1, the first day of the quarter, we completed the sale of our Wyoming operations. The proceeds will approximate $17 million subject to closing adjustments and this sale resulted in a $3.4 million gain after-tax in the quarter. This is recorded in discontinued operations. We followed that sale with the announcement on August 5 that we reached an agreement to sell our Kentucky utility for just under $2 million subject to normal regulatory approval. Our Pennsylvania utility is also under agreement for sale. That divestiture is moving through the normal regulatory approval process and we expect to close it this quarter. Subsequent to the quarter-end, in October we sold our former corporate headquarters building for approximately $1.4 million monetizing another non-core asset. When the sales of our Kentucky and Pennsylvania utilities are closed, we would have completed our asset rationalization program. The divestment these non-core assets enables us to focus our energies and resources on our operations which have higher growth potential. In Montana and Ohio, we can leverage scale we the already have in those markets. North Carolina and Maine are both underserved markets where demand for natural gas is growing. Overall, we continue to grow our customer base with approximate 1,000 customers added in the third quarter, driven by increases in Ohio, North Carolina and Maine. And internally we are progressing with our SAP implementation. This will facilitate our access to data for decision making and provide consistency and productivity improvements across our utilities. There was still some noise in our financial results. So let me turn it over to Jim to review those details. Jim? Jim Sprague Thank you, Gregory and good afternoon, everyone. Thank you for joining us today. Our third quarter 2015 financial results reflect lower full service distribution throughput primarily due to warmer weather in most of our markets. Because of unusual expense items that impacted our results for the quarter, so we are going to present both GAAP and adjusted non-GAAP results. For the quarter, revenue decreased to $13.1 million, down $0.5 million on an 11% decline in full service distribution throughput. Let me break down the contributing factors by segment. Revenue from our natural gas operations segment decreased $1.2 million or 9% to $11.4 million. The primary driver of the decrease was lower prices paid for natural gas in Montana, North Carolina and Ohio. Since our cost of natural gas is a direct pass-through to our customers, it is neutral to gross margin. However, on a weighted average basis, the 17% decline in heating degree days and resulting lower full service distribution throughput has a direct impact on margins. Consolidated gross margin was $6.9 million in the quarter, down about 2%. In the natural gas operations segment, it was virtually unchanged as a $0.2 million downward adjustment of the sales volume used to calculate unbilled revenue in Ohio was almost entirely offset by a $0.2 million increase in gross margin in Maine attributable to higher transportation volume. Our consolidated operating expenses for the third quarter increased by $0.5 million compared with the prior quarter to $9.9 million. The increase was primarily due to a $0.4 million recurring asset impairment charge related to our former corporate headquarters building that we be sold in October as well as other nonrecurring professional service costs. Those costs were offset by a reduction in corporate expenses resulting from operational improvement initiatives. Adjusted EBITDA was $0.5 million, down just about $0.1 million from the third quarter of 2014. Loss from continuing operations on an adjusted non-GAAP basis was $1.4 million or $0.13 per share, compared with a loss of $1.2 million or $0.11 per share in last year’s third quarter. You can find reconciliation of GAAP to non-GAAP numbers in the news release. On a GAAP basis, loss from continuing operations was $2.3 million or $0.22 per share in the third quarter. Turning to the balance sheet. We had $3.9 million of cash at the end of the quarter, up from $1.6 million at the end of December. We expect to continue to grow our cash position as we move into the winter months. Upon final resolution number of our PUCO ratio, we plan to complete refinancing of our long-term debt, which does not come due until mid-2017. Subsequent to the end of the quarter, we obtained a $3 million short-term bridge loan. The helps with providing g additional liquidity until we get to higher cash flow of funds to ensure we can support our unusual expenses. Cash provided by operating activities of continuing operations was $12.2 million in the first nine months, up 42% over the prior period. This increase was primarily due to improvements in working capital management. Capital expenditures for the first nine months of 2015 were $8.3 million, down from $16.3 million in the first nine months of 2014. Currently we expect another $1.4 million in the fourth quarter of 2015. This year’s investments have been primarily focused on adding services to install Maine in order to systematically expand our customer base primarily in our growth territories. We have established a greater amount of discipline in our project selection and management processes, focusing our resources where we can effectively drive earnings. We are currently evaluating our plans for 2016, which will help determine the timing of the decline of these unusual costs so we can redirect cash to capital expenditures. With that summary, let me turn the call back to Gregory. Gregory? Gregory Osborne Thank you, Jim. We are executing our strategy to leverage our utility management operation and investment capabilities to capture greater market penetration and earn the highest level of turns where there are growth opportunities. I would like to thank you all for joining us for 2015 third quarter earnings teleconference. This is an exciting time for Gas Natural as we continue to execute our strategy to improve our earnings power. In closing, I would like to turn it back to Deb. Deborah Pawlowski So thank you again, everyone. And I apologize for our lack of time here today, but management is more than happy to entertain follow-up calls later this week. So if you give me a call, 716-843-3908, if you would like to schedule for a follow-up, I would be more than happy to accommodate. Thanks so much. Have a great day. Question-and-Answer Session Operator Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!

Cleco’s (CNL) CEO Bruce Williamson on Q3 2015 Results – Earnings Call Transcript

Cleco Corporation (NYSE: CNL ) Q3 2015 Earnings Conference Call October 29, 2015 8:30 AM ET Executives Sybil Montegut – Senior Investor Relations Analyst Bruce Williamson – Chairman, President and Chief Executive Officer Tom Miller – Senior Vice President and Chief Financial Officer Darren Olagues – President-Cleco Power Analysts Paul Ridzon – Keybanc Tom Shuwet – RBC Operator Welcome to the Cleco Corporation 2015 Third-Quarter Earnings Call. My name is Sylvia, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Sybil Montegut, Senior Investor Relations Analyst. Sybil, you may begin. Sybil Montegut Good morning, and welcome to Cleco Corporation’s 2015 third quarter earnings call. You can access this call and slide presentation live via the Internet from Cleco’s website at www Telephone and Internet replays can be accessed through our website. The dial-in number for the telephone replay is 888-843-7419 if in the U.S., or 630-652-3042 if outside the U.S. The conference ID is 38458260. With me on the call today is Bruce Williamson, Chairman, President, and Chief Executive Officer of Cleco Corporation; and Tom Miller, Senior Vice President, Chief Financial Officer, and Treasurer; along with other members of Cleco management. Before we begin, please keep in mind that during this conference call we will make some forward-looking statements. These statements are subject to many risks and uncertainties. Actual results may differ materially from those contemplated in our forward-looking statements. Please refer to our cautionary note regarding forward-looking statements and risk factors in various reports filed with the U.S. Securities and Exchange Commission, or SEC, including our 2014 annual report on Form 10-K; our 2015 quarterly reports, Form 10-Q current reports on Form 8-K; and other reports filed with the SEC. In addition, please note that the date of this conference call is October 29, 2015, and any forward-looking statements that we make today are based on assumptions as of this date. With that, I will turn the call over to Bruce. Bruce Williamson Thanks, Sybil. Good morning and thank you for joining us. Let’s start with the agenda for today’s call, which is on slide 3 of the presentation, for those of you following along via the webcast. This morning, we’ll begin the call with a summary of third quarter earnings, followed by an update on the merger transaction. Tom will then provide an overview of third quarter and year-to-date financial results, and we’ll move to Q&A. Please turn with me to slide 4. Even though we had somewhat warmer summer weather for the quarter, our year-over-year results were negatively affected by the loss of a wholesale customer late last year and the third-quarter 2014 favorable multiyear tax settlement. With that said, we are maintaining the 2015consolidated operational earnings guidance range of $2.28 to $2.38 per diluted share. As a reminder, this earnings guidance is based on normal weather over the remainder of 2015, reflects a full year of operations under the formula rate plan extension, assumes an effective tax rate of approximately 36%, and excludes adjustments related to life insurance policies and merger-transaction costs. Regarding the merger, we continue to work with our state’s regulatory process to gain approval for our strategic transaction, led by Macquarie Infrastructure and Real Assets and British Columbia Investment Management Corporation. Earlier this month, we distributed a press release that announced the filing of our response addressing the Louisiana Public Service Commission, or LPSC, staff advisors testimony. LPSC staff advisors filed testimony in July in response to the original commitments that the new owners made late last year, when we announced the transaction. This filing was our first opportunity to understand the thought process of the staff advisors regarding the commitments. In our recently filed testimony, we believe that together with the new owner group, we’ve addressed all 77 commitments stated in the staff advisors testimony. Specifically, the enhanced commitments now offer substantial rate credits to retail customers; ensure continued service and power-quality delivery; provide financial stability; and significantly extend protections for employees, retirees, and communities. The transaction is a good deal that is now even stronger for these stakeholder groups because of the regulatory process. The next step in the regulatory process is a hearing with the Administrative Law Judge, or ALJ, that is scheduled to begin on November 9. As previously stated, we expect the transaction to close in the first quarter of 2016. And with that, I will turn call over to Tom to discuss third quarter and year-to-date financial results Tom Miller Thank you, Bruce, and good morning, everyone. Please turn to slide 5 for a review of our third-quarter financial results. GAAP earnings for the quarter were $0.90 per diluted share, $0.27 lower than the third quarter of last year. Third quarter operational earnings were $0.92 per share or $0.25 lower than the third quarter of 2014, 2015 operational guidance in our operational earnings for the quarter exclude $0.02 per share of losses on life insurance policy, $0.02 per share of merger transaction costs, and $0.02 per share of tax-levelization benefit. Looking from left to right on the chart, Power’s non-fuel revenue was up $0.05 per share from this period last year. Higher revenues from warmer summer weather increased earnings by $0.09 per share. The annual adjustment to the formula rate plan increased earnings by $0.06 per share and lower sights specific refunds increased earnings by $0.01. These increases were partially offset by lower sales to wholesale customer, including the expiration of a wholesale contract – decreased earnings by $0.11 per share. Other revenue increased earnings by $0.01 per share, primarily related to higher transmission and distribution revenue. Other expenses decreased earnings by $0.10 per share, primarily due to $0.06 per share of higher taxes other than income, related to the absence of the 2014 favorable tax settlements; $0.03 per share of higher pension expense due to lower discount rates and the adoption of a new mortality table; and $0.01, related to higher depreciation and amortization expense. Higher interest expense decreased earnings by $0.06 per share related to the absence of favorable tax settlements. And finally, higher income taxes decreased earnings by $0.15 per share, primarily due to $0.10 per share related to the absence of our 2014 favorable tax settlements, $0.02 per share related to lower tax credits, $0.02 per share of tax returns filed, and $0.01 related to other miscellaneous items. Now please turn to slide 6 for a review of the year-to-date results. GAAP earnings were $1.84 per diluted share for the first 9 months of 2015, a decrease of $0.36 per share compared to the same period last year. Operational earnings were $1.92 per diluted share for the first 9 months of 2015, a decrease of $0.26 per share. Year-to-date operational earnings exclude $0.06 of merger-transaction costs, $0.02 of losses of life insurance policies. Looking from left to right on the earnings waterfall chart, Cleco Power’s non-fuel base revenue was up $0.01 from this time last year. This increase was the result of the absence of the 2014 formula rate plan customer refund that increased earnings by $0.22 per share. Higher revenues from warmer summer weather and higher usage increased earnings by $0.10 per share and lower specific refunds increased earnings by $0.02 per share. These increases were partially offset by lower net sales to wholesale customers, including the expiration of a wholesale contract, which decreased earnings by $0.25 per share. The FRP annual adjustment decreased revenue by $0.04 per share and provisions for customer credits related to the energy efficiency program and the FERC review of transmission return on equity decreased earnings by $0.04 per share. Other revenue increased earnings by $0.05 per share primarily related to higher transmission and distribution revenue. Higher expenses decreased earnings by $0.01 per share, primarily due to $0.09 per share of higher pension expenses due to lower discount rates and the adoption of a new mortality table, $0.06 per share of higher taxes other than income, related to the absence of the 2014 favorable tax settlements, $0.05 per share related to higher non-recoverable fuel expense, related to MISO transmission expenses. As a result, of a new wholesale customer and higher administrative fees, $0.04 per share from the absence of the recovery of capacity expense, related to the Coughlin tolling agreement and $0.01 per share of higher miscellaneous expenses. These decreases were partially offset by $0.20 per share related to fewer planned outages at our generation facilities and $0.04 per share related to lower depreciation and amortization. Higher interest expenses decreased earnings by $0.04 per share, primarily due to $0.07 per share related to the absence of 2014 favorable tax settlements. This decrease was partially offset by $0.02 per share related to the absence of a customer surcredit and $0.01 per share related to retirement of long-term debt. AFUDC decreased earnings by $0.04, primarily due to completion of our MATS projects. And finally, higher income tax decreased earnings by $0.23 per share, primarily due to $0.16 per share, related to the absence of 2014 favorable tax settlements, $0.02 per share related to lower tax credits, $0.02 per share of tax returns filed, $0.02 per share of lower permanent items; and $0.01 per share, related to miscellaneous tax items. Operator, at this time, we’ll open the call for questions. Question-and-Answer Session Operator [Operator Instructions] And our first question comes from Paul Ridzon from Keybanc. Paul Ridzon Good mornings guys, how are you? Bruce Williamson Good morning, Paul. Paul Ridzon Just a quick question, I don’t see much in the press, but any commentary on the tone locally regarding the transaction? Anybody making any noise? Bruce Williamson Darren is on the call on a speaker line. I’ll let Darren comment, if he’d like to. Paul Ridzon Yes. Darren Olagues Paul, we have – ever since we announced – provided our rebuttal testimony, where we essentially agreed to the recommendations of the roadmap that was put in the staff testimony, we have been out in the communities, meeting with politicians, community leaders, our employees, making sure they understand the breadth and depth of commitments that have been made as part of the transaction. And the support has been great. And that support is funneling its way back to the commissioners to make sure that it’s clear that we have widespread support from the community and our employees for the transaction. Paul Ridzon Sounds good, thank you very much. Darren Olagues Okay. Operator Questions comes from Tom Shuwet from RBC Tom Shuwet Hi, good mornings guys. Darren Olagues Good morning. Bruce Williamson Good morning. Tom Shuwet Just speaking of the rebuttal that you folks filed – and it does seem – as you mentioned earlier, you met probably all the requests of the staff, and I’m curious as to why, or if there’s any reason why there wasn’t a stipulation agreement with staff. Because it seems like you folks are both on the same page at this point. Bruce Williamson Well, there are other interveners, and I think there are other interveners, and I think we’ve mentioned this before, that the Commission – look, this is a big deal, and the Commission wants to make sure that there’s – the full process has gone through, including an ALJ hearing. But that doesn’t mean that our goal isn’t to be as aligned as we can with the Public Service Commission staff as we walk into the hearing. Tom Shuwet Okay, thanks. Operator We have no further question at this time. A – Paul Ridzon Okay, then this concludes the question-and-answer portion of the call, and I’d just like to close by thanking you for your continued interest in Cleco. Operator Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!

SJW’s (SJW) CEO Richard Roth on Q3 2015 Results – Earnings Call Transcript

SJW Corp. (NYSE: SJW ) Q3 2015 Earnings Conference Call October 29, 2015 01:00 PM ET Executives Suzy Papazian – General Counsel Richard Roth – Chairman, President and CEO James Lynch – CFO Analysts Operator Good day, ladies and gentlemen and welcome to the SJW Corp. Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to Suzy Papazian, General Counsel. You may begin. Suzy Papazian Thank you, operator. Welcome to the third quarter 2015 financial results conference call for SJW Corp. Presenting today are Richard Roth, Chairman of the Board, President and Chief Executive Officer; and James Lynch, Chief Financial Officer. Before we begin today’s presentation, I would like to remind you that this presentation and related materials posted on our website may contain forward-looking statements. These statements are based on estimates and assumptions made by the company in light of its experience, historical trends, current conditions and expected future developments as well as other factors that the company believes are appropriate under the circumstances. Many factors could cause the company’s actual results and performance to differ materially from those expressed or implied by the forward-looking statements. For a description of some of the factors that could cause actual results to be different from statements in this presentation, we refer you to the press release and to our most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission, copies of which may be obtained at www.sjwcorp.com. All forward-looking statements are made as of today, and SJW Corp. disclaims any duty to update or revise such statements. You will have the opportunity to ask questions at the end of the presentation. As a reminder, this webcast is being recorded and an archive of the webcast will be available until January 25, 2016. You can access the press release and the webcast at our corporate website. I will now turn the call over to Rich. Richard Roth Thank you, Suzy. Welcome everyone and thank you for joining us. On the call with me today are Jim Lynch, our Chief Financial Officer and Palle Jensen, our Senior Vice President of Regulatory Affairs. For the first time today, we are incorporating the use of slides in our call for those who would like to follow along. Please visit our website at www.sjwcorp.com to view them. SJW’s third quarter results reflect lower usage and the regulatory delay associated with recovery of 2014 and 2015 loss sales. Despite the regulatory delay that has impacted earnings, the fundamental elements that drive our business and lead to sustain profitability remain strong. As evidence of SJW’s strong fundamentals, SJWC’s and SJWTX’s capital expenditure programs including the Montevina Water Treatment plant upgrade project are on track to add $108 million of capital improvements in 2015. To help put San Jose Water Company’s capital expenditure programs into perspective, please note that the company’s rate base has grown at a compound annual growth rate of over 8% since 2010. Looking ahead, San Jose Water Company is seeking regulatory approval in its pending general rate case to invest approximately $230 million in 2016 and 2017. SJW’s meticulous plan and capably executing capital program is essential in ensuring that our customers continue to receive high quality and reliable water service. Specifically, the renovation of the Montevina Water Treatment plant will markedly improve SJW’s ability to meet the region’s growing water supply challenges by treating a much broader spectrum of source water. While regulatory lag seems to have become the norm, the California and Texas regulatory environments remain generally constructive as evidenced by their support of rates and regulatory mechanisms that balance the need for continued investments with the need for conservation and affordability. An important example of California’s supporting regulatory regime is the California Public Utility Commission’s authorization for San Jose Water Company to record in memorandum accounts the difference between authorized and actual revenue, net of variable production costs as long as water use restrictions remain in effect. We were also encouraged that California regulators appear to be adopting sales forecasts that reflect and support our customers’ conservation efforts, thus reducing the need for additional charges to recover the difference between authorized and actual customer usage. SJWTX, Inc., our Texas Water and Waste Water Utility continues to experience robust growth in connections and revenue. Additional, SJWTX’s regional business model helps ensure that we’re able to provide high quality sustainable and reasonably priced water service as we sensibly expand our operations. I would now turn the call over to Jim, who will provide you with a detailed review and analysis of the third quarter results and other financial commentary. After Jim’s remarks, I will provide additional information on our regulatory filings, water supplies and other key operational and business matters. Jim? James Lynch Thank you, Rich. Net income for the quarter was $9.5 million or $0.46 per diluted share. This compares to $38.4 million or $1.88 per diluted share for the third quarter of 2014. Year-to-date, net income was $21.7 million or $1.06 per diluted share, compared with $46.1 million or $2.26 per diluted share for the same period in 2014. Third quarter revenue was $83 million, a 34% decrease over the third quarter of 2014. And year-to-date, 2015 revenue was $217.5 million, a 13% decrease over the first nine months of 2014. A significant portion of the change in our operating results was attributable to the decision in our 2012 general rate case decision in California that occurred in the third quarter of 2014. Recall that we recognized $46.5 million of revenue at the time the decision was received. This included true-up revenue, a revenue related to prior periods of approximately $37.7 million or $1.09 per diluted share recognized in the third quarter of 2014. Year-to-date, true up revenue and diluted per share earnings related to prior periods that were recorded in 2014 was approximately $21.9 million and $0.68 per diluted share respectively. Our 2015 quarterly and year-to-date results reflect the impact of rate increases that contributed approximately $12.4 million in new revenue or $0.38 per diluted share and $33.2 million in revenue or $1.02 per diluted share respectively. Results also reflect the impact of lower usage in our California service area due to the drought and related water conservation activities. In response to the drought, the Santa Clara Valley Water District set its 2015 water usage target at 30% below 2013 usage levels. This was followed by the CPUC’s authorization in June of 2015 to activate San Jose Water Company’s water shortage contingency plan that includes mandatory water usage reductions and the imposition of drought surcharges. As a result, we experienced a decline in customer usage of 12% in the third quarter, resulting in a $15.3 million reduction in revenue compared to the third quarter of 2014 or $0.47 per diluted share. Year-to-date, customer usage declined 11%, resulting in a $28.4 million revenue reduction or $0.87 per diluted share compared to the same period in the prior year. The revenue impact of lower usage due to water conservation is being tracked for future recovery in the company’s Mandatory Conservation Revenue Adjustment Memorandum Account or MCRAMA. During the 2015 third quarter the balance in the MCRAMA increased approximately $15.7 million to $25.6 million. In March of 2015, the company submitted a filing with the CPUC for recovery of approximately $9.6 million of the balance related to the period from April 1, 2014 to December 31, 2014. The company will recognize amounts approved by the CPUC under this filing net of any previously recognized supply balancing amounts once approval is received. We currently anticipate this will occur in the 2015 fourth quarter. Amounts accumulated in the MCRAMA for 2015 and beyond will be recognized once recovery is determined to be probable and other revenue recognition criteria have been met. We began collecting drought surcharges under our Water Shortage Contingency Plan in June of 2015. Through the third quarter of 2015 collections were $6.3 million. The collected surcharge amounts are not recorded as revenue rather they are recorded as regulatory liabilities. Once we begin recognizing the 2015 MCRAMA revenue, we will offset amounts due from customer surcharges with amounts collected in the drought surcharge liability account. In the meantime, drought surcharge collections provide the company with additional operating cash flows. The company is also tracking drought-related operational and administrative costs for future recovery in a Mandatory Conservation Memorandum Account or in MCMA. As of September 30, 2015, $5,500 was accumulated in the MCMA. The drought surcharge account, MCRAMA and MCMA will remain in effect until state water drought water restrictions are lifted. Lastly, in 2015 our year-to-date results include $1.9 million in revenue or $0.12 per diluted share related to the CPUC’s decision in the first quarter on our limited rehearing request on the effective date of our 2014 rates. Turning to water production, the lower usage we’ve experienced in both our California and Texas service areas and California due to water conservation and in Texas due to higher than normal rainfall has resulted in lower cost production. For the quarter, usage declines reduced production costs by $9.5 million or $0.29 per diluted share and year-to-date by $18.4 million or $0.57 per diluted share. This cost reduction was partially offset by the impact of increases in purchased water expenses and ground water production charges of $5.5 million or $0.17 per diluted share for the quarter and $9.3 million or $0.28 per diluted share year-to-date. Also recall that through the first nine months of 2015 we used 1.5 billion gallons of surface water compared to 230 million gallons in the same period of 2014. The use of surface water in the third quarter was not significant. However, year-to-date surface water use resulted in a $3.1 million or $0.10 per diluted share reduction in water production expenses. We do not anticipate any meaningful benefit from surface water supplies through the remainder of 2015. Non-production operating expenses included a $1.1 million increase or $0.03 per diluted share for the quarter and $2.7 million increase or $0.08 per diluted share year-to-date in pension expenses. The increase was primarily driven by changes in the underlying assumptions used to calculate periodic pension costs. In addition both the quarter and year-to-date include higher cost incurred in connection with our 2015 California general rate case and conservation activities in our California service area. Other expense and income in the third quarter of 2015 included the sale of multiple non-utility real estate properties for a gain of approximately $1.9 million or $0.06 per diluted share. Other expense and income in 2014 included a gain on the sale of California Water Service Company stock in the second quarter of $2 million or $0.06 per diluted share and sales of real estate investment properties in Texas and California in the second and third quarter respectively of approximately $300,000 each or $0.02 per diluted share. Another point of note, in the third quarter of 2014, the company recorded an income tax benefit of $4.8 million or $0.23 per diluted share related to the adoption of the Department of Treasury and Internal Revenue Service tangible property regulations. This was for the years 2013 and previous. Year-to-date the company also recorded a benefit of $880,000 or $0.04 per diluted share on the recognition of enterprise zone tax credits in 2014; similar amounts were recorded in 2015. Turning to our capital expenditure program, we added approximately $25 million in utility plant during the third quarter bringing our 2015 total to $63 million or approximately 58% of our 2015 planned utility plant capital expenditures. We anticipate completing approximately 90% of our planned utility plant capital budget amount in 2015. In addition, we have revised the timing of our planned capital expenditures on our Montevina plant retrofit project putting more of the budgeted cost in 2016 and 2017 as a result of design revisions and contract finalization. Including the Montevina plant retrofit project, we are on target to add approximately $108 million in utility plant in 2015 growing rate base in both our California and Texas service areas. From a liquidity perspective, year-to-date cash flows from operations increased by approximately $26 million or 58% due in large part to higher income and the collection of a $6 million income tax receivable that was generated at the end of 2014. In addition, we experienced a $10.6 million benefit from the collection of revenue in connection with the 2012 California rate case decision. Recall that the $46.5 million we received in the decision is being collected over a 36-month period that commenced in October 2014. At the end of the quarter we had $75.8 million available under our bank lines of credit for the short-term financing of utility planned additions and operating activities. The borrowing rate on credit line advances during the year averaged 1.3%. With that, I will stop and turn the call back over to Rich. Richard Roth Thank you Jim. In a testament to the efficacy of San Jose Water Company’s stout management plan, customers exceeded the conservation target set by the State Water Resources Control Board and the Santa Clara Valley Water District, our wholesale water supply. As a result, water levels in our local groundwater basins have rebounded, thus minimizing the existential threat of subsidence. It’s worth noting and plotting the tremendous response from our customers to the conservation mandate, their response has been enormously important in protecting the regions critical underground storage basin. San Jose Water Company’s ability to respond quickly and effectively to the vagaries of California’s water supply requires a comprehensive communications program to engage and inform customers and stakeholders. We have taken important steps to establish and maintain a web-based communication program that is the cornerstone of our efforts to effectively deliver timely and relevant customer information. Now let’s turn our attention to regulatory affairs, where San Jose Water Company’s 2015 general rate case is being processed by the California Public Utilities Commission. We anticipate the CPUC’s final decision by the end of 2015 for new rates for the years 2016, ’17, and ’18. In the event a final decision is not reached by the end of this year, San Jose Water Company will file for interim rates effective January 1st 2016. The interim rate filing is very important because it ensures that regardless of regulatory delay, new rates will be effective retroactive to January 1st 2016. San Jose Water Company’s Mandatory Conservation Revenue Adjustment Memorandum Account or MCRAMA established on March 26, 2014 allows the company to track revenue shortfalls net of production costs associated with reduced sales resulting from government mandated water restrictions. On March 26, 2015, the company filed for collection of $9.6 million associated with sales lost during the period April 1, 2014 through December 31, 2014. A decision on that filing is expected in late 2015. On September 20, San Jose Water Company received authorization to increase its revenue requirement by $274,721 via a rate base offset for planned additions related to the Montevina Water Treatment Plant upgrade project. More importantly, Montevina project will allow San Jose Water Company to maximize the use of our low-cost high-quality surface water supply for the benefit of our customers. Construction began in late September this year and the project is expected to be substantially complete by the end of 2017. When complete, the project will add a total of $62 million in utility plants and service in addition to the capital additions contained in San Jose Water Company’s general rate case proceeding. Despite the many instances of regulatory lacks, San Jose Water Company continues to constructively engage with regulators and to ensure that all filings are diligently processed. With the aforementioned strong fundamentals in place, San Jose Water Company and SJW Corp. continue to refine our business processes and strategies to effectively respond to the vicissitudes in weather, regulatory rulings, and economic conditions. Over the long haul, we remain confident in our ability to deliver sustained growth and profitability, earnings and dividends. With that I will turn the call back to the operator for questions. Question-and-Answer Session Operator James Lynch Okay, thank you operator. Before we end the call, I’d like to pull up one more slide, our earnings bridge for the quarter. The earnings bridge starts with our reported 2014 Q3 quarterly diluted earnings per share and then it reconciles the impact of activity reported quarter over quarter to get to our Q3 2015 quarterly earnings per share. We thought that that would assist you following along on the website with understanding the different components that went into driving our Q3 2015 revenue. With that Rich? Richard Roth Thank you everyone for joining us, we look forward to talking to you with our year-end results. Operator Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s call. You may all disconnect. Have a great day everyone. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. 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