Good day, and thank you for standing by. Welcome to the SJW Group Q3 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised, today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Andrew Walters, Chief Financial Officer and Treasurer. Please go ahead..

Thank you, operator. Welcome to our third quarter 2024 financial results conference call for SJW Group. I will be presenting today with Eric Thornburg, Chair of the Board, President, and Chief Executive Officer. For those who would like to follow along, slides accompanying our remarks are available on our website at sjwgroup.com.

Before we begin today, 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 results 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 financial results press release and to our most recent Forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on our website.

All forward-looking statements are made as of today and SJW Group disclaims any duty to update or revise such statements. You will have an opportunity to ask questions at the end of the presentation. This webcast is being recorded and an archive of the webcast will be available until January 20, 2025.

You can access the press release and the webcast at SJW Group's website. In addition, some of the information discussed today includes the non-GAAP financial measures of adjusted net income and adjusted diluted earnings per share. They have not been calculated in accordance with Generally Accepted Accounting Principles in the United States, or GAAP.

These non-GAAP financial measures should be considered as a supplement to the financial information prepared on a GAAP basis rather than an alternative to respective GAAP.

Financial measures -- reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the table, in the appendix of our presentation. I will now turn the call over to Eric..

Welcome, everyone, and thank you for joining us. My name is Eric Thornburg, and it is my honor to serve as Chair, President, and CEO of SJW Group.

I'm pleased to share that in the third quarter of 2024, we continued to meet drinking water and environmental regulations, deliver on our public health and environmental stewardship commitments, and provide high-quality water and service to customers.

We also delivered strong financial results, including a 7% increase in net income from this time last year.

Our performance reflects our continued execution of our successful growth strategy, which is focused on investments in our infrastructure and water systems across our national footprint and constructive engagement and consensus building with key local stakeholders.

For example, in California, we filed a settlement agreement with the California Public Utilities Commission for San Jose Water's 2025 through 2027 general rate case that we constructively negotiated with the Public Advocates Office, resolving all but two issues together.

We also filed our second System Improvement Charge in Texas and received approval for infrastructure recovery mechanism filings in both Connecticut and Maine that together covered almost 18 miles of pipe replacement in New England.

Year-to-date, we have invested $252 million, or approximately 76% of our $332 million capital expenditure plan for 2024 in water and wastewater utility infrastructure across all four states, and we're steadily advancing our five-year plan of investing $1.6 billion.

Also, our California operation anticipates receiving a grant of approximately $8 million through the Grid Resilience and Innovation Partnerships program, or GRIP, for advancing clean energy infrastructure. We anticipate matching that amount for a total $16 million investment to increase operational resilience and reduce energy costs.

Additionally, SJW Group was one of two water utilities recognized by Newsweek in its list of America's Greenest Companies 2025, and our Connecticut operations received a Top Workplace award from the Hartford Courant for the fourth consecutive year.

Importantly, we delivered earnings per diluted share of $1.17, and adjusted non-GAAP earnings per diluted share of $1.18 in the third quarter. Now, while I'm proud of our accomplishments, our culture is not one of complacency.

Our industry is facing significant challenges with the need to meet new water quality standards and replace aging infrastructure, while also maintaining affordability for our customers.

We know that regulators, legislators, and other policymakers are looking to us to be leaders to find creative, resourceful and efficient solutions to balance these at times competing needs, and we are up for that challenge.

We are focused on forward-thinking solutions that prioritize public health and safety, while optimizing operational efficiency, whether through the use of AI technology, economies of scale, or other continual improvement exercises.

Our industry-leading scientists and engineers are busy designing PFAS treatment facilities that meet the highest regulatory expectations while also tackling emerging contaminants, such as microplastics through groundbreaking research.

In parallel, we're diligently evaluating our pioneering income assistance programs in California and Connecticut to see how we can do more for a greater number of customers across our national footprint.

We also continue to be dedicated to constructive engagement and partnership with our local stakeholders to ensure that we are all well-positioned to achieve our shared mission of serving our communities effectively. That is our culture, and it's also our competitive advantage.

With that, I will pass it over to Andrew to review our detailed financial results and regulatory updates in our state operations.

Andrew?.

chemical and waste disposal costs in the full cost balancing account, and adjusting the service charge calculation.

The settlement agreement also authorizes a $450 million capital expenditure budget that would address several key needs such as treating PFAS to meet drinking water standards finalized by the US EPA earlier this year, reducing greenhouse gas emissions through solar generation, energy storage systems to replace diesel generators, fleet electrification, and advanced acoustic leak detection, and advancing the CPUC's environmental and social justice action plan to improve access to high-quality water service, climate resiliency, and economic and workforce development.

It also allows greater revenue recovery through the service charge and further aligns authorized to actual usage through a lower sales forecast. The settlement agreement includes a $53.1 million or 9.4% total revenue increase at the 2025 through 2027 authorized sales and customer forecast.

The annual step increase range between approximately 2.6% to 3.9%. The application we filed with the CPUC in January of 2024 requested a $103 million revenue increase over the three years and proposed a three-year $540 million capital expenditure program.

We view the settlement agreement as a testament to our ability to work with stakeholders and regulators to achieve constructive outcomes that are beneficial to our customers, and local communities while also delivering shareholder value.

If approved, the settlement agreement positions us well to continue our robust and necessary investment in our water system infrastructure. A CPUC decision is expected in the fourth quarter of 2024 with new rates effective January 1, 2025.

San Jose Water reached an agreement with the City of Cupertino, California, to manage the city's water system that became effective on October 1, 2024. The initial term of the agreement is 12 years with a provision to extend it for an additional eight years.

Under the new agreement, we will continue to operate and maintain the city's water system and pay an upfront fee of $22.1 million concession fee, which will be funded with equity through our ATM and we will make annual payments of approximately $1.8 million, subject to increases each year based on a specified construction cost index.

We first entered into an agreement with Cupertino in 1997. Since then, this arrangement has proven beneficial to our customers of San Jose Water and customers of Cupertino. As a large neighboring water system, we bring scale and efficiency to the city's water system operation and increased scale that helps San Jose Water serve its customers as well.

A CPUC-authorized annualized revenue increase of $768,000 became effective on July 1, 2024. Revenue increase was related to a requested rate base increase of approximately $4.8 million for advanced metering infrastructure projects. We are planning to invest approximately $27 million in this project in 2024.

It is a $100 million project that is separate from the general rate case. Capital budget and majority of the installation is expected through 2026. On September 18, 2024, the Connecticut Public Utilities Regulatory Authority authorized a $4.3 million increase in annualized revenue through the Water Infrastructure and Conservation Adjustment, or WICA.

The WICA surcharge became effective on October 1 and stands at 3.43%. The revenue increase was for approximately $41.9 million in completed infrastructure replacement projects that are in service and providing benefit to our customers. As we mentioned in the second quarter, Connecticut Water general rate case became effective on July 1, 2024.

As a reminder, the general rate case provided an annual revenue increase of $6.5 million with an opportunity to earn an additional $1.1 million by achieving certain performance metrics. A 9.3% return on equity and it maintained our 53% to 47% equity to debt capital structure.

This past week, Maine Water filed a general rate case application for the Camden-Rockland division with the Maine Public Utilities Commission. Maine Water is requesting a revenue increase of $1.1 million or 15.9% above current authorized revenue. A decision is expected in the second quarter of 2025.

On September 30, 2024, a water infrastructure charge, or WISC, application was filed for the Millinocket division to increase annualized revenues by $46,000. The decision is expected in the fourth quarter of 2024. On August 1, 2024, WISC increases were authorized in two divisions for a total annual revenue increase of $52,000.

I also want to share that Maine Water intends to file a petition with the Maine Public Utilities Commission before the end of the year, requesting consolidation of the tariffs in the company's 10 rate districts. It is a move that would streamline general rate case and WISC applications, which are currently filed on a district-by-district basis.

The company typically files two to four general rate case and WISC filings each year. This will improve administrative efficiency, reduce regulatory lag, and increase the burden on regulatory agencies and their staff, and ease the burden. Texas Water filed for a second System Improvement Charge, or SIC, this past September.

An SIC is an infrastructure recovery mechanism that is similar to WICA in Connecticut and WISC in Maine. We are requesting a $4.3 million increase in annual revenues for more than $41 million invested in completed infrastructure projects. We are targeting a decision in the first half of 2025.

We have filed for a sale, transfer, and merger application with the Public Utility Commission of Texas to close on the acquisition of 3009. The closing has not yet been scheduled. We expect to fund the acquisition of 3009 with equity through our ATM program.

We have been experiencing drought in our Texas service area and had water conservation measures in place for much of 2024. As a result, we will see lower water usage in 2024 compared to 2023. As you will recall, our KT Water Resources acquisition in 2023 has a projected 6,000 acre-feet of untapped water supply in the heart of Comal County.

Bringing the supply online to serve customers is a priority for us. It will be a multi-phased project and our goal is to complete it by the end of 2026. KT Water Resources was initially acquired by our unregulated subsidiary in Texas Water Resources.

In the third quarter of this year, our regulated utility purchased the assets of KT Water Resources from our regulated -- unregulated subsidiary. The regulated utility will fund the capital expenditures to bring the additional supply online.

2024 guidance for GAAP is currently at $2.65 to $2.75 per diluted share, and we reaffirm our guidance of $2.68 to $2.78 per diluted share on a non-GAAP basis. As mentioned earlier, we have reached our $65 million in gross proceeds from equity issuances, which was the top of our -- end of our guidance excluding acquisitions.

We maintain a five-year capital investment outlook of $1.6 billion, which includes approximately $230 million in estimated PFAS remediation based on finalized maximum contaminant levels.

The remaining factors underlying our 2024 guidance include potential for reduced usage based on conservation and other factors, as well as strategic reinvestments in our business in 2024, such as approximately $1.1 million in customer-related software expended year-to-date.

I would like to highlight that our guidance range is consistent with our long-term growth rate and is independent of real estate sales or merger and acquisition activities.

Further, we reaffirm our stated long-term growth rate of 5% to 7% that has anchored off our 2022 diluted earnings per share of $2.43, which is non-linear because of rate case cycles. I want to note that our recent settlement in California does provide a flatter rate impact than in years past. With that, I will turn the call over to Eric..

Thank you, Andrew, well done. One of the ways we measure our impact and success as a company is how have we been a force for good. Just a couple of weeks ago, Newsweek notified us that SJW Group has been selected as one of America's Greenest Companies 2025. We are one of only two water utilities selected for this prestigious recognition.

Only companies that meet the European Union's stringent sustainability criteria, considered the most advanced globally were eligible. This recognition reflects the passion and dedication of our people, who take our responsibility as environmental stewards very seriously.

Another exciting new development is that San Jose Water, along with several of our California-regulated private utility peers, were awarded a $50 million grant through the Grid Resilience and Innovation Partnerships, or GRIP, program for the installation of battery energy storage systems at critical high-power use pumping stations.

Established by the Bipartisan Infrastructure Law, GRIP is a significant federal investment focused on modernizing and strengthening the resilience of the US electric grid. The GRIP program will integrate battery storage energy storage systems at various sites operated by San Jose Water and our peers.

To meet the GRIP cost share requirements and secure these funds, San Jose Water has committed to match its anticipated $8 million share of the grant, bringing the total investment to an anticipated $16 million.

This funding represents a substantial investment in sustainability and operational flexibility for San Jose Water, significantly enhancing resilience while driving down energy costs. Only three California applicants were awarded grants through this very competitive program.

Other green achievements that I'd like to highlight include, between 2019 and 2022, we reduced our greenhouse gas emissions by over 20%, and we're on track for a further reduction in 2023. We will share that result after it's been audited, and our goal is a 50% reduction by 2030 from a 2019 baseline.

In California, our Advanced Leak Detection program, which leverages AI technology, continues to be leading edge with water loss to leaks or non-revenue water below 10%, compared to an industry benchmark of 15%, and we are fostering the expanded use of recycled water for irrigation to better preserve drinking water supplies.

In Connecticut, we've been recognized as a Top Workplace for the fourth consecutive year by the Hartford Courant. We're especially humbled that the award is based on the results of an anonymous employee survey conducted by an independent third-party.

The survey asks employees about company culture, career development, and the organization's purpose and values. We appreciate our employee's partnership in creating a work environment that sets us up for world-class service and success.

We'd like to extend a warm welcome to PURA Commissioner, David Arconti, and express our deep appreciation to outgoing Commissioner and Vice Chairman, Jack Betkoski, for his nearly four decades of public service, including 27 years at PURA.

We look forward to working with Commissioner, Arconti, and his fellow commissioners to best serve Connecticut residents and communities. Over the last several years, we've built a strong national platform to support our growing local operations through the good times and the inevitable headwinds.

And with a lot of effort and intention, we've maintained our fundamental values and culture through this growth, and that culture continues to guide us and distinguish us as we make business decisions that build trust with stakeholders.

I continue to be inspired by the contributions of our talented teams across our local operations as they consistently provide an essential service with integrity, reliability, genuine care, and transparency.

I'm confident our team's commitment to serving customers, communities, and the environment will continue to excel SJW Group's ability to deliver value to our stakeholders and reinforce our strong position for a successful future. And with that, I'll turn the call back over to our operator..

Thank you. [Operator Instructions] Our first question comes from Richard Sunderland with JPMorgan. Your line is open..

Hi, good morning. Thank you for the time today..

Hey, hi, Richard. Thanks for calling in..

Good morning..

Great. Thank you.

Starting with the usage trends in Texas, can you speak a little bit about the sales there relative to the 2024 guidance assumptions? Are they on track, ahead, or behind? And I guess similarly, how those trends, the GRC settlement, and other recent developments position you on a 2025 basis relative to the 5% to 7% long-term growth rate?.

That's an excellent question, Richard. So, let's start with 2024. We've definitely suffered some decreases due to usage and conservation in Texas this year. We are coming into the fourth quarter, so that impact becomes less in terms of the total dollar amount, but it still remains in place.

It is helpful to the fact that it's going to Stage 3 from Stage 4, but there's always some variation within the Texas area because there's different areas that have different drought levels, but that's still a positive development. So, as we look at the fourth quarter this year, that will be something we will continue to monitor.

We are not adjusting our guidance range due to that. And so, I would expect us to be kind of consistent with where we've talked about so far. Now, for 2025, however, we would expect the drought conditions to persist. We will have the benefit of the settled rate case, knock on wood, that that will happen according to when we expect it to.

And we will also have the full year of the Connecticut rate case. So, we are fully on track for meeting our long-term growth. I would say the one highlight that I put into these comments today was to talk about the fact that the California rate increases this year or this coming year starts in 2025 at 3.91%, assuming that gets approved.

That compares to a 13.35% that happened the last time that we had an approved rate case in 2022. So, the benefit of that is it flattens out our overall kind of earnings and revenue growth over three years cycle. So that's something I just want to highlight.

It's good for customers and it's good -- it's better for us to as we look at our earnings growth over a period of time..

Got it. Great. Thank you for all the color there. Yes, very helpful. The Maine process that you highlighted in the slides there on the tariff consolidation effort, I'm curious if you have any sense on how long that process could take and would it require a rate case after receiving approval kind of across the new consolidated jurisdiction.

Any other color there on sort of the relative rate levels would be helpful too..

Yeah, look, I think from our perspective, it's still early days in order to be able to comment on rate levels or those types of things, but here's the benefit of this.

This is a huge strategic move for our company to get this onto one rate cycle and it really will help the communities in Maine as well as we can further socialize the cost of the entire operation across the entire group of customers, because there are some very small systems that are disadvantaged by not having such a large base of customers to distribute those cost over.

Given that, what I would expect to see is an ability like we talked about to reduce the load on not only our team, but on customers and then also on the Maine Public Utility Commission staff as we prosecute rate cases.

You can imagine that we're going down from multiples down to a single rate case and single WICA filings across all these, and that will really be beneficial for everybody involved..

Got it. Very helpful..

Richard, the one thing I would add, I wouldn't expect us to bring everybody to the same level of rates immediately, that can be done gradually over time. But going forward we'll, as Andrew said, really smooth out the administrative aspects of filing multiple cases as opposed to just a single case. So, it'll be good for everyone..

No, got it. That's very clear. And then, one last one from me. I recognize this came up several times on 2Q, but just curious if there are any updates you can offer on Aquarion, your interest in the assets, and potential timeline..

Yeah. Thank you, Richard. I think, if I recall now, the Eversource team announced about February of 2024 that they were looking to sell Aquarion, and I think they've said publicly that they would like to wrap that up, at least announce who the successful bidder was by the end of 2024.

We do remain interested in the assets there and while I can't comment specifically on the process, it certainly would seem reasonable to know by the end of the year who the successful purchaser is, and then, of course, regulatory approval would commence in 2025.

So, we really believe that it would be a great acquisition for our shareholders, but at the same time, commit to remain disciplined and decisive about it going forward..

Great. I'll leave it there. Thank you very much for the time today..

Thank you, Richard..

Thank you..

One moment for our next question. Our next question comes from Jonathan Reeder with Wells Fargo. Your line is open..

Hey, Eric and Andrew.

How are you all today?.

Hi, Jonathan. Thanks for calling today..

Very good. Thank you..

Thanks for taking the question. Just, I guess piggybacking off of the last one with Aquarion, I know I've seen some Connecticut towns express concern over RWA's interest in buying Aquarion and what kind of impact that might have on their tax revenues and customer rates.

How influential do you think those concerns are to the process?.

Yeah, thank you, Jonathan. Yeah, I saw the same articles and for those who may not have followed along, for example, a company such as ours, Connecticut Water in this case, we pay property taxes to communities based upon the assets invested to serve that community. It is part of our rate recovery approach.

Many municipalities do not pay, of course, themselves, or in this case, if it was a different quasi-municipal utility, wouldn't pay the same level in property taxes to that community.

And so, if you're a community leader and you see that the potential is there that future property tax receipts would decrease, then you would rightfully be quite concerned about that. So, it's one of the ways that we participate in the communities and assist them, and I think it's a real issue.

I think community leaders in Bridgeport and Stamford and Greenwich and Torrington, and on and on, can -- could be quite concerned about it. But if there were Regional Water Authority in place, they, of course, could try to make some amends to those communities and help out.

So, I do think it will be a consequential matter, but I don't think it would be determinative, Jonathan..

Okay, great. And then, I guess, shifting over to California, the CPUC recently issued the decision that lowers the energy utilities allowed ROEs by 42 basis points in 2025 by effectively reducing the magnitude of that 2024 cost of capital mechanism [increase] (ph).

Is there any avenue for the CPUC to do something similar for the waters for 2025?.

Jonathan, I'll start and see if Andrew might want to add to it. So, of course, we've been tracking this proceeding as well, and at this time have no indication that a similar change is contemplated for the water utilities. We don't expect the energy decision to impact the way our WCCM is calculated.

And similar to the energy decision, any change to the methodology used to calculate our adjustment would have to be issued via commission order, and there's again nothing teed up at this moment that would suggest that or facilitate that.

And we'd obviously engage at any time that we did sense or see that there was a change being considered or proposed. So far, like I said, no indication at this time that we'd have a similar track..

Yeah. I may just add a couple of things, Eric, that since the mechanism of recent time has been out, there has been three adjustments, two up and one down. We started off with the down actually and had two ups in the most recent time around. The thing that I commend about the mechanism is a two-way mechanism.

It goes up and down, so it allows people to participate. In terms of the next adjustment, I don't know where the economy is ultimately going to go. If I could forecast interest rates, I might not be talking to you on this on this call, but odds are greater that there's more downside pressure than upside pressure.

And so, if I were an electric utility, I would understand the need to do this, and if you compare the outcomes of where our cost of debt has been and some of the other cost of capital mechanisms, the 20 basis points might be actually more consistent with what we're seeing today in the marketplace, but those can change over time.

So that's the thing to keep in mind. It's -- while it might be here today, it can change in the future..

Okay, great.

Just kind of sticking along those lines, can you discuss what SJW's -- I know you kind of coordinate with the broader water utilities in the state, but the potential cost of capital strategy, do you think the new applications are likely to filed in 2025 as scheduled or might there be a possibility to reach an agreement with a PAO to defer the full blown proceeding, maybe possibly in exchange for a reduction in the allowed ROEs?.

Look, I think the odds are greater than that. Like, we'll have to see where things are at the time and also what the commission workload is relative to us, so it's a discussion that needs to happen.

So that being said, I think the odds are likely -- more likely that we will end up filing in 2025, but that's a personal opinion and that's one without having that interaction to kind of find out what the workload is at the commission as well..

Okay. And then, last one for me. I appreciate that answer, Andrew.

Any potential impacts on the CapEx budget from the EPA's recently finalized Lead and Copper Rule?.

Yeah.

Look, I think there's that's something we will talk about the -- we'll give a revised five-year forecast in our next quarter's earnings as part of our also revised earnings forecast for 2025, but for sure, we are seeing continued increases in capital investment requirements, and whether it's for lead and copper or inflation pressures related to the PFAS, as well as, quite frankly, growth and other things that are going on in our system that's very exciting, but are going to require some very significant investments for us going forward.

So, I think overall, we're seeing certainly a more positive movement when it comes to that. Now, coupled with that, and this is very important for us, Eric talked about affordability as well, and I'm sure he'll add some more comments to this, but I would tell you that affordability is a key issue that we all are facing from a utility industry.

And we are zeroed in on things that we can do to further make the bills affordable for our customers. And so, we're trying to look through everything that we do and increase our efficiency for the benefit of our customers and to allow that investment to happen, not all in the backs of the customers, but on a shared basis..

And well said, Andrew.

I think we're viewing affordability as a strategic issue that we really need to think about comprehensively and propose solutions to the commissions and to our communities, and so by working hard to reduce operating expense, it opens up a little headroom than in the bill to continue to invest to provide safe and adequate drinking water.

So, all on the table to do our best to meet the affordability test for our communities..

Excellent. Appreciate the time today..

Thank you, Jonathan..

One moment for our next question. Our next question comes from Angie Storozynski with Seaport. Your line is open..

Thank you. So, two questions. One is, I understand the change in the earnings profile in California, but Andrew, you still kept your non-linear growth profile comments. I'm just wondering why that is if California is most smoothed out.

And then number two is, is there any exposure you guys have in California or any other jurisdiction to the data centers and the growth in water demand that those might have? Again, I don't know exactly in which jurisdiction, but I'm assuming either California or Texas. Thank you..

So, I'll start off with the comments on the non-linear. We still have two big divisions and one smaller division, Angie, so no matter how you look at it, that's going to be the case, and -- that we will have non-linear growth, but it's not as non-linear as it was before, just because of this current decision.

But in general, it's something that's going to happen. And you can understand, the comment that I said before, last time we started with a 13% increase when we first started our rate case in California, now we're only at 3.91%, so -- but that's we're very happy with kind of where that's come out, there's nothing wrong.

It's just the fact that we're making things more smooth for our customers. That's not necessarily always going to be the case and it just depends how well we do of continuing to drive down expenses, which helps offset those potential first-year adjustments when you go in for a rate case. So, so far, so good.

The second question, do you want to one, Eric?.

Yeah. On the data centers, it's a great question, but I would not expect to see volume increases driven by data centers using water for cooling.

I wouldn't expect to see significant volumetric changes resulting from that, but I would say that the economic development aspects and inevitably the growth that comes with that, there would definitely be infrastructure demands around that to support that community's growth and development, and so more of a secondary effect for us, Angie..

Awesome. Thank you..

Thank you very much. Appreciate your call today..

And I'm not showing any further questions at this time, I'd like to turn the call back over to Eric Thornburg for any closing remarks..

Well, thank you, operator, really appreciate that. And thank you, everyone, for joining us today.

We're in the home stretch of 2024, but there's still much to look forward to, including a CPUC decision on our settlement agreement in our California GRC, implementation of our AMI initiative, progress with bringing greater water supply online in Texas, and applying for consolidation of our tariffs in Maine and advancing our PFAS remediation strategy.

We will also continue to invest in our infrastructure, aiming to replace 1% of our pipe nationwide annually and explore the possibilities of how to ensure continued affordability for our customers, as the capital needs of operations in the water utility industry continues to increase.

SJW Group proudly leverages our national platform to support our distinct local operations in our shared mission to reliably serve high-quality water to 1.6 million people across four states.

And while we do this, we make sure we execute our growth strategy and deliver shareholder value, including paying a dividend, which we have faithfully done for 80 straight years, and we've raised that dividend for 56 consecutive years.

I recognize that it's our culture of service to our customers and the local communities that underlies our success, and I'm very proud of our people who make it all possible. Thank you again for your time today and your questions. We look forward to sharing our progress with you next quarter.

In the meantime, Andrew and I, along with the rest of the SJW Group team are always available for follow-up. Thank you again for your interest in SJW Group..

Thank you, ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day..