Suzy Papazian - General Counsel and Corporate Secretary Richard Roth - Chairman, President and Chief Executive Officer James Lynch - Chief Financial Officer and Treasurer.

Good day, ladies and gentlemen, and thank you for your patience. You’ve joined the SJW Corp. First Quarter 2016 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 be given at that time.

[Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Ms. Suzy Papazian, General Counsel. Ma’am, you may begin..

Thank you, operator. Welcome to the first quarter 2016 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 that 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 for our most recent Forms 10-K, 10-Q and 8-K 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 July 25, 2016.

You can access the press release and the webcast at our corporate website. I will now turn the call over to Rich..

Thank you, Suzy. Welcome, everyone, and thank you for joining us. I’m Rich Roth, Chairman and CEO of SJW Corp. On the call with me today are Jim Lynch, our Chief Financial Officer; and Palle Jensen, our Senior Vice President of Regulatory Affairs.

For those who would like to follow along, slides accompanying our remarks are available at our website at www.sjwcorp.com. While SJW’s first quarter results reflect the ongoing drought and the delay – and a decision on our 2015 general rate case application, the fundamentals that drive our business and lead to sustained profitability remains strong.

The company’s cash flow remains robust, as we continue to collect the 2013 and 2014 true-up adjustment resulting from San Jose Water Company’s delayed 2012 general rate case decision. Our capital programs continued to deliver growth in rate base as we invest intelligently and methodically in our water systems.

The San Jose metro area, Silicon Valley in the Texas I-35 corridor continued to enjoy robust economic growth. The California and Texas regulatory environments remain constructive and effective regulatory policies and mechanisms are in place to help us manage lower customer demand as a result of mandatory conservation measures.

With those brief remarks, I will now turn the call over to Jim for a detailed review and analysis of Q1 results and other financial commentary. After Jim’s remarks, I will provide additional information on our regulatory filings, water supply, and other key operational and business matters.

Jim?.

Thank you, Rich. First quarter revenue was $61.1 million, a 2% decrease over the first quarter of 2015. Net income for the quarter was $3.4 million, or $0.16 per diluted earnings per share, as compared to $4.7 million, or $0.23 diluted earnings per share for the first quarter of 2015.

The net decrease of $0.07 in diluted earnings per share was attributable to a $0.19 per share decrease due to lower customer usage. This was offset by cost savings to the lower water cost and usage of $0.11 per share and the recognition of $0.08 per share in net revenue track in our Water Conservation Memorandum Account or WCMA.

Customer rate increases contributed an additional $0.10 per diluted share, which was offset by higher water production expenses of $0.09 per share. The remaining decrease was primarily attributed to the $0.05 per share recovery in 2015 of amount subject to the rehearing of our 2012 rate case decision, the similar amount was recognized in 2016.

Turning to revenue, we continue to operate under drought conditions in our Northern California service area. Rich will provide an update on local water supplies during his remarks to follow.

And as a result of the continuation of customer conservation efforts, we experienced a decline in customer usage of 19% for the quarter compared to the first quarter of 2015. The revenue impact of lower customer usage was a decrease of $6.5 million.

Recall, that’s a difference between revenue authorized by the California Public Utilities Commission or the CPUC, and actual revenue, net of any variable cost savings from lower water purchase volumes is tracked in the company’s WCMA. For the quarter, the amount recognized of WCMA revenue was $3 million.

Customer rate increases were primarily the result of pass-through costs related to purchase and pumped groundwater average price increases of 19% by the Santa Clara Valley Water District that went into effect last July.

In addition, we received authorization this quarter to begin recovery of the first phase of construction completed on our Montevina Water Treatment Plant construction project. Currently, we are operating under interim rates, which were initially set equal to rate in effect at the end of 2015.

Rich will provide an additional update on the California rate case in his remarks on the regulatory activities. Turning to water production, lower water usage in our Northern California service area resulted in overall lower water production costs.

Water production costs were down $800,000 for the quarter, due to lower usage of $3.9 million, partially offset by higher purchase water cost of $3.1 million. Operating expenses, excluding water production costs were $29.9 million in the first quarter, an increase of $2 million when compared to the first quarter of 2015.

The increase was primarily the result of higher depreciation expenses due to assets placed in service during 2015, higher maintenance expenses due to main repairs, and higher administrative and general expenses due to an increase in salaries, which is partially offset by a decrease in pension expense and regulatory surcharges as a result of lower usage.

The rates for 2016 requested in our pending general rate case filing contemplated certain of these cost changes. Turning to our capital expenditure program, we added $31.6 million in utility plant in the first quarter of 2016.

This includes approximately $6.2 million of construction on our Montevina Water Treatment Plant project, combined this represents approximately 22% of our 2016 planned utility plant expenditures.

Recall that Montevina Treatment Plant project is being constructed using a progressive design build model that allows surface water production through the plant between construction phases.

In the first quarter of 2016, we processed approximately 890 million gallons of surface water through the plant and anticipate processing another 1.1 billion to 1.3 billion gallons prior to commencing in the next phase of construction.

From a liquidity perspective, quarterly cash flows from operations increased over the first quarter of 2015 by $4.9 million, or 18%, primarily due to collections of receivables, general working capital, and the collection of various balance in memorandum accounts, partially offset by previously invoicing in accrued water production costs.

In addition, we experienced $2.5 million cash increase from the collection of surcharges in connection with the 2012 GRC decision and $3.2 million in cash collected from drought surcharges in 2016. Note that the company has been collecting drought surcharges under our water shortage contingency plan since June of 2015.

Amounts collected are recorded by the company is regulatory liabilities. The liability will be settled against amounts, authorized by the CPUC for recovery under the WCMA. At the end of the first quarter, we had $57.5 million available on our bank lines of credit for short-term financing of utility plant additions and operating activities.

The borrowing rate on the line of credit advances averaged 1.36% during the first quarter of 2016. With that, I will stop and turn the call back over to Rich..

Thank you, Jim. After four years of below average precipitation, the water supply outlook for California has vastly improved, while the torrential precipitation predicted from El Nino did not fully materialize. The Sierra Nevada mountain snowpack, California’s largest and most important reservoir was nearly averaged for the first time in five years.

Accordingly, water deliveries from the state and federal water projects, which make up on average, 40% of the County’s water supply, have been increased 60% and 55% respectively of contracted amounts. Locally, our depleted water supply reservoirs and more importantly our groundwater basins are also benefiting from the increased precipitation.

As of April 4, the combined storage of the Santa Clara Valley Water District reservoir stands at 96% of seasonal average. Groundwater levels are also seeing a rebound and Lake Elsman, San Jose Water Company’s 2 billion gallon surface water reservoir is full for the first time since 2011.

While precipitation has improved the water supply picture, it has not been enough for the state water resources control Board and the Santa Clara Valley Water District to declare the drop over.

Currently, the State Water Board’s mandatory 25% conservation targets statewide remains in effect through October 2016, locally the district’s 30% conservation target remains in place through June 2016. Both agencies are closely monitoring the water supply situation and may take action to relax the rules or targets later this spring.

Given the difficulty in predicting future precipitation and the fact that we have had four years of below average precipitation, San Jose Water Company believes some of the level of conservation will need to be maintained to ensure that we can withstand another dry period in the immediate years ahead.

The California Public Utilities Commission or the Commission has provided much leadership guidance and assistance to California investor owned water companies and reconciling state and local mandates and they are supportive of the overall conservation effort.

Water revenue adjustment mechanisms are now in place for investor owned water companies to track and recover lost revenue due to mandated conservation and restrictions.

As Jim discussed in his comments, these mechanisms provide a high degree of assurance that the company will continue to have a realistic opportunity to earn its authorized return on its investments in utility plant. As of this date, we have recently received a proposed decision on our 2015 general rate case application and are closely reviewing it.

We will of course inform you once a final decision is available. Since a timely decision was not received, the company has allowed by California regulation, implemented interim rates effective January 1, 2016.

Although the rates did not change, this action will ultimately allow San Jose Water Company to apply the rate increase adopted in the commission’s final decision retroactively to January 1, 2016.

On February 5, the company requested commission authorization to recover the $7.7 million balance accumulated in the Water Conservation Memorandum Account or WCMA, during the period January 1, 2015 through December 31, 2015.

The WCMA tracks the revenue impact of mandatory conservation measures instituted by the State Water Board and the Santa Clara Valley Water District. The requested $7.7 million recovery is the net of the total drought related revenue reduction and the drought surcharges collected during 2015.

The under collection, which will be recovered via 12 month surcharge was approved effective April 27, 2016. On February 25, the commission affirmed by 5 to 0 vote the San Jose Water Company’s water shortage contingency plan with stage mandatory reductions and drought surcharges is just and reasonable.

The company’s water shortage contingency plan includes the drought allocations and drought surcharges currently in effect for residential customers and dedicated landscape services.

The water shortage contingency plan was originally implemented in June of 2015 in response to the Governor’s Executive Order, the State Water Resources Control Board’s emergency regulations and the Commission’s resolution remain in place until rescinded by the commission.

On February 29 San Jose Water Company requested commission authorization to increase revenue by $1.7 million via a rate base offset for the calendar year 2015 plant additions related to the Montevina Water Treatment Plant upgrade project. This request was approved effective March 30 of 2016. Regulatory delayed notwithstanding.

We believe that the commission has provided and will continue to provide constructive regulation enabling regulated water utilities to continue to make critically important investments in water system infrastructure and supplies.

We also believe that the commission recognizes that without such reports, conservation, critical water supply investments and other necessary infrastructure investments will be jeopardized.

Accordingly, San Jose Water Company is on track to invest approximately $140 million in utility plant in 2016, making it a record year in terms of planned capital expenditures included in the 2016 capital improvement plan is approximately $25 million associated with a complete rebuild of our Montevina Water Treatment Plant both our planned CapEx and Montevina project remain on schedule and on budget.

These commissioned approved investments directly correlate to an increase in rate base, the earnings engine for San Jose Water Company. Operationally, we are busy preparing for peak summer usage months with increased water supply availability.

Although the Santa Clara Valley Water District continues to reduce treated water deliveries to 80% of the monthly contract allocations, the improved water supply picture will allow San Jose Water Company to meet demand and continue to refine our operations to maximize the availability, reliability, and quality of our water supplies.

Lastly, the Board extends deep appreciation to Departing Board Member, Mark Kelly. The Kelly family’s friction multigenerational association with SJW stands several decades. Mark and his family have contributed SJW’s growth and success and we all wish him the very best in his future endeavors.

I am pleased to welcome Deborah Mann to the SJW core board Ms. Mann brings to SJW a wealth of experience from her 30 plus year career in the water industry. She currently serves as the Assistant General Manager and Chief Operating Officer at the Metropolitan Water District of Southern California. Ms.

Mann’s extensive knowledge, network and experience in the water industry will serve SJW well as we look to address structural water supply challenges and capitalize on water sector growth opportunities.

I’m also pleased to announce the Board’s appointment of Andrew Gere to the position of President and Chief Operating Officer of San Jose Water Company. Over his 20 plus years with the company, Andy has developed a broad and comprehensive knowledge of the company, its operations, and its employees.

He possesses a keen awareness and an appreciation of the challenges and the opportunities facing the company as well as the importance for the contributions made by all employees and his appointment reflects the Boards desire to perpetuate the company’s unique and effective team approach to operation, management and decision-making.

In summary, SJW has two outstanding regional water utilities located in economically vibrant and growing regions.

We continue to prudently invest in our water systems and remain confident that our proven model, business platforms and operating strategies will provide superior service levels, reliable water supplies, and competitive and sustainable total shareholder returns. With that, I will turn the call back to the operator for questions..

[Operators Instructions] As there are no questions in queue, I’d like to turn the call over to Rich Roth for any closing remarks, sir?.

Thank you. In closing, I just like to remind everyone that we have received a proposed decision on our rate cases covering in the years 2016 through 2018. It’s only a proposed decision, but as the decision makes its way through the final approval and process that we will provide more information through an 8-K to that.

Thank you very much for listening and we look forward to talking to you at the end of the second quarter..

Thank you, Mr. Roth and thank you ladies and gentlemen for your participation. That does conclude your program. You may disconnect your lines at this time..

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