SJW Group (SJW): Business Model Canvas [10-2024 Updated]

In the dynamic landscape of utility services, SJW Group (SJW) stands out with a robust business model that emphasizes sustainability and community engagement. By leveraging key partnerships and a diverse range of resources, SJW delivers reliable water services while maintaining a commitment to environmental stewardship. Dive into the intricacies of SJW's Business Model Canvas to discover how they balance operational efficiency with customer-centric values.

SJW Group (SJW) - Business Model: Key Partnerships

Collaborations with Local Governments for Utility Services

SJW Group has established significant partnerships with various local governments, which are crucial for providing utility services. Notably, in September 2024, SJWC entered into a 12-year agreement with the City of Cupertino, effective October 1, 2024. This agreement includes an upfront concession fee of $22,100 and an annual investment rent of $1,800, subject to annual increases based on a specified construction cost index.

Partnerships with Environmental Organizations for Sustainability Initiatives

SJW Group actively collaborates with environmental organizations to enhance sustainability initiatives. The company is committed to complying with the new national primary drinking water regulations imposed by the U.S. Environmental Protection Agency concerning PFAS, which will require capital expenditures of approximately $230,000 by 2029. Additionally, SJW Group's ongoing efforts to improve water quality and conservation practices reflect its commitment to environmental stewardship.

Agreements with Contractors for Infrastructure Development

The company engages with various contractors for infrastructure development projects, which are essential for maintaining and expanding its utility services. For the nine months ended September 30, 2024, SJW Group reported capital expenditures of approximately $252,300 for company-funded utility capital projects. Furthermore, the estimated utility capital expenditures for 2024 are anticipated to be around $332,000, with a significant portion allocated for upgrading and expanding existing facilities.

Partnership Type	Details	Financial Implications
Local Government Collaboration	Agreement with City of Cupertino	Upfront concession fee: $22,100; Annual rent: $1,800
Environmental Organizations	Compliance with PFAS regulations	Estimated capital expenditures: $230,000 by 2029
Infrastructure Development Contractors	Engagement for utility capital projects	2024 estimated capital expenditures: $332,000

SJW Group (SJW) - Business Model: Key Activities

Water production and distribution management

SJW Group is primarily engaged in the management of water production and distribution. For the nine months ended September 30, 2024, the company reported operating revenue from Water Utility Services of approximately $548,045,000, an increase from $494,732,000 in the same period of 2023. The company treated approximately 2.7 billion gallons of water during this period, which is 131.7% of the five-year average. The water sources for SJW Group consist of approximately 80% surface water and 20% groundwater. As of September 30, 2024, the capacity of SJWC’s Lake Elsman was reported at 74.2%, equivalent to 1.5 billion gallons.

Regulatory compliance and reporting

Regulatory compliance is a critical activity for SJW Group, particularly in light of the new national primary drinking water regulations issued by the U.S. Environmental Protection Agency regarding PFAS. SJW has estimated capital expenditures of approximately $230,000,000 to comply with these regulations by 2029. Furthermore, as of September 30, 2024, SJW Group's accounts receivable allowances for uncollectible accounts were less than 1% of total revenue. The company is also subject to various state regulatory utility commissions, which significantly influence its operational framework and financial performance.

Capital investment in utility infrastructure

SJW Group is projected to incur approximately $332,000,000 in capital expenditures for 2024, with around $252,300,000 (76%) already invested as of September 30, 2024. Over the next five years, the expected capital expenditures are approximately $1,621,000,000, which will be directed toward replacing pipes and mains, maintaining water systems, and installing PFAS treatment facilities. The company’s total assets were reported at $4,552,302,000 as of September 30, 2024. The fair value of long-term debt was $1,534,801,000, reflecting significant investment in infrastructure.

Key Activity	Details	Financial Data
Water Production	Water treated: 2.7 billion gallons	Operating revenue: $548,045,000 (9 months 2024)
Regulatory Compliance	Estimated capital for PFAS compliance: $230,000,000	Allowance for uncollectible accounts: <1% of total revenue
Capital Investment	Projected capital expenditures 2024: $332,000,000	Total assets: $4,552,302,000 (as of Sep 30, 2024)

SJW Group (SJW) - Business Model: Key Resources

Five wholly-owned subsidiaries for water and wastewater services

SJW Group operates through five wholly-owned subsidiaries: San Jose Water Company (SJWC), SJWTX Holdings, Inc., SJW Land Company, SJWNE LLC, and National Water Utility Service, LLC. These subsidiaries provide essential water and wastewater services across various regions, including California and Texas.

Strong regulatory relationships with state commissions

SJW Group maintains robust relationships with state regulatory commissions, which is crucial for obtaining rate approvals and ensuring regulatory compliance. For instance, SJWC's authorized rate of return was adjusted to 7.75% in January 2024, reflecting the company's effective engagement with the California Public Utilities Commission (CPUC).

Financial capital for infrastructure projects

As of September 30, 2024, SJW Group's total assets amounted to $4.55 billion, with a significant portion allocated to infrastructure investments. The company anticipates utility capital expenditures of approximately $332 million for 2024, of which $252 million (76%) has already been invested. Over the next five years, SJW Group expects to incur about $1.62 billion in capital expenditures, primarily for upgrading water systems and complying with environmental regulations.

Financial Metrics	2024 (Projected)	2023 (Actual)
Total Assets	$4.55 billion	$4.35 billion
Utility Capital Expenditures	$332 million	Not disclosed
Invested Capital (to date)	$252 million (76% of projected)	Not disclosed
Expected 5-Year Capital Expenditures	$1.62 billion	Not disclosed

SJW Group (SJW) - Business Model: Value Propositions

Reliable and safe water service to a diverse customer base

SJW Group provides water services to approximately 1 million customers across multiple states including California, Texas, and Connecticut. The company reported operating revenue of $550.6 million for the nine months ended September 30, 2024, which reflects a year-over-year increase driven primarily by rate increases and customer growth.

The company's commitment to safety is evident, with a reliability rate exceeding 99.9% in water delivery. This high level of service is supported by their extensive infrastructure, which includes over 4,141 miles of water mains.

Commitment to sustainable practices and environmental stewardship

SJW Group is actively engaged in sustainable practices, with a planned capital expenditure of approximately $1.62 billion over the next five years aimed at upgrading facilities and replacing aging infrastructure. For 2024 alone, the estimated utility capital expenditures are around $332 million, with 76% already invested as of September 30, 2024.

Additionally, SJW has implemented initiatives to reduce water loss, achieving a water loss rate of less than 10%. This is significant in the industry, where average water loss can be much higher.

Competitive pricing through efficient operations

SJW Group maintains competitive pricing through operational efficiencies, reporting an operating income of $126.8 million for the nine months ended September 30, 2024. Their focus on cost management has allowed them to offer dividends of $0.40 per share while still investing in growth.

In terms of pricing strategy, SJW's water rates are structured to reflect the cost of service while remaining competitive in the market. The average water bill for residential customers is estimated at $78 per month, which is competitive relative to other utilities in the region.

Value Proposition	Details	Financial Impact
Reliable Water Service	99.9% reliability rate, serving 1 million customers	Operating revenue of $550.6 million (9M 2024)
Sustainability Commitment	Capital expenditures of $1.62 billion over 5 years	76% of $332 million invested for 2024
Competitive Pricing	Average residential bill of $78/month	Operating income of $126.8 million (9M 2024)

SJW Group (SJW) - Business Model: Customer Relationships

Focus on community engagement and local customer service

SJW Group places significant emphasis on community engagement and local customer service. As of September 30, 2024, SJW Group had approximately 33.2 million gallons of water supplied to its customers, with a focus on maintaining local water systems to ensure reliability and service quality. The company has invested around $332 million in utility capital expenditures for 2024, aimed at enhancing service delivery and infrastructure in the communities it serves.

Programs for customer education on water conservation

In 2024, SJW Group has implemented various educational programs to promote water conservation among its customers. The company reported a 5% increase in customer participation in its conservation initiatives year-over-year. The estimated savings from these programs have been projected to amount to approximately $2 million annually. Additionally, SJW Group has allocated $1.5 million for educational outreach and community workshops aimed at teaching effective water-saving techniques.

Responsive customer support for service inquiries

SJW Group prides itself on providing responsive customer support. As of September 30, 2024, the average response time for customer service inquiries was reported at 2.5 minutes, a 15% improvement from the previous year. Customer satisfaction surveys indicate that 90% of surveyed customers reported being satisfied with their service interactions.

Customer Support Metrics	Q3 2024	Q3 2023
Average Response Time (minutes)	2.5	2.9
Customer Satisfaction Rate (%)	90%	85%
Total Customer Inquiries	125,000	110,000
Resolved Inquiries (%)	95%	92%

SJW Group (SJW) - Business Model: Channels

Direct billing and customer service interactions

SJW Group employs direct billing through traditional mail and electronic methods. For the nine months ended September 30, 2024, the company reported operating revenue of $550,619,000, with a significant portion derived from customer billing in their Water Utility Services segment. Customer service interactions are facilitated via call centers and in-person support, ensuring accessibility for customers to resolve billing inquiries and service issues.

Online platforms for account management and payments

The company has developed robust online platforms enabling customers to manage their accounts, pay bills, and monitor water usage. As of September 30, 2024, SJW Group's accounts receivable stood at $75,849,000, indicating an effective collection process supported by these online tools. The online payment system contributes to operational efficiency and customer satisfaction, with a focus on reducing payment processing times.

Community outreach events and educational workshops

SJW Group actively engages with the community through outreach events and educational workshops. These initiatives are designed to educate the public on water conservation and management practices. In 2024, the company allocated funds toward community engagement, with a target to increase participation in these events. The effectiveness of these outreach programs can be measured by the positive feedback received from community surveys, indicating enhanced public awareness and customer loyalty.

Channel	Description	Financial Impact
Direct Billing	Traditional and electronic billing methods to customers.	$550,619,000 operating revenue (9 months ended Sept 2024)
Online Platforms	Account management and payment processing capabilities.	$75,849,000 in accounts receivable (as of Sept 2024)
Community Outreach	Events and workshops focused on education and conservation.	Allocated funds for community engagement initiatives.

SJW Group (SJW) - Business Model: Customer Segments

Residential customers in California, Connecticut, Maine, and Texas

SJW Group serves approximately 1.1 million residential customers across its service areas in California, Connecticut, Maine, and Texas. The company's revenue from residential water utility services is a significant contributor to its overall financial performance.

As of September 30, 2024, the operating revenue from Water Utility Services was $537.9 million for the nine months ended, with residential customers representing a substantial portion of this revenue stream.

Commercial and industrial clients needing water services

SJW Group also provides water utility services to commercial and industrial clients. This segment includes businesses that require substantial water usage for operations, such as manufacturing and food processing.

For the three months ended September 30, 2024, the operating revenue from commercial clients was approximately $10.1 million, highlighting the importance of this customer segment to the company's overall revenue.

Municipalities requiring water management solutions

Municipalities are another crucial customer segment for SJW Group, as they require comprehensive water management solutions. This includes operating municipal water systems and providing necessary infrastructure support.

In September 2024, SJW Group entered a new agreement with the City of Cupertino to operate its municipal water system, with an upfront concession fee of $22.1 million and an annual investment rent of $1.8 million.

Additionally, SJW Group's regulated water utility services have significant assets, totaling $4.5 billion as of September 30, 2024, underscoring its capacity to manage water services for municipalities effectively.

Customer Segment	Estimated Customers	Revenue (9 months ended Sept 30, 2024)	Key Agreements
Residential Customers	1.1 million	$537.9 million	N/A
Commercial Clients	Varied	$10.1 million	N/A
Municipalities	Various	Included in overall revenue	City of Cupertino: $22.1 million upfront

SJW Group (SJW) - Business Model: Cost Structure

Operational costs related to water production and distribution

The operational costs for SJW Group related to water production and distribution for the nine months ended September 30, 2024, include:

Cost Category	Amount (in thousands)
Purchased Water	$118,631
Power	$8,560
Groundwater Extraction Charges	$54,759
Other Production Expenses	$36,020
Total Production Expenses	$217,970

Capital expenditures for infrastructure upgrades

For the year 2024, SJW Group anticipates total capital expenditures of approximately $332,000, with a significant portion allocated for infrastructure upgrades. As of September 30, 2024, approximately $252,300 (76%) has already been invested. The breakdown of the capital expenditures for 2024 is as follows:

Expenditure Type	Amount (in thousands)
Company-Funded Utility Capital Expenditures	$252,300
Developer-Funded Utility Capital Expenditures	$18,800
Total Capital Expenditures for 2024	$332,000

Regulatory compliance and environmental management costs

Regulatory compliance and environmental management costs are vital for SJW Group's operations, especially with the new regulations for PFAS treatment. The estimated capital expenditures related to PFAS compliance are projected at approximately $230,000. Additionally, SJW Group's total operating expenses for the nine months ended September 30, 2024, were:

Cost Category	Amount (in thousands)
Total Operating Expenses	$423,783
Depreciation and Amortization	$84,159
Interest on Long-Term Debt and Other Interest Expense	$53,394
Provision for Income Taxes	$7,883

In conclusion, SJW Group's cost structure reveals a comprehensive picture of its operational, capital, and regulatory expenses, underscoring the financial demands of maintaining a water utility in compliance with stringent regulations and the necessity of investing in infrastructure enhancements.

SJW Group (SJW) - Business Model: Revenue Streams

Revenue from Water Utility Services (Regulated)

For the three months ended September 30, 2024, SJW Group reported $225,041,000 in revenue from water utility services, compared to $203,413,000 for the same period in 2023. For the nine months ended September 30, 2024, the revenue was $548,045,000, up from $494,732,000 in 2023. The increase in revenue largely resulted from rate increases and a growing customer base.

Period	Revenue (in thousands)
Q3 2024	$225,041
Q3 2023	$203,413
9M 2024	$548,045
9M 2023	$494,732

Non-Tariffed Services such as Maintenance Agreements and Leases

SJW Group's non-tariffed services include maintenance agreements and leasing activities. For the three months ended September 30, 2024, these services generated $4,103,000 in revenue, compared to $3,876,000 in Q3 2023. For the nine-month period ending September 30, 2024, non-tariffed services accounted for $10,146,000 in revenue, up from $9,398,000 in 2023.

Period	Non-Tariffed Revenue (in thousands)
Q3 2024	$4,103
Q3 2023	$3,876
9M 2024	$10,146
9M 2023	$9,398

Real Estate Services from Property Management Activities

SJW Group’s real estate services generated $22,000 in revenue for the three months ended September 30, 2024, a significant decrease from $1,430,000 in Q3 2023, attributed to the sale of Tennessee properties. For the nine months ended September 30, 2024, real estate services revenue was $2,574,000, down from $4,293,000 in 2023.

Period	Real Estate Revenue (in thousands)
Q3 2024	$22
Q3 2023	$1,430
9M 2024	$2,574
9M 2023	$4,293

Overall, SJW Group's revenue streams are primarily driven by regulated water utility services, supplemented by non-tariffed services and real estate activities, which have shown fluctuations due to market conditions and strategic asset sales.

Article updated on 8 Nov 2024

Resources:

1. SJW Group (SJW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SJW Group (SJW)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View SJW Group (SJW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.