SJW SJW Group

Risks

• Our business is regulated and may be adversely affected by changes to the regulatory environment.
• Recovery of regulatory assets is subject to adjustment by the regulatory agencies and could impact the operating results of Water Utility Services.
• Changes in water supply, water supply costs or the mix of water supply could adversely affect the operating results and business of Water Utility Services.
• Fluctuations in customer demand for water due to seasonality, restrictions of use, weather, and lifestyle can adversely affect operating results.
• A contamination event or other decline in source water quality could affect the water supply of Water Utility Services and therefore adversely affect our business and operating results.
• Water Utility Services is subject to litigation risks concerning water quality and contamination.
• Water Utility Services is subject to possible litigation or regulatory enforcement action concerning water discharges to Waters of the United States (“WOTUS”).
• New or more stringent environmental regulations could increase Water Utility Services’ operating costs and affect its business.
• The water utility business requires significant capital expenditures that are dependent on our ability to secure appropriate funding. If SJW Group and its subsidiaries are unable to generate sufficient operating cash flows and obtain sufficient capital or if the rates at which we and our subsidiaries borrow increase, there would be a negative impact on our results of operations.
• We operate in areas subject to natural disasters or that may be the target of terrorist activities.
• Our operations, liquidity, and earnings may be adversely affected by wildfires and risk of fire hazards.
• A failure of our reservoirs, storage tanks, mains or distribution networks could result in losses and damages that may adversely affect our financial condition and reputation.
• Operating under contract water and waste systems in Maine and Connecticut will expose us to new risks.
• Water Utility Services rely on information technology and systems that are key to business operations. A system malfunction, security breach, cyber-attacks or other disruptions could compromise our information and expose us to liability, which could adversely affect business operations.
• SJW Land Company and Chester Realty, Inc. have real estate holdings that are subject to various business and investment risks.
• The price of our common stock may be volatile and may be affected by market conditions beyond our control.
• Our business strategy, which includes acquiring water systems and expanding non-tariffed services, will expose us to new risks which could have a material adverse effect on our business.
• We must continue to attract and retain qualified technical and managerial personnel in order to succeed.
• Adverse investment returns and other factors may increase our pension costs and pension plan funding requirements.
• Work stoppages, other labor relations matters and epidemic or pandemic illness events could adversely affect our business and operating results.
• Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also make it more difficult for stockholders to influence our policies or may reduce the rights of stockholders.
• We incurred substantial additional indebtedness to finance the merger with CTWS, and this additional indebtedness may reduce our business and operational flexibility and increase our borrowing costs.
• We may not have discovered undisclosed liabilities of CTWS during our due diligence process.
• Uncertainties associated within the combined company may cause a loss of management personnel and other key employees which could adversely affect the future business and operations of the combined company.
• The combined company is expected to incur additional costs in connection with the CTWS merger, including costs to integrate SJW Group and CTWS.
• SJW Group has committed to certain “ring-fencing” measures which will enhance CTWS’s separateness from SJW Group, which may limit SJW Group’s ability to influence the management and policies of CTWS (beyond the limitations included in other existing governance mechanisms).
• The combined company is and will be affected by developments in the water utility industry, including changes in regulation. A failure to adapt to the changing regulatory environment could adversely affect the stability of the combined company’s earnings.
• SJW Group’s dividend policy is subject to the discretion of our board of directors and may be limited by legal and contractual requirements.