California Water Service Group (“Group” or “Company,” NYSE: CWT), a
leading publicly traded water utility serving California, Hawaii,
New Mexico, Washington, and Texas, today reported financial results
for the second quarter of 2024.
Highlights included:
- Diluted earnings per
share of $0.70 in Q2 2024, compared to $0.17 in Q2 2023.
- $214.4 million of
capital invested in water system infrastructure for the first six
months of 2024.
- Declaration of the
318th consecutive quarterly dividend in the amount of $0.28 per
share.
- Filing of the 2024
General Rate Case (GRC) and Infrastructure Improvement Plans for
2025-2027 with the California Public Utilities Commission (CPUC).
The application also proposes a Low-Use Water Equity Program, which
would decouple revenue from water sales, to assist low-water-using,
lower-income customers.
- Affirmation of our
S&P Global credit rating of A+ Stable for California Water
Service Company.
According to Chairman and Chief Executive Officer Martin A.
Kropelnicki, financial results continued to benefit from the
effects of the 2021 California General Rate Case decision received
on March 7, 2024.
“I’m pleased to see the effects of the 2021 decision on our
results. I’m equally pleased with our team’s effort to put together
a 2024 California General Rate Case that reflects our dedication to
investing diligently in infrastructure, managing expenses
responsibly, and structuring rates to keep bills affordable for
customers. It reflects our continuing commitment to providing a
reliable, sustainable water supply for generations to come,” he
said.
Q2 2024 Financial Results
- Net income
attributable to Group was $40.6 million in Q2 2024, compared to net
income of $9.6 million in Q2 2023.
- Operating revenue
was $244.3 million, compared to $194.0 million in Q2 2023, an
increase of $50.3 million.
- Increased rates
added $19.3 million in revenue.
- Increased accrued
unbilled revenue as a result of an increase in customer rates and
unbilled days added $10.4 million.
- Rate mechanisms
approved in the 2021 California GRC added $16.7 million. Reported
revenues from the same quarter in the prior year did not reflect
these mechanisms.
- Operating expenses
were $196.1 million in Q2 2024, compared to $178.1 million in Q2
2023, an increase of $18.0 million.
- Water production
costs increased by $6.8 million to $77.6 million, primarily due to
an increase in wholesale rates and water usage.
- Income tax expenses
increased $8.4 million to $8.7 million, primarily due to the
increase in pre-tax income.
Year-to-Date 2024 Financial Results
- Net income attributable to Group was $110.5 million for the
six-month period ended June 30, 2024, or $1.90 diluted earnings per
share, compared to a net loss of $12.7 million, or ($0.23) per
diluted earnings per share, in the same period last year.
- Operating revenue was $515.0 million for the six months ended
June 30, 2024, compared to $325.1 million in the same period in
2023, an increase of $189.9 million.
- A cumulative adjustment for the impacts of the 2021 California
GRC decision added $131.5 million.
- Increased rates added $31.6 million in revenue.
- Recognition of $16.0 million of previously deferred WRAM
revenue as a result of securing California Extended Water and
Wastewater Arrearages Payment Program funds for the payment of
eligible customer balances.
- Operating expenses for the six months ended June 30, 2024, were
$389.0 million, compared to $326.7 million in the same period in
2023.
- Water production costs increased by $16.0 million, mostly due
to recording a cumulative adjustment of $9.2 million for the
impacts of the 2021 California GRC in 2024 and increases in rates
and water production.
- Other operations expense increased $10.1 million, primarily due
to the recognition of $13.6 million of costs associated with the
revenue deferral decrease.
- Income taxes increased $29.5 million, due mostly to an increase
in pre-tax net operating income due to the recognition of the 2021
California GRC.
As a result of the Q1 2024 adoption of the 2021 California GRC,
interim rate relief attributable to 2023 totaling $64.0 million was
recognized in 2024 operating revenue, including $18.7 million and
$35.4 million that were attributable to the three and six months
ended June 30, 2023, respectively.
Liquidity, Financing, and Capital
Investment
As of June 30, 2024, Group maintained $82.7 million of cash, of
which $45.4 million was classified as restricted, and had
additional short-term borrowing capacity of $355 million, subject
to meeting the borrowing conditions on the Group and Cal Water
lines of credit.
Group capital investments during the six-month period ended June
30, 2024, totaled $214.4 million, represents 56% of Group’s
estimated $385 million capital investment target for 2024.
Cal Water Files Infrastructure Improvement Plan for 2024
California General Rate Case; Plans to Invest $1.6 Billion in its
California Water Systems in Upcoming Three Years
On July 8, 2024, Group’s largest subsidiary, California Water
Service (Cal Water), submitted Infrastructure Improvement Plans for
2025-2027 as part of its triennial GRC filing. The application to
the CPUC also proposes a Low-Use Water Equity Program, which would
decouple revenue from water sales, to assist low-water-using,
lower-income customers.
Cal Water proposes to invest more than $1.6 billion in its
districts from 2025-2027, including approximately $1.3 billion of
newly proposed capital investments, to support its ability to
continue to provide a reliable supply of high-quality water.
To enhance affordability—particularly for low-use and low-income
customers, Cal Water’s application proposes a Low-Use Water Equity
Program that would decouple revenue from water sales across its
regulated service areas. The program is designed to work in
conjunction with Cal Water’s proposed progressive, four-tier rate
design and sales forecast proposals to keep rates affordable,
reinforce conservation goals, and provide the utility an
opportunity to recover its authorized revenue requirement in a
timely manner.
In its application, Cal Water has proposed to change 2024 rates
to increase 2026 total revenue by $140.6 million, or 17.1%. Cal
Water also proposes rate increases of $74.2 million, or 7.7%, in
2027; and $83.6 million, or 8.1%, in 2028.
The triennial filing begins an approximately 18-month review
process by the CPUC.
Company Hosts Emergency Response Exercises in Hawaii and
Responds to the Butte County Thompson Fire
To enhance coordination during emergencies, the Company’s Hawaii
subsidiary, Hawaii Water Service (Hawaii Water), hosted
representatives from emergency response and regulatory agencies,
elected and State offices, utilities, contractors, and other
community partners for Community Emergency Operations Center (EOC)
exercises in early July on both Maui and the Big Island.
Attendees of the Maui exercise, which included both an emergency
response course using the Incident Command System and a hands-on
disaster simulation, were Hawaii local and state representatives
and representatives from the Maui Police Department, Maui
Department of Water Supply, Hawaiian Electric, and the Hawaii
Public Utilities Commission. Attendees of the Hawaii island
exercise included representatives from Hawaii County Fire, Hawaii
Wildfire Management Organization (Firewise), Hawaii County Civil
Defense, Community Emergency Response Team (CERT) – Waikoloa, and
Hawaii Rural Water Association.
Emergency response training is regularly conducted throughout
the Company. In July, when the Butte County Thompson Fire
threatened Oroville, Calif., Cal Water activated emergency
operations, brought in additional resources to help manage the
water system and communicate with customers, and embedded with the
Butte County emergency operations center. None of the utility’s
assets were impacted during the fire, which burned 3,789 acres over
a six-day period.
Company Continues to Pursue Recovery for PFAS
Contamination Costs
In April, the U.S. Environmental Protection Agency adopted a new
National Primary Drinking Water Regulation to limit certain per-
and polyfluoroalkyl substances (PFAS) in drinking water. Under the
new regulation, public water systems across the country are
required to monitor for these PFAS by 2027 and to comply with
applicable maximum contaminant levels by 2029.
Although this regulation faces legal challenges, the Company is
proceeding with compliance efforts and believes it is well
positioned to comply within the designated timeline. At the same
time, it is vigorously pursuing financial recovery from responsible
parties. Group has submitted its initial claims in the 3M and
DuPont class action settlements and will continue to seek cost
recovery wherever it is appropriate to do so.
Separately, the EPA recently designated two of the most common
PFAS, specifically PFOA and PFOS, as hazardous substances under the
Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA).
ESG Progress is Highlighted in the Company’s New ESG
Report
In May, the Company released its 2023 ESG Report and ESG Analyst
Download. The ESG Report—which is aligned with recognized reporting
frameworks and standards, including the Sustainability Accounting
Standards Board Water Utilities & Services Industry Standards,
the Recommendations of the Task Force on Climate-Related Financial
Disclosures, and the Global Reporting Initiative Standards—details
progress made by Group's subsidiaries on the Company's ESG focus
areas last year, while the supplemental ESG Analyst Download
provides key ESG data and metrics.
This year's ESG Report highlights both ongoing efforts to
support Group's ESG strategy and objectives along with significant
achievements in 2023, such as how the Company is working to protect
the planet, serve customers, and engage the Company’s
workforce.
For additional details, please see Form 10-Q which will
be available
at https://www.calwatergroup.com/investors/financials-filings-reports/sec-filings
Quarterly Earnings Teleconference
All stockholders and interested investors are invited to attend
the conference call on August 1, 2024 at 8 a.m. PT (11 a.m.
ET) by dialing 1-800-715-9871 or 1-646-307-1963 and keying in
ID# 5681819, or you may access the live audio webcast
at https://edge.media-server.com/mmc/p/nfn5956c. Please join
at least 15 minutes in advance to ensure a timely connection to the
call. A replay of the call will be available from 2:00 p.m. ET on
Thursday, August 1, 2024, through Monday, September 30, 2024, at
1-800-770-2030 or 1-609-800-9909 and key in ID# 5681819, or by
accessing the webcast above. The call will be hosted by Chairman,
President and Chief Executive Officer Martin A. Kropelnicki, Senior
Vice President, Chief Financial Officer and Treasurer James P.
Lynch, and Vice President Rates and Regulatory Affairs, Greg A.
Milleman. Prior to the call, Cal Water will furnish a slide
presentation on its website.
About California Water Service Group
California Water Service Group is the parent company of
regulated utilities California Water Service, Hawaii Water Service,
New Mexico Water Service, and Washington Water Service, as well as
Texas Water Service, a utility holding company. Together, these
companies provide regulated and non-regulated water and wastewater
service to more than 2.1 million people in California, Hawaii, New
Mexico, Washington, and Texas. California Water Service Group’s
common stock trades on the New York Stock Exchange under the symbol
“CWT.” Additional information is available online
at www.calwatergroup.com.
This news release contains forward-looking statements
within the meaning established by the Private Securities Litigation
Reform Act of 1995 (“PSLRA”). The forward-looking statements are
intended to qualify under provisions of the federal securities laws
for “safe harbor” treatment established by the PSLRA.
Forward-looking statements in this news release are based on
currently available information, expectations, estimates,
assumptions and projections, and our management’s beliefs,
assumptions, judgments and expectations about us, the water utility
industry and general economic conditions. These statements are not
statements of historical fact. When used in our documents,
statements that are not historical in nature, including words like
will, would, expects, intends, plans, believes, may, could,
estimates, assumes, anticipates, projects, progress, predicts,
hopes, targets, forecasts, should, seeks or variations of these
words or similar expressions are intended to identify
forward-looking statements. Examples of forward-looking statements
in this news release include, but are not limited to, statements
describing Group’s plans and proposal pursuant to Cal Water’s
general rate case filed on July 8, 2024, and Group’s expectations
regarding compliance with PFAS regulations and pursuit of cost
recovery in relation to PFAS contamination. Forward-looking
statements are not guarantees of future performance. They are based
on numerous assumptions that we believe are reasonable, but they
are open to a wide range of uncertainties and business risks.
Consequently, actual results may vary materially from what is
contained in a forward-looking statement. Factors that may cause
actual results to be different than those expected or anticipated
include, but are not limited to: the outcome and timeliness of
regulations commissions’ actions concerning rate relief and other
matters, including with respect to the 20224 California GRC;
changes in regulatory commissions’ policies and procedures, such as
the CPUC’s decision in 2020 to preclude companies from proposing
fully decoupled WRAMs, which impacted the 2021 California GRC
Filing; governmental and regulatory commissions’ decisions,
including decisions on proper disposition of property; consequences
of eminent domain actions related to our water systems; increased
risk of inverse condemnation losses as a result of climate change
and drought; our ability to renew leases to operate water systems
owned by others on beneficial terms; changes in California State
Water Resources Control Board water quality standards; changes in
environmental compliance and water quality requirements; electric
power interruptions, especially as a result of public safety power
shutoff programs; housing and customer growth; the impact of
opposition to rate increases; our ability to recover costs;
availability of water supplies; issues with the implementation,
maintenance or security of our information technology systems;
civil disturbances or terrorist threats or acts; the adequacy of
our efforts to mitigate physical and cyber security risks and
threats; the ability of our enterprise risk management processes to
identify or address risks adequately; labor relations matters as we
negotiate with the unions; changes in customer water use patterns
and the effects of conservation, including as a result of drought
conditions; our ability to complete, in a timely manner or at all,
successfully integrate and achieve anticipated benefits from
announced acquisitions; the impact of weather, climate change,
natural disasters, and actual or threatened public health
emergencies, including disease outbreaks, on our operations, water
quality, water availability, water sales and operating results and
the adequacy of our emergency preparedness; restrictive covenants
in or changes to the credit ratings on our current or future debt
that could increase our financing costs or affect our ability to
borrow, make payments on debt or pay dividends; risks associated
with expanding our business and operations geographically; the
impact of stagnating or worsening business and economic conditions,
including inflationary pressures, general economic slowdown or a
recession, increasing interest rates, instability of certain
financial institutions, changes in monetary policy, adverse capital
markets activity or macroeconomic conditions as a result of the
geopolitical conflicts, and the prospect of a shutdown of the U.S.
federal government; the impact of market conditions and volatility
on unrealized gains or losses on our non-qualified benefit plan
investments and our operating results; the impact of weather and
timing of meter reads on our accrued unbilled revenue; the impact
of evolving legal and regulatory requirements, including emerging
environmental, social and governance requirements and our ability
to comply with PFAS regulations; and other risks and unforeseen
events described in our Securities and Exchange Commission (“SEC”)
filings. In light of these risks, uncertainties and assumptions,
investors are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this
news release. When considering forward-looking statements, you
should keep in mind the cautionary statements included in this
paragraph, as well as the Annual Report on Form 10-K, Quarterly
10-Q, and other reports filed from time-to-time with the SEC. We
are not under any obligation, and we expressly disclaim any
obligation to update or alter any forward-looking statements,
whether as a result of new information, future events or
otherwise.
ContactJames P. Lynch(408) 367-8200
(analysts)
Shannon Dean(408) 367-8243 (media)
|
|
CALIFORNIA
WATER SERVICE GROUPCONDENSED CONSOLIDATED BALANCE
SHEETSUnaudited |
|
|
(In thousands, except per share
data) |
|
June 30,2024 |
|
December 31,2023 |
ASSETS |
|
|
|
|
Utility
plant: |
|
|
|
|
Utility plant |
|
$ |
5,141,580 |
|
|
$ |
4,925,483 |
|
Less accumulated depreciation and amortization |
|
|
(1,199,399 |
) |
|
|
(1,152,228 |
) |
Net utility plant |
|
|
3,942,181 |
|
|
|
3,773,255 |
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
|
37,272 |
|
|
|
39,591 |
|
Restricted cash |
|
|
45,403 |
|
|
|
45,375 |
|
Receivables: |
|
|
|
|
Customers, net |
|
|
71,125 |
|
|
|
59,349 |
|
Regulatory balancing accounts |
|
|
5,495 |
|
|
|
64,240 |
|
Other, net |
|
|
17,110 |
|
|
|
16,431 |
|
Accrued unbilled revenue, net |
|
|
48,812 |
|
|
|
36,999 |
|
Materials and supplies |
|
|
17,645 |
|
|
|
16,170 |
|
Taxes, prepaid expenses, and other assets |
|
|
23,948 |
|
|
|
18,130 |
|
Total current assets |
|
|
266,810 |
|
|
|
296,285 |
|
Other
assets: |
|
|
|
|
Regulatory assets |
|
|
397,498 |
|
|
|
257,621 |
|
Goodwill |
|
|
37,039 |
|
|
|
37,039 |
|
Other assets |
|
|
227,714 |
|
|
|
231,333 |
|
Total other assets |
|
|
662,251 |
|
|
|
525,993 |
|
TOTAL
ASSETS |
|
$ |
4,871,242 |
|
|
$ |
4,595,533 |
|
CAPITALIZATION AND
LIABILITIES |
|
|
|
|
Capitalization: |
|
|
|
|
Common stock, $0.01 par value; 136,000 shares authorized, 58,825
and 57,724 outstanding on June 30, 2024 and December 31,
2023, respectively |
|
$ |
588 |
|
|
$ |
577 |
|
Additional paid-in capital |
|
|
929,376 |
|
|
|
876,583 |
|
Retained earnings |
|
|
627,705 |
|
|
|
549,573 |
|
Accumulated other comprehensive loss |
|
|
(13,068 |
) |
|
|
— |
|
Noncontrolling interests |
|
|
3,090 |
|
|
|
3,579 |
|
Total equity |
|
|
1,547,691 |
|
|
|
1,430,312 |
|
Long-term debt, net |
|
|
1,051,792 |
|
|
|
1,052,768 |
|
Total capitalization |
|
|
2,599,483 |
|
|
|
2,483,080 |
|
Current
liabilities: |
|
|
|
|
Current maturities of long-term debt, net |
|
|
1,183 |
|
|
|
672 |
|
Short-term borrowings |
|
|
245,000 |
|
|
|
180,000 |
|
Accounts payable |
|
|
143,533 |
|
|
|
157,305 |
|
Regulatory balancing accounts |
|
|
12,754 |
|
|
|
21,540 |
|
Accrued interest |
|
|
6,666 |
|
|
|
6,625 |
|
Accrued expenses and other liabilities |
|
|
103,364 |
|
|
|
64,197 |
|
Total current liabilities |
|
|
512,500 |
|
|
|
430,339 |
|
Deferred income
taxes |
|
|
363,597 |
|
|
|
352,762 |
|
Regulatory
liabilities |
|
|
742,842 |
|
|
|
683,717 |
|
Pension |
|
|
83,266 |
|
|
|
82,920 |
|
Advances for
construction |
|
|
199,640 |
|
|
|
199,448 |
|
Contributions in aid
of construction |
|
|
289,820 |
|
|
|
286,491 |
|
Other |
|
|
80,094 |
|
|
|
76,776 |
|
Commitments and
contingencies |
|
|
|
|
TOTAL CAPITALIZATION
AND LIABILITIES |
|
$ |
4,871,242 |
|
|
$ |
4,595,533 |
|
|
CALIFORNIA WATER SERVICE GROUPCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONSUnaudited |
|
(In thousands,
except per share data) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Operating
revenue |
|
$ |
244,299 |
|
|
$ |
194,044 |
|
|
$ |
515,048 |
|
|
$ |
325,144 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Water production costs |
|
|
77,644 |
|
|
|
70,867 |
|
|
|
141,829 |
|
|
|
125,875 |
|
Administrative and general |
|
|
32,042 |
|
|
|
34,975 |
|
|
|
67,638 |
|
|
|
70,961 |
|
Other operations |
|
|
25,626 |
|
|
|
25,823 |
|
|
|
52,551 |
|
|
|
42,427 |
|
Maintenance |
|
|
8,790 |
|
|
|
7,155 |
|
|
|
16,800 |
|
|
|
15,133 |
|
Depreciation and amortization |
|
|
32,978 |
|
|
|
29,824 |
|
|
|
65,822 |
|
|
|
59,739 |
|
Income tax expense (benefit) |
|
|
8,689 |
|
|
|
329 |
|
|
|
24,227 |
|
|
|
(5,315 |
) |
Property and other taxes |
|
|
10,364 |
|
|
|
9,122 |
|
|
|
20,121 |
|
|
|
17,899 |
|
Total operating expenses |
|
|
196,133 |
|
|
|
178,095 |
|
|
|
388,988 |
|
|
|
326,719 |
|
Net operating income (loss) |
|
|
48,166 |
|
|
|
15,949 |
|
|
|
126,060 |
|
|
|
(1,575 |
) |
Other income and
expenses: |
|
|
|
|
|
|
|
|
Non-regulated revenue |
|
|
5,513 |
|
|
|
4,485 |
|
|
|
10,611 |
|
|
|
9,108 |
|
Non-regulated expenses |
|
|
(4,125 |
) |
|
|
(2,957 |
) |
|
|
(6,079 |
) |
|
|
(5,232 |
) |
Other components of net periodic benefit credit |
|
|
4,338 |
|
|
|
4,756 |
|
|
|
7,611 |
|
|
|
9,977 |
|
Allowance for equity funds used during construction |
|
|
1,819 |
|
|
|
1,355 |
|
|
|
3,561 |
|
|
|
2,759 |
|
Income tax expense on other income and expenses |
|
|
(1,306 |
) |
|
|
(1,445 |
) |
|
|
(2,627 |
) |
|
|
(3,239 |
) |
Net other income |
|
|
6,239 |
|
|
|
6,194 |
|
|
|
13,077 |
|
|
|
13,373 |
|
Interest
expense: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
14,840 |
|
|
|
13,491 |
|
|
|
30,640 |
|
|
|
26,309 |
|
Allowance for borrowed funds used during construction |
|
|
(812 |
) |
|
|
(795 |
) |
|
|
(1,570 |
) |
|
|
(1,624 |
) |
Net interest expense |
|
|
14,028 |
|
|
|
12,696 |
|
|
|
29,070 |
|
|
|
24,685 |
|
Net income
(loss) |
|
|
40,377 |
|
|
|
9,447 |
|
|
|
110,067 |
|
|
|
(12,887 |
) |
Net loss attributable to
noncontrolling interests |
|
|
(174 |
) |
|
|
(109 |
) |
|
|
(401 |
) |
|
|
(232 |
) |
Net income (loss)
attributable to California Water Service Group |
|
$ |
40,551 |
|
|
$ |
9,556 |
|
|
$ |
110,468 |
|
|
$ |
(12,655 |
) |
Earnings (loss) per share
of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.70 |
|
|
$ |
0.17 |
|
|
$ |
1.90 |
|
|
$ |
(0.23 |
) |
Diluted |
|
$ |
0.70 |
|
|
$ |
0.17 |
|
|
$ |
1.90 |
|
|
$ |
(0.23 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
58,292 |
|
|
|
56,692 |
|
|
|
58,013 |
|
|
|
56,182 |
|
Diluted |
|
|
58,325 |
|
|
|
56,730 |
|
|
|
58,046 |
|
|
|
56,182 |
|
Dividends per share of
common stock |
|
$ |
0.28 |
|
|
$ |
0.26 |
|
|
$ |
0.56 |
|
|
$ |
0.52 |
|
California Water Service (NYSE:CWT)
過去 株価チャート
から 8 2024 まで 9 2024
California Water Service (NYSE:CWT)
過去 株価チャート
から 9 2023 まで 9 2024