California Water Service Group · NYSE:CWT
California Water Service — Q2 2022 Earnings Presentation
18 slides from California Water Service's earnings presentation, Jul 28, 2022
Slide 1: Second Quarter 2022 Results Presentation
Second Quarter 2022 Results Presentation July 28, 2022 0
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("Act"). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor" tr
Slide 3: Today's Participants
Today’s Participants Marty Kropelnicki Tom Smegal Dave Healey President & CEO Vice President, CFO & Treasurer Vice President, Controller INVESTOR RELATIONS 2
Slide 4: Presentation Overview
o Our Values and Priorities o Financial Results o Financial Highlights and Earnings Bridges o California Regulatory Update o California Drought Update o Items to Watch in Second Half of 2022 Presentation Overview o Business Development Status o CapEx and Rate Base Tables o In Summary INVESTOR RELATI
Slide 5: Investor Relations Update
INVESTOR BOARD RELATIONS UPDATE 4
Slide 6: Financial Results: Second Quarter 2022
Financial Results: Second Quarter 2022 (Amounts are in millions, except for EPS) Q2 2021 Q2 2022 Variance Operating Revenue $213.1 $206.2 (3.3%) Operating Expenses $170.9 $178.9 4.7% Net Interest Expense $10.8 $11.0 2.3% Net Income Attributable to CWT $38.2 $19.5 (49.0%) EPS $0.75 $0.36 (51.8%) Capi
Slide 7: Financial Results: YTD 2022
Financial Results: YTD 2022 (Amounts are in millions, except for EPS) YTD 2021 YTD 2022 Variance Operating Revenue $360.9 $379.2 5.1% Operating Expenses $315.7 $342.8 8.6% Net Interest Expense $20.7 $21.9 6.0% Net Income attributable to CWT $35.2 $20.6 (41.6%) EPS $0.69 $0.38 (45.0%) Capital Investm
Slide 8: Second Quarter Financial Highlights
Second Quarter Financial Highlights UNBILLED REVENUE A CHANGE IN UNBILLED REVENUE REDUCED ACCRUAL IS THE VALUE EARNINGS $15.2M OR $0.29 AS COMPARED TO Q2 OF WATER USED BUT 2021. IN 2021 UNBILLED ACCRUALS FOR Q2 WERE NOT YET BILLED AND UNUSUALLY LARGE BUT RETURNED TO NORMAL THEREFORE OUTSIDE RANGES B
Slide 9: EPS Bridge Q2 2021 to Q2 2022
EPS Bridge Q2 2021 to Q2 2022 $0.23 $1.00 $0.90 $0.80 $0.75 -$0.18 $0.70 $0.60 $0.50 $0.36 -$0.29 $0.40 -$0.12 -$0.03 $0.30 $0.20 $0.10 $0.00 INVESTOR RELATIONS 8
Slide 10: EPS Bridge YTD 2021 to YTD 2022
EPS Bridge YTD 2021 to YTD 2022 $0.48 $1.20 $1.00 $0.80 $0.69 -$0.35 $0.60 -$0.23 $0.38 $0.40 -$0.17 -$0.04 $0.20 $0.00 INVESTOR RELATIONS 9
Slide 11: California Regulatory Update
California Regulatory Update GENERAL RATE CASE (GRC) CONTINUES WITH HEARINGS CONCLUDED AND BRIEFS FILED IN JULY. PARTIES HAVE ALERTED THE ADMINISTRATIVE LAW JUDGE (ALJ) THAT A PARTIAL SETTLEMENT MAY BE FILED IN AUGUST. COST OF CAPITAL HEARINGS ARE CONCLUDED AND THE CASE, FOCUSING ON COST OF EQUITY A
Slide 12: California Drought Update
California Drought Update CALIFORNIA DROUGHT CONTINUES, PRIMARILY IMPACTING SURFACE WATER AVAILABILITY CALIFORNIA STATE WATER PROJECT DELIVERIES ARE AT 5%, ALL CALIFORNIA DISTRICTS IN “STAGE 2” DROUGHT IMPACTING SOME REGIONS SOLELY RELIANT ON IT RESTRICTIONS CALIFORNIA CUSTOMER USAGE DOWN 5% IN Q2 A
Slide 13: Other Issues to Watch in the Second Half of 2022
Other Issues to Watch in the Second Half of 2022 Capital Spending Bad Debt Expense Reserve for bad debt remains elevated Capital spending for Q2 remains on at $6.7M track, but risks continue to be elevated o California regulatory process has • Supply chains, inflation, availability recently begun al
Slide 14: 2022 Business Development Project Updates
2022 Business Development Project Updates System Water Wastewater Total Status Connections Connections Animas Valley Water 2,000 2,000 Closed April 2022 (NM) Railyard (TX) – New 350 (up to 1,500 350 (up to 1,500 at Closed June 2022 service area of BVRT at buildout) buildout) Skylonda (CA) 176 176 CP
Slide 15: Capital Investment and Depreciation
Capital Investment and Depreciation (in millions) 2015-2021 TOTAL 2008-2019 Capital Investment Depreciation CapEx $400 CAGR $355 $360 $365 $350 $300 $250 3x 9.7% DEPRECIATION $229 $259 $272 $274 $299 $293 $200 $177 $150 $131 $118 $116 $127 $135 $116 $100 $99 $109 $84 $89 $77 $144.6 YTD $58 $61 $61 $
Slide 16: Estimated Regulated Rate Base of CWT
Estimated Regulated Rate Base of CWT (in billions) $3.0 $2.74 $2.49 $2.5 $2.24 $1.95 $2.0 $1.82 $1.61 $1.5 $1.26 $1.24 $1.06 $1.12 $1.0 $0.5 $0.0 2016 2017 2018 2019 2020 2021 2022 *2023 *2024 *2025 *2023-2025 Rate Base Estimates include filed proposal in 2021 California General Rate Case plus estim
Slide 17: In Summary
o Change in unbilled revenue, which we expect not to materially impact full year earnings, was due to comparison with high unbilled in Q2 2021, lower water sales, and timing of meter reads o Market headwinds lowered unrealized valuation of certain retirement assets In Summary o Core business remains
Slide 18: Discussion
CALIFORNIA WATER SERVICE GROUP La i VEsTING FOR LIFE ¥
California Water Service Group — Q2 2022 Earnings Presentation on 6ix