California Water Service Group · NYSE:CWT
California Water Service — Q1 2020 Earnings Presentation
19 slides from California Water Service's earnings presentation, Apr 30, 2020
Slide 1: First Quarter 2020 Results Call Presentation
First Quarter 2020 Results Call Presentation April 30, 2020
Slide 2: Forward-Looking Statements
Forward - Looking Statements This presentation contains forward - looking statements within the meaning established by the Private Securities Litigation Refor m Act of 1995 ("Act"). The forward - looking statements are intended to qualify under provisions of the federal securities laws for "safe har
Slide 3: Today's Participants
Today’s Participants Marty Kropelnicki President & CEO Tom Smegal Vice President, CFO & Treasurer Dave Healey Vice President, Controller 3
Slide 4: Presentation Overview
Presentation Overview • Our Operating Priorities • Financial Results, Q1 • Financial Highlights, Q1 • Effects of the delayed California General Rate Case (“GRC”) • EPS Bridge, Q1 2020 vs. Q1 2019 • Strategic COVID - 19 Response • COVID - 19 Impacts to our business • 2018 California GRC Status Update
Slide 5: Our Operating Priorities
SERVICE GROUP Our Operating Priorities Ww wo Strong Brand & Reputation High-Quality Water 5 Wastewater
Slide 6: Financial Results: First Quarter
Financial Results: First Quarter (amounts are in millions, except for EPS) Q1 2019 Q1 2020 Variance Operating Revenue $126.1 $125.6 (0.4%) Operating Expenses $125.6 $132.5 5.5% Net Interest Expense $10.2 $9.9 (3.8%) Net In come (Loss) ($7.6) ($20.3) (167.1%) EPS ($0.16) ($0.42) (162.5%) Capital Inve
Slide 7: Q1 Financial Highlights
Q1 Financial Highlights Net loss increased by $12.7 million to $20.3 million due primarily to these factors: • The company estimates it would have recorded $15.4 million of pre - tax income from a timely, favorable resolution of the California GRC. o $7.9 million represents delayed pre - tax income
Slide 8: Estimated Benefit of the California GRC Upon Approval
Estimated Benefit of the California GRC Upon Approval • The Company estimates the following full - year impacts for 2020 when a final decision is adopted, independent of the outcome of disputed regulatory mechanisms: • The sales forecasts included in the 2018 GRC settlement are approximately 7% lowe
Slide 9: Potential Impact of Disputed GRC Items in Q1
Potential Impact of Disputed GRC Items in Q1 • As shown on the previous slide, the depreciation dispute is a “pass - through” expense affecting both adopted revenue and expense. • We did not record the effect of the disputed 2020 WRAM/MCBA decoupling mechanism in the quarter. Prevailing on this issu
Slide 10: EPS Bridge Q1 2019 to Q1 2020
EPS Bridge Q1 2019 to Q1 2020 -$0.60 -$0.50 -$0.40 -$0.30 -$0.20 -$0.10 $0.00 $0.10 $0.003 - $0.037 - $ 0.019 $0.083 - $0.16 - $0.116 - $ 0.035 - $0.139 - $0.42 * Represents a category of expense potentially related to the delayed 2018 California GRC 10
Slide 11: Strategic COVID-19 Pandemic Response
Strategic COVID - 19 Pandemic Response • California and Washington had early cases of COVID - 19 and took strong action to limit public activity. • We had planned for response to pandemics among other natural disasters through our Emergency Response Framework and training. We train our employees ann
Slide 12: COVID-19 Impacts to Our Business
• We anticipate the suspension of collection activity combined with economic disruption will increase customer account aging and potentially uncollectible amounts. Because we changed policies in mid - March and bill monthly, we cannot yet estimate the ultimate magnitude of these changes. o The typic
Slide 13: 2018 California General Rate Case Update
2018 California General Rate Case Update • Parties jointly met on April 9 with the assigned Commissioner’s office to urge the CPUC to move quickly to issue a proposed decision • Cal Water, with the support of CPUC’s Public Advocates Office, filed a motion in the case to request the CPUC implement ra
Slide 14: Q1 Capital Investment Update
Q1 Capital Investment Update • Company and developer - funded capital investments were $65.3 million, an increase of 9.0% compared to the same period in 2019. • Increased investments in the quarter are attributable in part to better weather in California. • The Company previously announced it would
Slide 15: Business Development Update
15 • On March 27, 2020, the Washington Utilities and Transportation Commission approved our acquisition of Rainier View Water Company (RVW). We are finalizing the transaction and transition plan and anticipate closing the purchase in the 2nd quarter. o RVW has approximately 18,000 service connection
Slide 16: Capital Investment History and Projection
Capital Investment History and Projection (in millions) *2020 - 2021 include capital investments in the proposed settlement filed in the 2018 California GRC and subject to approval of the CPUC along with investments in other jurisdictions. $99 $108 $113 $111 $118 $116 $131 $177 $229 $259 $272 $274 $
Slide 17: Regulated Rate Base of CWT
Regulated Rate Base of CWT (in millions) * Rate Base at Year End, including $17.8 million of ratebase offset capital projects filed for recovery in late 2019. ** 2020 - 2022 bar chart represents the minimum and maximum estimated rate base from the table above. The settlement in Cal Water’s 2018 GRC
Slide 18: Wrapping Up and Look Ahead
Wrapping Up and Look Ahead • Company operators are providing a high level of service to our customers during COVID - 19 mitigation while keeping our employees safe • Management is also focused on ensuring the settlement in our delayed California GRC and our positions on open issues are adopted by th
Slide 19: Discussion
WATER SERVICE GROUP ae WATER FOR LIFE Discussion a NYSE
California Water Service Group — Q1 2020 Earnings Presentation on 6ix