California Water Service Group · NYSE:CWT
California Water Service — Q1 2019 Earnings Presentation
21 slides from California Water Service's earnings presentation, Apr 25, 2019
Slide 1: Forward-Looking Statements
2 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"
Slide 2: Today's Participants
3 Today’s Participants Marty Kropelnicki President & CEO Tom Smegal Vice President, CFO & Treasurer Dave Healey Vice President, Controller
Slide 3: Presentation Overview
4 Presentation Overview Our Operating Priorities Financial Results, First Quarter Financial Highlights Discussion of Earnings Seasonality EPS Bridge, First Quarter Capital Investment Update 2018 California General Rate Case (GRC) Other Regulatory Items Financing Activities Business Development Activ
Slide 4: Presentation Overview
Presentation Overview Our Operating Priorities Financial Results, First Quarter Financial Highlights Discussion of Earnings Seasonality EPS Bridge, First Quarter Capital Investment Update 2018 California General Rate Case (GRC) Other Regulatory Items Financing Activities Business Development Activit
Slide 5: Financial Results: First Quarter
6 Financial Results: First Quarter (amounts are in millions, except for EPS) Q1 2018* Q1 2019 Variance Operating Revenue $134.6 $126.1 -6.3% Operating Expenses $124.7 $125.6 0.7% Net Interest Expense $8.7 $10.2 17.7% Net Loss -$0.8 -$7.6 -901.3% EPS -$0.02 -$0.16 -900.2% Capital Investments $70.7 $5
Slide 6: Q1 2019 Financial Highlights
7 Q1 2019 Financial Highlights Net Loss increased by $6.8M to a total loss of $7.6M, largely attributable to: Reduced unbilled revenue accrual of $7.1M Wet weather through March lowered water sales, impacting the accrual Unbilled revenue accrual is outside the WRAM decoupling mechanism and represent
Slide 7: Earnings Seasonality
California has had a wet winter which drove lower sales. While billed sales are recorded in the WRAM balancing account mechanism, unbilled revenue accrual is outside the WRAM and swings when usage is unusually high or low As the company grows rate base, fixed cost components such as depreciation, pr
Slide 8: Adopted Regulated Revenue in California
9 Adopted Regulated Revenue in California* * Excludes changes in unbilled revenue $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Adopted Revenue by Month (in millions)
Slide 9: Capital Investment Update
11 Capital Investment Update Company and developer funded capital investments were $59.9 million, a decrease of 15.3% compared to the first quarter of 2018 The decrease in utility plant investment was due to delays caused in part by wetter than normal weather 2019 capital spending levels are pending
Slide 10: 2018 California General Rate Case
12 2018 California General Rate Case Cal Water filed its 2018 GRC on July 2, 2018, requesting $828.5 million in capital investments over the period 2019-2021 Three municipalities and the California Public Advocates Office (Cal PA) are participating in the case Cal PA testimony was received on Februa
Slide 11: Other Regulatory Items in Q1 2019
In February 2019, Hawaii Water filed a GRC for its Kona service area requesting a combined increase of $0.6 million in water and wastewater rates. The company anticipates any rate changes approved by the Hawaii Public Utilities Commission would be effective in the first quarter of 2020 The CPUC has
Slide 12: Financing Activities
14 Financing Activities Company renewed and extended its revolving credit lines during the quarter Cal Water credit line is now $400 million, up from $300 million Standard and Poor’s recently changed Cal Water’s outlook to “Stable,” reaffirming its A+ rating
Slide 13: Business Development Activities
15 Business Development Activities We maintain an active business development approach focusing on opportunities near communities we serve In the quarter, the Company announced it would acquire the Kalaeoloa Water Company on the island of Oahu, which serves an area formerly part of the Barbers’ Poin
Slide 14: Decoupling Balancing Account Update
16 Decoupling Balancing Account Update Cal Water Q1 2019 sales were 83% of adopted estimates. Cal Water’s adopted sales continue to benefit from the Sales Reconciliation Mechanism (SRM), which allows for a true-up when annual sales are above or below adopted sales by more than 5%. The SRM triggered
Slide 15: Net WRAM Receivable Balance
17 Net WRAM Receivable Balance (in millions; end-of-year balance except 2019)
Slide 16: Outlook for the Remainder of 2019
18 Outlook for the Remainder of 2019 Major effort for the Company in 2019 will be the successful completion of the California GRC. We launched our Southern California regional call center this week to extend service hours and channels to better align our services to customer preferences. Training fo
Slide 17: Capital Investment History and Projection
19 Capital Investment History and Projection (in millions) *2019-2021 include capital investments proposed to the CPUC and subject to change based on regulatory outcome and other factors. CAGR = 10.6% (2008-2018) $99 $108 $113 $111 $118 $116 $131 $177 $229 $259 $272 $290 $285 $265 $0 $50 $100 $150 $
Slide 18: Regulated Rate Base of CWT
20 Regulated Rate Base of CWT (in millions) * Includes allowable additions of up to $197 million for advice letter recognition when projects are complete and in service **2020-2022 reflect rate base proposed in California GRC plus estimated rate base in other subsidiaries and are subject to change b
Slide 19: Summary
21 Summary Increased operating expenses were not offset by rate increases Third year of the California GRC limits revenue increases This is mainly a timing issue as volumetric revenues move more of the Company’s net income to the warm summer months Unbilled revenue lower due to wet weather through M
Slide 20: For Additional Information
For Additional Information: Thomas F. Smegal Vice President, Chief Financial Officer (408) 367-8200 or tsmegal@calwater.com Online at www.calwatergroup.com
Slide 21: For Additional Information
CALIFORNIA WATER SERVICE GROUP Amr wvestine FOR LIFE For Additional Information: Thomas F. Smegal Vice President, Chief Financial Officer (408) 367-8200 of 2 e iiliil Online at www.calwatergroup.com NYSE
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