California Water Service Group · NYSE:CWT
California Water Service — Q2 2021 Earnings Presentation
21 slides from California Water Service's earnings presentation, Jul 29, 2021
Slide 1: Second Quarter 2021 Results Presentation
Second Quarter 2021 Results Presentation July 29, 2021 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 Paul Townsley President & CEO Vice President, Corporate Development and Chief Regulatory Officer Tom Smegal Dave Healey Vice President, CFO & Treasurer Vice President, Controller INVESTOR RELATIONS 2
Slide 4: Presentation Overview
Presentation Overview o Our Operating Priorities o Financial Results and EPS Bridges o Earnings Notes o California Regulatory Update o Drought o Continuing COVID-19 Impacts o Business Development Update o Cap Ex and Rate Base Tables o In Summary INVESTOR RELATIONS 3
Slide 5: Our Operating Priorities
Our Operating Priorities Affordable, High-Quality Employees as Strong Brand & Enhanced Excellent Service Water & Best Advocates Reputation Stockholder Wastewater Value o Continuous o Safe workplace & o Environmental improvement, o Consistent sampling healthy lifestyles stewardship o Infrastructure e
Slide 6: Financial Results: Second Quarter 2021
Financial Results: Second Quarter 2021 (Amounts are in millions, except for EPS) Q2 2020 Q2 2021 Variance Operating Revenue $175.5 $213.1 21.4% Operating Expenses $163.0 $170.9 4.8% Net Interest Expense $10.5 $10.8 2.6% Net Income $5.3 $38.2 621.0% EPS $0.11 $0.75 593.4% Capital Investments $68.3 $7
Slide 7: Financial Results: YTD 2021
Financial Results: YTD 2021 (Amounts are in millions, except for EPS) YTD 2020 YTD 2021 Variance Operating Revenue $301.0 $360.9 19.9% Operating Expenses $295.5 $315.7 6.8% Net Interest Expense $20.3 $20.7 1.7% Net Income (Loss) ($15.0) $35.2 N/A EPS (LPS) ($0.31) $0.69 N/A Capital Investments $133.
Slide 8: Quarterly Financial Highlights
Quarterly Financial Highlights NET INCOME BETTER RESULTS PRIMARILY DUE TO THE RATE INCREASED BY INCREASES APPROVED IN THE CALIFORNIA GENERAL RATE CASE $32.9M REGULATORY BALANCING MECHANISMS WERE NOT RECOGNIZED UNTIL Q3 2020 WHEN THEY BECAME TO PROBABLE FOR RECOVERY UNDER THE GRC DECISION $38.2M CORE
Slide 9: EPS Bridge Q2 2020 to Q2 2021
EPS Bridge Q2 2020 to Q2 2021 $0.90 $0.80 $0.02 $0.75 $0.17 $0.70 $0.29 -$0.07 -$0.03 $0.60 $0.50 $0.40 $0.26 $0.30 $0.20 $0.11 $0.10 $0.00 *Rate relief also reflects benefit from refund of excess deferred income taxes INVESTOR RELATIONS 8
Slide 10: EPS Bridge YTD 2020 to YTD 2021
EPS Bridge YTD 2020 to YTD 2021 $0.80 $0.04 $0.23 $0.69 $0.41 $0.60 $0.05 $0.40 -$0.20 $0.47 $0.20 -$0.31 $0.00 -$0.20 -$0.40 *Rate relief also reflects benefit from refund of excess deferred income taxes INVESTOR RELATIONS 9
Slide 11: Additional Earnings Notes
Additional Earnings Notes Unbilled revenue accrual is currently In Q3 2020 we recognized $43M of net income attributable to Q1 adding $19.0M to and Q2 2020 which had been delayed by the 2018 California GRC. revenue as Authorized rate base for all operations is $1.82B. compared to Operating costs inc
Slide 12: Regulatory Update: California
Regulatory Update: California CALIFORNIA GENERAL RATE CASE FILED ON JULY 1: REQUESTING $1.02B CAPITAL SPENDING 2022-2024, $913M ON NEW PROJECTS PROJECTS FOR MAIN REPLACEMENT PROGRAM, WILDFIRE HARDENING MEDIAN CUSTOMER IN EACH SERVICE AREA WOULD SEE AN INCREASE IN 2023 OF $5 PER MONTH OR LESS UNDER T
Slide 13: 2021 California Drought
2021 CALIFORNIA DROUGHT COMPANY HELPED ITS CUSTOMERS MANAGE DEMAND SUCCESSFULLY IN THE 2012-2016 DROUGHT WE ARE ACTIVELY MONITORING WATER SUPPLY HIGHLIGHTS THE PROACTIVE CONDITIONS IN EVERY SERVICE AREA MOVES WE’VE MADE IN ESG WE ACTIVATED OUR DROUGHT PROGRAMS AT THE CPUC AND RISK MANAGEMENT COMBINI
Slide 14: Continuing Impacts from Covid-19 Pandemic
All company employees have returned to the office. We continue to be vigilant for employee and customer safety; we encourage and incentivize vaccination; and we follow local masking rules and recommendations as applicable. New Mexico and Hawaii have allowed us to restart bill collection processes. C
Slide 15: Business Development Update
Business Development Update In May, announced Announced Welcomed 500 Filed Change of agreement to majority ownership Control Application Kapalua Water and acquire HOH of BVRT in Texas, a with New Mexico utility holding 500 Kapalua Utilities on Kauai Wastewater PRC for 2,000 company focused and its 1
Slide 16: BVRT Texas wastewater partnership
• The company now owns 54% of BVRT through its new Texas subsidiary and has a right to acquire remaining equity • BVRT Utility Holding Company owns four wastewater utilities in Austin – San Antonio corridor • Austin and San Antonio among the five fastest growing cities in United States • BVRT wastew
Slide 17: Acquisition Status Changes Q2 2021
Acquisition Status Changes Q2 2021 System Water Wastewater Total Status Connections Connections Kapalua Water and Wastewater 500 500 1,000 Closed 5/1 (HI) The Preserve at Millerton (CA) Future up to Future up to Future up to CPUC approval on its 1,400 1,400 2,800 agenda for 8/5* Animas Valley Water
Slide 18: Capital Investment and Depreciation
Capital Investment and Depreciation (in millions) 2015-2020 2008-2019 Capital Investment Depreciation $400 $350 CapEx CAGR $355 $360 $365 $300 $250 3x 9.7% DEPRECIATION $229 $259 $272 $274 $299 $285 $200 $177 $138.5 YTD $150 $131 $118 $116 $131 $115 $123 $100 $99 $107 $84 $89 $77 $58 $61 $61 $64 $50
Slide 19: Estimated Regulated Rate Base of CWT
Estimated Regulated Rate Base of CWT (in billions) $3 $2.74 $2.49 $3 $2.24 $1.94 $2 $1.82 $1.61 $2 $1.26 $1.24 $1.06 $1.12 $1 $1 $0 2016 2017 2018 2019 2020 2021 *2022 **2023 **2024 **2025 *2022 Rate Base estimate assumes Cal Water is eligible for all escalation rate increases included in the Califo
Slide 20: In Summary
In Summary o Q2 results were in line with our expectations, with unbilled revenue moved forward due to a hot, dry early summer. o Active with two important filings at the CPUC: cost of capital review and our 2021 GRC. o Focused on drought and potential wildfires in the short- term, climate change re
Slide 21: Discussion
CALIFORNIA WATER SERVICE GROUP La INVESTING FOR LIFE sg DISCUSSION
California Water Service Group — Q2 2021 Earnings Presentation on 6ix