California Water Service Group · NYSE:CWT
California Water Service — Q3 2018 Earnings Presentation
21 slides from California Water Service's earnings presentation, Nov 1, 2018
Slide 1: 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 2: Today's Participants
Marty Kropelnicki President & CEO Today’s Participants Tom Smegal Vice President, CFO & Treasurer 3
Slide 3: Presentation Overview
Presentation Overview Our Operating Priorities Financial Results and Highlights EPS Bridges: Q3 2017 to Q3 2018 and YTD 2017 to YTD 2018 2018 California General Rate Case (GRC) and Other Rate Filings California Fires and Emergency Response Other Recent Activities Regulatory Balancing Account Update
Slide 4: Presentation Overview
F SS Presentation Overview 1 + Our Operating Priorities + Financial Results and Highlights + EPS Bridges: Q3 2017 to Q3 2018 and YTD 2017 to YTD 2018 + 2018 California General Rate Case (GRC) and Other Rate Filings + California Fires and Emergency Response + Other Recent Activities + Regulatory Bala
Slide 5: Financial Results: Third Quarter
(amounts are in millions, except for EPS) Q3 2017 Q3 2018 Variance Operating Revenue $211.7 $219.0 3.4% Operating Expenses $169.3 $173.4 2.5% Net Interest Expense $8.6 $10.3 20.3% Net Income $33.8 $34.4 1.6% EPS $0.70 $0.72 1.5% Capital Investments $71.7 $79.0 10.2% Financial Results: Third Quarter
Slide 6: Financial Results: Year-to-Date
(amounts are in millions, except for EPS) YTD 2017 YTD 2018 Variance Operating Revenue $504.9 $523.9 3.8% Operating Expenses $425.2 $445.2 4.7% Net Interest Expense $25.3 $28.8 14.0% Net Income $53.5 $44.9 -16.2% EPS $1.11 $0.93 -16.2% Capital Investments $180.4 $212.9 18.0% Financial Results: Year-
Slide 7: Q3 Financial Highlights
Q3 Financial Highlights Third quarter earnings increase of $0.6 million largely attributable to: Revenue increase due to $4.4 million of aggregate rate increases, net of the revenue reductions from the California Water Service (Cal Water) Cost of Capital decision. The revenue increase was partially
Slide 8: Q3 Financial Highlights
+ Third quarter earnings increase of $0.6 million largely attributable to: © Revenue increase due to $4.4 million of aggregate rate increases, net of the revenue reductions from the California Water Service (Cal Water) Cost of Capital decision. © The revenue increase was partially offset by a $1.8 m
Slide 9: EPS Bridge YTD 2017 to YTD 2018
EPS Bridge YTD 2017 to YTD 2018 10
Slide 10: Notes on EPS Bridge Items
Notes on EPS Bridge Items Increased revenue includes California escalation increases net of the California Cost of Capital revenue reduction effective January 1, 2018, as well as rate base offset rate relief and effect of Hawaii rate increases since corresponding period in 2017 Increased depreciatio
Slide 11: 2018 California General Rate Case
Cal Water filed its 2018 GRC on July 2, requesting $828.5 million in capital investments over the period 2019-2021 GRC is in the discovery phase through Q1 2019 Two municipalities and the California Public Advocate (Formerly Office of Ratepayer Advocates) are participating in the case Testimony is a
Slide 12: Other Rate Filings
Other Rate Filings Hawaii Waikoloa rate cases, filed in December 2017 requesting increases of $3.8 million in annual revenue Proceedings are ongoing and the Company anticipates a Hawaii Public Utilities Commission decision by year end Washington Water GRC was filed on July 2, requesting $1.6 million
Slide 13: California Fires and Emergency Response
California Fires and Emergency Response We continue our efforts to train for and manage incidents using the emergency operations center (EOC) framework EOCs have been activated nearly 20 times in the last three years During the quarter, Cal Water’s EOC was used in the Mendocino Complex fire, the lar
Slide 14: Other Recent Activities
Other Recent Activities Company issued $300 million of 2-year first mortgage bonds in September Used to refinance the revolving credit facility Will continue to finance capital improvements using line of credit and a combination of long-term debt and equity targeting the CPUC authorized capital stru
Slide 15: Regulatory Balancing Account Update
Regulatory Balancing Account Update Cal Water year-to-date sales are 94% of adopted estimates Change in adopted sales due to triggering the Sales Reconciliation Mechanism, which allows for a true-up when annual sales are above or below adopted sales by more than 5% The current WRAM receivable balanc
Slide 16: Net WRAM Receivable Balance
Net WRAM Receivable Balance (in millions; end-of-year balance except 2018) 17
Slide 17: Capital Investment History and Projection
Capital Investment History and Projection (in millions) *2018 estimated capital investment is the midpoint in the Company’s updated range of $240-$260 million. **2019-2021 include capital investments proposed to the CPUC and subject to change based on regulatory outcome and other factors. CAGR = 11.
Slide 18: Regulated Rate Base of CWT
Regulated Rate Base of CWT Regulated Rate Base of CWT (in millions) *Includes estimated cumulative additions in 2018 and 2019 of $96M and $197M for advice letters 19 **2020-2022 reflect rate base proposed in California GRC plus estimated rate base in other subsidiaries and are subject to change base
Slide 19: Summary
Summary Focus is on the 2018 California GRC filing Closing out rate cases in Hawaii and Washington On track to invest $240-$260 million in water system infrastructure in 2018 to provide safe, reliable service to our customers Company continues to focus on execution of long-term capital plan 20
Slide 20: Summary
nes * Focus is on the 2018 California GRC filing * Closing out rate cases in Hawaii and Washington * On track to invest $240-$260 millionin water system infrastructure in 2018 to provide safe, reliable service to our customers * Company continues to focus on execution of long-term capital plan 20
Slide 21: Making Good Things Happen
California Water Service Group — Q3 2018 Earnings Presentation on 6ix