California Water Service Group · NYSE:CWT
California Water Service — Q1 2023 Earnings Presentation
19 slides from California Water Service's earnings presentation, Apr 27, 2023
Slide 1: First Quarter 2023 Results Presentation
First Quarter 2023 Results Presentation April 27, 2023 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 ("PSLRA"). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor"
Slide 3: Today's Participants
Today’s Participants Marty Kropelnicki Tom Scanlon President & CEO Corporate Controller Tom Smegal Vice President, CFO & Treasurer INVESTOR RELATIONS 2
Slide 4: Presentation Overview
• Our Values and Priorities • Financial Results • Financial Discussion and Earnings Bridges • Unrecorded Regulatory Mechanisms • California Regulatory Update • California Drought Update • ESG Update Presentation Overview • PFAS Regulation • Business Development Status • CapEx and Rate Base Tables •
Slide 5: Investor Relations Update
INVESTOR BOARD RELATIONS UPDATE 44
Slide 6: Financial Results: First Quarter 2023
Financial Results: First Quarter 2023 (Amounts are in millions, except for EPS) Q1 2022 Q1 2023 Variance Operating Revenue $173.0 $131.1 (24.2%) Operating Expenses $163.9 $148.6 (9.3%) Net Interest Expense $10.9 $12.0 10.1% Net Income (Loss) Attributable to CWT $1.1 ($22.2) - Diluted EPS (LPS) $0.02
Slide 7: First Quarter Revenue Discussion
First Quarter Revenue Discussion 2022 vs 2023 BILLED AND UNBILLED REVENUES Due to the extremely wet winter in California, Q1 Cal Water sales fell 12% from Q1 2022 Weather also pushed unbilled revenue accrual down $5.8M Also, in 2022, sales and production cost changes had been offset $12.1M by the WR
Slide 8: Additional Q1 Financial Notes
ADDITIONAL Q1 FINANCIAL NOTES 2022 vs 2023 SALES Q1 HAD A $4.6M INCREASED GAIN ON CERTAIN NONQUALIFIED RETIREMENT PLAN ASSETS AS COMPARED TO Q1 2022 WATER PRODUCTION COSTS FELL $6.5M DUE TO LOWER DEMAND INVESTED $82.0M IN CAPITAL IMPROVEMENTS DURING THE QUARTER, A 19.7% INCREASE OVER Q1 2022 DESPITE
Slide 9: EPS Bridge Q1 2022 to Q1 2023
EPS Bridge Q1 2022 to Q1 2023 $0.30 $0.20 $0.10 $0.02 $0.00 -$0.10 -$0.20 -$0.30 -$0.40 -$0.35 -$0.50 -$0.40 -$0.07 -$0.03 -$0.03 $0.06 -$0.60 -$0.70 INVESTOR RELATIONS 8
Slide 10: Unrecorded Regulatory Mechanisms
Unrecorded Regulatory Mechanisms 2022 vs 2023 SALES Due to the delayed GRC we did not record certain regulatory mechanisms in the quarter: Interim Rate Memorandum Account (IRMA): Tracks the difference between interim rates and final rates authorized by the CPUC in our 2021 GRC Filing. For the quarte
Slide 11: California Regulatory Update
California Regulatory Update • In March, the CPUC extended the statutory deadline for the cost of capital case to August 2023. The Commission may issue a proposed decision any time before that date, or it may extend the deadline in a subsequent action. • Given the success of the company’s financing
Slide 12: California Drought
California Drought CALIFORNIA EXPERIENCED ONE OF ITS WETTEST WINTERS IN ON RECORD CAL WATER’S Q1 DROUGHT AS A RESULT, GOVERNOR NEWSOM ISSUED AN EXECUTIVE EXPENDITURES OF $0.3M ORDER EASING DROUGHT RESTRICTIONS ARE RECORDED IN A MEMORANDUM ACCOUNT THE EMERGENCY REGULATION ADOPTED BY THE STATE WATER F
Slide 13: ESG Update
ESG Update 2022 Key Accomplishments • invested more than $6.1 million in water conservation rebates and programs for customers, helping them save about 180 million gallons of drinking water. • completed a fleet study to identify optimal replacement cycles and opportunities to downsize vehicles. • cl
Slide 14: PFAS Regulation
PFAS Regulation • In March, the US EPA published a set of draft Maximum Contaminant Levels (MCLs) for PFAS compounds • Based on current information, if the regulation is adopted in its current form, we estimate capital investments of approximately $200M would be needed to comply • The draft regulati
Slide 15: Business Development Project Updates
Business Development Project Updates System Water Wastewater Total Status Connections Connections Bethel Green Acres 200 200 Closed March 2023 (WA) Skylonda (CA) 176 176 CPUC Approved June 2022* HOH Utilities (HI) 1,800 EDUs 1,800 EDUs HPUC Approved June 2022* Stroh’s Water (WA) 900 900 WUTC Approve
Slide 16: Capital Investment and Depreciation
Capital Investment and Depreciation (in millions) 2015-2022 TOTAL $400 CapEx Capital Investment Depreciation $360 $365 $350 $300 3x DEPRECIATION $259 $272 $274 $299 $293 $328 $250 $229 $200 $177 $150 $131 $118 $116 $133 $109 $124 $115 $100 $99 $84 $89 $82 YTD $77 $58 $61 $61 $64 $50 $55 $0 2012 2013
Slide 17: 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 18: In Summary
• Results were driven by the revenue shortfall in Q1 due to the record wet winter, the temporary absence of In Summary regulatory mechanisms and delayed California GRC. We anticipate potential future recognition of these mechanisms would result in additional revenue in a future period. • Our 2023 ES
Slide 19: Discussion
CALIFORNIA WATER SERVICE GROUP La i VEsTING FOR LIFE ¥
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