California Water Service Group · NYSE:CWT
California Water Service — Q1 2017 Earnings Presentation
19 slides from California Water Service's earnings presentation, Apr 27, 2017
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: Presenters
Marty Kropelnicki President & CEO Tom Smegal Vice President, CFO & Treasurer Paul Townsley Vice President, Regulatory Matters & Corporate Development 3
Slide 3: Presentation Overview
Presentation Overview Financial Results for the First Quarter Financial Highlights Q1 2017-Q1 2016 EPS Bridge Regulatory Update Drought and Winter Storm Update Financial Effects of the Drought Net WRAM receivable 2011-present Water Quality Initiatives Cap Ex 2007 Recorded to 2018 Projected Rate Base
Slide 4: Financial Results: First Quarter
5 Financial Results: First Quarter (amounts are in millions, except for EPS) Q1 2016 Q1 2017 Variance Operating Revenue $121.7 $122.0 0.3% Operating Expenses 115.5 114.0 -1.3% Income from Operations 6.3 8.0 28.4% Other Income 0.3 1.3 386.1% Net Interest 7.3 8.2 12.0% Net Income/Loss -$0.8 $1.1 EPS -
Slide 5: Financial Highlights – Q1
Financial Highlights – Q1 6 • Quarterly earnings increase of $1.9 million, largely attributable to: o Increase in revenue of $11.5 million from GRC rate increases o Decrease of $1.8 million in incremental drought-related costs o Increase in other income of $1.0 million, primarily due to implementati
Slide 6: EPS Bridge Q1 2016 to Q1 2017
-$0.02 7 EPS Bridge Q1 2016 to Q1 2017 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 -$0.02 -$0.04 -$0.06 $0.081 $0.003$0.02 $0.016 -$0.043 $0.024 -$0.041
Slide 7: Notes to Quarterly EPS Changes
Notes to Quarterly EPS Changes Increased rate relief is driven by recent GRC decisions. Change in unbilled revenue accrual is seasonal and reflects changes due to weather and other factors. Increased depreciation is consistent with $236.3 million additional capital investment placed into service in
Slide 8: 2017 California GRC Adopted Revenue by Month
2017 California GRC Adopted Revenue (in millions) by Month Total 2017 Adopted Revenue of $648.2M $80 $70 $60 $50 $40 $30 $20 $10 $0 63.3 46.4 9 68.067.069.5 59.5 52.1 52.0 41.541.742.045.0
Slide 9: California Regulatory Update
California Regulatory Update New tariff rates in effect January 1 as approved in the GRC decision Filed cost of capital application on April 3, 2017 Requested 10.75% ROE and 53.4% equity capital structure Beginning of a process which will set cost of capital beginning in 2018 • • Company in the plan
Slide 10: Other Regulatory Notes
Other Regulatory Notes California escalation increases of $17.2 million in 2018 and $16.3 million in 2019 are subject to earnings test which reviews capital investment performance $30 million of aggregate California advice letter revenue will be included in rates after completion of specific project
Slide 11: Drought and Winter Storm Update
12 See Forward-Looking Statements for factors which could cause actual results to differ materially from expectations presented here. DroughtandWinter StormUpdate • California moved from five-year drought to the wettest water year in California history o As of April 21, precipitation in northern Sie
Slide 12: Financial Effects of the Drought
costs on earnings) since 2008 with WRAM 2016 through Q2 2017 drought costs later in 2017 the first quarter filing as part of the adopted Sales Reconciliation Mechanism 13 Financial Effects of the Drought •Cal Water has been “decoupled” (minimizes effect of sales and production o Sales decline will n
Slide 13: Net WRAM Receivable Balance
Net WRAM Receivable Balance (in millions) (End of Year balance except current period) $60 $48 $50 $46 $45 $45 $37 $40 $30 $20 $10 $0 2011 2012 2013 2014 2015 2016 3/31/2016 14 $51 $40
Slide 14: Water Quality Initiatives
15 See Forward-Looking Statements for factors which could cause actual results to differ materially from expectations presented here. WaterQuality Initiatives • Cal Water is executing its plan to treat for 1,2,3 Trichloropropane (TCP) in compliance with California’s proposed maximum contaminant leve
Slide 15: Capital Investment History and Projection
Capital (in millions) Investment History and Projection $250 $200 $150 $118 $116 $113 $111 $108 $99 $100 $50 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *2017 *2018 *2017-2018 amounts are based upon Company projections including 2015 California Rate Case decision See Forward-Looking Stateme
Slide 16: Regulated Rate Base of CWT
Regulated (in millions) Rate Base of CWT $1,600 $1,400 $1,200 $1,058 $1,000 $800 $600 $400 $200 $0 2014 2015 2016 Est. 2017 Est. 2018 Est. 2019 See Forward-Looking Statements for factors which could cause actual results to differ materially from expectations presented here. 17 $1,399* $1,249* $1,140
Slide 17: What's next in 2017?
What’s next in 2017? • • Ongoing proceedings in cost of capital application anticipated throughout the summer. Company continues to focus on capital investment to comply with California’s proposed 1,2,3-Trichlorpropane (TCP) regulation, pass 2018 escalation earnings tests, and complete “advice lette
Slide 18: What's next in 2017?
_ ne ~ - ~ What’s-next in.2017? * Ongoing proceedings in cost of capital application anticipated throughout the summer. * Company continues to focus on capital investment to comply with California’s proposed 1,2,3-Trichlorpropane (TCP) regulation, pass 2018 escalation earnings tests, and complete “a
Slide 19: Discussion
Discussion
California Water Service Group — Q1 2017 Earnings Presentation on 6ix