California Water Service Group · NYSE:CWT
California Water Service — FY2021 Earnings Presentation
23 slides from California Water Service's earnings presentation, Feb 24, 2022
Slide 1: Full Year & Fourth Quarter 2021 Results Presentation
Full Year & Fourth Quarter 2021 Results Presentation February 24, 2022 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 Tom Smegal Dave Healey Vice President, CFO & Treasurer Vice President, Controller INVESTOR RELATIONS 2
Slide 4: Presentation Overview
o Our Values and Priorities o Financial Results o Earnings Breakdown for 2021 o Anticipated Factors in 2022 Results o California GRC Update o California Cost of Capital and Financing Update o California Drought Update Presentation Overview o Business Development Status and Recap o ESG Update o CapEx
Slide 5: Investor Board Relations Update
INVESTOR BOARD RELATIONS UPDATE 4
Slide 6: Financial Results: Full Year 2021
Financial Results: Full Year 2021 (Amounts are in millions, except for EPS) 2020 2021 Variance Operating Revenue $794.3 $790.9 -0.4% Operating Expenses $657.6 $664.1 1.0% Net Interest Expense $41.9 $43.2 3.2% Net Income Attributable to CWT $96.8 $101.1 4.4% EPS $1.97 $1.96 -0.5% Capital Investments
Slide 7: Financial Results: Fourth Quarter 2021
Financial Results: Fourth Quarter 2021 (Amounts are in millions, except for EPS) Q4 2020 Q4 2021 Variance Operating Revenue $189.2 $173.3 -8.4% Operating Expenses $164.1 $162.9 -0.8% Net Interest Expense $11.0 $11.3 2.4% Net Income Attributable to CWT $15.5 $3.5 -77.4% EPS $0.31 $0.07 -77.4% Capital
Slide 8: Full Year Financial Highlights
Full Year Financial Highlights NET INCOME SOLID YEAR IN THE FACE OF PANDEMIC, DROUGHT, INCREASED BY REGULATORY ACTIVITY $4.3M Infrastructure investment of $293M despite nation-wide supply- chain and COVID-19 challenges TO Acted on growth opportunities, adding Texas investments $101.1M Ongoing work o
Slide 9: Q4 2021 Financial Highlights
Q4 2021 Financial Highlights MAJOR DRIVERS Q4 Net income decreased by $9.2M Decrease in accrued unbilled revenue. For the full year, unbilled $12M to $3.5M revenue decreased $0.5M as compared to the full year of 2020. due mostly to the $2.1M Rate increases, excluding pass-through increases for purch
Slide 10: EPS Bridge 2020 to 2021
EPS Bridge 2020 to 2021 $2.50 $2.40 $0.07 - $0.16 $2.30 $0.22 $2.20 -$0.04 - $0.02 - $0.05 $2.10 -$0.03 $1.97 $1.96 $2.00 $1.90 $1.80 $1.70 $1.60 $1.50 INVESTOR RELATIONS 9
Slide 11: EPS Bridge Q4 2020 to Q4 2021
EPS Bridge Q4 2020 to Q4 2021 $0.70 $0.60 $0.50 $0.40 $0.03 - $0.14 $0.31 $0.30 -$0.03 - $0.04 $0.20 -$0.02 -$0.01 -$0.03 $0.07 $0.10 $0.00 INVESTOR RELATIONS 10
Slide 12: Anticipated Factors in 2022 Results
2022 California regulated operations adopted rate base of $1.84B and adopted net income of $90.5M. Other states, with $110M in rate base, are expected to add net income in line with their size. Third year of the California GRC process in 2022 with significant near-term inflation may pressure earned
Slide 13: California General Rate Case Update
California General Rate Case Update FILED ON JULY 1 REQUESTING $1.02B CAPITAL SPENDING 2022-2024, $913M ON NEW PROJECTS INCLUDING MAIN REPLACEMENT PROGRAM AND WILDFIRE HARDENING LOWER SALES FORECAST, NEW RATE DESIGN, WATER MIX FORECAST ARE DESIGNED TO MITIGATE LOSS OF DECOUPLING CAL ADVOCATES FEBRUA
Slide 14: Cost of Capital Proceeding and 2021 Financing Activities
Cost of Capital Proceeding and 2021 Financing Activities Cal Advocates testimony recommends On May 1, 2021 Cal Water filed for a 7.81% ROE on 49.44% equity. They review of Cost of Capital for 2022-2024 requesting a 10.35% ROE on 53.4% agree on cost of debt. Our rebuttal equity, with a cost of debt o
Slide 15: 2021-2022 California Drought Update
2021-2022 CALIFORNIA DROUGHT UPDATE GOVERNOR NEWSOM EXPANDED DROUGHT DECLARATION STATEWIDE ON OCTOBER 19, 2021 RECORD RAINS/SNOW IN NORTHERN CALIFORNIA IN CAL WATER HAS MOVED TO OCTOBER AND DECEMBER HAVE BEEN FOLLOWED BY STAGE 2 DROUGHT DRIEST RECORDED JANUARY/FEBRUARY ON RECORD RESTRICTIONS IN 6 DI
Slide 16: Recap of 2021 Acquisitions
Recap of 2021 Acquisitions System Water Wastewater Total Status Connections Connections BVRT Texas 2,500* (up to 61,000 in 2,500* (up to 61,000 Closed Partnership the future in existing in the future in service areas) existing service areas) Kapalua (HI) 500 500 1,000 Closed The Preserve at Future u
Slide 17: Pending Acquisitions
Pending Acquisitions System Water Wastewater Total Status Connections Connections Animas Valley Water 2,000 2,000 NMPRC approved (NM) transaction in February 2022. Close pending.* Keahou (HI) 1,500 EDUs 1,500 EDUs HPUC change of control filed* HOH Utilities (HI) 1,800 EDUs 1,800 EDUs HPUC change of
Slide 18: 2021 ESG Accomplishments
2021 ESG Accomplishments Published first Adopted four Established ESG Developed a Completed a framework- new ESG-related governance climate change robust ESG goal- aligned ESG policies framework strategy setting process Report o Human Rights o Board level oversight: o Reduce our own and o Short- and
Slide 19: Capital Investment and Depreciation
Capital Investment and Depreciation (in millions) 2015-2021 TOTAL Capital Investment Depreciation $400 $350 CapEx $355 $360 $365 $300 $250 3x $229 $259 $272 $274 $299 $293 DEPRECIATION $200 $177 $150 $131 $118 $116 $127 $135 $116 $100 $99 $109 $84 $89 $77 $58 $61 $61 $64 $50 $55 $0 2012 2013 2014 20
Slide 20: 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 21: 2022 Business Priorities
2022 Business Priorities Resolve Respond to Resolve California California California Cost of Drought GRC Capital Invest in Infrastructure Manage Supply Chains ESG Progress INVESTOR RELATIONS 20
Slide 22: In Summary
o Solid performance on earnings and CapEx despite challenges o Another strong year of business development o Looking forward to resolving major regulatory In Summary proceedings in 2022 and managing our response to the California drought INVESTOR RELATIONS 21
Slide 23: Discussion
CALIFORNIA WATER SERVICE GROUP La INVESTING FOR LIFE _ |e | DISCUSSION
California Water Service Group — FY2021 Earnings Presentation on 6ix