California Water Service Group · NYSE:CWT
California Water Service — Investor Presentation (June 2024)
32 slides from California Water Service's investor presentation, June 2024
Slide 1: California Water Service Group: Investing for Life
California Water Service Group Investing for Life June 2024 Investor Presentation
Slide 2: Forward-Looking Statements and Other Important Information
Forward-Looking Statements and Other Important Information 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 secu
Slide 3: Who We Are
WATER SERVICE GROUP Who We Are
Slide 4: Our Company At-a-Glance
Our Company At-a-Glance 1926 Company founded Our mission: to be the leading provider of i,260 + 93B+ sustainable water and waste- water services. Gallons of drinking Employees water delivered Our purpose: to enhance t he quality of life for our customers, communities, 2M+ 680M+ 57 Years employees, a
Slide 5: California Water Service Group: a leading publicly traded U.S. water utility
California Water Service Group: a leading publicly traded U.S. Financial Profile water utility providing high-quality water & wastewater services 2023 revenue $794.6M* 5.2% 2023 net income 3.0% of consolidated of consolidated revenue revenue $51.9M* 90.6% of consolidated revenue $161M 38,000 6,500 R
Slide 6: Our Business Model is Straightforward
Our Business Model is Straightforward Recover other Add non-regulated Earn reasonable costs through income (water return on capital reasonable system operations, invested in regulatory policies HomeServe, infrastructure and efficient antenna leases) operations 97.7% regulated revenue (return on equi
Slide 7: The Case for Investing in CWT
The Case for Investing in CWT Growth Strategic M&A Capital Allocation Corporate Responsibility Leverage deep expertise Opportunistically target Strong history of returning Taking a science-based to grow through capital new markets in high- cash to shareholders approach to reducing investment and gro
Slide 8: Recent Events
WATER SERVICE GROUP Recent Events
Slide 9: 2021 GRC Successfully Resolved
2021 GRC Successfully Resolved Decision provides clarity for all stakeholders, while enabling CWT to continue to provide safe, reliable water service to customers throughout California Final decision approved: March 7, 2024 Increases adopted revenues, after Authorizes Cal Water to invest approximate
Slide 10: EPA Sets Limits for PFAS
EPA Sets Limits for PFAS Group believes we are well-positioned to meet new PFAS regulation On April 10, 2024, EPA • Cal Water, Hawaii Water, New Mexico Water, and Washington Water have rigorous, established: coordinated water quality assurance programs and protocols in place to test and monitor the
Slide 11: Additional $83 Million Secured to Relieve Customers of Past-Due Balances
Additional $83 Million Secured to Relieve Customers of Past-Due Balances Repeated efforts to apply for funding to relieve California customers of past-due balances accumulated during the COVID-19 pandemic reflects Group’s commitment to supporting all customers, particularly those who need financial
Slide 12: Strategic, Continual Growth
Strategic, Continual Growth 12
Slide 13: Responsible Infrastructure Investment
Responsible Infrastructure Investment: Critical for safe, reliable, and efficient water and wastewater service 2023 Investment 30% Plan to invest more Expect to invest than $1.2 billion in ~$380 million water and in 2024, including 60% wastewater system developer-funded 10% infrastructure from capit
Slide 14: Capital Investment and Depreciation
Capital Investment and Depreciation: Growth in capital investment outpaces depreciation (in millions) $450 Capital Investment Depreciation $400 $384 $380 ** $350 $328 2015-2022 TOTAL $299 $293 $300 CapEx $250 $229 $259 $272 $274 3x DEPRECIATION $200 $150 $100 $118 $116 $131 $177 $133 $115 $124 $99 $
Slide 15: Regulated Rate Base Growth
Regulated Rate Base Growth: Estimated to achieve nearly $2.5 billion by 2025 (in billions) $3.00 $2.47 $2.50 $2.36 $2.20 $2.01 $2.00 $1.87 $1.61 $1.50 $1.24 $1.26 $1.06 $1.12 $1.00 $0.50 $0.00 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2025* *2024-2025 Rate Base estimates include amounts authoriz
Slide 16: Strategic Acquisitions
Strategic Acquisitions 1% Customer Count* 560,000 Targeted annual cumulative 550,000 addition of customers through new business development 540,000 36,056 activities (announced in 2019) 530,000 2-2.5% 520,000 Total connections added 510,000 through acquisitions since 2019 Growth achieved per year fr
Slide 17: Strategic Acquisitions
Strategic Acquisitions Improved diversification into adjacent and growing states including HI, WA, NM & TX 2019 2020 2021 2022 2023 Travis Air Force Base (CA) – 1 Crane Ridge (CA) – 26 Kapalua Water (HI) – 1,000 Keahou (HI) – 1,600 Stroh Water (WA) – 900 Ranier View (WA) – 18,500 BVRT (TX) – 1,812 R
Slide 18: Group & BVRT Water Resources
Group & BVRT Water Resources Strategic expansion into high-growth areas leveraging Group’s deep experience 2021 Group invested in BVRT Water Resources, a privately owned regional water & sewer utility BVRT New utility incubator for Group, investing in & growing greenfield water & sewer utilities 6 G
Slide 19: BVRT Growth
BVRT Growth As of 2020, 4 of top 15 metropolitan areas for population growth in U.S. were in Texas Anticipated Customer Growth 10,000+ Total connected & committed 20,000 TBD customers in 2023 20,000+ Additional likely customers in 15,000 14,000 14,000 existing service areas 10,000 9,000 100,000+ Add
Slide 20: Strong Financial Performance
Strong Financial Performance 20
Slide 21: Financial Overview
Financial Overview Three-Year Revenue (in millions) $846.4 $790.9 $794.6 $850.0 • 2023 results were impacted by $700.0 the delay in our 2021 CA General $550.0 Rate Case (GRC) decision received $400.0 $270.7 in March 2024; interim rate relief $250.0 $131.1 $100.0 related to 2023 included revenue 2021
Slide 22: Liquidity Profile
Liquidity Profile Group maintains strong liquidity profile to execute capital plan and strategic M&A investments (in millions) $450 • Expect to have adequate cash to support $400 capital investment and growth $350 • Credit facility of $600 million which can be $300 expanded up to $800 million $250 $
Slide 23: Capital Allocation | Balance Sheet
Capital Allocation | Balance Sheet Continue to maintain financial discipline with strong balance sheet, while allocating capital in efficient manner Increased annual Declared 317th Strong capital structure Maintain Board- dividend 7.7% from consecutive quarterly of 58.3% equity and authorized ATM pr
Slide 24: Committed to Doing the Right Thing
Committed to Doing the Right Thing 24
Slide 25: Sustainability and citizenship efforts deliver long-term value
Sustainability and citizenship efforts deliver long-term value Protecting Serving our Engaging Governing with our planet customers & communities our workforce integrity We minimize our impact We invest in the long-term We foster a positive We pursue excellence by on the planet while health of our co
Slide 26: Dedicated ESG Program Designed to Drive Progress and Enhance Transparency
Dedicated ESG Program Designed to Drive Progress and Enhance Transparency Program Highlights Annual Reporting Annual framework-aligned reporting on ESG Framework-aligned annual ESG reporting provides detailed updates on our topics most significant to the business sustainability and citizenship strat
Slide 27: Protecting Our Planet
Protecting Our Planet Detailed Climate Change Risk Assessment and Adaptation Commitment to reduce operational GHG emissions by Framework 63% by 2035 from 2021 base year Study completed in 2022 IDed climate-related physical risks Science-aligned target supports limiting global temperature and adaptat
Slide 28: Serving Our Customers & Communities
Serving Our Customers & Communities Numerous initiatives to support water affordability Robust water quality program and access 100% compliance achieved in 2021 with primary and $100+ million secured to help customers with past-due secondary federal and state water quality standards bills incurred d
Slide 29: Engaging Our Workforce
Engaging Our Workforce Commitment to creating a diverse and inclusive High employee satisfaction work environment Competitive pay and benefits, pathways to Partnerships with four new women- and minority- advancement, and commitment to fair labor owned staffing agencies established in 2023 to practic
Slide 30: Governing with Integrity
Governing with Integrity Clearly defined framework of oversight and controls Deeply ingrained business ethics Corporate governance structure aligns with All employees required to review and strategic objectives and enables Board to acknowledge Business Code of Conduct each year effectively oversee o
Slide 31: Awards and Ratings Reflect Strong Sustainability Performance
Awards and Ratings Reflect Strong Sustainability Performance ESG corporate QualityScore: Ranked No. 1 in overall customer satisfaction rating: Governance: 1 among large water utilities in western U.S. by B / “Prime” Environment: 4 J.D. Power in 2023 Social: 4 Earned USEPA 2023 “Excellence in Promoti
Slide 32: Questions?
Questions?
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