California Water Service Group · NYSE:CWT
California Water Service — Q2 2019 Earnings Presentation
21 slides from California Water Service's earnings presentation, Aug 1, 2019
Slide 1: Second Quarter 2019 Earnings Call Presentation
Second Quarter 2019 Earnings Call Presentation August 1, 2019
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 harb
Slide 3: Today's Participants
Today’s Participants Marty Kropelnicki President & CEO Tom Smegal Vice President, CFO & Treasurer Paul Townsley Vice President , Corporate Development and Chief Regulatory Officer Dave Healey Vice President, Controller
Slide 4: Presentation Overview
Presentation Overview • Our Operating Priorities • Financial Results, Second Quarter and YTD • Financial Highlights • EPS Bridge, Second Quarter and YTD • Capital Investment Update • 2018 California General Rate Case (GRC) • Wildfires and Public Safety Power Shutoffs (PSPS) • Travis Air Force Base (
Slide 5: Our Operating Priorities
SERVICE GROUP Our Operating Priorities High-Quality Water Strong Brand & Wastewater Reputation
Slide 6: Financial Results: Second Quarter
Financial Results: Second Quarter (amounts are in millions, except for EPS) Q2 2018* Q2 2019 Variance Operating Revenue $174.9 $179.0 2.3% Operating Expenses $148.1 $152.0 2.6% Net Interest Expense $9.8 $11.3 14.5% Net In come $14.8 $17.0 14.8% EPS $0.31 $0.35 14.6% Capital Investments $63.3 $62.0 -
Slide 7: Financial Results: Year-to-Date
Financial Results: Year - to - Date (amounts are in millions, except for EPS) YTD 2018* YTD 2019 Variance Operating Revenue $309.5 $305.1 - 1.4% Operating Expenses $272.8 $277.7 1.8% Net Interest Expense $18.5 $21.5 16.0% Net Income $14.0 $9.4 - 33.4% EPS $0.29 $0.19 - 33.5% Capital Investments $133
Slide 8: Q2 2019 Financial Highlights
Q2 2019 Financial Highlights • Net Income increased by $2.2 million to a total of $17 million, largely attributable to: o Reduction in business development expenses of $3.4 million o Increase in recognition of equity funds used in construction of $1 million o Rate increases of $5.1 million, offset b
Slide 9: EPS Bridge Q2 2018 to Q2 2019
EPS Bridge Q2 2018 to Q2 2019 *Reflects Q2 2018 results as disclosed in the second quarter 2019 Form 10 - Q. $0.31 $0.08 $0.05 $0.350 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 $0.50 - $ 0.07 $0.02 - $ 0.04
Slide 10: EPS Bridge YTD 2018 to YTD 2019
EPS Bridge YTD 2018 to YTD 2019 *Reflects 2018 results as disclosed in the second quarter 2019 Form 10 - Q. $0.29 $0.15 $0.06 $0.19 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $ 0.03 - $ 0.11 - $ 0.10 - $ 0.13
Slide 11: Capital Investment Update
Capital Investment Update • Year to date company and developer - funded capital investments were $121.9 million, a decrease of 9.0% compared to 2018 o The decrease in utility plant investment is due to weather delays in the first and second quarters and the impact of the GRC • 2019 capital spending
Slide 12: 2018 California General Rate Case
2018 California General Rate Case • Cal Water filed its 2018 GRC on July 2 , 2018, requesting $828.5 million in capital investments over the period 2019 - 2021 • Three municipalities and the California Public Advocate (Cal PA) are participating in the case • Parties have been engaged in settlement d
Slide 13: Wildfires and Public Safety Power Shutoffs
• Cal Water has been active in addressing wildfire risk in our service area in 2019 o California electric utilities have received permission to implement PSPS which will likely impact water system reliability o After the end of the second quarter, we have procured additional generators, booster pump
Slide 14: Travis Air Force Base
Travis Air Force Base • Cal Water began operations at TAFB on July 1 st as a regulated California district • We expect to make $12.5 million of initial improvements within the next two years and approximately $52 million of improvements over the 50 - year life of the contract • Under the regulated m
Slide 15: Decoupling Balancing Account Update
Decoupling Balancing Account Update • Cal Water Q2 2019 sales were 83% of adopted estimates • The net WRAM receivable balance is $61.3 million, up from $56.1 million at year - end 2018 • Change in adopted sales due to triggering the Sales Reconciliation Mechanism (SRM), which allows for a true - up
Slide 16: Net WRAM Receivable Balance
Net WRAM Receivable Balance (in millions; end - of - year balance) $46.1 $46.3 $47.1 $42.0 $39.2 $69.1 $56.1 $61.3 $0 $10 $20 $30 $40 $50 $60 $70 $80 2012 2013 2014 2015 2016 2017 2018 Q2 2019
Slide 17: Outlook for the Remainder of 2019
Outlook for the Remainder of 2019 • We are hopeful that settlement talks in the GRC will be fruitful. Any settlement will be made in a noticed public filing. • We are expanding regional call center efforts to improve customer service based on the successful launch of our Southern California regional
Slide 18: Capital Investment History and Projection
Capital Investment History and Projection (in millions) *2019 - 2021 include capital investments proposed to the California Public Utilities Commission (CPUC) and subject to change based on regulatory outcome and other factors. $99 $108 $113 $111 $118 $116 $131 $177 $229 $259 $272 $290 $285 $265 $0
Slide 19: Regulated Rate Base of CWT
Regulated Rate Base of CWT (in millions) * Includes allowable additions of up to $197 million for advice letter recognition when projects are complete and in service. ** 2020 - 2022 reflect rate base proposed in California GRC plus estimated rate base in other subsidiaries and are subject to change
Slide 20: Wrapping Up
Wrapping Up • Company focus is on the California GRC and supporting settlement efforts with the Office of Public Advocates • Three - pronged approach to wildfire risk (legislation, operational readiness, and infrastructure improvement) • Third year of the current California GRC cycle, with limited r
Slide 21: Discussion
oe WATER SERVICE GROUP mr investing FOR LIFE Discussion a NYSE
California Water Service Group — Q2 2019 Earnings Presentation on 6ix