California Water Service Group · NYSE:CWT
California Water Service — Q3 2016 Earnings Presentation
20 slides from California Water Service's earnings presentation, Oct 27, 2016
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: Today's Participants
Today’s Participants Marty Kropelnicki President & CEO 3 Paul Townsley Vice President, Regulatory Matters & Corporate Development Tom Smegal Vice President, CFO & Treasurer
Slide 3: Presentation Overview
Presentation Overview Financial Results Financial Highlights and EPS Bridge California GRC Update Drought Update Travis Air Force Base Contract Cap Ex 2007 Recorded to 2018 Projected Estimated regulated rate base 2014-2019 Net WRAM Balances 2010-2016 Our priorities moving forward 4
Slide 4: Financial Results Q3 2015 vs Q3 2016
Financial Results (amounts are in millions, except for EPS) Q3 2015 Q3 2016 Variance Operating Revenue $183.6 $184.3 0.4% Operating Expenses 151.3 154.2 1.9% Income from Operations 32.2 30.1 -6.7% Other Income/Loss -0.4 0.5 Net Interest 6.7 7.7 15.0% Net Income $25.1 $22.9 -8.9% EPS $0.52 $0.48 -7.7
Slide 5: Financial Results YTD 2015 vs YTD 2016
Financial Results (amounts are in millions, except for EPS) YTD 2015 YTD 2016 Variance Operating Revenue $449.9 $458.4 1.9% Operating Expenses 393.8 403.6 2.5% Income from Operations 56.2 54.9 -2.4% Other Income/Loss 0.2 1.4 Net Interest 19.9 22.6 14.0% Net Income $36.5 $33.6 -8.1% EPS $0.76 $0.70 -
Slide 6: Financial Highlights – YTD 2016
Financial Highlights – YTD 2016 is the third year of the California GRC cycle with limited rate relief Year to date earnings reduced by: Write-off of $3.2 million treatment plant design costs. This provision was included in the settlement filed in September 2016. Costs were for a joint water treatme
Slide 7: EPS Bridge YTD 2015 to YTD 2016
EPS Bridge YTD 2015 to YTD 2016 8
Slide 8: EPS Bridge chart
NESS 015 to vr0 20 $0.90 > $0.80 $0.76 = $0.70 == oo) Sue $0,028 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 $0.10 102015 EPS Incremental Increased Increased ©——Bakersfield Net Otheritems Favorable YTD 2016 £9 Drought Maintenance Interest Expense Adjustment Unbilled Expenses Expense Revenue Adjustment
Slide 9: Other Financial Highlights
Other Financial Highlights Capital investments were $166.4 million in the first nine months of 2016, on track to meet the annual target of $180-210 million. This is an increase of $48.1 million or 40.6% compared to the first nine months of 2015. The customer receivable for the WRAM decoupling mechan
Slide 10: California General Rate Case 2015 Update
California General Rate Case 2015 Update Settlement Agreement Revenue Increases $45.0M in 2017 $17.2M in 2018 $16.3M in 2019 Up to an additional $30M upon completion and approval of the Company’s advice letter projects Settlement CapEx of $658.8M over three years Settlement agreement filed on Septem
Slide 11: Regulatory Update - Continued
Regulatory Update - Continued California GRC Schedule Milestones Settlement was filed on September 2, 2016 Motion for interim rates granted October 7, 2016 To achieve a final decision by January 1, 2017, CPUC must issue a proposed decision by mid-November Hawaii GRCs On September 12, 2016 the Hawaii
Slide 12: Drought Update
Drought Update 13 While statewide drought restrictions have been lifted, much of California is still in a drought State’s surface water supply relies heavily on winter rain and snowfall Low snowfall this winter may trigger a return to drought restrictions As required by the State Water Board, Cal Wa
Slide 13: Drought – Financial Effects Muted by Regulatory Mechanisms
Drought – Financial Effects Muted by Regulatory Mechanisms Cal Water has been “decoupled” (minimizes effect of sales and production costs on earnings) since 2008 with WRAM Sales changes will not affect profits Revenue accrual, not included in WRAM, is a temporary impact Drought costs recorded for fu
Slide 14: Travis Air Force Base Contract
Travis Air Force Base Contract Cal Water has entered into a 50-year agreement with the U.S. Department of Defense to acquire the water distribution assets of, and to provide water utility service to, the Travis Air Force Base beginning in 2018, subject to California Public Utilities Commission appro
Slide 15: Capital Investment History and Projection
Capital Investment History and Projection in millions *2016-2018 amounts are based upon Company projections including 2015 California Rate Case Settlement See the Forward-Looking Statements for factors which could cause actual results to differ materially from the expectations presented here. CAGR =
Slide 16: Historic and Projected Regulated Rate Base
Historic and Projected Regulated Rate Base of CWT in millions 17 *Includes estimated cumulative advice letter additions (light blue) in years 2017, 2018, and 2019 of $28M, $96M, and $197M. See the Forward-Looking Statements for factors which could cause actual results to differ materially from the e
Slide 17: Net WRAM Balance
Net WRAM Balance in millions 18
Slide 18: Our Priorities Moving Forward
Our Priorities Moving Forward Anticipating action on the California GRC in the next few months Winter weather conditions will dictate whether the drought dissipates or worsens Cal Water will continue to monitor State Water Board long-term conservation regulations Company focused on completing capita
Slide 19: Our Priorities Moving Forward
Anticipating action on the California GRC in the next few months Winter weather conditions will dictate whether the drought dissipates or worsens Cal Water will continue to monitor State Water Board long-term conservation regulations Company focused on completing capital projects for 2016 and 2017,
Slide 20: Discussion
California Water Service Group — Q3 2016 Earnings Presentation on 6ix