California Water Service Group · NYSE:CWT
California Water Service — Q3 2019 Earnings Presentation
21 slides from California Water Service's earnings presentation, Oct 31, 2019
Slide 1: Third Quarter 2019 Earnings Call Presentation
Third Quarter 2019 Earnings Call Presentation October 31, 2019
Slide 2: Forward-Looking Statements
Forward - Looking Statements 2 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 ha
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 3
Slide 4: Presentation Overview
Presentation Overview • Our Operating Priorities • Financial Results, Third Quarter and YTD • Financial Highlights • EPS Bridge, T hird Quarter and YTD • 2018 California General Rate Case (GRC) • Capital Investment Update • Market Equity Program • Wildfires and Public Safety Power Shutoffs (PSPS) •
Slide 5: Our Operating Priorities
SERVICE GROUP Our Operating Priorities ea. Enhanced Stockholder Value Strong Brand & Reputation ASfordable, Excelent Service High-Quality Water Wastewater
Slide 6: Financial Results: Third Quarter
Financial Results: Third Quarter (amounts are in millions, except for EPS) Q3 2018* Q3 2019 Variance Operating Revenue $221.3 $232.5 5.1% Operating Expenses $174.0 $181.0 4.0% Net Interest Expense $10.3 $9.3 - 10.3% Net In come $36.2 $42.4 17.3% EPS $0.75 $0.88 17.1% Capital Investments $79.0 $73.0
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 $530.8 $537.7 1.3% Operating Expenses $446.8 $458.6 2.7% Net Interest Expense $28.8 $30.7 6.6% Net Income $50.2 $51.8 3.1% EPS $1.04 $1.08 3.0% Capital Investments $212.9 $194.
Slide 8: Q3 2019 Financial Highlights
Q3 2019 Financial Highlights • Net income increased by $6.2 million to a total of $42.4 million, largely attributable to: o Unbilled revenue accrual $ 5.5 million higher than in the third quarter of 2018 o Rate increases of $6.1 million, offset by operating expense increases which included $1.3 mill
Slide 9: EPS Bridge Q3 2018 to Q3 2019
EPS Bridge Q3 2018 to Q3 2019 * Reflects Q3 2018 results as disclosed in the third quarter 2019 Form 10 - Q . ** Asset - related items include net effect of changes in a llowance for equity funds used during construction (AFUDC), depreciation, interest, and property t axes which are driven by the ca
Slide 10: EPS Bridge YTD 2018 to YTD 2019
EPS Bridge YTD 2018 to YTD 2019 * Reflects 2018 results as disclosed in the third quarter 2019 Form 10 - Q. ** Asset - related items include net effect of changes in AFUDC, depreciation , interest , and property t axes which are driven by the capital investment program. $1.04 $0.24 $0.08 $1.08 $0.00
Slide 11: 2018 California General Rate Case
2018 California General Rate Case • Cal Water filed its 2018 General Rate Case (GRC) on July 2 , 2018, requesting $828.5 million in new capital investments over the period 2019 - 2021. • On October 8, 2019 Cal Water and the California Public Utilites Commision’s (CPUC) Public Advocates Office filed
Slide 12: Capital Investment Update
Capital Investment Update • Year - to - date company and developer - funded capital investments were $194.9 million, a decrease of 8.5% compared to 2018 • The Company now estimates 2019 capital spending levels between $250 and $260 million for 2019 with higher capital spending in 2020 and 2021 antic
Slide 13: Market Equity Approach
• The Company has signed an equity distribution agreement and filed a registration statement with the SEC this morning • We have identified $806 million or more of capital improvements covered by the proposed partial rate case settlement in California through 2021 • Management plans to maintain a ba
Slide 14: Public Safety Power Shutoffs and Wildfire Update
• Cal Water’s preparations for Public Safety Power Shutoffs (PSPS) and wildfires in its systems have been effective so far o Multiple PSPS have affected our service areas but we have been able to operate with backup electric generation o To date, Cal Water has spent $0.5 million on readiness for PSP
Slide 15: Update on Perfluorinated Compounds
Update on Perfluorinated Compounds • PFOS and PFOA, among other related compounds, have received significant regulatory and media attention in 2019. • The US Environmental Protection Agency (EPA) required utilities to sample for these chemicals between 2013 and 2015; however, testing methodologies h
Slide 16: Decoupling Balancing Account Update
Decoupling Balancing Account Update • Cal Water Q3 2019 sales were 84% of adopted estimates • The net WRAM receivable balance is $62.6 million, up from $56.1 million at year - end 2018 • Change in adopted sales due to triggering the SRM, which allows for a true - up when annual sales are above or be
Slide 17: 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 $62.6 $0 $10 $20 $30 $40 $50 $60 $70 $80 2012 2013 2014 2015 2016 2017 2018 Q3 2019 17
Slide 18: Capital Investment History and Projection
Capital Investment History and Projection (in millions) * 2019 represents the midpoint of the Company’s projection. 2020 - 2021 include capital investments in the proposed settlement filed in the 2018 California GRC and subject to approval of the CPUC along with investments in other jurisdictions. $
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 bar chart represents the minimum and maximum estimated rate base from the table above. The settlement in Cal Water’s 20
Slide 20: Wrapping Up
Wrapping Up • Company focus is on concluding the California GRC and ensuring the settlement is adopted by the CPUC • Equity issuances are expected to help finance anticipated capital improvements • Wildfire season still underway in California with multiple PSPS already this fall 20
Slide 21: Discussion
WATER SERVICE GROUP ae WATER FOR LIFE Discussion a NYSE
California Water Service Group — Q3 2019 Earnings Presentation on 6ix