CWT - Earnings call transcript Q1 2021 | California Water Service Group

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Operator

Hello, and welcome to the California Water Service Group Q1 2021 Results Conference Call. [Operator Instructions] It is now my pleasure to turn today's call over to our host, David Healey, VP and Controller. Please go ahead.

David Healey

Thank you, Lonnie. Welcome, everyone, to the 2021 First quarter results call for California Water Service Group. Corporate Martin President President and and our President are Smegal, CEO; Paul today Regulatory Vice Vice Chief our Chief of me Kropelnicki, and our Thomas Townsley, Officer. With and Development Financial Officer; Replay in first dial-in issued today. quarter found was our which information call release, be this earlier for can results replay available June until The XX, XXXX. will be

morning The As and ww.calwatergroup.com. an the earnings accompany slide deck a reminder, to at with available before also furnished we this is begin, slide quarter. the the X-K at was this company has a website deck call company's

looking we'd cover a Before at to the statements. results, first to like moments quarter few take forward-looking

various company's carefully press well risk the Because results to releases actual and differ as the all XX-Q of with the and over time to uncertainties, reports materially they deal could During found parties and as current Form begin. company's advises from strongly this, make current going and to to to interested certain events, understand of company other shareholders read these the I'm the pass expectations. filed risks to disclosures statements our company forward-looking Because statements. call, and future course the subject may are XX-K, exchange Securities with uncertainties Tom it from on in Form time the commissions. and

Thomas Smegal

and to the deck, first comparative call. I'm which And results slide quarter going XXXX. X, the going Dave, you, our on results my everybody. good table. and comments time to Thank is to XXXX Slide to Welcome morning, to start I'm

according our slightly for that XXXX, quarter. for in loss $XX.X our loss in out up Slide $XXX.X to -- our up to very about a moment. this rather, a as then And investments, $XXX.X slide on share our million the the to earnings from were reasons revenue from the plan. I'll to Capital share that operating Our switching was $X.XX talk loss quarter and from decreased $X X, per first went highlights. well of quarter we'll $X.XX loss the as point financial million And to net and for million per

we and by primarily I of the as was moment the loss million, the -- case $XX.X as mentioned California ago, the that decreased adoption late result net Rate So mentioned last year. General of a

freight we So with the that of couple of associated added that, increases $X.X that had factors with a different revenue. million associated

$X.X associated and expect, revenue and increases our from as adding in MCBA, balancing the did addition were here In balancing by the in quarter mechanisms. the in the rate as XXXX of if did as recognize revenue mechanisms continued that rate pension first and our somewhat coupling increases adopted healthcare we million We you'd the of XXXX well that. not as recall to that, quarter, and the the of costs have, That's recognizing recognition mechanisms. we're they our you'll back as well with and as in them depreciation operations, RAM first other offset associated And the case, case accounts. the

and we of amount at a used mentioned work during had used funds construction progress. construction during AFUDC the our in lower of lower a construction equity As year-end, result as that's equity, is funds

all project capital adding was had water During our that associated Palace to XXXX, we a reliability year. Peninsula And significant equity project. the Verdes with AFUDC

quarter, throughout about in lower year the was we're the it million. $X and to expecting AFUDC equity So see down

to It of return a normal certain quarter. revenue, to quarter value kind first item. the to so quarter million loss very plan for the that then increased basically $X.X a XXXX that our And target the as loss up negative similar. unbilled [indiscernible] Our of they're and small the of The capital fairly year. a of of We did market We in capital was I as retirement in spending, I of million control, typical a revenue, unbilled XXXX. in then so but of because the items market -- for probably very other accrual. in revenue a compared sort mentioned, had million for which to value compared are $X.X our atypical a slightly. unbilled outside X more we're assets And of that our first on $XXX,XXX believe mention was drop in XXXX, a want $X.X is on significant was general

to Flipping two chart in topics. in And items, same but amount we're Slide the about waterfall are last so detail that those covers I say, that I'd compared bridge our X. talk this, year. this more to the abnormal EPS those normal bit is little a won't

Next the are X, refunding in at just brief customers Slide the some rate rate associated with we to about change during wanted tax and for look effective I'll And the I rate is Jobs rates, of down company. tax comment there's cut make of tax the tax analysts that to remind as deferreds down excess of the so X%, on everyone XXXX, effective the tax rate -- million a a the the $XX is in to revenue drives income tax Act. and rate down. that the just

that. headline low. any just And tax money you so But the when making rate, we it's aren't very see on

related have was that investments qualifies allowed for estimate. XXXX the deductible just mains we million treatment. we're estimate a And In we of of end will $XXX our take to and had there state to And tax investments. that that deduction on you million big repair services, for services the current benefit $XX XXXX, and is thing, XXXX our that update to at there. and the mains tax second repairs, The

certain to between is bit still million. of close factor be hasn't just the a That going that timing of it's changed, to so spending change that's going tax is $XXX projects year little to a million going And for be to qualification. XXXX. and that be $XXX the anticipated the but Capital that's lower

in over to regulatory Paul Townsley morning. to regulatory California items this Thank will going update. a touch give Paul Tom. X this I'm Townsley items on you, to I turn morning, Next, it

is So of cost remember, our you cost years. is X the one capital filed filing will of the capital, once if every first

was we XXXX had X-year one because last Our in a extension.

of equity equity. currently filing And the will on our We application are that Monday, be X.X% application requesting May be that X. capital cost up the cost on will is in we commission, with that a of filing return from of approved XX.XX%, we

debt We advantage debt and X.XX% authorized and means of customer the authorized that up X.XX%. also is rate our of be a return new that requesting cost cost that debt from decreased from rate increase points month. issuances will of go about down perspective basis the increase of return those embedded $X.XX of taking X.X%. previously of together, Coupling would that the cost slightly equity XXX cost of of -- new refinancings going our debt the is so that a X median be just of will in what to from bill really X.XX% we're debt means And to a cost

all. change So on really not a a customer's bill big at

XXXX. which for will XX% remain unchanged structure, commission be of capital be that and we but lower-cost overall a in we've have I at point and are obtaining benefit existing Now application. about is capital January in Not much investing helping to capital new XX been cost might down, because be which new this our a our reviewed the refinancing been is of by really will that -- so debt cost also out the XX% is you debt only equity debt cost would effective approved debt what's lower filing our debt, customers. particular and to recall with -- that drive

filing. I'll in -- July will be Rate X on briefly just item is the weekend. our about second X-year July X, talk filed General because The Xst is the That Case actually,

you and We more on With turn will next when get working we our call. to to now, quarterly Marty. that conference I'll all we it are over that, provide to right information

Martin Kropelnicki

continued COVID-XX Paul. update on a to to in I responding provide quick Thanks, morning, Good efforts everyone. our want pandemic. the

rollout see very see as first, we've and X/X smooth Water those great been a grateful and of family life first well we've but continue we water seen with off within To of seen that X continued the our our bumps had quarter employees let of we seen news. being Currently, have as employees, vaccinated, in from vaccinated me vaccine cases vaccinated daily we've out, of start had the increases at incremental of we recovered. by then states saying First become kind benefits in. we that or people seen the to foremost, X was over to of a which operate cases employees have Cal no we've in sick only the of and that in steep is which COVID little we bumpy kind decline employees for of The number we're voice loss have number in the the date, -- have we've found sustained for. where a all

of our suspension In activities X terms a in of have all collection we maintained all supporting customers, states.

full lifted the activities suspension still U.S. we of operate force. our see to You're the collection in different in in in starting that states is X that around states

residential for about $X.X account million that million Interesting greater to additional on we sales by We in later a million. million, bad have builds demand have we're some the that working really Hawaii expenses I'll associated increase and business the doing $XXX,XXX seen collection for been in or offset have The and see activities. to and recovery incremental our aging $X.X lower collection debt more things $XX.X activities with recorded to driven little industrial potential suspension COVID by was about an XXX% from higher, adjust commission adopted, from California. in memo been $X.X note reserve, and customer gets $XX dates response talk currently continue an over use. fact million been water of approximately later account bit a has that and and And our that's with at a the

normal, business back see lines sales And on business $XX.X $XXX We credit, and back that start kind subject had some use of industrial to million borrowing and the so expect of of pick remained up. capacity to about we strong. up get Liquidity pick things and as conditions. see has additional to cash to we'll million

we're scheduled on California, fully the starting we be for of think entity of in, opened it come is business So worst and storm, it. here I which back the to operate XX. that COVID up we the June out to largest weathered is

slide, to on recently just a ESG next report. the Going I our about moment published take to talk to want

is There's you take will a through weeks Our report GRI was ago now published SASB report. deck a the link with that that and the aligns few available. referencing in

ESG ESG summary report annual Additionally, for included we're those and of report. hand to update producing the ESG-related it and as of over of doing work work frontier, hard of end on hard we in look we're forward We're you a projects quick very, that report our I'm that's of the this a lot very went throughout very copy the more on to XXXX. on proud to ESG Paul proxy, Paul? going the get A on our proud and first give annual back report. up it to reporting our work there's acquisitions. I

Paul Townsley

very you, Thank successful. Cal Water been effort business active The at and Marty. very development has

case, list very this can CAL to are we water of have [indiscernible] Skylonda to Water It's the activity all last are Calea Water system working as next or we items Washington all that be Kaho sorry, wastewater upon we within the on few in X There of and stores, in preserve Millican the the will family. the in to here water we Animas the you announced the first the states, closed on and deals You working exciting Rainier this get closed our expect other View, to operating capital I'm at And adding Loa recall of actually days. Hawaii. that are and well. was the we system, listed another system one, and Valley, that see -- that acquisitions system Hawaii in those System close year,

I announced they're other for Marty, a in still systems the it of to number So It will announced number an exciting with that, pipeline. back a give company. acquisitions our is And of you. time systems, with

Martin Kropelnicki

It to Actually, Tom. goes over

Thomas Smegal

Yes. it. I'm going to grab

Paul Townsley

the is going in sorry, slide. Tom next I'm to

Thomas Smegal

worries. no worries, No

So and we're Last of added this our line graph investment. capital on we depreciation. a quarter, is traditional for XX, Slide

we're that the So year making relationship you that can accrual for years. the that systems. see in occurs year CapEx every depreciation our the about last X between And we've point averaging Xx the the there and been depreciation our every being

only projection of -- $XXX and through our year. of the updating and window million our we this Case General midpoint during $XXX there, when of California. million And the goes this in the released so million [ph] estimate year, Rate have be $XXX CapEx this to And chart second call and between our I'll we is our slide. details quarter we

through second you'll XXXX similar that out that quarter decks. to Slide Flipping on rate you'll is project base that see case years rate the line XXXX which on of our as the is So and comment base will here, slide basis from the XX. XXXX here see and rate in the XXXX This well. through filing, we

turn summary. too rate base much Marty, new not So you XX now. over estimate the Slide right I'll the on for on it to

Martin Kropelnicki

Tom. Thanks, Great.

ready get of a for out as things close Q&A. and call couple to -- Just we our

very to requesting nice to get go the it pulling slight And we filed the quarter a in the There's a we're as very we because done. a ESG of pages case where cost and the filing year, annual our Paul this XXXX busy done. with general a rate have filing rate commission into talked report case, and report gets generic is this our case us that well XXXX about, as voluminous. and thousands always effort takes it's our that quarter our that up. proceeding the is of get First lot of of tens QX here with QX Administratively, apple year-end It's increase quarter. That audit, administratively done. heavy into slowest got foremost, very,

And at XXXX our General So that in everyone forward. forward Tom during on case. said, as call we we'll for earnings to Rate getting and moving on where file quarter update request look second the came our

Additionally, more and of this news. is kind late-breaking

declared have A state to emergencies. California counties Some Governor the In XX for seen of drought you declared the California. the drought hours. a state in of have press, Mendocino Gaba Newsom and Sonoma parts last of of may few the particular, emergency XX Northern California in in

have level with XX% the very snowpack we to that we that fully the throughout this earlier Given year, week drought was see mild of declarations this as only our of more expect season at local winter happen fact normal, that coupled XXXX. the

as preparedness of those we For shape. again, shape, The XX,XXX that master spent supply are also from decent our include know, a remember, months. plans, real foot reservoirs winter summer planning. like emergency in winter I they're And in a drought contingency a in drought of What mean spend into water rate going currently, our lot we what the on and year. we say plans. look in -- wouldn't emergency process, perspective The level? it's to California is master you Likewise, they're which light does XXXX. they're but shape is the of going what if time in happens great this issue decent part that case a updating at

be power us. And into disruptive a is move season. a to been given more it's shutdown will watch fact that the what public more a disruptive such potentially something safety fire So winter dry we for season, as

about PSPS our As fire as over throughout season fire point our events report, many of emergency season, an state. year, we employees operating and underway our the and the could be we the out think response during to that ESG of in prepared and COVID their early challenges despite XX% for completed PSPS have various environment, efforts are this well the happen season

state the in X, recall, customers X, of events days, you despite contingency resources planning move of down in cases some and that year, plan without and to ability our sure throughout to pressurized by successful may PSPS on none water X a number state went the up our systems the kept running. due went make we As and the pumps last a for company to our

as June we of normal, date and get that's some improve. things at back will reopen earlier, California are government the what amount of, into by and XX mentioned is official of seeing kind declared here hopefully, to we COVID-XX, to will state And As officially the the defined. throws the be be final I

continue their the and of making as are that bill creative to part them as management, propose their to similar they full water our the due credit that paid would for approved until outstanding the And keep a for of give they we to And credit people to the paying got equal by COVID, that that we on we customers payments X/XX long then what been Provided balance. recently. gets that [ph] a current. have issued low-income propose would did of been commission at recovery a past keep with industry. but particular, We go as approved This a and water OIR not edge it rear Phase has have program yet, solutions for for as impacted work II, part later into electric they utilities balance been electric proposal, every balances the date. has due who COVID approved industry month for program account the in in

of they of at yet. tunnel do at We the employees. employees get environment. employees XX% have back in our and office of back to that, what So we're and vaccinated to like It's commission see as very Obviously, environment. see operating past those the balances get a with to more nice does Having paid see the normal done. normal day back because a end QX get to nice our get been due is all field we starting seeing work every COVID we'd get are waiting of it the very the light, said not that. to employees hopefully, is what to to all down have

corporate back work. finalizing that remotely, to and more been we'll and to have Our we working that to jurisdictional corporate local to the the work process are have requirements offices the our back our in plans, ones bring of continue been employees monitor are the people ones

California, in plans So vary are bring kind roll developed we and work. by back to we're the green get to the of county once our to that can light people state but of county ready

Lonnie, we with prepared questions, So XXXX, for for the that, it open up comments our quarter will officially up please. wrap will first we of and

Operator

Instructions] [Operator

Thomas Smegal

from did at utilities our earnings exact having every same the time. the analysts of that comment I their call Marty, one get California

Martin Kropelnicki

hard I is a Yes. thing there season. are out today, earnings that, of Tom. I earlier know the about reports saw coming too, lot which

Thomas Smegal

Yes.

Operator

have we Baird. Kallo from And with of a line Ben comment the

Ben Kallo

utilities the didn't about a Star push was [indiscernible] California me. X. You're only utilities That I Water problem.

on all just there's are drought -- interest. point, Marty, I employees put my X is for Paul, it what know Can too. Because to or So guess, POCs? you as goes the be there. your kind guys that well last opinion last that a and the I've you about the been and of hope right? It's stuff, well. what point difference I I about guys are like are native What going been a California reading The doing? are I with this about bone in discussions Tom you the

Martin Kropelnicki

the you let Yes. I'll jump side. commission in Paul, the on I'll first take then And steps.

me never Let gone at Cal start off drought by a saying Water. of we've X out officially stage

regional-based down. need pretty when to us that -- account good, well, earlier restrictions our the coming and as tight indicated in that governor happen, expects week because declares were kind drought, emergency, The dried our the comments targets, were these memo -- the as water for his saying, governor for right: were drought strong of consumption was away. clearly path be we're We may to mandatory regional supply. have restrictions X this forward area. last on the we hitting getting We get easiest it's the goals taken which a he and probably One, kits we the to a keep the targets, very conservation things we out hit of

memo us, those a would for operations Mendicino did, account. County, for and for we in Sonoma we don't So apply If drought we have counties.

some water that, Marin the of agencies Northern stage water the like declare said also X seeing drought. Mud a East we're having Bay district Now or

And systems his in at we And local district, a for account to memo that affected have team point, the emergency. Marin will Northern so and the are do Northern drought try agency Paul a X reporting likely California by based that water apply on that.

were Ben, through right The So it where we what in have snowpack. watch have think, was I see. to of difference XXXX are it and we between and XX% now go we where our means, and we

remember where a press and If XXXX, he where X-feet a green did famous -- do where in you normally he's Brown the Meadow back was conference normally normally we standing on snow, pasture. would they be reading Governor standing in snowpack of a

expect at statewide you maybe So decent don't to have going in want snowpack. add conditions the reservoirs some to we in right be do more is know, of level local happens shape. That's issue drought we the Notwithstanding, do now. not XXXX. real are that? Paul, being The why see as necessarily what local here anything I declared to and on

Paul Townsley

the inquiries it's We've staff At -- this our getting Yes. early is been to days. commission, from as still been preparation. commission

those we've data some of been to so responding requests. And

The PSPS, other for there's a drought, higher the public attention shutdowns. ongoing aspect is of with lot the been power on commission potential course, safety of and of

will but focus drought, see as we've And we those, the been really in more has and to the begun so the that yet year to of don't think that on I commission continuing engage unfolds.

Ben Kallo

Great. for Tom. Maybe you,

through of for of the me, ran regulatory give kind walk sorry, time out dates go. so through as should for? things the just kind clear. far guys one all more different -- And just I'd watch You we as you Can

Thomas Smegal

Yes, absolutely.

be our that application. Monday, capital we're of going this the that. -- filing parameters So outlined we've And to of cost

model, commissions expected that's done. X it around the May the and That's that's filed year. the in be plan to get adjudicated doesn't if end So, by the of

Ben Kallo

right? for That's California,

Paul Townsley

of then and day of And that sometimes little filed gets there's will correct. Case July. bit Xth around addition days, load even again, General a we to That's mentioned And California, that, filed the Paul X. after Yes. July the be have weekend in that think for I Rate that there's

whatnot. Just and of holidays because the

early -- way. process. it that an we'll let's will July, put is And that XX-month be that So, see

not the just of And X we often have Case XXXX. Rate more General of to a can been and delayed than those last or months. date produce California X have -- rate X, delayed. been the result last year, So X is get that out our saw effective January found expected cases until just general as delayed we

have we'll about is when if of subject California to So see on these that rates Both not they're interim to decided time. are effective. filings

rate effective so those in case. filing commission data to of And the that have a new also file essentially rate We case is do Rainier dates. the the View we're agreed effective Washington with state as part we a acquisition,

For the both View year. and Rainier existing this our Group

And so but lot be be that year, smaller. that will a done will this

Ben Kallo

point rates that? Got do Does interest just it XX when just Or -- it. -- versus create number number, does your think -- think, the how matter? tick And you so much Right. XX.XX% I how last much then on you Do up? interest that guys matter?

Thomas Smegal

these company into pretty goes the applications. -- what So Ben, technical it's

return metric models, economist at models, who's come [indiscernible] pricing with looking of equity. up recommended cetera, models, a standard to for have rates CapEx lot We DPF the witness on a those et

So that's one know be it don't or it's that I another driving higher. point to

a organizations the this we in utilities. probably ROE case. as know states a water the done that you to in go have discount look we had California, and that water than than utilities we're you well as XXXX think we been unusual asked U.S., look. at for One on if the electric do. that the slide, quite There smaller haven't case, wanted that than thing in fact, other I in have the And is and point utilities. electrics to for every I'd bit almost And that out, it's I is back more lower the around not

so has you'd assume the there. on that ROE there's for bigger discount But California a per financial some waters. risk And a had, always reason,

in the that actually the ROEs with is we're more line in So California. suggesting ROE the here, electric XX.XX%

where we'll goes. see So that

to it. I some for we witness that. think arguments on and prevail that is hope think have we And strong, good our I

Ben Kallo

package? with how Does agree that be the just to front do the I there's any the of California impacting last and that lot of think Yes, does Or you I on guys? thing, Maybe you you? determined. a on scale. infrastructure know any infrastructure, impact of that Marty,

Martin Kropelnicki

Sure. of very very is Actually, area it's parts. good a complex very, and a of kind moving question, lot Ben, that a with

has the state National Our Commissioner by on headed Head very hill, former involved PUC the and allocations former been revolving PERC obviously, the want we for efforts we Association, Pennsylvania funds with of to Rob Paulson, for those make to can down the pushed federal within those sure funds they state-by-state that to the mandated laws. in when it's funds state allocated. as vary fit fight it But get get as access

for The other we are dollars about rich available to big the of going talked rear involved any is thing is Bill, management, as be that's Bat part been there been that and those. have in

were we or event any balances, is dollars with and customers access an to that Feds. with where utilities, governors COVID those outstanding relief, dollars. for investor taxpayers point well, the fact, week from water that were equal their have of emphasizing this customers at the the we come In That shall X we as on for

going on to that's and and for determined. what we and to we our trying dollars it, about have our those working are our CWA Association, those teams, dollars finalized we customers, federal be secure has have our down local actually Ben, working the working dollars to determined but nothing to see access It's watching yet. since get but them all very Department we underway. state, believe second is The the here work probably some on down are have yet, yet gray Health government it, nothing about the do when pushed has discussions Services nothing are how late the the of discussions for they team mechanics affairs say a that. it, had with the our I quarter, to when sometime dollars pushed teams but California over to in haven't Water area. been flowing happens me, concrete I but has We're keep So been states. fall, out, involved expect We're Feds from in out

Operator

questions [Operator Instructions] further at are There this time. no

Paul Townsley

taking you, everyone. today. for here for Lonnie, Great. being there's of a time concurrently. thank us calls lot happening conference know Thanks I

General anyone earlier, Tom if ESG report, all quarter. Case if end on second we're cost around, see on capital of mentioned ESG of with progress the doing you'll And stuff has you our As reporting at our we side. questions, great chance, and please the the were get look the forward read to a the Rate the

we end next at the and everyone would you. be a Thanks, back earnings be day. call. of quarter So everyone look to on our everybody. the well, safe, Lonnie, to forward Have next great talking to

Operator

call. This Thank does participation. conference conclude for your you today's

You may now disconnect.

California Water Service (CWT) 1 May 212021 Q1 Earnings call transcript