CWT - Earnings call transcript Q2 2021 | California Water Service Group

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Operator

Good morning, and welcome to California Water Service Group Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, David Healey, Vice President and Corporate Controller.

begin. may You

David Healey

O; Welcome call Carol. today the second Paul Executive XXXX Marty Chief Vice Thank Officer; Financial California everyone Water results and Officer Chief and for our me Smegal, Service quarter our Kropelnicki, President, you President to Tom will Group. are Townsley, today. release, can available Regulatory in be be Replay our our Corporate The which information XXXX. dial-in second Chief President and of results was found earlier issued for replay Vice quarter XX, October Development Officer. this until With call

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

we to to quarter at a take second moments Before looking cover the statements. would like forward-looking results, few

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

Tom Smegal

our talk other the some call. Thanks quarter. Paul for a to Today to turn our good us quarter are on and little financials earnings aspects about for to it then talk everyone. going and morning over with going the being and Marty Dave of that Thanks bit about for I'm second

So walk deck. to and start through I'm I'll slide the going

slides the to possible with be you don't so follow as page the I'll So you have if to numbers can as descriptive as usual, you. refer along try

For quarter $X.X million, net rose second slide diluted to is per income in in compared $XX.X the company's XXXX. per was as XXXX, to compared an of that as earnings on for That quarter quarter, XXXX. the X. the $X.XX basis share common to in On the million $X.XX share

to flip talk year-to-date you slide X, If about the can briefly we results.

will to The the of first slide CapEx end XXXX us. have slide, earnings second we to the in a loss compares better we loss Company a capital XXXX $XX.X $X.XX income the the a basis similar $X.XX number of Flipping compares did quarter. and case share net And $XXX.X the in XXXX. are financials of per million per that in Here, to million California in the things for million. of on result capital of primarily $XX as year-to-date what in X. is net investments we of to year-to-date, and because that investments XXXX million of general at have we Service very a next The story highlight I of have rate of Water the quarter about to talked here the a And $XXX.X basis, for share that XXXX. a on compared

and eventually at uncertainty the regulatory second all, got or that -- recall of because in the you'll of rates that not interim company time. commission, second year book the First approved if the we by last first the quarters, mechanisms did the

those did XXXX. in So of we quarter third book the

in from in were results when in XXXX to XXXX. being comparing our you chunk of keep that ended XXXX, missing So up mind big here earnings you're a those what results the

as expected. Our core operating increasing costs are

did $XXX more the as anticipated giving have million target, to quarter. some reduced $XXX on before. which year. impacts And is big for spending to our track revenue a lower our AFUDC talked our and between the on us We quarter. a the quarter, about the Capital equity about and talk about I'll as market X. pension of other have million We we've pop $X.XX for on the is EPS little because extensively -- by slide that's Flipping accrual, assets some unbilled our bit value of the

Marty drier happens for warmer we pops quarter, from us You revenue, unbilled believe we've quarter. can with relief, guess, OpEx, here there. quarter. third little and just what bridge. advanced see happening the factors now. time-to-time can is is revenue talk about I These the on we slide, about company. that earnings is about second will is what mark-to-market bit California revenue in It's unbilled see benefit increasing also a talk we've experienced were normally the adding rate investments but the The talking in this which a mechanisms, We This year, the plan as $X.XX are unbilled accrual regulatory that rapidly in the very and later. on next And the the I

We have that the of water happen That end this year. gets in July have June and hotter the weather our seems as usually earlier inflections California. to in sales around happened on

what year accrual so at the we're looking revenue is third earnings a And recording that earnings. be would with likely different more associated in unbilled quarter

is year. have about -- we slide add would course of entire not little can with bit that means. over revenue on unbilled we our talk described the so the the But generally as expectation that XX to And will that earnings what a

this is a effect. so And seasonal really

emphasize things in about for talked a year. typically that's looking zero to parties extra you're but this XX at is you is calls, the a come give around interested other These Talking couple if generally to prior to of so want end slide the on the about I community standpoint, we've the year remind about are And wanted not modeling that's of notes. and to back that factor down these. And going this from cases. new us some to most at profits going

because net QX XXXX. in I As of to not recognized the we general we QX probability million quarter. the end of the was attributable California which booked in we QX third of the and had because not that $XX was did mentioned and mechanisms, rate of And of those we regulatory income, XXXX, had interim case booked up recovery, of delayed booking sure And rates. weren't we

which another associated period. So properly is income thing third an quarter of now to recorded QX think about that high had release this in and all that we the of That XXXX, being earnings included the net extremely QX, proper is with quarter.

So, quarter all authorized we're is coming again, of on our return total up. $X.XX keep when that's Once third billion in a that rate remember thinking the regulated about with is that base earnings for rate -- in mind operations you're rate base. rate

to get earnings and of just capital And work into structure so return to the to by you the there rate base the of that company speak general to respect a and number. -- rate with get can and times calculating range so the

in are operating Our increasing costs and as particular. expected, taxes property wages depreciation,

fewer expected couple As And the year. lower amount we the calls, are from where deductions call state and -- enormous that the rate. XXXX we services bump-up means long-duration raises be The at of eligible of repairs and effective was last have projects I received net on AFUDC. the XXXX equity accruing tax a of mentioned that our big that to and recognition state that be in something last tax in end lower XXXX saw of is equity deduction income because we that is from AFUDC tax lower will

in all know can't a assets the don't to But bit market or predict do. I'm was certain going ever subtract the is what of so that XXXX and bit the we earnings the like year. us the fair to the We is a know what retirement that market add sure up will going that market do to from -- in Finally, here, for quite would in total value future. to what add it's up of XXXX.

So update. that's financial it in to my Paul regulatory turn to general over and I'm going about update talk the to

Paul Townsley

you, Thank Tom.

X% its year time lower rate stability last balance This part increases also report This forecasting filings, in forecast the Utilities WRAM/ adopted, case in provides rate customer increases customer the which conservation. discounts have significant the than July Company customer per of California to Rate sales during affordability addressing just all dive also our of end XX. Case We're in and is Commission design in full revenue the been six hard decision over units deeper our the of $X keep an case, to design I'm amount taken into has will worked Because the led a median a in We MCBA XXXX. but case approval collected when under fixed and and X. discovery revenue for and able us Water first to pleased this enable not three and in areas. capital affordability, to our our phase $X first expenditures service on preparing before sales the very month with now rate of of of rate charge. monthly used rate that this is slide to to service case in case this expect the Public month requesting our the Service each innovative we've water of on residential Turning history cycle. for Commission the be the filed which largest General billion

our Darcie Washington year. View Public With rate Commissioner Service Commission administrative State ago from our Rate by the She's expect the Company. news, of that, Marty. judge that named filed we understands case East as case customers fall. cost recently, was Washington that Water the end at a Commission, to in we case. I In the plus an Company also is the the we decision our our hand Commissioner Houck law the newest General week both acquired it's we sometime processes. Rainier covers attorney other new Case a at and this decision Commission Utilities in which of Pierce for this off assigned Commissioner will which capital this our legacy And Commissioner customers Water expect but in assigned the Just been an Commissioner Houck is

Marty Kropelnicki

droughts set second on Paul. is conditions drought approach Starting areas to on morning, so, plural about provide given on. county-by-county drought has quarter. off everyone. say the declared the talking XX, doing operational by want recently a in Thanks, evaluating I they state were and updates Good early the forth basis. And the page Two on I

the the of Schedule process what's well the called water something Public called Commission the and quickly XX June. water supply in our that Utilities plans. a Very Rule case drought our rate we water which declared various plans, of emergency. the on supply And as July contingency master kind is California now quarter, spread which cover XX.X plans under drought and Accordingly, we second as XX, process is XX.X in As filed stages of plans water share our with that planning which as we have XX.X, supply the XX.X counties of our XX master contingency Rule wrapped up Schedule Commission, the to part of state our within plan drought. is approved happy supply

We are in all officially we X the in drought districts Stage a that operate in.

supply in monitoring that the water have. state location are conditions we We of California within every currently

many We can which our as same summer customer-first we what to them last a the utilizing hit approach we drought trying for give the their doing help months. And developed reduction reduction we the that during really voluntary options we're model have XX% over call to asked targets. our customers customers as is the

utilizing includes week a months. as we the meet which drought that steering I committee the same go within every with we that into summer model, that have other we're So company

conditions front for made prepare the highlights about weather drought to current risk important drought more is moves management California and it over note the two what's state ESG proactive years riskier conditions. and think in we've type I of last the of the the on to

within team including come impacts of One as of focus resiliency, look to which together the demand at parts group supply the our our the of and and to in climate combined things we supply water team supply water one on did were one water different we and organization change. teams planning conservation

the and that that same So drought. major we're had plans targets. our the hit to then continue contingency to of stages approach was foundation last going the drought, The take for we're we're of to throughout the going move customers reduction has And on. in we all been path the the which laid what our XX%

impacts to on of Moving continued the talk COVID-XX the and about pandemic.

of employees of All day back July first at Remember We employees company's at our our returned back have work. XX% our every the phasing started that work. have employees in to week get a work to of throughout pandemic. been the

we remotely. corporate them could phased most worked in on ones are back be and staff of that the jobs So,

During them phased the at work. pandemic back we have and

including locked be to employee of vigilant all continue down. campuses We customer safety our for and are still

We employee XXX screenings rates day day. at for put the days out and XX day. there for have hours have We and location every despite have follow our we a pandemic, encouraged every year we local masking work Again, our incentives at a vaccination employees. been rules every

Looking collectability the happening at on we're collection a California allow that that billing Mexico in here. out on Washington Washington, under October They from and In Xst in came to allowed us process lays still to restart the again. our the will The what's and and front that the rules the and working process in end will Hawaii. receivable we're PUC collection recent moratorium California, start the us New decision process have through out moratorium.

have week working accounts came that activities. end the At I date remember yet. suspended now. that just increases and have second out we're decision of we saw the and exact don't The an in So customer collection quarter, through we last

leveled about to $XX.X done increased Bills It's a We million. think We out bit. well that in good over a year. haven't that's little slightly a – outstanding news.

California relief. continued the accounts for million, to and now our a that doubtful is California reserved entity. which of increase utilities have we for from State operating The million and to reserve largest the largest, states $X.X management water $X has $X.X within for budget the in California, arrearage the billion of operate State is We our

up help going but for to determined. incremental with from to continued and through companies to by ability to a comes bills for the water the like and So words, State the process State the being money these be picking association COVID-XX working run their best process offset forward, distributing in is The of is water receivables. it how there bills. We're the be to will affected of determine the chunk the other State quarter their tab quarter. with going about still a our people relief that The good second they're of the and to looks late that be some the pay $XXX,XXX COVID cost other

of the in been in and, in as $XX to capacity the back, as see business the with note the that, adopted is sales little So were memo the the bit. we're I'm a there businesses conditions, to and That's up borrowing residential million to being last continue to But various General lower out the on of offset development interesting to come expect for subject warmer Rate for going industrial captured XXX% about account. end pandemic. credit, slowed since the the Paul, $X.X but numbers Case. at Liquidity And to economy we in it $XXX year-over-year, sales over It's by additional in consumption course, of With total, liquidity as up summer climb. quarter residential beginning into are X%, we to you months. strong remained approved at borrowing business a of and back update. a that line was that, sales of California the move million million to and on that's stalled turn business remained hand of strong, water cash

Paul Townsley

you, Great. Marty. Thank

Group Antonio region known turn entry business has In the development If been California as Water and we busy announced our slide into you Texas will the Service of of corridor. May, Water area. the to Texas, XX. establishment fast-growing Austin-San Service in our

The Company a X also in owns Water as filing into which its will turn greenfield the Antonio water, utilities Hawaii, we a about Austin-San agreement Water X,XXX the customers our BVRT acquisition utility, week, wastewater A a Mexico or Commission our Company. Water Dwelling customers this majority July, we the to our the X,XXX on Millerton, New of Equivalent and Resource this will next Public of the utility and for Water announced recycled and June, with definitive Service development, Last of in Texas, of Commission the will added Company, ago, Morningstar Hawaii Hawaii an island New approval is in with on which our Service ownership Water Company. part utility four at corridor. water connections of bring approve be in Mexico the Wastewater Service we announced shortly Maui purchase. New to approval Regulatory new in anticipate closed which which month, Kapalua Utilities to customer newest acquire we meeting our wastewater Service California entry X,XXX in will acquire at execution Company, we that the bring Kauai As and And May, Also, Company. Units we its Water our of our application application for and to Commission Company the in Hawaii California Water Kapalua new known week filed Public Mexico bring X,XXX Preserve August to Northern Utilities its Public California a open ultimately to wastewater

the San cities Antonio growing five they tremendous that Boston to you Texas, little on are are slide growth and see really detail that, utilities a the can more to XX four into XX, you and region. the see this fastest you the poised among Remember that in have our we in on on capitalize entry map this turn is bit can If US. and

really is our slide Service it's recent XX, you We among in and out have if recap turn And that today Texas customers. final my four a Texas. activity. over to slide, some of customer Water opportunities business build of that's could approximately anticipate these their areas seeking service to utilities, out combined other commitments X,XXX customers in Meanwhile, development and XX,XXX

We opportunities, further to have And that, pipeline potential of the with excited I a back and and acquisitions other through full grow we the are Tom. growth deals. to it through company turn by will

Tom Smegal

Paul. which reflect first in are CapEx slide Rate Thanks, as the looking I'm updated made Case. and rate slide quarter, now proposal we've California General the base been XX, in XX promised and the that's XX and to our at slides

to been the the is each these on bars made to do want be of Paul the a remind the that going of year in with CPUC proposal of so and effect And to is last obviously, made, this XXXX. will everyone, late effect the suggested, by represent XXXX Commission be as evaluated determination charts proposal, that's and and I the three an date a

to we're $X again, that. Paul's to And show rate is so, our California does the regulatory that flip billion the year of proposal to $XXX with current And with we these would is But slide states the $X.XX other numbers to other about XXXX. plus our go that's can million and a obviously the that, result for as XX base XXXX in spending that be $XXX that states. the you of group range process. our corresponds for once if change CapEx we estimated XXXX in combined through the associated then the it put the CPUC base And what CapEx is through and million billion that anticipate rate to

base to proposed. another have base But the the again adopted and our rate increase of increase would higher team, give his rate point if other combined, a potentially that to were CPUC, proposal put We associated $X.XX that that $X.X billion Paul impact adopted there. the has last the XXXX states, as and would the $X.X to billion with that's proposal billion, rate California step forth with us case

in all news growth So the us from process, company a the regulatory a for lot good ahead in of but standpoint do respects. certainly to

both work. Paul for So those thank of aspects your you of doing

Marty Kropelnicki

The heavy speak, right? to lift, so

Tom Smegal

– Yeah. generating revenue Paul's got that items. two big generating

Marty Kropelnicki

right. Well, to wrap I'm All up going us here.

results were our expectations. with summary, in QX Just in line

that quarter-over-quarter out that. a really driven that the into our really But year-over-year for we of consumption was effects our that sifting you'll was accrual. late and much of we in financials accrual revenue seeing And GRC Clearly, remind Tom good the Sorry the down then reconciliations. the quarter graphs the as that do delayed months That got job a consumption General is the with you'll up. there that see in just see in Coast. start by warmer as We you West pointing revenue the and which really lumpiness factor-in everyone see did in can turn as unbilled down had summer winter go Case. increases to rains the go about the when Rate to those you drought see not earnings our we're typically the second the on through we as comparables move

So, due the up conditions. revenue weather we clearly the saw and the from a pick unbilled to drought

Rate this year, XXXX There's our phases So, hundreds Tactically as the quarter. Herculean of up data General of than on go to trying foremost fourth the kind get that capital of into on lot Obviously, event. forth going went Paul of as that followed said we're are consumption earlier first is discovery which four focused California and we and that things of really there hundreds data back the in wrapped anticipated. state we of up and move a the requests. for cost requests Case a by

vigilant forward working We up Commissioner with two a those going stay Houck bring stay look and on and on to So schedule. those on we're regulatory keenly wrapping resolution to successful focused to time to proceedings.

wildfires major burning is thing currently area. There wildfire on second officially in I and wildfires a Stage drought national are State are of the on, Coast said, nine is in Additionally, in forest wildfires. And West burning the The as for season. going two our And tactically big One the California the two things major are California. in drought. specifically customers. one we two

our accolades given into for the lastly, early summer with operate East going dry long focused to planning we're making will the service damage our go this season throughout Coast drinking hotter put on October and we term change to threat looms wildfire what But drier change as strategically from obviously months for the we any the to Big climate then of West their the smoke August, and a are the more effects say, that their change sure there resiliency out their you'll gone customers wildfires there. ahead supplied means And way and ready on from the K us to volatile. on trainings team those slow employees company we're for can climate water. climate the to customers the that could and think our and But and presentations. management seeing be schedule. That about on Q you're us So September smoke have our readiness of stay and focusing talking readiness hear through And clean business the and these I in do areas our minimizing we fresh our as Coast all year. to travel investor US. conditions in. keep filings Operations our pretty we that risk that effects. make focus for the it no finished and All fire team help all

here of report strongly encourage I If read I you keen do think that's focus for company come. the that. out years to is to This going been put to be strategically our there a haven't you ESG

for Q&A. Carol that it with officially end open and will we our So up comments prepared will

Operator

a Ben Baird. the have from Kallo question line of with You Instructions] [Operator

Ben Kallo

Hey guys, good morning.

Tom Smegal

Ben. morning, Good

Ben Kallo

questions. of couple A

the a bit unbilled guess Just you is And what -- there. to that's you just so I not revenue. a carryover understand then right going definitely explain it's think little maybe I be the Could it to don't first question carryover. or it's going a -- be on

Martin Kropelnicki

on it's remember is this outside and aspect our mechanism. confusing our thing of about the WRAM business talked unbilled a to occasions key we've the because accrual revenue of that Ben So multiple is

And yet the customers. billed number have multiplied that is would of days been customer those expected for that we're by the be occurring so, doing on bill what measuring not

the goes usage. this that this more normally you customer we've more up higher see accrual we -- because what The of and and what bill unbilled a year. so bill third higher seen quarter up that in went in is the in And have revenue rates quarter third

And reflected and bit so the quarter is it's that here unusual. second a in

going a that happen what's where is as was. it normal quarter to if high you is third have bill still So, as

representing occur it going You're bump you won't -- earnings additional at in accrual. quarter the up the see that has a least that past. to probably the to third in That in extent would normally

And so would be we'd we're essentially say get normally Then accrual third colder earnings to revenue like booking third the this weather because that the effect quarter as much in quarter in - a we're because unbilled the areas in from that second our we rain to period. when earn typically borrowing the summer and fourth you a money that really we're always winter in in is quarter bills I'd that dramatic is that factor see an in the the reversing of that because quarter revenue unbilled are third see accrual why normal you service a don't lower out as the drop big in the we're unbilled revenue because and quarter.

Ben? help that does So

Ben Kallo

great. That's

that climate million looking and then, rate what about could remind be really what guys talk then, California is you kind $XXX-some I know a there it XXXX, when change. And inside is -- allowed, stuff? will case. to what's mentioned to -- billion GRC, what you a Marty but Maybe I the went can't -- you the of $X for maybe out? -- think of? Is little consists about kind the the just was submitted maybe And that you in talk that you know, shook for? climate change-related that I talked more On bit us of in it. like what And

Paul Townsley

want you start on Do I to -- can that. me

this Paul So -- is the rate Townsley. hi,

terms the mains rate included. are in of is service I to the other, of a investments. aging capital of types case new similar bread-and-butter case last -- facilities replacements as So -- of part the territories, replacement treatment that of is projects case Obviously, rate types very as of well our different what our in would treatment this our and big well all call,

our we've Commission the for that types hoping coming have projects, whether we I'm are terms postponed the investments controversy I to in case. the on of a will be review case that capital So, this will appropriate But, of on we should last did rate particular time a approval of or in that in case. very of the expect of And the out result lot projects this be future. the not do really good expect just of those Commission I like our included

Marty Kropelnicki

think I would thing to the I add And that Ben. Yes.

of those For focused what planning management company. that really case and the kind we a follow the team, for rate integrated of have on has better been on, for you

will week, year. just so, close case, case. on of rate I last XX/X very say received. on did process in my file this the our to case. working we feeling we we gut That case, this are we our the kind what team rate that Normally about versus case. last followed we've on rate the and rate well rate the ask his And for improved Paul

very other of bringing I'm out in I'm bringing as should it's asking the well give in in really, The in in going at the and the week think year. more normally weeks masseuse people categories. process because outstanding process, massages. night. bringing have in was I there in kind -- indicative significance we bring just all every caffeine. morning. into capital our planning the The And improvements I'm in planning, with planning to capital was case, do doughnut think toms. really we the I'm as final made I rate handing well before learned, the team this of dinner of the I'm control the a control better six over case we and our I of expense outcomes. our work team that we improvements process rate that, upfront items, for the do in just the planning planning process. as And the continued just

feeling think rate And so, case. I the we're into good going really

these that we take now. is are years fact still that the just we're for effect I pandemic. here think remind got to middle the bigger the people a rates that from challenge of But a few in

not said, affordability. right it's keenly as effect on focused somebody's so, rates an now. And immediate were Paul we And on

rate out balancing with XXXX. We One like of from starting increasing is, out. we kind the really underserved while rate and the to and decoupling a recovery low-income the design move did what way handle the think team with cost fixed as things, of we figured plans our away in the communities I

look. And I'm rate with anxious so, this see it's fantastic firm, I going team anxious how plan how to Commission. a how to modeling The this job through the And economic I'm did an out modeling does. should think, see working

question the going is like think to I the design. rate

Ben Kallo

looking you And we remind it. last be couple should what think next the the months? Got as was or then, -- I capital of maybe is with just can time cost And of up, just for then, far us coming as you of one give kind said benchmark?

Marty Kropelnicki

bit, and little would a repair has get our regulatory Ben, kind called So the I said, pre-hearing conference. conference, after what's you down conference. report a soon, month we've the slowed yet well, say. pre-hearing have, staff, very commission's We've will pretty to the advocate internal the the timeline we'll you of filing. process not a a made staff, pre-hearing had quickly the Normally -- We

each that is the so, the we're a sometime discussions hearing actual potential it's And to then, with I. you what come details staff tell difficult them to from from repair September-October time settlement number. up Paul, expecting be by But, than more know the what And the report frame. it probably know normal advocate would then, they Obviously, then really expectation eventual a of any decision be. the schedule going I about process to lower goes an with. and is usually And going we the there. don't come up over parties' commission. have positions And

Ben Kallo

anything Is market us been an indicator? that in decided give there recently that's the could

Marty Kropelnicki

I'm Nothing aware in California that of.

Ben Kallo

Okay.

Marty Kropelnicki

benchmarks So, that -- obvious no there.

Ben Kallo

Yes.

Thanks, Okay. Thank you. guys.

Marty Kropelnicki

Thanks, Ben.

Operator

seems no [Operator this time. be Instructions] questions Ladies and to gentlemen, further at there

the turn to call I'll over for any time, this back management remarks. closing at -- I'll So

Marty Kropelnicki

lot nothing we kind And half Thank any Obviously got everyone's there's lot the second very If up earnings material that here to come our And fire appreciate and we'll much. iron filing going changes Carol. can in put of and on. call. a I We go of the out us we'll comes support. as the now Okay, earnings of between into and know, you if a to communicate then, you third year. everyone anything accordingly. for then, material between quarter for the company, week sooner. we now of happens it's a talk look out

everyone thanks we'll and us with soon. you. safe. talk for to today, that, here Be Thank being with So,

Operator

gentlemen, Thank participating. Ladies for and today's concludes this you conference.

disconnect. may now You

California Water Service (CWT) 1 Aug 212021 Q2 Earnings call transcript