CWT - Earnings call transcript Q2 2022 | California Water Service Group

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Operator

Good morning and welcome to the California Water Service Group Quarter Two, 2022 Earnings Release Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. welcome, the Vice conference, to Controller and like begin to over now David President Healey, Corporate I'd to you.

David Healey

issued Welcome release, California for can our With President, Chief Polly. earnings this CEO, and Kropelnicki, call you, everyone Officer. which our XXXX and quarter earlier the second Thank Vice Smegal, second our call today. President for in today Replay Water be me Group. Financial was found Tom Service earnings is Marty to quarter dial-in information

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

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

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

Thomas Smegal

some is $X.XX to or topline, income share attributable $XX.X per and in and in million moment. five and I you, summary second considerably Slide the to get from about give to our second everybody into start share financial XXXX. Thank the quarter per earnings morning, good the of the But down just want that's of release million just the quarter to call. $XX.X Dave, and Welcome details everyone. $X.XX net on a the I'll talking Group

$XX.X water similar will relatively with the is in net our comparable value to that accrual. in management talk in million per is per it Slide think calculation is our you that of For $XX.X $X.XX of and year-to-date in focus result, or with within company the regulatory therefore is a details every out, by to accrual. unbilled or primary used been has often year-to-date XXXX. outside billed income to year revenue talking the change talk it's our for share our XX-years our earnings but in I've of the that been about revenue yet Flipping we and get this unbilled period, has this million do, compared that financials, $X.XX of remember some to XX-years that in is and quarter. as period thing we has the we about we mechanisms it fluctuation the customers, do and the this. I now with the about been into all some seven, The and The of not I've share,

revenue big the end plus unbilled kind the likely a substantial a have we million a the a for This associated revenue a we year share of of to or the came that the the $XX.X accrual decrease of was the second was accrual our at before. in in the year, there which unbilled well XXXX, the the with in increase large on revenue last normal impact million earnings and little for the us for year. as year-end, reminder, per believes management as to unbilled year been quarter. and stable see If But within that revenue large accrual range of of that at -- result change down our a accrual bit just very company's revenue reflection with you've is however -- end are increase is unbilled that year -- and very in in of minus a quarter $X in at

And here we'll swing in year, a we it's that the emphasize swing want big revenue while relatively will big quarter so definitely a normal volatility go by a of accrual. all we last away and year-end that expect unbilled to from and that have

have the relative the the plan assets second thing value valuation in quarter of first of measured XXXX. that's of million our just is decreased control that assets those we impacting that's the of due market is to $X.X conditions other The outside the and quarter a our that non-qualified change to --

expenses and general offset given by the changes normally rate that and in other California changes Our in is passage that's in $X.X a million, positive is the that in element states, increase expect step the year would and depreciation, for partially inflation. operating maintenance rates the added and very of we rate and other increases, time interest, so this wages,

to CapEx mentioned, Our are higher largely just with and to Marty I to Case. the they In turn talk about California it out, market. unbilled driver what the about in prior Rate and little I over and mark a I'm the the along being charts, than talk over quarter the primary to General going will bit to both because the period. skip for year-to-date plan the bar

Martin Kropelnicki

X, law Thanks, no discussion. have with us to our effective we California law there largest California said cover the judge. over production our change Case, GRC I Tom. morning, date the on disagreement of major an has parties been -- and to Case, have want Great. We capital, XXXX do in anticipate everyone. XXXX items Rate entity concluded the a that, Rate still of in the here be Thanks August. administrative operating allowed have the have judge may today included The filed Tom, sometime second settlement has think and General January to hearings you administrative briefs being General we results Good you the quarter the joining continued, one. that General and been partial the Case. Rate in that Having the there cost look for closer that Accordingly, that filed water still the water is party. contested between among sales no mix for was

Thomas Smegal

thanks. Sure, Marty. Thanks,

been story the similar respect procedurally our cost -- the capital changes proceeding along expect would cost very an to to briefs our our of of of capital, hearings So has reduction with average this cost the refinancing been the down cost program other of That's and revenue capital the debt. has a that to concluded, have basis filed California, from cost in a have case. public ALJ the to cost out $XX case that case. we last in remind lower requested our I filing of And on adopted last and as that for the in if the wanted cost of result under investing our of of in last X.XX% consideration. had that in debt brought adopted that were capital, a X.XX% weighted case lower we of California see financing with debt million no to to coming

structure equity, capital don't effective to that capital also elements in reserve elements return the unknown Those date taken for equity, the capital cost of cost case, part this we and for of have the at and we because part, amount not cost case on there's are the an are in time. because of company. know And a two of timing, that the other the so,

in drought results should that booked here not have And that out investors will make it and our yet could there be so, update. retroactive, into commission for I back turn that XXXX. you aware that's the but to we Marty,

Martin Kropelnicki

A things Great. going on couple with the drought. of

First continues. and foremost, the drought

was were think, need the we last to and it just X% the water State U.S., as sustainability. focus solely as the are impacting Water continued to the wave, heat I the in deliveries on seen who the Project supply we've regions the really some rely that highlights California the -- but on California around mentioned cut State. world, from not of that quarter resiliency

is but most X% the For compared second the usage down XXXX, important. us, the customer to think is broader I in trend quarter,

you month number a June, was number X% over the it's it's quarter, good that's you and but XX% water year-to-date, if or savings of If for the it look our the just at our that customers look the summer into our conservation September. X%, to would I to July, drier expect and programs hold is messaging we that and take go August, starting sign drought grow as and months, to at number

declared the In of government balancing State is memorandum stage in for drought terms that when the has about recovery respond since total XXXX, account, is from $XXX,XXX where the which been all a that's is the of to million. used California, at the about remember, and you is drought recorded drought spending, during incremental date quarter to future that drought cost now alert the on a which account balance to State if $X.X a the

to started second a as into has We're want to supply we state we're was issues. capital chain from and very have items up watch is chain possible. clear going sure capital messaging to that want XX% globe. drought we take and months supply to our target summer happy while that with as one spending, about as of Tom the high the up to the have number year-over-year So close issues as continued very, Couple push and year: make other in the I this mentioned, X% half that, hold that immune those as dry spending as we're very around not of

ground. job we to has probability ability get continue uncertainty internally in capital effect the the on Water to at year we the those some of mitigating an threaten issues. ground and our and But get on, the second an that is risks on if excellent so the longer greater capital team the the our ability hit risks Our there of into any go go done chain those supply to half as the in -- all Cal

procured it has I mitigating excellent those on. an and but in at to we need job the obviously, get done that the As capital gets are supply team mentioned, the as harder chain these delays go items ground issues,

regulatory with we have don't In stuff the addition to that some case, yet. on approval rate

recall rate you the the if cycle way works, So, case program. includes it case rate the capital our XXXX

So, Rate are as and the commission a get high this assurance the capital company risk prioritizing making the approves but top of list we of think to that critical, we're in that we we as assumptions cycle, General terms things have done actually those through we're XXXX don't the go Case. of we need some until are GRC

to process have about pandemic. The of In like other primarily out at bad people a process collection California, the our non-payment. reserves driven debt to high shutting out other the COVID million, that now we States the remain $X.X now, just starting by it’s we and start out XX-day California process point for started thing I'd that is coming are

actually first week out start Our this process. to the notices went

So we the week, prior to to this as process. collection waited for have start zero been approval activities commission

be so that So customers to sent critical. seen accounts will What that operate watch started in, customer we've process once we the of second be other the collection States we the in in their year. pay started to will response and half the

next go as we The projects projects over highlight as process, on on during second wastewater Slide in water approved, a development. over X,XXX recently X,XXX XX, XXXX. the connections. update there's total, are pipeline of the business Going to of page, On we've well strong that announced closed, is that the the we've half business into this development page the just have year. quick remains projects connections as commissions In and

capital the very as want as XXXX. expect team busy Tom, second that you the to and depreciation? activity So go year, move of BD and half continue we the we the into we to cover into is

Thomas Smegal

coming those California a just base over we Slide you'll rate we reminder General Case project the these request, changes no it and California significant as are other XX, And the request changes, regulation for any announced Rate on a relative that rate see event made figure, the Case the relative capital rate and there, a update wouldn't to for expect make year-to-date of the XX we've you had our turn changes to is the new General states. same California plus or And shown summary. Sure. slides XX, the that base base, no to for we in to Rate with targets, Slide Marty. so and except to and the until out spending I'll

Martin Kropelnicki

Thanks, Tom.

retirement as The plans in lived item, change volatility. down summary, are major where has mentioned, for market quarter and cycle of was In for So plan and regulatory XXXX, it's you in hardest rate that the know, with up business process approval lowered California as case a Rate we? three-year non-qualified the as for we the been certain we the condition us changes of entity, It's year and that on always Tom for California us. await float have General the remains our the of in with all Cal for core outcomes strong our time unrealized we've the the Water, wait of and throughout you time, assets volatility as market those the regulatory long seen Case. a valuation based those unbilled of and will third

and expect months, of regulatory and to the at past second second General like customers haven't it's due be big fire summer to in August, as obviously we of busy closing I'd supply for as we worked XXXX course all going half on and have company. very XXXX mitigating the California, of lag paid So going focusing Management of a for just course, year. receivables that's strong opportunities out, half commission Rate the while. chain Between and time deal. we issues for the have eyes that try of that peak their and team go that the the growth season the I we to most that say collection of the a and on water are remained Case, General into into Case. And this focused as continue In the the amount Rate on the and for of to who now a cost September, resolve capital wait the remains on the October bill we're BD drought,

will it there? we questions. So with Paulie, [ph], you to Paulie open up that,

Operator

Sorry, Kallo first line Ben and the Baird. apologies. [Operator that Instructions] And question was your from of comes from

open. now is line Your

Ben Kallo

gentlemen. Hey,

Thomas Smegal

Good morning, Ben.

Ben Kallo

How are you?

Thomas Smegal

how you? are Good,

Ben Kallo

you -- and you rope estimates. Tom the have about because started just question in maybe kind in, of giving unbilled working range, maybe thought guys all all how of California? the look my you're first just with Good. Maybe on, I of back to If intricacies revenue Slide just XX at guidance annual of is, the us

Thomas Smegal

So is discussed whose on that rate base. we internally, to remainder to giving guidance. we've XX conclusions any with its come a course have profits company that are not annual relative of we Slide The are

Ben Kallo

Great.

Thomas Smegal

and is there total, earn in so, of to regulated and return what investment And the the estimated company corporation states drives other rate is showing on a opportunity base we're the the a including California what ours. like

on time and over return hope the investment would speaking, on base generally we that So, to earn XX. generally rate authorized shown Slide that's in the was

Ben Kallo

be for And $X.XX ‘XX? that the would

Thomas Smegal

No, rate sorry, that of billion $X.XX that's base. $X.XX

Ben Kallo

Okay, I understand.

chain but think could it's schedule in are maybe same And the supply or deployment, was you year, got reading I just but, maybe better guys just last changed then, the your same out question talk if quarter? incorrectly. through for I same the since worse? you I gotten Marty, that that how it's noted asked to CapEx then Sorry, are on on obviously you there, all risks

Martin Kropelnicki

timeline last would two were say, order, know it's lot can't lead we finished study ways gotten there -- in it's and it I little it's weeks that seeing the to the you and together and times design, permitting, potential pre-ordering time so to Ben, weeks, piece just that slow it's has what of report far the projects the and basis just its inputs, and over of do for the we out to we eight then us XX capital lead an weeks, Sure. that pulling bit. valves, as procurement, fittings, real from pipes, annual worse the to that I the procurement went order out capital now, going you but on do iron about down to we're -- ductile internally number think a a if XX the

ground, it get to right, approved historical Now, job perspective when where so then us case, means the into test is a is California. just perspective California, a I slow ground, have or year, state get in into the state so say longer capital we're to take our will the of it rate part not down, the especially we capitals in that

timelines bit stuff been So of longer out They the order taking base. have been things we're they've stuff and team has doing, just earlier. seeing been supplier the putting so to the those some a expanding

We have in six them loaded now going up for have we a we know to XX-months. but next the we're right to months on items that we now, can may need get not need

just track, it's the So at get global -- issue keeping longer a water really supply again especially to on excellent it's an team and main. stuff taking has done and job us chain but

our the this because is very that have zero point to probability so constrained time. more makes in at supply low of the sense? chain think is goal getting I effect, And Does but is that

Ben Kallo

cost to does. of rates It is Tom, back that you does changed that go decision revisit way guys you or have the a there bearing for on filed, to the no? or any capital. have interest Obviously, since

Thomas Smegal

you hearings there data, is XXXX regulatory that case supplied data an models and of as to and obligated can the fact not of what from a law the to. that Ben, into decision that to up the year commission, five It's and dramatically. attention to don't incorporates have data analysts. the I commissioners case judge, read going we did those recognize rate have little drawn where data. the that go been that it, we that be market was them, a put So, the from tried back standpoint a make interesting in necessarily bit -- and I'm in input the question environment newer as We was since points They're had really far the vague briefs interest actually to the certain was public the changed commission's this did the mean and about to and end the have process documents the environment but initial really to administrative that's draw

mechanism as though capital mechanism. the agreed the of One and had many is parties a in of adjustment years we've that cost water things for to a California

So, the AA more a basis there you downward the period change a of so basis basis Curve, in is -- in would XXX on the than upward or points points XX% Utility of to a triggers it collar, return Bond change in Moody's that, change of of by a a at doesn't looking equity point baseline There’s the that’s however, points. of XXX AA XX change. equity cost Moody's basis change XX get Curve if it if

that's AA And there so out look XXXX. and that appears Moody's in something events to out right for now, market there now, we it the the when to data the it's baseline -- extreme triggering we're that's compared at for close what's

data So alone cost with amount if bump get were mechanism, to basis react to amount that capital just there return a is authorized for the equity. and the XX adjustment points leave their a commission possibility on the just would higher of from we

a very a the XX-month with average, actually dependent rates it's and so point weighted it's time. it's at not However, over on in interest what's period, entire happening

average. it many XXXX point, if but that the trigger those months of likely It rate the trigger the so that higher than weighted don't given seems higher we for here you'd for need instantaneous rates that is to And XXXX. trigger rates, know would the would much now trigger more

said, data reasonable and equity a fair sure hopeful of the is that can the commission we're on lately make return companies the that environment. have Look So that at that current come thing. do out in the being right that's the all

Ben Kallo

there. well, -- payers then does that there service I as rate all last we don't my does well? are be I factor here about rate also we your Then your And you utilities it your I read you. if mean, that your rate who impact how in case at because case, how a but that that, raise all question rates with Thank thank you. when just areas, does say have rates, from, of energy your of know lot raise over across fighting impact commission Great, can increasing guess,

Thomas Smegal

to and purchase Let a utility standpoint reminder allowed XXXXs that companies the tracker has me tax for mechanical mechanism pump try power a just address from water costs, a well. since water costs cost, it first, as and as California the

when interesting. to of standpoint, but rates really the they brief about kind filed rate a reacting February. is -- electric of everyone do the the little Their had to they financial statements from a hot there how how back January, change our were we're and ratepayer base were They a no I have case, power we the customer so in pass-through, impact was the is the people in that's was the which I've economy was very and pandemic. on awful economy the inflation And when material commission's bit psychology impact and essentially the of the talking initially from jobless later think do company read they very our on of whipsaw with in back advocate that situation, testimony and with everything -- and to have our in California.

obviously, impact it's electric cost, And water probably to biggest official, wages total a elected when thing. so not talk In that anyone our sort the of is fifth factor to there cost the compared appointed the employee biggest company, purchase power it's, and or and to public. representing any sixth the you or that's is populism

that So you little a a on Marty, more cases, we think hopeful it's And if we're have factor rate our it's certainly mechanistic. commission but the evaluates bit when add anything?

Martin Kropelnicki

they’re then trying you, Tom, been our well, input commission into heard cost rates. the raised to by raise I've your with at consider mean, I my argument never you with I've cost time of, always and think can't back, here point that never broader commission to had a if input Water raising not your rates, was production. production, to Cal to I Yes, that's

of Page have terms map. kind in in four, corporate of if you where just other would our look thing I on say affordability, strategic The we general,

means including power and thing stay it our to base costs. affordability, input see we do, encompassing is we so try on very focused customers what affordability first everything you those that to The

driving customers So of I when at and the think part that's paid under affordability to question you're in was, two last they've we who our been intervening kind we six, try to talking intervening we look case, kind us, are the might be of involved, your of three, always rate about case, we're really for next been couple do our rate in rate and a advisement, last and where but parties couple nine, and this rate cities XX-years, because they've of off case current for of planning have there take pretty silent the cases.

So, guess, intervenors conservation and needs have that State. I the we've balance on affordability, a promote and pretty hitting within with the of good side we kind that of the of and growing don't health, about protect job and done us to trying the the base the needs of a of water, and rate capital needs because lot to company

Ben Kallo

guys I you much. appreciate Thank very it.

Martin Kropelnicki

Bye, Ben. a Have good day.

Operator

any will at Kropelnicki. we pause There are I'll back the this turn Marty final to And over questions. Instructions] [Operator call questions for time. further no

Martin Kropelnicki

for thank Polly, thanks right. you, All us everyone, joining today.

earnings on eyes I the end when of California season the we'll of we'll and call the to the and California everyone. all will we start-up giving process and of in QX the state update fire collection end update regulatory that an Tom, forward everyone next guess be, look that mentioned, As will the be October, and activities

you have Thank day joining you. to So, talk great thanks soon. and us. we'll safe, for a Be

Operator

This conference concludes today's call.

You now may disconnect.

California Water Service (CWT) 29 Jul 222022 Q2 Earnings call transcript