CWT - Earnings call 2 2023 | California Water Service Group

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Operator

Thank you for your patience, and welcome, everyone, to the California Water Service Group Second Quarter 2023 Earnings Call. [Operator Instructions] I would now like to turn the call over to Marty Kropelnicki, Chairman, President and Chief Executive Officer. Mr. Kropelnicki, please go ahead.

Martin Kropelnicki

Great. Jack. you, Thank everyone. Good morning, joining us for morning. this Thanks Apologies for technical difficulties. the line with We problems telecommunication getting had some our through.

jump turn the for on Dave, Financial Milleman, apologies And forward-looking is to Dave Affairs. Interim Chief Dave into sincere Prior financial Healey, to and So, for it for you the our results Vice that. With to getting President results and President, the the Rates please. Vice me into quarter, I'm go today Officer; Healey Regulatory Greg quarter, statements. why to going through statement don't our and

David Healey

Thank call until results available you, in The Marty. release, Replay be quarterly be dial-in will September information XX, today. for our earlier replay can this XXXX. which issued was found

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

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

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

on with the I'll X second starts moving quarter on Our their X, values Slide discuss and results. Slide presentation to priorities. And

compared June second earnings income for and million net the ended group diluted of XX, $XX.X and quarter to quarter $X.X as income per share per attributable So, $X.XX share million to was to attributable of XXXX. net $X.XX the group during diluted earnings was XXXX, of

in general second California quarter, temporary case. and XXXX our the absence quarter results primarily included last of we XXXX increases rate rate mechanisms general As discussed reflect regulatory

the there As to operating case, rate of period year. revenue a a in result quarter delayed decrease general XXXX as last compared the second California same was

a balances to for record the program governor during period over arrearage the interest December of mostly expense second the off struggling authorized or decreased rate usage. in most customer monthly $XX.X added period million XXXX, revenue expenses water increases final XX, commission of a pay borrowings XX.X% customers second GRC written a were increased quarter districts are million to to company. our approximately last mid-June quarter until during the quarter commission. last operating to second XXXX. compared in same of California, the was effective of second our due X% million, Net approximately during increases delinquent to on the million year. increase This the May with to same the This to $X bills. program We rates short-term In our for revenue extended along help the the XX.X% covers an XXXX delay the state's capital decrease improvements credits. increase to in additional rate quarter due customer general from million the due $XX.X slightly invested interest California days Additionally, XXXX $XX GRC, General in California, lines our it The X, quarter. Total in $X.X of increase authorized XXXX, million, a by rate with as operating period past most decreased year. of $X.X operating case general XXXX the during XX and

end the last to the offset State file California million annual plan to item. with $XX.X filed our advice revenues, California letter known for We application in July increase Our Board these operating in at Resources to September. One funds increases of is water Control costs. the Water production

over And EPS is XXXX Milleman to General Greg absence Our I'll it Page temporary rate Rate of and to turn mechanisms. bridge discuss the on California XX. increases Case, now general regulatory

Greg Milleman

Thank you, Dave.

Looking first X, quarter. consistent at with Page the

We from from this X using the are whilst temporary shown to on mechanisms decision. available revenues California same Public The slide. Commission of mechanisms Utility primary the delayed the are impact revenues track the

XXXX the Moving the to consumption-driven and XXXX of mechanisms. Page million a between positions currently and revenues operating filings regulatory to on in quarter delayed decision X. second of that temporary current parties on $XX $XX We estimate GRC impact be based million

where on Slide to is attention back While $XX million revenues is except XX, the which same your that, I'm the this estimated activities for temporary for X. I'll year-to-date $XX in be to it topic, Slide Dave, to to I'd delay million. With the turn you, information, call

David Healey

Thank you, Greg.

The second XX quarter earnings moving bridge on XX. to is and Slide Slide

$X.XX XXXX, or per million per XX, common loss group group compared June to to XX, million earnings $XX.X net net attributable X-month $X.XX was the or common XXXX. the share ended for share ended For attributable period June loss income to of diluted diluted period $XX.X X-month

and to $XXX.X XXXX. the XXXX discussed, compared X-month to XXXX, to or million for million related operating $X.X and expenses partially and X-month $XX.X regulatory of primarily in to for were $XXX.X in XXXX, $X.X X-month million deferral. Water a the $XX million The or decrease usage, attributable expenses decrease a revenue absence $XX.X million. $XX.X the $XX.X million. $XX.X for XXXX by was These which deferral XXXX. compared California production included The million compared $XXX.X of the million. a increase compared period our to rate million, was attributable XX, XXXX, rate Other depreciation general ended production customer general a in of million case. million was MCBA reflect results were temporary decrease ended $X.X were period to costs XX, million partially June in Greg period for of million decreased and general decrease of XX.X% to X% of -- June the million. Total costs the period XXXX June operations a was same million rate by $X revenue ended decreases $XXX.X property primarily was amortization usage. period for in $XX.X in in in in in taxes revenue decrease of or the X-month water decrease million customer in million XXXX, and general XX, As other decrease expenses million $XXX.X of case, offset The revenue $XX.X and in mechanisms ended $X.X increases deferral, rate a to increases decrease Operating general $XXX.X or million costs XX, million XXXX, June the X.X% XXXX the increases, due XX.X% $X.X XXXX, $XX.X offset administrative and in revenue to million decrease RAM

$XXX.X ATM million months the company invested program This of in by also X The increased of X cash for first improvements. the during XXXX. XXXX, the is first $XXX.X During record months million a company. infrastructure company's the

for update. The We program, turn regulatory are on market, now ATM our XX. or is pleased continue at of with the I'll March will results ATM we Slide And to Milliman EPS a XXXX. bridge year-to-date our program, it over Greg through of the and

Greg Milleman

this Thank to XX, After the perspective that of increased XXXX, from related the ROE rate continues the proceeding, decision with bond of we our index In it our is its of end to capital regards water Further, expect capital comps implementation debt triggered July will to be from borrow at our cost Dave. up X.XX%. cost if water of capital to and going forward. already end the we have considering a current of on X is mechanism GRC mechanism, on it trued to year. -- will with as effective the we're XXXX. On California commission, you, This X.X% is have second to on trends, be have beginning the again and cost case, will following key point XXXX, actual judge lower update. it the had before current assigned X.XX%, the extending now the he's that the of proposed the the proceeding. end judge has decision December our the or our and working an and will have we June that career of October our XX Shortly decision the long a after started XX, January commission XX, hopeful is of Slide to year, general a XXXX increase the case, ALJs

turn Moving over forward I to XX, it Marty. to Slide will

Martin Kropelnicki

Great. Thanks, Greg.

that Just happening. a the quick PFOS, PFO update on events are

to wells million draft last Yet approximately I XXXX. regulations, the confirmed. now. by we regulations having is draft came and we'd EPA in it standards put XX the it's in adopted states, be strictest regulation said that compliance California it But think the operate, those California, a approximately we right the X to frame. of XXXX. this a back of in is, draft from quality out investment [X working That's states was million incremental $XXX in the we has started needed on bit we of deck, in that, tight on as Based quarter XX in think ways] water treat the time wells as have the as

after ahead pivot move Water those NAWC, us when and belong curve this of National to adopted. Also the continue -- for and polluters. as get a of Association treaty ahead here we well We've all to rate of the gone all big see So, wait is we to are Companies. noteworthy, that judiciously the the

finalized. of number gone to you courts be settlements has some Wall a seen Street and that The Journal, may of before And the there proposed been have have ready in

we our necessary We for offset we go are implement from that any as personally remove drinking and PFOA to operate the recovery involved the And in will treatment for water. states PFOS customers in. litigation that costs cost to

the I about to moment to business ahead to want Moving development. talk slide, take next a

us of of big has we system. the in on Skylonda end in Mutual, quarter, is last a but our had the Commission busy which the customers. of since at talked the It's both That Public Utilities QX, it's a past, the time California As [BD] we on that's small Bay is Area. closing number XXX, approved really not another system announced sides

improve So, us the we interconnect an by allows Bay parts parts Skylonda Area. in that it resiliency own and between of the build X the and reliability to Bay, X acquiring part one the that and Skylonda

our Utility. Pacific Washington excuse XXX of in to to to service the on addition, HOH In the close And ahead Water approval company that's we Hawaii me, the the with Commission the Stroh adding we our Northwest. system closed move got state connections in -- Washington

So, HOH of and Island are on KSSC the both Hawaii.

on will So, on we're means Maui, this system we'll island and moving on we'll approximately that wastewater add We're be big now fourth our in be Oahu X,XXX wastewater island, into it's of gets a the connections. us That Hawaii. Hawaii.

are The full. in So overall, busy not is our and we're or business space, a for complement busy. big far to of between. water quarter scale our pretty that our acquire that achieve existing help things team we be close our seeing Again, and bolt-on of was really there's business there's and enough But and for of pipeline existing really, acquisitions. and that to parallel businesses improve team reduce development bring to service. on that kind They're can it economies to few continues certainly, the system customers costs

on on ahead slide, next depreciation the capital slide. Looking investment and the

of some Dave was $XX.X winter a for the making for us terms out the up on record West we're ground million said, ground. new wet of Clearly, the getting As out quarter capital it long and Coast. a of in

And good a $XXX.[XX] also job which I at speeding done think year-to-date, up. it XX.X%, that was was the million. has up team

So, targets for our XXXX. on track for are we

some more probably I peers of bit, little in our case a give the of a of little idea an rate if is back importantly, California. more you why our than complex pull think state you

we that's our XXXX, and in over XXXX that invested capital billion For system. will of have XXXX, $X

sets it's billion the So, $X rate a case. delayed, rate pay

I'm forward. work is he is we news to capital glad not deal Greg But details Milliman, work thing big investment gets good with to but complicated commission the a it's it's and the with So, I'm continuing. all of move as the that, the through.

to and dollars the stay improve continue we're with sustainability. taking on to steps track investment resiliency We and our

This is what the give the change rate we'll of we proposed earnings just will group, snapshot at what obviously decision, like looks get to continues sense look will accordingly. will this this regulated assuming a the is. of base case as slide, a a for like rate is the grow. when as next Looking our this But and slide base growth you rate update adopted

disappointing, in are rate of step mentioned, that case as looking we pattern taking a I Obviously, California. it just and in is very out. moved quarter. that delayed general So, kind proposed adopted were capital came quarter we out a still back the with at once in the where quickly while the happy and And is the holding very we're was decision cost will say complicated. second I that came the with decision of

mentioned, and We've had book, second this In including very added X to combat think being the and I Greg our X the judge. Hawaii and by general it doing it annual judge. schedule-driven, our other with before the I doing third encouraged for and to rate do he's As we whether this record very State to the this of We're by And plan, in think he's ground very continued case. you and And Washington. quarter, facilitate ALJ the ESG in continue to business our with very was we're progress our emissions Scope also is behalf the on published through our he's of familiar kind think report, sustainability significant And we're put our customers was more can California, climate we new in part it the change make that which what I development. adding into terms reliability. help want delays the hopefully, good that. objective, and anything growth Scope despite improve of will of was what ALJ. case, than the process. Obviously, don't business capital we're cases

are rate before the So, keep a to year. we rate we're proposed the wait, will allow plan. said, going out, the optimistic as number book hopefully Once decision that that low on end that Greg as that we're and that case, comes now. get sense And right a to us a mechanisms you of we're case that executing business we the the to right now, book based ranges provided the high a mechanisms is we of share give can't building of we that's and why not and what numbers shared those the

a our Lastly, to new board I who moment take member want a Directors. joined talk of to about Board

you of our joined that. may Patton have Some Charles seen Board.

an our Some leader. a his with of know, get board very operations and may lucky Charles, outstanding he's rates. you governmental an is him background veteran He and us had board and outstanding first external in yesterday. We're on to who utility very, affairs meeting with XX-year in he

Water Charles welcome Group California the So to Service Board.

please? we So, open it Jack, for that's Why the now. up update don't for questions,

Operator

with of first Our Seaport. from Instructions] the comes [Operator question line Angie Storozynski

Agnieszka Storozynski

pieces in earnings there's mean, I power. just so many moving your

were So couple proposed to Is final And retroactively hoping year decision to decision one? to back of have that just need revenue a GRC of you actually in to a assuming adjustments you One, book final things. this the a a or all these that correct? X/X/XXXX. just I'm

Martin Kropelnicki

accounting the enough year deferred. a go the by the proposed been are have that we have and hoping confidence for with decision end proposed items a Angie, that to of should provide the departments decision book to ahead various

Agnieszka Storozynski

of power? I the the have Like But I contribution -- half of thumb apply happened is roughly a obviously a us. been like we had ballpark even a distribution Okay. what assume total that would gain first earnings the half I pension. adjustments for of adjustments if is XXXX? is certain the the show And the percentage to earnings infer of rule for of the of there earnings, on mean can on all showed example, were the would I the that can have we us mean, earnings based have -- can revenue you what to just you sense first

Martin Kropelnicki

believe the why range that's we what and Angie, lower. we the high you the is Yes. gave

we've thought the obviously, range the have of the can kind come you we've is to look. is think between But thing goal in best especially our And X do one of cases. X rate posts. we point well that rate done Historically, cases, X show those last determine best goal kind You'll to the we what out we'll in very done, post.

has harder in cycles team we really Utilities the of the with to terms case that from last Commission their Cal is rate the a California. The thing together and a game quality officially decoupling. Public decoupled putting successful think are I resolution Water in upped X getting

under we case. could it's now curve to to of little demand-driven, and curve had kind that in consumption consumption you So, at the really a over rules, going bit, look of we're think follow in or XX -- show haven't move years. around really the business what decoupling And rate that we it way old the was our obviously, the that that pattern was,

So, a fairly year, earnings obviously, was what a quarter. We would first wave, quarter. based on very, and the in is and seasonality And and hitting based wet but had we and heat over around going quarter consumption based from to decoupling, this consumption will getting this we're quite consumption. very on I expect through down, the away jump bit on wet move we're U.S., all had up weather massive third second happening now which a the the

but So, cases. clear with on a accounting variables those are work the we I and that's our internally not the answer, we know super deal that do rate as

Operator

Jonathan Wells Reeder Fargo. with

Jonathan Reeder

how degree to guess, know in it the is some of levels agreement? those some Obviously, the you come it's year, weather that the against are the Angie's year in expect or not question is you the to difficult to it's I of usage half maybe kind partial weather levels? in how first this influenced against in just first I full influenced expand to half, the degree, the but there. usage Can included discuss, maybe tracking GRCs very given customer year, pieces moving usage settlement on

Martin Kropelnicki

now, with Dave of right consumption related predicted to decoupling, But what at the uncertain to the is having about without the is Jonathan, time long believe removed challenging into drought that the left related that efforts we're associated that with the I governor drought and revenues the happen. XX% in reported that's capture to predict for drought orders related executive from but that from will And mechanism XX%, future would mechanisms one based the that, will or of case. the actual as to continuing as period lost lost And but consumption. mechanism the state. because memoranda continue consumption of the mandatory other revenues to mechanism for drought -- for conservation conservation place the mechanisms are the still the in drought, all how rate lost on and a revenues

Jonathan Reeder

conservation get at, in looked those it when early Right. And measures did was mandatory like April?

Martin Kropelnicki

It April. was in

Jonathan Reeder

Okay.

XX% in included that what's So against actually is settlement? GRC the partial settlement,

Martin Kropelnicki

That's Correct. right.

Jonathan Reeder

you. Got Okay.

So, still year, with decent to trends the is of to to cost line? of I kind the I a it headwind you. a a they decoupling that as amount well going Monterey-Style guess, account to to you much a help or tailwind more to full of loss given coming these supply water that having taking favorable those guess, expect, you as, the EPS? this the and flow guess, it by RAM the the lower in be supply costs, be I Do should into going Is loss decoupling? Or are bottom to headwind potentially usage

David Healey

I you. question take Jonathan, that for can

But there know if to the will small a don't is -- Monterey-Style be value RAM second positive XX%, of the year. in what the going if I So, half at the mechanism.. in still we're be is it consumption

Jonathan Reeder

supply? revenue the against guess, the I netting, that's And Okay. impact

David Healey

a quantity level. it certain at actual right -- It's But at a to tracks the XX%, to And it's big rate just we're filled. going be now, we're And single not Yes. rates a XXX%. value. not there's quantity

Jonathan Reeder

proposed getting help No, results. to good there. at cost the I in Okay. of Congrats and All the appreciate rate on outcome before decision right. the case year-end least capital luck good a

Operator

Baird. Instructions] with Sunderland [Operator Davis

Davis Sunderland

the event don't there course, year [indiscernible] then the decision And next year. isn't end We we this think that XXXX? too about year, CapEx to follow-up. [indiscernible] or deep I but in of end a how of proposed one have the risk should changes deployment the the going by get beyond in of

Martin Kropelnicki

obviously, risk-based because, capital the its company good the a takes in our prioritizing rate a approach And question That's to general is program case. XXXX Sure. capital. included

capital we've doing climate we're to to So, the things the we that up [indiscernible], now, to capital do feel our are necessary to order improvements efforts wildfire, make have step change for that in we and had things system maintain spending rate like case, picked it the up adaptation. that In event, the up not next rate project the a picked the is will case. get of case, in the XXXX is will -- in approved XXXX rate there rate it case, get

exposure depreciation is with we really be interim rate financial how the pick the up in So, and it next associated period in cycle. to any going the

Davis Sunderland

one helpful. That's maybe PFOS it. legislation. about other question, And the Got just

with offset been mentioned portion quantifying time funding out polluters. then costs. have you into And You the the called other Is on parties that potential or benefits may some going any -- litigation million that? a sources responsible of some of could guys or CapEx against these of there in I line $XXX know that maybe of some associated the

detail or those applied? funds Just what may about might any be when other those be

Martin Kropelnicki

and the don't know you the to there's litigation claimants yet. one We those are claimants. multibillion-dollar settlements. if of settlement. obviously, group And that of Yes. We're these follow paper, a And

active to how Counsel and representative So, General very or we know you it's is how though, is out in work be it's will class the kind the I distributed. to don't going of our tell going lawsuit.

with how pieces So, work. will to work the closely plaintiffs' counsel, the we counsel understand group's those very

people offset about but from personal main the a it's And to those treatment. with point because millions once settlements it, standpoint working help the in dollars. those go the get associated to of is just and be made will the those more and the I judge a that judge will distributed proposal to going and capital the and investor adopt we'll how the settlements opinion, them, those approves the a start litigation going funds judge clarity involved So funds. I distributing with and the anticipate, millions to of has costs reps, not then position are then and of it get be then anticipate the they an to funds into this all is again,

and benefits really the it should where So, be. it customer, that's

And cover for about and treatment. capital left that million that be so, offset of to then capital $X obviously, want PFOA is what's that. will try we But as to get that doesn't to the cost rate-based treatment, invested our top over because much I that it's XXXX, for program, XXXX billion on going XXXX, that incremental and of $XXX to this talked PFOS

And the so, of rate want We to run having to shocks. effect minimize you of customers. risk really the the try

funds, I XXXX, think So, very, in are XXXX or settlement very likely.

of In addition Valley, to one number like that, Bay much especially some of it's of and a affluent for its for a and lower level, Silicon water rural quality when to we're PFOS the an and looking federal Bay other it's or that grant you same Area. customers, the in number communities. overall have to go the put money economically area at really same funds connections California areas trying underserved to different the standards and poorer get lower as thing much Area the state environment, from of It's the not treatment in

costs and customers. funds the those dollars grant So, for offset litigation from go to all will proceed

Operator

over turn final Kropelnicki That now Mr. closing our question. was remarks. for call I'll the back to

Martin Kropelnicki

all, right. name All Jack, right. thank getting you for first my Hey of

of XX about spell X record, it name right. out say my age get just who can I the it And me XXX about took could till for You're before of or it the right.

and We'll be our and focal doing business taking model But us. to plan on to the look not all talking end of we we're avail XX. our rate call going general QX joining Again, execute you on eyes our having a we're that, that correctly. Everyone, while business eyes thanks to the forward that's earnings we're our can. full thank So, will everyone off to October at for point. name the for case, my

So, We working thank and you lines the Apologies for some issues morning. technology being technical had with with for correctly. delays. us this the

for we'll you later. have bearing thanks and talk Thank and with So, us, a day. good everyone to

Operator

concludes thank you This conference. participation. today's for We your

You may disconnect. now

California Water Service (CWT) 27 Jul 232023 Q2 Earnings call transcript