California Water Service (CWT) 31 Oct 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the California Water Service Group Third Quarter 2024 Earnings Call. [Operator Instructions]. After the speaker's remarks, there will be a question-and-answer session. Instructions]. [Operator would Vice the Officer. President I Jim over to Senior Lynch, and like now call turn to And Chief Financial go ahead, Please sir.

results President Marty Kropelnicki, Welcome, third Chairman and Service Kathleen. to Greg our and With call Milleman, Regulatory and XXXX Vice Group. is you, Water Rates for today Thank me CEO; California of everyone, quarter our Affairs.

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

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

few address moments Before statements. to I'd at looking quarter a XXXX forward-looking third results, take like to

may actual of forward-looking current the differ events, they company's course the certain these deal risks company various results expectations. and to the call, and with make statements the uncertainties, could are future Because statements. from During materially subject

result, disclosures As Form other turn company's well And to carefully the the understand the shareholders press uncertainties XX-K, from in and filed I'll read time to XX-Qs, Securities time the and and our parties Exchange as releases all as found Form interested current risks reports to a with now Marty. and on strongly advises company Commission. over call

happy happy of to to can X you quarter today. and We're topics really join today. Halloween. the morning, you with we share pleased main everyone, our I'm There's want here Thanks, very Jim. results cover Good XXXX. that third us for

certain date an rate quarter, on where to $XX.X benefit continues financial going quarter We we want administrative the XXXX we've our invested Utilities do certain what financial and awards million about allow judge results. year to third then the us do moment the like from regulatory let's the and give few Jim, balances strong the letters you that update received a recognition environmental our going our to oversee case. We leadership being Jim We one take the an commissioner during had start you. want off, collect capital that the like approval into preconference that release regulatory highlights California. first initial to Lynch to of been to won Public amount we Commission we've things case, that take a of that's to we through advice lastly, quarterly and XXXX. assigned and general And and our to The performance talk typically year-end. back during of about talk some have record talk from and law California that through quarter. But a the this continued looks corporate about of analysis to in

results XXXX So our Marty financial in mentioned, authorized as and structure QX from benefit continue XXXX GRC. to new rate rates our the California

MRAM million mechanism, compared typically rates usage dry related offset $XXX.X $X.XX $X.XX by and increase increase million or higher were expenses in an in increase due billed declines. and QX QX the in million. rate operating water a result, a $XX.X higher per As for by and QX of share structure [ in the million cooler million in or periods customer diluted to increase $XX.X warm was Net usage. balance increases, higher is operating for million in primarily increase $XXX.X QX income filings pretax our usage million. wholesale XXXX $X.X rate increases in The tiered per quarter increases weather year income The revenue of compared includes mechanism that a depreciation rates $XX.X to quarter operating XXXX. were increased higher decreases. $XX.X a million adjustment In earnings. These million. production driven by million to $XX to an compared the as our typically The million XXXX due XX.X% new and a diluted in $X.X QX $XXX amortization million including our share $X.X to assets MRAM was by when customer Monterrey a of revenue costs to new $XX.X our of $XXX.X MRAM]. Recall authorized is operating million that $X.X regulatory wet in customers XXXX the was of when driven rate in usage, primarily adjustment in million service weather increase or customers prior usage water expenses our revenue placed in reduction taxes to to usage,

In Slide $X.XX investments on diluted $X.X earnings is plan respectively. share, benefit share significant addition, growth and to usage million during on per diluted third XXXX $X.XX were due The and drivers primarily unrealized $X net presented the of gains other X. The quarter increased in of QX per increase impact rate of an the activity on nonqualified more income increases million.

addition, the respectively. Year-to-date compared Year-to-date to $X.XX in including revenue on water drivers ] same $X.XX partially of rate $XXX.X XXXX interim million These quarterly diluted revenue diluted increases net in $XX.X expenses of results and XXXX million of balance nonqualified year-to-date million to [ was was in by share, were expenses from increases, diluted benefit and Irma per share. The revenue $XXX mechanisms operating compared $X.XX deferred share million, In benefited offset Year-to-date results. or $X.XX the to production $X.XX regulatory per change MRAM $XXX.X cumulative increased in of gains plan income investments as contributed the in relief million XXXX $XX of share. the amortization and GRC and growth from in XXXX. million primarily recognition income diluted XXXX depreciation XXXX per of XXXX rate $XX net diluted million. by share the $XX.X driven $XXX.X million XXXX per RAM or of year-to-date

increase in million XXXX year-to-date $XX.X the contributed million MRAM driven expenses operating million. $X.X of balance was $XXX.X added expenses increased an usage wholesale to that of was change $X.X increased in an $XX.X XXXX to million In due water cost usage. Water were our Year-to-date, compared higher the increase and XXXX million. primarily million additional in $XX.X by operating The production or XXXX increases million rates costs addition, $XXX.X due water to ICBA, in production cost account and the balancing incremental authorized GRC.

earnings production in respectively. ] and amortization per per higher our deferred MRAM expenses related and XXXX water expenses and share, on due million per recognition We $XX.X increased deferred $XX.X with $X.XX diluted higher usage pretax deferred share. year-to-date million. Also, associated $X.XX higher expense and diluted These $X.X $X.XX primarily partially revenue and costs share, impact [ activity share tax diluted is XXXX of year-to-date presented drivers RAM deferred $X.XX, $X.XX offset of revenue and increases higher and recognition $X.XX and of diluted depreciation earnings respectively. The more earnings added rate earnings rate increased and also per the balance XXXX relief earnings of $X.XX of The earnings cumulative were per recognized share, another Slide amortization on interim RAM change by RAM recognized depreciation income of water in diluted and in The include increases the respectively to X. $X.XX earnings. of million, significant

X-month As QX XXXX $XX attributable and rate interim of been was relief, XXXX would a and million. period our have QX XXXX million attributed adopted reminder, XXXX rate the in to $XX.X was included the GRC relief interim XXXX million to totaling $XX.X year-to-date.

to Turning capital. our

delivery We XX% million safe our of million of service. continue our significant is the during capital Company and September the water $XXX.X totaled XXXX, in $XXX ensure X-month XX, XXXX water reliable to make to help capital period investments which base. ended investments infrastructure

our applied XXXX program of on through will GRC $XXX for infrastructure period capital investment estimated is planned that positive investments quarter and reminder, our of ] million a beginning having Scrib of in multiple the the projects presented later call. The the PFOS capital include impact our will years #XX. and XXXX, discuss XXXX rate be As estimated over XXXX XXXX do is base fourth XXXX. XXXX from regulated Slide constructed increases the in investments and capital in on improvement for not on plan [ plan

of requested, other capital annual the as Our overall grow $X.XX by end GRC growth to the approved, an billion base result rate California to investments is This and increase compounded If in infrastructure is XXXX. projected with rate XXXX our of improvement base planned utilities would a states XXXX. over coupled and XX.X%. X.X% of plan, in

Moving to XX. Slide

We XX% structure capital a a XX% and maintain sheet strong with debt. continue equity to balance of

from system our the ATM billion stock sale program. sales and million or of shares infrastructure under stock issue in million, raised at $XX.X decision the of the During issued final equity approximately market Cal $X.X to ] raised the from finance securities million equity of the XXX,XXX from water the Year-to-date, approximately quarter to XXX,XXX [ during under shares granting to CPUC up XXXX quarter, ATM we've program. debt common the $XX.X new our $X.X XXXX. We Water Authority investments to a

purposes $XX.X can future, capital approximately that general including in have investments strategic We planned remaining million be and the program raised opportunities. for under corporate the

for proceeds XX, bear XXXX. of on XX, Water bank million October quarterly a first share a just that dividend I of its private On $XXX yesterday, consecutive a XX, to Directors record XXXth on XXXX. $X.XX October XXXX. of bonds and the in dividend. is stockholders and bonds, credit. And believe the our bond mature at side, completed to November note, sale XX, borrowings is of Cal line certain Water mortgage that's This debt existing placement of declared the issuance of November refinance closed Board the XXXX. short-term X.XX% on rate bonds interest Cal per The our

Slide to Moving XX.

position. maintain continue to liquidity a We strong

of have the borrowing of update million September lines the we $XX.X credit $XXX.X Further, XXXX, had and over had and that, short-term equivalents call million on additional and an million. With give on regulatory general our classified As restricted. Greg? company XX, to which as rate of capacity company cash of case Greg Cal XXXX cash was Water our I'll to matters. other $XXX turn

assigned Thanks, assigned case case we rate progress been we XXXX our Commissioner filing. Slide case Commissioner our pleased to Jim. general The I'm We've judge On rate the XXXX the is that general prehearing XX, Baker. initial to commissioner to and with a to case. completed have and continue discuss the conference make report

negative past at to the are given a with with educate [indiscernible] advocates California rate pleased assigned public We work this customer delays. impacts associated his case

sales Jim invest from designed includes while application keeping This our continue our earlier, XXXX water approximately billion we're conservation to districts providing goals. program equity investments mentioned and of water low-use capital $X.X affordable innovative newly in XXXX, service. decouple $X.X rates reinforcing billion to proposed including proposing high-quality As to revenue reliable, to from water

Our for increases $XXX.X generate to million and $XX.X additional proposal rate for XXXX. includes million an XXXX million XXXX, for $XX.X

months review year. With tours I'll We responding are all requests. for actively XX-month hearings PUC the X in our back the preparing are are into the with process and We've standard to now Marty. later participation district to call public completed the data that, return and

of with out of past just rate data cases. the consistent kind curiosity, Greg, volume of requests

just on Yes, the past rate.

want to Slide of take Moving I our talk cost about ahead, for XX. on capital moment I'm XXXX. a to

change utilities adjustment of year. you XXX can the from many tracks to event called what's mechanism. to XX, X greater following an October of for point Cost the basically a index in of In up and adjustment ROE, there's apply know, California, mechanism make basis capital the capital the a we both company As its have September adjustment or cost down. bond

So in to locks therefore, period report and I'm was that at XX, a less it change XX.XX%, September our we happy ROE. XXX the than think point ROE is very XXXX good for it basis ended very which

happened Other that the few mechanisms. quarter I important. think that Moving on a are to regulatory There's next the things slide. in

in things The for combination the is X the the I [indiscernible] memo One incremental mentioned a the balance. be filed my those advice approved have the balance There's emphasize. comments, been primary As recovery X incremental here number XXXX total in we years. collecting the that of will account, filings by California. letters that opening approximately we of XXXX X $XX.X million and MRAM rates next cost over CPUC

expect year. the we about collect million into from XXXX, balances as move $XX.X For to new we these

#XX, Slide take to and our a to about environmental leadership I on recognition. Going corporate talk moment to want

did our Water environmental all, of of posted the for to workplace I continue Efficiency excellence. The for recognition very study proud be the a recently and that First received highlighted we Alliance years our conservation customer stewardship important program. of customers last which impact not of XX% projections conservation approximately that XX with the programs, reduced the have over compared type bills have to by same

results XX we've over with and very the our achieved last survey we're what has of happy customers helped the So the years.

for U.S. Service save useful implemented consecutive life year. Environmental our customers. devices conservation we products second the water-efficient of that our an over the addition, Protection WaterSense the for awarded in we've that Water California XXX million Award In the gallons recognizes the Excellence of additional our programs. products to Agency promotion This date the will The have life

our were ongoing a place energy year, and commitment are consecutive utility quarter, we X most trustworthy then work, the us among workplace and Newsweek creating lastly, named exceptional supporting category. of the consecutive recognized honored for as we and to water were during one recognized in its an year. the world's utilities for And places the our companies reflecting ninth second employees. Additionally, that by great to environment only This

I are a our most yes, important ones our heard of assets, they're employees, of ones but and they're many because all customers. and probably you say we fixed make the pumps, as that think it happen with assets have interface the company pipes that, me our are that

who a him prepares contributions moment take an has outstanding at and job to be thank Resource now want HR wife, ] and all Ron XXXX. mention moment as Water. I Officer; will best Human take that Webb], quarter on an filed a him his that retirement and of want our President Chief excellent is the he we colleague made to of [ retirement, personally and Head a announced to and countless the wish K dearly the X, friend been to retiring has done during as Vice missed. Cal HR will who who and he I here for be our April Ron has [ Lastly, Ron

years wish is have and HR I'm the miss Ron's for by everyone with to and be a as national said we I early And position all your CEO, executive. working you with announce as of it's a XX your working his think search you year-end in to XXXX. one confidence been replacement you, I best just that, and or retirement. Having Ron, appreciate, the can a started closest fantastic hope to in replacement, going

were So take They in us happy bit where with with results quarter? our expectations. does quarter. for line a the Very are the that the little confusing. for Results

all and given the a the parts together, how general did XXXX they good Jim think I case. fit job laying rate delayed out moving

the Moving Jim capital a on year. as is forward, it's the ground really simple. And of The record strategy in release. focused we've invested getting the mentioned, amount capital on press this

the So infrastructure plan. quarter investments very want and and rate to focused and strong in also case. service customers servicing stay on our doing going the improvement in fourth then general We our on XXXX we're customer

end We new we rates by in As Greg the are moving everything said, effect case we XXXX want of so conclude far, and plan. that X/X/XX. do tracking we make things can make the sure that sure to rate to with

a there's lot going So on.

it's growth that internal just be as out up incremental. million. said, incremental infrastructure capital that of base rate Jim the the historically growth that's base We've this is, I'd that the And on X. the next number bumping not plus CAGR depreciation given of rate growth a reflected rate on or thing been point the XX.X% That's will the in needs existing cycle in $XXX side. about rate, investment other The and

what wrap the to one on up company, -- season It's open fire. the just which to Park and is areas, before been customers. light. for areas, overall, ground this our it's and close going areas damage this stuff I getting service And major have did guess been Surprisingly, spreads X stick within forward. the Fire year the the do, fires had -- our lot has we comments. capital So really Boreal Thomson happening Fire, fire thing the year. our the serving were have a of we service of which none the really the relatively I'd we We to to We're and at service that

that winter's very good a week off our will fire which few that the season help start November. the here, [indiscernible], affected to typically territory. I'm the have snowfall of until on the that major service is weeks are last down to which nothing bring getting this happy So a in first we that report we of sign goes end

So with it please. that, Kathleen, we up will open for questions,

of Reeder Fargo. Instructions]. Jonathan [Operator first And line the comes Wells question from your of

restoring just and out to there the commissioners supportive ] get language pool rate of on against rationale think PDs see the we Jonathan, wanted CPUC's PD you enough some But case? are just decision your strongly section decoupling? the today. view All decoupling. Calum's as pretty hold recent I language on that in to that Or [ revised? start to know do the might are of

consensus a the could maybe and would was other right industry the Jonathan, allow held to potentially around in -- to That It's the this meeting. is we mean going And tightening X PD the kind months month, little a up was of a a almost mean. that soon tell. the are putting over too that language is sign Greg. disallowing just strong December the the on of it. there not now feeling that is But what it way or exactly could language it

Okay. either. enough. Fair tell I can't

strategy I differential that our I the keenly I And X on things think be are know in thing But I [indiscernible]. a of do were may application, for peer add companies for our on focused application would read full think one in and to this I decoupling that, haven't Jonathan, California. us. any we

back couple number when that I early focused we we was one. as on guess XXXX, originally -- were in we the very decoupled were conservation originally One, a

our of was first rate in focused in rate new underserved that that design customers and lifeline communities low-income we thing year. on our design kind other kind The helps a of having a application with rate

in lower our rate term that's going of really important. it also think It lifeline we about that low-income sure the like of the application, on reduces be was the there spectrum. the So wasn't to and communities about And there's economic range economic just a making conservation. are lower customers really,

even right. Yes. in And it think, BD, it then door where, softening I No. that language the is the if kind of that's opens just to

of, ways just where the reimagined Some some of Marty. mentioned, goals the on decoupling guess, designing really of these I focuses you it

about on of we think at and very economic lot took And for the rate important commission. lower filed the piece sustained design the this heart what's that Right, It's I community I give scale it. made -- the the interested They're that is they've very to public. our here people that a goal the our in credit decoupling in case. team mechanism we for of in of

see reducing to a Okay. points similar look something that increase. XX the ROEs issued to magnitude Is -- Great. CPUC cost XXXX capital avenue energy I of out. forward lowering the decision plays do know I any how of there the by that for for the to in recently by effectively the the CPUC allowed Also, XXXX for basis utilities mechanism XXXX? waters

a mean, can first, comment. Greg, and a possibility. I'll that's go I add I always you think

energy ROEs industries. Our lagged historically have the

coming real So off we're ROEs. high not

above it recently. In down in XX% number just XXXX, of our for on back where $XX.XX years, back then I company was ROE fact, a went [indiscernible] up is think went it and the at about

that's think possibility. a I So

in appetite see, step a of I we a as which the means keep it get to ground earnings up getting the little you than existing That that in a kind demands on we and to One, for water. our of It's great electric number base growing that with ground rate have there's going in different growing have the factors industry. rate case, the we're have potentially is stockholders. capital customers. and we current capital to for think up, future on just

and on on recovered a and being have some some there though, California, the given electric which of are side the pressure may thing, general incremental I increases commission electrical to were layers just bills. costs case increases in you have put electric in California, that political the added other rate were be overall outside on the that rates, is customers think lot think pressure that in the of wildfire multiple of I rate

might And a us, will so we we would I XXXX. of until It can and to be most if we be the there. I capital on Greg, file but want ROE. to that likely for do. great we defer add we'll hard application its defend our company's anything know do it don't that? again, get think have you cost But in -- position think think that to on to best I

companies, change would file time. have of between only which application their believe, add scheduled did -- the they The the I cost there's water else emergency, I to an is And in unlike their thing the energies an that, XXXX capital to in option if an COVID. was

And that of on the think different why us, water. as cost treatment might so be well of the I to capital X also energies there's between

a be XX, as through of will on this process cost commission Jonathan, obviously, our and we'll the provide updates hot XXXX. in the go with topic capital So we for

Yes.

any in haven't in this think XX, trigger any is had And year the ROE we we have think pushback the kind of the at least to recalculation as the our I at didn't takeaway, Marty we mentioned, term, that in currently September of experiencing commission the movement now. XX.XX% I for from terms XXXX, from how near the terms in $XX.XX are about break. we what

No, what said to them. Jim heard from back demonstrate we we made a filing how just and

Okay.

good. So

that maybe that So sort if in ROE be? extension would of ROE it XXXX safe to then adjustment get an the exchange, in or of you some would and sounds XX.XX for include there's sort to -- be I is new mean, [indiscernible] maybe like -- you whatever open multiyear I extension guess, the some

electric been like And increase float it's X-way supporter and adjustment again, it I capital a speculate lagged our It's mechanism. up the that hard cost future. and mechanism say, need does something down, capital the ROEs on our a we have on have a big because to industry, growing have to the of and will of I investment.

anything -- around think to hard it. to obviously, because any we'd can don't speculate facts it. that we process But can I cleaner really we So just if have we it's to we what's allows rate right enough is what our Cal obviously, sure And to which base appropriate do for Water, allow an that's to we to us make because want circumstances do growth. attract settle it's a that have is and us love continue ROE capital

we'll on So in dialogue more it, a have we hard get really I not think speculate lot it's it. certainty but with it about into a commission as to being the

authorized Sure. under XX.X% capital kind XX approved And of last of cost equity. of that [indiscernible]? How then with capital. the of your last the Slide does XX.X% the indicates cost kind reconcile structures, on capital California

cap structure actual of our right that's as No, now.

a about talk ... bit So little

Yes. a as in operating as And to our subsequent to structure if working amounts again, mentioned $XXX kind Jonathan, that I authorized financing. quarter -- mirror or manage in grew, you mortgage close did of on the million in end, to debt bond right? utilities. we first possible we So we which call, that are raised other the --

closer utilities to the to more operating we've So what the to the amount debt it's in first subsequent $XXX line, more to at this path end. is the structure equity. And group with group. get kind the in at quarter through with to step starting was really, line -- balance our that to that got but the what And million get optimal take we at we'll most in get that line issued and authorized we're work capital of it

from question clarity. area? impacts then and the me. are last EPA's appreciate the California major potential rule? finalized I lead recently issue a CapEx your on copper Is budget Great. Okay. that that What And for the for service

being I frankly, West nice East Coast. the one Coast It's our infrastructure is things the really about of the is than newer out on not. mean,

went as based So has what and in level. that that we we a more think customers' one testing seen in our wells testing, have is action of district, updated hit purchased of all our associated But our in homes. we that the on couple water district with it's we've spine,

us, the to got impact I is the next be that. is on want PFOS So of kahuna that's an ahead that the of next -- to $XXX million [ us an big don't frankly, big which, schedule invest, incremental X ] for and for we think years nice because X it's we because

on copper not losing role too and I'm much lead West. So sleep the now

[Operator Instructions] will There the over back no questions Kropelnicki, are now for I Martin at to CEO, remarks. this. and conference Chairman closing turn

thank everyone of to free to that if for feel today. have you Please questions, Kathleen, and for Thanks out we you. joining can. one reach answer us we'll the best

again, fourth forward we when quarter at into we third closed look of of the lot everyone on a goal our strong. the quarter overall strategy We're we update closing, the to Just February giving But going our with results earnings existing for plan momentum. executing focused announce an and the into business of the quarter stay going the fourth and to core the company XXXX. end just

Be everyone safe, soon. and Halloween. So talk happy Thank you. we'll to

Thank that Ladies for all concludes joining. you call. and gentlemen, today's

disconnect. now may You