California Water Service Group Announces Second Quarter 2022 Results
SAN JOSE, Calif., July 28, 2022 (GLOBE NEWSWIRE) -- California Water Service Group (NYSE: CWT) ( “Group”) today announced net income attributable to Group of
The
The change in accrued unbilled revenue was mostly driven by the timing of when meter reads were completed during the month of June 2022 as compared to June 2021 and a decrease in customer consumption. In the second quarter of 2022, accrued unbilled revenue added
According to President and Chief Executive Officer Martin A. Kropelnicki, results were in line with company expectations. “Although we were impacted by a few factors outside of our control, I’m pleased with second quarter results for our core operations. I’d also highlight that we:
- Completed acquisitions in California, New Mexico, and Texas and entered into an agreement to acquire a system serving 900 customers in Washington.
- Secured nearly
$2.4 million in grants to fund improvements in two of our water-stressed, disadvantaged communities. - Moved all California districts into Stage 2 of our Water Shortage Contingency Plan and continued to respond to worsening drought conditions.
- Renewed our at-the-market equity program with a planned size of up to
$350 million over a three-year period to help fund our capital program. - Continued to work toward a successful conclusion of our 2021 California cost of capital review and general rate case filing.
- And continued to invest in our water system infrastructure, including investments designed to better prepare us for wildfire and other climate change impacts.
Given the state of the economy and the uncertain timing of the conclusion of our general rate case in California, I expect the remainder of the year to be challenging. But I know I’m working alongside a strong, dedicated team of professionals who have a track record of performing in difficult times,” Kropelnicki said.
Additional Financial Results for the second quarter of 2022
Operating revenue decreased
Total operating expenses increased
Water production costs decreased
Administrative and general expenses increased
Other operations expenses increased
Depreciation and amortization expense increased
Income taxes decreased
Property and other taxes increased
Net other income decreased
Year-to-Date Results
For the six month period ended June 30, 2022, net income attributable to Group was
The
The change in accrued unbilled revenue was mostly driven by the timing of when meter reads were completed during the month of June 2022 as compared to June 2021 and a decrease in customer consumption. In the first six months of 2022, accrued unbilled revenue added
Liquidity and Financing
The company maintained
The company invested
On July 27, 2022, the Board of Directors approved a quarterly cash dividend of
Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA)
The under-collected net receivable balance in the WRAM and MCBA balancing account was
Other Information
All stockholders and interested investors are invited to listen to the 2022 second quarter conference call on July 28, 2022 at 8:00 a.m. PT (11:00 a.m. ET) by dialing 1-800-715-9871 or 1-646-307-1963 and keying in ID #1318225. Please dial in at least 15 minutes in advance of the call to ensure a timely connection. A replay of the call will be available from 11:00 a.m. PT (2:00 p.m. ET) on July 28, 2022 through September 28, 2022, at 1-800-715-9871 or 1-646-307-1963, ID #1318225. The replay will also be available under the investor relations tab at www.calwatergroup.com. Prior to the call, the company will post a slide presentation on its website. The presentation can be found at www.calwatergroup.com/docs/q22022slides.pdf after 6:00 a.m. PT. The call will be hosted by President and Chief Executive Officer Martin A. Kropelnicki, Vice President and Chief Financial Officer Thomas F. Smegal III, and Vice President and Corporate Controller David B. Healey.
California Water Service Group is the parent company of regulated utilities California Water Service, Hawaii Water Service, New Mexico Water Service, and Washington Water Service, as well as Texas Water Service, a utility holding company. Together, these companies provide regulated and non-regulated water and wastewater service to more than 2.1 million people in California, Hawaii, New Mexico, Washington, and Texas. California Water Service Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.” Additional information is available online at www.calwatergroup.com.
This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("Act"). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor" treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management's judgment about the Company, the water utility industry and general economic conditions. Such words as will, would, expects, intends, plans, believes, may, estimates, assumes, anticipates, projects, progress, predicts, hopes, targets, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to: the impact of the ongoing COVID-19 pandemic and related public health measures; our ability to invest or apply the proceeds from the issuance of common stock in an accretive manner; governmental and regulatory commissions' decisions, including decisions on proper disposition of property; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures, such as the CPUC’s decision in 2020 to preclude companies from proposing fully decoupled WRAMs in their next GRC filing (which impacted our 2021 GRC filing related to our operations commencing in 2023); the outcome and timeliness of regulatory commissions' actions concerning rate relief and other matters, including with respect to our 2021 GRC filing; increased risk of inverse condemnation losses as a result of climate change and drought; our ability to renew leases to operate water systems owned by others on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions, especially as a result of Public Safety Power Shutoff (PSPS) programs; housing and customer growth; the impact of opposition to rate increases; our ability to recover costs; availability of water supplies; issues with the implementation, maintenance or security of our information technology systems; civil disturbances or terrorist threats or acts; the adequacy of our efforts to mitigate physical and cyber security risks and threats; the ability of our enterprise risk management processes to identify or address risks adequately; labor relations matters as we negotiate with the unions; changes in customer water use patterns and the effects of conservation, including as a result of drought conditions; our ability to complete, in a timely manner or at all, successfully integrate and achieve anticipated benefits from announced acquisitions; the impact of weather, climate change, natural disasters, and actual or threatened public health emergencies, including disease outbreaks, on our operations, water quality, water availability, water sales and operating results and the adequacy of our emergency preparedness; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; risks associated with expanding our business and operations geographically; the impact of stagnating or worsening business and economic conditions, including inflationary pressures, general economic slowdown or a recession, increasing interest rates, and changes in monetary policy; and other risks and unforeseen events described in our SEC filings. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the Annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.
Contact
Tom Smegal
(408) 367-8200 (analysts)
Shannon Dean
(408) 367-8243 (media)
| CALIFORNIA WATER SERVICE GROUP | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| Unaudited | ||||||||||
| (In thousands, except per share data) | June 30 | December 31 | ||||||||
| 2022 | 2021 | |||||||||
| ASSETS | ||||||||||
| Utility plant: | ||||||||||
| Utility plant | $ | 4,341,433 | $ | 4,197,344 | ||||||
| Less accumulated depreciation and amortization | (1,406,757 | ) | (1,350,482 | ) | ||||||
| Net utility plant | 2,934,676 | 2,846,862 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | 61,749 | 78,380 | ||||||||
| Receivables: | ||||||||||
| Customers, net | 68,404 | 60,785 | ||||||||
| Regulatory balancing accounts | 56,625 | 78,597 | ||||||||
| Other, net | 19,803 | 18,452 | ||||||||
| Unbilled revenue, net | 38,796 | 32,760 | ||||||||
| Materials and supplies at weighted average cost | 10,567 | 9,511 | ||||||||
| Taxes, prepaid expenses, and other assets | 20,708 | 21,973 | ||||||||
| Total current assets | 276,652 | 300,458 | ||||||||
| Other assets: | ||||||||||
| Regulatory assets | 287,625 | 285,692 | ||||||||
| Goodwill | 36,814 | 36,814 | ||||||||
| Other assets | 146,985 | 153,445 | ||||||||
| Total other assets | 471,424 | 475,951 | ||||||||
| TOTAL ASSETS | $ | 3,682,752 | $ | 3,623,271 | ||||||
| CAPITALIZATION AND LIABILITIES | ||||||||||
| Capitalization: | ||||||||||
| Common stock, $.01 par value; 68,000 shares authorized, 54,356 and 53,716 outstanding in 2022 and 2021, respectively | $ | 544 | $ | 537 | ||||||
| Additional paid-in capital | 682,353 | 651,121 | ||||||||
| Retained earnings | 519,625 | 525,936 | ||||||||
| Noncontrolling interests | 4,784 | 5,386 | ||||||||
| Total equity | 1,207,306 | 1,182,980 | ||||||||
| Long-term debt, net | 1,054,170 | 1,055,794 | ||||||||
| Total capitalization | 2,261,476 | 2,238,774 | ||||||||
| Current liabilities: | ||||||||||
| Current maturities of long-term debt, net | 5,783 | 5,192 | ||||||||
| Short-term borrowings | 70,000 | 35,000 | ||||||||
| Accounts payable | 139,732 | 144,369 | ||||||||
| Regulatory balancing accounts | 9,627 | 17,547 | ||||||||
| Accrued interest | 6,740 | 6,542 | ||||||||
| Accrued expenses and other liabilities | 54,201 | 47,926 | ||||||||
| Total current liabilities | 286,083 | 256,576 | ||||||||
| Deferred income taxes | 300,489 | 298,945 | ||||||||
| Pension | 94,796 | 92,287 | ||||||||
| Regulatory liabilities and other | 254,109 | 252,938 | ||||||||
| Advances for construction | 198,674 | 198,086 | ||||||||
| Contributions in aid of construction | 287,125 | 285,665 | ||||||||
| Commitments and contingencies | ||||||||||
| TOTAL CAPITALIZATION AND LIABILITIES | $ | 3,682,752 | $ | 3,623,271 | ||||||
| CALIFORNIA WATER SERVICE GROUP | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| Unaudited | ||||||||||
| (In thousands, except per share data) | ||||||||||
| For the Three Months ended: | ||||||||||
| June 30, | June 30, | |||||||||
| 2022 | 2021 | |||||||||
| Operating revenue | $ | 206,194 | $ | 213,123 | ||||||
| Operating expenses: | ||||||||||
| Operations: | ||||||||||
| Water production costs | 70,907 | 74,911 | ||||||||
| Administrative and general | 32,686 | 31,756 | ||||||||
| Other operations | 29,417 | 20,720 | ||||||||
| Maintenance | 7,615 | 6,610 | ||||||||
| Depreciation and amortization | 28,773 | 27,237 | ||||||||
| Income taxes | 1,454 | 1,972 | ||||||||
| Property and other taxes | 8,053 | 7,671 | ||||||||
| Total operating expenses | 178,905 | 170,877 | ||||||||
| Net operating income | 27,289 | 42,246 | ||||||||
| Other income and expenses: | ||||||||||
| Non-regulated revenue | 7,002 | 5,374 | ||||||||
| Non-regulated expenses | (8,541 | ) | (1,815 | ) | ||||||
| Other components of net periodic benefit credit | 3,765 | 2,688 | ||||||||
| Allowance for equity funds used during construction | 1,042 | 848 | ||||||||
| Income tax expense on other income and expenses | (345 | ) | (512 | ) | ||||||
| Net other income | 2,923 | 6,583 | ||||||||
| Interest expense: | ||||||||||
| Interest expense | 11,586 | 11,206 | ||||||||
| Allowance for borrowed funds used during construction | (589 | ) | (453 | ) | ||||||
| Net interest expense | 10,997 | 10,753 | ||||||||
| Net income | 19,215 | 38,076 | ||||||||
| Net loss attributable to noncontrolling interests | (269 | ) | (149 | ) | ||||||
| Net income attributable to California Water Service Group | $ | 19,484 | $ | 38,225 | ||||||
| Earnings per share of common stock | ||||||||||
| Basic | $ | 0.36 | $ | 0.75 | ||||||
| Diluted | $ | 0.36 | $ | 0.75 | ||||||
| Weighted average shares outstanding | ||||||||||
| Basic | 54,007 | 51,080 | ||||||||
| Diluted | 54,042 | 51,080 | ||||||||
| Dividends per share of common stock | $ | 0.25 | $ | 0.23 | ||||||
| CALIFORNIA WATER SERVICE GROUP | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| Unaudited | ||||||||||
| (In thousands, except per share data) | ||||||||||
| For the Six Months ended: | ||||||||||
| June 30, | June 30, | |||||||||
| 2022 | 2021 | |||||||||
| Operating revenue | $ | 379,187 | $ | 360,860 | ||||||
| Operating expenses: | ||||||||||
| Operations: | ||||||||||
| Water production costs | 132,445 | 129,737 | ||||||||
| Administrative and general | 66,097 | 62,125 | ||||||||
| Other operations | 55,269 | 38,632 | ||||||||
| Maintenance | 14,956 | 13,379 | ||||||||
| Depreciation and amortization | 57,543 | 54,284 | ||||||||
| Income taxes | 37 | 1,871 | ||||||||
| Property and other taxes | 16,413 | 15,667 | ||||||||
| Total operating expenses | 342,760 | 315,695 | ||||||||
| Net operating income | 36,427 | 45,165 | ||||||||
| Other income and expenses: | ||||||||||
| Non-regulated revenue | 12,199 | 10,946 | ||||||||
| Non-regulated expenses | (15,527 | ) | (6,575 | ) | ||||||
| Other components of net periodic benefit credit | 7,779 | 5,667 | ||||||||
| Allowance for equity funds used during construction | 2,017 | 1,392 | ||||||||
| Income tax expense on other income and expenses | (857 | ) | (870 | ) | ||||||
| Net other income | 5,611 | 10,560 | ||||||||
| Interest expense: | ||||||||||
| Interest expense | 23,081 | 21,428 | ||||||||
| Allowance for borrowed funds used during construction | (1,152 | ) | (747 | ) | ||||||
| Net interest expense | 21,929 | 20,681 | ||||||||
| Net income | 20,109 | 35,044 | ||||||||
| Net loss attributable to noncontrolling interests | (461 | ) | (149 | ) | ||||||
| Net income attributable to California Water Service Group | $ | 20,570 | $ | 35,193 | ||||||
| Earnings per share of common stock | ||||||||||
| Basic | $ | 0.38 | $ | 0.69 | ||||||
| Diluted | $ | 0.38 | $ | 0.69 | ||||||
| Weighted average shares outstanding | ||||||||||
| Basic | 53,870 | 50,762 | ||||||||
| Diluted | 53,918 | 50,762 | ||||||||
| Dividends per share of common stock | $ | 0.50 | $ | 0.46 | ||||||
