California Water Service Group Reports First Quarter 2025 Results
- Net income increased by $9.2 million compared to Q1 2024 non-GAAP figures
- Operating revenue grew by $23.5 million on a non-GAAP basis
- Proposed $1.6 billion infrastructure investment plan for 2025-2027
- 58 consecutive years of dividend increases with a 7.7% 5-year compound growth rate
- Strong liquidity with $90.1 million cash and $315 million additional borrowing capacity
- Customer rate changes and increased usage added $23.0 million in new revenue
- Net income decreased by $56.6 million year-over-year
- Operating revenue declined by $66.7 million compared to Q1 2024
- Operating expenses at $181.6 million despite $11.3 million decrease
- Pending regulatory approval for proposed rate increases of 17.1% in 2026, 7.7% in 2027, and 8.1% in 2028
Insights
California Water Service shows operational improvement when adjusted for one-time regulatory benefits recorded last year, with continued infrastructure investments supporting long-term growth.
California Water Service Group's Q1 2025 results require careful interpretation due to significant one-time regulatory impacts in the comparable period. While headline figures show net income declining to
When compared to adjusted non-GAAP figures for Q1 2024, the company actually demonstrated improved operational performance with net income increasing by
On the expense side, operating costs decreased by
From a regulatory standpoint, the 2024 California GRC is progressing on schedule, though the company was unable to reach a global settlement with California Public Advocates. The proposed rate adjustments would increase revenue by
The company maintained
For income-focused investors, the company declared its 321st consecutive quarterly dividend of
SAN JOSE, Calif., May 01, 2025 (GLOBE NEWSWIRE) -- California Water Service Group (“Group” or “Company,” NYSE: CWT), a leading publicly traded water utility serving California, Hawaii, New Mexico, Washington, and Texas, today reported financial results for the first quarter 2025.
Financial highlights included:
- The inclusion of both GAAP and non-GAAP financial measures for 2024 to assist investors in comparing 2024 and 2025 performance.
- Net income attributable to Group of
$13.3 million , or$0.22 per diluted share, a decrease of$56.6 million and$0.99 per share, respectively, compared to the same period in the prior year. However, Q1 2025 net income and diluted earnings per share increased by$9.2 million and$0.15 , respectively, compared to Q1 2024 non-GAAP net income of$4.1 million and diluted earnings per share of$0.07 .
- Operating revenue of
$204.0 million , a decrease of$66.7 million compared to Q1 2024. However, operating revenue increased by$23.5 million compared to the non-GAAP operating revenue of$180.5 million for Q1 2024.
As a result of the delayed 2021 California GRC decision, interim rate relief related to 2023, including revenue of
Other Highlights included:
- Continued on-time progress on the 2024 California General Rate Case and Infrastructure Improvement Plan (2024 California GRC).
- Declaration of the 321st consecutive quarterly dividend in the amount of
$0.30 per share.
Chairman and Chief Executive Officer Martin A. Kropelnicki commented, “We are pleased with our strong start to 2025, which reflects our ongoing commitment to operating efficiently while continuing to deliver safe, reliable water service to our customers. As we progress through the year, we remain focused on achieving a timely and constructive resolution to our 2024 California GRC, which is critical to supporting infrastructure investment and long-term service reliability. From a macroeconomic standpoint, we believe our consistent performance, predictable results through rate base growth, and strong dividend program offer an attractive value proposition to drive long-term shareholder value.”
Q1 2025 Financial Results
The Company encourages stockholders and other interested parties to assess first quarter 2025 results as compared to first quarter 2024 results factoring in the significant benefit of 2023 interim rate relief from the delayed 2021 California GRC decision as discussed below.
- Q1 2025 operating revenue was
$204.0 million compared to$270.7 million in Q1 2024, a decrease of$66.7 million . Compared to Q1 2024 non-GAAP revenue of$180.5 million , Q1 2025 revenue increased$23.5 million .- Customer rate changes and increased usage added
$23.0 million in new revenue. - Adoption of the 2021 California GRC decision in Q1 2024 added
$90.3 million of revenue related to 2023 interim rate relief that did not recur in Q1 2025.
- Customer rate changes and increased usage added
- Q1 2025 operating expenses were
$181.6 million compared to$192.9 million in Q1 2024, a decrease of$11.3 million .
- Water production costs decreased by
$1.2 million to$63.0 million .- Incremental Cost Balancing Account (ICBA) expense decreased
$9.3 million . - Increased usage and higher wholesale water rates partially offset ICBA expense decrease by
$8.1 million .
- Incremental Cost Balancing Account (ICBA) expense decreased
- Depreciation and amortization expense increased
$3.1 million to$36.0 million due to new utility plant placed in service. - Income tax expenses decreased
$14.5 million to$1.0 million primarily due to the decrease in pre-tax income.
- Water production costs decreased by
Liquidity, Financing, and Capital Investment
As of March 31, 2025, Group’s cash and cash equivalents were
Group capital investments during the quarter ended March 31, 2025, were
California Regulatory Activity
2024 General Rate Case and Infrastructure Improvement Plan
On July 8, 2024, Cal Water submitted the 2024 California GRC that included Infrastructure Improvement Plans for 2025-2027. Cal Water proposes to invest more than
The triennial rate filing, which was initiated in July 2024, is an approximately 18-month review process leading to a final California Public Utilities Commission (CPUC) decision.
The 2024 California GRC is progressing on schedule. California Public Advocates (Cal PA) issued its report, Cal Water provided rebuttal testimony, and, in April, settlement discussions took place. Although Cal Water was unable to reach a global settlement with Cal PA, it is currently developing a list of undisputed items to narrow the focus of evidentiary hearings, which are expected to occur in May 2025.
Escalation Increase Requests
As a part of the 2021 California GRC decision, Cal Water was authorized to request annual escalation rate increases for 2025 for those districts that passed the CPUC’s earnings test. In November of 2024, Cal Water requested 2025 escalation rate increases for 18 of its regulated districts. The increase in annual adopted gross revenue associated with the November 2024 filing was
Palos Verdes Peninsula Water Reliability Project
On January 30, 2025, a final decision was issued approving Cal Water’s request to include
California Drought Memorandum Account (DRMA)
On January 30, 2025, a final decision was issued that approved Cal Water’s request to recover
Other Regulatory Matters
Hawaii Water Service – 2024 Ka’anapali General Rate Case (2024 Ka’anapali GRC)
During the first quarter of 2025, a settlement was reached in the 2024 Ka’anapali GRC between Hawaii Water Service and the Hawaii Division of Consumer Advocacy. The settlement calls for a total test year revenue requirement of
Dividend
The Group Board of Directors declared the 321st consecutive quarterly dividend in the amount of
For additional details, please see Form 10-Q which will be available at https://www.calwatergroup.com/investors/financials-filings-reports/sec-filings
Quarterly Earnings Teleconference
All stockholders and interested investors are invited to attend the conference call on Thursday, May 1, 2025, at 8 a.m. PT/11 a.m. ET by dialing 1-800-715-9871 or 1-646-307-1963 and keying in ID# 7963586, or accessing the live audio webcast at https://edge.media-server.com/mmc/p/ucroi7t4. Please join at least 15 minutes in advance to ensure a timely connection to the call. A replay of the call will be available from 2:00 p.m. ET on Thursday, May 1, 2025, through Monday, June 30, 2025, at 1-800-770-2030 or 1-609-800-9909 and key in ID# 7963586, or by accessing the webcast above. The call will be hosted by Chairman, President and Chief Executive Officer Martin A. Kropelnicki, and Senior Vice President, Chief Financial Officer and Treasurer James P. Lynch. Prior to the call, Cal Water will furnish a slide presentation on its website.
About California Water Service Group
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 (“PSLRA”). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the PSLRA. Forward-looking statements in this news release are based on currently available information, expectations, estimates, assumptions and projections, and our management’s beliefs, assumptions, judgments and expectations about us, the water utility industry and general economic conditions. These statements are not statements of historical fact. When used in our documents, statements that are not historical in nature, including words like will, would, expects, intends, plans, believes, may, could, estimates, assumes, anticipates, projects, progress, predicts, hopes, targets, forecasts, should, seeks or variations of these words or similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements in this news release include, but are not limited to, statements describing Cal Water’s expected financial performance, investments in infrastructure projects, and expectations regarding Group’s plans and proposals pursuant to and progress of the 2024 GRC, annual dividend yield, and Hawaii Water Service rate increase. Forward-looking statements are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Consequently, actual results or outcomes may vary materially from what is contained in a forward-looking statement. Factors that may cause actual results or outcomes to be different than those expected or anticipated include, but are not limited to: the outcome and timeliness of regulatory commissions’ actions concerning rate relief and other matters, including with respect to the 2024 GRC; the impact of opposition to rate increases; our ability to recover costs; federal governmental and state regulatory commissions’ decisions, including decisions on proper disposition of property; changes in state regulatory commissions’ policies and procedures, such as the CPUC’s decision in 2020 to preclude companies from proposing fully decoupled WRAMs, which impacted the 2021 GRC Filing; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements, such as the United States Environmental Protection Agency’s (EPA) finalization of a National Primary Drinking Water Regulation establishing legally enforceable maximum contaminant levels (MCL) for six PFAS in drinking water in 2024; the impact of weather, climate change, natural disasters, including wildfires and landslides, 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; electric power interruptions, especially as a result of public safety power shutoff programs; availability of water supplies; our ability to invest or apply the proceeds from the issuance of common stock in an accretive manner; consequences of eminent domain actions relating to our water systems; our ability to renew leases to operate water systems owned by others on beneficial terms; increased risk of inverse condemnation losses as a result of the impact of weather, climate change, and natural disasters, including wildfires and landslides; housing and customer growth; 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; 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, changes in tariff policy and uncertainty regarding tariffs and other retaliatory trade measures, the interest rate environment, changes in monetary policy, adverse capital markets activity or macroeconomic conditions as a result of geopolitical conflicts, and the prospect of a shutdown of the U.S. federal government; the impact of market conditions and volatility on unrealized gains or losses on our non-qualified benefit plan investments and our operating results; the impact of weather and timing of meter reads on our accrued unbilled revenue; the impact of evolving legal and regulatory requirements, including emerging environmental, social and governance requirements; the impact of the evolving U.S. political environment that has led to, in some cases, legal challenges and uncertainty around the funding, functioning, and policy priorities of the U.S. federal regulatory agencies and the status of current and future regulations; and other risks and unforeseen events described in our Securities and Exchange Commission (“SEC”) filings. In light of these risks, uncertainties and assumptions, investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the Annual Report on Form 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the SEC. We are not under any obligation, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
Contacts:
James P. Lynch (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) | |||||||
| March 31, 2025 | December 31, 2024 | ||||||
| ASSETS | |||||||
| Utility plant: | |||||||
| Utility plant | $ | 5,498,140 | $ | 5,400,489 | |||
| Less accumulated depreciation and amortization | (1,267,925 | ) | (1,241,785 | ) | |||
| Net utility plant | 4,230,215 | 4,158,704 | |||||
| Current assets: | |||||||
| Cash and cash equivalents | 44,460 | 50,121 | |||||
| Restricted cash | 45,675 | 45,566 | |||||
| Receivables: | |||||||
| Customers, net | 53,888 | 58,585 | |||||
| Regulatory balancing accounts | 62,286 | 55,917 | |||||
| Other, net | 32,818 | 33,976 | |||||
| Accrued and unbilled revenue, net | 34,974 | 39,718 | |||||
| Materials and supplies | 20,283 | 20,511 | |||||
| Taxes, prepaid expenses, and other assets | 24,839 | 19,742 | |||||
| Total current assets | 319,223 | 324,136 | |||||
| Other assets: | |||||||
| Regulatory assets | 367,231 | 357,406 | |||||
| Goodwill | 37,063 | 37,063 | |||||
| Other assets | 304,019 | 302,974 | |||||
| Total other assets | 708,313 | 697,443 | |||||
| TOTAL ASSETS | $ | 5,257,751 | $ | 5,180,283 | |||
| CAPITALIZATION AND LIABILITIES | |||||||
| Capitalization: | |||||||
| Common stock, | $ | 596 | $ | 595 | |||
| Additional paid-in capital | 967,689 | 966,975 | |||||
| Retained earnings | 668,023 | 674,918 | |||||
| Accumulated other comprehensive loss | (7,063 | ) | (7,217 | ) | |||
| Noncontrolling interests | 2,744 | 3,015 | |||||
| Total equity | 1,631,989 | 1,638,286 | |||||
| Long-term debt, net | 1,104,373 | 1,104,571 | |||||
| Total capitalization | 2,736,362 | 2,742,857 | |||||
| Current liabilities: | |||||||
| Current maturities of long-term debt, net | 72,445 | 72,422 | |||||
| Short-term borrowings | 285,000 | 205,000 | |||||
| Accounts payable | 141,295 | 167,533 | |||||
| Regulatory balancing accounts | 19,109 | 22,648 | |||||
| Accrued other taxes | 6,708 | 6,084 | |||||
| Accrued interest | 19,829 | 8,406 | |||||
| Other accrued liabilities | 59,698 | 56,271 | |||||
| Total current liabilities | 604,084 | 538,364 | |||||
| Deferred income taxes | 416,230 | 411,083 | |||||
| Regulatory liabilities | 826,595 | 814,551 | |||||
| Pension | 82,007 | 81,665 | |||||
| Advances for construction | 202,423 | 202,614 | |||||
| Contributions in aid of construction | 293,956 | 294,970 | |||||
| Other | 96,094 | 94,179 | |||||
| Commitments and contingencies | |||||||
| TOTAL CAPITALIZATION AND LIABILITIES | $ | 5,257,751 | $ | 5,180,283 | |||
| CALIFORNIA WATER SERVICE GROUP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited | |||||||
| (In thousands, except per share data) | |||||||
| Three Months Ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Operating revenue | $ | 203,973 | $ | 270,749 | |||
| Operating expenses: | |||||||
| Operations: | |||||||
| Water production costs | 62,991 | 64,185 | |||||
| Administrative and general | 34,174 | 35,596 | |||||
| Other operations | 28,836 | 26,925 | |||||
| Maintenance | 7,668 | 8,010 | |||||
| Depreciation and amortization | 35,956 | 32,844 | |||||
| Income tax expense | 1,035 | 15,538 | |||||
| Property and other taxes | 10,968 | 9,757 | |||||
| Total operating expenses | 181,628 | 192,855 | |||||
| Net operating income | 22,345 | 77,894 | |||||
| Other income and expenses: | |||||||
| Non-regulated revenue | 5,081 | 5,098 | |||||
| Non-regulated expenses | (3,466 | ) | (1,954 | ) | |||
| Other components of net periodic benefit credit | 4,800 | 3,273 | |||||
| Allowance for equity funds used during construction | 1,797 | 1,742 | |||||
| Income tax expense on other income and expenses | (1,703 | ) | (1,321 | ) | |||
| Net other income | 6,509 | 6,838 | |||||
| Interest expense: | |||||||
| Interest expense | 16,509 | 15,800 | |||||
| Allowance for borrowed funds used during construction | (857 | ) | (758 | ) | |||
| Net interest expense | 15,652 | 15,042 | |||||
| Net income | 13,202 | 69,690 | |||||
| Net loss attributable to noncontrolling interests | (129 | ) | (227 | ) | |||
| Net income attributable to California Water Service Group | $ | 13,331 | $ | 69,917 | |||
| Earnings per share of common stock: | |||||||
| Basic | $ | 0.22 | $ | 1.21 | |||
| Diluted | $ | 0.22 | $ | 1.21 | |||
| Weighted average shares outstanding: | |||||||
| Basic | 59,511 | 57,733 | |||||
| Diluted | 59,566 | 57,774 | |||||
| Dividends per share of common stock | $ | 0.34 | $ | 0.28 | |||
Non-GAAP Financial Measures
The Company’s revenue, net income, and diluted earnings per share are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and represent amounts reported on filings with the Securities and Exchange Commission. Adjusted revenue, net income, and diluted earnings per share are non-GAAP financial measures representing GAAP balances that, in this earnings release, are adjusted to exclude the effects of 2023 interim rate relief related to the delayed 2021 California GRC recorded by the Company in March 2024. These non-GAAP financial measures are provided as additional information for investors and analysts to better assess the Company’s 2025 financial performance as compared to 2024 without the impact of the 2023 interim rate relief on 2024 results. Management also uses these non-GAAP financial measures in evaluating the Company’s performance. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, even when the same or similarly titled terms are used to identify such measures, limiting their usefulness for comparative purposes. Further, these non-GAAP financial measures should be considered as a supplement to the financial information prepared on a GAAP basis rather than an alternative to the respective GAAP measures.
| Reconciliation of Non-GAAP Financial Measures | ||||||
| Three Months Ended March 31, | ||||||
| (in millions, except per share amounts) | 2025 | 2024 | ||||
| Reported GAAP Revenue | $ | 203,973 | $ | 270,749 | ||
| Adjustments: | ||||||
| 2023 interim rate relief related to the 2021 California General Rate Case recorded in 2024 | — | (90,266 | ) | |||
| Adjusted Revenue (non-GAAP) | $ | 203,973 | $ | 180,483 | ||
| Reported GAAP Net Income | $ | 13,331 | $ | 69,917 | ||
| Adjustments: | ||||||
| 2023 interim rate relief related to the 2021 California General Rate Case recorded in 2024 | — | (65,813 | ) | |||
| Adjusted Net Income (non-GAAP) | $ | 13,331 | $ | 4,104 | ||
| Reported GAAP Diluted Earnings Per Share | $ | 0.22 | $ | 1.21 | ||
| Adjustments: | ||||||
| 2023 interim rate relief related to the 2021 California General Rate Case recorded in 2024 | — | (1.14 | ) | |||
| Adjusted Diluted Earnings Per Share (non-GAAP) | $ | 0.22 | $ | 0.07 | ||
FAQ
What were CWT's earnings per share in Q1 2025?
How much is California Water Service Group's quarterly dividend in 2025?
What is CWT's proposed infrastructure investment plan for 2025-2027?
How much revenue did California Water Service Group generate in Q1 2025?
What rate increases has CWT proposed in its 2024 California General Rate Case?
