California Water Service Group Reports Strong Second Quarter 2026 Financial Results
Rhea-AI Summary
California Water Service Group (NYSE: CWT) reported Q2 2026 net income of $56.5 million, or $0.93 per diluted share, up from $42.2 million, or $0.71, in Q2 2025. Operating revenue rose to $308.6 million from $265.0 million, aided by $15.3 million of IRMA revenue tied to the delayed 2024 California General Rate Case (CA GRC), $15.0 million from rate and regulatory mechanism changes, higher consumption, and deferred regulatory revenues.
The final 2024 CA GRC decision authorizes company-wide rate increases of $90.5 million (10.9%) in 2026, $43.2 million (4.7%) in 2027, and $48.9 million (5.1%) in 2028, plus about $1.45 billion of pre-approved infrastructure investments through 2027 and up to $229 million recoverable via advice letters. In Q2 2026, the company invested a record $147 million in infrastructure and $276.4 million year-to-date. It is progressing on the planned $218 million acquisition of Nexus Water Group’s Nevada and Oregon systems, expected to add roughly 36,000 customer equivalent units and $109 million of rate base, subject to regulatory approvals. The board declared a quarterly dividend of $0.335 per share, supporting an expected annualized dividend of $1.34, representing an 8% increase and the 326th consecutive quarterly dividend.
Positive
- Q2 2026 earnings growth net income $56.5m vs. $42.2m; diluted EPS $0.93 vs. $0.71
- Q2 2026 revenue increase $308.6m vs. $265.0m; YTD 2026 revenue $523.2m vs. $468.9m
- Approved multi-year rate hikes revenue up $90.5m (10.9%) in 2026, $43.2m (4.7%) in 2027, $48.9m (5.1%) in 2028
- Large capital program authorized about $1.45b pre-approved infrastructure through 2027 plus up to $229m via advice letters
- Record infrastructure investment $147m in Q2 2026 vs. $119m; $276.4m YTD vs. $229.5m
- Nexus acquisition agreement $218m deal to add ~36,000 customer units and ~$109m of rate base, subject to approvals
- Dividend increase annual dividend expected at $1.34 per share, up 8%, with 326th consecutive quarterly dividend declared
Negative
- Higher operating expenses Q2 2026 operating expenses $237.7m vs. $213.1m; YTD $434.1m vs. $394.8m
- Rising water production costs Q2 up $6.3m to $91.8m; YTD up $14.7m to $163.2m, mainly from higher wholesale rates
- Other operations cost growth Q2 other operations $45.1m vs. $31.7m; YTD $76.4m vs. $60.5m, including conservation and deferred revenue-related items
- Higher income tax expense Q2 income tax $13.9m vs. $6.9m; YTD $13.9m vs. $8.0m due to reduced TCJA amortization and higher pre-tax income
- Increased interest burden Q2 net interest expense $19.8m vs. $16.5m; YTD $38.3m vs. $32.2m
- More short-term debt short-term borrowings $205.0m at June 30, 2026 vs. $130.0m at December 31, 2025
News Explained
The CPUC’s final rate-case decision renews water-revenue adjustment and cost-balancing mechanisms, adds a Sales Reconciliation Mechanism, and approves greater recovery of fixed costs regardless of water sales, changing the approved framework for how Cal Water recovers costs.
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Apr 29 | Q1 earnings report | Positive | -6.9% | Q1 results and California rate-case update preceded a negative 24-hour reaction. |
| Oct 30 | Q3 earnings report | Positive | -4.8% | Q3 results and infrastructure investment were followed by a negative reaction. |
| Jul 31 | Q2 earnings report | Positive | +1.3% | Q2 earnings growth, infrastructure spending, and regulatory progress preceded a positive reaction. |
| May 01 | Q1 earnings report | Negative | -0.8% | Lower reported quarterly revenue and earnings preceded a negative reaction. |
| Feb 27 | Annual earnings report | Positive | -2.2% | Full-year revenue and earnings growth preceded a negative 24-hour reaction. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
CWT's tag-specific earnings history showed predominantly negative reactions despite several positive or mixed earnings announcements.
Key Terms
general rate case regulatory
interim rates memorandum account regulatory
revenue stabilization mechanisms regulatory
rate base financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
SAN JOSE, Calif., July 29, 2026 (GLOBE NEWSWIRE) -- California Water Service Group (Group or the Company, NYSE: CWT), a leading publicly traded water utility serving California, Hawaii, New Mexico, Washington, and Texas, today reported strong second quarter 2026 results.
Second Quarter 2026 Results Reflect Resolution of the 2024 California General Rate Case (2024 CA GRC)
The Company reported that second-quarter 2026 results were in line with expectations as the Company received a final decision on the 2024 CA GRC at the end of April. The Company recognized the decision retroactively to January 1, 2026, as provided for in its California Interim Rates Memorandum Account (IRMA).
Q2 2026 net income was
- IRMA revenue related to the delayed 2024 CA GRC and implementation of new rates added
$15.3 million ,$9.2 million of which related to Q1 2026. - Rate changes and changes in regulatory mechanisms added
$15.0 million . - Increased customer consumption increased revenue by
$4.1 million due to variability in climate conditions between the two quarters. - Deferred revenue expected to be collected within the next 24 months related to prior year regulatory mechanisms added
$9.3 million of revenue.
Q2 2026 operating expenses were
- Water production costs increased by
$6.3 million , primarily due to increases in wholesale water rates. - Other operations expenses increased by
$13.4 million , of which$7.9 million related to recognized deferred revenue related to prior year’s regulatory mechanisms and$2.1 million related to conservation program activities. - Depreciation and amortization expenses decreased by
$6.5 million due to lower depreciation rates in California approved in the 2024 CA GRC. - Income taxes increased by
$7.0 million as a result of a reduction in the Tax Cuts and Jobs Act (TCJA) deferred accrued income tax amortization and higher pre-tax income.
YTD 2026 Financial Results Also Reflect Resolution of the 2024 CA GRC
YTD 2026 net income was
- IRMA revenue related to the delayed 2024 CA GRC and implementation of new rates added
$15.3 million . - Rate changes and changes in regulatory mechanisms added
$29.5 million . - Deferred revenue expected to be collected within the next 24 months related to prior year regulatory mechanisms added
$8.5 million of revenue.
YTD 2026 operating expenses were
- Water production costs increased by
$14.7 million , primarily due to increases in wholesale water rates. - Other operations expenses increased by
$15.8 million , of which$8.0 million related to recognized deferred revenue related to prior year’s regulatory mechanisms and$2.6 million related to conservation program activities. - Depreciation and amortization expenses decreased by
$2.5 million due to lower depreciation rates in California approved in the 2024 CA GRC. - Income taxes increased by
$6.0 million as a result of a reduction in the TCJA deferred accrued income tax amortization and higher pre-tax income.
“Receiving the final decision in our 2024 CA GRC provides the regulatory framework needed to continue investing in the infrastructure our customers depend on, while supporting long-term earnings and cash flow visibility,” said Chairman and Chief Executive Officer Martin A. Kropelnicki. “The decision authorizes meaningful rate adjustments through 2028, approximately
“During the quarter, we also achieved a record level of infrastructure investment as we continue modernizing and strengthening our water systems across our service territories. In addition, we made meaningful progress on our planned acquisition of Nexus Water Group's systems in Nevada and Oregon, including filing Change of Control applications with the applicable regulatory agencies. Finally, we declared our 326th consecutive quarterly dividend,” Kropelnicki added. “These actions reflect our disciplined approach to investing in our business, growing our regulated footprint, and creating long-term value for our customers, communities, and stockholders.”
Cal Water Receives Final Decision on the 2024 CA GRC
Subsidiary California Water Service Company (Cal Water) received a final decision from the CPUC on its 2024 CA GRC and Infrastructure Improvement Plan on April 30, 2026.
The decision authorizes rate adjustments expected to increase company-wide revenue by
The decision also renews key revenue stabilization mechanisms, including the Monterey-style Water Revenue Adjustment Mechanism and water production incremental cost balancing accounts, establishes a new Sales Reconciliation Mechanism, and approves a rate design that increases recovery of fixed costs regardless of water sales. These mechanisms are designed to support more predictable cost recovery while helping mitigate the financial impact of customer usage variability and other uncertain costs.
Company Invests a Record
In the second quarter of 2026, the Company invested
Company Continues to Make Progress on Water System Acquisitions
In February 2026, the Company announced an agreement to acquire Nexus Water Group’s water and wastewater systems in Nevada and Oregon for approximately
The acquisition remains subject to customary regulatory approvals and closing conditions, but remains on track with the Company filing Change of Control applications with the public utilities commissions in Nevada and Oregon in April and continuing integration activities.
In Texas, the Company received notification that its change in control application has been deemed complete by the Public Utility Commission of Texas.
Company Delivers Strong Dividend Performance
During the first quarter, the Company announced its intent to increase the annual dividend by
For additional details, please see the Form 10-Q which will be available at:
www.calwatergroup.com/investors/financials-filings-reports/sec-filings, or listen to the earnings teleconference or teleconference replay.
Quarterly Earnings Teleconference Scheduled
The quarterly teleconference will take place on July 30, 2026, at 8 a.m. PT/11 a.m. ET. To join, dial 1-800-715-9871 or 1-646-307-1963 and key in ID# 5478283, or access the live audio webcast at
edge.media-server.com/mmc/p/p8cvrm58/.
A replay of the call will be available from 2 p.m. ET on July 30, 2026, through September 28, 2026, at 1-800-770-2030 or 1-609-800-9909 by keying in ID# 5478283, or by accessing the webcast above. The call will be hosted by Chairman and Chief Executive Officer Martin A. Kropelnicki and Senior Vice President, Chief Financial Officer and Treasurer James P. Lynch. Prior to the call, the Company will publish a slide presentation on its website.
About California Water Service Group
Group is the parent company of regulated utilities Cal Water, Hawaii Water Service, New Mexico Water Service and Washington Water Service, as well as Texas Water Service (TWSC, Inc.), a utility holding company. Together, these companies provide regulated and non-regulated water and wastewater service to more than 2.2 million people in California, Hawaii, New Mexico, Washington, and Texas. 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 the Company’s expected financial performance, expectations regarding the Company’s plans and proposals pursuant to the 2024 CA GRC and the anticipated closing of the Company’s acquisition of Nexus Water Group’s Nevada and Oregon subsidiaries and expected integration of the acquired systems and benefits resulting from the acquisition. 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 general rate cases and other regulatory proceedings; 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; 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 (NPDWR) establishing legally enforceable maximum contaminant levels (MCL) for PFAS in drinking water in 2024 as well as legal challenges to such MCLs; EPA’s proposed new PFAS rulemaking, including impacts to the current PFAS NPDWR; 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; increased risk of inverse condemnation losses as a result of the impact of weather, climate change and natural disasters, including wildfires and landslides; shifts in population, including housing and customer growth; issues with the implementation, maintenance or security of our information technology and operational technology systems; physical and cyber security risks and threats and the adequacy of our efforts to mitigate such 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, including the Oregon, Nevada and BVRT 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, including into other geographic areas; the impact of stagnating or worsening business and economic conditions, including inflationary pressures, general economic slowdown or a recession, changes in tariff policy, the interest rate environment, changes in monetary policy, adverse capital markets activity or macroeconomic conditions as a result of geopolitical conflicts, including ongoing conflicts in the Middle East, and the prospect of shutdowns 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 and unbilled revenue; the impact of evolving legal and regulatory requirements, including sustainability requirements; the impact of the evolving U.S. political environment and changes effected, proposed, or threatened by the U.S. federal government that has led to, in some cases, legal challenges and uncertainty around the funding, functioning and policy priorities of 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. A credit rating is not a recommendation to buy, sell or hold any securities, may be changed at any time by the applicable ratings agency and should be evaluated independently of any other information.
| CONTACT: | Jim 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) | June 30, 2026 | December 31, 2025 | |||||
| ASSETS | |||||||
| Utility plant: | |||||||
| Utility plant | $ | 6,182,880 | $ | 5,909,242 | |||
| Less accumulated depreciation and amortization | (1,371,706 | ) | (1,329,652 | ) | |||
| Net utility plant | 4,811,174 | 4,579,590 | |||||
| Current assets: | |||||||
| Cash and cash equivalents | 43,445 | 51,820 | |||||
| Restricted cash | 45,697 | 45,553 | |||||
| Receivables: | |||||||
| Customers, net | 72,315 | 56,322 | |||||
| Short-term regulatory assets | 91,122 | 72,511 | |||||
| Other, net | 48,327 | 49,004 | |||||
| Accrued and unbilled revenue, net | 56,695 | 39,674 | |||||
| Materials and supplies | 18,334 | 19,784 | |||||
| Taxes, prepaid expenses, and other assets | 31,250 | 19,760 | |||||
| Total current assets | 407,185 | 354,428 | |||||
| Other assets: | |||||||
| Regulatory assets | 334,709 | 339,865 | |||||
| Goodwill | 37,063 | 37,063 | |||||
| Other assets | 364,833 | 360,219 | |||||
| Total other assets | 736,605 | 737,147 | |||||
| TOTAL ASSETS | $ | 5,954,964 | $ | 5,671,165 | |||
| CAPITALIZATION AND LIABILITIES | |||||||
| Capitalization: | |||||||
| Common stock, June 30, 2026 and December 31, 2025, respectively | $ | 618 | $ | 596 | |||
| Additional paid-in capital | 1,070,262 | 973,454 | |||||
| Retained earnings | 749,745 | 729,276 | |||||
| Accumulated other comprehensive loss | (13,152 | ) | (13,922 | ) | |||
| Noncontrolling interests | 2,619 | 2,571 | |||||
| Total equity | 1,810,092 | 1,691,975 | |||||
| Long-term debt, net | 1,471,948 | 1,471,968 | |||||
| Total capitalization | 3,282,040 | 3,163,943 | |||||
| Current liabilities: | |||||||
| Current maturities of long-term debt, net | 590 | 2,270 | |||||
| Short-term borrowings | 205,000 | 130,000 | |||||
| Accounts payable | 201,432 | 175,729 | |||||
| Short-term regulatory liabilities | 94,248 | 25,458 | |||||
| Accrued other taxes | 3,744 | 6,048 | |||||
| Accrued interest | 13,115 | 12,976 | |||||
| Other accrued liabilities | 62,541 | 65,683 | |||||
| Total current liabilities | 580,670 | 418,164 | |||||
| Deferred income taxes | 466,636 | 450,946 | |||||
| Regulatory liabilities | 903,905 | 929,814 | |||||
| Pension | 95,191 | 94,226 | |||||
| Advances for construction | 211,191 | 210,638 | |||||
| Contributions in aid of construction | 305,106 | 297,016 | |||||
| Other long-term liabilities | 110,225 | 106,418 | |||||
| Commitments and contingencies | |||||||
| TOTAL CAPITALIZATION AND LIABILITIES | $ | 5,954,964 | $ | 5,671,165 | |||
CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Operating revenue | $ | 308,596 | $ | 264,954 | $ | 523,169 | $ | 468,927 | |||||||
| Operating expenses: | |||||||||||||||
| Operations: | |||||||||||||||
| Water production costs | 91,843 | 85,503 | 163,172 | 148,494 | |||||||||||
| Administrative and general | 36,221 | 33,317 | 69,907 | 67,491 | |||||||||||
| Other operations | 45,144 | 31,695 | 76,377 | 60,531 | |||||||||||
| Maintenance | 9,150 | 9,043 | 17,516 | 16,711 | |||||||||||
| Depreciation and amortization | 29,536 | 36,029 | 69,500 | 71,985 | |||||||||||
| Income tax expense | 13,872 | 6,915 | 13,946 | 7,950 | |||||||||||
| Property and other taxes | 11,931 | 10,643 | 23,688 | 21,611 | |||||||||||
| Total operating expenses | 237,697 | 213,145 | 434,106 | 394,773 | |||||||||||
| Net operating income | 70,899 | 51,809 | 89,063 | 74,154 | |||||||||||
| Other income and expenses: | |||||||||||||||
| Non-regulated revenue | 6,241 | 4,911 | 11,462 | 9,992 | |||||||||||
| Non-regulated expenses | (3,579 | ) | (2,868 | ) | (9,036 | ) | (6,334 | ) | |||||||
| Other components of net periodic benefit credit | 2,288 | 4,589 | 6,260 | 9,389 | |||||||||||
| Allowance for equity funds used during construction | 2,085 | 1,898 | 4,164 | 3,695 | |||||||||||
| Income tax expense on other income and expenses | (1,716 | ) | (1,752 | ) | (3,107 | ) | (3,455 | ) | |||||||
| Net other income | 5,319 | 6,778 | 9,743 | 13,287 | |||||||||||
| Interest expense: | |||||||||||||||
| Interest expense | 20,809 | 17,464 | 40,428 | 33,973 | |||||||||||
| Allowance for borrowed funds used during construction | (1,044 | ) | (927 | ) | (2,112 | ) | (1,784 | ) | |||||||
| Net interest expense | 19,765 | 16,537 | 38,316 | 32,189 | |||||||||||
| Net income | 56,453 | 42,050 | 60,490 | 55,252 | |||||||||||
| Net loss attributable to noncontrolling interests | (12 | ) | (118 | ) | (12 | ) | (247 | ) | |||||||
| Net income attributable to California Water Service Group | $ | 56,465 | $ | 42,168 | $ | 60,502 | $ | 55,499 | |||||||
| Earnings per share of common stock: | |||||||||||||||
| Basic | $ | 0.94 | $ | 0.71 | $ | 1.01 | $ | 0.93 | |||||||
| Diluted | $ | 0.93 | $ | 0.71 | $ | 1.01 | $ | 0.93 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 60,357 | 59,574 | 60,030 | 59,542 | |||||||||||
| Diluted | 60,434 | 59,629 | 60,105 | 59,590 | |||||||||||
| Dividends per share of common stock | $ | 0.34 | $ | 0.34 | $ | 0.67 | $ | 0.64 | |||||||
