Core Viewpoint - The California Public Utilities Commission has issued a proposed decision on the 2024 General Rate Case for California Water Service, which includes significant revenue increases over the next three years [1][2]. Revenue Increases - The proposed decision authorizes additional revenues of $92.3 million in 2026 (an 11.1% rate increase), $50.8 million in 2027 (a 5.5% rate increase), and $52.4 million in 2028 (a 5.4% rate increase) [2]. Infrastructure Investment - The final infrastructure investment budget for 2025 through 2027 was not included in the proposed decision, but the company expects it will be provided as an attachment to the final decision [2]. Rate Mechanisms - The proposed decision does not authorize the company's request to decouple sales from revenues but reauthorizes a Monterey-Style Water Revenue Adjustment Mechanism and water production incremental cost balancing accounts [3]. - A sales reconciliation mechanism is established, allowing the company to adjust sales forecasts annually, and a new rate design is approved to help recover fixed costs regardless of water sales [4]. Company Response - The company expressed appreciation for the timely issuance of the proposed decision and looks forward to further discussions with the Commission to align more closely with its application [5]. Upcoming Actions - Written comments from the company are due by April 2, 2026, and oral arguments are yet to be scheduled. The California Public Utilities Commission is expected to adopt a final decision at its meeting on April 30, 2026, or shortly thereafter [6]. Company Overview - California Water Service Group is the parent company of several regulated utilities providing water and wastewater services to over 2.1 million people across multiple states, with its common stock trading on the New York Stock Exchange under the symbol "CWT" [7].

Core Viewpoint - California Water Service Group (NYSE:CWT) is expanding its operations through the acquisition of Nexus Water Group's water and wastewater systems, which will enhance its service capacity and customer base as it approaches its centennial year [2]. Group 1: Acquisition Details - The company announced an agreement to purchase Nexus Water Group's systems in Nevada and Oregon, adding approximately 36,000 equivalent residential connections and a combined rate base of about $109 million as of December 31, 2025 [2]. - The acquisition price is approximately $218 million, subject to standard closing adjustments, and will be funded through working capital, existing debt, and equity facilities [2]. - The transaction is expected to close by the end of 2026, pending approvals from relevant public utility commissions, and is anticipated to become accretive to existing operations within a year after closing [2]. Group 2: Company Overview - California Water Service Group serves as the parent company of several regulated utilities, including California Water Service, Hawaii Water Service, New Mexico Water Service, Washington Water Service, and Texas Water Service, providing services to over 2.1 million people across these states [3].

Core Insights - California Water Service Group (CWT) is set to acquire Nexus Water Group's water and wastewater systems in Nevada and Oregon, enhancing its geographical reach and operational capacity, positioning it as one of the largest regulated water utilities in the western United States [1][10] Acquisition Details - The acquisition will add approximately 36,000 new residential connections and is expected to cost around $218 million, subject to typical closing adjustments [2][10] - Financing for the acquisition will come from working capital, existing debt, and equity facilities, with the transaction anticipated to close by the end of 2026 [2][10] Industry Context - The U.S. water utilities face significant challenges with aging infrastructure, operating nearly 2.2 million miles of pipelines, leading to substantial water wastage, with an estimated 20% of treated water lost annually due to leaks [4] - The Environmental Protection Agency estimates that $1.25 trillion will be needed over the next 20 years to maintain and expand water services [4] Consolidation Trends - The U.S. water industry is highly fragmented, with over 50,000 community water systems and around 14,000 wastewater treatment systems, many of which lack the financial resources to modernize [5] - Larger utilities are increasingly acquiring smaller systems to improve service quality and infrastructure investment, with companies like American Water Works planning to invest $19 billion to $20 billion from 2026 to 2030 [6] - Essential Utilities, Inc. plans to invest $1.7 billion to strengthen its operations, while Middlesex Water Company intends to invest $506 million in infrastructure projects from 2026 to 2028 [7][8] Stock Performance - CWT's stock has seen a 1.4% increase over the past month, compared to a 6.8% growth in the industry [9]

Core Viewpoint - The California Water Service Group reported a challenging fourth quarter in 2025, primarily due to adverse weather conditions impacting consumption, alongside significant infrastructure investments and ongoing growth initiatives through acquisitions and regulatory filings. Financial Performance - Fourth-quarter 2025 revenue was $220 million, a slight decrease from $222 million in the same quarter of 2024. Net income fell to $11.5 million, or $0.19 per diluted share, compared to $19.7 million, or $0.33 per diluted share, a year earlier [3][7] - For the full year 2025, operating revenue totaled $1.0 billion, down from $1.37 billion in 2024. Adjusted for non-GAAP comparisons, 2025 revenue increased by approximately $50.8 million, or 5.4% [8] - Net income attributable to the group was $128.2 million in 2025, compared to $190.8 million in 2024. On a non-GAAP basis, net income increased by $1.4 million, or 1% [9] Weather Impact - The weaker performance in the fourth quarter was attributed to "exceptionally wet and cold weather" in December, driven by a strong West Coast storm pattern, which limited typical demand offsets [2][4] - Weather-related consumption declines reduced earnings by $0.59 per share, partially offset by $0.48 per share from tariff and regulatory benefits [1][7] Infrastructure Investment - The company reported a record $517 million in infrastructure investment for 2025, with $152.3 million spent in the fourth quarter, representing a 19.8% increase over 2024 levels [6][11] - Additional anticipated capital expenditures related to PFAS compliance and mitigation were noted, with expected spending of $50–70 million in 2026 [12] Acquisitions and Growth Initiatives - California Water Service Group agreed to acquire Nexus Water operations in Nevada and Oregon, with a rate base of approximately $109 million, and to take full ownership of BVRT Texas assets, expanding its footprint to eight states [5][16] - The Nexus acquisition is expected to be accretive within the first year, pending regulatory approvals [17] Regulatory Updates - The company is awaiting a decision on its 2024 California general rate case, with a proposed decision expected "very soon" and a potential vote in April [20][21] - An interim California rate increase of 3% was implemented in January 2025 following a delay in the decision [20] Shareholder Returns - The company declared its 324th consecutive quarterly dividend of $0.33 per share in January 2026, with an intended annual dividend of $1.34 per share for 2026, marking a 10.7% increase in 2025 and an additional 8% increase planned for 2026 [15]

Employee and Management Information - As of December 31, 2025, the company had 1,336 employees, with 1,182 at Cal Water, 84 at Washington Water, 48 at Hawaii Water, and 22 at New Mexico Water [126]. - As of December 31, 2025, 696 employees were represented by the Utility Workers Union of America (UWUA) and 109 by the International Federation of Professional and Technical Engineers (IFPTE) [127]. - The company has an average management tenure exceeding 15 years, reflecting a strong focus on employee retention and development [125]. Risk and Resilience Assessments - The company completed workshops and recertified tier 1 and tier 2 Risk and Resilience Assessments (RRAs) and tier 1 Emergency Response Plans (ERPs) in 2025, with additional workshops planned for 2026 [106]. - The company is required to conduct additional risk and resilience assessments and develop emergency response plans for each water system under the 2018 America's Water Infrastructure Act [106]. Environmental and Regulatory Concerns - The company expects environmental regulation to increase, resulting in higher operating costs in the future, with no assurance that Commissions will approve rate increases to recover these costs [113]. - The company maintains a fleet of vehicles, including retrofitted heavy-duty diesel vehicles to meet California emission standards, which may increase operating costs if future legislation affects fleet operations [117]. Security Measures - The company has heightened security measures at its facilities in response to terrorism and other risks, complying with federal regulations concerning water facility security [105]. Financial and Market Risks - The company does not engage in hedge arrangements to mitigate market fluctuations on assets, liabilities, or contractual commitments, operating solely in the United States, thus avoiding foreign currency exchange rate risks [339]. - Interest rate risk exists, but is mitigated by operating in a regulated industry; customer rates may increase with interest rates, subject to Commission approval in future General Rate Case filings [340]. - The majority of the company's debt is long-term and fixed-rate, with $1,474.2 million of existing long-term debt instruments not expected to mature in the next 12 months [341]. - A hypothetical 10 percent increase in interest rates on existing borrowings would not materially affect the company's earnings [341]. Emergency Preparedness - The company leased additional emergency generators during 2025, 2024, and 2023 to respond to potential Public Safety Power Shutoffs (PSPSs) approved by the CPUC [104].

Core Insights - California Water Service Group (CWT) reported fourth-quarter 2025 adjusted earnings of 19 cents per share, missing the Zacks Consensus Estimate of 36 cents by 47.2% and down 42.4% from the previous year's 33 cents per share [1][9] CWT's Total Revenues in Q4 - Operating revenues for CWT totaled $219.9 million, falling short of the Zacks Consensus Estimate of $232 million by 5.2% and decreasing 0.9% from $222 million in the prior-year quarter [2][9] CWT's Operational Update - Total operating expenses increased to $194.4 million, up 2.4% from $189.9 million in the year-ago quarter, driven by higher administrative and general expenses as well as increased other operations expenses [3] - Net operating income was reported at $25.6 million, a decline of 20.7% from $32.3 million in the previous year [3] - Net interest expenses rose to $18.3 million, up 16.6% from $15.7 million in the prior-year quarter [3] Rate Cases and Revenue Increase - The company completed rate cases in Hawaii and Washington, resulting in an addition of $5.1 million in authorized revenues [4] CWT's Financial Update - As of December 31, 2025, CWT had cash and cash equivalents of $51.8 million, an increase from $50.1 million as of December 31, 2024 [5] - The net long-term debt stood at $1,471.9 million, up from $1,104.6 million a year earlier [5] - The management approved a 10.71% increase in the annual dividend rate, raising it by 12 cents to $1.24 per common share, which includes a one-time special dividend of 4 cents [5] Infrastructure Investment - CWT invested $517 million in water system infrastructure in 2025, marking a 9.8% increase compared to investments in 2024 [6] CWT's Zacks Rank - California Water currently holds a Zacks Rank 3 (Hold) [7]

Financial Data and Key Metrics Changes - In Q4 2025, revenue was $220 million, a slight decrease from $222 million in Q4 2024. Net income for the quarter was $11.5 million, or $0.19 per diluted share, compared to $19.7 million, or $0.33 per diluted share in the prior year [10][11] - For the full year 2025, operating revenue was $1 billion, compared to $1.37 billion in 2024. However, when compared to non-GAAP 2024 revenue of $949.3 million, revenue increased by $50.8 million or approximately 5.4% [12] - Net income attributed to the group was $128.2 million, down from $190.8 million in 2024, but increased by $1.4 million or 1% when compared to non-GAAP 2024 income [12][13] Business Line Data and Key Metrics Changes - The company invested a record $517 million into infrastructure systems in 2025, including $52.3 million in Q4 alone, representing a 19.8% increase over construction levels in 2024 [8][14] - The company maintained an A+ stable credit rating from S&P, one of the highest-rated credit utilities in North America [9] Market Data and Key Metrics Changes - The company experienced a significant weather impact in December 2025, which negatively affected financial results due to exceptionally wet and cold weather across California [7][10] - The company implemented a 3% interim rate increase in California in January 2026, following a delay in the rate case decision [9][10] Company Strategy and Development Direction - The company announced the acquisition of Nevada and Oregon operations from Nexus Water, which will expand its geographical footprint and regulatory diversification [4][20] - The company is focused on timely completion of acquisitions and regulatory activities, including the 2024 rate case in California and other rate cases in different states [37][39] - The primary growth engine is the reinvestment of existing capital into the rate base, with a target of maintaining a 10% year-over-year increase in capital expenditures [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory environment, noting that the current case is being prioritized by the commission, which is expected to lead to more timely decisions in the future [45][52] - The company is committed to maintaining affordable rates while ensuring the reliability and quality of water services, especially in light of rising costs in California [39][52] Other Important Information - The company declared its 324th consecutive quarterly dividend of $0.33 per share and announced an intended annual dividend of $1.34 per share for 2026, marking the 59th consecutive increase [17][18] - The company plans to spend between $50 million and $70 million on PFAS programs in 2026, in addition to ongoing capital investments [63][64] Q&A Session Summary Question: Is the delay of cases something that should be expected as a new norm? - Management indicated that recent efforts by the California Water Association have focused on educating commissioners about the impacts of delays, leading to a more timely process for future cases [48][50] Question: What are the regulatory mechanisms in Oregon and Nevada? - Management highlighted that Nevada has a reasonable commission allowing phased-in statewide rates and a hybrid rate environment, while Oregon also has a hybrid system with mechanisms for interim rates [56][57] Question: Update on PFAS funding and plans? - Management confirmed ongoing plans to comply with new MCLs for PFAS, with significant investments planned for 2026 to enhance water quality and safety [63][64]

Financial Data and Key Metrics Changes - In Q4 2025, revenue was $220 million, a slight decrease from $222 million in Q4 2024. Net income for the quarter was $11.5 million, or $0.19 per diluted share, compared to $19.7 million, or $0.33 per diluted share in the prior year [10][11] - For the full year 2025, operating revenue was $1 billion, compared to $1.37 billion in 2024. When compared to non-GAAP 2024 revenue of $949.3 million, revenue increased by $50.8 million, or approximately 5.4% [12] - Net income attributed to the group was $128.2 million, down from $190.8 million in 2024, but increased by $1.4 million, or 1%, when compared to non-GAAP 2024 income [12][13] Business Line Data and Key Metrics Changes - The company invested a record $517 million into infrastructure systems in 2025, including $52.3 million in Q4 alone, representing a 19.8% increase over construction levels in 2024 [8][14] - The company maintained an A+ stable credit rating from S&P, one of the highest-rated credit utilities in North America [9] Market Data and Key Metrics Changes - The company experienced a significant consumption decline due to weather impacts, with $12.7 million in consumption decrease in 2025, of which $14.6 million occurred in Q4 [11] - The company received approval for a 3% interim rate increase in California, implemented in January 2026 [9] Company Strategy and Development Direction - The company announced the acquisition of Nevada and Oregon operations from Nexus Water, expanding its geographical footprint and regulatory diversification [4][20] - The company plans to continue pursuing growth opportunities in high-growth areas and strategic acquisitions that meet investment criteria [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the timely completion of the 2024 California General Rate Case, highlighting proactive engagement with regulators [33][52] - The company is committed to maintaining affordable rates while ensuring capital replacement and infrastructure investment [39] Other Important Information - The company declared its 324th consecutive quarterly dividend of $0.33 per share and announced an intended annual dividend of $1.34 per share for 2026, representing an 8.1% increase over 2025 [17][18] - The company plans to spend between $50 million and $70 million on PFAS programs in 2026, in addition to ongoing capital expenditures [64] Q&A Session Summary Question: Is the delay of cases something that should be expected as a new norm? - Management indicated that recent efforts by the California Water Association have focused on educating commissioners about the impacts of delays, leading to more timely case processing [48][49] Question: What are the regulatory mechanisms in Oregon or Nevada? - Management highlighted that Nevada has a reasonable commission allowing phased-in statewide rates and a hybrid rate environment, while Oregon has similar mechanisms for interim rates and construction work in progress [56][57] Question: Update on PFAS funding and plans? - Management confirmed ongoing plans for PFAS upgrades, with $20 million spent in 2025 and an expected $50 million to $70 million in 2026, emphasizing the importance of water quality [63][64]

Financial Data and Key Metrics Changes - In Q4 2025, revenue was $220 million, a slight decrease from $222 million in Q4 2024. Net income for the quarter was $11.5 million, or $0.19 per diluted share, compared to $19.7 million, or $0.33 per diluted share in the prior year [11][12] - For the full year 2025, operating revenue was $1 billion, compared to $1.37 billion in 2024. When compared to non-GAAP 2024 revenue of $949.3 million, revenue increased by $50.8 million, or approximately 5.4%. Net income attributed to the group was $128.2 million, compared to $190.8 million in 2024, reflecting a 1% increase when compared to non-GAAP 2024 income [13][14] Business Line Data and Key Metrics Changes - The company invested a record $517 million into infrastructure systems in 2025, including $52.3 million in Q4 alone, representing a 19.8% increase over construction levels in 2024 [9][15] - The company maintained an A+ stable credit rating from S&P, one of the highest-rated credit utilities in North America [10] Market Data and Key Metrics Changes - The company experienced a significant weather impact in December 2025, which negatively affected financial results, particularly in California due to exceptionally wet and cold weather [8][11] - The company received approval for a 3% interim rate increase in California, implemented in January 2026, following a delay in the rate case decision [10][12] Company Strategy and Development Direction - The company announced the acquisition of Nevada and Oregon operations from Nexus Water, which will expand its geographical footprint and solidify its position in the Western U.S. water industry [4][22] - The company plans to continue pursuing growth opportunities in high-growth areas and strategic acquisitions that align with its capital investment strategy [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the timely completion of the 2024 California General Rate Case, highlighting proactive engagement with regulators and a focus on affordability for customers [35][56] - The company is committed to addressing PFAS regulations and has allocated significant capital for related projects, with plans to spend between $50 million and $70 million in 2026 [66][68] Other Important Information - The company declared its 324th consecutive quarterly dividend of $0.33 per share and announced an intended annual dividend of $1.34 per share for 2026, representing an 8.1% increase over 2025 [19][20] - The company maintains a strong liquidity profile with $51.8 million in unrestricted cash and $45.6 million in restricted cash, along with approximately $470 million available on bank lines of credit [18] Q&A Session Summary Question: Is the delay of cases something that should be expected as a new norm? - Management indicated that recent efforts by the California Water Association have focused on educating commissioners about the impacts of delays, leading to a more timely process for future cases [51][56] Question: What are the regulatory mechanisms in Oregon or Nevada? - Management highlighted that Nevada has a reasonable commission allowing phased-in statewide rates and a hybrid rate environment, while Oregon has mechanisms for interim rates and construction work in progress [59][60] Question: Update on PFAS funding and plans? - Management confirmed ongoing plans to address PFAS regulations, with significant spending allocated for treatment and infrastructure improvements, emphasizing the importance of water quality [66][68]

Q4 and YE 2025 Earnings & Strong Start to 2026 February 26, 2026 Today's Speakers Marty Kropelnicki Chairman & CEO James Lynch Sr. Vice President, CFO & Treasurer Greg Milleman VP, Rates & Regulatory Affairs Shilen Patel Chief Business Development Officer & VP TWSC, Inc. 2 Forward-Looking Statements and Other Important Information This presentation contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The forward-looking stateme ...