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Financial Performance - Net income attributable to California Water Service Group for Q3 2025 was $61.2 million, a slight increase from $60.7 million in Q3 2024, with earnings per diluted share remaining at $1.03[107]. - For the nine months ended September 30, 2025, net income decreased to $116.7 million from $171.1 million in the same period of 2024, reflecting a $54.4 million decline primarily due to a $34.4 million decrease in operating revenue[108]. - Operating revenue for Q3 2025 increased by $11.6 million, or 3.9%, to $311.2 million compared to $299.6 million in Q3 2024[110]. - For the nine months ended September 30, 2025, operating revenue decreased by $34.4 million, or 4.2%, to $780.2 million compared to $814.6 million in the same period of 2024[110]. - Total operating expenses for Q3 2025 increased by $7.8 million, or 3.4%, to $240.6 million, driven by higher water production costs and depreciation[111]. - For the nine months ended September 30, 2025, total operating expenses rose by $13.6 million, or 2.2%, to $635.4 million, primarily due to increases in water production costs and other operational expenses[112]. - The net change in operating revenue for Q3 2025 was influenced by rate increases of $12.7 million, partially offset by a decrease in customer usage of $8.1 million[113]. Water Production and Costs - Water production sources for Q3 2025 included 52% from well production, 44% from purchased water, and 4% from surface water, compared to 50%, 46%, and 4% respectively in Q3 2024[114]. - Water production costs increased by $7.6 million, or 8.0%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in wholesale rates[115]. - For the nine months ended September 30, 2025, water production costs rose by $14.3 million, or 6.0%, compared to the same period in 2024, driven by higher wholesale rates and increased customer usage[115]. - Other operations expenses increased by $7.8 million for the nine months ended September 30, 2025, mainly due to a $2.9 million rise in bad debt expense and a $2.2 million increase in labor expense[116]. - Depreciation and amortization expense rose by $3.1 million and $9.2 million for the three and nine months ended September 30, 2025, respectively, due to utility plant placed in service in 2024[117]. Regulatory and Compliance - The company anticipates regulatory challenges and uncertainties regarding rate increases and compliance with new environmental standards, which may impact future financial performance[102]. - The effective tax rate for the company is expected to remain stable, with no material impact from recent legislative changes on income tax expense for Q3 2025[106]. - The Water Board adopted a maximum contaminant level (MCL) of 10 parts per billion for Chromium-6 in drinking water, with compliance required within two to four years[177]. - Management believes that supplies will meet current water quality standards using available treatment processes or by installing the best available technologies[173]. - The company is well positioned to comply with new urban water use regulations established by California's Assembly Bill 1668 and Senate Bill 606[175]. Future Investments and Projections - Cal Water proposed to invest over $1.6 billion in infrastructure improvements from 2025 to 2027, with approximately $1.3 billion allocated for new capital investments[124]. - Cal Water expects to increase total revenue by $140.6 million, or 17.1%, in 2026, with additional increases of $74.2 million, or 7.7%, in 2027, and $83.6 million, or 8.1%, in 2028[125]. - In September 2025, Cal Water submitted an advice letter to recover $18.7 million related to MWRAM undercollection through surcharges implemented on October 1, 2025[134]. - Cal Water filed an application for $125.0 million in PFAS treatment costs in 2026 and 2027, with associated annual revenue increases of $6.7 million and $9.0 million for 2027 and 2028, respectively[136]. - The company implemented new rates on January 1, 2025, resulting in an annual gross revenue increase of $27.2 million from escalation rate increases for 18 regulated districts[129]. Cash Flow and Financing - Cash flow from operations for the nine months ended September 30, 2025, was $254.7 million, an increase of 14.0% compared to $222.8 million in the same period of 2024[147]. - Utility capital expenditures for the nine months ended September 30, 2025, totaled $364.7 million, with an estimated range of $450.0 million to $550.0 million for the full year 2025[150][168]. - Net cash provided by financing activities for the nine months ended September 30, 2025, was $139.1 million, compared to $132.3 million for the same period in 2024[151]. - The company paid dividends of $56.0 million during the nine months ended September 30, 2025, up from $48.8 million in the same period of 2024[151]. - The company borrowed $420.0 million on unsecured revolving credit facilities during the nine months ended September 30, 2025, compared to $370.0 million in 2024[152]. Asset and Shareholder Information - Book value per common share increased to $28.54 as of September 30, 2025, compared to $27.49 at December 31, 2024[167]. - The net income for the nine months ended September 30, 2025, was $118.1 million, compared to $193.5 million for the full year 2024[162]. - As of September 30, 2025, total assets were $5.01 billion, an increase from $4.71 billion as of December 31, 2024[163]. - The company plans to use proceeds from the issuance of $70.0 million and $100.0 million in senior unsecured notes to refinance existing indebtedness and for general corporate purposes[158]. - The company expects to maintain a long-term dividend payout ratio goal of 60% of net income[164]. Water Supply and Extraction - Average annual groundwater extraction from adjudicated groundwater basins is approximately 7.8 billion gallons, representing 14.9% of the total average annual water supply pumped from wells for 2023 to 2024[172]. - Average annual groundwater extraction from managed groundwater basins is approximately 29.6 billion gallons, accounting for 56.4% of the total average annual water supply pumped from wells for 2023 to 2024[172]. - Well pump taxes for the nine months ended September 30, 2025, were $17.8 million, compared to $15.7 million for the same period in 2024[172]. - Statewide reservoir storage as of September 30, 2025, was 109% of the historical average over the last 50 years[173]. - Estimated capital investment required to comply with the PFAS regulation is approximately $226.0 million[176]. Contractual Obligations - There have been no material changes in contractual obligations outside the normal course of business during the nine months ended September 30, 2025[178].

Financial Data and Key Metrics Changes - Q3 2025 revenue increased by $11.6 million, or 3.9%, to $311.2 million compared to $299.6 million in Q3 2024 [17] - Net income for the quarter was $61.2 million, or $1.03 per diluted share, consistent with the prior year [17] - Year-to-date operating revenue for 2025 was $780.2 million, a decrease of $34.4 million, or 4.2%, compared to $814.6 million for the first nine months of 2024 [20] - Year-to-date net income attributable to the Group was $116.7 million, a decrease of $54.4 million, or 31.8%, compared to $171.1 million in the same period in 2024 [20] Business Line Data and Key Metrics Changes - Capital investments for Q3 2025 were $135 million, up 14.8% year-over-year, and year-to-date investments totaled $364.7 million, representing a 9.8% increase compared to 2024 [11][23] - The company received an additional $24 million in net PFAS settlement proceeds during the quarter, bringing the year-to-date total recovery to about $35 million [13] Market Data and Key Metrics Changes - The company continues to expand in Texas, with an all-party settlement in Texas awaiting final Commission approval [12] - The South Austin market is projected to grow significantly, with a current population of 5 million expected to exceed 8 million by 2050 [32] Company Strategy and Development Direction - The company is focused on maintaining operational excellence and executing capital programs responsibly as it approaches its centennial year in 2026 [50] - The company is pursuing alternative water resources and partnerships to support growth in Texas, including a public-private partnership with the Guadalupe-Blanco River Authority [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the California general rate case, noting improved communication and transparency from the Commission compared to previous cases [43][45] - The company is well-positioned to absorb inflationary pressures and maintain growth despite economic headwinds [78] Other Important Information - The company declared its 323rd consecutive quarterly dividend of $0.30 per share, representing a 10.71% increase [30] - The company has a strong liquidity profile with $76 million in unrestricted cash and $255 million available on bank lines of credit [24] Q&A Session Summary Question: Rate base growth projections - Management clarified that there is currently no partial settlement in California and they remain committed to their capital expenditure projections [54][56] Question: Impact of recent merger in Texas - Management stated that their growth strategy remains focused on organic growth and infrastructure reinvestment, despite the merger of competitors [72][74] Question: Planning for higher interest rates - Management indicated that they are well-positioned with long-term financing and have mechanisms in place to adjust for changes in the cost of capital [80][82]

Core Insights - California Water Service Group (CWT) reported quarterly earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.20 per share, representing an earnings surprise of -14.17% [1] - The company posted revenues of $311.24 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.36% and showing an increase from $299.56 million year-over-year [2] - The stock has added about 4.7% since the beginning of the year, underperforming the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $235.2 million, and for the current fiscal year, it is $2.41 on revenues of $1.01 billion [7] - The estimate revisions trend for California Water Service Group was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Utility - Water Supply industry is currently in the top 17% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Today's Speakers Marty Kropelnicki Investing for Life Third Quarter 2025 Earnings Presentation October 30, 2025 ©2025 California Water Service Group 1 Chairman & CEO James Lynch Sr. Vice President, CFO & Treasurer Greg Milleman Vice President, Rates & Regulatory Affairs ©2025 California Water Service Group 2 Forward-Looking Statements and Other Important Information Executing Strategy in Q3 2025 Delivered strong performance through first nine months of 2025* Invested $135.2 million in Q3 in water system inf ...

Financial Performance - Q3 2025 net income was $61.2 million, with diluted EPS of $1.03, consistent with Q3 2024 results[6] - Revenue for Q3 2025 increased by $11.6 million or 3.9% to $311.2 million compared to $299.6 million in Q3 2024[7] - YTD 2025 net income decreased by 31.8% to $116.7 million or $1.96 per diluted share compared to $171.1 million or $2.93 per diluted share in YTD 2024[9] - YTD 2025 revenue decreased by $34.4 million or 4.2% to $780.2 million compared to $814.6 million in YTD 2024[9] - Operating revenue for Q3 2025 was $311,235,000, an increase from $299,563,000 in Q3 2024, representing a growth of approximately 0.22%[28] - Net income attributable to California Water Service Group for Q3 2025 was $61,230,000, compared to $60,680,000 in Q3 2024, reflecting a slight increase of about 0.90%[28] - Reported GAAP Revenue for the nine months ended September 30, 2025, was $780,162 million, a decrease from $814,611 million in 2024, reflecting a decline of approximately 4.1%[30] - Adjusted Revenue (non-GAAP) increased to $780,162 million in 2025 from $727,129 million in 2024, representing a growth of about 7.3%[30] - Reported GAAP Net Income for the nine months ended September 30, 2025, was $116,729 million, down from $171,148 million in 2024, indicating a decrease of approximately 31.8%[30] - Adjusted Net Income (non-GAAP) rose to $116,729 million in 2025 compared to $107,168 million in 2024, showing an increase of about 8.9%[30] - Reported GAAP Diluted Earnings Per Share (EPS) decreased to $1.96 in 2025 from $2.93 in 2024, a decline of approximately 33.2%[30] - Adjusted Diluted EPS (non-GAAP) increased to $1.96 in 2025 from $1.84 in 2024, reflecting a growth of about 6.5%[30] Operating Expenses and Investments - Operating expenses for Q3 2025 increased by $7.8 million or 3.4% to $240.6 million compared to $232.8 million in Q3 2024[9] - The company reported a total operating expense of $240,620,000 for Q3 2025, compared to $232,815,000 in Q3 2024, which is an increase of approximately 3.35%[28] - $135.2 million was invested in water system infrastructure during Q3 2025, a 14.8% increase from Q3 2024[6] - Capital investments for the nine months ending September 30, 2025, were $364.7 million, up 9.8% from $332.2 million in the same period of 2024[14] Dividends and Settlements - The Company declared its 323rd consecutive quarterly dividend of $0.30 per share, with a five-year compound annual dividend growth rate of 7.7%[6] - The Company received $24.2 million in additional proceeds from PFAS settlements in Q3 2025, totaling $34.8 million year-to-date[18] Regulatory and Compliance - The company has received regulatory approval for rate increases in Hawaii and is seeking a $4.9 million increase in Washington to recover higher operating costs[16][17] - The company anticipates challenges related to regulatory actions and environmental compliance impacting future performance[25] Balance Sheet and Assets - Total assets as of September 30, 2025, were $5,519,417,000, up from $5,180,283,000 as of December 31, 2024, indicating a growth of approximately 6.56%[27] - Total current liabilities increased to $729,919,000 as of September 30, 2025, from $538,364,000 at the end of 2024, marking an increase of about 35.54%[27] - The company’s cash and cash equivalents increased to $75,990,000 as of September 30, 2025, from $50,121,000 at the end of 2024, representing a growth of about 51.00%[27] - The company’s long-term debt as of September 30, 2025, was $1,103,819,000, slightly down from $1,104,571,000 at the end of 2024[27]

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Core Insights - California Water Service Group reported strong financial results for Q3 2025, reflecting a focus on expense control, infrastructure investment, and customer service [1][3]. Financial Highlights - Q3 2025 net income was $61.2 million with diluted EPS of $1.03, consistent with Q3 2024 [7]. - Revenue for Q3 2025 increased by $11.6 million or 3.9% to $311.2 million compared to $299.6 million in Q3 2024 [8]. - Operating expenses in Q3 2025 rose by $7.8 million or 3.4% to $240.6 million compared to $232.8 million in Q3 2024 [8]. - Year-to-date (YTD) 2025 net income was $116.7 million or $1.96 per diluted share, a decrease of 31.8% compared to YTD 2024 [8]. - YTD 2025 revenue decreased by $34.4 million or 4.2% to $780.2 million compared to $814.6 million in 2024 [8]. Capital Investment and Financing - The company invested $135.2 million in water system infrastructure during Q3 2025, a 14.8% increase from Q3 2024 [7]. - As of September 30, 2025, cash and cash equivalents totaled $76.0 million, with an additional short-term borrowing capacity of $255.0 million [10]. - The company announced the sale of $170.0 million in Senior Unsecured Notes and $200.0 million in First Mortgage Bonds [11][12]. Regulatory Updates - Inflation-based interim rate increases for California Water Service are authorized effective January 1, 2026, until a final decision is issued in the 2024 General Rate Case [7][14]. - Hawaii Water Service received approval to increase annual revenues by $4.7 million in its Waikoloa systems [16]. Community Engagement and Recognition - The company opened its seventh annual Firefighter Grant Program to support local fire departments [19]. - Recognized among the "World's Most Trustworthy Companies" for the third consecutive year and certified as a Great Place To Work for ten consecutive years [20]. Dividend Information - The company declared its 323rd consecutive quarterly dividend of $0.30 per share, with a five-year compound annual dividend growth rate of 7.7% [7][21].

Core Insights - California Water Service Group (CWT) is preparing to release its quarterly earnings on October 30, 2025, with an anticipated earnings per share (EPS) of $1.20 and projected revenue of $321.3 million [1][6] Investment Activity - Ethic Inc. has increased its investment in CWT by 91.2% during the second quarter, now holding 10,592 shares valued at $482,000, indicating strong confidence in CWT's future performance [2][6] - Wealth Enhancement Advisory Services LLC and Allspring Global Investments Holdings LLC have also increased their stakes in CWT by 2.6% and 113% respectively, reflecting growing investor interest [3] Company Initiatives - CWT's recent consolidation of its water system in West Goshen, supported by a $3.45 million grant from the California Department of Water Resources, demonstrates its commitment to providing safe and reliable water services [4][6] Financial Metrics - CWT maintains a price-to-earnings (P/E) ratio of 20.8, a price-to-sales ratio of 2.85, and an enterprise value to sales ratio of 2.88, indicating investor confidence in its earnings potential [5] - The company has a current ratio of 0.53, which suggests potential challenges in covering short-term liabilities [5]

Core Points - California Water Service Group declared its 323rd consecutive quarterly dividend of $0.30 per common share, payable on November 21, 2025, to stockholders of record as of November 10, 2025 [1] Company Overview - California Water Service Group is 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 water and wastewater services to over 2.1 million people across these states [2]