Group 1 - California Water Service Group reported Q1 2025 earnings with revenue of $203 million, which is nearly 25% lower than the previous year's figure [1] - The reported revenue is also $11.5 million less than expected, indicating a significant shortfall [1] Group 2 - The company operates in a market where financial performance can be influenced by various external factors, and the current results may not reflect the long-term potential [1]

Core Points - California Water Service (Cal Water) has organized field trips for over 400 students across California to educate them about the importance of water conservation and its role in the ecosystem [1][2] - The initiative, Aqua Adventures, is part of Cal Water's conservation education program "Tap Into Learning," which has been running for 11 years and offers various educational opportunities for students [2][4] - Cal Water also provides $250 Water Smart Grants for teachers to propose water-related classroom projects, promoting further engagement in water conservation education [4] Company Overview - California Water Service provides reliable water utility services to more than 2.1 million people through 499,400 service connections [5] - The company focuses on enhancing the quality of life for customers and communities by investing in water and wastewater infrastructure and sustainability initiatives [5] - Cal Water has received recognition as one of "America's Most Responsible Companies" and "World's Most Trustworthy Companies" by Newsweek, highlighting its commitment to integrity and community well-being [5]

Core Viewpoint - California Water Service Group emphasizes its commitment to sustainability and corporate responsibility in its 2024 Sustainability Report, highlighting progress in emissions reductions, water quality, infrastructure investments, and employee development [1][4]. Group 1: Protecting the Planet - The company has reduced Scope 1 and 2 greenhouse gas emissions by 23.5% compared to the base year 2021 [6]. - It has invested nearly $3 million in emissions-reducing energy solutions, including LED lighting retrofits and EV charger installations [6]. - The company conducted over 615,000 water quality tests, achieving 100% compliance with federal and state water quality standards [6]. Group 2: Serving Customers - California Water Service Group provides reliable water and wastewater services to over 2.1 million people across multiple states [5]. - The company has invested in wildfire-hardening projects to enhance resilience during fire events [6]. Group 3: Engaging the Workforce - The company invested more than $815,000 in employee training, averaging 16 hours of training per employee in 2024, which is a 17% increase from the previous year [6]. - It launched the Career Pathways program to outline training and education for employee advancement [6]. - CEO town halls and quarterly leadership visits are conducted to share information and gather employee feedback [6]. Group 4: Governing with Integrity - The Sustainability Report aligns with SASB, TCFD, and GRI standards, ensuring transparency in reporting achievements and metrics [4]. - The company has been recognized as one of "America's Most Responsible Companies" and "World's Most Trustworthy Companies" by Newsweek [7].

Core Points - Hawaii Water Service has received approval to increase annual revenue by $276,900 in its Ka'anapali system due to infrastructure upgrades and increased operating costs [1] - The last adjustment to base water rates for Ka'anapali was in 2016 [1] - The Hawaii Public Utilities Commission approved a new tiered structure for usage rates to encourage water conservation and support affordability for lower water-using customers, effective April 18, 2025 [2] Company Overview - Hawaii Water Service is a subsidiary of California Water Service Group, which provides regulated and non-regulated water and wastewater services to over 2.1 million people across multiple states [3] - California Water Service Group's common stock trades on the New York Stock Exchange under the symbol "CWT" [3] Infrastructure Investments - Significant investments in the Ka'anapali service area include upgrades to two storage tanks and reservoirs, installation of two additional generators for power outage reliability, and routine replacement of pumping equipment [5]

Core Insights - The Association of California Water Agencies (ACWA) will host its 2025 Spring Conference & Expo on May 14-15 in Monterey, focusing on critical water resource issues in California [1][4] - The conference will feature discussions on disaster responses, watershed health, groundwater recharge, and coordination between state and federal water supply efforts [2] Group 1 - The conference will address responses to various disasters, including catastrophic wildfires in Los Angeles, and how water agencies can prepare for such events [2] - Keynote speakers include National Water Supply Alliance President Katherine Zitsch, who will discuss water supply challenges faced by California and the U.S. Southeast, and Family Farm Alliance Executive Director Dan Keppen, who will share insights from his advocacy work for Western farmers and ranchers [3] Group 2 - ACWA represents approximately 470 public agency members responsible for about 90% of the water delivered in California [4] - The event will provide a platform for presentations, panel discussions, and networking among public water agency leaders [1][4]

Core Insights - California Water Service Group (CWT) reported first-quarter 2025 adjusted earnings of 22 cents per share, exceeding the Zacks Consensus Estimate of 16 cents by 37.5%, but down 81.8% from 1.21 in the same quarter last year [1] - Total operating revenues were $204 million, surpassing the Zacks Consensus Estimate of $180 million by 13.2%, yet decreased 24.7% from $270.7 million in the prior-year quarter [2] - Total operating expenses were $181.6 million, a decrease of 5.8% from $192.9 million in the year-ago quarter, with water production costs down by $1.2 million [3] Financial Performance - Net operating income was reported at $22.3 million, significantly lower than $77.9 million from the previous year [3] - Net interest expenses increased to $15.7 million, up 4.1% from $15 million in the prior-year quarter [4] - As of March 31, 2025, cash and cash equivalents stood at $44.5 million, down from $50.1 million as of December 31, 2024, while net long-term debt was $1.1044 billion, slightly down from $1.1046 billion [5] Market Position - CWT currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook in the market [6] - Upcoming earnings reports from competitors include American States Water (AWR) on May 7, with an estimated earnings increase of 12.9%, and Essential Utilities Inc. (WTRG) on May 12, with an estimated earnings increase of 9.6% [7][8]

Financial Performance - Net income attributable to California Water Service Group for Q1 2025 was $13.3 million, or $0.22 per diluted share, down from $69.9 million, or $1.21 per diluted share in Q1 2024, representing a decrease of $56.6 million [95]. - Operating revenue for Q1 2025 decreased by $66.7 million, or 24.7%, to $204.0 million compared to $270.7 million in Q1 2024, primarily due to the cumulative adjustment from the delayed approval of the 2021 GRC [96]. - Total operating expenses decreased by $11.3 million, or 5.8%, to $181.6 million in Q1 2025, mainly due to a reduction in income tax expense [97]. - Cash flow from operations for Q1 2025 was $38.4 million, up from $26.5 million in Q1 2024, indicating improved operational efficiency [116]. - Net income for Q1 2025 decreased due to the prior year's $111.8 million operating revenue from the MWRAM and IRMA, which was not repeated in 2025 [117]. Revenue and Rate Changes - The net change in operating revenue for Q1 2025 included a $21.4 million increase from rate changes and a $3.8 million recognition of Palos Verdes Pipeline revenue, offset by an $80.7 million decrease from the Interim Rates Memorandum Account [96]. - Proposed rate changes aim to increase total revenue by $140.6 million (17.1%) in 2026, $74.2 million (7.7%) in 2027, and $83.6 million (8.1%) in 2028 [107]. - Cal Water's proposed Low-Use Water Equity Program aims to decouple revenue from water sales, enhancing affordability for low-use and low-income customers [106]. Expenses and Costs - Water production costs decreased by $1.2 million, or 1.9%, in Q1 2025, primarily due to a decrease in Incremental Cost Balancing Accounts (ICBA) expense [99]. - The company recorded a decrease of $14.5 million in income tax expense for Q1 2025, attributed to lower pre-tax operating income compared to Q1 2024 [103]. - Other operations expenses increased by $1.9 million, or 7.1%, in Q1 2025, primarily due to inflation-related increases in various operational costs [101]. - Depreciation and amortization expenses increased by $3.1 million in Q1 2025 due to utility plant placed in service in 2024 [102]. Capital Investments - Cal Water plans to invest over $1.6 billion in its districts from 2025 to 2027, with approximately $1.3 billion allocated for new capital investments, focusing on replacing aging water pipelines [106]. - Total capital expenditures for 2025 are estimated between $450.0 million and $550.0 million, reflecting ongoing investment in infrastructure [120]. - Utility plant expenditures for the three months ended March 31, 2025, totaled $110.1 million, with an estimated range for 2025 capital expenditures between $450.0 million and $550.0 million [139]. - The company estimates a capital investment of approximately $226.0 million will be required to comply with new PFAS regulations by 2029 [145]. Financing and Cash Flow - Net cash provided by financing activities in Q1 2025 was $65.9 million, compared to $86.6 million in Q1 2024, indicating a decrease in financing activity [121]. - As of March 31, 2025, short-term borrowings amounted to $285.0 million, an increase from $205.0 million at the end of 2024 [126]. - The net receivable balances for IRMA, MWRAM, and related mechanisms were $121.7 million as of March 31, 2025, up from $57.9 million in the previous year [123]. - The company has a syndicated unsecured revolving line of credit of $200.0 million, with $150.0 million available as of March 31, 2025 [137]. Assets and Liabilities - As of March 31, 2025, total assets increased to $4,782,552,000 from $4,712,571,000 as of December 31, 2024, representing a growth of 1.48% [133]. - Current liabilities increased to $527,239,000 as of March 31, 2025, compared to $471,432,000 as of December 31, 2024, reflecting an increase of 11.83% [133]. - Construction work in progress was reported at $378.4 million as of March 31, 2025, indicating ongoing investment in utility infrastructure [140]. Dividends and Shareholder Returns - The quarterly common stock dividend payment was $0.34 per share, up from $0.28 per share for the same period in 2024, reflecting a 21.43% increase [134]. - The second quarter dividend of $0.30 per share was declared, marking the 321st consecutive quarterly dividend [135]. Other Operational Metrics - Average annual groundwater extraction from adjudicated groundwater basins approximates 7.8 billion gallons, accounting for 14.9% of total average annual water supply pumped from wells [142]. - Book value per common share decreased to $27.35 at March 31, 2025, from $27.49 at December 31, 2024, indicating a decline of 0.51% [138]. - Cash contributions to the employee pension plan in Q1 2025 were $2.3 million, with an estimated total contribution of $5.2 million expected for the year [118].

Financial Data and Key Metrics Changes - For Q1 2025, operating revenue was $274 million, an increase from $270.7 million in Q1 2024. Adjusted for interim rate relief, revenue increased by 13% over non-GAAP 2024 revenue of $180.5 million [8][9] - Net income attributed to the group was $13.3 million or $0.22 per diluted share, compared to $69.9 million or $1.21 per diluted share in Q1 2024. Adjusted for interim rate relief, net income increased by 225% over non-GAAP income of $4.1 million [9][10] - Capital investments during the quarter totaled $110.1 million, consistent with the record quarter reported in Q1 2024 [10][11] Business Line Data and Key Metrics Changes - The company reported significant investments in water infrastructure, with a focus on maintaining and replacing water systems. The capital investment program is expected to lead to a compounded annual rate base growth of approximately 11.7% if approved [10][11] - The approval of two advice letters contributed to earnings per share, with one recovering drought expenses and the other related to the Palos Verdes pipeline project [9][10] Market Data and Key Metrics Changes - The company reported a strong snowpack in California at 99% of normal for April, which is expected to support water supply through the summer months. Major reservoirs remain above historical averages [21][22] - In Hawaii, a settlement was reached in the Kannapali General Rate Case, increasing revenue by $1.1 million [20] Company Strategy and Development Direction - The company is focused on maintaining a strong liquidity profile, with $44.5 million in unrestricted cash and $315 million available on credit lines as of March 31, 2025 [11][12] - The growth strategy includes ongoing greenfield development in Texas and evaluating domestic M&A opportunities, with a primary focus on rate base growth [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress of the 2021 general rate case, noting that discussions with advocates and the commission are moving forward on schedule [14][24] - The company is cautious about potential market volatility and inflation impacts on costs, emphasizing the importance of managing controllable expenses [23][44] Other Important Information - The Board of Directors approved a quarterly dividend of $0.30 per share, representing a 10.7% increase from the previous year [13] - The company is actively managing wildfire risks as the fire season begins, focusing on infrastructure investments to mitigate potential impacts [27] Q&A Session Summary Question: Insights on the California GRC and key points of contention - Management indicated that while a global settlement was not reached, discussions are ongoing to identify non-contentious areas for submission to the judge [30][31] Question: Comparison of the current GRC with the previous one - Management noted that the current GRC is progressing more positively than the previous one, with better engagement from the commission and advocates [38][40] Question: Managing costs amid market volatility - Management acknowledged the uncertainty regarding tariffs and supply chain impacts but expressed optimism based on past experiences managing costs during COVID [43][45] Question: Factors driving better-than-expected Q1 results - Management attributed the positive results to effective budget management, a more accurate water mix in the rate case, and favorable expense timing [55][57] Question: Potential for a global settlement in the GRC - Management stated that while a global settlement is not guaranteed, there is still hope for reaching agreements on undisputed items as the process moves forward [64][66] Question: Status of the ATM program renewal - Management confirmed that the ATM program is in the process of renewal, with announcements expected in early spring [72][73]

Core Viewpoint - California Water Service Group (CWT) reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, but down from $1.21 per share a year ago, indicating a 37.50% earnings surprise [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates three times over the last four quarters [2] - The quarterly revenue was $203.97 million, surpassing the Zacks Consensus Estimate by 13.24%, compared to $270.75 million in the same quarter last year [2] - The earnings surprise for the previous quarter was 120%, with actual earnings of $0.33 per share against an expected $0.15 [1] Group 2: Stock Performance - California Water Service Group shares have increased by approximately 11.7% since the beginning of the year, contrasting with a -5.3% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Group 3: Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.42 on revenues of $225.05 million, and for the current fiscal year, it is $2.32 on revenues of $951.69 million [7] - The outlook for the Utility - Water Supply industry is favorable, ranking in the top 32% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - For Q1 2025, operating revenue was $204 million, compared to $270.7 million in Q1 2024, reflecting a decrease due to interim rate relief recorded in the previous year [8] - Net income attributed to the group was $13.3 million or $0.22 per diluted share, down from $69.9 million or $1.21 per diluted share in Q1 2024 [9] - Adjusted for interim rate relief, Q1 revenue increased by 13% over non-GAAP 2024 revenue of $180.5 million, and net income increased by 225% over non-GAAP income of $4.1 million [10] Business Line Data and Key Metrics Changes - Capital investments during the quarter totaled $110.1 million, consistent with the record quarter reported in Q1 2024 [11] - The company expects annual capital expenditures to increase over the next five years due to ongoing infrastructure needs [12] Market Data and Key Metrics Changes - As of March 31, 2025, the company had $44.5 million in unrestricted cash, $45.7 million in restricted cash, and $315 million available on credit lines, indicating a strong liquidity profile [12] Company Strategy and Development Direction - The company is focused on rate base growth, targeting a compounded annual growth rate of approximately 11.7% [12] - The ongoing greenfield development in Texas is progressing well, with a focus on the South Austin corridor [23] - The company is also evaluating domestic M&A opportunities as a supplemental growth strategy [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress of the 2021 general rate case, noting that discussions with the California Public Advocates are ongoing [14][15] - The company is managing controllable expenses tightly due to market volatility and inflation, while maintaining a focus on capital execution [22][23] - Management is optimistic about the water supply situation in California, with strong snowpack and reservoir levels above historical averages [20][21] Other Important Information - The Board of Directors approved a quarterly dividend of $0.30 per share, representing a 10.7% increase from the previous year [13] - The company received regulatory approvals for various projects, including the Palos Verdes Peninsula Water Reliability Project, which is the largest in the company's history [17][18] Q&A Session Summary Question: Key points of contention in the California GRC - Management indicated that they cannot disclose specific details due to ongoing settlement discussions but are identifying non-contested areas for submission to the judge [28][30] Question: Comparison of the current GRC to the previous one - Management noted that the current GRC is progressing better than the previous one, with more positive engagement from the commissioner and advocates [36][39] Question: Managing costs amid market volatility - Management stated that it is too early to predict the impact of tariffs and supply chain issues but remains optimistic based on past experiences managing supply constraints [41][42] Question: Drivers behind better-than-expected Q1 results - Management attributed the positive results to effective budget management, a more accurate water mix in the rate case, and higher customer usage [51][55] Question: Potential for a global settlement in the GRC - Management expressed uncertainty about achieving a global settlement but remains hopeful as they proceed with the hearings [60][62]