California Water Service(CWT) - 2023 Q1 - Quarterly Report

Financial Performance - Operating revenue for the three months ended March 31, 2023, was $131.1 million, a decrease of 24.3$172.993 million for the same period in 2022[14]. - Net loss for the three months ended March 31, 2023, was $22.334 million, compared to a net income of$0.894 million in the same period last year[14]. - Basic and diluted loss per share for the first quarter of 2023 was $(0.40), compared to earnings of$0.02 per share in Q1 2022[14]. - Total operating expenses for the same period were $148.624 million, down 9.3$163.855 million year-over-year[14]. - Total operating revenue for Q1 2023 was $131,100, a decrease of 24.3$172,993 in Q1 2022[28]. - Revenue from contracts with customers was $145,225 in Q1 2023, down 8.7$158,933 in Q1 2022[34]. - The decrease in net income of $23.3 million was primarily due to a decrease in operating revenue of$41.9 million, partially offset by a decrease in total operating expenses of $15.3 million[116]. - Total operating expenses decreased mainly due to a reduction in water production costs by$6.5 million and other operations expenses by $9.2 million, along with an increase in income tax benefit of$4.2 million[116]. Cash Flow and Financing - Cash provided by operating activities was $20.970 million for the three months ended March 31, 2023, down from$54.193 million in the same period of 2022[18]. - Net cash provided by financing activities was $62.526 million for the three months ended March 31, 2023, compared to$5.682 million in the same period last year[18]. - Cash flow from operations for Q1 2023 was $21.0 million, a decrease from$54.2 million in Q1 2022, primarily due to a one-time payment of $20.8 million received in 2022[151]. - The Company raised$18.2 million from the sale of 326,042 shares of common stock through its at-the-market equity program during the three months ended March 31, 2023[57]. - As of March 31, 2023, the company had short-term borrowings of $130.0 million, up from$70.0 million at the end of 2022[160]. Assets and Liabilities - Total assets as of March 31, 2023, were $3.886 billion, a slight increase from$3.851 billion at the end of 2022[11]. - Total equity decreased to $1.303 billion as of March 31, 2023, from$1.322 billion at the end of 2022[11]. - Current liabilities increased to $350.304 million as of March 31, 2023, compared to$294.650 million at the end of 2022[11]. - The book value per common share decreased to $23.19 as of March 31, 2023, from$23.70 at the end of 2022[177]. Regulatory and Compliance - The company filed its 2021 GRC requesting $1.0 billion for water infrastructure improvements, with a final decision on the case delayed[110]. - The California Public Advocates Office recommended a return on equity of 7.81$81.980 million, an increase from $68.496 million in Q1 2022[18]. - Total capital expenditures for Q1 2023 were$82.0 million, compared to $68.5 million in Q1 2022, with a proposed$1.0 billion investment in water infrastructure from 2022 to 2024[154][178]. Employee Compensation - The Company granted 42,301 Restricted Stock Awards (RSAs) during the first three months of 2023, increasing the total outstanding RSAs to 65,941 shares as of March 31, 2023, with a weighted-average fair value of $55.47[54]. - Approximately$3.5 million of total unrecognized compensation cost related to RSAs is expected to be recognized over a weighted average period of 2.0 years[53]. - The Company granted 42,464 performance-based Restricted Stock Units (RSUs) in Q1 2023, resulting in a total of 100,072 outstanding RSUs as of March 31, 2023, with a weighted-average fair value of $55.38[55]. - The total unrecognized compensation cost related to RSUs is approximately$3.9 million, expected to be recognized over a weighted average period of 2.1 years[55]. Market Conditions and Future Outlook - The company expects future net income and net other income to be significantly affected by market conditions impacting unrealized gains or losses on non-qualified benefit plan investments[117]. - The company expects to require approximately $200 million in capital investments to comply with proposed PFAS regulations if adopted[185]. - Management believes that supplies pumped from underground aquifers and purchased from wholesale suppliers will meet customer demand during 2023 and beyond[182]. Water Supply and Usage - Annual groundwater extraction from adjudicated groundwater basins is approximately 5.7 billion gallons, representing 10.8% of total annual water supply pumped from wells[181]. - Annual groundwater extraction from managed groundwater basins is approximately 31.5 billion gallons, accounting for 59.9% of total annual water supply pumped from wells[181]. - Annual groundwater extraction from unmanaged groundwater basins is approximately 15.4 billion gallons, which is 29.3% of total annual water supply pumped from wells[181]. - As of March 30, 2023, California's snowpack water content was 190% of long-term averages, with the northern Sierra region being crucial for urban water supplies[182]. Internal Controls and Management - The company plans to implement a remediation plan for internal control weaknesses in the second quarter of 2023[195]. - Management is committed to continuous improvement of financial reporting controls and will review internal controls diligently[194].