Core Viewpoint - California Water Service Group's subsidiary, California Water Service, has entered into an agreement to own and operate the wastewater and recycled water systems of the Silverwood community in San Bernardino County, CA, aligning with its strategy to diversify water sources and enhance sustainability [1][2]. Agreement Details - Cal Water will serve approximately 500 wastewater connections currently supplied by the City of Hesperia after the completion of Silverwood's wastewater treatment plant, which is expected to have over 15,000 customer connections upon full development [3]. - The ownership transfer will occur in phases as systems are completed, contingent upon satisfying closing conditions, and will be reorganized as a Cal Water district under the California Public Utilities Commission's supervision [4]. Service Reliability and Expansion - California Water is focused on expanding operations in the western United States through acquisitions, exploring new opportunities in both regulated and non-regulated water and wastewater activities [5]. - The company plans to invest $660 million in capital expenditures in 2025 and a total of $2.06 billion from 2025 to 2027 to upgrade infrastructure and improve service quality [7]. Industry Significance - The U.S. has nearly 50,000 community water systems and 14,000 wastewater treatment systems, which are vital for public health and environmental sustainability [8]. - There is a growing trend of U.S. water utility companies acquiring wastewater systems to address funding and management challenges faced by municipalities, bringing in necessary capital and expertise for upgrades [9]. Competitor Activities - Other companies, such as American Water Works, Middlesex Water Company, and Essential Utilities, are also pursuing wastewater acquisitions as part of their growth strategies, indicating a broader industry trend towards consolidation and expansion in wastewater services [11][12][13]. Stock Performance - Over the past three months, California Water's shares have increased by 0.5%, compared to a 4.3% growth in the industry [14].

Q1 2025 Performance Highlights - Produced water volumes increased by 7% sequentially and 3% year-over-year[13] - Water Solutions volumes increased by 7% sequentially and 54% year-over-year[13] - Net income was $16 million, and Adjusted EBITDA reached $57 million, a 4% sequential increase and a 6% year-over-year increase[13] - Adjusted Operating Margin remained strong at $044 per barrel[13] - Capital Expenditures were $21 million, down 44% year-over-year[13] Asset and Infrastructure - Aris Water Solutions has approximately 790 miles of produced water pipeline right of way[11] - The company's water handling facilities have a capacity of approximately 1800 kbwpd[11] - Water recycling facilities have a capacity of approximately 1400 kbwpd[11] - Recycled water storage capacity is approximately 16 million barrels[11] - Contracted dedicated acres at McNeill Ranch are approximately 625000[11] Q2 2025 Outlook - The company estimates Produced Water Handling Volumes between 1200 kbwpd and 1250 kbwpd[22] - Water Solutions Volumes are projected to be between 475 kbwpd and 525 kbwpd[22] - Adjusted Operating Margin per Barrel is expected to be between $041 and $043[22] - Adjusted EBITDA is projected to be between $500 million and $550 million[22] - Total Capital Expenditures are estimated to be between $200 million and $250 million[22] Strategic Initiatives - Aris Water Solutions purchased the McNeill Ranch for $450 million, spanning approximately 45000 surface acres in Texas and New Mexico[34] - The company applied for a permit to discharge up to 475 kbwpd of treated produced water for reservoir replenishment with the Texas Commission on Environmental Quality[30]

Financial Performance & Outlook - Aris achieved full year 2024 Adjusted EBITDA of $212 million, exceeding initial guidance by 12%[14] - The company generated $73 million in Free Cash Flow in 2024, surpassing initial guidance by approximately 32%[14] - Aris anticipates 2025 Adjusted EBITDA to be in the range of $215 million to $235 million[20] - The company projects Free Cash Flow for 2025 to be between $75 million and $95 million[20] - Aris expects Adjusted Operating Margin per Barrel for 2025 to be between $043 and $045[20] Operational Highlights - Produced water volumes for full year 2024 reached 1,120 kbwpd, exceeding initial guidance by approximately 7%[14] - Aris purchased the McNeill Ranch for $45 million, excluding ~$11 million of transaction related expenses, adding approximately 45,000 surface acres[9, 10] - The company's water infrastructure includes approximately 790 miles of pipeline and approximately 625,000 dedicated acres as of December 31, 2024[13] Capital Allocation & Shareholder Returns - Aris has increased its quarterly dividend to $014 per share, a 33% increase[37] - The company's available liquidity as of December 31, 2024, was approximately $332 million, including approximately $303 million undrawn from the revolving credit facility[36]