California Water Service(CWT) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Reported net income for the first quarter was $69.9 million, up nearly 415$22.2 million in the first quarter of 2023 [71] - Diluted earnings per share for the first quarter 2024 was $1.21, compared to a loss of$0.48 per share in the first quarter of 2023 [102] - Net interest expense increased 25.5% to $15 million during the first quarter compared to$12 million for the first quarter of 2023 [5] Business Line Data and Key Metrics Changes - Operating revenue for the quarter increased 106.5% to $270.7 million compared to$131.1 million in the prior year [101] - First quarter operating expenses increased to $192.9 million from$148.6 million, primarily driven by higher water production costs and deferred costs associated with recognized revenue [80] Market Data and Key Metrics Changes - The overall rate base grew to an estimated $2.2 billion by the end of 2023, an increase of 15.4$380 million in capital investments for the year, including an estimated $20 million in developer-funded projects [81] Company Strategy and Development Direction - The company is committed to investing in infrastructure improvements and addressing PFAS treatment, with plans to spend between$12 million and $20 million this year on PFAS treatment [89] - The company aims to maintain a strong liquidity position with cash and cash equivalents of$88.3 million and additional short-term borrowing capacity of $320 million [82] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the water supply situation in California, noting good snowpack levels and replenishment of underground aquifers [117] - The company is focused on achieving a return on equity (ROE) of 10.27$83 million under the State of California Extended Arrearage Program to assist customers with past due balances from the COVID-19 pandemic [73] - The company has a commitment to reduce absolute Scope 1 and Scope 2 greenhouse gases by 63% by 2023 from a 2021 baseline [111] Q&A Session All Questions and Answers Question: How should we think about the timing of the cash recovery of the retroactive 2023 GRC revenues? - The company will start requesting it in the third quarter, with cash flows expected to come in more during 2025 and 2026 [58][60] Question: Will you be booking AFUDC earnings associated with PFAS CapEx? - The company will accrue AFUDC on capital projects, which will flow through the income statement [90] Question: Is dividend growth a lever to adjust downwards if there are higher equity needs? - The company aims to maintain a dividend growth rate above inflation and considers market conditions and capital needs when making decisions [144]