Yahoo Finanza California Water Service Group (CWT) (Q1 2024) Earnings Call Transcript Highlights: A Strong ...
Operating Revenue: Increased 106.5% to $270.7 million in Q1 2024 from $131.1 million in Q1 2023.
Net Income: Reported at $69.9 million in Q1 2024, up from a loss of $22.2 million in Q1 2023.
Earnings Per Share (EPS): $1.21 in Q1 2024, compared to a loss of $0.4 per share in Q1 2023.
Capital Investments: $110 million in Q1 2024, anticipating $380 million for the year.
Rate Base Growth: Estimated at $2.2 billion by end of 2023, projected to grow to $2.36 billion by end of 2024.
Dividends: Quarterly dividend declared at $0.28 per share, marking the 317th consecutive quarterly dividend.
Liquidity: Cash and cash equivalents of $88.3 million as of March 31, 2024.
COVID-19 Arrearage Program: Received approximately $83 million from the State of California to assist customers with past due balances.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you update us on water supply and water production costs as they were rather high in the quarter? How should we think about that for the remainder of the year? A: (James Lynch, CFO) The state of California is doing well with a snowpack count higher than the 20-year average for the second consecutive year. This has helped replenish underground aquifers. The new ICBA provides some protection against cost increases in water production. Other production expenses increased mainly due to the recognition of deferred RAM revenue, which should reduce as we unwind those deferred revenue costs.
Q: How should we think about the timing of the cash recovery of the retroactive 2023 GRC revenues? A: (Greg Milleman, VP - Rates and Regulatory Affairs) We will be filing in the third quarter for recovery of those back monies, with the new rates going into effect by May 31. The recovery will be based on a per CCF surcharge, varying seasonally.
Q: How should we think about the $83 million arrearage payment program in terms of cash recovery and its potential to offset 2024 external equity needs? A: (James Lynch, CFO) The arrearage payment will be applied to customer balances and RAM balances, improving cash flow but not affecting revenue. This helps the company by reducing the immediate need to issue equity, especially given the current market conditions.
Q: Given the GRC final outcome and the recovery of some CapEx through the advice letter recovery process, where do you expect your earned ROEs in 24 and 25 to come in relative to the allowed levels? A: (James Lynch, CFO) For 2024, we should be at or slightly above the ROE. For 2025, regulatory lag and inflation may impact this, but we aim to budget to hit our ROE.
Q: Can you provide more details on the impact of the retroactive GRC decision on first quarter earnings? A: (James Lynch, CFO) The first quarter included approximately $90 million of revenue related to the GRC decision, with an incremental $8.5 million of expenses also related to the decision.
Q: Regarding the PFAS spending, will you be booking AFUDC earnings associated with this CapEx? How will it flow through the income statement? A: (Martin Kropelnicki, CEO) We are eligible to use the AFUDC mechanism as we move forward with PFAS-related expenditures, which will allow us to reduce our interest expense to the extent that we are making expenditures related to those projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
