SOURCE: California Water Service Group

California Water Service Group

November 05, 2013 17:50 ET

California Water Service Group Announces Results for the 3rd Quarter of 2013

SAN JOSE, CA--(Marketwired - Nov 5, 2013) - California Water Service Group (NYSE: CWT) today announced net income of $29.2 million and earnings per share of $0.61 for the third quarter of 2013, compared to net income of $29.8 million and earnings per share of $0.71 for the third quarter of 2012. The year-to-year decrease in earnings per share was primarily attributable to the dilutive effect of the stock offering completed in March 2013.

During the third quarter of 2013, State of California enterprise zone tax credits for the periods 2008 to 2013 and current year equipment repairs and maintenance state income tax deductions contributed $4.1 million to net income. During the third quarter of 2012, mains repairs and maintenance state income tax deductions contributed $6.2 million to net income.

Revenue for the third quarter of 2013 was $184.4 million, compared to revenue of $178.1 million in third quarter of 2012. The increase in revenue was due primarily to an increase in water usage of $4.0 million, net of WRAM, which includes a $1.1 million increase in accrued unbilled revenue. Rate increases added $3.5 million in revenue and the effect of other regulatory mechanisms decreased revenue by $1.2 million.

Total operating expenses for the third quarter of 2013 increased by $6.8 million, or 4.8%, to $148.6 million. Water production costs increased by $4.1 million, or 6.2%, to $70.6 million, primarily due to wholesale water rate increases and increased sales to existing customers. Administrative costs increased $0.7 million, or 3.1%, to $24.7 million, due primarily to increases in labor and health care expenses; these increases were partially offset by a reduction in conservation program expenses. Other operations expenses remained unchanged at $17.7 million.

Maintenance expense increased $0.2 million, or 4.5%, to $4.6 million, due to an increase in main and service repair. Depreciation expense increased $0.8 million, or 5.7%, to $4.6 million due to 2012 capital additions.

Other income and expenses, net of income taxes, decreased $0.1 million primarily due to a decrease in unrealized gains associated with the Company's non-qualified retirement plans. Interest expense decreased by $0.1 million, or 1.1%, to $7.1 million.

According to President and Chief Executive Officer Martin A. Kropelnicki, core results for the third quarter are in line with expectations and reflect the Company's budget discipline.

"We have remained diligent in our efforts to operate within budget, which is particularly critical given the fact that we are in the third year of our three-year rate case cycle in California. I am also pleased with our progress to reach a settlement agreement with parties to our 2012 General Rate Case that will enable us to recover costs, make critical infrastructure investment, and address affordability issues, assuming it is approved by the California Public Utilities Commission as proposed," he said. 

Cal Water Files Settlement Agreement on 2012 General Rate Case
On October 31, 2013, the Company announced that its largest subsidiary, California Water Service Company (Cal Water), had reached a settlement agreement with the California Public Utilities Commission's Office of Ratepayer Advocates and other parties to its 2012 General Rate Case. The Commission may or may not approve the settlement agreement; it is expected to issue a final decision in early 2014. If the settlement agreement were adopted as proposed, it would add $45 million in total revenues in 2014 and an estimated $10 million in 2015 and 2016. Cal Water would be authorized to invest $447 million in infrastructure improvements over three years in order to provide safe, reliable water service to customers throughout the state. It would also be allowed to increase the discount for qualified low-income customers and the Rate Support Fund discount for customers residing in higher cost service areas. For additional information, visit www.cpuc.ca.gov

Other Information
All stockholders and interested investors are invited to listen to the 2013 third quarter conference call on 11 a.m. ET on Wednesday, November 6, 2013, which can be accessed by dialing 1-888-503-8169 or 1-719-325-2315 and keying in ID# 9201217. A replay of the call will be available from 2:00 p.m. ET on Wednesday, November 6, 2013, through January 6, 2014, at 1-888-203-1112 or 1-719-457-0820, ID# 9201217. The call, which will be hosted by President and Chief Executive Officer Martin A. Kropelnicki, and Vice President and Chief Financial Officer Thomas F. Smegal, will also be webcast under the investor relations tab at www.calwatergroup.com.

California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, Inc., CWS Utility Services, and HWS Utility Services. Together these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. California Water Service Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available on our website at www.calwatergroup.com.

 This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("Act"). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor" treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management's judgment about the Company, the water utility industry and general economic conditions. Such words as would, expects, intends, plans, believes, estimates, assumes, anticipates, projects, predicts, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to: governmental and regulatory commissions' decisions; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; new legislation; electric power interruptions; increases in suppliers' prices and the availability of supplies including water and power; fluctuations in interest rates; changes in environmental compliance and water quality requirements; acquisitions and our ability to successfully integrate acquired companies; the ability to successfully implement business plans; changes in customer water use patterns; the impact of weather on water sales and operating results; access to sufficient capital on satisfactory terms; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; the involvement of the United States in war or other hostilities; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; and, other risks and unforeseen events. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.

   
   
CALIFORNIA WATER SERVICE GROUP  
CONDENSED CONSOLIDATED BALANCE SHEETS  
Unaudited  
   
(In thousands, except per share data)   September 30,     December 31,  
    2013     2012  
ASSETS            
Utility plant:            
  Utility plant   $ 2,190,573     $ 2,096,363  
  Less accumulated depreciation and amortization     (685,351 )     (639,307 )
    Net utility plant     1,505,222       1,457,056  
                 
Current assets:                
  Cash and cash equivalents     48,847       38,790  
  Receivables: net of allowance for doubtful accounts of $815 as of September 30, 2013 and $714 as of December 31, 2012                
    Customers     42,979       29,958  
    Regulatory balancing accounts     27,047       34,020  
    Other     9,802       11,943  
  Unbilled revenue     25,815       15,394  
  Materials and supplies at weighted average cost     5,689       5,874  
  Taxes, prepaid expenses, and other assets     10,373       10,585  
    Total current assets     170,552       146,564  
                 
Other assets:                
  Regulatory assets     354,879       344,419  
  Goodwill     2,615       2,615  
  Other assets     50,165       45,270  
    Total other assets     407,659       392,304  
    $ 2,083,433     $ 1,995,924  
                 
CAPITALIZATION AND LIABILITIES                
Capitalization:                
  Common stock, $.01 par value   $ 477     $ 419  
  Additional paid-in capital     327,890       221,013  
  Retained earnings     271,887       252,280  
    Total common stockholders' equity     600,254       473,712  
  Long-term debt, less current maturities     430,227       434,467  
    Total capitalization     1,030,481       908,179  
                 
Current liabilities:                
  Current maturities of long-term debt     48,013       46,783  
  Short-term borrowings     11,515       89,475  
  Accounts payable     60,414       47,199  
  Regulatory balancing accounts     1,699       5,018  
  Accrued interest     10,656       4,705  
  Accrued expenses and other liabilities     64,716       49,887  
    Total current liabilities     197,013       243,067  
                 
Unamortized investment tax credits     2,180       2,180  
Deferred income taxes, net     168,091       158,846  
Pension and postretirement benefits other than pensions     247,335       244,901  
Regulatory and other liabilities     91,185       92,593  
Advances for construction     184,879       187,584  
Contributions in aid of construction     162,269       158,574  
Commitments and contingencies     -       -  
    $ 2,083,433     $ 1,995,924  
                 
                 
   
   
CALIFORNIA WATER SERVICE GROUP  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
Unaudited  
(In thousands, except per share data)  
             
For the Three-Months ended:            
    September 30     September 30  
    2013     2012  
             
Operating revenue   $ 184,404     $ 178,135  
Operating expenses:                
  Operations:                
    Water production costs     70,614       66,489  
    Administrative and general     24,670       23,925  
    Other operations     17,657       17,658  
  Maintenance     4,575       4,377  
  Depreciation and amortization     14,505       13,720  
  Income taxes     11,165       10,387  
  Property and other taxes     5,414       5,218  
    Total operating expenses     148,600       141,774  
                     
    Net operating income     35,804       36,361  
                 
Other income and expenses:                
  Non-regulated revenue     3,649       3,756  
  Non-regulated expenses, net     (2,825 )     (2,697 )
  Income tax (expense) on other income and expenses     (330 )     (422 )
    Net other income     494       637  
                 
Interest expense:                
  Interest expense     7,687       8,024  
  Less: capitalized interest     (540 )     (798 )
    Net interest expense     7,147       7,226  
                 
Net income   $ 29,151     $ 29,772  
                 
Earnings per share                
  Basic   $ 0.61     $ 0.71  
  Diluted   $ 0.61     $ 0.71  
Weighted average shares outstanding                
  Basic     47,737       41,905  
  Diluted     47,770       41,905  
Dividends declared per share of common stock   $ 0.1600     $ 0.1575  
                 
                 
             
             
CALIFORNIA WATER SERVICE GROUP  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
Unaudited  
(In thousands, except per share data)  
   
For the Nine-Months ended:  
    September 30     September 30  
    2013     2012  
             
Operating revenue   $ 450,403     $ 438,436  
Operating expenses:                
  Operations:                
    Water production costs     171,956       158,119  
    Administrative and general     73,106       69,110  
    Other operations     50,332       59,213  
  Maintenance     12,896       14,742  
  Depreciation and amortization     43,625       41,383  
  Income taxes     19,567       19,477  
  Property and other taxes     16,564       13,802  
    Total operating expenses     388,046       375,846  
                   
    Net operating income     62,357       62,590  
                 
Other income and expenses:                
  Non-regulated revenue     10,386       11,943  
  Non-regulated expenses, net     (8,482 )     (8,491 )
  Income tax (expense) on other income and expenses     (765 )     (1,383 )
    Net other income     1,139       2,069  
                 
Interest expense:                
  Interest expense     23,527       23,484  
  Less: capitalized interest     (1,619 )     (2,647 )
    Net interest expense     21,908       20,837  
                 
Net income   $ 41,588     $ 43,822  
                 
Earnings per share                
  Basic   $ 0.91     $ 1.05  
  Diluted   $ 0.90     $ 1.05  
Weighted average shares outstanding                
  Basic     45,927       41,886  
  Diluted     45,957       41,886  
Dividends declared per share of common stock   $ 0.4800     $ 0.4725  
                 
                 

1720 North First Street
San Jose, CA 95112-4598

Contact Information

  • Contact:

    Tom Smegal
    (408) 367-8200 (analysts)

    Shannon Dean
    (310) 257-1435 (media)