CALIFORNIA WATER SERVICE GROUP Q4 FY2024 earnings call

• 2024 was a strong year with benefits from the 2021 California General Rate Case, interim rate relief, and a lower cost water supply mix due to higher precipitation.
• Record capital investments of $471 million in 2024, a 23% increase from 2023, to support water infrastructure.
• Annual dividend increased to $1.24 per share, a 10.71% increase, with a 7.7% 5-year compound annual growth rate.
• Progress in the 2024 General Rate Case, including completed public participation hearings and positive support for infrastructure plans.
• Growth in Texas, with over 4,200 customers connected and ~16,000 committed connections in escrow for future development.
• Strong liquidity profile with $50.1 million in unrestricted cash, $45.6 million in restricted cash, and $395 million in available credit.
• Focus on emergency preparedness, including community EOC exercises and wildfire mitigation plans.

In 2024, California Water Service Group achieved strong financial results. Annual operating revenue increased to over $1 billion, up from $794.6 million in 2023. Annual net income was $190.8 million or $3.25 per diluted share, a significant increase from $51.9 million or $0.91 per diluted share in 2023. For Q4 2024, operating revenue was $222.2 million, a 3.6% increase from the prior year Q4. Net income for Q4 2024 was $19.7 million or $0.33 per diluted share, compared to $30.1 million or $0.52 per diluted share in Q4 2023. Company capital investments in 2024 totaled a record $471 million, a 23% increase over 2023. The overall rate base grew to almost $2.4 billion for the year, an increase of 9.1% over 2023.

• 2025 focus on managing controllable expenses during the third year of the California rate case.
• Aim to conclude the 2024 General Rate Case by the end of 2025.
• Continue strategic growth through targeted domestic M&A and greenfield development in Texas.
• Evaluate equity and debt needs based on market conditions to support capital plans, with the current ATM to be reassessed after April.

• Uncertainty regarding timing and cost of PFAS/PFOA projects due to evolving regulations and testing requirements.
• Regulatory risks related to rate case negotiations, including potential differences with public advocates on CapEx, expenses, and decoupling.
• Market risks affecting debt and equity issuance, including interest rate fluctuations.

Q: Thoughts on public advocates' position in the 2026 to 2028 GRC and potential for settlement.

A: Greg Milleman is optimistic, stating they are working on a rebuttal to strengthen their negotiation position for settlement discussions.

Q: Equity issuance in 2024 and future needs.

A: Jim Lynch notes the current ATM expires in April, and they will assess market conditions to determine equity needs for capital plans, targeting to raise equity only as necessary.

Q: Plans to enter water business in Texas.

A: Martin Kropelnicki expects to enter the water business in South Austin when the pipeline from the Guadalupe Basin River Authority is completed in 2026, as part of a public-private partnership.

Q: PFAS/PFOA spending cadence.

A: Martin Kropelnicki explains uncertainty due to evolving regulations and testing, but the program is corporate-focused to meet water quality standards, with estimates still being refined.