Attached files

file filename
8-K - 8-K - CALIFORNIA WATER SERVICE GROUPa11-23577_18k.htm

Exhibit 99.1

 

NEWS RELEASE
CALIFORNIA WATER SERVICE GROUP

 

 

1720 North First Street

For immediate release

 

San Jose, CA 95112-4598

August 3, 2011

 

 

 

Contact:

Marty Kropelnicki (408) 367-8200 (analysts)

 

 

Shannon Dean (310) 257-1435 (media)

 

 

CALIFORNIA WATER SERVICE GROUP ANNOUNCES RESULTS FOR THE 2ND QUARTER OF 2011

 

SAN JOSE, CA  —  California Water Service Group (NYSE : CWT) today announced net income of $12.2 million and earnings per common share (EPS) of $0.29 for the second quarter of 2011, compared to net income of $10.4 million and EPS of $0.25 for the second quarter of 2010.  Per share amounts reflect the June 10, 2011, two-for-one stock split.

 

For the quarter, total revenue increased 11%, or $13.1 million, to $131.4 million.  Rate increases added $12.0 million and revenue from sales to new customers added $0.8 million.  Water usage by existing customers and other charges decreased revenue by $2.4 million.  During the quarter, the net effect of the water revenue adjustment mechanism (WRAM) and the modified cost balancing account (MCBA) was an increase of $2.7 million to revenue.   The WRAM is a ratemaking mechanism that decouples water sales from revenues and the MCBA is an account that allows California Water Service Company (Cal Water) to track and recover or refund changes in water production costs.

 

1



 

Total operating expenses were up 10%, or $9.8 million, to $111.8 million. Water production costs increased by 7%, or $2.9 million, to $44.7 million, primarily due to increases in the cost of purchased water costs and pump taxes; these increases were partially offset by a reduction in purchased water quantities.  Administrative costs increased $2.1 million, or 11%, to $20.6 million, due primarily to increases in wage and benefit expenses.  Other operations expenses increased $1.0 million, or 7%, to $15.7 million, due to increased conservation and water quality expenses.

 

Maintenance expense increased 3%, or $0.1 million, to $5.3 million, compared to $5.2 million for the same period last year. Depreciation expense increased $1.7 million, or 16%, to $12.4 million due to 2010 capital additions and updated depreciations rates adopted by the California Public Utilities Commission effective January 1, 2011.  Income taxes increased $1.5 million, or 22%, to $8.6 million.

 

Other income, net of income taxes, increased by $0.2 million to $0.2 million.  Interest expense increased $1.6 million, or 28%, to $7.5 million, due to increased interest expense resulting from the November 2010 long-term debt offering.

 

For the twelve months ended June 30, 2010, net income was $40.2 million and diluted earnings per share were $0.96, compared to net income of $38.4 million and diluted earnings per share of $0.92 for the same period in the prior year.  Revenues for the trailing twelve months were $481 million, compared to $455 million for the same period last year.

 

On June 29, 2011, the company announced that it had expanded its unsecured revolving credit facilities to $400 million and extended the term for five years.  The proceeds from credit facilities may be used for working capital purposes, including the short-term financing of capital projects.  Also in the second quarter, Standard & Poor’s

 

2



 

reaffirmed Cal Water’s general credit rating of A+ stable and AA- for Cal Water’s First Mortgage Bonds.

 

Finally, at their annual meeting on May 24, 2011, stockholders authorized an increase in shares to allow the two-for-one stock split announced by the Company on April 5, 2011.  The stock split was effective June 10, 2011.

 

“We are pleased with our second quarter performance and continue to see improvements in rate relief from the 2009 General Rate Case that took effect January 1, 2011.  The rate relief follows our customers’ consumption patterns and as a result, more rate relief is achieved during late spring and summer,” said President and Chief Executive Officer Peter C. Nelson.  “In addition, Standard & Poor’s affirmation of our credit rating and the Company’s expansion of our unsecured lines of credit reflect the strength of our balance sheet and our ability to continue to make prudent investments in infrastructure,” Nelson added.

 

Rate-Related Matters

 

On May 1, 2011, California Water Service Company (Cal Water) filed its Cost of Capital (COC) application seeking to increase its return on equity from 10.2 percent to 11.25 percent.  The Company cannot predict the outcome of this application, but it expects to receive a decision from the CPUC by the end of the year.

 

Other News

 

On May 17, 2011, Hawaii Water Service Company (Hawaii Water), a wholly owned subsidiary of California Water Service Group, celebrated the completion of a $9.5 million upgrade at its Pukalani Wastewater Treatment Plant with an opening ceremony attended by employees, neighbors, and government dignitaries.  The plant is the first in the

 

3



 

state to use state-of-the-art membrane-bioreactor filtration technology, which treats the effluent to a higher quality without increasing the footprint of the facility.

 

2nd Quarter Teleconference Information

 

All stockholders and interested investors are invited to listen to the 2011 second quarter teleconference on Thursday, August 4, 2011, at 11 a.m. (EDT) by dialing 1-866-871-4881 and keying in ID #: 1538142.  A replay of the call will be available from 2:00 p.m. (EDT) on August 4, 2011, through October 3, 2011, at 1-888-266-2081, passcode 1538142.   The call, which will be hosted by President and Chief Executive Officer Peter C. Nelson and Vice President and Chief Financial Officer Martin A. Kropelnicki, 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.”

 

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 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

 

4



 

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.

 

Additional information is available at our website at www.calwatergroup.com.

 

Attachments (2).

 

###

 

5



 

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

 

(In thousands, except per share data)

 

 

 

June 30,

 

December 31

 

 

 

2011

 

2010

 

ASSETS

 

 

 

 

 

Utility plant:

 

 

 

 

 

Utility plant

 

$

1,895,384

 

$

1,843,766

 

Less accumulated depreciation and amortization

 

(567,788

)

(549,469

)

Net utility plant

 

1,327,596

 

1,294,297

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

32,882

 

42,277

 

Receivables

 

 

 

 

 

Customers

 

30,620

 

25,813

 

Regulatory balancing accounts

 

13,085

 

14,784

 

Other

 

6,148

 

5,386

 

Unbilled revenue

 

21,545

 

13,925

 

Materials and supplies at average cost

 

6,064

 

6,058

 

Taxes, prepaid expense, and other assets

 

21,267

 

17,967

 

Total current assets

 

131,611

 

126,210

 

Other assets:

 

 

 

 

 

Regulatory assets

 

245,956

 

229,577

 

Goodwill

 

2,615

 

2,615

 

Other assets

 

37,375

 

39,367

 

Total other assets

 

285,946

 

271,559

 

 

 

$

1,745,153

 

$

1,692,066

 

 

 

 

 

 

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

Capitalization:

 

 

 

 

 

Common stock, $.01 par value-68,000 shares authorized, 41,752 and 41,667 outstanding in 2011 and 2010, respectively

 

$

418

 

$

417

 

Additional paid-in capital

 

217,937

 

217,308

 

Retained earnings

 

219,885

 

217,801

 

Total common stockholders’ equity

 

438,240

 

435,526

 

Long-term debt, less current maturities

 

477,968

 

479,181

 

Total capitalization

 

916,208

 

914,707

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

2,377

 

2,380

 

Short-term borrowings

 

32,760

 

23,750

 

Accounts payble

 

51,647

 

39,505

 

Regulatory balancing accounts

 

2,297

 

3,025

 

Accrued interest

 

4,689

 

4,651

 

Accrued expenses and other liabilities

 

37,856

 

34,037

 

Total current liabilities

 

131,626

 

107,348

 

Unamortized investment tax credits

 

2,244

 

2,244

 

Deferred income taxes, net

 

120,046

 

107,084

 

Pension and postretirement benefits other than pensions

 

162,439

 

155,224

 

Regulatory liability and Other

 

70,726

 

82,204

 

Advances for construction

 

187,277

 

186,899

 

Contributions in aid of construction

 

154,587

 

136,356

 

 

 

 

 

 

 

 

 

$

1,745,153

 

$

1,692,066

 

 



 

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)

 

 

 

June 30

 

June 30

 

For the Three-Months ended:

 

2011

 

2010

 

 

 

 

 

 

 

Operating revenue

 

$

131,397

 

$

118,321

 

Operating expenses:

 

 

 

 

 

Operations:

 

 

 

 

 

Water production costs

 

44,745

 

41,834

 

Administrative and General

 

20,554

 

18,480

 

Other operations

 

15,738

 

14,749

 

Maintenance

 

5,288

 

5,158

 

Depreciation and amortization

 

12,373

 

10,638

 

Income taxes

 

8,638

 

7,091

 

Property and other taxes

 

4,506

 

4,087

 

Total operating expenses

 

111,842

 

102,037

 

 

 

 

 

 

 

Net operating income

 

19,555

 

16,284

 

 

 

 

 

 

 

Other income and expenses:

 

 

 

 

 

Non-regulated revenue

 

3,739

 

3,692

 

Non-regulated expenses, net

 

(3,509

)

(3,691

)

Gain on sale of non-utility property

 

62

 

 

Income tax (expense) on other income and expenses

 

(112

)

 

Net other income

 

180

 

1

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Interest Expense

 

8,061

 

6,939

 

Less: capitalized interest

 

(516

)

(1,035

)

Net interest expense

 

7,545

 

5,904

 

 

 

 

 

 

 

Net income

 

$

12,190

 

$

10,381

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

Basic

 

$

0.29

 

$

0.25

 

Diluted

 

$

0.29

 

$

0.25

 

Weighted average shares outstanding

 

 

 

 

 

Basic

 

41,752

 

41,606

 

Diluted

 

41,768

 

41,636

 

Dividends per share of common stock

 

$

0.15375

 

$

0.14875

 

 



 

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)

 

 

 

June 30

 

June 30

 

For the Six-Months ended:

 

2011

 

2010

 

 

 

 

 

 

 

Operating revenue

 

$

229,546

 

$

208,593

 

Operating expenses:

 

 

 

 

 

Operations:

 

 

 

 

 

Water production costs

 

76,703

 

72,289

 

Administrative and General

 

41,056

 

35,924

 

Other operations

 

30,373

 

28,315

 

Maintenance

 

10,487

 

10,109

 

Depreciation and amortization

 

24,961

 

21,430

 

Income taxes

 

7,397

 

8,499

 

Property and other taxes

 

9,066

 

7,990

 

Total operating expenses

 

200,043

 

184,556

 

 

 

 

 

 

 

Net operating income

 

29,503

 

24,037

 

 

 

 

 

 

 

Other income and expenses:

 

 

 

 

 

Non-regulated revenue

 

8,072

 

7,113

 

Non-regulated expenses, net

 

(6,933

)

(7,237

)

Gain on sale of non-utility property

 

62

 

 

Income tax (expense) benefit on other income and expenses

 

(478

)

60

 

Net other income (expense)

 

723

 

(64

)

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Interest Expense

 

16,549

 

13,428

 

Less: capitalized interest

 

(1,232

)

(1,854

)

Net interest expense

 

15,317

 

11,574

 

 

 

 

 

 

 

Net income

 

$

14,909

 

$

12,399

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

Basic

 

$

0.36

 

$

0.30

 

Diluted

 

$

0.36

 

$

0.30

 

Weighted average shares outstanding

 

 

 

 

 

Basic

 

41,724

 

41,582

 

Diluted

 

41,740

 

41,612

 

Dividends per share of common stock

 

$

0.30750

 

$

0.29750