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8-K - 8-K - CALIFORNIA WATER SERVICE GROUPa15-10259_18k.htm

Exhibit 99.1

 

NEWS RELEASE

CALIFORNIA WATER SERVICE GROUP

GRAPHIC

 

 

1720 North First Street

San Jose, CA 95112-4598

 

DRAFT

April 29, 2015

For Immediate Release

 

Contact:

 

Tom Smegal (408) 367-8200 (analysts)

Shannon Dean (310) 257-1435 (media)

 

CALIFORNIA WATER SERVICE GROUP ANNOUNCES

 

FIRST QUARTER 2015 RESULTS

 

SAN JOSE, CA  —  California Water Service Group (NYSE: CWT) today announced  net income of $1.6 million or diluted earnings per common share of $0.03 for the first  quarter of 2015, compared to a net loss of $5.5 million or a $0.11 net loss per diluted common share for the first quarter of 2014.

 

The increase in net income is attributable primarily to the approval of the California Water Service (Cal Water) General Rate Case (GRC), Company’s largest subsidiary, during the third quarter of 2014. Increases in administrative and general, income tax, and property tax expense were partially offset by reductions in other operations, depreciation and amortization, maintenance, and net interest expense.  Net other income increased $0.5 million in 2015.

 

Total revenue increased $11.5 million, or 10%, to $122 million for the first quarter of 2015 as compared to revenue of $110.5 million for the first quarter of 2014.  Rate increases added $1.8 million, revenue decoupling mechanisms and balancing accounts added $9.1 million, and sales to new customers added an additional $0.6 million.

 

Total operating expenses increased $5.1 million, or 5%, to $114.5 million, for the first quarter of 2015 as compared to the prior year.

 

Water production expenses decreased $0.2 million, or 0.4%, to $45.2 million, due primarily to a reduction in customer water consumption associated with our water conservation programs.

 

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Administrative and general and other operations expenses increased $2 million, or 5%, to $43.5 million, due primarily to increases in employee pension and other postretirement benefit costs of $3.8 million and employee wage increases of $1.4 million.  These cost increases were partially offset by decreases in conservation program costs of $1.3 million and health care costs of $2.1 million. Conservation program costs are affected by seasonal patterns and are dependent on customer demand for our programs. Changes in employee pension and other postretirement benefits, water conservation program, and employee medical costs for regulated California operations did not affect earnings, because the Company was allowed by the California Public Utilities Commission (CPUC) to track these costs in balancing accounts for future recovery, which creates a corresponding change to operating revenue.

 

Maintenance expenses decreased $0.5 million, or 11%, to $4.5 million, due primarily to decreased costs for repairs of wells and transmission and distribution mains.

 

Depreciation and amortization expense decreased $0.7 million, or 5%, to $15.3 million, mostly due to lower 2015 California depreciation rates authorized in the GRC decision last year, which was partially offset by increases in utility plant.

 

Income tax expense increased $4.5 million, due primarily to an increase in pre-tax operating income during the first quarter of 2015.  Income taxes charged to other income and expenses increased $0.3 million, also due to an increase in pre-tax operating income from non-regulated service agreements during the first quarter of 2015.

 

Property and other taxes increased $0.1 million, or 3%, to $5.4 million, due primarily to property taxes on utility plant placed in service during 2014 and an increase in payroll and franchise taxes in 2015.

 

Net other income increased $0.5 million, due primarily to a reduction in lower margin service agreement activity.

 

Net interest expense decreased $0.2 million, or 3%, to $6.5 million for the first quarter of 2015, compared to the same period last year. The decrease was due primarily an increase in capitalized interest charged to construction projects and a decrease in interest expense driven by decreased short-term borrowing rates partially offset by an increase in short-term borrowings during the first quarter of 2015.

 

In March, the Company entered into unsecured revolving credit facilities for Group and its subsidiaries totaling $450 million for a five-year term.  The proceeds are expected to be used for working capital, including

 

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short-term financing of capital projects.  Of the total, $300 million is available to Cal Water, and $150 million is available to Group and its other subsidiaries.  The credit facilities may each be expanded by up to $50 million, or $100 million total.

 

According to President and Chief Executive Officer Martin A. Kropelnicki, this quarter’s results were positively impacted by rate relief realized in the 2012 GRC decision for Cal Water.

 

“Although our business is typically seasonal with the first quarter being the slowest, this year our bottom line benefited from the rate case increase authorized by the CPUC,” he said. “We also continue to focus on operating efficiently and investing prudently in capital to deliver results for our shareholders and high-quality, reliable water service to our customers.”

 

According to Kropelnicki, the biggest challenge for the remainder of the year will be contending with the drought.

 

“We are facing unprecedented conditions in California.  We continue to focus our efforts on monitoring and augmenting water supplies while helping our customers achieve reductions in their water use required by the State of California,” he said.

 

All stockholders and interested investors are invited to listen to the first quarter 2015 conference call on April 30, 2015, at 11:00 a.m. (EDT), by dialing 1-888-438-5448 or 1-719-457-1035 and keying in ID# 9010716.  A replay of the call will be available from 2:00 p.m. EDT on April 30, 2015, through June 30, 2015, at 1-888-203-1112 or 1-719-457-0820, ID# 9010716. 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, 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 approximately 2 million people in more than 100 California, Washington, New Mexico, and Hawaii communities.  Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.” Additional information is available at our web site at www.calwatergroup.com.

 

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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 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.

 

Attachments (2).

 

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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

 

 

 

March 31,

 

December 31,

 

(In thousands, except per share data)

 

2015

 

2014

 

ASSETS

 

 

 

 

 

Utility plant:

 

 

 

 

 

Utility plant

 

$

2,373,167

 

$

2,342,471

 

Less accumulated depreciation and amortization

 

(766,545

)

(752,040

)

Net utility plant

 

1,606,622

 

1,590,431

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

33,311

 

19,587

 

Receivables:

 

 

 

 

 

Customers

 

24,327

 

25,803

 

Regulatory balancing accounts

 

50,016

 

53,199

 

Other

 

13,349

 

14,136

 

Unbilled revenue

 

22,599

 

23,740

 

Materials and supplies at weighted average cost

 

6,158

 

6,041

 

Taxes, prepaid expenses, and other assets

 

9,495

 

11,618

 

Total current assets

 

159,255

 

154,124

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Regulatory assets

 

401,089

 

390,331

 

Goodwill

 

2,615

 

2,615

 

Other assets

 

51,164

 

49,850

 

Total other assets

 

454,868

 

442,796

 

 

 

$

2,220,745

 

$

2,187,351

 

 

 

 

 

 

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

Capitalization:

 

 

 

 

 

Common stock, $.01 par value

 

$

479

 

$

478

 

Additional paid-in capital

 

331,029

 

330,558

 

Retained earnings

 

289,158

 

295,590

 

Total common stockholders’ equity

 

620,666

 

626,626

 

Long-term debt, less current maturities

 

419,014

 

419,233

 

Total capitalization

 

1,039,680

 

1,045,859

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

6,596

 

6,607

 

Short-term borrowings

 

109,115

 

79,115

 

Accounts payable

 

57,684

 

59,395

 

Regulatory balancing accounts

 

5,580

 

6,126

 

Accrued interest

 

9,583

 

4,194

 

Accrued expenses and other liabilities

 

65,385

 

62,269

 

Total current liabilities

 

253,943

 

217,706

 

 

 

 

 

 

 

Unamortized investment tax credits

 

2,032

 

2,032

 

Deferred income taxes, net

 

214,814

 

214,842

 

Pension and postretirement benefits other than pension

 

277,094

 

270,865

 

Regulatory and other liabilities

 

81,499

 

83,279

 

Advances for construction

 

181,553

 

182,284

 

Contributions in aid of construction

 

170,130

 

170,484

 

Commitments and contingencies

 

 

 

 

 

$

2,220,745

 

$

2,187,351

 

 



 

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)

 

 

 

March 31,

 

March 31,

 

For the Three-Months ended:

 

2015

 

2014

 

 

 

 

 

 

 

Operating revenue

 

$

121,985

 

$

110,515

 

Operating expenses:

 

 

 

 

 

Operations:

 

 

 

 

 

Water production costs

 

45,202

 

45,402

 

Administrative and general

 

27,695

 

25,141

 

Other operations

 

15,843

 

16,376

 

Maintenance

 

4,457

 

5,005

 

Depreciation and amortization

 

15,319

 

16,053

 

Income taxes (benefit)

 

613

 

(3,839

)

Property and other taxes

 

5,359

 

5,225

 

Total operating expenses

 

114,488

 

109,363

 

 

 

 

 

 

 

Net operating income

 

7,497

 

1,152

 

 

 

 

 

 

 

Other income and expenses:

 

 

 

 

 

Non-regulated revenue

 

3,247

 

4,280

 

Non-regulated expenses, net

 

(2,243

)

(4,119

)

Income tax (expense) on other income and expenses

 

(403

)

(79

)

Net other income

 

601

 

82

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Interest Expense

 

7,069

 

7,075

 

Less: capitalized interest

 

(546

)

(365

)

Net interest expense

 

6,523

 

6,710

 

 

 

 

 

 

 

Net income (loss)

 

$

1,575

 

$

(5,476

)

 

 

 

 

 

 

Earnings (loss) per share

 

 

 

 

 

Basic

 

$

0.03

 

$

(0.11

)

Diluted

 

$

0.03

 

$

(0.11

)

Weighted average shares outstanding

 

 

 

 

 

Basic

 

47,825

 

47,756

 

Diluted

 

47,854

 

47,756

 

Dividends per share of common stock

 

$

0.16750

 

$

0.1625