California Water Service Group Announces Second Quarter 2013 Results
SAN JOSE, CA -- (Marketwired) -- 07/31/13 -- California Water Service Group (NYSE: CWT) today announced net income of $13.5 million or $0.28 per diluted common share for the second quarter of 2013, compared to net income of $13.0 million or $0.31 per diluted common share for the second quarter of 2012. The year-to-year decrease in earnings per share is attributable to the dilutive effect of the stock offering completed in March 2013.
Revenue for the second quarter of 2013 was $154.6 million, compared to revenue of $143.6 million in second quarter 2012. The increase in revenue is due primarily to an increase in usage of $9.6 million, net of WRAM, which includes a $3.6 million increase in accrued unbilled revenue. Rate increases added $3.8 million in revenue and the effect of other regulatory mechanisms decreased revenue by $2.4 million.
Total operating expenses for the second quarter of 2013 increased $9.9 million, or 7.9%, to $133.8 million. Water production costs increased $7.0 million, or 13.2%, to $59.6 million, due primarily to increased wholesaler water prices and increases in the quantity of water produced. Administrative and general expense and other operations expense increased $0.3 million, or 0.7%, to $40.2 million, due primarily to increased wage and employee benefit costs, which were partially offset by decreased conservation program expense.
Maintenance expense decreased $0.4 million, or 9.0%, to $4.2 million, due primarily to a decrease in main and service repairs. Depreciation expense increased $0.8 million, or 5.7%, to $14.5 million due to 2012 capital additions.
Other income, net of income taxes, decreased $0.2 million in the second quarter of 2013. Interest expense increased $0.4 million, or 5.7%, to $7.3 million due to a decrease in capitalized interest charged to construction projects.
According to Chairman and Chief Executive Officer Peter C. Nelson, second quarter results were in line with the company's expectations.
"Given the fact that 2013 is the third year of our General Rate Case cycle in California and we expect to receive only limited rate increases, we continue to focus on managing operating expenses and working toward the best outcome in our current General Rate Case filed in 2012," Nelson said.
"The Company continues to have productive settlement negotiations with the California Public Utilities Commission's Division of Ratepayer Advocates and other interested parties. Hearings on the case are scheduled to resume in August, and a final decision is expected to become effective at the end of 2013," he said.
All stockholders and interested investors are invited to listen to the second quarter 2013 conference call August 1, 2013 at 11 a.m. EDT by dialing 1-888-337-8198 and keying in ID # 2783716. A replay of the call will be available from 2 p.m. EDT on Thursday, August 1, 2013, through September 29, 2013, at 1-888-203-1112 and will 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 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.
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.
| CALIFORNIA WATER SERVICE GROUP | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| Unaudited | ||||||||||
| (In thousands, except per share data) | June 30, | December 31, | ||||||||
| 2013 | 2012 | |||||||||
| ASSETS | ||||||||||
| Utility plant: | ||||||||||
| Utility plant | $ | 2,160,706 | $ | 2,096,363 | ||||||
| Less accumulated depreciation and amortization | (670,452 | ) | (639,307 | ) | ||||||
| Net utility plant | 1,490,254 | 1,457,056 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | 38,668 | 38,790 | ||||||||
| Receivables: net of allowance for doubtful accounts of $714 for both periods presented | ||||||||||
| Customers | 41,493 | 29,958 | ||||||||
| Regulatory balancing accounts | 25,560 | 34,020 | ||||||||
| Other | 14,335 | 11,943 | ||||||||
| Unbilled revenue | 24,750 | 15,394 | ||||||||
| Materials and supplies at weighted average cost | 5,720 | 5,874 | ||||||||
| Taxes, prepaid expenses, and other assets | 13,550 | 10,585 | ||||||||
| Total current assets | 164,076 | 146,564 | ||||||||
| Other assets: | ||||||||||
| Regulatory assets | 353,910 | 344,419 | ||||||||
| Goodwill | 2,615 | 2,615 | ||||||||
| Other assets | 47,752 | 45,270 | ||||||||
| Total other assets | 404,277 | 392,304 | ||||||||
| $ | 2,058,607 | $ | 1,995,924 | |||||||
| CAPITALIZATION AND LIABILITIES | ||||||||||
| Capitalization: | ||||||||||
| Common stock, $.01 par value | $ | 477 | $ | 419 | ||||||
| Additional paid-in capital | 327,628 | 221,013 | ||||||||
| Retained earnings | 250,375 | 252,280 | ||||||||
| Total common stockholders' equity | 578,480 | 473,712 | ||||||||
| Long-term debt, less current maturities | 430,705 | 434,467 | ||||||||
| Total capitalization | 1,009,185 | 908,179 | ||||||||
| Current liabilities: | ||||||||||
| Current maturities of long-term debt | 48,040 | 46,783 | ||||||||
| Short-term borrowings | 28,815 | 89,475 | ||||||||
| Accounts payable | 57,158 | 47,199 | ||||||||
| Regulatory balancing accounts | 4,717 | 5,018 | ||||||||
| Accrued interest | 4,608 | 4,705 | ||||||||
| Accrued expenses and other liabilities | 52,872 | 49,887 | ||||||||
| Total current liabilities | 196,210 | 243,067 | ||||||||
| Unamortized investment tax credits | 2,180 | 2,180 | ||||||||
| Deferred income taxes, net | 167,611 | 158,846 | ||||||||
| Pension and postretirement benefits other than pensions | 248,003 | 244,901 | ||||||||
| Regulatory and other liabilities | 88,578 | 92,593 | ||||||||
| Advances for construction | 186,202 | 187,584 | ||||||||
| Contributions in aid of construction | 160,638 | 158,574 | ||||||||
| Commitments and contingencies | - | - | ||||||||
| $ | 2,058,607 | $ | 1,995,924 | |||||||
| CALIFORNIA WATER SERVICE GROUP | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| Unaudited | ||||||||||
| (In thousands, except per share data) | ||||||||||
| For the Three-Months ended: | ||||||||||
| June 30 | June 30 | |||||||||
| 2013 | 2012 | |||||||||
| Operating revenue | $ | 154,555 | $ | 143,552 | ||||||
| Operating expenses: | ||||||||||
| Operations: | ||||||||||
| Water production costs | 59,645 | 52,678 | ||||||||
| Administrative and general | 23,155 | 22,167 | ||||||||
| Other operations | 17,030 | 17,729 | ||||||||
| Maintenance | 4,188 | 4,605 | ||||||||
| Depreciation and amortization | 14,491 | 13,712 | ||||||||
| Income tax expense | 9,548 | 9,062 | ||||||||
| Property and other taxes | 5,715 | 3,977 | ||||||||
| Total operating expenses | 133,772 | 123,930 | ||||||||
| Net operating income | 20,783 | 19,622 | ||||||||
| Other income and expenses: | ||||||||||
| Non-regulated revenue | 3,215 | 4,051 | ||||||||
| Non-regulated expenses, net | (3,240 | ) | (3,695 | ) | ||||||
| Income tax benefit (expense) on other income and expense | 16 | (138 | ) | |||||||
| Net other (expense) income | (9 | ) | 218 | |||||||
| Interest expense: | ||||||||||
| Interest expense | 7,803 | 7,821 | ||||||||
| Less: capitalized interest | (539 | ) | (946 | ) | ||||||
| Net interest expense | 7,264 | 6,875 | ||||||||
| Net income | $ | 13,510 | $ | 12,965 | ||||||
| Earnings per share | ||||||||||
| Basic | $ | 0.28 | $ | 0.31 | ||||||
| Diluted | $ | 0.28 | $ | 0.31 | ||||||
| Weighted average shares outstanding | ||||||||||
| Basic | 47,729 | 41,911 | ||||||||
| Diluted | 47,760 | 41,911 | ||||||||
| 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 Six-Months ended: | ||||||||||
| June 30 | June 30 | |||||||||
| 2013 | 2012 | |||||||||
| Operating revenue | $ | 265,999 | $ | 260,301 | ||||||
| Operating expenses: | ||||||||||
| Operations: | ||||||||||
| Water production costs | 101,342 | 91,630 | ||||||||
| Administrative and general | 48,436 | 45,185 | ||||||||
| Other operations | 32,675 | 41,555 | ||||||||
| Maintenance | 8,321 | 10,365 | ||||||||
| Depreciation and amortization | 29,120 | 27,663 | ||||||||
| Income tax expense | 8,402 | 9,090 | ||||||||
| Property and other taxes | 11,150 | 8,584 | ||||||||
| Total operating expenses | 239,446 | 234,072 | ||||||||
| Net operating income | 26,553 | 26,229 | ||||||||
| Other income and expenses: | ||||||||||
| Non-regulated revenue | 6,737 | 8,187 | ||||||||
| Non-regulated expenses, net | (5,657 | ) | (5,794 | ) | ||||||
| Income tax (expense) on other income and expense | (435 | ) | (961 | ) | ||||||
| Net other income | 645 | 1,432 | ||||||||
| Interest expense: | ||||||||||
| Interest expense | 15,840 | 15,460 | ||||||||
| Less: capitalized interest | (1,079 | ) | (1,849 | ) | ||||||
| Net interest expense | 14,761 | 13,611 | ||||||||
| Net income | $ | 12,437 | $ | 14,050 | ||||||
| Earnings per share | ||||||||||
| Basic | $ | 0.28 | $ | 0.34 | ||||||
| Diluted | $ | 0.28 | $ | 0.34 | ||||||
| Weighted average shares outstanding | ||||||||||
| Basic | 45,004 | 41,877 | ||||||||
| Diluted | 45,034 | 41,877 | ||||||||
| Dividends declared per share of common stock | $ | 0.3200 | $ | 0.3150 | ||||||
Released July 31, 2013