California Water Service Group (CWT) Reports Q3 2023 Earnings
California Water Service Group (NYSE:CWT) reports Q3 2023 net income of $34.4 million, down from $55.9 million in Q3 2022.
Operating revenue for Q3 2023 stands at $255.0 million, a decrease from $266.3 million in the same period last year.
The company's earnings were significantly impacted by the delayed decision from the California Public Utilities Commission (CPUC) on its pending 2021 general rate case (GRC).
CWT's operating expenses for Q3 2023 increased by 5.0% to $211.5 million, compared to $201.4 million in Q3 2022.
California Water Service Group (NYSE:CWT) announced its Q3 2023 results on October 26, 2023. The company reported a net income attributable to the Group of $34.4 million and diluted earnings per share of $0.60 for the quarter ended September 30, 2023. This is a significant decrease compared to the net income of $55.9 million and diluted earnings per share of $1.03 for the same quarter in 2022.
Impact of Regulatory Delays
The company's Q3 results primarily reflect the impact of the delayed proposed decision from the California Public Utilities Commission (CPUC) on California Water Service Companys pending 2021 general rate case (GRC) to set new rates, rate design, and regulatory mechanisms. The CPUC extended the GRC completion date to December 31, 2023. Once approved by the CPUC, the GRC accumulative adjustment will be retroactive to January 1, 2023.
Operating Revenue and Expenses
Operating revenue was $255.0 million for the quarter ended September 30, 2023, compared to $266.3 million for the same period in 2022. The $11.3 million, or 4.3%, revenue decrease was primarily due to a $29.6 million decrease in Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA) revenue as the mechanisms concluded on December 31, 2022. This was partially offset by $13.7 million of general rate increases and a $1.8 million decrease in revenue deferral.
Operating expenses for the third quarter of 2023 were $211.5 million, compared to $201.4 million in 2022, an increase of $10.1 million or 5.0%. Water production costs increased $3.6 million, or 4.1%, to $92.3 million in 2023 compared to $88.7 million in 2022. The increase in water production costs was primarily attributable to rate increases in purchased water and pump tax.
CEO's Commentary
The delay in Cal Waters GRC clearly had a temporary adverse impact on our results, but I believe the appointment of a second judge on the case is a promising development. I am hopeful that we will see meaningful progress before the end of the year. Additionally, there is good news to report for the third quarter: The bottom line is that regulatory delays are eventually resolved, but our focus continues to be on executing our strategy, said Chairman and Chief Executive Officer Martin A. Kropelnicki.
Year-to-Date Results
For the nine-month period ended September 30, 2023, net income attributable to Group was $21.8 million or $0.38 earnings per diluted common share, compared to a net income attributable to Group of $76.4 million or $1.41 earnings per diluted common share for the nine-month period ended September 30, 2022.
Liquidity and Financing
Group maintained $69.0 million of cash as of September 30, 2023, of which $34.3 million was classified as restricted, and had additional short-term borrowing capacity of $485.0 million, subject to meeting the borrowing conditions on the Group and Cal Water line of credit facilities.
Explore the complete 8-K earnings release (here) from California Water Service Group for further details.
This article first appeared on GuruFocus.
